Freight (FRGT) 424B3Prospectus supplement

Filed Pursuant to Rule 424(b)(3)

Under the Securities Act of 1933

Registration Statement No. 333-266853

FREIGHT TECHNOLOGIES, INC.

19,147,688 Ordinary Shares

This prospectus relates to the resale, by the selling shareholders identified in this prospectus of up to 19,147,688 ordinary shares, par value $0.011 per share (or “Ordinary Shares”), as further described below under “Prospectus Summary—Private Placements.”

The selling shareholders are identified in the table commencing on page 93 . No Ordinary Shares are being registered hereunder for sale by us. We will not receive any proceeds from the sale of the Ordinary Shares by the selling shareholders but may receive up to $3.6 million from the exercise of Warrants A, C and D, if they are exercised. All net proceeds from the sale of the Ordinary Shares covered by this prospectus will go to the selling shareholders. We will receive no cash proceeds from the conversion of any of the preferred shares or the exercise of any warrants. See “Use of Proceeds.” The selling shareholders may sell all or a portion of the Ordinary Shares from time to time in market transactions through any market on which our Ordinary Shares are then traded, in negotiated transactions or otherwise, and at prices and on terms that will be determined by the then prevailing market price or at negotiated prices directly or through a broker or brokers, who may act as agent or as principal or by a combination of such methods of sale. See “Plan of Distribution.”

Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “FRGT.” The last reported sale price of our Ordinary Shares on August 26, 2022 was $1.77 per share.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (or the JOBS Act) and are subject to reduced public company reporting requirements.

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 24.

Neither the Securities and Exchange Commission (or the SEC) nor any state or other foreign securities commission has approved nor disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is August 30, 2022.

Holding Foreign Companies Accountable Act

The Holding Foreign Companies Accountable Act (the “HFCA Act”) was enacted on December 18, 2020. The HFCA Act states if the SEC determines that a company has 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 shall prohibit the company’s shares from being traded on a national securities exchange or in the over the counter trading market in the U.S.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC identifies it 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.

On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. 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 years.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, PCAOB announced the PCAOB HFCA Act determinations (the “PCAOB determinations”) relating to the PCAOB’s inability to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.

Our previous auditor, Centurion ZD CPA & Co., the independent registered public accounting firm that issued the audit report included 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 Centurion ZD CPA & Co.’s compliance with applicable professional standards. Centurion ZD CPA & Co. is headquartered in Hong Kong with no branches or offices in the United States. As such, Centurion ZD CPA & Co., was identified as a firm subject to the PCAOB’s determinations.

On June 13, 2022, we dismissed Centurion ZD CPA & Co. and appointed UHY LLP as our new independent public accounting firm. UHY LLP, which is headquartered in Michigan, has been inspected by the PCAOB on a regular basis, with the last inspection completed in 2019, and it is not subject to the determinations announced by the PCAOB on December 16, 2021. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares. If our Ordinary Shares are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our Ordinary Shares 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 our Ordinary Shares.

See “Risk Factors — Risks Related to our Ordinary Shares - Our shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2021. If the bill passed by the U.S. Senate on June 22, 2021 is passed by the U.S. House of Representatives and signed into law, this would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable from three years to two. The delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our securities. Such risks include but not limited to that trading in our securities may be prohibited under the HFCA Act and as a result an exchange may determine to delist our securities.

We cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. It remains unclear what the SEC’s implementation process related to the March 2021 interim final amendments will entail or what further actions the SEC, the PCAOB or Nasdaq will take to address these issues and what impact those actions will have on U.S. companies that have significant operations in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market). In addition, the March 2021 interim final amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, the market price of our Ordinary Shares could be adversely affected, trading in our securities may be prohibited and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require significant expense and management time.

See “Risk Factors — NASDAQ may apply additional and more stringent criteria for our continued listing.”

Neither the Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus does not constitute, and there will not be, an offering of securities to the public in the British Virgin Islands.

The date of this prospectus is August 30, 2022.

TABLE OF CONTENTS

You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we have referred you. Neither we nor the selling shareholders have authorized anyone to provide you with different information. Neither we nor the selling shareholders are offering to sell the Ordinary Shares, nor are we seeking offers to buy the Ordinary Shares, in any jurisdictions where offers and sales are not permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the Ordinary Shares.

For investors outside of the United States: Neither we nor the selling shareholders have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

We were incorporated under the laws of the British Virgin Islands as a business company established under the BVI Business Companies Act of 2004, as amended with limited liability and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the SEC, we currently qualify for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934.

COMMONLY USED DEFINED TERMS

Unless otherwise indicated or the context requires otherwise, references in this prospectus to:

MARKET AND INDUSTRY DATA

Unless otherwise indicated, information contained in this prospectus concerning our industry, our market share and the markets that we serve is based on information from independent industry and research organizations, other third-party sources (including industry publications, surveys and forecasts) and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets that we believe to be reasonable. Although we believe the data from these third-party sources is reliable, we have not independently verified any such information. In addition, projections, assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in the estimates made by third-parties and by us.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and uncertainties, such as statements related to future events, business strategy, future performance, future operations, backlog, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “plan,” “continue,” “estimate,” “expect,” “may,” “will,” “project,” “predict,” “potential,” “targeting,” “intend,” “could,” “might,” “should,” “believe” and similar expressions or their negative. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on management’s belief, based on currently available information, as to the outcome and timing of future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed in such forward-looking statements. When evaluating forward-looking statements, you should consider the risk factors and other cautionary statements described in “Risk Factors.” We believe the expectations reflected in the forward-looking statements contained in this prospectus are reasonable, but no assurance can be given that these expectations will prove to be correct. Forward-looking statements should not be unduly relied upon.

Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to:

These factors are not necessarily all of the important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements. Other unknown or unpredictable factors could also cause actual results or events to differ materially from those expressed in the forward-looking statements. Our future results will depend upon various other risks and uncertainties, including those described in “Risk Factors.” All forward-looking statements attributable to us are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result of new information, future events or otherwise.

Cautionary Statement Regarding Holding Foreign Companies Accountable Act

Holding Foreign Companies Accountable Act (the “HFCA Act”)

The Holding Foreign Companies Accountable Act (the “HFCA Act”) was enacted on December 18, 2020. The HFCA Act states if the SEC determines that a company has 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 shall prohibit the company’s shares from being traded on a national securities exchange or in the over the counter trading market in the U.S.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC identifies it 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.

On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. 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 years.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, PCAOB announced the PCAOB HFCA Act determinations (the “PCAOB determinations”) relating to the PCAOB’s inability to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.

Our previous auditor, Centurion ZD CPA & Co., the independent registered public accounting firm that issued the audit report included 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 Centurion ZD CPA & Co.’s compliance with applicable professional standards. Centurion ZD CPA & Co. is headquartered in Hong Kong with no branches or offices in the United States. As such, Centurion ZD CPA & Co., was identified as a firm subject to the PCAOB’s determinations.

On June 13, 2022, we dismissed Centurion ZD CPA & Co. and appointed UHY LLP as our new independent public accounting firm. UHY LLP, which is headquartered in Michigan, has been inspected by the PCAOB on a regular basis, with the last inspection completed in 2019, and it is not subject to the determinations announced by the PCAOB on December 16, 2021.  If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares. If our Ordinary Shares are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our Ordinary Shares 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 our Ordinary Shares.

See “Risk Factors — Risks Related to our Ordinary Shares - Our shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2021. If the bill passed by the U.S. Senate on June 22, 2021 is passed by the U.S. House of Representatives and signed into law, this would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable from three years to two. The delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our securities. Such risks include but not limited to that trading in our securities may be prohibited under the HFCA Act and as a result an exchange may determine to delist our securities.

We cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. It remains unclear what the SEC’s implementation process related to the March 2021 interim final amendments will entail or what further actions the SEC, the PCAOB or Nasdaq will take to address these issues and what impact those actions will have on U.S. companies that have significant operations in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market). In addition, the March 2021 interim final amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, the market price of our Ordinary Shares could be adversely affected, trading in our securities may be prohibited and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require significant expense and management time.

See “Risk Factors — NASDAQ may apply additional and more stringent criteria for our continued listing.”

Cautionary Statement About Being a Foreign Private Issuer

We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

We are a British Virgin Islands company and substantially all of our assets are located outside of the U.S. A substantial majority of our current operations are conducted in Mexico. In addition, some of our directors and officers reside outside the U.S. As a result, it may be difficult for you to effect service of process within the U.S. or elsewhere upon these persons. It may also be difficult for you to enforce in Mexico or British Virgin Islands courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, some of whom are not residents in the U.S. and the substantial majority of whose assets are located outside of the U.S. It may be difficult or impossible for you to bring an action against us in the British Virgin Islands if you believe your rights under the U.S. securities laws have been infringed. In addition, there is uncertainty as to whether the courts of the British Virgin Islands or Mexico would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the U.S. or any state and it is uncertain whether such British Virgin Islands or Mexico courts would hear original actions brought in the British Virgin Islands or Mexico against us or such persons predicated upon the securities laws of the U.S. or any state.

Our corporate affairs will be governed by our Amended Memorandum and Articles, the BVI Act and the common law of the British Virgin Islands. The rights of shareholders to take legal action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are to a large extent governed by the common law of the British Virgin Islands. The common law of the BVI is derived in part from comparatively limited judicial precedent in the BVI as well as that from English common law, which has persuasive, but not binding, authority on a court in the BVI. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the British Virgin Islands have a less developed body of securities laws as compared to the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law. There is no statutory recognition in the BVI of judgments obtained in the U.S., although the courts of the BVI will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. As a result of all of the above, public members may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling members than they would as members of a U.S. public company.

Certain corporate governance practices in the British Virgin Islands, which is our home country, differ significantly from the NASDAQ Capital Market corporate governance listing standards. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under NASDAQ Capital Market corporate governance listing standards applicable to U.S. domestic issuers. For a discussion of significant differences between the provisions the BVI Act and the laws applicable to companies incorporated in the United States and their shareholders, see “DESCRIPTION OF ORDINARY SHARES - Material Differences in British Virgin Islands Law and our Memorandum and Articles of Association and Delaware Law”.

PROSPECTUS SUMMARY

This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our Ordinary Shares. You should carefully consider, among other things, our consolidated financial statements and the related notes and the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

Overview

We were originally established as “China Internet Nationwide Financial Services Inc.”, a holding company incorporated under the laws of British Virgin Islands on September 28, 2015. Our corporate name was changed to “Hudson Capital Inc.” on April 23, 2020 and we began to trade under our new symbol, “HUSN” on May 8, 2020. Our securities were also transferred to the Nasdaq Capital Market at the opening of business on July 16, 2020.

We were previously involved in providing financial advisory services in the People’s Republic of China. Since February 14, 2022, when we consummated the Merger and March 30, 2022, when we sold our wholly-owned Hong Kong subsidiary, Hongkong Internet Financial Services Limited (“HKIFS”), which held and operated our financial advisory business, in its entirety to a private investor, we are no longer in the financial advisory business and no longer have any presence or holdings outside of North America.

Instead, we are now, through our wholly-owned subsidiary, Freight App, Inc. (formerly known as “Freight Hub, Inc.” and hereinafter referred to as “Fr8App”) and Fr8App’s wholly-owned Mexico subsidiary, Freight App de México, S.A De C.V. (“Freight App Mexico”) involved in the freight management business. On May 26, 2022, we changed our name and ticker symbol from Hudson Capital, Inc. and HUSN, respectively, to Freight Technologies, Inc., and FRGT, respectively.

Our Products

Fr8App’s technology product offerings includes (i) a computerized platform (the “Platform”) that holds an online portal (the “Portal”) and a mobile App solution (the “App”) to provide third-party logistics (“3PL”) services to companies actively involved in the freight transportation market, (ii) a Transport Management Solution (“TMS “) for customers to manage their own fleet, and (iii) freight brokerage support and customer service based on the Platform.

The freight transportation supply chain begins with parties having transportation needs (“Shippers”) and addressed by those offering freight transportation services (“Carriers”). Shippers seeking suitable means of transportation for their supplies represent demand and Carriers with freight transportation capability represent supply. The digital freight matching technology on Fr8App’s Platform streamlines and simplifies cross-border shipping logistics by facilitating the matching of demand with supply. Shippers that use Fr8App’s Platform can connect with a wide network of reliable Carriers who can fulfill their logistics needs across North America. Use of Fr8App’s Platform brings the additional benefit of providing transparency on all shipment characteristics to allow for the identification of available and qualified freight capacity.

Fr8App believes it is the first digital commercial freight-matching broker to offer 3PL while targeting the domestic Mexican and the cross-border Mexico-U.S.-Canada markets (“Target Markets”). Fr8App serves cross-border traffic across the Mexico-U.S. border, the U.S.-Canada border, and domestic shipments within each of these three countries, with a primary focus on full truck-load freight. Its cutting-edge cloud-based Platform was designed to connect in real-time parties with commercial transportation needs.

Market Opportunity

According to Modor Intelligence, the Mexican 3PL market is expected to register a compound annual growth rate of over 7.0% between 2021 and 2025. According to the same source, the US and Canadian 3PL markets are expected to grow at a 3.5% and 3.0% compound annual growth rate, respectively, over the same time period. Fr8App believes this commercial freight market growth is driven by growing domestic economies and increasing trade flows, which are not only from one region to another, but are more decentralized and fragmented. Fr8App believes these factors are expected to intensify the complexity of logistics activities in the coming years in what has been a relatively fragmented Mexican transportation market on a historical basis. Fr8App believes the U.S. and Canadian markets remain relatively fragmented as well though they have each seen major logistics companies enter the industry over the past decade. Fr8App believes the evolution of supply chains is also susceptible to changes in consumer habits, driven further by e-commerce and international health issues, such as the COVID 19 pandemic. Rising consumer expectations have had an observable effect throughout the supply chain, driving the need for greater efficiency and speed. Technology in warehouses, onboard trucks, and on smartphones has led to automating critical processes, improving visibility into the shipment lifecycle, and enabling faster decisions. In addition to profitability, sustainability and reliability has likely become a consideration of every Shipper’s bottom line. Fr8App believes that an ability to respond to increasing market volatility in real-time, can become an asset contributing to a Shipper’s business success. Fr8App believes this consideration is further exacerbated by qualified driver shortages in the U.S. and Canada. Fr8App believes the TMS market to be in a development stage similar to the consumer transportation industry, or “taxicabs”, prior to the introduction of wider reaching platforms like Uber and Cabify. Fr8App continues to invest in improving its TMS technology and expects these investments to help improve its Platform as well as the range of services Fr8App may offer to its Shippers and Carriers over time.

Fr8App believes the Mexican commercial freight market is also ripe for technological disruption as adoption of technology in this industry segment has lagged several others in the commercial transportation space. Fr8App believes there are significant complexities within the Mexican freight transportation market that give Fr8App a competitive advantage. As an example, there are standard ways in which a new carrier is evaluated as a potential business counterparty in the U.S. There are several industry, data and government databases and electronic tools for investigating a potential business supplier and no such vetting processes overseeing the commercial freight transportation market in Mexico. Fr8App intends to gain a deep understanding of these unique processes, within the Mexican transportation industry, to gain a competitive advantage over future market entrants. Fr8App intends to leverage this competitive advantage into opportunistically selected routes carrying traffic into the U.S. and Canada.

Fr8App’s Growth Strategy

Fr8App’s operations center in Mexico is located in Monterrey, Mexico, a city which accounts for the second highest GDP in Mexico (behind only Mexico City) and, historically, a transportation hub within the domestic and cross border Mexican freight transportation market. Fr8App plans to leverage its presence in Monterrey to become a leader in international freight to and from Mexico, and into and across the U.S., and into Canada.

Fr8App intends to establish itself as the top digital freight matching broker in the Mexican domestic market as well as U.S-Mexico and Mexico-U.S. cross-border markets. Fr8App intends to leverage its position within the U.S-Mexico and Mexico-U.S. cross-border markets, into opportunistically expanding its footprint across select routes in the U.S. and into Canada. Fr8App’s growth strategy consists of the following:

Fr8App plans to expand its Shipper base and increase its Carrier ecosystem throughout all three countries, with an initial focus on the Mexico-U.S. cross-border market, a select portion of the U.S. domestic market and a select segment of the Mexican domestic market. With recent investments in its Platform and internal tools for sales representatives, Fr8App plans to hire additional employees in its Shipper and Carrier Sales areas and its operations teams, and establish formal training programs for its labor force and access the highly trained labor market in Mexico to manage its ongoing daily operations throughout North America. Using creative marketing campaigns, Fr8App intends to reinforce the benefits of using its Platform and increase adoption amongst existing Shipper and Carrier customers. With the use of business intelligence tools and management solutions, Fr8App will actively manage margins and maintain lean operating units. By leveraging customer references and building off existing Shipper relationships, Fr8App believes it will be able to add new accounts to its portfolio across the domestic trucking industry in Mexico, at the U.S.-Mexico cross-border and opportunistically select routes within the U.S. and the U.S.-Canada border commercial freight transportation market.

Fr8App plans to continue to build trust among its Carriers by managing its Shipper base to provide a high level of fulfilment, and effective management of loads. Fr8App will monitor service levels across its Platform with on-time pick up and delivery metrics. To deliver high performance attention while maximizing value to its Carrier customers, Fr8App plans to grow its Carrier sales force to quickly respond to high volume primary loads and spot loads, as necessary.

Fr8App intends to establish a very well-trained bilingual sales force and operations team and has implemented a successful “Fr8App University” Program. Fr8App intends to help grow its sales and operations teams by developing a college recruiting program and hiring qualified individuals to train them within the industry and continue working with them on a side-by-side basis.

Fr8App will continue to invest in its technology to improve and differentiate its Platform, as well as, expand its TMS offerings for Shippers. Fr8App plans on integrating more of its business customers through customized API’s and launching a fleet management system for Carriers.

Intellectual Property

On January 7, 2021, Fr8App filed a trademark application with the U.S. Patent and Trademark Office for the Fr8Technologies design mark. Fr8App currently does not hold any patents or own any registered trademarks. Fr8App believes that the success of its business depends on the quality of its proprietary software solutions, technology, processes, and domain expertise. While it considers its intellectual property rights to be valuable, Fr8App believes that its competitive position depends primarily on its ability to increase and eventually to maintain a leadership position by developing innovative proprietary solutions, technology, information, processes, insights and business intelligence to satisfy both Shippers and Carriers’ needs through its Platform.

Fr8App’s principal asset consists of its software, which it invests in on a monthly basis through development work by employees and externally contracted parties. Fr8App invested approximately $0.5 million and $0.2 million in software during the years ended December 31, 2021 and December 31, 2020, respectively. Fr8App expects to continue investing in its software in line with the expansion of its product offerings. Financing for investment in software has historically been provided for by the company’s operations.

Competitive Strengths

We believe that the following strengths have contributed to our success and are differentiating factors that set us apart from our peers.

Threats and Challenges

Coronavirus (COVID-19) Update

The world is experiencing a global pandemic of a novel strain of coronavirus (COVID-19) and its various strains. The pandemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and business facilities globally for most of the past two years. We believe there is a risk that our business, results of operations, and financial condition will be adversely affected by the continued pandemic. Potential impact to our results of operations will also depend on future developments and new information that may emerge regarding the duration and severity of the COVID-19 and the actions taken by government authorities and other entities to contain the COVID-19 or mitigate its impact, almost all of which are beyond our control.

The impact of COVID-19 on our business, financial condition, and results of operations includes, but are not limited to, the following:

Due to COVID-19, Fr8App has experienced great volatility in global and domestic supply chains. The extent to which COVID-19 ultimately impacts the third-party logistics (“3PL”) industry, Fr8App’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and unpredictable, including new information which may emerge concerning the severity and duration of the COVID-19 outbreak and any additional virus strains and the effectiveness of actions taken to contain the COVID-19 outbreak, among others. Additionally, the extent to which COVID-19 ultimately impacts Fr8App’s operations will depend on a number of factors, many of which will be outside of its control. The COVID-19 outbreak is evolving, and new information emerges daily; accordingly, the ultimate consequences of the COVID-19 outbreak cannot be predicted with certainty.

For a detailed description of the risks associated with coronavirus, see “Significant Risk Factors – COVID-19 Pandemic”.

Significant Risk Factors

An investment in our Ordinary Shares involves a number of risks. You should carefully read and consider all of the information contained in this prospectus (including in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto) before making an investment decision. These risks could adversely affect our business, financial condition and results of operations, and cause the trading price of our Ordinary Shares to decline. You could lose part or all of your investment. In reviewing this prospectus, you should bear in mind that past results are no guarantee of future performance. See “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of forward-looking statements, and the significance of forward-looking statements in the context of this prospectus.

The following is a summary of our most significant risk factors:

COVID-19 Pandemic

Risks Related to Fr8App’s Business

Risks Related to Fr8App’s Financial Position and Need for Additional Capital

Risks Related to Fr8App’s Operations

Risks Related to Employee Matters and Managing Growth

Risks Related to our Ordinary Shares

Our Corporate Structure

We are a British Virgin Islands business company that wholly owns our Delaware subsidiary, our wholly-owned subsidiary, Freight App, Inc. (formerly known as “Freight Hub, Inc.” and hereinafter referred to as “Fr8App”) and Fr8App’s wholly-owned Mexico subsidiary, Freight App de México, S.A De C.V. (“Freight App Mexico”).

The following diagram illustrates our corporate structure as of the date of this prospectus. For more detail on our corporate history please refer to “Our History and Corporate Structure” appearing on page 64 of this prospectus.

Corporate Information

Our principal executive office is located at 2001 Timberloch Place, Suite 500 The Woodlands, TX 77380 and our phone number is (773) 905-5076. We maintain a corporate website at https://www.fr8.app/. The information contained in, or accessible from, our website or any other website does not constitute a part of this prospectus.

Implications of Our Being an “Emerging Growth Company”

As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An “emerging growth company” may take advantage of reduced reporting requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company, we:

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.

Certain of these reduced reporting requirements and exemptions were already available to us due to the fact that we also qualify as a “smaller reporting company” under SEC rules. For instance, smaller reporting companies are not required to obtain an auditor attestation and report regarding management’s assessment of internal control over financial reporting, are not required to provide a compensation discussion and analysis, are not required to provide a pay-for-performance graph or CEO pay ratio disclosure, and may present only two years of audited financial statements and related MD&A disclosure.

Implications of Being a Foreign Private Issuer

We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

THE OFFERING

This prospectus relates to the resale by the selling shareholders identified in this prospectus of up to 19,147,688 Ordinary Shares, including 14,401,194 Ordinary Shares that are issuable upon conversion of the Company’s preferred shares. All of the Ordinary Shares, when sold, will be sold by these selling shareholders. The selling shareholders may sell their Ordinary Shares from time to time at prevailing market prices. We will not receive any proceeds from the sale of the Ordinary Shares by the selling shareholders or from the conversion of the preferred shares into Ordinary Shares.

PRIVATE PLACEMENTS

Freight Technologies, Inc. (the “Company”) entered into a merger agreement, dated December 13, 2021, and as amended on December 29, 2021 (the “Merger Agreement”) by and among Hudson Capital Merger Sub I, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), Freight App, Inc., a Delaware corporation (“Fr8App”) and ATW Master Fund II, L.P., as the representative of the stockholders of Fr8 App (the “Stockholders’ Representative”). On February 14, 2022, a Certificate of Merger was filed with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of Delaware Law, whereby in accordance with the Merger Agreement, Merger Sub I merged with and into Fr8App, with Fr8App surviving the Merger and continuing as a direct wholly-owned subsidiary of the Company (the “Merger”). The Merger closed on February 14, 2022 and the separate corporate existence of Merger Sub and its Certificate of Incorporation and by-laws then in effect ceased, and the organizational documents of Fr8App after the Merger is in the form as agreed by the Company and Fr8App.

In connection with the Merger, the following unregistered, restricted securities were issued to shareholders of Fr8App, subject to customary adjustments for stock splits, dividends, rights offerings, pro rata distributions and fundamental transactions (the “Merger Consideration”):

* Includes 400,558 shares to be granted under the Hudson Capital, Inc. Equity Incentive Plan.

The Company relied on the exemption from registration for the issuance of the shares listed above pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder.

Securities Purchase Agreement

On February 9, 2022, the Company, Fr8App, ATW Opportunities Master Fund, L.P. (“ATW Opportunities”) together with certain existing stockholders of Fr8App (collectively, the “SPA Investors”) entered into an amended and restated Securities Purchase Agreement (the “A&R SPA”) pursuant to which the Company agreed to, among other things, issue four series of warrants (Series A, Series B, Series C and Series D) to purchase an aggregate of 16,257,671 of the Company’s Ordinary Shares. These warrants will remain exercisable for a period of seven years after issuance. The exercise price of Series A, Series B, Series C and Series D Warrants are $1.50, $1.20, $0.75 and $1.125 per Ordinary Share, respectively, subject to customary adjustments for stock splits, dividends, rights offerings, pro rata distributions and fundamental transactions.

On February 9, 2022, the Company and ATW Opportunities, together with certain investors (collectively, the “PIPE Investors”) entered into a Securities Purchase Agreement pursuant to which the Company agreed to sell and issue to the PIPE Investors an aggregate of 2,333,333 restricted Series B Preferred Shares along with Series A warrants to purchase 2,333,333 of the Company’s Ordinary Shares, in a private placement for an aggregate purchase price of $3,500,000 (the “At-Merger Financing”) upon closing of the Merger. The 2,333,333 restricted Series B Preferred Shares are initially convertible into restricted ordinary shares on a 1:1 basis. In addition, the Company has a post-closing obligation to issue to PIPE Investors Series A warrants to purchase an aggregate of 2,333,333 Ordinary shares at $1.50 per share, subject to customary adjustments for stock splits, dividends, rights offerings, pro rata distributions and fundamental transactions.

The A&R SPA and the At-Merger Financing closed on February 14, 2022. The Company relied on the exemption from registration of the abovementioned securities pursuant to an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder.

Securities issued by the Company under the A&R SPA and the At-Merger Financing are not part of the Merger Consideration. After taking into account of the Merger, the A&R SPA and the At-Merger Financing and before the previously-announced reverse split took effect, the Company had a total 14,534,488 Ordinary Shares issued and outstanding, 2,781,592 Series A2 Preferred Shares, 9,841,804 Series A1A Preferred Shares, 15,445 Series Seed Preferred Shares, 18,591,004 Series B Preferred Shares, 1,251,647 Series A4 Preferred Shares, 11,480 Ordinary Shares Warrant and 9,164 Series Seed Warrant, 4,266,667 Series A Warrants, 870,434 Series B Warrants, 5,661,634 Series C Warrants, and 7,792,269 Series D Warrants outstanding.

Registration Rights Agreement

In connection with the A&R SPA and At-Merger Financing, the Company and the PIPE Investors (including ATW Opportunities) entered into a registration rights agreement, whereby the Company agreed to file a registration statement to register for resale the Conversion Shares (defined in the Registration Rights Agreement) of an aggregate of 37,182,008 shares held as soon as practicable within six (6) months from the closing of the Merger. The registration statement must be declared effective by the 60th day following filing or, in the event the SEC notifies the Company that it will “review” the registration statement, the 90^th calendar day following the filing date and with respect to any additional registration statements which may be required pursuant to the Registration Rights Agreement, the 60^th calendar day following the date on which an additional registration statement is required to be filed thereunder.

Reverse Split

The Company’s Ordinary Shares began trading on a 2.2:1 reverse split basis on February 15, 2022. The number of shares in the aforementioned paragraphs are based on a pre-reverse split basis.

July 2022 Securities Purchase Agreement

On July 12, 2022, the Company and ATW Opportunities entered into another Securities Purchase Agreement pursuant to which the Company agreed to sell and issue to ATW Opportunities 1,285,714 Series A4 Preferred Shares for an aggregate consideration of $2,700,000. The sale contemplates two closings – the first being for 809,524 Series A-4 Preferred Shares for a consideration of $1,700,000 comprising $1,500,000 in cash and the extinguishment of a $200,000 promissory note issued by Freight App, Inc. to ATW Opportunities dated December 29, 2021 (the “First Closing”) and the second being for 476,190 Series A4 Preferred Shares for a consideration of $1,000,000 in cash (the “Second Closing”) within 60 days of the closing of the first sale. The First Closing was consummated on July 13, 2022. The Company relied on the exemption from registration of the abovementioned securities pursuant to an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder.

Also on July 12, 2022, the Company entered into a Securities Amendment Agreement with holders of the Company’s Series Seed, Series A1-A, Series A2, and Series A4 Preferred Shares (collectively, the “Series A Preferred Shares”), Series B Preferred Shares and Series A, B, C and D warrants issued pursuant to the Amended and Restated Securities Purchase Agreement dated as of February 9, 2022 (the “Warrants”). The parties to the Securities Amendment Agreement have agreed to the following:

The Company’s memorandum and articles of association pertaining to its Series A Preferred Shares shall be amended to remove the anti-dilution provision following a reset of the conversion price as follows:

The Company’s memorandum and articles of association pertaining to its Series B Preferred Shares shall be amended to reset the conversion price to $1.40 (using a stated value, post reverse split, of $6.60).

The Company shall issue amended and restated Warrants to the Warrant holders with the following amendments:

The registration rights agreement dated February 9, 2022 is amended and restated as of July 12, 2022 (hereinafter, the “Revised Registration Rights Agreement”) with the following amendments:

On August 4, 2022, the Company entered into a Waiver of Registration Rights with ATW Opportunities Master Fund, L.P., ATW Master Fund II, L.P., ATW Partners Opportunities Management, LLC and Chardan Capital Markets LLC wherein the latter agreed to waive their rights to the registration of an aggregate 45,052,854 Ordinary Shares (comprising 581,818 Ordinary Shares and 44,471,036 Ordinary Shares underlying certain preferred shares and warrants).

Service Fees

Each of Sichenzia Ross Ference LLP and Loeb and Loeb, LLC was issued 15,570 and 250,000 restricted Ordinary Shares for legal services rendered.

Acorn Management Partners, LLC was issued 46,012 restricted Ordinary Shares for investor relations services to be rendered

Rodrigo Alberto Marroquin Calero was issued 106,500 restricted Ordinary Shares for logistics administration services rendered and to be rendered.

The Company relied on the exemption from registration for the issuance of the shares listed above pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D thereunder.

It is now in the context abovementioned transactions and Revised Registration Statement that the Company is hereby registering the aforementioned Ordinary Shares and the Ordinary Shares underlying the Series A and Series B Preferred Shares and the Warrants.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated statements of operations and cash flow data for the years ended December 31, 2021, 2020 and 2019 and the summary consolidated balance sheet data as of December 31, 2021, 2020 and 2019 have been derived from our consolidated financial statements included elsewhere in this prospectus. You should read the summary consolidated financial data in conjunction with those financial statements and the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our consolidated financial statements are prepared and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP, our consolidated financial statements have been prepared as if the current corporate structure had been in existence throughout the periods presented. 

Our historical results do not necessarily indicate results expected for any future periods. The selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” below. Our audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP.

* - The number of shares outstanding was adjusted retroactively for all period presented to reflect the 5 to 1 reverse stock split change which was effective on October 29, 2020 and an additional 2.2 to 1 reverse stock split change which was effective February 15, 2022.

Warrants to purchase Ordinary Shares are not included in the diluted loss per share calculations when their effect is antidilutive.

The following table presents the selected consolidated financial information for Fr8App.

STATEMENTS OF OPERATIONS

BALANCE SHEET

RISK FACTORS

Investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision. The risks and uncertainties described below represent our known material risks to our business. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, you may lose all or part of your investment. You should not invest in this offering unless you can afford to lose your entire investment.

COVID-19 Pandemic

A global pandemic or spread of disease, real or perceived, as well as natural disasters in any country in which Fr8App operates could materially and adversely affect the demand for its services, its operations and financial conditions.

The novel coronavirus (COVID-19) pandemic and the concurrent economic slowdown may have an unexpected effect on Fr8App’s business, financial condition, and results of operations. In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world have implemented measures to reduce the spread of COVID-19. These measures have adversely affected workforces, customers, supply chains, consumer sentiment, economies, and financial markets, and, along with decreased consumer spending, have led to an economic downturn across many global economies. COVID-19 has also caused widespread unemployment and border closings.

Due to COVID-19, Fr8App has experienced great volatility in global and domestic supply chains. The extent to which COVID-19 ultimately impacts the third-party logistics (“3PL”) industry, Fr8App’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and unpredictable, including new information which may emerge concerning the severity and duration of the COVID-19 outbreak and any additional virus strains and the effectiveness of actions taken to contain the COVID-19 outbreak, among others. Additionally, the extent to which COVID-19 ultimately impacts Fr8App’s operations will depend on a number of factors, many of which will be outside of its control. The COVID-19 outbreak is evolving, and new information emerges daily; accordingly, the ultimate consequences of the COVID-19 outbreak cannot be predicted with certainty.

Severe weather conditions and other natural or manmade disasters, including storms, floods, fires, earthquakes, epidemics, pandemics, conflicts, unrest, or terrorist attacks, may disrupt Fr8App’s business and result in decreased revenues. Customers may reduce shipments, or Fr8App’s costs to operate its business may increase, either of which could have a material adverse effect on Fr8App. Any such event affecting one of the countries in which Fr8App operates could result in a significant interruption in its business. Natural disasters such as major fires in Australia, Brazil and the Western United States and other major weather or geological events around the globe could adversely affect the demand for its services, its operations and financial condition.

Risks Related to Fr8App’s Business

Fr8App’s limited operating history may make it difficult for you to evaluate the success of its business to date and to assess its future viability.

Fr8App was founded in 2015 with a view to developing and bringing solutions to the cross-border commercial freight market on the U.S.-Mexico border, and by extension, the U.S.-Canada border. The first commercial version of Fr8App’s products was launched in 2017. Fr8App continued its product development efforts throughout 2018, added initial business intelligence and analytics to supplement its basic products in 2019 and offered its revised products package with active freight brokerage support towards the end of 2019 and into early 2020. The latest generation of Fr8App products was brought to market during the second quarter of 2020 and a new management team was hired during the second and third quarters of 2020 to bring a renewed focus to promoting freight services to Shippers and Carriers (each as defined below). Accordingly, you should consider Fr8App’s prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development. Any predictions you make about its future success or viability may not be as accurate as they would be if Fr8App had a longer operating history or a history of successfully developing and marketing its product offerings. Fr8App’s relatively limited operating history may make it difficult for you to evaluate the success of its business and assess its future viability.

Fr8App may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving its business objectives. Fr8App’s transition from a company with a development focus to a company successfully marketing and monetizing its product offerings may take longer than anticipated, or may not be successful at all.

Fr8App’s early stage operations could expose it to a high concentration of revenues in individual clients and increase the volatility of its revenues.

Fr8App works with a number of large corporate entities in addressing their logistics needs. Many of these clients use Fr8App for a very small amount of their overall logistics needs. Shippers tend to be repeat customers and can grow in size relative to Fr8App’s book of business in an accelerated manner. Fr8App’s largest single client during 2021 represented approximately 37% of total 2021 revenues. Large increases and decreases in Fr8App’s client base may add volatility to results while the Company remains in its early growth stages.

A significant data breach or IT system disruption could materially adversely affect Fr8App, including requiring Fr8App to increase spending on data and system security.

Fr8App relies heavily on information technology networks and systems, including the Internet and a number of internally-developed systems and applications, to manage or support a wide variety of important business processes and activities throughout its operations. For example, Fr8App relies on information technology to analyze its customer loads and input their information into its databases, identify different routes and their costs, track ongoing shipments, confirm receipts, transfer documents, and a number of other functions that are integral to the ongoing operation of Fr8App’s business.

In addition, the provision of service to Fr8App’s customers and the operation of its networks and systems involve the collection, storage and transmission of significant amounts of information and potentially sensitive or confidential data. Fr8App is subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data security. The scope of the laws that may be applicable to us is often uncertain and may be conflicting, particularly with respect to foreign laws.

Fr8App’s information technology systems are susceptible to damage, disruptions or shutdowns due to programming errors, defects or other vulnerabilities, power outages, hardware failures, computer viruses, cyber-attacks, ransomware attacks, malware attacks, theft, misconduct by employees or other insiders, telecommunications failures, misuse, human errors or other catastrophic events. Hackers acting individually or in coordinated groups, may launch distributed denial of service attacks or other coordinated attacks that may cause service outages, gain inappropriate or block legitimate access to systems or information, or result in other interruptions in Fr8App’s business. In addition, the foregoing breaches in security could expose Fr8App and its customers to a risk of loss, disclosure or misuse of proprietary information and sensitive or confidential data.

Fr8App protects its software, web portal and platform solutions from third-party attacks and implement what it believes to be state-of-the art prophylactic controls around and throughout its software environment. However, there is no assurance that Fr8App’s web portal and platform solution will not sometimes malfunction or be subject to malicious attacks. Any unexpected malfunction of Fr8App’s system could cause major interruptions to its daily operations, including its ability to deliver its third-party logistics (“3PL”) services to customers, to collect payments from its customers or pay its key suppliers. Although to date Fr8App is unaware of a data breach or system disruption that has had a material adverse effect on it, Fr8App cannot provide any assurances that such events and impacts will not be material in the future, and its efforts to deter, identify, mitigate and/or eliminate future breaches may require significant additional effort and expense and may not be successful.

Trade wars or adverse political changes in any country in which Fr 8App operates could materially and adversely affect the demand for its services, its operations and financial conditions.

Fr8App has business operations in the U.S., Mexico and Canada. These three countries currently have a free trade agreement which directly impacts the amount of international trade across the US-Mexico and the US-Canada borders. The first such trade agreement went into effect in 1994 and was followed by tremendous increase in trade amongst all three countries. Unanticipated changes in the trade agreements or sudden political changes in any of these three countries in which Fr8App operates could have a material adverse effect on customers’ demand for its services. Fr8App’s business can be greatly impacted by the laws, regulations and policies that affect trade among these three countries, including tariff and trade policies, export requirements and other restrictions. The factors that result in general economic changes are also beyond Fr8App’s control, and it may be difficult for Fr8App to adjust its business model to mitigate the impact of these factors. In particular, Fr8App’s business is affected by levels of industrial production, consumer spending and retail activity and Fr8App could be materially and adversely affected by adverse developments in these and other aspects of the economies in which Fr8App operates. If Fr8App is unable to implement its business strategies successfully or properly react to changes in market conditions as a result of trade wars or political changes in these countries, its financial condition, results of operations and cash flows could be materially and adversely affected.

Fr8App’s industry is rapidly evolving. It expects to continue to face significant competition, which could adversely affect Fr8App.

The 3PL industry is rapidly evolving, including demand for greater efficiency and increased visibility into the shipment lifecycle. Fr8App expects continued significant competition on a national and international level. Fr8App’s competitors include the postal services of the U.S. and other nations, various motor carriers, express companies, freight forwarders, air couriers, large transportation and e-commerce companies that are making significant investments in their capabilities, and start-ups and other companies that combine technologies with crowdsourcing to focus on local market needs, some of whom may currently be its customers.

Competition may also come from other sources in the future as new technologies are developed and new methods of transportations are made widely available. Innovations in transportation technology, including driverless trucks, artificial intelligence and logistics could adversely affect the demand for Fr8App’s 3PL services. If Fr8App is unable to adapt to these changes, its business could be adversely affected.

Fr8App is directly affected by the cyclicality of the trucking industry and general economic conditions.

The trucking industry has historically been highly cyclical and especially susceptible to trends in economic activity. The trucking industry has historically fluctuated in response to factors that are beyond Fr8App’s control, such as general economic conditions, interest rates, federal and state regulations, consumer spending and fuel costs. The industry is particularly sensitive to the consumer, industrial and manufacturing sectors of the economy, which generate a significant portion of the freight tonnage hauled by heavy-duty trucks. Since truck fleet owners and professional truck drivers are some of the key carriers Fr8App serves, Fr8App’s business activities are directly tied to the purchase and production of goods and other key macro-economic measurements. When individuals and companies purchase and produce fewer goods, Fr8App’s customers transport fewer goods. Downturns in consumer business cycles, such as the home construction, automobile, and manufactured goods sectors, can create excess capacity in the trucking industry and may have a material adverse effect on Fr8App’s business and operating results.

Fr8App could be affected by strikes or labor unrest at any border crossing that is relied upon by its customer base.

The cross-border trucking industry relies on many government-provided services and agencies such as the U.S. Customs and Border Protection that may be unionized and is subject to strikes or labor unrest that could be disruptive to cross-border freight on a short-term basis. Lower or inefficient cross-border crossings due to labor unrest or strikes could adversely affect Fr8App’s customers and Fr8App’s operating results and financial condition.

Fr8App is exposed to the effects of changing fuel and energy prices, including gasoline, jet fuel and diesel, and what interruptions in supplies of these commodities can bring to the demand for the shipping and commercial freight industry.

Changing fuel and energy costs have a significant impact on the expenses incurred by the shipping and commercial freight industry. On April 20, 2020, the price for oil traded at negative prices for the first time in modern history. In the event that this short-term distortion in fuel prices were to last, air freight costs would continue to drop, making it an attractive alternative to trucking. If air freight or some other form of freight became increasingly attractive to shippers in general, there could be a switch from truck freight to air freight, or some other, more economic means of freight. During March 2022, gasoline prices in the United States were reaching historic highs with significant day to day volatility. Higher fuel charges may affect Carriers results and performance when they are unable to pass on their higher costs to Shipper clients. Changes in fuel prices, disruption in energy supplies as a result of war, actions by producers or other factors beyond Fr8App’s control, could in turn have a material adverse effect on Fr8App’s business.

Truck Driver or other supply shortages within the transportation value chain could have material adverse effect on Fr8App’s business and operating results.

Fr8App’s freight brokerage support and customer services relies on Fr8App being able to assist with securing carrier services for shippers at commercially feasible rates. Truck driver or other supply shortages within the transportation value chain could adversely affect Fr8App’s ability to secure carrier services at commercially favorable rates, which could, in turn, have a material adverse effect on Fr8App’s business and operating results.

Fr8App currently does not hold any patents or own any registered trademarks.

Fr8App currently does not hold any patents or own any registered trademarks. Although Fr8App believes that the success of its business depends on the quality of its proprietary software solutions, technology, processes, and domain expertise, and has taken appropriate steps to protect its intellectual property, the measures taken may not be inadequate.

On September 6, 2018, Hub Group, Inc. (“Hub Group”) filed a Notice of Opposition with the Trademark Trial and Appeal Board (“TTAB”) against Fr8App’s U.S. Trademark Application Serial No. 87102800 (the “Trademark Application”) for its “Fr8HUB” unitary design mark (the “Mark”). On August 27, 2021 Fr8App and Hub Group entered into a binding Settlement Agreement and Release (the “Settlement”) fully resolving the TTAB proceeding. Under the terms of the Settlement, Fr8App agreed to irrevocably abandon the Trademark Application and permanently cease further commercial use of the terms “FreightHub,” “Fr8Hub” and “Hub,” as well as any confusingly similar marks (together the “Source Identifiers”), including abandoning any and all commercial and intellectual property rights to the Source Identifiers, refraining from filing additional trademark applications involving the Source Identifiers, and refraining from otherwise seeking to secure or enforce its rights to the Source Identifiers. There are no damages, penalties or payments arising under the Settlement. However, consumer or market confusion could result from Fr8App’s adoption of the identifiers “Freight App” and “Fr8App” and its abandonment of the terms “FreightHub” and “Fr8Hub” going forward. The duration or impact of such confusion, if any, is difficult to estimate. Hub Group has fully released any further legal claims concerning Fr8App’s use of the Source Identifiers through the date of the Settlement.

The impact of environmental laws and regulations and their enforcement could materially and adversely affect Fr8App’s business.

Motor carrier deregulation in the U.S. began in 1970-71 with initiatives in the Nixon Administration and continued into the 1980s through the Carter administration. They were part of a sweeping reduction in price controls, entry controls, and collective vendor price setting in U.S. transportation. While these deregulations by and large had a positive impact on the transportation volumes over the years, changes of regulations in the trucking industry could adversely affect Fr8App’s business. Routes and pricing for commercial freight could be regulated. Controlled margins or prices for certain goods could be put into effect. Fr8App cannot predict the impact of any new regulations on the 3PL and transportation industries. The effect these potential regulations could have on the commercial freight business, and in turn, its business and operating results may be long-lasting.

Risks Related to Fr8App’s Financial Position and Need for Additional Capital

Fr8App has a history of significant operating losses and expect to incur losses for the foreseeable future, and Fr8App may never achieve or maintain profitability.

Fr8App has a history of significant operating losses, and Fr8App has not been profitable since inception in 2015. Fr8App plans to continue to invest in improving Fr8App’s platform and services. Recurring losses from Fr8App’s operations could raise substantial doubt regarding its ability to continue as a going concern. If Fr8App fails to transition from a company with a development focus and in early growth strategies to fully commercializing its product offerings, it may not be able to fund its operations without raising additional capital, if at all. While Fr8App has been successful in raising capital in the past, there is no assurance that it can access additional capital in the future when needed, on favorable terms, or at all. If Fr8App fails to execute its business plan and strategies, it may incur losses for the foreseeable future, and be unable to fund its operations at some time in the future.

Raising additional capital may cause dilution to Fr8App’s existing shareholders, restrict its operations or cause it to relinquish valuable rights.

While Fr8App has been successful in raising capital in the past, there is no assurance that Fr8App can access additional capital in the future when needed, on favorable terms, or at all. To the extent that Fr8App raises additional capital through the sale of equity, convertible debt securities or other equity-based derivative securities, your ownership interest may be diluted and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. Any indebtedness Fr8App incurs would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on its ability to incur additional debt, limitations on its ability to acquire or license intellectual property rights, limitations on the payment of dividends, and other operating restrictions that could adversely impact its ability to conduct its business. Furthermore, the issuance of additional securities, whether equity or debt, by Fr8App, or the possibility of such issuance, may cause the market price of its common stock to decline and existing shareholders may not agree with its financing plans or the terms of such financings. If Fr8App raises additional funds through strategic partnerships and alliances, licensing arrangements or monetization transactions with third parties, it may have to relinquish valuable rights to its technologies, or product candidates, or grant licenses on terms unfavorable to Fr8App. Adequate additional financing may not be available to Fr 8App on acceptable terms, or at all. If Fr8App is unable to raise additional funds when needed, it may be required to delay, limit, reduce or terminate its product development or future commercialization efforts or grant rights to develop and market product candidates that it would otherwise prefer to develop and market itself.

Risks Related to Fr8App’s Operations

A number of Fr8App’s personnel are based outside of the United States and regularly conduct business outside of the United States. Fr8App is subject to economic, political, regulatory and other risks associated with international operations.

As a number of personnel that support Fr8App’s operations are based in Mexico, Fr8App’s business is subject to risks associated with conducting business outside of the United States. Accordingly, Fr8App’s future results could be harmed by a variety of factors, including:

Exchange rate fluctuations may materially affect Fr8App’s results of operations and financial condition.

Though most of Fr8App’s revenues are denominated in U.S. dollars, Fr8App does effect contracts in Mexico whereby Fr8App invoices for its services in Mexican pesos. Fr8App may execute contracts in Canadian dollars or other currencies at some point in the future. Fr8App also has a number of its personnel operating in Mexico and it pays an ongoing payroll and key suppliers in Mexico. Unexpected exchange rate fluctuations between the U.S. dollar and the Mexican peso could adversely affect Fr8App’s results from operations.

Fr8App monitors and manages its exposures to changes in currency exchange rates and interest rates. It may use derivative instruments to mitigate the impact of changes in these rates on Fr8App’s financial position and results of operations; however, changes in exchange rates and interest rates cannot always be predicted or hedged and may have a material adverse effect on Fr8App.

Fr8App may be subject to claims by third parties asserting that its employees or Fr8App has misappropriated their intellectual property, or claiming ownership of what Fr8App regards as its own intellectual property.

Many of Fr8App’s employees have spent many years in the high technology, transportation and logistics industries. Some of these employees may be subject to proprietary rights, non-disclosure and non-competition agreements, or similar agreements, in connection with such previous employment. Although Fr8App tries to ensure that its employees do not use the proprietary information or know-how of others in their work for Fr8App, Fr8App may be subject to claims that it or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such third party. Litigation may be necessary to defend against such claims. If Fr8App fails in defending any such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights or personnel or sustain damages. Such intellectual property rights could be awarded to a third party, and Fr8App could be required to obtain a license from such third party to commercialize its technology or products. Such a license may not be available on commercially reasonable terms or at all. Even if Fr8App is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

Risks Related to Employee Matters and Managing Growth

Fr8App’s management team is relatively new and its future success will depend on its ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel.

Fr8App’s President, Chief Executive Officer and Chief Financial Officer all joined Fr8App in September 2020 and their Chief Operating Officer in August 2021 and have not worked together prior to joining Fr8App. Fr8App’s ability to execute its business strategies and manage its growth will largely depend on its executive team and key employees, the loss of whose services may adversely impact the achievement of its objectives. While Fr8App has entered into employment agreements with certain of its executive officers and key employees, any of them could leave Fr8App’s employment at any time. Fr8App does not maintain “key person” insurance policies on the lives of these individuals or the lives of any of its other employees. The loss of the services of one or more of its current employees might impede its objectives. Furthermore, replacing executive officers or other key employees may be difficult and may take an extended period of time because of the limited number of individuals in Fr8App’s industry with the breadth of skills and experience required to develop, gain marketing approval of and commercialize products successfully.

Recruiting and retaining other qualified employees, consultants and advisors for Fr8App’s business, including scientific, technical and experienced industry personnel, will also be critical to its success. There is currently a shortage of skilled executives in Fr8App’s industry, which is likely to continue. As a result, competition for skilled personnel is intense and the turnover rate can be high. Fr8App may have to incur additional recruiting and training expenses to adequately staff its company. Fr8App may not be able to attract and retain personnel on acceptable terms.

The trucking industry is highly fragmented and regulated.

The trucking industry, one of Fr8App’s target customers, is a disparate group comprised of truck fleet owners and independent truck drivers. Some truck fleet owners are small companies, and like independent truck drivers, may not be familiar with the industry trends or have exposure to new technologies or new methods of doing business. As a result, Fr8App may not be able to establish a consistently effective method for marketing its digital Marketplace and mobile application platform to such industry participants.

The trucking industry is also highly regulated. The jurisdiction of the Department of Transportation (“DOT”), the Environmental Protection Agency (“EPA”) and similar state agencies, extends to Fr8App’s customers in the trucking industry. DOT and EPA regulations are subject to varying interpretations which may evolve over time. If compliance with the current regulations is not actively enforced by these agencies, or enforcement continues to vary from region to region, that may affect some of Fr8App’s carriers’ businesses and in turn, its business could be materially and adversely affected. Fr8App cannot assure you that government agencies will not adopt new policies or regulations that could adversely affect its business, results of operations and financial condition.

Increased security requirements impose substantial costs on Fr8App and it could be the target of an attack or have a security breach, which could materially adversely affect Fr8App.

Fr8App operates in a particularly complex legal and regulatory environment. The legal environment of a cloud-based software business is evolving in the U.S. and other jurisdictions and Fr8App is subject to a variety of laws and regulations in the United States and abroad that involve matters central to its business.

Fr8App’s business is subject to a variety of U.S. and Mexican laws, rules and regulations, including those affecting “Motor Carriers, Owner-Operators and Transportation Brokers” issued by the US Federal Motor Carrier Safety Administration (“FMCSA”) of the DOT. Fr8App is subject to many U.S., Canadian and Mexican federal, state and local laws and regulations including those related to internet activities, privacy, rights of publicity, data protection, intellectual property, health and safety, competition, consumer protection, payments, transportation services, insurance coverage and taxation. These laws and regulations are constantly evolving and may be interpreted, applied, created or amended in a manner that could harm Fr8App’s business.

Many of these laws and regulations are still evolving and being tested in courts and could be interpreted in ways that could harm Fr8App’s business. These may involve privacy, data protection and personal information, content, intellectual property, data security, retention and deletion. In particular, Fr8App is subject to federal, state and foreign laws regarding privacy and protection of people’s data. Foreign data protection, privacy, content and other laws and regulations can impose different obligations or be more restrictive than those in the U.S. U.S. federal, state and foreign laws and regulations which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation and enforcement of these laws and regulations are often uncertain, particularly in the new and evolving industry in which Fr8App operates and may be interpreted and applied inconsistently from country to country and inconsistently with its current policies and practices. Fr8App’s customers upload and store customer data in its cloud-based platform. This presents legal challenges to Fr8App’s business and operations, such as consumer privacy rights or intellectual property rights. Both in the U.S. and abroad, Fr8App must monitor and comply with a wide variety of laws and regulations regarding the data stored and processed on its cloud-based platform as well as in the operation of its business. Fr8App cannot determine the effect that any new requirements will have on its cost structure or its operating results, and new rules or other future security requirements may increase its costs of operations and reduce operating efficiencies. Regardless of its compliance with security requirements or the steps Fr8App takes to secure the data on its platform, it could also be the target of an attack or security breaches could occur, which could materially adversely affect Fr8App’s business.

Fr8App’s growth plan may not succeed as quickly as anticipated, if at all.

Fr8App’s commercial freight Marketplace and mobile application platform matching the needs of carriers offering transportation services and shippers requiring commercial freight services is relatively new to the market. Success of its digital commercial freight matching brokerage service will depend on the adoption rate of this relatively new technology by Fr8App’s customers. Since many carriers are small companies slow to adapt to new technologies, Fr8App may not be able to establish a consistently effective method for marketing its platform and mobile application to such industry participants. Fr8App’s plan to commercialize and grow the usage of its platform and service offerings may not succeed as quickly as anticipated, if at all.

Fr8App expects to expand its organization, and as a result, it may encounter difficulties in managing its growth, which could disrupt its operations.

Fr8App expects to aggressively grow its sales and carrier personnel, specifically targeting at its key accounts and leveraging known customer preferences, to increase adoption of Fr8App’s solution platform for both its shippers and carriers with live 24/7 tracking on shipment. Fr8App is establishing creative marketing campaigns in Mexico’s domestic market and cross-border market. As it expands its cross-cultural workforce both in the U.S. and Mexico, Fr8App may encounter difficulties in managing its growth. Fr8App also plans to invest in its technology team so it can continue to build out internal tools on its platform. Failure to manage its growth could disrupt its operations and materially and adversely affect its results of operations and financial condition.

Fr8App is likely to have material weaknesses in its internal control systems and will need to hire additional personnel and develop and maintain proper and effective internal control over financial reporting, or the accuracy and timeliness of its financial reporting will be adversely affected.

Post Merger, Fr8App’s financial statements has become those of the Company’s and Fr8App’s management team members are now the executive officers of the Company. They will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of the Company’s internal control over financial reporting. In particular, Fr8App will be required to perform system and process evaluation and testing of its internal control over financial reporting to allow management to report on the effectiveness of its internal control over financial reporting. Fr8App has not yet been required to do such an analysis. 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.

To address these potential control weaknesses, Fr8App will likely need to add personnel as well as implement new financial processes. Fr8App intends to take steps to remediate the control weaknesses described above through hiring additional qualified accounting and financial reporting personnel, and further evolving its accounting processes and policies. Fr8App may not be able to fully remediate these weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time.

The Company’s independent registered public accounting firm will not be required to attest to the effectiveness of the Company’s internal control over financial reporting for so long as the Company remains a “smaller reporting company” as defined in applicable SEC regulations. The management team of the Company will be required to disclose changes made in its internal controls and procedures on a quarterly basis. To comply with the requirements of its financial statements becoming those of the Company following the Merger, Fr8App will need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or internal audit staff. The Company’s new audit committee must also be advised and regularly updated on management’s review of internal controls. Fr8App is only now beginning the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation of its internal control over financial reporting needed to comply with Section 404, and Fr8App may not be able to complete its evaluation, testing and any required remediation in a timely fashion. Moreover, if Fr8App is not able to comply with the requirements of Section 404 in a timely manner or if it identifies or its independent registered public accounting firm identifies deficiencies in Fr8App’s internal control over financial reporting that are deemed to be material weaknesses, the market price of the Company’s Ordinary Shares could decline and the Company could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities, which would require additional financial and management resources.

Risks Related to our Ordinary Shares

The trading price of our Ordinary Shares and is likely to be volatile, which could result in substantial losses to our shareholders.

The trading price of our Ordinary Shares is likely to continue to be volatile and could fluctuate widely in response to a variety of factors, many of which are beyond our control. In addition to market and industry factors, the price and trading volume for our Ordinary Shares may be highly volatile for specific business reasons, including:

Any of these factors may result in large and sudden changes in the volume and trading price of our Ordinary Shares. In addition, the stock market has at times experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies and industries. These fluctuations may include a so-called “bubble market” in which investors temporarily raise the price of the stocks of companies in certain industries, such as the e-commerce industry, to unsustainable levels. These market fluctuations may significantly affect the trading price of our Ordinary Shares. In the past, following periods of volatility in the market price of a company’s securities, shareholders have often instituted securities class named as a defendant in shareholder class action lawsuits. The litigation process may utilize a material portion of our cash resources and divert management’s attention from the day-to-day operations of our Company, all of which could harm our business. If adversely determined, the class action suits may have a material adverse effect on our financial condition and results of operations.

We are vulnerable to predatory short selling practices.

We are vulnerable to predatory short sellers who publish false or negative reports on us alleging, among other things, market manipulation, false or misleading statements and misleading or deceptive conduct. While we will expend every reasonable effort to refute such negative reports, there is no guarantee that our efforts will be successful and in the event that our efforts are unsuccessful, this could result in a suspension on the trading of our shares, a decline in the trading price of our shares, investigations or inquiries by governmental and regulatory agencies, increased costs and expenses in responding to such investigations or inquiries and/or even a delisting of our shares from the national exchange. Any and all of the foregoing would have a negative impact on us and to our shareholders.

You must rely on the judgment of our management as to the use of its resources, the different market segments it may develop or its ability to develop certain relationships.

Our management has considerable discretion in the market segments it chooses to pursue. You will not have the opportunity, as part of your investment decision, to assess whether the company’s business development efforts are appropriately focused, which may be used for purposes that do not improve our efforts to achieve or maintain profitability or increase our Ordinary Shares price in the short term. The Company may focus its resources on developing market segments that do not produce income, that produce negative margins or that lose value.

Substantial future sales or registrations or perceived potential sales or registrations of our Ordinary Shares or other equity or equity-linked securities in the public market could cause the price of our Ordinary Shares to decline significantly.

Sales of our Ordinary Shares or other equity or equity-linked securities in the public market, or the perception that these sales could occur, could cause the market price of our Ordinary Shares to decline significantly. As of December 31, 2021, we had 7,551,467 Ordinary Shares outstanding (equivalent to 3,432,485 following the 2.2:1 reverse split on February 15, 2022). All of our Ordinary Shares were freely transferable by persons other than our affiliates without restriction or additional registration under the Securities Act. However sale of Ordinary Shares or their perceived potential sale by any other substantial shareholder in the public market could cause the price of our Ordinary Shares to decline significantly.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our Ordinary Shares and trading volume could decline.

The trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our Ordinary Shares or publishes inaccurate or unfavorable research about our business, the market price for our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Ordinary Shares to decline significantly.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies and subject to reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. issuer.

The information we are required to file with or furnish to the SEC will be less extensive and less timely as compared to that required to be filed with the SEC by U.S. domestic issuers. As a British Virgin Islands company listed on the NASDAQ Capital Market, we are subject to the NASDAQ Capital Market corporate governance listing standards. However, NASDAQ Capital Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the British Virgin Islands, which is our home country, may differ significantly from the NASDAQ Capital Market corporate governance listing standards. Although we do not currently plan to utilize the home country exemption for corporate governance matters, to the extent that we choose to do so in the future, our shareholders may be afforded less protection than they otherwise would under the NASDAQ Capital Market corporate governance listing standards applicable to U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.

Our shareholders may face difficulties in protecting their interests, and their ability to protect their rights through the U.S. federal courts may be limited because we are incorporated under British Virgin Islands law, we conduct most of our operations in Mexico and some of our directors and our executive officers reside outside the United States.

We are a British Virgin Islands company and substantially all of our assets are located outside of the U.S. A substantially majority of our current operations are conducted in Mexico. In addition, some of our directors and officers reside outside the U.S. As a result, it may be difficult for you to effect service of process within the U.S. or elsewhere upon these persons. It may also be difficult for you to enforce in Mexico or British Virgin Islands courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, some of whom are not residents in the U.S. and the substantial majority of whose assets are located outside of the U.S. It may be difficult or impossible for you to bring an action against us in the British Virgin Islands if you believe your rights under the U.S. securities laws have been infringed. In addition, there is uncertainty as to whether the courts of the British Virgin Islands or Mexico would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the U.S. or any state and it is uncertain whether such British Virgin Islands or Mexico courts would hear original actions brought in the British Virgin Islands or Mexico against us or such persons predicated upon the securities laws of the U.S. or any state. See “Enforceability of Civil Liabilities.

As a result of the foregoing, our public shareholders may have more difficulty in protecting their interests through actions against us, our management, our directors or our major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

We are a BVI company and, because judicial precedent regarding the rights of members is more limited under BVI law than that under U.S. law, you may have less protection for your member rights than you would under U.S. law.

Our corporate affairs are governed by our memorandum and articles of association, as amended and restated from time to time, the BVI Act and the common law of the BVI. The rights of members to take action against the directors, actions by minority members and the fiduciary responsibilities of our directors to us under BVI law are to a large extent governed by the common law of the BVI. The common law of the BVI is derived in part from comparatively limited judicial precedent in the BVI as well as that from English common law, which has persuasive, but not binding, authority on a court in the BVI. The rights of our members and the fiduciary responsibilities of our directors under BVI law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the U.S. In particular, the BVI has a less exhaustive body of securities laws than the U.S. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the BVI. There is no statutory recognition in the BVI of judgments obtained in the U.S., although the courts of the BVI will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. As a result of all of the above, public members may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling members than they would as members of a U.S. public company.

We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.

We are subject to rules and regulations by various governing bodies, including, for example, the Securities and Exchange Commission, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law, including the laws of the BVI. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.

There may be delays in handling of mail received at the Company’s registered office..

Mail addressed to the Company and received at its registered office will be forwarded unopened to the forwarding address supplied by Company to be dealt with. None of the Company, its directors, officers, advisors or service providers (including the organization which provides registered office services in the BVI) will bear any responsibility for any delay howsoever caused in mail reaching the forwarding address.

The requirements of being a public company may strain our resources and distract our management.

We are required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements will be time-consuming and will result in increased costs to us, either or both of which could have a negative effect on our business, financial condition and results of operations.

As a public company, we will be subject to the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual and current reports with respect to our business and financial performance. The Sarbanes-Oxley Act requires that we maintain disclosure controls and procedures and internal control over financial reporting. To improve the effectiveness of our disclosure controls and procedures and our internal control over financing reporting, we will need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. These activities may divert management’s attention from other business concerns and we will incur significant legal, accounting and other expenses that we did not have as a private company prior to going public, which could have a material adverse effect on our business, financial condition and results of operations.

There could be adverse United States federal income tax consequences to United States investors if we were or were to become a passive foreign investment company.

While we do not believe we are or will become a passive foreign investment company, or PFIC, there can be no assurance that we were not a PFIC in the past and will not become a PFIC in the future. The determination of whether or not we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. Specifically, we will be classified as a PFIC for United States federal income tax purposes if either: (1) 75% or more of our gross income in a taxable year is passive income, or (2) the average percentage of our assets by value in a taxable year which produce or are held for the production of passive income (which includes cash) is at least 50%. The calculation of the value of our assets will be based, in part, on the quarterly market value of our Ordinary Shares, which is subject to change. See “Taxation — Material United States Federal Income Tax Considerations — Passive Foreign Investment Company.”

Although we do not believe we were or will become a PFIC, it is not entirely clear how the contractual arrangements between us and our variable interest entities will be treated for purposes of the PFIC rules. If it were determined that we do not own the stock of our variable interest entities for United States federal income tax purposes (for instance, because the relevant PRC authorities do not respect these arrangements), we may be treated as a PFIC. See “Material United States Federal Income Tax Considerations — Passive Foreign Investment Company.”

If we were or were to become a PFIC, such characterization could result in adverse United States federal income tax consequences to our shareholders that are United States investors. For example, if we are a PFIC, our United States investors will become subject to increased tax liabilities under United States federal income tax laws and regulations and will become subject to burdensome reporting requirements. We cannot assure you that we were not or will not become a PFIC for any taxable year. Further, if we are a PFIC for any year during which a U.S. investor holds our Ordinary Shares, we generally will continue to be treated as a PFIC with respect to that investor for all succeeding years during which he is a shareholder. You are urged to consult your own tax advisors concerning United States federal income tax consequence on the application of the PFIC rules. See “Material United States Federal Income Tax Considerations — Passive Foreign Investment Company.”

We have recently received several written notifications from The NASDAQ Stock Market LLC informing us that we no longer meet certain continued listing requirements of the NASDAQ Global Market.

On January 28, 2020, we received written notification from The NASDAQ Stock Market LLC (“NASDAQ”) that we no longer met Listing Rule 5450(v)(1)(A) which requires us to maintain a minimum $10,000,000 in stockholders’ equity for continued listing. The Company reported in its Current Report on Form 6-K for the period ended June 30, 2019 that its stockholders’ equity was $9,490,313. Under the NASDAQ Rules, the Company had 45 calendar days (no later than March 13, 2020) to submit a plan to regain compliance.

On March 12, 2020, we received a letter from the NASDAQ indicating that, the closing bid price of the Company’s Ordinary Shares for the last 30 consecutive business days did not meet the minimum bid price of $1.00 per share required for continued listing on The NASDAQ Global Market pursuant to NASDAQ Listing Rule 5450(a)(1). The letter also indicated that the Company would be provided with a compliance period of 180 calendar days, or until August 31,2020, in which to regain compliance pursuant to NASDAQ Listing Rule 5810(c)(3)(A). The letter further provided that if, at any time during the 180-day period, the closing bid price of the Company’s Ordinary Shares was at least $1.00 for a minimum of ten consecutive business days, NASDAQ would provide the Company with written confirmation that it had achieved compliance with the minimum bid price requirement. If the Company did not regain compliance by August 31, 2020, an additional 180 days may be granted to regain compliance if the Company (i) met the continued listing requirement for market value of publicly held shares and all other initial listing standards for The NASDAQ Global Market (except for the bid price requirement) and (ii) provided written notice of its intention to cure the deficiency during the second 180-day compliance period.

On April 16, 2020 we received a letter from the NASDAQ indicating the Company’s Market Value of Publicly Held Shares (“MVPHS”) did not meet the minimum value of $5,000,000 for the last 30 consecutive business days in contravention of the NASDAQ’s Listing Rules (“Rules”). However, the Rules also provided the Company a compliance period of 180 calendar days in which to regain compliance. We were informed that if at any time during this compliance period the Company’s MVPHS closed at $5,000,000 or more for a minimum of ten consecutive business days, the NASDAQ would provide the Company written confirmation of compliance and this matter would be closed. In the event the Company did not regain compliance with the Rules prior to the expiration of the compliance period, it would receive written notification that its securities are subject to delisting. Alternatively, the Company may consider applying to transfer the Company’s securities to The NASDAQ Capital Market (the “Capital Market”). In order to transfer, the Company must submit an on-line Transfer Application, pay the $5,000 application fee, and meet the Capital Market’s continued listing requirements.

Although we transitioned to the Capital Market and had regained compliance with the continued listing requirements of the NASDAQ , we recently received another written notification from the NASDAQ on May 13, 2021 informing us that we no longer meet NASDAQ Listing Rule 5550(b)(1), which requires us to maintain a minimum $2,500,000 in stockholders’ equity for continued listing. We had reported in our annual report on Form 20-F for the period ended December 31, 2020 that our stockholders’ equity was $631,145. Under the Rules, we had 45 calendar days (no later than June 28, 2021) to submit a plan to regain compliance. If our plan was accepted, we should be granted an extension of up to 180 calendar days from the date of written notification letter to evidence compliance. We submitted our plan and the NASDAQ granted us until November 9, 2021 to regain compliance. On September 28, 2021, we announced in a Form 6-K filed with the Securities and Exchange Commission that we had consummated a sale of an aggregate of 630,000 ordinary shares, par value $0.005 and a pre-funded warrant to purchase 650,000 ordinary shares to ATW Opportunities Master Fund, L.P. for an aggregate purchase price of $2,700,000 pursuant to a securities purchase agreement dated September 16, 2021 (the “Securities Purchase”). Because of the Securities Purchase, we believe that we had regained compliance with the stockholders’ equity requirement. The NASDAQ shall continue to monitor our ongoing compliance with the stockholders’ equity requirement and, if at the time of its next periodic report we do not evidence compliance, we may be subject to delisting.

As part of the issuance of shares in the Merger, we announced in a Form 6-K filed with the Securities and Exchange Commission that we had pro forma projections showing capital for the Company in excess of $5,000,000 following the Merger.

We intend to take all reasonable actions to ensure compliance, including without limitation, effecting the Merger. However, there can be no assurance that we will be able to regain compliance with the NASDAQ Rules or will otherwise be in compliance with other NASDAQ listing criteria post Merger. In the event we are unsuccessful, our Ordinary Shares will be delisted and you will likely experience a devaluation in the market price of your shares as well as face challenges in trading them forthwith.

Our shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2021. If the bill passed by the U.S. Senate on June 22, 2021 is passed by the U.S. House of Representatives and signed into law, this would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable from three years to two. The delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

Our Ordinary Shares may be delisted under the Holding Foreign Companies Accountable Act (the “HFCA Act”) if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2021. If the bill passed by the U.S. Senate on June 22, 2021 is passed by the U.S. House of Representatives and signed into law, this would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two. The delisting of our shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.

The HFCA Act was enacted on December 18, 2020. The HFCA Act states if the SEC determines that a company has 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 shall prohibit the company’s shares from being traded on a national securities exchange or in the over the counter trading market in the U.S.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC identifies it 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.

On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. 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 years.

On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

On December 16, 2021, PCAOB announced the PCAOB HFCA Act determinations (the “PCAOB determinations”) relating to the PCAOB’s inability to inspect or investigate completely registered public accounting firms headquartered in mainland China of the PRC or Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in the PRC or Hong Kong.

Our previous auditor, Centurion ZD CPA & Co., the independent registered public accounting firm that issued the audit report included 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 Centurion ZD CPA & Co.’s compliance with applicable professional standards. Centurion ZD CPA & Co. is headquartered in Hong Kong with no branches or offices in the United States. As such, Centurion ZD CPA & Co., was identified as a firm subject to the PCAOB’s determinations.

On June 13, 2022, we dismissed Centurion ZD CPA & Co. and appointed UHY LLP as our new independent public accounting firm. UHY LLP, which is headquartered in Michigan, has been inspected by the PCAOB on a regular basis, with the last inspection completed in 2019, and  it is not subject to the determinations announced by the PCAOB on December 16, 2021. If trading in our Ordinary Shares is prohibited under the HFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares. If our Ordinary Shares are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our Ordinary Shares 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 our Ordinary Shares.

Given the recent developments, we cannot assure you whether NASDAQ or regulatory authorities would also apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.

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’s auditor 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 had announced that the SEC staff was preparing a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the recommendations in the PWG report. The implications of possible additional regulation in addition to the requirements of the HFCA Act and what was recently adopted on December 2, 2021 are uncertain. Such uncertainty could cause the market price of our Ordinary Shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded on the national securities exchange earlier than would be required by the HFCA Act. If our Ordinary Shares are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our Ordinary Shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on our Ordinary Shares.

NASDAQ may apply additional and more stringent criteria for our continued listing.

NASDAQ Listing Rule 5101 provides NASDAQ with broad discretionary authority over the initial and continued listing of securities in NASDAQ and NASDAQ may use such discretion to deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued listing of the securities on NASDAQ inadvisable or unwarranted in the opinion of NASDAQ, even though the securities meet all enumerated criteria for initial or continued listing on NASDAQ. In addition, NASDAQ has used its discretion to deny initial or continued listing or to apply additional and more stringent criteria in the instances, including but not limited to where the company engaged an auditor that has not been subject to an inspection by PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated sufficient resources, geographic reach, or experience to adequately perform the company’s audit; (ii) where a company planned a small public offering, which would result in insiders holding a large portion of the company’s listed securities. NASDAQ was concerned that an offering size was insufficient to establish the company’s initial valuation, and there would not be sufficient liquidity to support a public market for the company; and (iii) where the company did not demonstrate sufficient nexus to the U.S. capital market, including having no U.S. shareholders, operations, or members of the board of directors or management. For the any aforementioned concerns, we may be subject to the additional and more stringent criteria of NASDAQ for our continued listing.

The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by NASDAQ, and the Holding Foreign Companies Accountable Act (“HFCA Act”) all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our securities. Such risks include but not limited to that trading in our securities may be prohibited under the HFCA Act and as a result an exchange may determine to delist our securities.

We cannot assure you whether NASDAQ or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. It remains unclear what the SEC’s implementation process related to the March 2021 interim final amendments will entail or what further actions the SEC, the PCAOB or NASDAQ will take to address these issues and what impact those actions will have on U.S. companies that have significant operations in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market). In addition, the March 2021 interim final amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, the market price of our Ordinary Shares could be adversely affected, trading in our securities may be prohibited and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require significant expense and management time.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the Ordinary Shares by the selling shareholders. All net proceeds from the sale of the Ordinary Shares will go to the selling shareholders.

We may receive proceeds from the exercise of the Warrants, if they are exercised for cash. If the Warrants were to be exercised for cash, we would receive the following proceeds: Series A Warrants - $1,282,800, Series C Warrants - $1,748,896 and Series D Warrants - $595,989, for a total of $3,627,686 for 1,689,468 Ordinary Shares. We however expect that the Warrants will be exercised on a cashless basis at the following conversion ratios: Series A Warrants,0.7790, Series C Warrants 0.8880, Series D Warrants 0.8260, for a total of 1,442,947 Ordinary Shares.

We intend to use the net proceeds of such warrant exercise, if any, for general working capital purposes. We can make no assurances that the Warrants will be exercised for cash, or the quantity which will be exercised or in the period in which it will be exercised, or if they will be converted on a cashless basis at the ratio corresponding to the respective Warrants.

DIVIDEND POLICY

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future.

Subject to the rights of the Series A Preferred Shares, the holders of our Ordinary Shares are entitled to dividends out of funds legally available when and as declared by our board of directors.

The holders of our Series A Preferred Shares are entitled to receive, simultaneously with the holders of Ordinary Shares, a dividend on each outstanding Series A Preferred Share in an amount as calculated in accordance with the Amended Memorandum and Articles.

The holders of Series B Preferred Shares shall be entitled to receive dividends on Series B Preferred Shares equal (on an as-if-converted-to-Ordinary Shares basis) to and in the same form as dividends actually paid on Ordinary Shares when, as and if such dividends are paid on Ordinary Shares. No other dividends or other distributions shall be paid on Series B Preferred Shares.

Our board of directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future. Should we decide in the future to pay dividends, as a holding company, our ability to do so and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries and other holdings and investments. In addition, our operating subsidiaries may, from time to time, be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the assets of the Company available for distribution to its shareholders shall be distributed to:

(a) the holders of Series A4 Preferred Shares, the holders of Series A2 Preferred Shares, the holders of Series A1 Preferred Shares, the holders of the Series Seed Preferred Shares and the holders of Ordinary Shares, pro rata based on the number of shares held by each shareholder, treating for this purpose all such securities as if they had been converted to Ordinary Shares pursuant to the terms of the Amended Memorandum and Articles immediately prior to such liquidation, dissolution or winding up of the Company; and

(b) the holders of Series B Preferred Shares shall be entitled to receive out of the assets, whether capital or surplus, of the Company the same amount that a shareholder of Ordinary Shares would receive if the Series B Preferred Shares were fully converted (disregarding for such purposes any conversion limitations hereunder) to Ordinary Shares which amounts shall be paid pari passu with all shareholders of Ordinary Shares.

Subject to the BVI Act and our Amended Memorandum and Articles, our directors may, by resolution, declare dividends at a time and amount as they think fit if they are satisfied, based on reasonable grounds, that, immediately after distribution of the dividend, the value of our assets will exceed our liabilities and we will be able to pay our debts as they fall due. There is no further BVI law restriction on the amount of funds which may be distributed by us by dividend, including all amounts paid by way of the subscription price for Ordinary Shares regardless of whether such amounts may be wholly or partially treated as share capital or share premium under certain accounting principles. Shareholder approval is not (except as otherwise provided in our Amended Memorandum and Articles) required to pay dividends under BVI law. In accordance with, and subject to, our Amended Memorandum and Articles, no dividend shall bear interest as against the Company (except as otherwise provided in our Amended Memorandum and Articles).

If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our subsidiaries, Freight App, Inc. and Freight App de México S.A De C.V.

This summary of certain Mexican federal tax considerations refers only to holders of Ordinary Shares that are not residents of Mexico for Mexican tax purposes and that will not hold the Ordinary Shares or a beneficial interest therein through a permanent establishment for tax purposes (we refer to any such non-resident holder as a Foreign Holder). For purposes of Mexican taxation, an individual is a resident of Mexico if he/she has established his/her domicile in Mexico. When an individual also has a place of residence in another country, that individual will be considered a resident of Mexico for tax purposes, if such individual has his/her center of vital interest in Mexico. An individual would be deemed to have his/her center of vital interest in Mexico if, among other things: (a) more than 50% of his/her total income for the year were derived from Mexican sources, or (b) his/her principal center of professional activities were located in Mexico.

CAPITALIZATION

You should read this table in conjunction with the sections titled “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

The following table sets forth our cash and cash equivalents and our capitalization as of December 31, 2021:

The Merger between Hudson Capital, Inc and Freight App, Inc is treated as an equity transaction for financial reporting purposes. Freight App, Inc is considered the acquirer for accounting purposes and the historical financial statements of Hudson Capital, Inc before the Merger will be replaced with the historical financial statements of Freight App, Inc before the Merger in future filings with the SEC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Cautionary Note Regarding Forward-Looking Statements” and under “Risk Factors” elsewhere in this prospectus.

Overview

Prior to February 14, 2022, we were mainly in the business of providing financial services in the People’s Republic of China to meet the financial and capital needs of our clients, which comprise largely of small-to-medium sized enterprises (“SMEs”). Through our wholly-owned subsidiaries, Hongkong Internet Financial Services Limited and CIFS (Xiamen) Financial Leasing Co., Ltd, our contractually controlled and managed company, Hongkong Shengqi Technology Limited, its wholly-owned subsidiary, Beijing Yingxin Yijia Network Technology Co., Ltd and its contractually controlled and managed company, Sheng Ying Xin (Beijing) Management Consulting Co., Ltd (“SYX” or “Sheng Ying Xin”), and SYX’s wholly-owned subsidiaries, Kashgar Sheng Yingxin Enterprise Consulting Co., Ltd. (“Kashgar SYX”), Fu Hui (Shenzhen) Commercial Factoring Co., Ltd (“FuhuiSZ”), Yingda Xincheng (Beijing) Insurance Broker Co., Ltd (“Yin Da Xin Cheng”), Fuhui (Xiamen) Commercial Factoring Co., Ltd (“FuhuiXM”), Zhizhen Investment & Research (Beijing) Information Consulting Co., Ltd. and Hangzhou Yuchuang Investment Partnership. We primarily offered commercial payment advisory services, international corporate financing advisory services, intermediary bank loan advisory services and supply chain financing services.

We historically generated revenue from service fees in connection with our (i) commercial payment advisory services, (i) international corporate financing advisory services,(iii) intermediary bank loan advisory services, and (iv) supply chain financing services (factoring services). Additionally we historically earned interest income from our direct or entrusted lending activities. Our total net revenue from service fees was $1.4 million in 2019, declined to $0.6 million in 2020 and decreased to $0.0 in 2021. We had a net loss of $62.0 million, $9.1 million and $2.1 million in fiscal years 2019, 2020 and 2021, respectively.

Our service fee business materially slowed down in recent years. Although the number of clients served and the amount of services provided grew rapidly through 2017, due to the economic downturn in China since 2018, our clients’ financial needs significantly decreased. We served 47 customers, 47 customers and only one customer and arranged approximately $2.4 million, $996 million and $0.42 million in financings in 2017, 2018 and 2019, respectively. In 2020, because of the COVID-19 pandemic, which resulted in a nation-wide lockdown, all economic activities came to a virtual standstill for over a year. We started to recover gradually in the last quarter of 2020, but the PRC economy had not yet recovered and this downward pressure on our business carried forward to 2021 through today. We used to provide technical services through our subsidiary, Beijing Anytrust Science & Technology Co., Ltd (“Anytrust”). In 2018, we generated $0.5 million from the provision of technical services. However, in order to reduce our operating losses, we disposed of Anytrust in December 30, 2018 and therefore we no longer provide such technical services. Our other service fee businesses have been severely hampered by the COVID-19 effect and shifts in value added and distribution chains in North America away from China and towards a more regional focus.

Key Factors Affecting Our Results of Operations

Major factors that have affected our results of operations include the following:

Economic Conditions in China

The demand for financial services from borrowers is dependent upon overall economic conditions in China and of Chinese company activities outside of China. General economic factors, including the interest rate environment and unemployment rates, may affect borrowers’ willingness to seek loans and investors’ ability and desire to invest in loans. For example, significant increases in interest rates could cause potential borrowers to defer obtaining loans as they wait for interest rates to become stable or decrease. Additionally, a slowdown in the economy, such as from a rise in the unemployment rate and a decrease in real income, may affect individuals’ level of disposable income. Sectoral shifts away from expanding Chinese companies could affect demand for our services. All of this and others may negatively affect borrowers’ repayment capability, which in turn may decrease their willingness to seek loans and potentially cause an increase in default rates. If actual or expected default rates increase generally in China or the finance market, investors may delay or reduce their investments in loan products in general, including those provided by us.

Ability to Acquire Borrowers Effectively

Our ability to increase the loan volume facilitated through us largely depends on our ability to attract potential borrowers through sales and marketing efforts. Presently, we are largely dependent on key members of our management team, including our former largest shareholder and former Chairman and Chief Executive Officer, Mr. Jianxin Lin and Mr. Jinchi Xu, who have extensive experience in the financial service industry and important relationships with borrowers, banks and lending institutions for our business.

Our future sales and marketing efforts would include those related to borrower acquisition and retention, and general marketing. We intended to continue to dedicate significant resources to our sales and marketing efforts and constantly seek to improve the effectiveness of these efforts, in particular with regard to borrower and investor acquisition.

Effectiveness of Risk Management

Our ability to effectively segment borrowers into appropriate risk profiles affects our ability to match them with attractive products and services offered by the relevant bank or lending institution in terms of offering attractive pricing to borrowers as well as our ability to offer them attractive returns on financial products, both of which directly relate to the level of user confidence in our services.

Ability to Innovate

Our growth to date had depended on, and were we to continue our service fee strategy, our future success will depend in part on, successfully meeting borrower demand with new and innovative loan and investment products customized for their needs. We have made efforts to source loan and investment products to meet the individualized needs of our borrowers. We evaluated the popularity of existing product offerings and services that cater to the ever evolving needs of our borrowers. We also sought to negotiate better terms for our customers based on our relationships with banks and lending institutions.

From the borrower perspective, we could continue to attempt to tailor credit products to meet their specific needs.

Ability to Compete Effectively

Our fee service business and results of operations depended on our ability to compete effectively in the markets in which we operated. The financial services industry in China is intensely competitive, and we expect that competition to persist and intensify in the future. In addition to competing with other finance companies, we also competed with other types of financial products and companies that attract borrowers, investors or both. With respect to borrowers, we primarily competed with traditional financial institutions, such as finance business units in commercial banks and other finance companies. If we were unable to compete effectively, the demand for our services could stagnate or substantially decline, we could experience reduced revenues or our services could fail to maintain or achieve more widespread market acceptance, any of which could harm our business and results of operations.

Regulatory Environment in China

The regulatory environment for the financial services industry in China is developing and evolving, creating both challenges and opportunities that could affect our financial performance. Due to the relatively short history of the financial services industry in China, the PRC government has not adopted a clear regulatory framework governing our industry. We made efforts to ensure compliance with existing laws, regulations and governmental policies relating to our industry and to comply with new laws and regulations or changes under existing laws and regulations that may arise in the future. While new laws and regulations or changes to existing laws and regulations could make loans more difficult to be accepted by borrowers on terms favorable to us, or at all, these events could also provide new product and market opportunities.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the financial statements. Critical accounting policies are those accounting policies that may be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance. While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies used in the preparation of our financial statements require significant judgments and estimates. For additional information relating to these and other accounting policies, see Note 2 to our consolidated financial statements included elsewhere in this annual report.

Principle of consolidation and combination

The consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Use of Estimates

The preparation of these consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures of contingent assets and liabilities. Management makes its estimates based on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements mainly include the allowance for doubtful accounts, the valuation allowance of deferred tax assets, the estimated useful lives of long-lived assets, the impairment assessment of goodwill, intangibles and other long-lived assets, the fair value of identifiable assets and liabilities acquired through business combination.

Revenue Recognition

Revenue principally consists of consulting service and factoring service revenue. Revenue comprises the fair value of the consideration received or receivable for the provision of services in the ordinary course of the Company’s activities and is recorded net of value added tax (“VAT”). Consistent with the criteria of ASC 605 “Revenue Recognition” (“ASC 605”), the Company recognizes revenue when the following four revenue recognition criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been provided, (iii) the selling price is fixed or determinable, and (iv) collectability is reasonably assured.

The Company’s services included commercial payment advisory services, intermediary bank loan advisory services, international corporate financing advisory services and supply chain financing services (factoring business). We used to provide technical services through Anytrust. However, we disposed of Anytrust on December 30, 2018 to reduce our operating losses. As a result, we no longer provide technical services.

For commercial payment advisory services, after signing contracts with the client, the Company would start to identify and select banks and financial products, coordinate with banks to structure financing solutions for the client. Then the client prepares application materials and sends them to the bank. When approved by the bank, the client deposits cash with the bank or purchase wealth management products sold by the bank. After this step, the bank issues a letter of guarantee, which the client will pledge as security for the acceptance bills. The letter of guarantee is a document that the bank provides certifying itself as guarantor. The Company’s service fee is a percentage of the amount of cash deposited with or wealth management products purchased from the bank by the client. The Company recognizes revenue after the client receives a bank credit contract from the bank and when the Company receives a contract completion confirmation from the client.

For intermediary bank loan advisory services, the Company would match small-to-medium sized enterprises (“SMEs”) with financing sources. The Company would then charge borrowers an introduction fee which is calculated at a percentage of the loan. The Company recognizes revenue after the client receives a bank credit contract from the bank and when the Company receives a contract completion confirmation from the client. The Company typically receives the contract completion confirmation when the client receives the bank financing and signs off on the contract completion confirmation.

For international corporate financing advisory services, the Company worked with overseas banks to structure and provide clients with financing solutions to obtain facilities from overseas banks for the clients’ offshore affiliates. After signing contracts with the client, the Company would identify potential overseas banks and domestic banks to provide the client’s financing needs, structure financing solutions and facilitate the application process. After the client provided security to the domestic bank, the domestic bank would issue a letter of guarantee to the overseas bank. The overseas bank would provide credit to the affiliate designated by client. The Company’s service fee was a percentage of credit granted by the overseas bank to the offshore affiliate. The Company recognized revenue after the offshore affiliate receives a credit approval notice from the offshore bank and when the Company received a contract completion confirmation from the client. The Company typically received the contract completion confirmation when the affiliate receives the bank financing and the client signs off on the contract completion confirmation.

For technical services, after signing the contract, and we have provided the clients with the technical services and charged our clients the relevant fees, we recognized revenue when the services are rendered.

Our factoring services provided owners of SMEs with holistic supply chain financing solutions and value-added services in order to reduce financing costs and improve efficiency during a business transaction.

There were no claw back provisions or other guarantees. Full service fee were due upon the contract completion confirmation from the client.

Interest income from loans to a third party

The Company accepted clients’ application for short-term loans and conducts a review of their credit status and application materials. The Company lent its own funds in the form of direct and entrusted loans to the eligible clients and received interest income, which was calculated at a percentage of the amount of fund the Company lent. The Company recognized interest income monthly on accrued basis as interest income.

Fair Value of Financial Instruments

The Company has adopted ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.

Its establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The carrying value of cash and cash equivalents, accounts receivable, other current assets and prepaid expenses, short term loans, other payables and accrued expenses approximate their fair values because of the short-term nature of these instruments.

The Company does not have any level 2 or level 3 assets and liabilities as of December 31, 2021 and 2020.

Goodwill

Goodwill is the excess of the consideration transferred over the fair value of the acquired assets and assumed liabilities in a business combination. Were the company to have any goodwill recorded on its books, it would test goodwill for impairment at the reporting unit level on an annual basis and between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired. The Company first has the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company decided, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is mandatory. Otherwise, no further testing is required. The Company does not have any goodwill as of December 31, 2021 and 2020.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the financial statements. Critical accounting policies are those accounting policies that may be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on financial condition or operating performance. While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies used in the preparation of our financial statements require significant judgments and estimates. For additional information relating to these and other accounting policies, see Note 2 to our consolidated financial statements included elsewhere in this annual report.

Results of Operations

Results for the Year ended December 31, 2021 compared to the Year ended December 31, 2020

Operating Metrics for the year ended December 31, 2021 and December 31, 2020

We regularly monitor a number of metrics in order to measure our current and projected future performance. These metrics aid us in developing and refining our growth strategies and making strategic decisions.

The amount of financing advised is calculated by summing up the financing amount indicated on the financing contracts. The revenue is calculated by multiplying the service fee ratio indicated on the contract and the financing amount advised.

The following tables set forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of variance. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Revenue

A breakdown of our revenue for the year ended December 31, 2021 versus the year ended December 31, 2020 is set forth below:

Net revenue for the year ended December 31, 2021 decreased by 100% year-over-year to $0 from $0.6 in the same period in 2020.

Overall, our revenue decreased for the year ended December 31, 2021 compared to the same period in 2020, mainly due to a reduction in business opportunities as a result of the overall economic environment and COVID-19 pandemic in the PRC and strategic adjustment of our business to diversify and explore new business opportunities.

Cost of Revenue

Total cost of revenue, comprises mainly revenue-generating staffing costs. The main reasons for the decrease in cost of revenue was because we did not have any business in 2021 and very minimal business volume in 2020.

Gross Profit and Gross Margin

Gross profit for the year ended December 31, 2021 decreased by 100% to $0.0 from $0.6 for the year ended December 31, 2020. The decrease is in line with the revenue decrease of 100% over the same periods.

Gross margin, or gross profit as a percentage of total revenue, was zero for the year ended December 31, 2021 and 100% for the year ended December 31, 2020. There is no significant cost of revenue for either year.

Operating Expenses

The following table sets forth the breakdown of our operating expenses for the year ended December 31, 2021 and 2020, respectively:

Total operating expenses for the year ended December 31, 2021 decreased 39.6% to $2,495.3 from $4,133.9 in the year ended December 31, 2020.

General and administrative expenses consist primarily of staff costs, rental expenses and office related expenses. General and administrative expenses were $2,495.3 for the year ended December 31, 2021 compared to $4,123.1 for the year ended December 31, 2020, a decrease of $1,627.8. The decrease in general and administrative expenses is mainly due to the downsizing in our operations.

Selling and marketing expenses for the year ended December 31, 2021 decreased by 100% to $0 from $10.7 in the year ended December 31, 2020. The year-over-year decrease primarily resulted from the downsizing in our operations.

(Loss) Income from Operations and Operating Margin

Loss from operations in the year ended December 31, 2021 was $2,495.3, compared with loss from operations of $4,133.2 in the year ended December 31, 2020.

Operating margin, or income from operations as a percentage of total revenue was nil as there in no revenue for the year ended December 31, 2021, compared with a large negative margin for the year ended December 31, 2020, due to the previously discussed changes.

Other income/(expenses)

The following table sets forth the breakdown of our other income for the year ended December 31, 2021 and the year ended December 31, 2020:

Other income, which principally consists of interest income on loans to third parties, was $0.8 and $365.0 for the years ended December 31, 2021 and 2020, respectively, a decrease of 99.8% year over year. This decrease is in line with the decrease in average loan balances to third parties.

Other income/(expenses) (which include interest expenses) for the year ended December 31, 2021 increased by $310.2 to $349.8 of other income from $38.9 of other income in the year ended December 31, 2020, due to writing off of certain long outstanding payables and liabilities in 2021.

Impairment loss on loans to third parties and property and equipment amounted decreased by $5.3 million to $0.0 in 2021 from $5.3 million in 2020. Management assessed the collectability of its assets by the end of the year and determined that a provision of $0.0 and $4,800.0 be made against entrusted loans, direct loans and office equipment in 2021 and 2020, respectively. The assessment was based on the customer’s ability to pay and its financial strength. After we exhausted all efforts to pursue repayment, we determined that an impairment had to be made.

Income tax (benefit) expense

Income tax expense was $0.0 and $0.0 for the year ended December 31, 2021 and 2020, respectively.

Foreign Currency Translation Gain/(Loss)

Foreign currency translation gain was $558.0 in the year ended December 31, 2021, compared with a gain of $2,686.4 in the year ended December 31, 2020 as a result of the fluctuations in the exchange rates of the Renminbi against the US dollar.

Net (Loss) Income

Net loss for the year ended December 31, 2021 was $2,145.5, as compared to net loss of $9,075.4 for the year ended December 31, 2020. The net loss is mainly due to the COVID-19 pandemic, which resulted in a significant downturn in our business and an increase in impairment losses against uncollectible assets.

Liquidity and Capital Resources

As of December 31, 2021 and December 31, 2020, we held cash of $276.3 and $3,274.3, respectively.

The following table summarizes our cash flows for the year ended December 31, 2021 and for the same period in 2020.

Operating activities

Net cash used in operations was $4,854.5 for the year ended December 31, 2021, representing an increase of $1,035.8 from cash used in operating activities of $3,818.7 for the year ended December 31, 2020. Cash used in operations was primarily from the net loss of $2,145.5, and the settlement of tax liabilities, current liabilities and estimated liabilities offset by collections on currents assets in a net amount of $2,658.1 during 2021.

Investing activities

Net cash used in investing activities for year ended December 31, 2021 was $2,355.4, an increase of $2,247.3 from net cash used in investing activities of $108.1 for the year ended December 31, 2020. This is mainly attributed by the increase of our loans to third parties by $2,450.0 compared to 2020.

Financing activities

Net cash provided by financing activities for the year ended December 31, 2021 was $3,599.5, a decrease of approximately $678.4 from cash used in financing activities of $4,278.0 for the year ended December 31, 2020. The amount was represented the net proceeds from private placements during 2021 and 2020.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

COMMITMENTS AND CONTINGENCIES

The Company has no operating lease commitment as of December 31, 2021.

For the years ended December 31, 2021, 2020 and 2019, rental expenses under operating leases were approximately $112.1, $82.7 and $258.5, respectively.

For the year ended December 31, 2020, the Company had written back an accrued payroll for the Company’s VIEs amounting to $475.9 (RMB3,105,476). There has been no claim from the relevant employees for which this accrual was originally recorded for over 2 years. Clause 27 of the Labor Dispute Mediation and Arbitration Law of the People’s Republic of China provides that a claimant has the right to claim any outstanding wages within one year after termination of the employment. Notwithstanding the foregoing, the Company could not assure that the claimants have not lodged their claims or that the claims have not been delivered to our VIE. Accordingly, there may be a potential but unlikely claim of $475.9 (RMB3,105,476) against the Company.

In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. The Company is not currently involved in any such claims.

Results for the Year ended December 31, 2020 compared to the Year ended December 31, 2019

Operating Metrics for the year ended December 31, 2020 vs. December 31, 2019

We regularly monitor a number of metrics in order to measure our current and projected future performance. These metrics aid us in developing and refining our growth strategies and making strategic decisions.

The amount of financing advised is calculated by summing up the financing amount indicated on the financing advisory contracts. The revenue is calculated by multiplying the service fee ratio indicated on the contract and the financing amount advised.

The following tables set forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of variance. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

Revenue

A breakdown of our revenue for the year ended December 31, 2020 versus the year ended December 31, 2019 is set forth below:

Net revenue for the year ended December 31, 2020 decreased by 100% year-over-year to $0.6 from $1,365.8 in the same period in 2019.

Approximately 30.5% of our revenue or $417.3 was derived from providing intermediary bank loan advisory services to just one customer in 2019.

Overall, our revenue decreased substantially for the year ended December 31, 2020 compared to the same period in 2019, mainly due to a reduction in business opportunities as a result of the overall economic environment and COVID-19 pandemic in the PRC and strategic adjustment of our business to diversify and explore new business opportunities.

Cost of Revenue

Total cost of revenue, which comprises mainly revenue-generating staffing costs, was $0.0 for the year ended December 31, 2020 compared to $0.1 for the year ended December 31, 2019. The main reasons for the decrease in cost of revenue was the very minimal business volume in 2020.

Our cost of revenue is broken down as follows:

Gross Profit and Gross Margin

Gross profit for the year ended December 31, 2020 decreased by 100% to $0.6 from $1,366.3 for the year ended December 31, 2019. The decrease is in line with the revenue decrease of 100% over the same periods.

Gross margin, or gross profit as a percentage of total revenue, was 100% for both years ended December 31, 2020 and 2019, both of which had no significant cost of revenue during their respective years.

Operating Expenses

The following table sets forth the breakdown of our operating expenses for the year ended December 31, 2020 and 2019, respectively:

Total operating expenses for the year ended December 31, 2020 increased 107% to $4,133.9 from $1,994.0 in the year ended December 31, 2019.

General and administrative expenses consist primarily of staff costs, rental expenses and office related expenses. General and administrative expenses were $4,123.1, or as compared to $1,893.5, or 139% of total revenue for the year ended December 31, 2019, an increase of $2,229.6. The increase in general and administrative expenses is mainly due to an increase in legal and professional expenses to maintain our Nasdaq listing status.

Selling and marketing expenses for the year ended December 31, 2020 decreased by 89% to $10.7 from $100.5 in the year ended December 31, 2019. The year-over-year decrease primarily resulted from downsize in our business.

Income from Operations and Operating Margin

Loss from operations in the year ended December 31, 2020 was $4,133.3, compared with loss from operations of $627.7 in the year ended December 31, 2019.

Operating margin, or income from operations as a percentage of total revenue was significantly negative for the year ended December 31, 2020, compared with negative 46% for the year ended December 31, 2019 due to the previously discussed changes.

Other income/(expenses)

The following table sets forth the breakdown of our other income for the year ended December 31, 2020 and the year ended December 31, 2019:

Other income principally consists of interest income on loans to third parties was $365.0 and $2,191.6 for the years ended December 31, 2020 and 2019, respectively, a decrease of 83.3% year over year. This decrease is in line with the decrease of average loan balances to third parties, which were $0.0 and $4,800.0 for the years ended December 31, 2020 and 2019, respectively.

Other income/expenses (which include interest expenses) for the year ended December 31, 2020 decreased by $5,103.7 to $38.9 of other income from $5,611.5 of other expenses in the year ended December 31, 2019 due to $4,857.2 of previously accrued payroll over 2 years in 2020 ..

Impairment loss on loans to third parties and property and equipment amounted decreased by $53.142.4 to $5,346.0 million in 2020 from $57,941.7 in 2019. Management assessed the collectability of its assets by the end of the year and determined that a provision of $5,346.0 and $57,941.6 million be made against entrusted loans, direct loans and office equipment in 2020 and 2019, respectively. The assessment was based on the customer’s ability to pay and its financial strength. After we exhausted all efforts to pursue repayment, we determined that an impairment had to be made.

Income tax (benefit) expense

Income tax expense was $0.0 for the year ended December 31, 2020, compared with income tax benefit of $7.2 for the year ended December 31, 2019.

Foreign Currency Translation Gain/(Loss)

Foreign currency translation gain was $2,686.4 in the year ended December 31, 2020, compared with a loss of $365.3 in the year ended December 31, 2019 as a result of the fluctuations in the exchange rates of the Renminbi against the US dollar.

Net (Loss) Income

Net loss for the year ended December 31, 2020 was $9,075.4, as compared to net loss of $61,995.8 for the year ended December 31, 2019. The net loss is mainly due to COVID-19 pandemic, a significant downturn in our business and an increase in impairment losses against uncollectible assets.

Liquidity and Capital Resources

As of December 31, 2020 and December 31, 2019, we held cash of $3,274.3 and $ 13.6, respectively.

The following table summarizes our cash flows for the year ended December 31, 2020 and for the same period in 2019.

Operating activities

Net cash used in operations was $3,818.7 for the year ended December 31, 2020, representing a decrease of $2,747 million from cash used in operating activities of $1,071.4 million for the year ended December 31, 2019, though our losses of $9,075.4 in 2020 mainly because our impairment losses were $5,346.0 in 2020.

Investing activities

Net cash used in investing activities for year ended December 31, 2020 was $108.1, a decrease of $91.9 from net cash used in investing activities of $200.0 for the year ended December 31, 2019. This is mainly attributed by purchase of fixed assets in US office in 2020.

Financing activities

Net cash provided by financing activities for the year ended December 31, 2020 was $4,278.0, an increase of approximately $4,309.2 from cash used in financing activities of $31.2 for the year ended December 31, 2019. The increase was mainly attributable to the $4,278.0 net proceeds from private placements during 2020.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements during either year ended December 31, 2020 or 2019.

COMMITMENTS AND CONTINGENCIES

The following table sets forth the Company’s operating lease commitment as of December 31, 2020:

For the years ended December 31, 2020 and 2019, rental expenses under operating leases were approximately $82.7 and $258.5, respectively.

At December 31, 2020, the Company has an accrued payroll for the Company’s VIEs amounting to $475. 9 (RMB3,105,476). There has been no claim from the relevant employees for over 2 years. Clause 27 of the Labor Dispute Mediation and Arbitration Law of the People’s Republic of China provides that a claimant has the right to claim any outstanding wages within one year after termination of the employment. Notwithstanding the foregoing, the Company could not assure that the claimants have not lodged their claims or that the claims have not been delivered to our VIE. Accordingly, there may be a potential claim of $475. (RMB3,105,476) against the Company.

In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. The company is not currently involved in any such claims.

FR8APP’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus/proxy statement. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” and elsewhere in this prospectus/proxy statement. Please note that all dollar amounts in this section are stated in thousands of US Dollars.

Company Overview

Fr8App was founded in 2015 as a Delaware corporation. Fr8App believes it is the first digital commercial freight-matching broker to offer 3PL while targeting the domestic Mexican and the cross-border Mexico-U.S.-Canada markets (“Target Markets”). Fr8App serves cross-border traffic across the Mexico-U.S. borders, the U.S.-Canada border, and domestic shipments within each of these three countries, with a primary focus on full truck-load freight. Its cutting-edge cloud-based Portal and Platform were designed to connect in real-time parties having commercial transportation needs.

Fr8App has created a free online commercial freight marketplace and mobile application platform that allow for automating the connection of carriers offering freight transportation services and shippers requiring transportation services. Fr8App’s platform solution and mobile application allow trucking companies to secure transportation for their goods within the palm of their hands and in real-time, assigning their transportation needs to capable drivers instantaneously, with the click of a button. Fr8App’s cutting-edge cloud-based online portal and mobile platform were designed to simplify connections between parties requiring transportation and those offering transportation services, all the while increasing efficiencies, reducing costs and increasing revenue for shippers and carriers. Each of our portal and platform are offered in English and Spanish. We have created and offer to the market specialized technology that helps facilitate supply chain visibility, operation, reliability and sustainability.

Trends

Fr8App believes the growing interest in digital freight matching platforms shows that traditional 3PL providers recognize the sweeping technological shifts in the industry and is ready to offer solutions to market participants. During the six months marking the second and third quarters of 2020, the industry has seen severe swings due to the volatility of global and domestic supply chains in light of significant market distortions resulting from the global pandemic caused by the virus known as COVID-19. This supply chain volatility has led large and small freight brokers to, among other tactics, pivot toward more abundant and secure sources of freight capacity which is available in a digital marketplace and facilitated by software portals and platforms. Fr8App believes the supply chain will continue to evolve into a more digital platform. As it does so, Fr8App believes digital brokers, like Fr8App can play an integral role in easing capacity constraints, opening up new lanes, and providing a benchmarking tool for shippers.

In the short-term, Fr8App believes the COVID-19 pandemic has also changed the nature of global commerce and shipping. Cross-border travel and trade restrictions have been put into effect and many remain in place, even as economies and trade continue to re-open around the globe. Trucking capacity is no longer readily available across borders. Contract carriers can still only go to certain pre-specified locations and companies continue to need to determine where specific available freight capacity is and how much it costs. Fr8App believes that these conditions are creating part of the market void where digital brokers come into play for cross-border and consequently, intra-country commerce.

Results of Operations

Comparison of the Years Ended December 31, 2021, December 31, 2020 and December 31, 2019

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

($’000’s)

Revenues

Fr8App’s revenues grew to $21,474 for the year ended December 31, 2021 from $9,206 for the year ended December 31, 2020, an increase of $12,268 and 133.3% on year-over-year basis. This year-over-year increase in the year ended December 31, 2021 shows the impact of Fr8App’s restructuring in early 2020 including the incorporation of a new executive management team, the development and growth of key repeat shipper clients over the time periods compared, and the effects from a more highly trained and focused salesforce in early 2021 versus that in place in early 2020. The increase in year-over-year performance was also due to a more favorable environment in 2021 as restrictions related to the COVID pandemic began to abate relative to those in place in 2020. Cross border freight as the US-MX border during the fourth quarter of 2021 is estimated to have increased by over 11% in relation to cross border freight in the fourth quarter of 2020.

Fr8App’s revenues grew to $9,206 for the year ended December 31, 2020 from $4,180 for the year ended December 31, 2019, an increase of $5,026 and 120.2% on year-over-year basis. This year-over-year increase in the year ended December 31, 2020 show the impact of Fr8App’s new product offerings on its revenue growth and the effects from a more highly trained and focused salesforce as Fr8App shifted its target client base away from broker clients and focused more directly towards shipper clients.

Costs of Revenue

Similar to the pattern seen in revenues, Fr8App’s cost of revenue, exclusive of depreciation and amortization, grew to $19,559 for the year ended December 31, 2021 from $8,412 for the year ended December 31, 2020, an increase of $11,147 and 132.5% on a year-over-year basis. This year-over-year increase moves in similar fashion and magnitude with our revenue, with some differences due to varying margins in the traffic and in the traffic mix itself from quarter-to-quarter and year-to-year. We also had some pressure on costs in the latter part of 2021 as the US economy appeared to return to a more normal level of activity following the significant declines from the COVID-pandemic. Freight levels towards the end of 2021 in our segment were reaching all-time highs and led to some strains on capacity. For instance, average diesel fuel prices increased nearly 15% in the first half of 2021 relative to the first half of 2020. This compares to an increase of approximately 43% in the second half of 2021 relative to the first half of 2020. As this trend continues, we expect our margins to compress in the near term until some stability returns to these key markets for the industry.

In parallel with the increase in revenues, Fr8App’s cost of revenue grew to $8,412 for the year ended December 31, 2020 from $3,849 for the year ended December 31, 2019, an increase of $4,563 and 118.6% on a year-over-year basis. This year-over-year increase in the year ended December 31, 2020 moves in similar fashion and magnitude with our revenue, with some differences due to varying margins in the traffic from quarter-to-quarter and year-to-year.

Compensation and Employee Benefits

Fr8App’s compensation and employee benefits expenses were $3,712 for the year ended December 31, 2021 compared to $2,212 for the year ended December 31, 2020, which was a $1,500 or 67.8% increase on a year-over-year basis. Fr8App anticipates that its compensation and employee benefits expenses will continue to increase on a year-over-year basis as we continue to invest in the expansion of our sales force (both shipper and carrier) and in the support staff required for the company to operate as a publicly-traded company, albeit at a lesser rate than our expected increase in revenues. We also incorporated some variable compensation plans during early 2021 to incentivize management and staff efforts and activities in mid-2021. Total employees at the end of 2021 were 90.

Fr8App’s compensation and employee benefits expenses were $2,212 for the year ended December 31, 2020 compared to $1,559 for the year ended December 31, 2019, which was a $653 or 41.9% increase on a year-over-year basis. Fr8App anticipates that its compensation and employee benefits expenses will continue to increase as we continue to invest in the expansion of our sales force and the support staff required for the company to operate as a publicly-traded company, albeit at a lesser rate than our expected increase in revenues. Total employees at the end of 2020 were 69.

General and Administrative

General and administrative expenses were $2,618 for the year ended December 31, 2021 compared to $2,737 for the year ended December 31, 2020, which was a decrease of $119 or 4.3%. The decrease in expenses for the year ended December 31, 2021 is due to the incurrence of consulting services and employee termination expenses during 2020 as the company worked towards establishing its new strategic direction and terminated the then existing executive team in favor of the team in place today. Savings in consulting services and termination fees were offset by increases in legal fees, advisory fees and accounting fees and third-party software fees on a year-over-year basis. We expect our general and administrative expenses to continue to increase as the company becomes a publicly traded company in 2022 and the anticipated growth in the underlying business itself.

General and administrative expenses were $2,737 for the year ended December 31, 2020 compared to $1,047 for the year ended December 31, 2019, which was an increase of $1,690 or a 161.3% increase. The increase in expenses for the year ended December 31, 2020 is due to payment of additional expenses for consulting, accounting and legal fees in preparation for Fr8App’s repositioning and in the executive termination fees incurred in 2020.

Sales and Marketing

Sales and marketing expenses were $92 for the year ended December 31, 2021 compared to $24 for the year ended December 31, 2020, which was an increase of $68 or a 288.0% increase. The increase in marketing expenses in 2021 should continue on a similar albeit lower increasing trend and is consistent with our design and branding efforts during 2021 which are now developed towards more targeted efforts aimed at specific shippers and carriers fitting with the company’s sectors where we offer higher levels of value-added services and support to our clients, compared to less targeted efforts in the past.

Sales and marketing expenses were $24 for the year ended December 31, 2020 compared to $131 for the year ended December 31, 2019, which was a decrease of $107 or a 81.9% decrease. The decrease in marketing expenses in 2020 is consistent with our refocusing of sales efforts during 2020 towards more targeted efforts aimed at specific shippers and carriers fitting with the company’s target profile compared to less targeted efforts in the past.

Depreciation and Amortization

Depreciation and amortization expense represents the amortization of previously capitalized software development costs, as appropriate, and depreciation expenses related to Fr8App’s fixed assets. This expense decreased to $302 for the year ended December 31, 2021, from $531 for the year ended December 31, 2020, a decrease of $229 or 43.1% on a year-over-year basis. This expense pattern is consistent with the levels of investment in Fr8App’s software and its fixed assets over time as these decreased by nearly 45.0% on a year-over-year basis during 2020 relative to the year before. Investments in software increased 2021 by approximately 106.6% over the 2020 level, so we anticipate this expense to stabilize or increase marginally during 2022.

Depreciation and amortization expenses decreased to $531 for the year ended December 31, 2020, from $660 for the year ended December 31, 2019, a decrease of $129 or 19.5% on a year-over-year basis. This expense pattern is consistent with the levels of investment in Fr8App’s software and its fixed assets over time as these decreased by approximately 45.0% on a year-over-year basis.

Other income and expenses

During the year ended December 31, 2021, other income and expense represents losses on warrants issued in relation to debt and related change in fair value of the warrants outstanding after issue, gains and losses from debt settlement and interest expenses incurred by Fr8App’s debt facilities over the course of the year, offset by a minimal amount of interest income. During the year ended December 31, 2021, Fr8App incurred a loss on the issuance of private warrants for approximately $2,829 and a change in fair value of the warrant liabilities for $497, a gain in the loss from extinguishment of debt amounting to $116, and net interest expense of $1,136. The notes payable and warrants and related accounting treatment are more fully described in Notes 12 and 17, respectively, of our consolidated financial statements. The additional net interest expense for the year ended December 31, 2021 was due to a higher amount of debt outstanding, including convertible debt, over the year-ago period.

During the year ended December 31, 2020, Fr8App recognized a loss from settlement of convertible notes outstanding at the time for $785 and net interest expense of $334. Interest expense decreased to $334 for the year ended December 31, 2020, from $428 for the year ended December 31, 2019, a decrease in expenses of $95 or 22.0%. This decrease was due to settlement of convertible notes and relatively lower overall levels of debt in the year ended December 31, 2020 versus a similar prior year period.

Net Loss

Fr8App’s net loss for the year ended December 31, 2021 increased from $8,201 from $5,852 for the year ended December 31, 2020 or by $2,349 or 40.1% on a year-over-year basis, as a result of the items described above.

Fr8App’s net loss for the year ended December 31, 2020 increased to $5,852 from $3,505 for the year ended December 31, 2019 or by $2,347 or 67.0% on a year-over-year basis as a result of the items described above.

Liquidity and Financial Position

Fr8App has historically met its cash needs through a combination of cash flows from operating activities, term loans, promissory notes, bonds, convertible notes, private placement offerings and sales of equity. Fr8App’s cash requirements are generally for operating activities and debt repayments. Fr8App funded its early operations with a combination of debt and equity and we have recently positioned the company to operate on a go-forward basis with a minimal amount of long-term debt. Fr8App’s net notes payable in the amount of $8,120 at December 31, 2019 were converted into equity during the year ended December 31, 2020. Fr8App’s Warrant Liability of $4,951 and current Notes Payable of $7,858 at December 31, 2021 were converted to equity at the Merger in February 2022. Fr8App raised a total of $4,866 in convertible notes during 2020 and an additional $3,609 in convertible notes during 2021. We also received net proceeds at the closing of the Merger in the amount of approximately $3,500 million and continue to incur short-term debt over the near-term that is collateralized by our accounts receivable. Fr8App expects it will maintain its short-term debt facility with a third party to continue to support ongoing operations.

Our accounts receivable and unbilled receivable balances at December 31, 2021 grew by 59.1% on a year-over-year comparative basis, which is consistent with the increase in revenues over the periods compared. Fr8App’s accounts payable, short-term borrowings and accrued expenses have also increased at a rate of 26.4% on a year-over-year comparative basis, also in line with the increase in operating levels over the time periods compared. At December 31, 2021, Fr8App has an accumulated net capital deficit of $8,971, no long-term debt, and a working capital deficit of $9,739. All of the convertible notes payable and warrant liabilities converted to equity at the time of the Merger. At December 31, 2020, Fr8App had an accumulated net capital surplus of $2,265, net convertible notes payable of $3,790 and a paycheck protection program (“PPP”) loan for $115. The PPP loan was forgiven during the course of the 2021 calendar year.

In March 2019, we initially secured a revolving line of credit that it used to assist with managing our working capital. The maximum principal amount that may be drawn under the line of credit was $3 million at December 31, 2021 and was increased since then to $5 million. The initial maturity date on this facility was March 7, 2020 and it has since been extended by mutual written consent of the lender and Fr8App to a maturity date of July 31, 2023. As of December 31, 2021 the amount drawn under this facility was $1,732.

Cash flows (‘000’s)

Comparison of the Years ended December 31, 2021, December 31, 2020 and December 31, 2019

The following table summarizes our sources and uses of cash for the years ended December 31, 2021, December 31, 2020 and December 31, 2019:

Cash flows used in Operating Activities

Net cash used in operating activities represent the cash receipts and disbursements related to our activities other than investing and financing activities. We expect cash provided by operating activities to be our primary use of funds for the foreseeable future as the Company continues to fund its growing operations.

Net cash flows used in operating activities is derived by adjusting our net loss for:

For the year ended December 31, 2021, net cash used in operating activities was $5,930. The $5,930 of net cash used in operating activities consisted of a net loss of $8,201 adjusted for non-cash charges related to valuation of a warrant liability for $2,331, non-cash charges of $1,444, net changes in our net operating assets and liabilities amounting to $1,383 and interest accrued on long term borrowings and a gain on extinguishment of debt of $115. The non-cash charges primarily consisted of amortization of costs and interest accruals on convertible notes of $906 and of $302 for depreciation and amortization. The cash required to fund the change in our net operating assets and liabilities was primarily due to increases in accounts receivable of $1,527 and prepaid and other assets of $592 offset by an increase in accounts payable and accrued expenses of $730. The changes in our accounts payable and accounts receivable balances are a result of the Company’s overall increase in business activities relative to earlier periods.

For the year ended December 31, 2020, net cash used in operating activities was $3,413. The $3,413 of net cash used in operating activities consisted of a net loss of $5,852 adjusted for non-cash compensation for services received of $1,271, non-cash charges totaling $932, a loss from extinguishment of debt of $785 and a net change in our net operating assets and liabilities of $548. The non-cash charges primarily consisted of $531 for depreciation and amortization, $240 for charges in interest or amortization of costs on convertible debt and $161 in share-based compensation. The change in our net operating assets and liabilities was primarily due to an increase in accounts receivable of $1,736 and prepaid expenses of $469, offset by an increase in payables and accrued expenses of $1,656. The changes in our accounts payable and accounts receivable balances are a result of the Company’s overall increase in business activities over the time periods compared.

For the year ended December 31, 2019, net cash used in operating activities was $2,328. The $2,328 of net cash used in operating activities consisted of a net loss of $3,505 adjusted for non-cash compensation expenses including payment for services received of $732 issuance of non-voting common shares for $308, and a net change in our net operating assets and liabilities of $136. The non-cash charges primarily consisted of $660 for depreciation and amortization, $57 for charges in interest or amortization of costs on convertible debt and $15 in share-based compensation. The change in our net operating assets and liabilities was primarily due to an increase in accounts receivable of $312 and prepaid expenses of $56, offset by an increase in payables and accrued expenses of $607. The changes in our accounts payable and accounts receivable balances are a result of the Company’s overall increase in business activities over the time periods compared.