Prospectus Filed Pursuant to Rule 424(b)(3) (424b3)

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

Commonly Used Defined Terms	5
Cautionary Statement Regarding Forward Looking Statements	6
Prospectus Summary	10
Risk Factors	24
Use of Proceeds	39
Dividend Policy	39
Capitalization	40
Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Private Placements	61
Business	64
Management	81
Beneficial Ownership of Principal Shareholders and Management	88
Related Party Transactions	89
Selling Shareholders	93
Plan of Distribution	99
Description of Share Capital and Governing Documents	100
Taxation	113
Expenses	118
Legal Matters	118
Experts	118
Interests of Named Experts and Counsel	118
Enforceability of Civil Liabilities	118
Disclosure of Commission Position on Indemnification	120
Where You Can Find Additional Information	120
Index to Financial Information	F-1

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:

	●	“Amended Memorandum and Articles” refers to the amended and restated memorandum and articles of association in force on the date of this Registration Statement.

	●	“BVI Act” refers to the BVI Business Companies Act (As Revised).

	●	“we,” “us,” “our Company,” “our,” or “FRGT” refers to Freight Technologies, Inc., (formerly known as Hudson Capital, Inc. or “HUSN”), its subsidiaries, and, in the context of describing our operations and consolidated financial information, our consolidated affiliated entities in China, including but not limited to, prior to the Merger, Hongkong Internet Financial Services Limited, Hongkong Shengqi Technology Limited, Beijing Yingxin Yijia Network Technology Co., Ltd, Sheng Ying Xin (Beijing) Management Consulting Co., Ltd, Kashgar Sheng Yingxin Enterprise Consulting Co., Ltd., Fu Hui (Shenzhen) Commercial Factoring Co., Ltd., Ltd., CIFS (Xiamen) Financial Leasing Co., Ltd., Fuhui (Xiamen) Commercial Factoring Co., Ltd., Zhizhen Investment & Research (Beijing) Information Consulting Co., Ltd., Hangzhou Yuchuang Investment Partnership and our U.S. subsidiaries, Hudson Capital USA Inc., Hudson Capital Merger Sub I Inc. and Hudson Capital Merger Sub II Inc and after the Merger, Freight App, Inc. and Freight App de México S.A De C.V.

	●	“China” or “PRC” refers to the People’s Republic of China, and solely for the purpose of this annual report, excluding Taiwan, Hong Kong and Macau;

	●	“Fr8App” refers to Freight App, Inc., our primary operating subsidiary.

	●	“Merger” refers to the consummation of that certain merger agreement, dated December 13, 2021, and as amended on December 29, 2021 (the “Merger Agreement”) by and among Hudson Capital, Inc,. Hudson Capital Merger Sub I, Inc., a Delaware corporation and wholly-owned subsidiary of Hudson Capital (“Merger Sub”), Freight App, Inc., a Delaware corporation (“Fr8App”) and ATW Master Fund II, L.P., as the representative of the stockholders of Fr8App (the “Stockholders’ Representative”) whereby 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 closed on February 14, 2022 and the separate corporate existence of Merger Sub I 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.

	●	“shares” or “Ordinary Shares” refers to our ordinary shares, par value $0.011 per share and prior to the reverse split, par value $0.005.

	●	“U.S.” means the United States of America;

	●	“U.S. GAAP” refers to generally accepted accounting principles in the United States;

	●	“RMB” or “Renminbi” refers to the legal currency of China;

	●	“$,” “dollars,” “US$” or “U.S. dollars” refers to the legal currency of the United States; and

	●	all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

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:

	●	the effect of economic and political conditions in the industries and markets in which our businesses operate in the United States, Mexico and Canada and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, inflation, levels of end market demand in construction, the impact of weather conditions, concerns over border issues, pandemic health issues (including the coronavirus disease (“COVID-19”) and its effects, among other things, on production and on global supply, demand, and distribution disruptions as the outbreak continues and results in an increasingly prolonged period of travel, commercial and/or other similar restrictions and limitations), natural disasters and the financial condition of our customers and suppliers;
	●	challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services, the ongoing availability and dependability of cloud-based systems;
	●	rates of adoption of new technology, from products that could be potential competitors to Our products to those that might affect the primary target market of carriers and commercial truck freight in general;

	●	rates of adoption of self-driving units commercial trucks or other transportation methods that are competitive with trucking and truck freight;
	●	future levels of indebtedness, capital spending and research and development spending;
	●	future availability of capital and credit and factors that may affect such availability, including credit market conditions and our capital structure and credit ratings;
	●	delays and disruption in the delivery of materials and services from suppliers; continuity and/or development of new inventory, merchandising and distribution strategies;
	●	cost reduction efforts and restructuring costs and savings and other consequences thereof;
	●	new business and investment opportunities;
	●	risks resulting from a less diversified business model and balance of operations across product lines, regions and industries due to the separation;
	●	the outcome of legal proceedings, investigations and other contingencies;
	●	the effect of changes in political conditions in the U.S. and other countries, in which our businesses operate, including the effect of changes in U.S. trade policies, on general market conditions, global trade policies and currency exchange rates in the near term and beyond;
	●	the effect of changes in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in Mexico, U.S. and Canada and any other countries in which our businesses may operate;
	●	our ability to retain and hire key personnel;
	●	the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs.

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”)

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 not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;
	●	for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies;
	●	we are not required to provide the same level of disclosure on certain issues, such as executive compensation;
	●	we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;
	●	we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and
	●	we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction.

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

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.

	●	*Strengthened management team.* Key members of our management team have extensive experience in their field with the skills and expertise that are essential in developing technology, expanding shipper and carrier networks and executing on business plans. The majority of our team is bilingual and collectively have experience across North America and a deep industry network.

	●	*Flexible product offerings.* We offer a variety of options for both Shippers and Carriers to address their freight needs. Our platform can accommodate a single transaction for a client as easily as a number of transactions on a repeated basis. We also offer some of our corporate shipper clients, our Fr8Fleet product, where we provide capacity for freight over periods of time, such as a month, rather than on a trip-by-trip basis. We also offer accessory features such as our Fr8Radar for tracking all shipments through use of our app and Fr8Data for more sophisticated users that want tools to manage their freight requirements on a more proactive basis.

	●	*Sticky Users.* We have a substantial presence of Shippers and Carriers on our platform, and we offer a number of products and accessories that can be tailored to individual Shipper and Carrier requirements. We believe that the Shippers and Carriers will continue to use our platform and support services once they have actually tried and operated the platform and will be a good referral source and/or endorsement for new clients.

	●	*End-to-End Solution.* Our platform offers an end-to-end solution to any Shipper or Carrier wanting to engage in the freight business on a cross-border basis. It allows our Shipper clients to rely on Us to address their freight management logistics needs and it provides Carrier clients with leading edge technology that they could not develop on their own and that allows them to offer their services to large corporate clients.

	●	*Continuous improvement on operating efficiencies.* Fr8App has defined different operating initiatives focused on continuing to improve efficiency. These initiatives help to improve data accuracy, automate manual work/activities and optimize process lead times. We believe Fr8App continues to be well positioned to manage costs and utilize assets. We will continue to seek new opportunities for process optimization and cost savings.

	●	*Preparing organization for future growth*. Our primary focus within organizational development is maintaining strong relationships with our employees. We invest in our employees through internal communication, training programs such as Fr8App Academy, recognition programs and providing competitive wages and benefits. We are designing a scalable operating model and an approach that drives value to the business.

Threats and Challenges

	●	*Changes in trade policy.* A significant portion of the traffic on our platform is related to cross-border freight. Changes in trade policy could have unexpected effects on the traffic booked on our platform. There have been a number of events on both the US/Canada and the US/Mexico borders over the past year or so that could have had a material adverse effect on cross-border traffic.

	●	*Variations in production / value added chains.* The amount of trade occurring between China and the United States and relocation of production facilities away from areas of perceived lower cost in Asia were factors that were significantly affected by the recent outbreaks of COVID-19. A number of important manufacturing projects, including the TESLA factory announced for Austin, TX are examples of a shift in how attractive it is to locate production facilities either in North America or in closer proximity to North America. Such shifts in production and value-added chains can have significant effects on the demand for freight and the traffic booked on our platform.

	●	*Inflation.* Inflation in the United States is reaching new highs, with annual rates of 8.4% in April 2022. Our ability to accommodate higher costs for both Shippers and Carriers could affect the traffic booked on our platform. At the margin, increasing costs for diesel could also result in alternate sources of transportation becoming more appealing to the marketplace.

	●	*Truck-driver and Truck Availability.* Late 2021 and early 2022 were marked by a number of commentaries in the media in relation to truck-driver and truck availability shortages. Drivers and trucks are two key elements feeding into the potential demand for freight services and traffic booked on our platform. Maintaining an active Carrier presence on our platform could be more difficult should both drivers and trucks remain short in supply.

	●	*Workforce retention.* The availability of a skilled workforce to manage our platform and continue developing and growing our company in a relatively unique market segment presents unique challenges. We have partially addressed these challenges by creating Fr8University, whereby we recruit and train individuals on the manner in which our industry and company work. As we continue to be successful and as our competition begins to increase, it may be increasingly difficult to retain our workforce.

	●	*Technology adaptability and usability*. Owner-operators and small freight and distribution companies in Mexico (majority of freight operating model in Mexico) take time to become familiar with new and digital technology. Much effort may be required to assist these Carriers with the understanding of new apps and using freight ecosystem technology.

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:

	●	The closure of our offices and suspension of operations;
	●	The suspension of all in-person consultations, marketing, and advertising activities; and
	●	Great volatility in global and domestic supply chains

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

●

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.

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

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

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

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

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

	●	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.

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

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

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

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.

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

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.

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

	●	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.

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.

	●	The trucking industry is highly fragmented and regulated.

	●	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’s growth plan 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 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.

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.

	●	We are vulnerable to predatory short selling practices.

	●	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.

	●	Substantial future sales or registrations or perceived potential sales or registrations of our ordinary shares, ordinary shares or other equity or equity-linked securities 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.

	●	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.

	●	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 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.

	●	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.

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

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

	●	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.

	●	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.

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

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:

	●	may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A;

	●	are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives, which is commonly referred to as “compensation discussion and analysis”;

	●	are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

	●	are not required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on frequency” and “say-on-golden-parachute” votes);

	●	are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

	●	are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act; and

	●	will not be required to conduct an evaluation of our internal control over financial reporting for two years.

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 not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;

	●	for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies;

	●	we are not required to provide the same level of disclosure on certain issues, such as executive compensation;

	●	we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;

	●	we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and

	●	we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction.

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.

Ordinary Shares currently issued and outstanding	7,689,462

Ordinary Shares offered by the selling shareholders	19,147,688

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 covered by this prospectus 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, or the quantity which will be exercised or in the period in which it will be exercised. See the section of this prospectus titled “Use of Proceeds.”

Risk factors	Investing in our Ordinary Shares involves a high degree of risk. You should read the “Risk Factors” section starting on page 24 of this prospectus for a discussion of factors to consider carefully before deciding to invest in the Ordinary Shares.

Nasdaq Capital Market symbol:	Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “FRGT.”

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”):

Securities Issued in Merger	Issued at Merger			Underlying Ordinary Shares
Ordinary Shares		5,670,842			5,670,842
A2 Preferred Shares		2,781,592			2,781,592
A1A Preferred Shares		9,841,804			9,841,804
Series Seed Preferred Shares		15,445			15,445
Series B Preferred Shares		16,257,671			16,257,671
Series A4 Preferred Shares		1,251,647			1,251,647
Ordinary Shares Warrant		11,480			11,480
Series Seed Warrant		9,164			9,164
Equity Awards for Ordinary Shares		4,308,231	*		4,308,231	*
Total Issued in Merger		40,147,876			40,147,876

* 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^thcalendar 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:

(i)

Series A Preferred Shares

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:

	●	Series A1-A: $1.40 (using a stated value, post reverse split, of $2.086)
	●	Series A2: $1.40 (using a stated value, post reverse split, of $3.122)

(ii)

Series B Preferred Shares

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).

(iii)

Warrants

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

	●	The anti-dilution provision shall be deleted.
	●	The cashless exercise formula shall be amended so that upon a cashless exercise of the applicable Warrant, 0.779 Company’s ordinary share will be issued for each Series A Warrant, 0.816 ordinary share shall be issued for each Series B Warrant, 0.888 ordinary share shall be issued for each Series C Warrant and 0.826 ordinary share shall be issued for each Series D Warrant.

(iv)

Registration Rights Agreement

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:

	●	The Registrable Securities in the Revised Registration Rights Agreement shall be expanded to include the Ordinary Shares underlying the Series A-4 Preferred Shares issued pursuant to the aforementioned July 12, 2022 Securities Purchase Agreement;
	●	The “Effectiveness Date” has been redefined, with respect to the Initial Registration Statement required to be filed under the Registration Rights Agreement, the 60th calendar day following the Filing Date (or, in the event the Commission notifies the Company that it will “review” the Registration Statement, the 120th calendar day following the Filing Date) and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the 90th calendar day following the date on which an additional Registration Statement is required to be filed hereunder; provided, however, if such Effectiveness Date falls on a day that is not a Business Day, then the Effectiveness Date shall be the next succeeding business day; provided, further, that if the Commission is closed for operations due to a government shutdown, the Effectiveness Date shall be extended by the same amount of days that the Commission remains closed for operations;
	●	The partial liquidated damages in Section 2(d) has been amended downward to be a product of 0.1% multiplied by the aggregate subscription amount.

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.

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.

All Numbers (US$’000’s)	Years ended December 31,
	2021			2020			2019
Revenue	$	-		$	0.6		$	1,366.4
Cost of revenue		-			-			0.1
Gross profit		-			0.6			1,366.3
General and administrative expense		2,495.3			4,123.1			1,893.5
Selling and distribution expense		-			10.7			100.5
(Loss) income from operations		(2,495.3	)		(4,133.2	)		(627.7	)
Interest income on bank deposit		0.0			0.0			0.7
Other income (expenses)		349.0			38.9			(5,611.5	)
Interest income from loans to third parties		0.8			365.0			2,191.6
Impairment loss on loans to third parties and property and equipment		-			(5,346.0	)		(57,941.7	)
(Loss) income before income taxes		(2,145.5	)		(9,075.4	)		(61,988.6	)
Income tax (benefit) expenses		-			-			7.2
Net (loss) income	$	(2,145.5	)	$	(9,075.4	)	$	(61,995.8	)
Comprehensive loss (income)	$	(1,587.5	)	$	(6,389.0	)	$	(62,361.0	)
Weighted average number of shares, basic and diluted		2,988,285	*		2,911,885	*		2,010,381	*
(Loss) earnings per share, basic and diluted	$	(0.72	)*	$	(3.12	)*	$	(30.84	)*

* - 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

	Year Ended December 31,
	2021			2020			2019
	(Audited)			(Audited)			(Audited)
Net revenue	$	21,474,151		$	9,205,941		$	4,179,845
Cost of revenue		19,558,807			8,411,570			3,848,776
Compensation and employee benefits		3,712,325			2,212,407			1,559,278
Sales and marketing		91,657			23,622			130,641
General and administrative		2,618,126			2,737,184			1,047,551
Depreciation and amortization		302,100			531,027			659,961
Other expenses		(3,351,677	)		(1,119,056	)		(428,683	)
Loss from operations		(8,160,541	)		(5,828,925	)		(3,495,045	)
Income tax provision		40,264			23,051			9,981
Change in redemption value of preferred stock		-			(912,687			-
Net loss attributable to common stockholders		(6,764,663	)		(6,764,663	)		(3,505,026	)
Other comprehensive gain (loss)		(50,541	)		2,159	)		(1,529	)
Comprehensive loss	$	(8,251,345	)	$	(5,849,817	)	$	(3,506,555	)

Income (loss) per ordinary share attributable to the Company
Basic and diluted	$	(0.61	)	$	(0.85	)	$	(37.28	)
Weighted average ordinary share outstanding
Basic and diluted		13,500,265			7,953,545			94,055

BALANCE SHEET

	As of December 31,
	2021			2020			2019
	(Audited)			(Audited)			(Unaudited)
Current assets	$	8,521,300		$	6,112,335		$	1,438,918
Total assets		9,288,660			6,604,957			2,239,071
Current liabilities		18,260,152			3,847,061			1,452,720
Long term liabilities		-			3,904,912			8,119,704
Share capital		152			144			11
Total stockholder’s deficit	$	(8,971,492	)	$	(1,147,016	)	$	(7,333,353	)

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

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.

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:

	●	economic weakness, including inflation, or political instability, particularly on the U.S./Mexico and U.S./Canada international borders;
	●	differing and changing regulatory requirements for product approvals;
	●	differing jurisdictions could present different issues for securing, maintaining or obtaining freedom to operate in such jurisdictions;
	●	potentially reduced protection for intellectual property rights;
	●	difficulties in compliance with different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, tax requirements, treaties and regulations;
	●	changes in U.S. and non-U.S. regulations and customs, tariffs and trade barriers;
	●	changes in non-U.S. currency exchange rates of the Mexican Peso or the Canadian dollar and the potential imposition of currency controls;
	●	trade protection measures, import or export licensing requirements or other restrictive actions by governments;
	●	differing reimbursement regimes and price controls in certain non-U.S. markets;
	●	difficulties with compliance with transfer pricing regulations;
	●	changing restrictions or conditions for the repatriation of profits;
	●	negative consequences from changes in tax laws;
	●	compliance with tax, employment, immigration and labor laws for employees living or traveling abroad, including, for example, the variable tax treatment in different jurisdictions of options granted under its share option schemes or equity incentive plans;
	●	workforce uncertainty or labor unrest;
	●	litigation or administrative actions resulting from claims against us by current or former employees or consultants individually or as part of class actions, including claims of wrongful terminations, discrimination, misclassification or other violations of labor law or other alleged conduct;
	●	difficulties associated with staffing and managing international operations, including differing labor relations; and
	●	business interruptions resulting from geo-political actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.

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:

	●	variations in our results of operations;
	●	the high number of non-voting Ordinary Shares outstanding in comparison to total Ordinary Shares;
	●	announcements about our earnings that are not in line with analyst expectations;
	●	publication of operating or industry metrics by third parties, including government statistical agencies, that differ from expectations of industry or financial analysts;
	●	changes in financial estimates by securities research analysts;

	●	announcements made by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments;
	●	press reports, whether or not true, about our business;
	●	regulatory allegations or actions or negative reports or publicity against us, regardless of their veracity or materiality to our Company;
	●	changes in pricing made by us or our competitors;
	●	conditions in the financial advisory market;
	●	additions to or departures of our management;
	●	fluctuations of exchange rates of the Mexican Peso and the U.S. dollar;
	●	release or expiry of transfer restrictions on our outstanding Ordinary Shares;
	●	sales or perceived potential sales or other disposition of existing or additional Ordinary Shares or other equity or equity-linked securities, including by our principal shareholders, directors officers and other affiliates;
	●	actual or perceived general economic and business conditions and trends globally and in the freight industry in particular;
	●	the potential or actual effect of program trading on our stock price; and
	●	changes or developments in the global regulatory environment.

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.

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:

On an actual basis for Freight App, Inc.

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.

On an as adjusted basis to give effect to the following transactions which occurred between December 31, 2021 and July 31, 2022 and to reverse split of 2.2 effective as of February 15, 2022:

●

Securities Issued in the Merger between Hudson Capital, Inc and Freight App, Inc (*)

Ordinary Shares			2,577,655
A2 Preferred Shares			1,264,360
A1A Preferred Shares			4,473,547
Series Seed Preferred Shares			7,020
Series B Preferred Shares			7,389,851
Series A4 Preferred Shares			568,930
Total Issued in Merger			16,281,364

	(*)	Outstanding shares prior to the Merger multiplied by an exchange ratio of 1.26855 and including an exchange of all of Fr8App Inc.’s Series A1-B Preferred Shares for Ordinary Shares and Series A4 Preferred Shares in connection with the Merger.
	●	4,307,415 of Hudson Capital, Inc.’s outstanding Ordinary Shares at the Merger
	●	1,060,606 Series B Preferred Shares issued at the closing of the Merger at a total consideration of $3,500,000
	●	868,611 Ordinary Shares and vested restricted shares awards issued during the period
	●	1,285,714 Series B2 Preferred Shares issued for a total consideration of $2,700,000

On an as further adjusted basis to give effect to:

	●	Conversion of series A and B shares to 37,347,648 Ordinary shares, based on adjusted conversion prices of all series A and series B shares.
	●	Conversion of 1,939,394 in Series A Warrants, 395,652 in Series B Warrants, 2,573,470 in Series C Warrants and 3,541,941 in Series D Warrants, at fixed exchange ratios of 0.779, 0.816, 0.888 and 0.826, respectively, in lieu of the then existing strike prices, for an aggregate amount of 7,044,524 Ordinary Shares.

	As of December 31, 2021
	Actual			Pro forma as adjusted			Pro forma as further adjusted

Cash	$	3,152,993		$	8,206,989		$	8,206,989
Indebtedness		12,808,885			-			-
Equity
Actual: Preferred stock, $.00001 par value, 30,050,652 shares authorized;12,928,610 issued and outstanding at December 31, 2021, Series seed preferred stock, $.00001 par value, 19,958 shares authorized;12,175 issued and outstanding at December 31, 2021, Common stock, $.00001 par value, 34,441,711 shares authorized; 1,284,970 voting and 80,000 non-voting issued and outstanding at December 31, 2021. Pro forma as adjusted: Preferred stock, $.0001 par value, 51,525,000 shares authorized, 16,043,009 issued and outstanding; Series seed preferred stock, $.0001 par value, 25,000 shares authorized, 7,020 issued and outstanding; Common stock, $.011 par value, unlimited number of shares authorized, 7,753,681 issued and outstanding; Blank Check preferred shares, no par value, unlimited number of shares authorized, none issued. Pro forma as further adjusted: Preferred stock, $.0001 par value, 51,525,000 shares authorized, none issued and outstanding; Series seed preferred stock, $.0001 par value, 25,000 shares authorized, none issued and outstanding; Common stock, $.011 par value, unlimited number of shares authorized, 66,909,106 issued and outstanding; Blank Check preferred shares, no par value, unlimited number of shares authorized, none issued.		152			86,895			736,012
Additional paid-in capital		12,879,029			30,715,333			30,066,216
Accumulated deficit		(21,800,763	)		(22,163,763	)		(22,163,763	)
Accumulated other comprehensive (loss) income		(49,910	)		(49,910	)		(49,910	)

Total stockholders’ deficit		(8,971,492	)		8,588,555			8,588,555

Total Capitalization	$	3,837,393		$	8,588,555		$	8,588,555

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:

Level 1	-	Quoted prices in active markets for identical assets or liabilities.

Level 2	-	Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3	-	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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.

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.

	For the Year Ended December 31,
	2021		2020
	RMB	US$	RMB	US$
	(in Million)
Amount of financing advised:	-	-	-	-
Commercial Payment	-	-	-	-
International Corporate Financing	-	-	-	-
Intermediary Loan	-	-	-	-
Amount of financing factored:	-	-	-	-
Factoring Business	-	-	-	-

	For the Year Ended December 31,
	2021	2020
Number of clients advised⁽¹⁾	-	-
Commercial Payment	-	-
International Corporate Financing	-	-
Intermediary Loan	-	-

(1)	The number of clients for a specified period represents the number of clients whose financing were funded during such period.

	For the Year Ended December 31,
	2021	2020
	(in US$ thousands)
Fees billed to clients⁽²⁾	-	-

(2)	Represent amounts net of VAT.

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.

All Numbers (US$’000’s)	Years ended December 31,						Variance
	2021			2020			Amount			%
Revenue	$	-		$	0.6		$	(0.6	)		(100.0	)%
Cost of revenue		-			-			-			-
Gross profit		-			0.6			(0.6	)		(100.0	)%
General and administrative expense		2,495.3			4,123.1			(1,627.8	)		(39.5	)%
Selling and distribution expense		-			10.7			(10.7	)		(100.0	)%
(Loss) income from operations		(2,495.3	)		(4,133.2	)		(1,638.5	)		(39.6	%
Interest income on bank deposit		0.0			0.0			(0.0	)		(64.3	)%
Other income (expenses)		349.0			38.9			310.2			797.9	%
Interest income from loans to third parties		0.8			365.0			(364.3	)		(99.8	)%
Impairment loss on loans to third parties and property and equipment		-			(5,346.0	)		(5,3460	)		(100.0	)%
(Loss) income before income taxes		(2,145.5	)		(9,075.4	)		(6,929.8	)		(76.4	)%
Income tax (benefit) expenses		-			-			-			-
Net (loss) income	$	(2,145.5	)	$	(9,075.4	)	$	(6,929.8	)		(76.4	)%
Comprehensive loss (income)	$	(1,587.5	)	$	(6,389.0	)	$	(4,801.4	)		(75.2	)%

Revenue

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

All Numbers (US$’000’s)	For the Year Ended December 31,										Variance
	2021		%			2020		%			Amount			%
Intermediary Bank Loan Services	$	-		-	%	$	-		-	%	$	-				%
Factoring Service		-		-	%		0.6		100	%		(0.6	)		(100.0	)%
Total Amount	$	-		-	%	$	0.6		100	%	$	(0.6	)		(100.0	)%

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:

	For the Year Ended December 31,										Variance
All Numbers (US$’000’s)	2021		%			2020		%			Amount			%
General and administrative expenses	$	2,495.3		100.0	%	$	4,123.1		99.7	%	$	(1,627.8	)		(39.5	)%
Selling and marketing expenses		-		-	%		10.7		0.3	%		(10.7	)		(100.0	)%
Total Amount	$	2,495.3		100.0	%	$	4,133.9		100	%	$	(1,638.5	)		(39.6	%

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:

All Numbers (US$’000’s)	For the Year Ended December 31,											Variance
	2021		%			2020			%			Amount			%
Interest income on loans to third parties	$	0.8		0.2	%	$	365.0			(7.4	)%	$	(364.2	)		(99.8	)%
Interest income on bank deposits		0.0		(0.0	)%		0.0			(0.0	)%		0.0	)		(64.3	)%
Other income (expenses)		349.0		99.8	%		38.9			10.3	%		310.2			797.9	%
Impairment loss on loans to third parties and property and equipment		-		-	%		(5,346.0	)		97.1	%		(5,346.0	)		(100	)%
Total Amount	$	349.8		100.0	%	$	(4,942.1	)		100.0	%	$	5,291.9			107.1	%

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.

All Numbers (US$’000’s)	Year ended December 31, 2021			Year ended December 31, 2020
Net cash used in operating activities	$	(4,854.5	)	$	(3,818.7	)
Net cash used in investing activities		(2,355.4	)		(108.1	)
Net cash provided by financing activities		3,599.5			4,278.0
Effect of exchange rate change on cash and cash equivalents		557.4			2,909.5
Net (decrease) increase in cash and cash equivalents		(3,053.0	)		3,260.7
Cash and cash equivalents, beginning balance		3,274.3			13.6
Cash and cash equivalents, ending balance	$	221.3		$	3,274.3

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

	For the Year Ended December 31,
	2020				2019
	RMB		US$		RMB		US$
	(in Million)
Amount of financing advised:		-		-		153		22
Commercial Payment		-		-		-		-
International Corporate Financing		-		-		-		-
Intermediary Loan		-		-		153		22
Amount of financing factored:		-		-		-		-
Factoring Business		-		-		15		2

	For the Year Ended December 31,
	2020		2019
Number of clients advised⁽¹⁾		-		1
Commercial Payment		-		-
International Corporate Financing		-		-
Intermediary Loan		-		1

(1)	The number of clients for a specified period represents the number of clients whose financing were funded during such period.

	For the Year Ended December 31,
	2020		2019
	(in US$ thousands)
fees billed to clients⁽²⁾		-		417

(2)	Represent amounts net of VAT.

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.

	Years ended December 31,						Variance
All Numbers (US$’000’s)	2020			2019			Amount			%
Revenue	$	0.6		$	1,366.4		$	(1,365.8	)		(100.0	)%
Cost of revenue		-			0.1			(0.1	)		(100.0	)%
Gross profit		0.6			1,366.3			(1,365.7	)		(100.0	)%
General and administrative expense		4,123.1			1,893.5			2,229.6			117.8	%
Selling and distribution expense		10.7			100.5			(89.7	)		(89.3	)%
(Loss) income from operations		(4,133.2	)		(627.7	)		3,505.6			558.5	%
Interest income on bank deposit		0.0			0.7			(0.7	)		(97.9	)%
Other income (expenses)		38.9			(5,611.5	)		(5,103.7	)		(91.0	)%
Interest income from loans to third parties		365.0			2,191.6			(1,826.6	)		(83.3	)%
Impairment loss on loans to third parties and property and equipment		(5,346.0	)		(57,941.7	)		(53,142.4	)		(91.7	)%
(Loss) income before income taxes		(9,075.4	)		(61,988.5	)		(52,913.2	)		(85.4	)%
Income tax (benefit) expenses		-			7.2			(7.2	)		(100.4	)%
Net (loss) income	$	(9,075.4	)	$	(61,995.8	)	$	(52,920.4	)		(85.4	)%
Comprehensive loss (income)	$	(6,389.0	)	$	(62,361.0	)	$	(55,972.1	)		(89.8	)%

Revenue

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

	For the Year Ended December 31,										Variance
	2020		%			2019		%			Amount			%
Intermediary Bank Loan Services	$	-		-	%	$	417.3		30.5	%	$	(417.3	)		(100.0	)%
Factoring Service		0.6		100	%		949.1		69.5	%		(948. 5	)		(100.0	)%
Total Amount	$	0.6		100	%	$	1,366.4		100	%	$	(1,365.8	)		(100.0	)%

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:

	For the Year Ended December 31,										Variance
All Numbers (US$’000’s)	2020		%			2019		%			Amount			%
Sales tax and surcharges	$	-		-	%	$	0.1		100.0	%	$	(0.1	)		(100.0	)%
Total Amount	$	-		-	%	$	0.1		100	%	$	(0.1	)		(100	)%

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:

	For the Year Ended December 31,										Variance
All Numbers (US$’000’s)	2020		%			2019		%			Amount			%
General and administrative expenses	$	4,123.1		99.7	%	$	1,893.5		95.0	%	$	2,229.6			117.8	%
Selling and marketing expenses		10.7		0.3	%		100.5		5.0	%		(89.7	)		(89.3	)%
Total Amount	$	4,133.9		100	%	$	1,994.0		100	%	$	2,139.9	)		107.3	)%

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:

	For the Year Ended December 31,												Variance
All Numbers (US$’000’s)	2020			%			2019			%			Amount			%
Interest income on loans to third parties	$	365.0			(7.4	)%	$	2,191.6			(3.5	)%	$	(1,826.6	)		(83.3	)%
Interest income on bank deposits		0.0			(0.0	)%		0.7			(0.0	)%		(0.7	)		(97.9	)%
Other income (expenses)		38.9			10.3	%		(5,611.5	)		9.1	%		5,103.7			91.0	%
Impairment loss on loans to third parties and property and equipment		(5,346.0	)		97.1	%		(57,941.7	)		94.4	%		53,142.4			91.7	%
Total Amount	$	(4,942.1	)		100.0	%	$	(61,360.9	)		100.0	%	$	56,418.7			91.9	%

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.

All Numbers (US$’000’s)	Year ended December 31, 2020			Year ended December 31, 2019
Net cash (used in) provided by operating activities	$	(3,818.7	)	$	(1,071.4	)
Net cash used in investing activities		(108.1	)		(200.0	)
Net cash (used in) provided by financing activities		4,278.0			(31.2	)
Effect of exchange rate change on cash and cash equivalents		2,909.5			(262.7	)
Net (decrease) increase in cash and cash equivalents		3,260.7			(1,565.3	)
Cash and cash equivalents, beginning balance		13.6			1,578.8
Cash and cash equivalents, ending balance	$	3,274.3		$	13.6

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:

All Numbers (US$’000’s)	Office Rental

Year ending December 31,
2020		34.0
Total	$	34.0

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)

	For year ended												For year ended
	Dec 31 2021			Dec 31 2020			Inc/(Dec)			%			Dec 31 2020			Dec 31 2019			Inc/(Dec)			%
Revenue
Revenue		21,474			9,206			12,268			133.3	%		9,206			4,180			5,026			120.2	%
Cost and Expense
Cost of revenue (exclusive of depreciation shown separately below)		19,559			8,412			11,147			132.5	%		8,412			3,849			4,563			118.6	%

Compensation and employee benefits		3,712			2,212			1,500			67.8	%		2,212			1,559			653			41.9	%
General and administrative		2,618			2,737			(119	)		-4.3	%		2,737			1,047			1,690			161.3	%
Sales and marketing		92			24			68			283.0	%		24			131			(107	)		-81.9	%
Depreciation and amortization		302			531			(229	)		-43.1	%		531			660			(129	)		-19.5	%
Total cost and expenses		26,283			13,916			12,367			88.9	%		13,916			7,246			6,670			92.1	%

Operating loss		(4,809	)		(4,710	)		(99	)		2.1	%		(4,710	)		(3,066	)		(1,644	)		53.6	%

Other income and (expenses)
Interest expense, net		(1,136	)		(334	)		(802	)		240.0	%		(334	)		(429	)		95			-22.0	%

Other income and (expenses)		(2,216	)		(785	)		(1,431	)		182.3	%		(785	)		-			(785	)		n/a
Total other income (expense)		(3,352	)		(1,119	)		(2,233	)		199.5	%		(1,119	)		(429	)		(690	)		161.0	%

Loss before income taxes		(8,161	)		(5,829	)		(2,332	)		40.0	%		(5,829	)		(3,495	)		(2,334	)		66.8	%

Income tax expense		40			23			17			73.9	%		23			10			13			130.0	%

Net loss		(8,201	)		(5,852	)		(2,349	)		40.1	%		(5,852	)		(3,505	)		(2,347	)		67.0	%

Change in redemption value of preferred stock		-			(913	)		913			100.0	%		(913	)		-			(913	)		n/a
Net loss attributable to common stock holders		(8,201	)		(6,765	)		(1,436	)		21.2	%		(6,765	)		(3,505	)		(3,260	)		93.0	%
Foreign translation adjustment		(50	)		2			(52	)		-2,600	%		2			(2	)		4			-200	%
Comprehensive Income (Loss)		(8,251	)		(5,850	)		(2,401	)		41.0	%		(5,850	)		(3,507	)		(2,343	)		66.8	%

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:

	Years Ended December 31,
	2021			2020			2019
Net cash used in operating activities		(5,930	)		(3,413	)		(2,328	)
Net cash used in investing activities		(470	)		(228	)		(414	)
Net cash provided by financing activities		6,833			6,092			2,326
Net effect of exchange rates on cash		(47	)		(1	)		(1	)
Net increase (decrease) in cash and cash equivalents		386			2,450			(417	)

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:

	●	non-cash operating items such as depreciation and amortization, stock-based compensation and other non-cash income or expenses;

	●	changes in operating assets and liabilities reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations as well as any losses from extinguishment of debt or changes in value of preferred stock.

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.

Cash flows used in Investing Activities

For the year ended December 31, 2021, net cash used in investing activities was $470. The cash flow used was driven by investment in software development and purchases of equipment.

For the year ended December 31, 2020, net cash used in investing activities was $228. The cash flow used was driven by investment in software development.

For the year ended December 31, 2019, net cash used in investing activities was $414. The cash flow used was driven by investment in software development.

Cash flows provided by Financing Activities

For the year ended December 31, 2021, net cash provided by financing activities was $6,833. The cash flow provided was driven primarily by proceeds from convertible notes of $3,609, proceeds from notes payable of $2,620, a net draw on borrowing facilities for $432 and proceeds from the exercise of warrants for $191.

For the year ended December 31, 2020, net cash provided by financing activities was $6,092. The cash flow provided was driven primarily proceeds from convertible notes of $4,866, a net repayment on borrowing facilities for $672, proceeds from the exercise of warrants for $439, and proceeds from a PPP loan of $115.

For the year ended December 31, 2019, net cash provided by financing activities was $2,326. The cash flow provided was driven primarily proceeds from convertible notes of $2,050, a net draw on borrowing facilities for $270.

PRIVATE PLACEMENTS

Securities Issued in Merger	Issued at Merger			Underlying Ordinary Shares
Ordinary Shares		5,670,842			5,670,842
A2 Preferred Shares		2,781,592			2,781,592
A1A Preferred Shares		9,841,804			9,841,804
Series Seed Preferred Shares		15,445			15,445
Series B Preferred Shares		16,257,671			16,257,671
Series A4 Preferred Shares		1,251,647			1,251,647
Ordinary Shares Warrant		11,480			11,480
Series Seed Warrant		9,164			9,164
Equity Awards for Ordinary Shares		4,308,231	*		4,308,231	*
Total Issued in Merger		40,147,876			40,147,876

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

Securities Purchase Agreement

Registration Rights Agreement

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

(i) Series A Preferred Shares

	●	Series A1-A: $1.40 (using a stated value, post reverse split, of $2.086)
	●	Series A2: $1.40 (using a stated value, post reverse split, of $3.122)

(ii) Series B Preferred Shares

(iii) Warrants

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

	●	The anti-dilution provision shall be deleted.
	●	The cashless exercise formula shall be amended so that upon a cashless exercise of the applicable Warrant, 0.779 Company’s ordinary share will be issued for each Series A Warrant, 0.816 ordinary share shall be issued for each Series B Warrant, 0.888 ordinary share shall be issued for each Series C Warrant and 0.826 ordinary share shall be issued for each Series D Warrant.

(iv) Registration Rights Agreement

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:

●

The Registrable Securities in the Revised Registration Rights Agreement shall be expanded to include the Ordinary Shares underlying the Series A-4 Preferred Shares issued pursuant to the aforementioned July 12, 2022 Securities Purchase Agreement;

●

The “Effectiveness Date” has been redefined, with respect to the Initial Registration Statement required to be filed under the Registration Rights Agreement, the 60th calendar day following the Filing Date (or, in the event the Commission notifies the Company that it will “review” the Registration Statement, the 120th calendar day following the Filing Date) and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the 90th calendar day following the date on which an additional Registration Statement is required to be filed hereunder; provided, however, if such Effectiveness Date falls on a day that is not a Business Day, then the Effectiveness Date shall be the next succeeding business day; provided, further, that if the Commission is closed for operations due to a government shutdown, the Effectiveness Date shall be extended by the same amount of days that the Commission remains closed for operations;

●

The partial liquidated damages in Section 2(d) has been amended downward to be a product of 0.1% multiplied by the aggregate subscription amount.

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.

BUSINESS

Our History and Corporate Structure

We were established as “China Internet Nationwide Financial Services Inc.”, a holding company incorporated under the laws of British Virgin Islands on September 28, 2015. On October 7, 2015, we incorporated Hongkong Internet Financial Services Limited (“HKIFS”) in Hong Kong SAR. HKIFS, in turn, incorporated Beijing Yingxin Yijia Network Technology Co., Ltd (“BYYNT”) in the People’s Republic of China with a registered capital of RMB1,000,000 (approximately $150,375.94) on December 31, 2015. BYYNT entered into a series of contractual agreements (the “PRC VIE Agreements”) with Sheng Ying Xin (Beijing) Management Consulting Co., Ltd (“Sheng Ying Xin” or “SYX”), a company incorporated in the People’s Republic of China on September 16, 2014.

On September 2, 2019, Hongkong Shengqi Technology Limited (“HKSQ” or “HKSQ VIE”) became a shareholder of BYYNT. HKSQ was incorporated in Hong Kong on August 29, 2019. On September 26, 2019, a series of agreements were entered into among HKIFS, HKSQ and its shareholder (the “HKSQ VIE Agreements”). As a result of the HKSQ VIE Agreements, HKIFS become the primary beneficiary of HKSQ.

Similar to the HKSQ VIE Agreements, the PRC VIE Agreements essentially conferred control and management as well as the economic benefits of Sheng Ying Xin onto BYYNT. In spite of the shareholder change in BYYNT, we were able to retain full control and management over Sheng Ying Xin and were still entitled to substantially all of the economic benefits of BYYNT through the HKSQ VIE Agreements.

Accordingly, the results of operations, assets and liabilities of BYYNT and Sheng Ying Xin have been included in the accompanying consolidated financial statements. Because we are a holding company that managed Sheng Ying Xin though a series of contractual arrangements, our consolidated financial statements are essentially those of BYYNT’s and Sheng Ying Xin’s as we are conferred their economic benefits.

Through Sheng Ying Xin and its subsidiaries, we provided almost all our financial advisory services in the People’s Republic of China.

On July 28, 2017, we announced the pricing and closing of our initial public offering (“IPO”) of 2,023,146 of our ordinary shares at a price to the public of $10.00 per share for a total of $20,231,460 before underwriting discounts and commissions and offering expenses. Our shares began trading on NASDAQ Global Market on August 8, 2017 under the symbol “CIFS.”

After several years of decline in our financial advisory business in the People’s Republic of China, the board of directors of the Company (the “Board”), together with management began to consider various long- and short-term strategic options to strengthen our business and enhance stockholder value. Strategic options that have been considered included strategic alliances, mergers and acquisitions, divestitures, other business combinations, and delisting from Nasdaq, as well as continuing operations as an independent company. As a result of the continued deterioration of the Company’s share price and erosion of stockholder value, the Board determined that it was critical to pursue a strategic option in the near-term.

In keeping with our plan to diversity our operations, rebrand ourselves and seek new strategic options, not only were our Board members and management completely changed but 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.

The Board considered multiple potential merger candidates before identifying Fr8App as the most able to complete a merger and best potential value for its stockholders. Pursuant to such determination, we entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”) on October 10, 2020 with Hudson Capital Merger Sub I, Inc., our Delaware wholly-owned subsidiary (“Merger Sub I”), Hudson Capital Merger Sub II, Inc., a Delaware subsidiary of Merger Sub I (“Merger Sub II”), Fr8App and ATW Master Fund II, L.P., as the representative of the stockholders of Fr8App (the “Stockholders’ Representative”).

This Merger Agreement was terminated on December 13, 2021 after the Board determined it was in our best interest to change strategies. In its stead, a new merger agreement was entered into between, us, Merger Sub I, Fr8App and the Stockholders’ Representative on December 13, 2021 (the “New Merger Agreement”). 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 New Merger Agreement, Merger Sub I merged with and into Fr8App, with Fr 8App 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 I 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 Fr 8App.

Securities Issued in Merger	Issued at Merger			Underlying Ordinary Shares
Ordinary Shares		5,670,842			5,670,842
A2 Preferred Shares		2,781,592			2,781,592
A1A Preferred Shares		9,841,804			9,841,804
Series Seed Preferred Shares		15,445			15,445
Series B Preferred Shares		16,257,671			16,257,671
Series A4 Preferred Shares		1,251,647			1,251,647
Ordinary Shares Warrant		11,480			11,480
Series Seed Warrant		9,164			9,164
Equity Awards for Ordinary Shares		4,308,231	*		4,308,231	*
Total Issued in Merger		40,147,876			40,147,876

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

Also, in connection with the Merger, the Company’s Board accepted the resignations from the Board of Warren Wang, Hon Man Yun, Ming Yi (Martin), Hong Chen and Xiaoyue Zhang, and from the position of the Chief Executive Officer and Chief Financial Officer of Warren Wang and Hon Man Yun, respectively, effective upon closing of the Merger. Messrs. Javier Selgas, Nicholas H. Adler, William Samuels, and Marc Urbach were appointed new directors of the Board. Each of the following executives was appointed to the respective office set opposite to his/her name:

Javier Selgas – Chief Executive Officer

Mike Flinker - President

Luisa Irene Lopez Reyes – Chief Operating Officer

Paul Freudenthaler – Secretary and Chief Financial Officer

On October 26, 2020, we filed Amended and Restated Memorandum and Articles of Association with the Registrar of Corporate Affairs of the British Virgins Islands (the “BVI”) to effect a 5-for-1 reverse stock split of the Company’s ordinary shares. On February 14, 2022, we effected another 2.2:1 reverse split of our ordinary shares and our ordinary shares began trading on a split adjusted basis on February 15, 2022.

On March 25, 2022, we dissolved Merger Sub II and Hudson Capital Holding Co., Ltd. On March 30, 2022, we sold HKIFS in its entirety to a private investor. The divestment of HKIFS was effected through the sale of the entirety of the equity interest in HKIFS. As of the divestment date, there are no remaining or contingent obligations or benefits from HKIFS. On May 26, 2022 the Company changed its name from Hudson Capital, Inc., to Freight Technologies, Inc.

With the divestment of HKIFS, we are no longer involved in the financial advisory business in the People’s Republic of China nor do we maintain any operations, personnel, assets, or corporate presence of any type in Asia. We are now, through Fr8App, operating a North American transportation logistics technology platform, focusing on truckload freight for domestic and cross-border markets in Mexico, the US and Canada. Fr8App uses its proprietary technology platform to connect carriers and shippers and significantly improve matching and operation efficiency via innovative technologies such as live pricing and real-time tracking, digital freight marketplace, broker, transportation management, fleet management, and committed capacity solutions. Below is a diagrammatic representation of our present corporate structure:

Business Overview

Freight App, Inc. (formerly known as “Freight Hub, Inc.” and hereinafter referred to as “Fr8App”) was incorporated in 2015 as a Delaware corporation. It was founded with a view to developing and bringing solutions to the relatively unorganized cross-border commercial freight market on the U.S.-Mexico border, and by extension, the U.S.-Canada border. In January 2019, Freight Hub México, S.A De C.V., a wholly-owned subsidiary of Fr8App was formed. In December 2021, Freight Hub Mexico, S.A De C.V. changed its name to Freight App de México, S.A De C.V. (“Freight App Mexico”). As a result of the Merger, on February 14, 2022, Fr8App became our wholly-owned subsidiary. 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.

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 and customer service, ramping up at the end of 2019 and fully launched during the second quarter of 2020. The latest generation of Fr8App products were brought to market during the second quarter of 2020 and a new management team was hired during the third quarter of 2020 to bring a renewed focus to promoting freight services to Shippers (defined below) and Carriers (defined below). Fr8Data and Fr8Radar are product features that are further described below and that play an integral role in Fr8App’s product offerings. During 2021, Fr8App launched the broker portal, an electronic feature to address reporting obligations to Mexican authorities called “Carta Porte”, an internal pricing tool, automated onboarding and a number of EDI Integrations with Shippers and API integrations with third-parties. Towards the end of 2021, Fr8App introduced its private fleet product, Fr8Fleet.

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. 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.

Fr8App’s Portal is the system’s front-end, a tool that Fr8App’s customers and providers use to summarize data on the Fr8App Platform such that it is in a usable form from a business perspective. This data is accessed online on a computer via a browser, or through a mobile App located on a smart telephone. Once customers and providers (“Shippers” and “Carriers”) gain access to the Platform they can enter into transactions such as booking a load and administering the manner in which that load will be managed, and reviewing summary information on display within the Platform. Below are two screen-shots from the Portal for illustrative purposes:

Fr8App’s Platform

Fr8App’s Platform contains the primary operating system. It is a digital business to business (“B2B”) marketplace that facilitates real-time booking of freight transactions at the Shipper and Carrier level. The matching of Shipper requirements and Carrier capacities can occur on the Platform automatically, without the need for human intervention. A Fr8App Platform user can be very involved in the process and actively control its shipment activities by inputting Shipper requirements and matching those with Carrier offerings and tracking shipments as they leave their point of origin and arrive at their ultimate destination, i.e., managing his or her company’s logistics. Among other things, Fr8App’s Platform can provide a system user with a summary of all its freight activities through a combination of reports or visual displays on its screen. A system user can track the status of a given delivery on a visual display of the map with status updates on the load location and status from the moment the shipment leaves its origin through to its final destination. A system user can also set up routes that are physically different from one that the Platform might recommend if that system user has a preference for a given route over another, perhaps because of altitude or temperature differences on competing routes.

Shippers can use Fr8App’s Platform to post their freight needs, find available Carriers, enter into a freight contract with them, and monitor the transported goods while their shipment is in transit. Carriers can use Fr8App’s Platform (through the Portal or mobile App), to accept shipment requests, assign transportation jobs to available truck drivers instantaneously, or make themselves available on routes or route segments to avoid driving “dead” or empty trucks from one location to another. Carriers can receive notifications every time a load or job request is entered by a Shipper that matches the criteria they are looking for on a given shipment type and shipment lane. Every time there is a match and a Carrier hauls a load, the Platform’s algorithm takes this into account and creates a history that can be referred to when attempting to fulfill future Shipper requests. Fr8App’s mobile App gives Carriers full visibility on all of their shipping options and helps them eliminate empty miles on the road, leading to a reduction in operating costs. Its specialized technology is designed to enhance supply chain visibility and operations, helping reduce Carrier’s carbon footprint and improving profitability and environmental sustainability.

Fr8App’s API

Fr8App’s Platform has a public application programming interface (“API”), that is accessible free of charge and has the ability to automate the matching of Shippers requirements (commercial freight demand) with Carrier capacities (commercial freight supply). An API is an interphase consisting of a series of computer instructions that allow one type of system to interact with another separate system by taking information from one system and making it legible and usable by another. It can be compared to something like a translator that takes instructions in English and translates them into Spanish so that users on both sides of the translation can work with the underlying instructions. In Fr8App’s service offering context, an API allows one of our customer’s freight tracking systems to provide information to Fr8App’s Platform and for our Platform to provide information to our customer’s system using a data structure or language that is legible by that customer’s computer system. An API is a tool allowing Fr8App to have a number of different customers and providers, each with different operating systems, to interact with and use Fr8App’s Platform.

Fr8App’s Mobile App, FMS, TMS

Users can access the Platform through an internet browser on a computer or through the mobile App in a smartphone, using the same credentials.

Fr8App also offers a cloud-based TMS solution to maximize the efficiency of a Shipper’s transportation operations. TMS can be used by either a Shipper or a Carrier as its key logistics tool, independent of using Fr8App’s Platform or Portal solutions. TMS can help Shippers and/or Carriers manage their fleet as well as post requests for freight services on its Platform. The cloud-based TMS solution is available to Shippers wanting to actively manage their supporting Carriers or their own fleet of trucks. Fr8App also gives a TMS solution user the option to source additional freight capacity or offer its over-capacity on the Fr8App Platform. Fr8FMS (Fr8App´s “FMS”) allows transportation companies and owner operators to handle their own fleet reducing their operational costs, and enables them to haul loads from Shippers in the platform´s marketplace.

Fr8Radar

Fr8Radar is a product feature that provides Shippers and Carriers track and trace visibility, via Fr8App´s mobile solution, or through the integrations with other third-party GPS providers or other technology companies providing track and trace solutions for the industry. Track and trace visibility through Fr8Radar allows Shippers to follow their freight operations in real time, using just one system, and not one for each GPS provider. Fr8Radar also enables low tech Carriers to provide real time position of each load to their customers.

Fr8Data

Fr8Data is the group of tools and reports developed to show Shippers and Carriers real time dashboards with all the detailed information of their shipments in real time, to increase control and make better business decisions. Fr8Data enables the analysis of historical data to find better matching between Shippers and Carriers and better pricing calculations, based on real data saved in Fr8App´s platform. Fr8Data consists of set of tools and analysis methodologies intended to be used for improvement a system user – be they a Shipper, a Carrier or Fr8App itself.

Fr8App’s Brokerage Support and Customer Service

Finally, Fr8App offers customers freight brokerage support and customer service based on using the Platform for fulfillment. The brokerage and customer services offered are based on using the Platform to book freight to meet a Shipper’s needs and fulfills those needs with Carriers that have already been onboarded on the Platform. It facilitates full usage of the Platform’s utility and it is aided by experienced users of the system and Fr8App’s in-house of experts. In late 2021, we also introduced Fr8Fleet, a private fleet management product whereby large corporate shippers are allowed to purchase fleet capacity over a period of time, say a month, in exchange for a fixed fee. Fr8App’s customer service group works with such clients to secure carrier capacity to fulfill their freight needs over a given period of time.

Industry Overview and Market Trend

According to the Statista, the U.S. domestic truck freight transportation market, in 2021, was approximately $732 billion in size. Over the same period, the Mexican domestic freight market was estimated at approximately $45 billion. In 2021, the cross-border U.S.-Mexico freight transportation market grew to $461 billion while Mexico’s trade with the U.S. grew at an annual compound growth rate of approximately 7.5% between 2011 and 2021. Fr8App expects the market to continue growing at rates at least equal to historic rates.

A primary contributor to the growth in the North American cross-border freight transportation markets has been the increased level of trade between the U.S., Mexico and Canada. Effective July 1, 2020, the three countries signed a new free trade deal the United States, Mexico, Canada Agreement (“USMCA”), replacing the North American Free Trade Agreement (“NAFTA”) enacted on January 1, 1994. As of 2019, Mexico became the U.S.’s largest single trading partner. According to the United Nations, Mexico exported an extra $3.5 billion of goods into the U.S., in the first half of 2019, since the summer of 2018 when the trade war between the U.S. and China began. Fr8App believes the replacement of NAFTA with the USMCA creates a stable environment attractive to multi-national companies considering Mexico as a market from which to export to both the United States and Canada.

In early 2020, U.S. President Donald Trump used trade policy in a manner that displaced global supply chains across industries and around the world. With global supply chains in disarray and no foreseeable end to the COVID-19 pandemic, Fr8App believes Mexico is a logical location for U.S. companies considering options to diversify away from the geopolitical risks associated with the ongoing U.S.-China trade tension. The approval of the USMCA in combination with new perspectives as related to national security implications of foreign-based supply chains may bring about changes in Mexico’s freight market, in terms of globalization or regionalization and logistics integration, as well as, the role of 3PL operators. Fr8App believes this supply chain volatility is driving an increase in demand for large and small freight brokers to secure more abundant freight capacity, in real-time, which is readily available on Fr8App’s digital marketplace and facilitated by its Portal and Platform solutions. Fr8App believes this supply chain volatility is aggravated by a shortage of drivers thereby creating further pressure on the need for a more comprehensive approach to logistics management, with the view to meeting supply chain requirements while attempting to minimize increases in the related freight costs. Fr8App acts as an intermediary between the total system’s freight requirements and the related freight demand in a more efficient manner than if various of the parties requiring freight contracted these services on their own or managed their own proprietary fleets. Fr8App believes that its ability to secure available freight capacity, using the Portal and Platform solutions, amongst available truck drivers offers customers an organized, efficient solution to transporting goods domestically and internationally in favorable or unfavorable market environments. Additionally, Fr8App believes it is well positioned to benefit from the increasing trade across both the U.S.-Mexico and the U.S.-Canada borders caused by supply chain volatility and magnified by the COVID-19 pandemic.

Fr8App believes that traditional 3PLs rely on a network of offices staffed with individuals tasked with communicating with colleagues, customers and transportation companies to identify and secure freight services that meet their customers’ specific needs. The process is manual, inefficient, and lacks transparency. Cross-border transportation challenges can include tracking, visibility, multiple hand-offs (where applicable), and international customs and regulatory inefficiencies. The ability to access real-time freight capacity and locate the right truck at the right time becomes critical to securing a reliable shipment service. Fr8App believes market conditions have created an increased demand for digital freight brokers who can help ease capacity constraints, open up new shipping lanes, and provide a benchmarking tool for both Shippers and Carriers.

Important Factors of the Trucking Industry

According to an October 2020 article titled, “Trends Transforming the Trucking Industry Outlook in 2021” published by Linchpin, below are the factors affecting the outlook for the U.S. trucking industry:

	●	Highest GDP contribution– The U.S. currently stands at the number one spot when it comes to GDP contribution from the trucking industry.
	●	Job percentage – more than 5.8% of jobs in the U.S. are related to the trucking industry.
	●	Total freight carried – Trucks carried approximately 10.8 billion tons of goods across the country each year.
	●	Top commodities traded between the U.S. and Mexico – computers and parts ($151 billion), electrical machinery ($124 billion), motor vehicles and parts ($120 billion).
	●	Preferred form of transportation – almost 70% of the goods transported in the U.S. are carried around by trucks from state to state.
	●	Grocery store dependence – grocery stores are highly dependent on truck drivers to carry supplies to multiple locations. Most grocery stores would run out of transportation options within three days if truck drivers halted grocery deliveries.
	●	Truck driver shortage – experts believe that the trucking industry needs to hire at least 900,000 more drivers to meet the growing demand.
	●	Miles per year – on average, a truck driver logged in more than 100,000 miles over the past year.

Market Opportunity

The Fr8App Solution

Fr8App’s Platform provides visibility on freight transportation options not readily apparent with traditional 3PL solutions. The Platform allows Shippers and Carriers to book loads at the palm of their hands and assign jobs to drivers, in real-time, with the click of a button. Shippers and Carriers register on the Platform and are approved to transact after undergoing a rigorous vetting process.

The vetting process for Shippers includes the following:

	●	Mexico Beneficial Cargo Owner (BCO) or Broker (3PL): Articles Incorporation charter, tax registration number, legal representative power of attorney, legal representative ID, banking information, address receipt, fiscal situation document, fiscal obligations opinion document (updated), Fr8App credit form
	●	For US or Canada Client (BCO): W-9 form for US, TD1 form for Canada, Fr8App credit form
	●	For US or Canada Broker (3PL): W-9 form for US, TD1 form for Canada, Fr8App credit form, insurance and bond certificates, license and authority number of broker

Fr8App collections group performs a credit report analysis which includes a due diligence of the customer credit record, revenues of the customer for the latest 5 years, industry in which client operates, review of current insurance coverage, and payment terms negotiated. Fr8App has had immaterial bad debt expense in the past several years.

The vetting process for Carriers includes the following:

●

A due diligence review is performed to ensure that carriers are following regulatory compliance, whether they are a line or base haul carrier, which routes they operate, truck types, cargo they are eligible to transport, reliability and availability. Depending on location, the document set-up requirements are as follows:

	■	Mexico: Articles Incorporation charter, tax registration number, Servicio de Administración Tributaria (“SAT” is the Mexican equivalent to the IRS in US) legal opinion, legal representative power of attorney, legal representative ID, Standard Carrier Alpha Code (“SCAC”), banking information, insurance policy, ACH format, security questionnaire, verified mobile phone,

	■	US and Canada: W-9 form for US, TD1 for Canada, MC Certification (Insurance certificate), ACH Form

	■	Once approved, Shippers can request bids for a certain service or Carriers can provide bids on Shipper requests. Fr8App’s Platform matches up Shippers and Carriers and assigns a driver and truck to the job. The driver picks up the supplies while the Platform tracks the progress of the trip, in real time. The driver delivers the shipment, uploads documentary evidence of the delivery (“POD”) and is paid.

Fr8App’s Platform automatically matches Shippers with Carriers within the Fr8App network, instantaneously. Carriers are sent push notifications through the Platform every time a load or job request is entered by a Shipper that matches the criteria Carriers are looking for on a given shipment and lane.

By leveraging its technology, the increasing usage, and amount of traffic booked on its Platform, Fr8App can work with customers to optimize their supply chain, eliminate empty miles on the road, and reduce their carbon footprint. A transformation in the logistics transportation industry is taking place. With its proprietary software, Fr8App offers smart solutions that create sustainable alternatives and offer benefits to both Shippers and Carriers, including:

	●	a single point of contact as a control center
	●	full visibility to freight transportation, in real-time
	●	ability to book shipment loads in minutes
	●	matching with only pre-approved Carrier compliance
	●	live 24/7 tracking on shipment while in-transit
	●	real-time messaging capabilities with Carriers
	●	advanced data analytics
	●	ability to secure quality loads faster on preferred routes
	●	ability to reduce “deadhead” empty loads
	●	convenient and faster payment
	●	scalable technology for Carriers who plan to grow their fleet

Fr8App’s Customers

Fr8App’s customers consist of Shippers and Carriers across North America. A Shipper will use Fr8App’s Platform to request bids on a shipment or a series of shipments of certain characteristics and a Carrier will agree to the terms set forth on its Platform. Carriers have the option to carry out deliveries prior to receiving payment from Fr8App, and Shippers may start shipments before submitting their payment to Fr8App. Fr8App mitigates payment risks by pre-screening and approving all Shippers and Carriers prior to approving either party. Fr8App believes that Shippers value the features and benefits from its Platform by working with trusted Carriers that help alleviate driver shortages. Shippers also benefit from the cost transparency available on Fr8App’s Platform as there are no hidden fees. Shippers can count on the safety and reliability of the Platform as Fr8App tracks cross border shipments. Lastly, Shippers can benefit by managing their logistics needs in one control center, all on Fr8App’s Platform.

For the year ended December 31, 2021, each of two customers accounted for 35% and 15% of Fr8App’s accounts receivable, and for the year ended December 31, 2020, each of three customers accounted for 11%, 12% and 13% of its accounts receivable. For the year ended December 31, 2021, one customer accounted for 37% of Fr8App’s revenues. For the year ended December 31, 2020, one customer accounted for 13% of the Company’s revenues.

Fr8App believes Carriers value its ability to assist in minimizing empty (deadhead) miles and making every mile, a mile paid for. Carriers also benefit from the Platform’s transparency and know how much they are scheduled to make from fulfilling each job. Carriers receive faster payment for their services by using Fr8App’s Platform and avoid potentially expensive factoring companies. Lastly, Carriers can benefit from Fr8App’s Platform by using it as a tool to streamline workflows and increase overall efficiency.

Fr8App’s Growth Strategy

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 pickup 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.

Focusing On Automation

	●	Go Digital: Fr8App believes that by providing more sophisticated automation to the relatively untapped digital commercial freight market in Mexico, and expanding upon initial efforts in the U.S. and Canada, it will strengthen its position within the domestic transportation segments in Mexico and the U.S. and grow its revenue stream. By leveraging existing relationships with Shippers, Fr8App will train Carriers utilizing the Platform to improve operations and gain more transportation loads. Fr8App plans to introduce “native onboarding” through API integration with relationship management integration software coupled with building out of internal tools and capabilities. Fr8App would like Shippers and Carriers to work toward making its Platform totally “self-serve” where Carriers and Shippers gain access to the Platform without human intervention. Its goal is to automate sales and operations functionality throughout the process while providing real-time visibility for all parties; – Shippers, Carriers and Fr8App.

	●	*Be digital*: Fr8App intends to continue refining and automating its operational flow and maximize efficiencies while thoughtfully growing its brokerage division. Fr8App is investing in adding development efforts to expand its technology team and to work towards building out more internal tools to maximize efficiency in its brokerage division such as real-time pricing tools by coupling historical lane data analytics with API integration as well as other unique internal data sets.

Balancing Contractual and Spot Business

Primary markets are markets with established regular routes that are contracted for over a period of time. and spot markets are negotiated at a specific point in time and, usually in response to some form of short-term overage that was not originally planned by a Carrier. Fr8App understands the importance of balancing its efforts and business between primary and spot markets. As Fr8App moves forward advances in serving the domestic with Mexico domestic and U.S.-Mexico cross-border markets opportunities, Fr8App will try to leverage spot opportunities presented by different global situations, such as high market volatility as a result of COVID-19, the trade wars, and other macroeconomic factors creating a shortage of supply and surplus in demand. As the market stabilizes, Fr8App will increasingly try to target higher volume, long-term contractual business directly from Shippers.

Research and Development

The latest generation of Fr8App products were brought to market during the second quarter of 2020 and consist of (1) the online Portal and Mobile App by itself, (2) the TMS, and (3) Fr8App’s Platform supplemented with freight brokerage support and customer service.

All products work under the same business model whereby revenues are generated as a percentage of commission per transaction. Each one of the shipments that are made through the Platform (Portal or App) are considered a transaction. The difference between the products resides in the degree of active assistance provided by Fr8App in the operation of the Platform itself. If the system user operates with the Platform without assistance, the interaction between Shipper and Carrier offerings is automatically carried out on the system with a fixed commission representing Fr8App’s revenues. If the Platform is supplemented with freight brokerage support and customer service, then the Fr8App team’s active intervention is required through the Platform’s BackOffice, thus allowing more flexibility to the parties involved to negotiate and agree on rates. Currently, Fr8App’s offering of using its Platform supplemented with freight brokerage support and customer service accounts for 100% of Fr8App’s revenue. Fr8App believes the industry is still anchored in communication through traditional channels (phone or email), and human attention is valued in the management of shipments.

Fr8App’s BackOffice

However, for traditional brokers, the Fr8App Platform is a solution to try to get capacity to their clients, quickly, when they have not achieved it through their traditional channels and methods. We anticipate that brokers will use the Portal to help augment their present offerings in the freight market over time and thereby providing Fr8App with an additional source of revenue.

Fr8App’s systems development team works in a development environment that is based on Scrum methodology. This methodology allows it to deliver new functionalities as frequently as it designs, which is presently every two weeks. By applying concepts such as Continuous Integration and Continuous Delivery (“CI/CD”), Fr8App believes its development process is highly robust. Following is a visual depiction of the Scrum Methodology:

Its technology has been designed with the goals of building a highly efficient, adaptable, scalable and secure platform with the potential to vastly improve operating margins of freight transactions. Following are some of the features of Fr8App’s technology infrastructure and development methodologies:

	1.	Efficiency & Adaptability:

	a.	Highly automated agile development process supported by CI and CD tools.
	b.	Event based, microservice architecture.
	c.	Applications packaged in Docker images.
	d.	Container orchestration via Kubernetes leveraging automated rollouts and rollbacks, service discovery and load balancing.
	e.	Modern, extendable, API suited for integration with industry data providers (TMS, telematics, ELD, Compliance, Big Data providers and other systems).

	2.	Scalability & High-availability:

	a.	Project hosted in GoogleCloudPlatform.
	b.	Underlying platform invented in telco industry, designed for scale with minimal downtime.
	c.	Erlang’s (via Elixir) let-it-crash philosophy, reducing codebase and allowing smaller teams to produce more.
	d.	CQRS design pattern used throughout the system, separation between read & write storage.
	e.	Easy horizontal scaling via Kubernetes.
	f.	EventStore as a framework for CQRS, EventsFr8App’scing, and messaging.
	g.	Postgresql hosted in Aiven.

	3.	Security & Auditability:

	a.	No information is lost, all transactions are stored in immutable storage. Fr8App can go back in time and reinterpret the data from the beginning of time with the new knowledge it is acquiring.
	b.	System is being monitored by automated monitoring tools (Stackdriver, Prometheus) and is alerting the engineering team via Slack integration. Grafana is used to visualize system parameters in real-time. All API traffic is stored in BigQuery for deep analysis of system’s usage.
	c.	Using highest industry available encryption standards.
	d.	All information is encrypted on the go, https & wss.
	e.	Personally identifiable information is encrypted in rest as well.
	f.	Strict data and code access policies applied to product, and to development process.
	g.	Full snapshot, i.e. base backup of Postgresql.
	h.	Postgresql streaming backup, i.e. WAL records.
	i.	Entire instances backed up.
	j.	Access to multiple data centers in different geographic zones

Fr8App is developing and plans to develop reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining, predictive analytics, and prescriptive analytics. All these enhanced functionalities will increase the utility and add value to any user of its Platform and in turn, help drive traffic to the Platform itself.

Sales and Marketing

Fr8App targets its product offerings to high volume contractual lanes from direct small and mid-market Shippers with $1 to $200 million in annual revenue. Fr8App builds Carrier density with high volume consistent business from Shippers and builds buying power as it continues to attract more Carriers to use the Platform. Fr8App is establishing creative marketing campaigns in the Mexico domestic market to reinforce the benefits of using its Platform and Portal, and to increase adoption of its technology and solution.

Fr8App has recruited a proven industry executive, Mike Flinker as its President. Mike brings with him over 40 years of industry experience to lead Fr8App’s sales and business development efforts. Fr8App’s Chief Executive Officer, Javier Selgas, initially joined Fr8App as Chief Technology Officer and has over a dozen years of experience in developing technology and digital marketing. Fr8App’s Chief Financial Officer and Secretary, Paul Freudenthaler, has over 30 years of financial experience and has been Chief Financial Officer for several leading companies in both the U.S. and Mexico. Fr8App’s Chief Operating Officer has over 25 years of experience within the logistics and supply chain industry across North America. As of March 30, 2022, Fr8App has a total of 82 benefits-eligible employees and 10 contract-based employees. Fr8App believes that by positioning and growing its cross-cultural human capabilities, interacting at a local level with Shippers and Carriers and by providing international knowledge and expertise, Fr8App will execute best practices in a smart and accelerated fashion and help build the trust among its customers and employees and strengthen its operations ecosystem.

Regulations

The Carriers with which Fr8App transacts its business, are usually legal corporate entities, LLC’s, or their equivalents, in Mexico and Canada. Fr8App enters into contracts for the provision of services with Shippers and Carriers while the Shippers and Carriers are typically subject to rules and regulations for operating within their given industry and, as applicable, the freight industry within their respective countries of operation. Carriers are responsible for being duly certified and operating under good standing as required by their corporate residence and the locations over which they carry freight. For US carriers, the main regulator is the US Department of Transportation (“DOT”) and various state level equivalents. For Mexico Carriers, the relevant counterparty is the “Secretaria de Transporte” and in Canada it is “Canadian Transportation Agency”. Of note is that nearly the entirety of regulatory compliance burden with Fr8App’s business footprint falls on the Carriers themselves. For example, Fr8App’s regulatory compliance in the U.S. is for the most part limited to remaining in good standing with the DOT. Meanwhile the US based Carriers Fr8App works with are also required to comply with the DOT but may also have additional requirements for maintaining a number of operating licenses, insurance requirements and special certifications (i.e., border-crossing).

Consequently, the cost to comply with government regulation for Fr8App is relatively low. Government regulations affecting the manner in which the truck freight industry operates, and more specifically on Fr8App, would likely impose a number of obligations on parties that secure Carrier freight services within the freight industry. Depending on the nature of the regulatory changes, Fr8App’s business model could be adversely affected. However, it is nearly impossible to attempt to identify all cases that would affect the Company’s business model. For example, a change in trade regulations could increase or decrease freight volumes across a given border but the Company’s business model may not be adversely affected. A disease in products such as lettuce could affect the segment of our business that works with lettuce producers shipping from Mexico into the US and Canada. A US policy to impose tariffs on foreign steel could decrease cross-border traffic but increase domestic freight traffic in the steel industry. In comparison, if regulations were decreased and border restriction removed or lessened, as it occurred in the European Union as border restrictions eased, the added-value that Fr8App provides to our customers by assisting them with the nuances of border-crossing freight could be eliminated and our business from that segment could be negatively affected.

While Fr8App does not anticipate any wide or far-reaching changes in regulations affecting our industry, they are not out of the question and they could affect Fr8App’s business model in a material way.

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 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. These may involve privacy, data protection and personal information, content, intellectual property, data security, retention and deletion. In particular it 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 it 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 data in its Platform. This presents legal challenges to its 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.

Competition

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 startups and other companies that combine technologies with crowdsourcing to focus on local market needs, some of whom may currently be its customers.

In Mexico, Fr8App competes with many logistics companies and freight brokers. Fr8App also buy from and sell transportation services to companies that compete with us. There are very few direct technology-based competitors that are focused on the domestic transportation market in Mexico.

In contrast, the domestic U.S. 3PL industry is crowded with globally recognized competitors, some of whom, offer transportation services as well as traditional 3PL services. Fr8App technology was developed in part to improve traditional 3PL solutions offered by established corporations such as XPS Logistics, Inc., C.H. Robinson Worldwide, Inc. and J.B. Hunt Transport Services, Inc. Traditional 3PL providers leverage their vast network of offices and employees to coordinate freight transportation domestically and internationally. Additionally, a wave of new entrants have entered the 3PL space with novel, real-time 3PL solutions; similar to Fr8App’s Portal and Platform. Companies such as Uber Freight LLC, Convoy, Inc. and NEXT Trucking, LLC have each accessed the 3PL market with the support of private financing to disrupt established 3PL corporations.

Furthermore, both established and emerging competitors have direct access to U.S.-Canadian cross border trade routes, where Fr8App intends to serve on an opportunistic basis as well. According to the U.S. Bureau of Transportation Statistics, a total of $343.0 billion worth of freight moved across the U.S.-Canada border in 2019.

In the future, 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.

Intellectual Property

Employees

As of June 30, 2022, we have a total of 86 employees, 73 of them are based in Mexico with the remaining in the U.S. and other virtual locations and 10 contract-based employees. None of its employees are represented by a labor union or covered by a collective bargaining agreement. Fr8App considers its relationship with its employees to be good. Fr8App has four principal executives including its CEO, COO, CEO and President. Fr8App has the following number of people including its executives in each of its departments: Finance and Administration – 12, Carrier Sales – 19, Shipper Sales 10, IT – 9, Operations – 33 and Support – 5. Relationships with employees are stable and favorable.

Facilities

Fr8App’s U.S. headquarters office is located at 2001 Timberloch Place, Suite 500, The Woodlands, Texas 77380, and its Mexican headquarters office is in Monterrey, Mexico. The U.S. headquarters location consists of a rental office in a shared office facility. The facilities in Monterrey consists of 62 workstations and two private offices in a work suite facility in Monterrey. Fr8App evaluates its needs for facilities on an ongoing basis. There are no environmental issue affecting access and utilization of any of the company’s assets.

MANAGEMENT

Directors and Senior Management

The following table sets forth information regarding our executive officers, key employees and directors as of the date of this prospectus:

Directors and Executive Officers	Age	Position/Title

Javier Selgas	37	Chief Executive Officer and Director

Mike Flinker	66	President

Paul Freudenthaler	58	Chief Financial Officer and Secretary

Luisa Irene Lopez Reyes	50	Chief Operating Officer

Nicholas H. Adler	47	Director

William Samuels	46	Director

Marc Urbach	49	Director

Executive Officers

Javier Selgas, Chief Executive Officer and director, was Fr8App’s Chief Technology Officer from March to September 2020, and was responsible for all of Fr8App’s technologies and products. From May 2017 to March 2020, Javier was the Country Manager in Osigu, a technology company in the healthcare space, leading its new operation in Spain. From February 2013 to May 2017, Javier also headed AJEgroup’s IT division in Asia Pacific region playing a key role in the continued development of strategic IT growth and supplier relationships, ensuring flexibility in response to an increasingly demanding corporation. Prior to joining AJEGroup, Javier dedicated his professional career as an IT consultant in big corporations such as Endesa and Ibermatica. Javier earned a Master’s Degree from Barcelona University, and a Bachelor of Science degree in Software Engineering from European University.

Mike Flinker, President, is a 40 year transportation industry veteran. Mike joined Fr8App in September 2020. In 1987, Mike co-founded FLS Transportation Services Inc. (“FLS”) where he served as the President from inception until his retirement in August 2018. FLS started as a cross-border logistics company operating solely between Canada and the U.S. and eventually expanded to the domestic U.S. market in 2005. FLS was the largest cross-border logistics company in Canada and within 11 years, went on to become the 20th largest logistics company in the U.S. FLS was sold to a mid-market private equity fund in March 2020. Prior to founding FLS, Mike worked for Clarke Transport Inc., Canadian Pacific and Reimer Express Inc. (a division of Roadway Express). Mike served on the boards of multiple charities and is currently heading the capital campaign for Cedars Cancer Center which is the cancer center for the McGill University Health Center.

Paul Freudenthaler, Chief Financial Officer and Secretary, joined Fr8App in September 2020. Prior to joining Fr8App, Paul has served as the chief financial officer for several leading companies in both the U.S. and Mexico. From August 2015 to April 2016, he was the chief financial officer for EZ Corp., the Mexico division of Crediamigo, a payroll discount lender. From November 2016 to August 2020, Paul was the chief financial officer of Ascentium Capital, the largest independent small business lender in the U.S. Paul drove the growth and successful sale of Ascentium Capital from private equity investors to one of the largest banks in the United States. Paul was the chief financial officer for Old Mutual in Latin America from June 2012 to July 2015, Macquarie in Mexico City from June 2009 to May 2012 and Irwin Union Bank in the United States from August 2005 to August 2008. Paul’s experience includes successful public offerings and a number of acquisitions totaling well over $1 billion in both Mexico and the United States. Paul was born in Canada and grew up in Mexico City, before spending the following 30 years splitting his time among Mexico, the U.S. and Canada. Paul earned his MBA in Finance from The Wharton School of Business, a CPA License from Texas State Board of Public Accounting, and a Bachelor of Commerce in Accounting and Economics from the University of Calgary, Canada.

Luisa Irene Lopez Reyes, Chief Operating Officer, joined Fr8App in August 2021. From December 2017 to July 2021, Luisa had the responsibility to start Landstar operations in Mexico and to develop business for domestic and cross border divisions. During October 2015 to November 2017 Luisa served as an Operations Director for School and Personnel Transportation Division for Grupo Traxion. Prior to running transportation business, Luisa has performed as an Operation Head in different transnational companies: Editorial Televisa 2015-2017, Danone Water Division 2014, PriceShoes 2009-2013, ConAgra Foods 2006-2009, Nestlé 2000-2006. During her professional career Luisa has received awards as the best logistics provider from WM and DHL trough innovation and IT platforms implementation achieving efficiencies in logistics processes. Luisa has a Business Coaching Master, Supply Chain Management Certification and a Bachelor Degree in PR.

Non-Employee Directors

Nicholas H. Adler, our current Chairman of the Board, is a practicing attorney in Nashville, Tennessee specializing in defense litigation, bankruptcy, foreclosure, and real estate matters. He has been a partner at Brock & Scott PLLC since 2012. Nick is admitted to practice law in New York and Tennessee as well as all Federal districts within Tennessee. After his graduation from law school, Nick practiced with a large international firm in New York specializing in securities regulation. Since 2005, his practice has focused on the representation of national and regional credit grantors in Tennessee. He is also active in real estate development and asset management in Nashville. Nick earned his B.A. in political science from Vanderbilt University and his J.D. from The Washington and Lee University School of Law.

William Samuels, a current member of our Board, is a practicing attorney in Manhattan, New York specializing in intellectual property law. He has been a partner at Warshaw Burstein, LLP since June 2020. Between October 2017 and May 2020, he was a partner at Scarinci & Hollenbeck LLC and prior to that, he was a partner at W.R. Samuels Law PLLC starting January 2010. He is Treasurer of the New York State Bar Intellectual Property Section and co-chair of that section’s Trademark Law Committee. He earned his BA in English Literature from Georgetown University, MA in English Literature from the University of Pennsylvania and J.D. from Emory University.

Marc Urbach, a current member of Fr8App’s Board of Directors, is the owner of Doorstep Delivery Logistics LLC and has been its Chief Executive Officer since August 2020, and consultant at OTS Ventures Inc. since January 2017. Prior to that, he was the President/CFO and board member of Ideanomics, Inc. (formerly known as YOU On Demand Holdings, Inc.) He has been an executive at various private and public companies in the past 25 years. He earned his B.S. in Accounting from Babson College.

Executive Compensation

The following table sets forth the amount of compensation that was paid, earned and/or accrued during the fiscal year ended December 31, 2021, to each of our officers and directors.

Name	Compensation ($)
Directors and Officers
Warren Wang¹	$	276,000
Hon Man Yun¹		108,000
Hong Chen¹		36,000
Xiaoyue Zhang¹		36,000
Ming Yi¹		36,000
Total	$	492,000

Messrs. Warren Wang, Hon Man Yun, Ming Yi (Martin), Hong Chen and Xiaoyue Zhang, resigned from the board of directors and from the position of the Chief Executive Officer and Chief Financial Officer in the case of Messrs. Warren Wang and Hon Man Yun, respectively, effective on February 14, 2022.

We have not set aside or accrued any amounts to provide pension, retirement or similar benefits to our executive officers and directors. Our PRC subsidiaries and consolidated variable interest entity are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.

Board of Directors

Our board of directors consists of four directors. A director is not required to hold any shares in our Company to qualify to serve as a director. A director may vote with respect to any contract, proposed contract or arrangement in which he is interested, and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of our directors at which any such contract or proposed contract or arrangement is considered, provided (a) such director has declared the nature of his interest forthwith after becoming aware of the fact he is interested in a transaction entered into or to be entered into by the Company to all other directors and (b) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee. The directors may exercise all the powers of the company to borrow money, to mortgage or charge its undertaking, property and uncalled capital, and to issue debentures or other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party. None of our non-executive directors has a service contract with us that provides for benefits upon termination of service.

Committees of the Board of Directors

We established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.

Audit Committee. Our audit committee consists of Messrs. Adler, Samuels and Urbach. Mr. Urbach is the chairman of our audit committee. We have determined that Messrs. Adler, Samuels and Urbach satisfy the “independence” requirements of NASDAQ Rule 5605 and Rule 10A-3 under the Securities Exchange Act of 1934. Our board of directors has determined that Mr. Urbach qualifies as an audit committee financial expert and has the accounting or financial management expertise as required under Item 407(d)(5)(ii) and (iii) of Regulation S-K. The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our Company. The audit committee will be responsible for, among other things:

	●	appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors;

	●	reviewing with the independent auditors any audit problems or difficulties and management’s response;

	●	discussing the annual audited financial statements with management and the independent auditors;

	●	reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures;

	●	reviewing and approving all proposed related party transactions;

	●	meeting separately and periodically with management and the independent auditors; and

	●	monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

A copy of the audit committee’s current charter is available at our corporate website at: https://www.fr8.app/investors/governance/.

Compensation Committee. Our compensation committee consists of Messrs. Adler and Urbach. The compensation committee will assist the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee will be responsible for, among other things:

	●	reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

	●	reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

	●	reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and

	●	selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.

A copy of the compensation committee’s current charter is available at our corporate website at: https://www.fr8.app/investors/governance/.

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Messrs. Adler and Samuels. The nominating and corporate governance committee will assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee will be responsible for, among other things:

	●	selecting and recommending to the board nominees for election by the shareholders or appointment by the board;

	●	reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity;

	●	making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and

	●	advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.

A copy of the nominating and corporate governance committee’s current charter is available at our corporate website at: https://www.fr8.app/investors/governance/

Duties of Directors

Under British Virgin Islands law, the directors owe fiduciary duties at both common law and under statute, including a statutory duty to act honestly, in good faith and with a view to our best interests. When exercising powers or performing duties as a director, the director is required to exercise the care, diligence and skill that a reasonable director would exercise in the circumstances taking into account, without limitation, the nature of the company, the nature of the decision and the position of the director and the nature of the responsibilities undertaken by him. In exercising the powers of a director, the directors must exercise their powers for a proper purpose and shall not act or agree to the company acting in a manner that contravenes our memorandum and articles of association or the BVI Act.

Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:

	●	convening shareholders’ meetings;

	●	declaring dividends and distributions;

	●	appointing officers and determining the term of office of the officers;

	●	exercising the borrowing powers of our Company and mortgaging the property of our Company; and

	●	approving the transfer of shares in our Company, including the registration of such shares in our share register.

Terms of Directors and Officers

Our directors may be elected by a resolution of directors, or by resolution of our shareholders. Each of our directors will hold office until the expiration of his or her term, if any, or until his earlier death, resignation or removal. A director may be removed from office (i) with or without cause, by resolution of shareholders passed at a meeting called for the purpose of removing the director or by a written resolution passed by at least 75% of the votes of the shares of the Company entitled to vote, or (ii) with cause, by a resolution of directors passed at a meeting called for the purpose of removing the director. Our officers are elected by and serve at the discretion of the board of directors.

Employment Agreements and Indemnification Agreements

Fr8App’s current Chief Executive Officer joined Fr8App in March 2020 as its Chief Technology Officer, and became the Chief Executive Officer in September 2020. Both President and Chief Financial Officer of Fr8App joined Fr8App in September 2020. Fr8App’s Chief Operating Officer joined Fr8App in August 2021. Set forth below are compensation arrangements based on their current employment agreements with Fr8App. All employment agreements were continued under the same terms at the time of the Merger and all options and equity compensation items adjusted consistent with the exchange ratio related the Merger.

Under his Employment Agreement with Fr8App, Javier Selgas serves as Fr8App’s Chief Executive Officer, receives an annual base salary of $250,000 and is eligible for a discretionary bonus payable in the first fiscal quarter after the end of each fiscal year. He is entitled to receive (i) an option grant for 70,030 shares of Fr8App Common Stock at $0.55 per share, fully vested upon grant, and (ii) an option grant for 140,060 shares of Fr8App Common Stock at an exercise price equivalent to the Applicable Per Share Merger Consideration upon the Closing of the Merger, vesting over four years starting in September 2021. In the event Javier Selgas is terminated without cause or for good reason, he will be entitled to receive continued payment of his base salary for six months immediately following the termination date. He was awarded an additional stock option grant for 42,018 shares of Fr8App Common Stock at $1.76 per share, vesting over four years starting in December 2021.

Under his Executive Services Agreement with Fr8App, Mike Flinker serves as the President, receives an annual base salary of $220,000 and is eligible to receive a discretionary bonus payable in the first fiscal quarter after the end of each fiscal year. He is entitled to receive an option grant for 105,045 shares of Fr8App Common Stock at the Applicable Per Share Merger Consideration upon the Closing of the Merger, vesting over four years starting in September 2020. In the event Mike Flinker is terminated without cause or for good reason, he will be entitled to receive continued payment of his base salary for three months immediately following the termination date.

Under his Employment Agreement with Fr8App, Paul Freudenthaler serves as Fr8App’s Chief Financial Officer, receives an annual base salary of $250,000 and is eligible to receive a discretionary bonus payable in the first fiscal quarter after the end of each fiscal year. He is entitled to receive (i) an option grant for 35,015 shares of Fr8App Common Stock at $0.55 per share, fully vested upon grant, and (ii) an option grant for 175,075 shares of Fr8App Common Stock at the Applicable Per Share Merger Consideration upon the Closing of the Merger, vesting over four years starting in September 2020. In the event Paul Freudenthaler is terminated without cause or for good reason, he will be entitled to receive continued payment of his base salary for six months immediately following the termination date. He was awarded an additional stock option grant for 42,018 shares of Fr8App Common Stock at $1.76 per share, vesting over four years starting in December 2021.

Under her Employment Agreement with Fr8App, Luisa Irene Lopez Reyes serves as Fr8App’s and Freight App Mexico’s Chief Operating Officer, receives an annual base salary of MXP$3,000,000 and is eligible to receive a discretionary bonus payable within the first 2-1/2 months after the end of the applicable fiscal year. She is entitled to receive (i) an option grant for 14,893 shares of Fr8App Common Stock at $1.76 per share, fully vested upon grant, and (ii) an option grant for 74,463 shares of Fr8App Common Stock at the Applicable Per Share Merger Consideration, vesting over four years starting on the one year anniversary date of the Effective Date of the Merger. In the event that Ms. Reyes is terminated without cause or for good reason, she will be entitled to receive continued payment of her base salary for three months immediately following the termination date.

Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations. The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.

We have entered into board services agreements and indemnification agreements with each of our independent director appointees and our CEO who is a non-independent member of the Company’s board of directors. These agreements set forth the services to be provided and compensation to be received by our independent directors and the indemnifications provided to them by the Company. Pursuant to these agreements, the directorship of our independent director appointees will last until the earlier of (i) the date on which the director resigns, or (ii) is removed in accordance with the Company’s governing documents and applicable law.

NASDAQ Requirements

Our Ordinary Shares are currently listed on the NASDAQ Capital Market and, for so long as our securities continue to be listed, we will remain subject to the rules and regulations established by NASDAQ Stock Market as being applicable to listed companies. NASDAQ has adopted, and from time-to-time adopts, amendments to its Marketplace Rule 5600 that imposes various corporate governance requirements on listed securities. Section (a)(3) of Marketplace Rule 5615 provides that foreign private issuers such as our Company are required to comply with certain specific requirements of Marketplace Rule 5600, but, as to the balance of Marketplace Rule 5600, foreign private issuers are not required to comply if the laws of their home jurisdiction do not otherwise mandate compliance with the same or substantially similar requirement.

We currently comply with those specifically mandated provisions of Marketplace Rule 5600. In addition, we have elected to voluntarily comply with certain other requirements of Marketplace Rule 5600, notwithstanding that our home jurisdiction does not mandate compliance with the same or substantially similar requirements; although we may in the future determine to cease voluntary compliance with those provisions of Marketplace Rule 5600 that are not mandatory. However, we have elected not to comply with the following provisions of Marketplace Rule 5600, since the laws of the British Virgin Islands do not require compliance with the same or substantially similar requirements:

	●	our independent directors do not hold regularly scheduled meetings in executive session (rather, all board members may attend all meetings of the board of directors);

	●	the compensation of our executive officers is recommended but not determined by an independent committee of the board or by the independent members of the board of directors; and our CEO is not prevented from being present in the deliberations concerning his compensation;

	●	related party transactions are not required to be reviewed and we are not required to solicit member approval of stock plans, including: those in which our officers or directors may participate; stock issuances that will result in a change in control; the issuance of our stock in related party acquisitions or other acquisitions in which we may issue 20% or more of our outstanding shares; or, below market issuances of 20% or more of our outstanding shares to any person; and

	●	we are not required to hold an in-person annual meeting to elect directors and transact other business customarily conducted at an annual meeting (rather, we complete these actions by written consent of holders of a majority of our voting securities).

We may in the future determine to voluntarily comply with one or more of the foregoing provisions of Marketplace Rule 5600. For example, we have voluntarily decided to compose of the majority of our board of directors with independent directors as defined by the NASDAQ rules.

Indemnification of Directors and Executive Officers and Limitation of Liability

In accordance with, and subject to, the provisions of the BVI Act, the Amended Memorandum and Articles (including the limitations detailed therein), provide that the Company shall indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who (a) is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director of the Company; or (b) is or was, at the request of the Company, serving as a director of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise.

Pursuant to the BVI Act, the indemnity applies only to a person who has acted honestly and in good faith and in what he believed to be the best interests of the Company and, in the case of criminal proceedings, provided the person had no reasonable cause to believe that his conduct was unlawful. The Company shall not indemnify a person who has not so acted, and any indemnity given to such a person is void and of no effect.

The termination of any proceedings by any judgement, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and with a view to the best interests of the Company or that the person had reasonable cause to believe that his conduct was unlawful.

Expenses, including legal fees, incurred by a director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the director to repay the amount if it shall ultimately be determined that the director is not entitled to be indemnified by the Company in accordance with the Amended Memorandum and Articles.

Expenses, including legal fees, incurred by a former director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the former director to repay the amount if it shall ultimately be determined that the former director is not entitled to be indemnified by the Company in accordance with the Amended Memorandum and Articles and upon such other terms and conditions, if any, as the Company deems appropriate.

The indemnification and advancement of expenses provided by, or granted pursuant to, the Amended Memorandum and Articles is not exclusive of any other rights to which the person seeking indemnification or advancement of expenses may be entitled under any agreement, resolution of members, resolution of disinterested directors or otherwise, both as to acting in the person’s official capacity and as to acting in another capacity while serving as a director of the Company.

The Company may purchase and maintain insurance in relation to any person who is or was a director of the Company, or who at the request of the Company is or was serving as a director of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not the Company has or would have had the power to indemnify the person against the liability under the Amended Memorandum and Articles.

We have also entered into indemnification agreements with our directors and executive officers under Delaware law as described above, pursuant to which we have agreed to indemnify each such person and hold him harmless against expenses, judgments, fines and amounts payable under settlement agreements in connection with any threatened, pending or completed action, suit or proceeding to which he has been made a party or in which he became involved by reason of the fact that he is or was our director or officer. Except with respect to expenses to be reimbursed by us in the event that the indemnified person has been successful on the merits or otherwise in defense of the action, suit or proceeding, our obligations under the indemnification agreements are subject to certain customary restrictions and exceptions.

In addition, we maintain standard policies of insurance under which coverage is provided to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act, and to us with respect to payments which may be made by us to such directors and officers pursuant to the above indemnification provision or otherwise as a matter of law.

BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our Ordinary Shares as of the date of this prospectus by:

	●	each person, or group of affiliated persons, known to us to be the beneficial owner of more than 5% of our issued and outstanding Ordinary Shares;
	●	each of our directors and executive officers; and
	●	all of our current directors and executive officers as a group.

The term “beneficial owner” of securities refers to any person who, even if not the record owner of the securities, has or shares the underlying benefits of ownership. These benefits include the power to direct the voting or the disposition of the securities or to receive the economic benefit of ownership of the securities. A person also is considered to be the “beneficial owner” of securities that the person has the right to acquire within 60 days by option or other agreement. Beneficial owners include persons who hold their securities through one or more trustees, brokers, agents, legal representatives or other intermediaries, or through companies in which they have a “controlling interest”, which means the direct or indirect power to direct the management and policies of the entity. The Company’s directors and executive officers do not have different voting rights than other shareholders of the Company.

We are not controlled by another corporation, by any foreign government or by any natural or legal persons except as set forth herein, and here are no arrangements known to us which would result in a change in control of our Company at a subsequent date. Except as indicated in footnotes to this table, we believe that the shareholders named in this table have sole voting and investment power with respect to all shares shown to be beneficially owned by them, based on information provided to us by such shareholders. Unless otherwise noted below, each beneficial owner’s address is: c/o 2001 Timberloch Place, Suite 500, The Woodlands, TX 77380.

Name of Beneficial Owner¹	Number of Shares		% of Class

Five Percent Holders

ATW Opportunities Master Fund, L.P.² 17 State Street, 2100, New York, NY 10004		33,436,456		81.3	%

ATW Master Fund II, L.P.² 17 State Street, 2100, New York, NY 10004		6,956,726		47.5	%

ATW Partners Opportunities Management, LLC² 17 State Street, 2100, New York, NY 10004		984,780		11.4	%

*Directors and Named Executive Officers³:*

Javier Selgas⁴		140,060		0.4	%
Mike Flinker⁴		52,522		0.2	%
Luisa Irene Lopez Reyes⁴		17,995		0.1	%
Paul Freudenthaler⁴		122,552		0.4	%
Nicholas H. Adler⁵		14,286		0.2	%
William Samuels⁵		14,286		0.0	%
Marc Urbach⁵		10,714		0.0	%
All Directors and Executive Officers as Group		372,415		1.1	%

(1) For each person and group included in this table, percentage ownership is calculated by dividing the sum of the number of Ordinary Shares beneficially owned by such person or group and the number of the number of Ordinary Shares underlying share options or warrants held by such person or group that are exercisable within 60 days after July 31, 2022 by the sum of (i) 7,689,462 being the number of shares outstanding as of the date of this registration statement and (ii) the number of Ordinary Shares underlying share options held by such person or group that are exercisable within 60 days after the date of this registration statement.

(2) ATW Opportunities Master Fund, L.P., ATW Master Fund II, L.P. are limited partnerships, comprising Messrs. Antonio Ruiz-Gimenez and Kerry Propper as General Partners. ATW Opportunities Management, LLC is a limited liability corporation with Messrs. Antonio Ruiz-Gimenez and Kerry Propper as managing members. Accordingly. Both Messrs. Ruiz-Gimenez and Propper hold joint voting and dispositive power of the Ordinary Shares held by the limited partnerships. ATW Opportunities Master Fund, L.P. owns warrants convertible to 5,433,956 Ordinary Shares and preferred shares convertible to 28,002,501 Ordinary Shares. ATW Master Fund II, LP beneficially owns zero Ordinary Shares, warrants convertible to 448,245 Ordinary Shares and preferred shares convertible into 6,508,482 Ordinary Shares. ATW Partners Opportunities Management, LLCs owns preferred shares convertible into 984,780 Ordinary Shares.

(3) Unless otherwise indicated, the address for those listed below is c/o Freight Technologies, Inc., at 2001 Timberloch Place, Suite 500, The Woodlands, Texas 77380.

(4) Each of the executive officers’ beneficial ownership represent options from the employee stock ownership plan convertible into Ordinary Shares that have vested within 60 days after the date of this registration statement.

(5) Each of the directors’ holdings represent a mixture of restricted stock and stock options from the employee stock ownership plan convertible into ordinary shares that have vested within 60 days after the date of this report. Each of Messrs. Adler and Samuels own 14,286 Ordinary Shares. Mr. Urbach owns 8,333 Ordinary Shares and restricted shares vesting into 2,381 Ordinary Shares.

Record Holders

Based upon a review of the information provided to us by our transfer agent, as of July 31, 2022, there were a total of 434 holders of record of our shares, of which 37 record holders had a registered address in the United States, representing an aggregate of 6,322,141 of our Ordinary Shares, or approximately 86.2% of our issued and outstanding share capital. These numbers are not representative of the number of beneficial holders of our shares nor is it representative of where such beneficial holders reside, since many of these shares were held of record by brokers or other nominees.

We are not controlled by another corporation, by any foreign government or by any natural or legal persons except as set forth herein, and there are no arrangements known to us which would result in a change in control of our Company at a subsequent date.

Transfer Agent and Registrar

The transfer agent and registrar for our Ordinary Shares is Transhare Corporation.

RELATED PARTY TRANSACTIONS

Contractual Arrangements between WFOE and Sheng Ying Xin

On February 17, 2016, Beijing Yingxin Yijia Network Technology Co., Ltd. (“BYYNT” or “WFOE”) entered into certain contractual arrangements with Sheng Ying Xin and the its shareholders (“SYX Shareholders”), as amended and re-signed on April 26, 2016. Pursuant to these contractual arrangements, WFOE shall have the power, rights and obligations equivalent in all material respects to those it would possess if it were the sole equity holder of Sheng Ying Xin, including absolute control rights and the rights to the assets, property and revenue of Sheng Ying Xin and the receipt of, approximately 100% of the net income of Sheng Ying Xin as a service fee to WFOE. SYX Shareholders did not receive any consideration in exchange for their agreements to give up their control over Sheng Ying Xin.

Each of the VIE Agreements is described in detail below:

Exclusive Business Cooperation Agreement

Pursuant to the Exclusive Business Cooperation Agreement between Sheng Ying Xin and WFOE, WFOE provides Sheng Ying Xin with technical support, consulting services and other management services relating to its day-to-day business operations and management, on an exclusive basis and to the extent permissible under the PRC laws, utilizing its advantages in technology, human resources, and information. For services rendered to Sheng Ying Xin by WFOE under this agreement, WFOE is entitled to collect a service fee on a monthly basis, which is approximately equal to the net income of Sheng Ying Xin.

The Exclusive Business Cooperation Agreement shall remain in effect for ten years unless it is terminated by WFOE with 30-day prior notice. Sheng Ying Xin does not have the right to terminate the agreement unilaterally. WFOE may unilaterally extend the term of this agreement with prior written notice.

The sole director and president of WFOE, Mr. Jianxin Lin, is currently managing Sheng Ying Xin pursuant to the terms of the Exclusive Business Cooperation Agreement. WFOE has absolute authority relating to the management of Sheng Ying Xin, including but not limited to decisions with regard to expenses, salary raises and bonuses, hiring, firing and other operational functions.

Contracts that give us effective control of the variable interest entity

Share Pledge Agreement

Under the Share Pledge Agreement between the two SYX Shareholders and WFOE, the SYX Shareholders pledged all of their equity interests in Sheng Ying Xin to WFOE to guarantee the performance of Sheng Ying Xin’s obligations under the Exclusive Business Cooperation Agreement. Under the terms of the agreement, WFOE, as pledgee, will be entitled to certain rights, including, but not limited to, the right to collect dividends generated by the pledged equity interests. The SYX Shareholders also agreed that upon occurrence of any event of default, as set forth in the Share Pledge Agreement, WFOE is entitled to dispose of the pledged equity interest in accordance with applicable PRC laws. The SYX Shareholders further agreed not to dispose of the pledged equity interests or take any actions that would prejudice WFOE’s interest. All of the equity interest pledges with respect to the equity interests of Sheng Ying Xin according to the Share Pledge Agreement have been registered with relevant office of the Administration for Industry and Commerce in China.

The Share Pledge Agreement shall be effective until all payments due under the Exclusive Business Cooperation Agreement have been paid by Sheng Ying Xin. WFOE shall cancel or terminate the Share Pledge Agreement upon Sheng Ying Xin’s full payment of fees payable under the Exclusive Business Cooperation Agreement.

Exclusive Option Agreement

Under the Exclusive Option Agreement, the SYX Shareholders irrevocably granted WFOE (or its designee) an exclusive option to purchase, to the extent permitted under PRC law, once or at multiple times, at any time, part or all of their equity interests in Sheng Ying Xin at the exercise price of RMB1.00. The agreement remains effective for a term of ten years and may be renewed at WFOE’s election. Once WFOE exercise such option, the parties shall enter into a separate equity interest transfer or similar agreement.

Power of Attorney

Under the Power of Attorney, the SYX Shareholders authorize WFOE to act on their behalf as their exclusive agent and attorney with respect to all rights as shareholders, including but not limited to: (a) attending shareholders’ meetings; (b) exercising all the shareholder’s rights, including voting, that shareholders are entitled to under the laws of China and the Articles of Association, including but not limited to the sale or transfer or pledge or disposition of shares in part or in whole; and (c) designating and appointing on behalf of shareholders the legal representative, the director, supervisor, the chief executive officer and other senior management members of Sheng Ying Xin.

Although it is not explicitly stipulated in the Power of Attorney, the term of the Power of Attorney shall be the same as the term of that of the Exclusive Option Agreement.

This Power of Attorney is coupled with an interest and shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as the SYX Shareholder is a shareholder of Company.

Contractual Arrangements between Hongkong Shengqi Technology, WFOE and Sheng Ying Xin

On September 2, 2019, Hongkong Shengqi Technology Limited (“HKSQ”) became a shareholder of WFOE. HKSQ was incorporated in Hong Kong on August 29, 2019. Mr. Jianxin Lin is the sole shareholder of HKSQ. On September 26, 2019, a series of agreements were entered into among HKIFS, HKSQ and its shareholder (the “HKSQ VIE Agreements”). As a result of the HKSQ VIE Agreements, HKIFS become the primary beneficiary of HKSQ.

The contractual agreements among HKSQ, WFOE and Sheng Ying Xin essentially confer control and management as well as the economic benefits of Sheng Ying Xin onto WFOE. In spite of the shareholder change in WFOE, we are able to retain full control and management over Sheng Ying Xin and are still entitled to substantially all of the economic benefits of WFOE through the HKSQ VIE Agreements.

Accordingly, the results of operations, assets and liabilities of HKSQ, WFOE and Sheng Ying Xin have been included in the accompanying consolidated financial statements.

Each of the VIE Agreements is described in detail below:

Exclusive Business Cooperation Agreement

Pursuant to the terms of the certain Exclusive Business Cooperation Agreement dated September 26, 2019, between Hongkong Internet Financial Services Limited (“HKIFS”) and HKSQ (the “Exclusive Business Cooperation Agreement”), HKIFS is the exclusive technology services and consultancy service provider to HKSQ. HKSQ agreed to pay HKIFS all fees payable for technology services and consultancy service, the amount of which equals 100% of the net profit of HKSQ. Any payment from HKSQ to HKIFS must comply with applicable Chinese laws. HKIFS is also obligated to bears all losses of HKSQ. Further, the parties agreed that HKIFS shall retain sole ownership of all intellectual property developed in connection with providing technology services to HKSQ. The Exclusive Business Cooperation Agreement has a ten-year term. The term of these agreements may be extended if confirmed in writing by HKIFS, prior to the expiration of the term. The extended term shall be determined by HKIFS, and HKSQ shall accept such extended term unconditionally.

Contracts that give us effective control of the variable interest entity

Power of Attorney

Pursuant to the terms of a certain Power of Attorney Agreement dated September 26, 2019, among HKIFS and the shareholders of HKSQ (the “Power of Attorney”), each of the shareholders of HKSQ irrevocably appointed HKIFS as their proxy to exercise on each of such shareholder’s behalf all of their voting rights as shareholders pursuant to PRC law and the Articles of Association of HKSQ, including the appointment and election of directors of HKSQ. The term of the Power of Attorney is valid so long as such shareholder is a shareholder of HKSQ.

Exclusive Option Agreement

Pursuant to the terms of a certain Exclusive Option Agreement dated September 26, 2019, among HKIFS, HKSQ and the shareholders of HKSQ (the “Exclusive Option Agreement”), the shareholders of HKSQ granted HKIFS an irrevocable and exclusive purchase option (the “Option”) to acquire HKSQ’s equity interests and/or remaining assets, but only to the extent that the acquisition does not violate limitations imposed by PRC law on such transactions. Accordingly, the Option is exercisable at any time at HKIFS’s discretion so long as such exercise and subsequent acquisition of HKSQ does not violate PRC law. The consideration for the exercise of the Option is RMB 1 in total. To the extent HKSQ shareholders receive any of such consideration, the Option requires HKSQ shareholders to transfer (and not retain) the same to Sheng HKSQ or HKIFS. The Exclusive Option Agreement has a ten-year term.

The term of these agreements may be extended if confirmed in writing by HKIFS, and if no written confirmation was obtained from HKIFS, the Exclusive Option Agreement will be automatically renewed, the term of the renewed agreement will be determined till HKIFS’s written confirmation.

The contractual agreements between HKSQ, WFOE and Sheng Ying Xin essentially confer control and management as well as the economic benefits of Sheng Ying Xin onto WFOE. In spite of the shareholder change in WFOE, we are able to retain full control and management over Sheng Ying Xin and are still entitled to substantially all of the economic benefits of WFOE through the HKSQ VIE Agreements.

Transaction and balances from related parties:

The Company received consulting, accounting and recruiting services from various shareholders. The total cost of these services for the years ended December 31, 2021, 2020 and 2019 were $350,000, $353,000 and $152,000, respectively. The accounts payable to these various shareholders as of December 31, 2021 and December 31, 2020 were $140,000, $30,000, and $0 respectively.

The Company also provided freight services to a customer owned by a shareholder. The accounts receivable from this certain customer as of December 31, 2021, 2020 and 2019 was $0, $24,000 and $7,000, respectively. The revenue of these services for the years ended December 31, 2021, 2020 and 2019 was $99,000, $164,000 and 134,000, respectively.

In 2021, the Company issued various warrants to ATW, an affiliate of a shareholder and entered into various promissory notes with shareholders. (See Note 12 and 17 of audited financials).

For the year ended December 31, 2021, the Company entered into sublease agreement with PX Capital USA Inc. (“PX Capital”), incurring of rental of $112,100 for the period from January 1, 2021 to December 31, 2021. The Company also entered into consultant agreement with PX Capital for consultancy services rendered by PX Capital of $120,000 for the period from January 1, 2021 to December 31, 2021. The Company and PX Capital had a common Chief Executive Officer, Mr. Warren Wang.

For the year ended December 31, 2021, the Company has entered into an agreement with Wave Sync Corp. (“Wave Sync”) for the disposal of a used motor vehicle for $100,000. For the year ended December 31, 2021, the Company purchased equity shares of $250,000 from Montis Digital Limited, a company incorporated in Gibraltar, and $500,000 from Archax Holdings Ltd., a company incorporated in the United Kingdom. The Company then sold all of the equity shares to Wave Sync for a total of $750,000. Montis Digital Limited and Archax Holdings Ltd. are not related parties of the Company. The Company and Wave Sync had a common Chief Financial Officer, Mr. Hon Man Yun.

For the year ended December 31, 2020, the Company entered into sublease agreement with PX Capital, incurring rental of $68,000 for the period from April 1, 2020 to December 31, 2020. The Company had also entered into a consultant agreement with PX Capital for consultancy services rendered by PX Capital of $80,000 for the period from April 1, 2020 to December 31, 2020. The Company and PX Capital had a common Chief Executive Officer, Mr. Warren Wang.

Related parties of the Company represented entities that are directly or indirectly owned by directors and officers of the Company or in which the directors and officers of the Company has significant influence.

Due from related parties:

As of December 31, 2020, the Company has related party receivables of $81,756, due to advances made on behalf of related parties, including $46,416 due from Sheng Ying Xin (Beijing) Film Industry Co., Ltd., $30,214 from Beijing Zhiping Science.

As of December 31, 2019, the Company has related party receivables of $76,467, due to advances made on behalf of related parties, including $43,414 due from Sheng Ying Xin (Beijing) Film Industry Co., Ltd and $28,259 from Beijing Zhiping Science.

Due to related party:

As of December 31, 2021, the Company has related party payables of $100 due to Mr. Warren Wang the chief executive officer of the Company, who lend funds for the Company’s operations. The payables are unsecured, non-interest bearing and due on demand.

As of December 31, 2020 and 2019, the Company has related party payables of $358,241 and $279,925, respectively, due to Mr. Jianxin Lin, our founder, former Chairman of the board of directors and former chief executive officer and Mr Jinchi Xu, our former director and chief financial officer, who lent funds for the Company’s operations. The payables are unsecured, non-interest bearing and due on demand.

Review, approval or ratification of transactions with related persons.

Our Audit Committee, consisting of independent directors, is charged with reviewing and approving all agreements and transactions which had been entered into with related parties, as well as reviewing and approving all future related party transactions.

SELLING SHAREHOLDERS

The selling shareholders acquired the Ordinary Shares being registered for resale pursuant various private placements as more particularly set forth in their respective footnotes. We have agreed to file this registration statement covering the resale of the Ordinary Shares sold in the offering. We are registering the Ordinary Shares in order to permit the selling shareholders to offer the Ordinary Shares for resale from time to time.

Other than the relationships described herein, to our knowledge, the selling shareholders are not an employee or supplier of ours or our affiliates. Within the past three years, other than the relationships described herein, the selling shareholders have not held a position as an officer or a director of ours, nor have the selling shareholders had any material relationship of any kind with us or any of our affiliates. All information with respect to share ownership has been furnished by the selling shareholders, unless otherwise noted. The Ordinary Shares being offered are being registered to permit public secondary trading of such Ordinary Shares and the selling shareholders may offer all or part of the Ordinary Shares they own for resale from time to time pursuant to this prospectus. The selling shareholders do not have any family relationships with our officers, other directors or controlling shareholders.

The term “selling shareholder” also includes any transferees, pledgees, donees, or other successors in interest to the selling shareholders named in the table below. Unless otherwise indicated, to our knowledge, the persons named in the table below has sole voting and investment power (subject to applicable community property laws) with respect to the Ordinary Shares set forth opposite such persons’ names. We will file a supplement to this prospectus (or a post-effective amendment hereto, if necessary) to name successors to the named selling shareholders who are able to use this prospectus to resell the Ordinary Shares registered hereby.

The table below lists the selling shareholders and other information regarding the beneficial ownership of the Ordinary Shares held by the selling shareholders. The second column lists the number of Ordinary Shares beneficially owned by the selling shareholders, based on its ownership of Ordinary Shares, as May 30, 2022.

The third column lists the Ordinary Shares being offered by this prospectus by the selling shareholders.

In accordance with the terms of a registration rights agreement with the holders of the Ordinary Shares, this prospectus generally covers the resale of at least a number of Ordinary Shares issued. Because the number of Ordinary Shares may be adjusted, the number of Ordinary Shares that will actually be issued may be more or less than the number of Ordinary Shares being offered by this prospectus. The fourth column assumes the sale of all of the Ordinary Shares offered by the selling shareholders pursuant to this prospectus. The selling shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”

Name of Selling Shareholder	Ordinary Shares Beneficially Owned Prior to Offering^*		% (Percent) of Ordinary Shares Beneficially Owned Prior to Offering			Maximum Number of Ordinary Shares to be Sold Pursuant to this Prospectus		% (Percent) Maximum Number of Ordinary Shares Beneficially Owned Prior to Offering			Ordinary Shares Owned Immediately After Sale of Maximum Number of Shares in this Offering
ATW Partners Opportunities Management, LLC¹		-		-			1,928,571		25.1	%		-
Yuri Kokush²		342,533		4.45	%		2,636,923		34.8	%		-
PX Global Advisors LLC³		1,140,000		14.8	%		-		14.8	%		-
SPAChub Global LLC⁴		909,091		11.8	%		909,091		11.8	%		-
Ignacio Mounetou⁵		196,646		2.6	%		1,647,968		21.5	%		-
Kli Capital LLP⁶		179,540		2.3	%		1,591,580		20.7	%		-

¹Antonio Ruiz-Gimenez is the control person of ATW Partners Opportunities Management, LLC. The address of ATW Partners Opportunities Management, LLC is 507 West 28th Street 1205, New York, NY 10001. ATW Partners Opportunities Management, LLCs owns preferred shares convertible into 28,002,501 Ordinary shares of which 1,928,571 Ordinary Shares are being registered herein.

²Yuri Kokush owns 342,533 Ordinary Shares of which 300,151 are restricted and being registered herein together with warrants convertible to 357,897 Ordinary Shares and preferred shares convertible to 2,021,257 Ordinary Shares.

³Pengfei Xie, serving as the sole shareholder, director and officer of the company, is the control person of PX Global Advisors LLC. The address of PX Global Advisors LLC is 19 West 44th Street, Suite 1001, New York, NY 10036. PX Global Advisors LLC owns 1,140,000 Ordinary Shares.

⁴The controlling person of SPAChub Global LLC is Suying Liu. The address of SPAChub Global LLC is 86 Calle Cervantes, 10B, San Juan, PR 00907. SPAChub Global LLC owns 909,091 Ordinary Shares all of which are being registered herein.

⁵Ignacio Mounetou owns 196,646 Ordinary Shares of which 190,735 are restricted and being registered herein together with warrants convertible to 169,926 Ordinary Shares and preferred shares convertible to 1,293,218 Ordinary Shares.

⁶The controlling person for Kli Capital LLP is Shmuel Gniwisch. The address of Kli Capital LLP is 1083 Main St., Champlain, NY 12919. Kli Capital LLP 179,540 Ordinary Shares of which 179,540 are restricted and being registered herein together with warrants convertible to 150,887 Ordinary Shares and preferred shares convertible to 1,261,153 Ordinary Shares.

JADI Trust⁷	-	-		943,664	12.3	%	-
Andrew Intrater⁸	364,374	4.7	%	1,575,803	20.5	%	-
The Ezrah Charitable Trust⁹	217,554	2.8	%	930,662	14.9	%	-
Grays West Ventures LLC¹⁰	60,269	0.8	%	1,038,469	13.5	%	-
Jason Epstein¹¹	158,953	2.1	%	778,826	10.1	%	-
Ohad Axelrod¹²	385,963	5.0	%	385,963	5.0	%	-
FEA FR8 LLC¹³	29,555	0.4	%	785,928	10.6	%	-
Winston J. Churchill¹⁴	67,647	0.8	%	612,786	8.0	%	-
Ramiro E. Menchaca II¹⁵	98,294	1.3	%	531,641	6.9	%	-
Ramnarain Joseph Jaigobind¹⁶	-	-		424,078	5.5	%	-
Steve Oliveira¹⁷	227,159	3.0	%	-	3.0	%	-
ATW Fund I, L.P.¹⁸	-	-		312,959	4.1	%	-

⁷Andrew Intrater is the control person of JADI Trust. The address of JADI Trust is 400 Madison Avenue, Suite 11, New York, NY 10017. JADI Trust owns zero Ordinary Shares, warrants convertible to 256,970 Ordinary Shares and preferred shares convertible to 686,694 Ordinary Shares.

⁸Andrew Intrater owns 364,374 Ordinary Shares of which 364,374 are restricted and being registered herein together with preferred shares convertible to 1,211,429 Ordinary Shares.

⁹Steve Oliveria is control person to the Ezrah Charitable Trust. The address of Steve Oliveira is 207 Commodore Dr., Jupiter, FL 33477. Ezrah Charitable Trust owns 217,554 Ordinary Shares of which 0 are restricted and being registered herein together with warrants convertible to 162,866 Ordinary Shares and preferred shares convertible to 767,797 Ordinary Shares.

¹⁰Edmundo Gonzalez is the control person of Grays West Ventures LLC. The address of Grays West Ventures LLC is 14 Todd Drive, East Hampton, NY 11937. Grays West Ventures LLC owns 60,269 Ordinary Shares of which 57,314 are restricted and being registered herein together with warrants convertible to 101,342 Ordinary Shares and preferred shares convertible to 882,768 Ordinary Shares.

¹¹Jason Epstein owns 158,953 Ordinary Shares of which 158,953 are restricted and being registered herein together with warrants convertible to 79,449 Ordinary Shares and preferred shares convertible to 540,424 Ordinary Shares.

¹²Ohad Axelrod owns 385,963 Ordinary Shares of which 385,963 are restricted and being registered herein.

¹³Andrew Intrater is the control person of FEA FR8 LLC. The address of FEA FR8 LLC is 400 Madison Avenue, Suite 11, New York, NY 10017. FEA FR8 LLC owns 29,555 Ordinary Shares of which 0 are restricted and being registered herein together with warrants convertible to 137,537 Ordinary Shares and preferred shares convertible to 648,390 Ordinary Shares.

¹⁴Winston J. Churchill owns 67,647 Ordinary shares of which 61,736 are restricted and being registered herein together with warrants convertible to 70,603 Ordinary Shares and preferred shares convertible to 486,359 Ordinary Shares.

¹⁵ Ramiro E. Menchaca II owns 98,294 Ordinary Shares of which 98,294 are restricted and being registered herein together with warrants convertible to 52,042 Ordinary Shares and preferred shares convertible to 381,306 Ordinary Shares.

¹⁶Ramnarain Joseph Jaigobind owns preferred shares convertible to 424,078 Ordinary Shares.

¹⁷Steve Oliveira owns 227,159 Ordinary Shares of which 0 are restricted and being registered herein.

¹⁸Antonio Ruiz-Gimenez is the control person of ATW Fund I, LP. The address of ATW Fund I, LP is 507 West 28th Street 1205, New York, NY 10001. ATW Fund I, LP owns preferred shares convertible to 312,959 Ordinary Shares.

Kerry Propper¹⁹	-	-		537,936	7.0	%	-
Pishinano Investment Holdings, Ltd.²⁰	81,372	1.1	%	207,504	2.7	%	-
Charles Simonian²¹	83,030	1.1	%	187,225	2.4	%	-
Michael Richter²²	47,741	0.6	%	205,176	2.7	%	-
M&M Energy Investors LLC²³	31,699	0.4	%	188,353	2.5	%	-
DelMar International Inc.²⁴	51,889	0.7	%	120,109	1.6	%	-
International Crisis Group²⁵	-	-		111,491	1.4	%	-
Enrique Resendez²⁶	35,102	0.5	%	61,197	0.8	%	-
Nicolas Rocha²⁷	35,177	0.5	%	60,895	0.8	%	-
Sharbaugh Trust²⁸	14,345	0.2	%	97,303	1.3	%	-
BGSA Holdings LLC²⁹	46,129	0.6	%	46,129	0.6	%	-

¹⁹Kerry Propper owns warrants convertible to 91,353 Ordinary Shares and preferred shares convertible to 446,583 Ordinary Shares.

²⁰Control persons of Pishinano Investment Holdings, Ltd., are Andrew Intrater and Yuri Kukosh. The address of Pishinano Investment Holdings, Ltd. is 400 Madison Avenue, Suite 11A, New York, NY 10017. Pishinano Investment Holdings, Ltd. Owns 81,372 Ordinary Shares of which 81,372 are restricted and being registered herein together with preferred shares convertible to 126,132 Ordinary Shares.

²¹Charles Simonian owns 83,030 Ordinary Shares of which 83,030 are restricted and being registered herein together with preferred shares convertible to 104,195 Ordinary Shares.

²²Michael Richter owns 47,741 Ordinary Shares of which 46,190 are restricted and being registered herein together with warrants convertible to 18,980 Ordinary Shares and preferred shares convertible to 141,557 Ordinary Shares.

²³Kerry Miller and Jonathan Miller, each of whom are partners of M & M Energy Investors LLC, have shared voting control and investment discretion over the securities reported herein that are held by M & M Energy Investors LLC. As a result, each of Kerry Miller and Jonathan Miller may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities reported herein that are held by M & M Energy Investors LLC. The address of the foregoing individuals and entities is 835 Marseilles Drive, Atlanta, GA 30327. M & M Energy Investors LLC owns 31,699 Ordinary Shares of which 30,635 are restricted and being registered herein together with warrants convertible to 20,632 Ordinary Shares and preferred shares convertible to 138,150 Ordinary Shares.

²⁴The address of Delmar International, Inc. is 10636 Cote De Liesse, Lachine QC H8T 1A5 Canada. Barclay Hurley is authorized signer for Delmar International, Inc. Delmar International, Inc. owns 51,889 Ordinary Shares of which 51,889 are restricted and being registered herein together with preferred shares convertible to 68,220 Ordinary Shares.

²⁵The controlling person at International Crisis Group is Comfort Ero, serving as CEO. The address of International Crisis Group is 1629 K St., NW Suite 1000, Washington, DC 20006. International Crisis Group owns preferred shares convertible to 111,491 Ordinary Shares.

²⁶Enrique Resendez owns 35,102 Ordinary Shares of which 35,102 are restricted and being registered herein together with warrants convertible to 2,609 Ordinary Shares and preferred shares convertible to 23,486 Ordinary Shares.

²⁷Nicolas Rocha owns 35,177 Ordinary Shares of which 35,177 are restricted and being registered herein together with warrants convertible to 2,609 Ordinary Shares and preferred shares convertible to 23,109 Ordinary Shares.

²⁸John Justin Churchill, serving as trustee, is the control person of Sharbaugh Trust. The address of Sharbaugh Trust is 5 Great Valley Parkway, Suite 210, Malvern PA 19355. Sharbaugh Trust owns 14,345 Ordinary Shares of which 13,161 are restricted and being registered herein together with warrants convertible to 11,947 Ordinary Shares and preferred shares convertible to 73,379 Ordinary Shares.

²⁹The owner of BGSA Holdings, LLC is Ben Gordon. The address of BGSA Holdings, LLC is 525 S Flager Dr., Suite 200, West Palm Beach, FL 33401. BGSA Holdings, LLC owns 46,129 Ordinary Shares of which 46,129 are restricted and being registered herein.

Pearl Cohen³⁰	-	-		96,438	1.3	%	-
Nadia’s Initiative, Inc.³¹	-	-		56,139	0.7	%	-
Keep a Child Alive, Inc.³²	-	-		56,138	0.7	%	-
Yehezkel CPA LLC³³	34,597	0.4	%	34,597	0.4	%	-
Ramiro E. Menchaca, Sr.³⁴	11,666	0.2	%	57,993	0.8	%	-
Sichenzia Ross Ference, LLP³⁵	15,570	0.2	%	15,570	0.2	%	-
Nicholas H. Adler³⁶	14,286	0.2	%	14,286	0.2	%	-
Oren Charnoff³⁷	6,463	0.1	%	11,303	0.1	%	-
Alvaro Garrido Serina ³⁸	10,227	0.1	%	10,227	0.1	%	-
CBP Associates. Inc.³⁹	-	-		5,285	0.1	%	-
Highline Search Group LLC⁴⁰	-	-		5,285	0.1	%	-
Harry Martin⁴¹	9,470	0.1	%	9,470	0.1	%	-
Marc Urbach⁴²	14,286	0.2	%	14,286	0.2	%	-
William Samuels⁴³	14,286	0.2	%	14,286	0.2	%	-

³⁰The controlling person at Pearl Cohen is Oded Kadosh. The address is 7 Times Square 19th Floor, New York, NY 10036. Pearl Cohen owns preferred shares convertible to 96,438 Ordinary Shares.

³¹The controlling person at Nadia’s Initiative is Nadia Murad, President and Board Chair. The address of Nadia’s Initiative is 17 State Street, Suite 2100, New York, NY 10004. Nadia’s Initiative preferred shares convertible to 56,139 Ordinary Shares.

³²The controlling person at Keep A Child Alive is Antonio Ruiz, Exec Chairman & CEO. The address of Keep A Child Alive is 17 State Street, Suite 2100, New York, NY 10004. Keep A Child Alive owns preferred shares convertible to 56,138 Ordinary Shares.

³³The owner at Yehezkel CPA, LLC is Sylvia Yehezkel. The address is Yehezkel CPA, LLC, 1560 Broadway, Ste. 1111, New York, NY 10036. Yehezkel CPA, LLC 34,597 Ordinary Shares of which 34,597 are restricted and being registered herein.

³⁴Ramiro E. Menchaca Sr. owns 11,666 Ordinary Shares of which 11,666 are restricted and being registered herein together with warrants convertible to 5,830 Ordinary Shares and preferred shares convertible to 40,497 Ordinary Shares.

³⁵The controlling person at Sichenzia Ross Ference LLP is Benjamin Tan. Sichenzia Ross Ference LLP address is 1185 Avenue of the Americas, 31st Floor, New York, NY 10036. Sichenzia Ross Ference LLP owns 15,570 Ordinary Shares of which 15,570are restricted and being registered herein.

³⁶Nicholas H. Adler owns 14,286 Ordinary Shares of which 14,286 are restricted and being registered herein.

³⁷Oren Charnoff owns 6,463 Ordinary Shares of which 6,463 are restricted and being registered herein together with preferred shares convertible to 4,840 Ordinary Shares.

³⁸Alvaro Garrido Serina owns 10,227 Ordinary Shares of which 10,227 are restricted and being registered herein.

³⁹The controlling person at CBP Associates, Inc. is Michael Martin. CBP Associates, Inc. address is 1102 Cornwallis Dr., Greensboro, NC 27408. CBP Associates, Inc. owns warrants convertible to 5,285 Ordinary Shares.

⁴⁰The controlling person at Highline Search Group is Anthony O’Neill. The Highline Search Group address is 15388 Cyntheanne Rd., Noblesville, IN 46060. Highline Search Group owns warrants convertible to 5,285 Ordinary Shares.

⁴¹Harry Martin owns 9,470 Ordinary Shares of which 9,470 are restricted and being registered herein.

⁴²Marc Urbach owns 14,286 Ordinary Shares of which 14,286 are restricted and being registered herein.

⁴³William Samuels owns 14,286 Ordinary Shares of which 14,286 are restricted and being registered herein.

Yaron Eitan⁴⁴	3,003	0.0	%	8,354	0.1	%	-
Mario Mena⁴⁵	3,788	0.0	%	3,788	0.0	%	-
Emanuel Zareh⁴⁶	1,082	0.0	%	2,848	0.0	%	-
Edna Paulina Delgadillo Carrillo⁴⁷	947	0.0	%	947	0.0	%	-
Alon Gorbonos⁴⁸	-	-		692	0.0	%	-
Diana Macias⁴⁹	379	0.0	%	379	0.0	%	-
Jesus Alvarez⁵⁰	50,454	0.7	%	50,454	0.7	%	-
Loeb and Loeb, LLC⁵¹	250,000	3.3	%	250,000	3.3	%	-
Acorn Management Partners, LLC⁵²	46,012	0.6	%	46,012	0.6	%	-
Rodrigo Alberto Marroquin Calero⁵³	106,500	1.4	%	106,500	1.4	%	-

(*) Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Ordinary Shares subject to warrants currently exercisable, or exercisable within 60 days of July 31, 2022 are counted as outstanding for computing the percentage of the selling shareholder holding such options or warrants but are not counted as outstanding for computing the percentage of any other selling shareholder.

⁴⁴Yaron Eitan owns 3,003 Ordinary Shares of which 3,003 are restricted and being registered herein together with warrants convertible to 899 Ordinary Shares and preferred shares convertible to 4,452 Ordinary Shares.

⁴⁵Mario Mena owns 3,788 Ordinary Shares of which 3,788 are restricted and being registered herein.

⁴⁶Emanuel Zareh owns 1,082 Ordinary Shares of which 1,082 are restricted and being registered herein together with warrants convertible to 309 Ordinary Shares and preferred shares convertible to 1,457 Ordinary Shares.

⁴⁷Edna Paulina Delgadillo Carrillo owns 947 Ordinary Shares of which 947 are restricted and being registered herein.

⁴⁸Alon Gorbonos owns 692 Ordinary Shares.

⁴⁹Diana Macias owns 379 Ordinary Shares of which 379 are restricted and being registered herein.

⁵⁰Jesus Alvarez owns 50,454 Ordinary Shares of which 50,454 are restricted and being registered herein.

⁵¹The controlling person at Loeb & Loeb, LLC is Mitchell Nussbaum. The Loeb & Loeb, LLC address is 15388 10100 Santa Monica Blvd., Suite 2200, Los Angeles, CA 90067. Loeb & Loeb, LLC owns 250,000 Ordinary Shares of which 250,000 are restricted and being registered herein.

⁵²The controlling person at Acorn Management Partners is Gregory S. Lowe. The Acorn Management Partners address is 4080 McGinnis Ferry Road, Ste. 1101, Alpharetta, GA 30005. Acorn Management Partners owns 46,012 Ordinary Shares of which 46,012 are restricted and being registered herein.

⁵³Rodrigo Alberto Marroquin Calero owns 106,500 Ordinary Shares of which 106,500 are restricted and being registered herein.

PLAN OF DISTRIBUTION

We are registering the Ordinary Shares previously issued, to permit the resale of these Ordinary Shares by the selling shareholders from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the Ordinary Shares. Unlike an initial public offering, any resale by the selling shareholders of the Ordinary Shares is not being underwritten by any investment bank. We will bear all fees and expenses incident to our obligation to register the Ordinary Shares.

The selling shareholders may sell all or a portion of the Ordinary Shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the Ordinary Shares are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The Ordinary Shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,

	●	on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;
	●	in the over-the-counter market;
	●	in transactions other than on these exchanges or systems or in the over-the-counter market;
	●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	●	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	●	an exchange distribution in accordance with the rules of the applicable exchange;
	●	privately negotiated transactions;
	●	sales pursuant to Rule 144 under the Securities Act;
	●	broker-dealers may agree with the selling securityholders to sell a specified number of such shares at a stipulated price per share;
	●	a combination of any such methods of sale; and
	●	any other method permitted pursuant to applicable law.

If the selling shareholder effect such transactions by selling Ordinary Shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the Ordinary Shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved).

The selling shareholders may pledge or grant a security interest in some or all of the Ordinary Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Ordinary Shares from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer and donate the Ordinary Shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. The selling shareholders and any broker-dealer participating in the distribution of the shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of Ordinary Shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling shareholder and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

Under the securities laws of some states, the Ordinary Shares may be sold in such states only through registered or licensed brokers or dealers In addition, in some states, the Ordinary Shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification requirement is available and is complied with.

There can be no assurance that the selling shareholders will sell any or all of the Ordinary Shares registered pursuant to the registration statement, of which this prospectus forms a part.

The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares by the selling shareholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the Ordinary Shares to engage in market-making activities with respect to the shares. All of the foregoing may affect the marketability of the Ordinary Shares and the ability of any person or entity to engage in market-making activities with respect to the Ordinary Shares.

We will pay all expenses of the registration of the Ordinary Shares pursuant to the registration rights agreement, estimated to be $154,013 in total, including, without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that the selling shareholders will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling shareholders against liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreements, or the selling shareholders will be entitled to contribution. We may be indemnified by the selling shareholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling shareholders specifically for use in this prospectus, in accordance with the related registration rights agreement, or we may be entitled to contribution.

Once sold under the registration statement, of which this prospectus forms a part, the Ordinary Shares will be freely tradable in the hands of persons other than our affiliates.

DESCRIPTION OF SHARE CAPITAL AND GOVERNING DOCUMENTS

Freight Technologies, Inc. is a BVI business company incorporated on September 28, 2015 and our affairs are governed by the provisions of our memorandum and articles of association, as amended and restated from time to time, the BVI Act, and the applicable laws of the British Virgin Islands, or the BVI (including applicable common law).

As provided in our Amended Memorandum and Articles, subject to the BVI Act, we have full capacity to carry on or undertake any business or activity, do any act or enter into any transaction, and, for such purposes, full rights, powers and privileges. Our registered office is c/o Maples Corporate Services Limited, P.O. Box 173, Road Town, Tortola, British Virgin Islands.

As of the date of this prospectus, the Company is authorized to issue an unlimited number of shares divided into (a) an unlimited number of shares divided into an unlimited number of ordinary shares with a par value of US$0.011 each, (b) a maximum of 30,525,000 series A preferred shares (together, the “Series A Preferred Shares”) designated as follows: (i) a maximum of 25,000 series seed preferred shares with a par value of US$0.0001 each (the “Series Seed Preferred Shares”), (ii) a maximum of 10,000,000 series A1-A preferred shares with a par value of US$0.0001 each (the “Series A1-A Preferred Shares”), (iii) a maximum of 3,000,000 series A2 preferred shares with a par value of US$0.0001 each (the “Series A2 Preferred Shares”); and (iv) a maximum of 17,500,000 series A4 preferred shares with a par value of US$0.0001 each (the “Series A4 Preferred Shares”), (c) a maximum of 21,000,000 series B preferred shares with a par value of US$0.0001 each (the “Series B Preferred Shares”) and (d) an unlimited number of blank check preferred shares with no par value (the “Blank Check Preferred Shares”). As of the date of this prospectus, 7,689,462 Ordinary Shares, 5,316 Series Seed Preferred Shares, 4,451,929 series A1-A Preferred Shares, 1,264,366 Series A2 Preferred Shares, 1,378,456 .81 Series A4 Preferred Shares and 17,318,280 Series By Preferred Shares were issued, fully paid and outstanding. No Blank Check Preferred Shares have been issued. All of our issued and outstanding shares have been validly issued, fully paid and non-assessable. Our Ordinary Shares are not redeemable and are not subject to any preemptive right.

Ordinary Shares

In the last three years, we have issued an aggregate of 3,113,060 Ordinary Shares in several private placements and public offerings for aggregate net proceeds of approximately $6,779,190, which amount includes the issuance of Ordinary Shares upon the conversion of options, warrants and performance rights.

Pre-Funded Warrants and Options

In addition to Ordinary Shares, in the last three years, we have issued pre-funded warrants to purchase an aggregate of 650,000 Ordinary Shares to advisors, consultants and investors, with exercise prices ranging from $0.001 per share, of which 499,751 warrants have been exercised, and no options have been granted.

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Preferred Shares

In the three years prior to December 31, 2021, we issued an aggregate of zero Preferred Shares. At the closing of the Merger on February 14, 2022, we issued $3.5 million, in Preferred Series B Shares which are convertible into 1,060,606 Ordinary Shares in addition to 1,939,394 in Series A Warrants with an exercise price of $3.300, 395,652 in Series B Warrants with an exercise price of $2.640, 2,573,470 in Series C Warrants with an exercise price of $1.650, and 3,541,941 in Series D Warrants with an exercise price of $2.475. Series A, B, C and D warrants all had termination dates of February 14, 2029. On February 14, 2022, we also issued Series Seed Preferred Shares, Series A1-A Preferred Shares, Series A2 Preferred Shares, Series A4 Preferred Shares and Series B Preferred Shares, which were convertible into 7,020 Ordinary Shares, 4,473,547 Ordinary Shares, 1,264,360 Ordinary Shares, 2,195,930 Ordinary Shares, and 8,450,457 Ordinary Shares, respectively. On July 11, 2022, the Company amended all Series A, B, C and D Warrants to permit a cashless exercise at fixed exchange ratios into Ordinary Shares of 0.779, 0.816, 0.888 and 0.826, respectively, for an aggregate amount upon exchange of all Warrants of 7,044,524 Ordinary Shares. On July 11, 2022, we agreed to issue 1,928,571 Series A4 Preferred Shares for an aggregate amount of $2.7 million. On July 11, 2022, we also adjusted the conversion prices all Series A Preferred Shares and Series B Preferred Shares that contain features requiring adjustment of conversion prices in cases where offerings for equity are made at a lower price that that particular share’s conversion price. The additional Ordinary shares to be registered arising from the adjustment of conversion prices as a result of the July 11, 2022 financing was 37,347,648 shares.

The following are summaries of material provisions of our Amended Memorandum and Articles and the BVI Act insofar as they relate to the material terms of our Ordinary Shares, Series A Preferred Shares and Series B Preferred Shares.

Ordinary Shares

General. The Amended Memorandum and Articles authorize the issuance of an unlimited number of Ordinary Shares with a par value of US$0.11 each. Holders of Ordinary Shares will have the same rights. All of our outstanding Ordinary Shares are fully paid and non-assessable. To the extent they are issued, certificates representing the Ordinary Shares are issued in registered form.

Dividends. 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 subject to the BVI Act. Our Amended Memorandum and Articles provide that dividends may be declared and paid at such time, and in such an amount, as the directors determine subject to their being satisfied that the Company will meet the statutory solvency test immediately after the dividend.

Voting Rights. In respect of all matters subject to a members’ vote, each Ordinary Share is entitled to one vote for each Ordinary Share registered in his or her name on our register of members. Holders of Ordinary Shares shall at all times vote together on all resolutions submitted to a vote of the members. Voting at any meeting of members is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any one member.

Liquidation. 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 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.

Series A Preferred Shares

General. The Amended Memorandum and Articles authorise the issuance of a maximum of 30,525,000 Series A Preferred Shares designated as follows: (i) a maximum of 25,000 Series Seed Preferred Shares with a par value of US$0.0001 each, (ii) a maximum of 10,000,000 Series A1-A Preferred Shares with a par value of US$0.0001 each, (iii) a maximum of 3,000,000 Series A2 preferred shares with a par value of US$0.0001 each; and (iv) a maximum of 17,500,000 Series A4 preferred shares with a par value of US$0.0001 each. All of our outstanding Series A Preferred Shares are fully paid and non-assessable. To the extent they are issued, certificates representing the Series A Preferred Shares are issued in registered form.

Dividends. 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.

Voting Rights. The holders of Series A Preferred Shares shall not be entitled to vote on any resolution of shareholders, except in relation to a variation of the rights of the Series A Preferred Shares.

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Conversion Rights. The Series A Preferred Shares are convertible, at the option of the holder thereof, at any time and from time to time, into such number of fully paid and non-assessable Ordinary Shares at the applicable Conversion Price as detailed in the Amended Memorandum and Articles and subject to adjustment in the event (i) of a division or combination of shares, (ii) that the Company makes or issues or fixes a record date for the determination of holders of Ordinary Shares entitled to receive a dividends or other distribution payable on the Ordinary Shares in additional Ordinary Shares, (iii) that the Company makes or issues or fixes a record date for the determination of holders of Ordinary Shares entitled to receive a dividends or other distribution payable in shares of the Company (other than a distribution of Ordinary Shares in respect of the outstanding Ordinary Shares), and (iv) of any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Ordinary Shares (but not the Series A Preferred Shares) is converted into or exchanged for securities, cash or other property.

Protective Provisions. At any time when Series A Preferred Shares are outstanding, the Company shall not do any of the following without the written consent or affirmative approval of the holders of at least a majority of the Series A Preferred Shares voting together as a single class, which must include ATW Master Fund II, L.P.: (a) amend, alter or repeal any provision of the Amended Memorandum and Articles in any manner that is adverse to, derogates from, or negatively affects the rights of any class of Series A1-A Preferred Shares or the Series A2 Preferred Shares, (b) create, or the authorise the creation of, or issue or oblige itself to issue shares of, any additional class or series of shares that ranks senior to the Series A1 Preferred Shares or the Series A1-A Preferred Shares with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and rights of redemption, or increase the authorised number of any such class of Series A Preferred Shares or increase the authorised number of any additional class or series of shares of the Company, (c) reclassify, alter or amend any existing security of the Company that is pari passu with the Series A2 Preferred Shares or the Series A1-A Preferred Shares if such reclassification, alteration or amendment would render such other security senior to any such class of Series A Preferred Shares; (d) reclassify, alter or amend any existing security of the Company that is junior to the Series A Preferred Shares if such reclassification, alteration or amendment would render such other security senior to or pari passu with any such class of Series A Preferred Shares, (e) purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or distribution on any shares of the Company other than (i) redemptions of or dividends or distributions on the Series A2 Preferred Shares and Series A1-A Preferred Shares as expressly authorised in the Amended Memorandum and Articles, (ii) dividends or other distributions payable on the Ordinary Shares solely in the form of additional shares of Ordinary Shares by way of bonus share issue or otherwise and (iii) any repurchase, redemption, surrender or other acquisition of shares from former employees, officers, directors, consultants or other persons who performed services for the Company or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof, or (f) create, or hold shares or capital stock in, any subsidiary that is not wholly owned (either directly or through one or more other subsidiaries) by the Company, or permit any subsidiary to create or authorize the creation of, or issue or obligate itself to issue, any shares of any class or series of shares or capital stock, or sell, transfer, or otherwise dispose of any shares or capital stock of any direct or indirect subsidiary of the Company, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such subsidiary.

Any rights, powers, preferences and other terms of the Series A Preferred Shares in the Amended Memorandum and Articles, may be waived on behalf of all holders of Series A Preferred Shares by the written consent or affirmative vote of the holders of a majority of the then outstanding Series A Preferred Shares.

Series B Preferred Shares

General. The Amended Memorandum and Articles authorise the issuance of a maximum of 21,000,000 Series B Preferred Shares with a par value of US$0.0001 each. All of our outstanding Series B Preferred Shares are fully paid and non-assessable. To the extent they are issued, certificates representing the Series B Preferred Shares are issued in registered form.

Dividends. 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.

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Voting Rights. The holders of Series B Preferred Shares shall not be entitled to vote on any resolution of shareholders, except in relation to a variation of the rights of the Series A Preferred Shares.

Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, 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.

Conversion Rights. The Series B Preferred Shares are convertible, at the option of the holder thereof, at any time and from time to time and after the Series B Original Issue Date, into such number of fully paid and non-assessable Ordinary Shares at the applicable Conversion Price as detailed in the Amended Memorandum and Articles and subject to adjustment if the Company (i) pays a share dividend or issues bonus shares or otherwise makes a distribution or distributions payable in Ordinary Shares on Ordinary Shares or any other Ordinary Share Equivalents (which, for avoidance of doubt, shall not include any Ordinary Shares issued by the Company upon conversion of, or payment of a dividend on, the Series B Preferred Shares), (ii) subdivides outstanding Ordinary Shares into a larger number of shares, (iii) combines (including by way of reverse share split or combination) outstanding Ordinary Shares into a smaller number of shares, or (iv) issues, in the event of a reclassification of the Ordinary Shares, any shares of the Company.

Protective Provisions. As long as any Series B Preferred Shares are outstanding, the Company shall not do any of the following without the written consent or affirmative approval of the holders of a majority of the then outstanding Series B Preferred Shares: (a) alter or change adversely the powers, preferences or rights given to the Series B Preferred Shares or alter or amend the Amended Memorandum and Articles, in any manner that adversely affects the rights of the holders of the Series B Preferred Shares, (b) increase the number of authorised Series B Preferred Shares; or (c) enter into any agreement with respect to any of the foregoing.

Any rights, powers, preferences and other terms of the Series B Preferred Shares in the Amended Memorandum and Articles, may be waived on behalf of all holders of Series B Preferred Shares by the written consent or affirmative vote of the holders of a majority of the then outstanding Series B Preferred Shares.

Blank Check Preferred Shares

Our Amended Memorandum and Articles provide that Blank Check Preferred Shares may be issued from time to time in one or more series. Our board of directors are authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors are able to, without shareholder approval, issue Blank Check Preferred Shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects. The ability of our board of directors to issue Blank Check Preferred Shares without shareholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no Blank Check Preferred Shares issued and outstanding at the date hereof. Although we do not currently intend to issue any Blank Check Preferred Shares, we cannot assure you that we will not do so in the future. No Blank Check Preferred Shares are being issued or registered in this offering.

General

Objects and Purposes, Register, and Shareholders. Subject to the BVI Act and BVI law, our objects and purposes are unlimited. Our register of members will be maintained by our transfer agent, Transhare Corporation. Under the BVI Act, a BVI company may treat the registered holder of a share as the only person entitled to (a) exercise any voting rights attaching to the share, (b) receive notices, (c) receive a distribution in respect of the share and (d) exercise other rights and powers attaching to the share. Consequently, as a matter of BVI law, where a shareholder’s shares are registered in the name of a nominee (such as Cede & Co), the nominee is entitled to receive notices, receive distributions and exercise rights in respect of any such shares registered in its name. The beneficial owners of the shares registered in a nominee’s name will therefore be reliant on their contractual arrangements with the nominee in order to receive notices and dividends and ensure the nominee exercises voting and other rights in respect of the shares in accordance with their directions.

Directors’ Powers. Under the BVI Act, subject to any modifications or limitations in a company’s memorandum and articles of association, a company’s business and affairs are managed by, or under the direction or supervision of, its directors; and directors generally have all powers necessary to manage a company. A director must disclose any interest he has on any proposal, arrangement or contract not entered into in the ordinary course of business and on usual terms and conditions. An interested director may (subject to the memorandum and articles) vote on a transaction in which he has an interest. In accordance with, and subject to, our Amended Memorandum and Articles, the directors may by resolution of directors exercise all the powers of the Company to incur indebtedness, liabilities or obligations and to secure indebtedness, liabilities or obligations whether of the Company or of any third party.

Appointment and Removal of Directors. In accordance with our Amended Memorandum and Articles, any director may be appointed by resolution of shareholders or resolution of directors. A director shall be removed from office (a) with or without cause, by resolution of shareholders passed at a meeting called for the purpose of removing the director or by written resolution passed by at least 75% of the votes of the shares of the company entitled to vote or (b) with cause, by resolution of directors passed at a meeting of directors called for the purpose of removing the director.

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Shareholder Meetings. In accordance with, and subject to, our Amended Memorandum and Articles, (a) any director of the Company may convene meetings of the shareholders at such times as the director considers necessary or desirable (and the director convening a meeting of shareholders may fix as the record date for determining those shareholders that are entitled to vote at the meeting the date notice is given of the meeting, or such other date as may be specified in the notice, being a date not earlier than the date of the notice); and (b) upon the written request of shareholders entitled to exercise 30% or more of the voting rights in respect of the matter for which the meeting is requested, the directors shall convene a meeting of shareholders. Under BVI law, the memorandum and articles of association may be amended to decrease but not increase the required percentage to call a meeting above 30%. In accordance with, and subject to, our Amended Memorandum and Articles, (a) the director convening a meeting shall give not less than 7 days’ notice of a meeting of shareholders to those shareholders whose names on the date the notice is given appear as shareholders in the register of members of the Company and are entitled to vote at the meeting; and the other directors; (b) a meeting of shareholders held in contravention of the requirement to give notice is valid if shareholders holding at least 90% of the total voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose, the presence of a shareholder at the meeting shall constitute waiver in relation to all of the ordinary shares that that shareholder holds; (c) a quorum required for a meeting of members consists of not less than 50% of the votes of the Share entitled to vote present in person or by proxy at the meeting or, if a corporation or other non-natural person, by its duly authorized representative; and (d) if within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the request of the shareholders, shall be dissolved; in any other case it shall stand adjourned to the next business day in the jurisdiction in which the meeting was to have been held at the same time and place or to such other time and place as the directors may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the ordinary shares entitled to vote on the matters to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved.

Disclosure of the Securities and Exchange Commission’s Position on Indemnification for Securities Act Liabilities. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Transfer of Shares. Under the BVI Act shares that are listed on a recognized exchange may be transferred without the need for a written instrument of transfer if the transfer is carried out in accordance with the laws, rules, procedures and other requirements applicable to shares listed on the recognized exchange and subject to the Company’s memorandum and articles of association.

Calls on Shares and Forfeiture of Shares. Our board of directors may from time to time make calls upon members for any amounts unpaid on their shares in a notice served to such members at least 14 clear days prior to the specified time of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.

Redemption of Shares. Subject to the written consent or affirmative approval of the holders of Series A Preferred Shares where applicable, the BVI Act and our Amended Memorandum and Articles permit us to purchase our own shares with the prior written consent of the relevant members, on such terms and in such manner as may be determined by our board of directors and by a resolution of directors and in accordance with the BVI Act.

Issuance of Additional Shares. Subject to the written consent or affirmative approval of the holders of Series A Preferred Shares, our Amended Memorandum and Articles authorize our board of directors to issue additional shares from time to time as our board of directors shall determine. Our Amended Memorandum and Articles do not provide for pre-emptive rights.

However, under British Virgin Islands law, our directors may only exercise the rights and powers granted to them under our Amended Memorandum and Articles for a proper purpose and for what they believe in good faith to be in the best interests of our Company.

Anti-Takeover Provisions. Some provisions of our Amended Memorandum and Articles may discourage, delay or prevent a change of control of our company or management that members may consider favorable, including provisions that:

	●	authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our members; and
	●	limit the ability of members to requisition and convene general meetings of members.

Summary of Certain Significant Provisions of BVI Law

The BVI Act differs from laws applicable to US corporations and their shareholders. Set forth below is a summary of certain significant provisions of the BVI Act applicable to us (save to the extent that such provisions have been, to the extent permitted under the BVI Act, negated or modified in our Amended Memorandum and Articles in accordance with the BVI Act).

Mergers, Consolidations and Similar Arrangements. The BVI Act provides for mergers as that expression is understood under US corporate law. Common law mergers are also permitted outside of the scope of the BVI Act. Under the BVI Act two or more BVI companies or a BVI company and non-BVI company, each a “constituent company”, may merge or consolidate. The BVI Act provides for slightly different procedures depending on the nature of the parties to the merger.

A merger involves the merging of two or more companies into one of the constituent companies (to the merger) with one constituent company continuing in existence to become the surviving company post-merger. A consolidation involves two or more companies consolidating into a new company.

A merger is effective on the date that the articles of merger (as described below) are registered by the Registrar of Corporate Affairs in the BVI, or on such later date, not exceeding 30 days from the date of registration as is stated in the articles of merger.

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As soon as a merger becomes effective:

	a)	the surviving company (so far as is consistent with its memorandum and articles, as amended by the articles of merger) has all rights, privileges, immunities, powers, objects and purposes of each of the constituent companies;
	b)	the memorandum and articles of the surviving company are automatically amended to the extent, if any, that changes to its memorandum and articles are contained in the articles of merger;
	c)	assets of every description, including choses in action and the business of each of the constituent companies, immediately vest in the surviving company;
	d)	the surviving company is liable for all claims, debts, liabilities and obligations of each of the constituent companies;
	e)	no conviction, judgment, ruling, order, claim, debt, liability or obligation due or to become due, and no cause existing, against a constituent company or against any shareholder, director, officer or agent thereof, is released or impaired by the merger; and
	f)	no proceedings, whether civil or criminal, pending at the time of a merger by or against a constituent company, or against any shareholder, director or officer, or agent thereof, are abated or discontinued by the merger; but

	a.	the proceedings may be enforced, prosecuted, settled or compromised by or against the surviving company or against the shareholder, director, officer or agent thereof, as the case may be; or
	b.	the surviving company may be substituted in the proceedings for a constituent company.

The registrar shall strike off the Register of Companies a constituent company that is not the surviving company in the merger.

The BVI Act provides that any shareholder of the Company is entitled to payment of the fair value of his shares upon dissenting from a merger, unless the Company is the surviving company of the merger and the shareholder continues to hold the same or similar shares. The following is a summary of the position in respect of dissenters rights in the event of a merger under the BVI Act.

A dissenter is in most circumstances required to give to the Company written objection to the merger, which must include a statement that the dissenter proposes to demand payment for his shares if the merger takes place. This written objection must be given before the meeting of shareholders at which the merger is submitted to a vote, or at the meeting but before the vote. However, no objection is required from a shareholder to whom the Company did not give notice of the meeting of shareholders or where the proposed merger is authorized by written consent of the shareholders without a meeting.

Within 20 days immediately following the written consent, or the meeting at which the merger was approved, the Company shall give written notice of the consent or resolution to each shareholder who gave written objection or from whom written objection was not required, except those shareholders who voted for, or consented in writing to, the proposed merger.

A shareholder to whom the Company was required to give notice who elects to dissent shall, within 20 days immediately following the date on which the copy of the plan of merger or an outline of the merger is given to him, give to the Company a written notice of his decision to elect to dissent, stating:

	a)	his name and address;
	b)	the number and classes of shares in respect of which he dissents (which must be all shares that he holds in the Company); and
	c)	a demand for payment of the fair value of his shares.

Upon the giving of a notice of election to dissent, the dissenter ceases to have any of the rights of a shareholder except the right to be paid the fair value of his shares, and the right to institute proceedings to obtain relief on the ground that the action is illegal.

The Company shall make a written offer to each dissenter to purchase his shares at a specified price that the Company determines to be their fair value. Such offer must be given within 7 days immediately following the date of the expiration of the period within which shareholders may give their notices of election to dissent, or within 7 days immediately following the date on which the merger is put into effect, whichever is later.

If the Company and the dissenter fail, within 30 days immediately following the date on which the offer is made, to agree on the price to be paid for the shares owned by the dissenter, then within 20 days:

	a)	the Company and the dissenter shall each designate an appraiser;
	b)	the two designated appraisers together shall designate an appraiser;
	c)	the three appraisers shall fix the fair value of the shares owned by the dissenter as of the close of business on the day prior to the date of the meeting or the date on which the resolution was passed, excluding any appreciation or depreciation directly or indirectly induced by the action or its proposal, and that value is binding on the Company and the dissenter for all purposes; and
	d)	the Company shall pay to the dissenter the amount in money upon the surrender by him of the certificates representing his shares, and such shares shall be cancelled.

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Continuation into a Jurisdiction Outside the BVI. In accordance with, and subject to, our memorandum and articles, the Company may by resolution of shareholders or by a resolution passed unanimously by all directors of the Company continue as a company incorporated under the laws of a jurisdiction outside the BVI in the manner provided under those laws. The Company does not cease to be a BVI company unless the foreign law permits continuation and the BVI company has complied with the requirements of that foreign law. Where a company that wishes to continue as a company incorporated under the laws of a jurisdiction outside the BVI has a charge registered in respect of the property of the company undersection 163 of the BVI Act which has not been released or satisfied, it shall, before continuing and provided that the charge does not contain a covenant prohibiting continuation of the company outside the BVI, provide a written declaration addressed to the Registrar specifying that: (a) a notice of satisfaction or release in respect of the charge has been filed and registered under section 165 of the BVI Act; (b) where paragraph (a) has not been complied with, the chargee to whom the registered charge relates has been notified in writing of the intention to continue the company as a company incorporated under the laws of a jurisdiction outside the BVI and the chargee has given his or her consent or has not objected to the continuation; or (c) where paragraph (a) has not been satisfied and the chargee, after notification under paragraph (b), has not given his or her consent or objected to the continuation, the chargee’s interest secured by the registered charge shall not be diminished or in any way compromised by the continuation and the charge shall operate as a liability of the continued company incorporated under the laws of a jurisdiction outside of the BVI. Where a company is continued under the laws of a jurisdiction outside the BVI, (a) the company continues to be liable for all of its claims, debts, liabilities and obligations that existed prior to its continuation, (b) no conviction, judgment, ruling, order, claim, debt, liability or obligation due or to become due, and no cause existing, against the company or against any shareholder, director, officer or agent thereof, is released or impaired by its continuation as a company under the laws of the jurisdiction outside the BVI, (c) no proceedings, whether civil or criminal, pending by or against the company, or against any shareholder, director, officer or agent thereof, are abated or discontinued by its continuation as a company under the laws of the jurisdiction outside the BVI, but the proceedings may be enforced, prosecuted, settled or compromised by or against the Company or against the shareholder, director, officer or agent thereof, as the case may be; and (d) service of process may continue to be effected on the registered agent of the company in the BVI in respect of any claim, debt, liability or obligation of the Company during its existence as a company under the BVI Act.

Directors. In accordance with, and subject to, our memorandum and articles (including, for the avoidance of any doubt, any rights or restrictions attaching to any ordinary shares), (a) the directors are elected by resolution of shareholders or by resolution of directors for such term as the shareholders or directors determine; (b) each director holds office for the term, if any, fixed by the resolution of shareholders or resolution of directors appointing him, or until his earlier death, resignation or removal. If no term is fixed on the appointment of a director, the director serves indefinitely until his earlier death, resignation or removal: (c) a director may be removed from office (i) with or without cause, by a resolution of shareholders passed at a meeting of shareholders called for the purposes of removing the director or for purposes including the removal of the director or by a written resolution passed by a least 75% of the shareholders of the Company entitled to vote or (ii) with cause, by a resolution of directors passed at a meeting of directors called for the purpose of removing the director or for purposes including the removal of the director; (d) a director may resign his office by giving written notice of his resignation to the Company and the resignation has effect from the date the notice is received by the Company at the office of its registered agent or from such later date as may be specified in the notice and a director shall resign forthwith as a director if he is, or becomes, disqualified from acting as a director under the BVI Act (e) the directors may at any time appoint any person to be a director either to fill a vacancy or as an addition to the existing directors and where the directors appoint a person as director to fill a vacancy, the term shall not exceed the term that remained when the person who has ceased to be a director ceased to hold office; (f) a vacancy in relation to directors occurs if a director dies or otherwise ceases to hold office prior to the expiration of his term of office; and (g) a director is not required to hold ordinary shares as a qualification to office.

In accordance with, and subject to, our memorandum and articles, (a) any one director of the Company may call a meeting of the directors by sending a written notice to each other director; (b) the directors of the Company or any committee thereof may meet at such times and in such manner as the directors may determine to be necessary or desirable; (c) a director shall be given not less than 3 days’ notice of meetings of directors, but a meeting of directors held without 3 days’ notice having been given to all directors shall be valid if all the directors entitled to vote at the meeting who do not attend waive notice of the meeting, and for this purpose the presence of a director at a meeting shall constitute waiver by that director and the inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting; (d) a meeting of directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than one-half of the total number of directors, unless there are only 2 directors in which case the quorum is present; (e) a director may by a written instrument appoint an alternate who need not be a director and the alternate shall be entitled to attend meetings in the absence of the director who appointed him and to vote or consent in place of the director until the appointment lapses or is terminated; (f) a resolution of directors is passed if either (i) the resolution is approved at a duly convened and constituted meeting of directors of the Company or of a committee of directors of the Company by the affirmative vote of a majority of the directors present at the meeting who voted except that where a director is given more than one vote, he shall be counted by the number of votes he casts for the purpose of establishing a majority; or (ii) the resolution is consented to in writing by a majority of directors or by a majority of members of a committee of directors of the Company, as the case may be, unless (in either case) the BVI Act or our memorandum and articles require a different majority.

Indemnification of Directors. BVI law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the BVI High Court to be contrary to public policy (e.g. for purporting to provide indemnification against the consequences of committing a crime). An indemnity will be void and of no effect and will not apply to a person unless the person acted honestly and in good faith and in what he believed to be in the best interests of the company and, in the case of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful. Our post-offering amended and restated memorandum and articles of association permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty or fraud of such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in our post-offering amended and restated memorandum and articles of association.

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Directors and Conflicts of Interest. As noted above, pursuant to the BVI Act and the Amended Memorandum and Articles, a director of a company who has an interest in a transaction and who has declared such interest to the other directors, may:

	(a)	vote on a matter relating to the transaction;

	(b)	attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purposes of a quorum; and

	(c)	sign a document on behalf of the Company, or do any other thing in his capacity as a director, that relates to the transaction,

and, subject to compliance with the BVI Act shall not, by reason of his office be accountable to the Company for any benefit which he derives from such transaction and no such transaction shall be liable to be avoided on the grounds of any such interest or benefit.

In accordance with, and subject to, our Amended Memorandum and Articles, (a) a director of the Company shall, forthwith after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the Company, disclose the interest to all other directors of the Company; and (b) for the purposes noted foregoing, a disclosure to all other directors to the effect that a director is a member, director or officer of another named entity or has a fiduciary relationship with respect to the entity or a named individual and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that entity or individual, is a sufficient disclosure of interest in relation to that transaction.

Shareholders’ Suits. Under the provisions of the BVI Act, the memorandum and articles of association of a company are binding as between the company and its shareholders and between the shareholders.

If the majority shareholders have infringed a minority shareholder’s rights, the minority may seek to enforce its rights either by derivative action or by personal action. A derivative action concerns the infringement of the company’s rights where the wrongdoers are in control of the company and are preventing it from taking action, whereas a personal action concerns the infringement of a right that is personal to the particular shareholder concerned.

The BVI Act provides for a series of remedies available to shareholders. Where a company incorporated under the BVI Act conducts some activity which breaches the BVI Act or the company’s memorandum and articles of association, the BVI High Court can issue a restraining or compliance order. Shareholders can now also bring derivative, personal and Representative Actions under certain circumstances.

In certain circumstances, a shareholder has the right to seek various remedies against the company in the event the directors are in breach of their duties under the BVI Act. Pursuant to Section 184B of the BVI Act, if a company or director of a company engages in, proposes to engage in or has engaged in, conduct that contravenes the provisions of the BVI Act or the memorandum or articles of association of the company, the courts of the British Virgin Islands may, on application of a shareholder or director of the company, make an order directing the company or director to comply with, or restraining the company or director from engaging in conduct that contravenes the BVI Act or the memorandum or articles. Furthermore, pursuant to Section 184I(1) of the BVI Act, a shareholder of a company who considers that the affairs of the company have been, are being or likely to be, conducted in a manner that is, or any acts of the company have been, or are likely to be oppressive, unfairly discriminatory, or unfairly prejudicial to him in that capacity, may apply to the courts of the British Virgin Islands for an order which, inter alia, can require the company or any other person to pay compensation to the shareholders.

Squeeze-out Provisions. Shareholders of a company holding 90% of the votes of the outstanding shares entitled to vote and shareholders of a company holding 90% of the votes of the outstanding shares of each class of shares entitled to vote as a class, may give a written instruction to the company directing it to redeem the shares held by the remaining shareholders.

Dissent Rights. The BVI Act provides that any shareholder of a company is entitled to payment of the fair value of his shares upon dissenting from any of the following: (a) a merger if the company is a constituent company, unless the company is the surviving company and the shareholder continues to hold the same or similar shares; (b) a consolidation, if the company is a constituent company; (c) any sale, transfer, lease, exchange or other disposition of more than 50% in value of the assets or business of the company if not made in the usual or regular course of the business carried on by the company but not including: (i) a disposition pursuant to an order of the court having jurisdiction in the matter, (ii) a disposition for money on terms requiring all or substantially all net proceeds to be distributed to the shareholders in accordance with their respective interests within one year after the date of disposition, or (iii) a transfer pursuant to the power of the directors to transfer assets for the protection thereof; (d) a compulsory redemption of 10% or fewer of the issued shares of the company required by the holders of 90% or more of the votes of the outstanding shares of the company pursuant to the terms of Section 176 of the BVI Act; and (e) an arrangement, if permitted by the BVI court.

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Generally any other claims against a company by its shareholders must be based on the general laws of contract or tort applicable in the BVI or their individual rights as shareholders as established by the company’s memorandum and articles of association. There are common law rights for the protection of shareholders that may be invoked, largely derived from English common law. For example, under the rule established in the English case known as Foss v. Harbottle, a court will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express dissatisfaction with the conduct of the company’s affairs by the majority or the board of directors. However, every shareholder is entitled to seek to have the affairs of the company conducted properly according to law and the constituent documents of the Company. As such, if those who control the Company have persistently disregarded the requirements of company law or the provisions of the company’s memorandum and articles of association, then the courts may grant relief. Generally, the areas in which the courts will intervene are the following:

	●	a company is acting or proposing to act illegally or beyond the scope of its authority;

	●	the act complained of, although not beyond the scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained;

	●	the individual rights of the plaintiff shareholder have been infringed or are about to be infringed; or

	●	those who control the Company are perpetrating a “fraud on the minority.”

Share Repurchases and Redemptions. As permitted by the BVI Act and subject to our Amended Memorandum and Articles (in particular to the written consent or affirmative approval of the holders of Series A Preferred Shares where applicable), shares may be repurchased, redeemed or otherwise acquired by us by resolution of directors and with the consent of the shareholder whose shares are being purchased. Depending on the circumstances of the redemption or repurchase, our directors may need to determine that, immediately following the redemption or repurchase, we will be able to satisfy our debts as they fall due and the value of our assets exceeds our liabilities. Our directors may only exercise this power on our behalf, subject to the BVI Act, our memorandum and articles of association and to any applicable requirements imposed from time to time by the SEC, the or any other stock exchange on which our securities are listed.

Inspection of Books and Records. A member of the Company is entitled, on giving written notice to the Company, to inspect

(a) the memorandum and articles of association of the Company; (b) the register of members; (c) the register of directors; and (d) the minutes of meetings and resolutions of members and of those classes of members of which he is a member; and to make copies of or take extracts from the documents and records. Subject to the post offering amended and restated memorandum and articles of association, the directors may, if they are satisfied that it would be contrary to the Company’s interests to allow a member to inspect any document, or part of a document, specified in (b), (c) and (d) above, refuse to permit the member to inspect the document or limit the inspection of the document, including limiting the making of copies or the taking of extracts from the records.

Where a company fails or refuses to permit a member to inspect a document or permits a member to inspect a document subject to limitations, that member may apply to the BVI High Court for an order that he should be permitted to inspect the document or to inspect the document without limitation.

A company is required to keep at the office of its registered agent: its memorandum and articles of association of the company; the register of members or a copy of the register of members; the register of directors or a copy of the register of directors; and copies of all notices and other documents filed by the company in the previous ten years.

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Where the place at which the original register of members or the original register of directors of the Company is changed, the Company must provide the registered agent with the physical address of the new location of the records within 14 days of the change of location.

A company is also required to keep at the office of its registered agent or at such other place or places, within or outside the BVI, as the directors may determine the minutes of meetings and resolutions of shareholders and of classes of shareholders; and the minutes of meetings and resolutions of directors and committees of directors. If such records are kept at a place other than at the office of the Company’s registered agent, the Company is required to provide the registered agent with a written record of the physical address of the place or places at which the records are kept and to notify the registered agent, within 14 days, of the physical address of any new location where such records may be kept.

Dissolution; Winding Up. Under BVI law, the liquidation of a company may be a voluntary solvent liquidation or an insolvent liquidation under the Insolvency Act. Where a company has been struck off the Register of Companies under the BVI Act continuously for a period of 7 years it is dissolved with effect from the last day of that period.

Anti-Money Laundering Laws. In order comply with legislation or regulations aimed at the prevention of money laundering the Company is required to adopt and maintain anti-money laundering procedures, and may require members to provide evidence to verify their identity. Where permitted, and subject to certain conditions, the Company also may delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.

If any person resident in the British Virgin Islands knows or suspects that another person is engaged in money laundering or terrorist financing and the information for that knowledge or suspicion came to their attention in the course of their business the person will be required to report his belief or suspicion to the Financial Investigation of the British Virgin Islands, pursuant to the Proceeds of Criminal Conduct Act 1997 (as amended). Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.

Exchange Controls. We know of no BVI laws, decrees, regulations or other legislation that limit the import or export of capital or the payment of dividends to shareholders who do no reside in the BVI.

Material Differences in BVI Law and our Amended and Restated Memorandum and Articles of Association and Delaware Law

Our corporate affairs are governed by our Amended Memorandum and Articles and the provisions of applicable BVI law, including the BVI Act and BVI common law. The BVI Act differs from laws applicable to US corporations and their shareholders. The following table provides a comparison between certain statutory provisions of the BVI Act (together with the provisions of our memorandum and articles of association) and the Delaware General Corporation Law relating to shareholders’ rights.

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Shareholder Meetings

BVI		Delaware
● In accordance with, and subject to, our memorandum and articles, (a) any director of the company may convene meetings of the shareholders at such times and in such manner as the director considers necessary or desirable; and (b) upon the written request of shareholders entitled to exercise 30% or more of the voting rights in respect of the matter for which the meeting is requested the directors shall convene a meeting of shareholders		● May be held at such time or place as designated in the charter or the by-laws, or if not so designated, as determined by the board of directors

● May be held inside or outside the BVI		● May be held inside or outside Delaware

● In accordance with, and subject to, our memorandum and articles, (a) the director convening a meeting shall give not less than 7 days’ notice of a meeting of shareholders to those shareholders whose names on the date the notice is given appear as shareholders in the register of members of the company and are entitled to vote at the meeting; and the other directors; and (b) the director convening a meeting of shareholders may fix as the record date for determining those shareholders that are entitled to vote at the meeting the date notice is given of the meeting, or such other date as may be specified in the notice, being a date not earlier than the date of the notice		● Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any

Shareholder’s Voting Rights

BVI		Delaware

● In accordance with, and subject to, our memorandum and articles (including, for the avoidance of any doubt, any rights or restrictions attaching to any shares), (a) a shareholder may be represented at a meeting of shareholders by a proxy who may speak and vote on behalf of the shareholder; and (b) the instrument appointing a proxy shall be produced at the place designated for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote. The notice of the meeting may specify an alternative or additional place or time at which the proxy shall be presented		● Any person authorized to vote may authorize another person or persons to act for him by proxy

● In accordance with, and subject to, our memorandum and articles (including, for the avoidance of any doubt, any rights or restrictions attaching to any shares), (a) a meeting of shareholders is duly constituted if, at the commencement of the meeting, there are present in person or by proxy not less than 50% of the votes of the shares entitled to vote on resolutions of shareholders to be considered at the meeting; and (b) if within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the request of shareholders, shall be dissolved; in any other case it shall stand adjourned to the next business day in the jurisdiction in which the meeting was to have been held at the same time and place or to such other time and place as the directors may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the Shares or each class or series of ordinary shares entitled to vote on the matters to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved		● The charter or bylaws may specify the number to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares shall constitute a quorum

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● In accordance with, and subject to, our memorandum and articles (including, for the avoidance of any doubt, any rights or restrictions attaching to any shares), (a) at any meeting of the chairman appropriate whether any resolution proposed has been carried or not and the result of his decision shall be announced to the meeting and recorded in the minutes of the meeting. If the chairman has any doubt as to the outcome of the vote on a proposed resolution, he shall cause a poll to be taken of all votes cast upon such resolution. If the chairman fails to take a poll then any shareholder present in person or by proxy who disputes the announcement by the chairman of the result of any vote may immediately following such announcement demand that a poll be taken and the chairman shall cause a poll to be taken. If a poll is taken at any meeting, the result shall be announced to the meeting and recorded in the minutes of the meeting; and (b) a resolution of shareholders is passed if either (i) the resolution is approved at a duly convened and constituted meeting of the shareholders of the company by the affirmative vote of a majority of the votes of the ordinary shares entitled to vote thereon which were present at the meeting and were voted; or (ii) the resolution is consented to in writing by a majority of the votes of ordinary shares entitled to vote thereon; unless (in either case) the BVI Act or our memorandum and articles require a different majority

		● Except as provided in the charter documents, changes in the rights of shareholders as set forth in the charter documents require approval of a majority of its shareholders

● In accordance with, and subject to, our memorandum and articles (including, for the avoidance of any doubt, any rights or restrictions attaching to any Preferred Shares), the company may amend its memorandum or articles by a resolution of shareholders or by a resolution of directors, save that no amendment may be made by a resolution of directors: (i) to restrict the rights or powers of the shareholders to amend the memorandum or articles; (ii) to change the percentage of shareholders required to pass a resolution of shareholders to amend the memorandum or articles; (iii) in circumstances where the memorandum or articles cannot be amended by the shareholders; or (iv) to certain specified clauses of the memorandum of association		● The memorandum and articles of association may provide for cumulative voting

Directors

BVI		Delaware

● In accordance with, and subject to, our memorandum and articles, the minimum number of directors shall be one		● Board must consist of at least one member

● In accordance with, and subject to, our memorandum and articles (including, for the avoidance of any doubt, any rights or restrictions attaching to any shares), (a) the directors are elected by resolution of shareholders or by resolution of directors for such term as the shareholders or directors determine; (b) each director holds office for the term, if any, fixed by the resolution of shareholders or resolution of directors appointing him, or until his earlier death, resignation or removal. If no term is fixed on the appointment of a director, the director serves indefinitely until his earlier death, resignation or removal: (c) a director may be removed from office (i) with or without cause, by a resolution of shareholders passed at a meeting of shareholders called for the purposes of removing the director or for purposes including the removal of the director or by a written resolution passed by a least 75% of the shareholders of the company entitled to vote or (ii) with cause, by a resolution of directors passed at a meeting of directors called for the purpose of removing the director or for purposes including the removal of the director; (d) a director may resign his office by giving written notice of his resignation to the company and the resignation has effect from the date the notice is received by the company at the office of its registered agent or from such later date as may be specified in the notice and a director shall resign forthwith as a director if he is, or becomes, disqualified from acting as a director under the BVI Act; (e) the directors may at any time appoint any person to be a director either to fill a vacancy or as an addition to the existing directors and where the directors appoint a person as director to fill a vacancy, the term shall not exceed the term that remained when the person who has ceased to be a director ceased to hold office; (f) a vacancy in relation to directors occurs if a director dies or otherwise ceases to hold office prior to the expiration of his term of office; and (g) a director is not required to hold ordinary shares as a qualification to office.		● Number of board members shall be fixed by the by laws, unless the charter fixes the number of directors, in which case a change in the number shall be made only by amendment of the charter

● Directors do not have to be independent		● Directors do not have to be independent

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Fiduciary Duties

BVI		Delaware

● Directors owe duties at both common law and under statute including as follows: ● Duty to act honestly and in good faith and in what the director believes to be in the best interests of the company; ● Duty to exercise care, diligence and skill that a reasonable director would exercise in the same circumstances; and ● Duty to exercise powers for a proper purpose and directors shall not act, or agree to the company acting, in a manner that contravenes the BVI Act or the memorandum and articles of association;		● Directors and officers must act in good faith, with the care of a prudent person, and in the best interest of the corporation
		● Directors and officers must refrain from self-dealing, usurping corporate opportunities and receiving improper personal benefits

● The BVI Act provides that a director of a company shall, forthwith after becoming aware of the fact that he is interested in a transaction entered into, or to be entered into, by the company, disclose the interest to the board of the company. However, the failure of a director to disclose that interest does not affect the validity of a transaction entered into by the director or the company, so long as the transaction was not required to be disclosed because the transaction is between the company and the director himself and is in the ordinary course of business and on usual terms and conditions. Additionally, the failure of a director to disclose an interest does not affect the validity of the transaction entered into by the company if (a) the material facts of the interest of the director in the transaction are known by the shareholders entitled to vote at a meeting of shareholders and the transaction is approved or ratified by a resolution of shareholders or (b) the company received fair value for the transaction		● Directors may vote on a matter in which they have an interest so long as the director has disclosed any interests in the transaction

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Shareholder Derivative Actions

BVI		Delaware

● Generally speaking, the company is the proper plaintiff in any action. A shareholder may, with the leave of the BVI court, bring proceedings or intervene in proceedings in the name of the company, in certain circumstances. Such actions are known as derivative actions. The BVI court may only grant leave to bring a derivative action where the following circumstances apply: ● the company does not intend to bring, diligently continue or defend or discontinue the proceedings; and ● it is in the interests of the company that the conduct of the proceedings not be left to the directors or to the determination of the shareholders as a whole when considering whether to grant leave, the BVI court is also required to have regard to the following matters:		● In any derivative suit instituted by a shareholder of a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law

ii.

iii.

iv.

whether the shareholder is acting in good faith;

whether a derivative action is in the interests of the company, taking into account the directors’ views on commercial matters;

whether the action is likely to succeed;

the costs of the proceedings in relation to the relief likely to be obtained; and

whether an alternative remedy to the derivative claim is available

● Complaint shall set forth with particularity the efforts of the plaintiff to obtain the action by the board or the reasons for not making such effort

● Such action shall not be dismissed or compromised without the approval of the Delaware Court of Chancery

TAXATION

The following is a summary of the material British Virgin Islands, Mexican and United States federal income tax consequences and considerations relevant to an investment in our Ordinary Shares. The discussion is not intended to be, nor should it be construed as, legal or tax advice to any particular prospective purchaser. The discussion is based on laws and relevant interpretations thereof in effect as of the date hereof, all of which are subject to change or different interpretations, possibly with retroactive effect. The discussion does not address United States state or local tax laws, or tax laws of jurisdictions other than the British Virgin Islands, the Mexico and the United States. To the extent the discussion herein relates to matters of British Virgin Islands, Mexico or United States tax law, it is the opinion of Maples and Calder, our counsel as to matters of British Virgin Islands law, SMPS Legal, our counsel as to matters of Mexican law, and Sichenzia Ross Ference LLP, our counsel as to matters of United States federal law, respectively.

British Virgin Islands Taxation

The following summary contains a description of certain British Virgin Islands and U.S. federal income tax consequences of the acquisition, ownership and disposition of ordinary shares, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase ordinary shares. The summary is based upon the tax laws of British Virgin Islands and regulations thereunder and on the tax laws of the U.S. and regulations thereunder as of the date hereof, which are subject to change.

British Virgin Islands Tax Considerations

Prospective investors should consult their professional advisers on the possible tax consequences of buying, holding or selling any Shares under the laws of their country of citizenship, residence or domicile.

Under Existing British Virgin Islands Laws.

The Company and all dividends, interest, rents, royalties, compensation and other amounts paid by the Company to persons who are not resident in the BVI and any capital gains realized with respect to any shares, debt obligations, or other securities of the Company by persons who are not resident in the BVI are exempt from all provisions of the Income Tax Ordinance in the BVI.

No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable by persons who are not resident in the BVI with respect to any shares, debt obligation or other securities of the Company.

All instruments relating to transfers of property to or by the Company and all instruments relating to transactions in respect of the shares, debt obligations or other securities of the Company and all instruments relating to other transactions relating to the business of the Company are exempt from payment of stamp duty in the BVI. This assumes that the Company does not hold an interest in real estate in the BVI.

There are currently no withholding taxes or exchange control regulations in the BVI applicable to the Company or its members.

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Mexico Taxation

Pursuant to the provisions of the Mexican Income Tax Law, dividends paid to non-Mexican holders are currently subject to a 10% Mexican withholding tax. Pursuant to provisions of the Mexican Income Tax Law having temporary effect, dividends paid to non-Mexican holders from profits generated by us prior to 2014, will not be subject to the 10% withholding tax. This Mexican withholding tax is considered final and cannot be credited against any other tax in Mexico.

Non-Mexican holders may be subject to a reduced tax rate, provided that such holders are entitled to benefits under an income tax treaty to which Mexico is a party and which is in effect. Dividends paid from distributable earnings that have not been subject to Mexican corporate income tax are subject to a tax at the corporate level, payable by us, in addition to the withholding tax described above. This corporate tax paid by us in respect of any such dividend distribution is not final and may be credited by us against our corporate income tax liability during the fiscal year in which the tax was paid and for the following two years. Dividends paid from our net after tax account balance are not subject to this corporate income tax.

Material United States Federal Income Tax Considerations

The following is a general summary of material U.S. federal income tax considerations relating to the purchase, ownership and disposition of the Ordinary Shares by U.S. Investors (as defined below) that purchase the Ordinary Shares pursuant to the public offering and hold such Ordinary Shares as capital assets as defined under the Internal Revenue Code of 1986, as amended, or the Code. This summary is based on the Code, the Treasury regulations issued pursuant to the Code, or the Treasury Regulations, and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or to different interpretation. Such change could materially and adversely affect the tax consequences described below. No assurance can be given that the Internal Revenue Service, or IRS, would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. This summary is for general information only and does not address all of the tax considerations that may be relevant to specific U.S. Investors in light of their particular circumstances or to U.S. Investors subject to special treatment under U.S. federal income tax law (such as banks or other financial institutions, insurance companies, tax-exempt organizations, retirement plans, partnerships, regulated investment companies, dealers in stock, securities or currencies, brokers, real estate investment trusts, certain former citizens or residents of the United States, persons who acquire Ordinary Shares as part of a straddle, hedge, conversion transaction or other integrated investment, persons that have a “functional currency” other than the U.S. dollar, persons that own directly, indirectly or constructively 10.0% or more of our Company’s shares, persons that are resident in or hold Ordinary Shares in connection with a permanent establishment outside the United States or persons that generally mark their securities to market for U.S. federal income tax purposes). This summary does not address any U.S. state or local or non-U.S. tax considerations or any U.S. federal estate, gift or alternative minimum tax considerations.

As used in this summary, the term “U.S. Investor” means a beneficial owner of Ordinary Shares that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate, the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust, (a) if a court within the United States is able to exercise primary supervision over its administration and one or more “U.S. persons” (within the meaning of the Code) have the authority to control all of its substantial decisions, or (b) if a valid election is in effect for the trust to be treated as a U.S. person.

If an entity treated as a partnership for U.S. federal income tax purposes holds the Ordinary Shares, the tax treatment of such partnership and each partner thereof will generally depend upon the status and activities of the partnership and such partner. A holder that is treated as a partnership for U.S. federal income tax purposes should consult its own tax adviser regarding the U.S. federal income tax considerations applicable to it and its partners of the purchase, ownership and disposition of the Ordinary Shares.

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Prospective investors should consult their tax advisers as to the particular tax considerations applicable to them relating to the purchase, ownership and disposition of Ordinary Shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.

Taxation of Dividends

Subject to the PFIC discussion below, a U.S. Investor will be required to include in gross income the gross amount of any distribution paid on the Ordinary Shares (including any amount of taxes withheld by our Company) out of our Company’s current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Distributions in excess of our Company’s current and accumulated earnings and profits would be treated as a non-taxable return of capital to the extent of the U.S. Investor’s adjusted tax basis in the Ordinary Shares and thereafter as a gain from the sale of the Ordinary Shares, but only if our Company calculates our earnings and profits in accordance with U.S. federal income tax principles. As our Company does not at this time intend to makes such calculations, a U.S. Investor should expect to treat the entire amount of any distribution received as a dividend.

In case of a U.S. Investor that is a corporation, dividends paid on the Ordinary Shares will be subject to regular corporate rates and will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations.

Dividends received by an individual, trust or estate should be subject to a maximum income tax rate of 20% (plus the tax on investment income, discussed below). This reduced income tax rate is applicable to dividends paid by “qualified foreign corporations” and only if certain holding period requirements and other conditions are met. A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive tax treaty with the U.S. and which includes an exchange of information program or (ii) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the U.S. As we expect to be readily tradeable on the NASDAQ, our Company should be a qualified foreign corporation paying dividends subject to a reduced rate of taxation.

Dividends received by an individual, trust or estate will be counted as investment income that is subject to the 3.8% surtax on net investment income. U.S. Investors should consult their own tax advisors to determine whether, based on all of their investment income, they are subject to this tax.

A U.S. Investor may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on the Ordinary Shares. A U.S. Investor who does not elect to claim a foreign tax credit for foreign income tax withheld, may instead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such investor elects to do so for all creditable foreign income taxes. For purposes of calculating the foreign tax credit limitation, dividends paid by our Company will, depending on the circumstances of the U.S. investor, be either general or passive income.

Taxation of Sale, Exchange or Other Disposition of Ordinary Shares

Subject to the PFIC discussion below, a U.S. Investor generally will recognize capital gain or loss upon the sale, exchange or other disposition of Ordinary Shares in an amount equal to the difference, if any, between the amount realized on the sale, exchange or other disposition and the U.S. Investor’s adjusted tax basis in such Ordinary Shares. This capital gain or loss will be long-term capital gain or loss if the U.S. Investor’s holding period in the Ordinary Shares exceeds one year. Long-term capital gain of a non-corporate U.S. investor is generally taxed at preferential rates. The deductibility of capital losses is subject to limitations. The gain or loss will generally be income or loss from sources within the United States for U.S. foreign tax credit purposes. U.S. Investors are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on the disposition of Ordinary Shares, including the availability of the foreign tax credit under an investor’s own particular circumstances.

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A U.S. Investor that receives non-U.S. currency on the disposition of the Ordinary Shares will realize an amount equal to the U.S. dollar value of the foreign currency received on the date of disposition (or in the case of cash basis and electing accrual basis taxpayers, the settlement date) whether or not converted into U.S. dollars at that time. Very generally, the U.S. Investor will recognize currency gain or loss if the U.S. dollar value of the currency received on the settlement date differs from the amount realized with respect to the Ordinary Shares. Any currency gain or loss on the settlement date or on any subsequent disposition of the foreign currency generally will be U.S. source ordinary income or loss.

Passive Foreign Investment Company

In general, a foreign corporation will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (i) at least 75.0% of its gross income is “passive income” or (ii) at least 50.0% of the average value of its total assets is attributable to assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, certain royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. In determining whether a foreign corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25.0% interest (by value) is taken into account.

We do not expect to be a PFIC for the current taxable year or any future year. The PFIC determination, however, depends upon the application of complex U.S. federal income tax rules concerning the classification of our assets and income for this purpose and the application of these rules is uncertain in some respects. Under the income and asset tests, whether our Company is a PFIC will be determined annually based upon the composition and nature of our income and the composition, nature and valuation of our assets, all of which are subject to change. For purposes of the asset test, any cash, including proceeds from the public offering, will generally be treated as a passive asset and the amount of cash held by our Company in any year will depend, in part, on when our Company spends the cash raised from the public offering and generated in its operations. In addition, the determination of our Company’s PFIC status will depend upon the nature of the assets acquired by our Company. Moreover, the determination of the value of our Company’s assets may depend on its market capitalization, which may fluctuate, and on whether our variable interest entities are treated as wholly-owned subsidiaries. Accordingly, there can be no assurance that we will not be a PFIC in the current or any future year. In addition, there can be no assurance that the IRS will not challenge any determination by our Company that it does not constitute a PFIC.

If our Company is classified as a PFIC for any taxable year during which a U.S. Investor owns Ordinary Shares, the U.S. Investor, absent certain elections (including a mark-to-market election discussed below), will generally be subject to adverse rules (regardless of whether our Company continues to be classified as a PFIC) with respect to (i) any “excess distributions” (generally, any distributions received by the U.S. Investor on the Ordinary Shares in a taxable year that are greater than 125 percent of the average annual distributions received by the U.S. Investor in the three preceding taxable years or, if shorter, the U.S. Investor’s holding period for the Ordinary Shares) and (ii) any gain realized on the sale or other disposition of Ordinary Shares.

Under these adverse rules (a) the excess distribution or gain will be allocated ratably over the U.S. Investor’s holding period, (b) the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which our Company is classified as a PFIC will be taxed as ordinary income, and (c) the amount allocated to each of the other taxable years during which our Company was classified as a PFIC will be subject to tax at the highest rate of tax in effect for the applicable class of taxpayers for that year and an interest charge will be imposed with respect to the resulting tax attributable to each such taxable year.

If our Company is a PFIC for any taxable year during which a U.S. Investor holds the Ordinary Shares, our Company will continue to be treated as a PFIC with respect to that U.S. Investor for all succeeding years during which the U.S. Investor holds the Ordinary Shares. The U.S. Investor may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the special tax rules discussed above) as if the U.S. Investor’s Ordinary Shares had been sold on the last day of the last taxable year for which our Company was a PFIC. If our Company holds or acquires an interest in an entity which is itself a PFIC, such an interest may be treated as owned by a U.S. Investor. U.S. Investors should consult their own tax advisers regarding the consequences to them if our Company holds or acquires an interest in an entity which is itself a PFIC.

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Although the PFIC rules permit a U.S. holder of stock in a PFIC in certain circumstances to avoid some of the disadvantageous tax treatment described above by making a “qualified electing fund,” or QEF, election, a U.S. Investor will not be able to elect to treat our Company as a QEF because our Company does not intend to prepare the information that the U.S. Investor would need to make a QEF election.

If our Company is a PFIC in any year with respect to a U.S. Investor, the disadvantageous tax treatment described above may in part be avoided with respect to our Company if a U.S. Investor validly makes a mark-to-market election as of the beginning of such U.S. Investor’s holding period. If such election is made, such U.S. Investor generally will be required to take into account the difference, if any, between the fair market value of, and its adjusted tax basis in, the Ordinary Shares at the end of each taxable year as ordinary income or, to the extent of any net mark-to-market gains previously included in income, ordinary loss, and to make corresponding adjustments to the tax basis of such Ordinary Shares. In addition, any gain from a sale, exchange or other disposition of the Ordinary Shares will be treated as ordinary income, and any loss will be treated as ordinary loss (to the extent of any net mark-to-market gains previously included in income). A mark-to-market election is available to a U.S. Investor only if the Ordinary Shares are considered “marketable stock.” Generally, shares will be considered marketable stock if the shares are “regularly traded” on a “qualified exchange” within the meaning of applicable Treasury Regulations.

If our Company is a PFIC in any year with respect to a U.S. Investor, the U.S. Investor will be required to file an annual return on IRS Form 8621 reporting his interest in our Company and describing any distributions received on the Ordinary Shares and any gain realized on the disposition of the Ordinary Shares (as well as reporting any mark-to-market or other elections).

U.S. Investors should consult their tax advisors regarding the potential application of the PFIC regime, including eligibility for and the manner and advisability of making a mark-to-market election, and any reporting requirements that arise as a result of our classification as a PFIC.

Certain Reporting Requirements

Certain U.S. Investors are required to file information returns with the IRS, including IRS Form 926, Return by U.S. Transferor of Property to a Foreign Corporation, reporting transfers of cash (in excess of $100,000) or other property to our Company and information relating to the U.S. Investor and our Company. Substantial penalties may be imposed upon a U.S. Investor that fails to comply.

Certain individual U.S. Investors (and, under Treasury regulations, certain entities) may be required to report to the IRS (on Form 8938) information with respect to their investments in our Ordinary Shares not held through an account with a U.S. financial institution. U.S. Investors who fail to report required information could become subject to substantial penalties.

U.S. Investors are encouraged to consult with their own tax advisors regarding foreign financial asset reporting requirements with respect to their investment in our Ordinary Shares.

Backup Withholding Tax and Information Reporting Requirements

Under certain circumstances, U.S. backup withholding tax and/or information reporting may apply to U.S. Investors with respect to dividend payments made on or the payment of proceeds from the sale, exchange or other disposition of the Ordinary Shares, unless an applicable exemption is satisfied. U.S. Investors that are corporations generally are excluded from these information reporting and backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding tax rules will be allowed as a credit against a U.S. Investor’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Investor timely furnishes required information to the IRS.

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EXPENSES

The following are the estimated expenses of the issuance and distribution of the securities being registered under the registration statement of which this prospectus forms a part, all of which will be paid by us. With the exception of the SEC registration fee, all amounts are estimates and may change:

SEC registration fee	$	8,183
Printer fees and expenses	$	0
Legal fees and expenses	$	120,000
Accounting fees and expenses	$	25,000
Miscellaneous	$	1,000
Total	$	154,183

LEGAL MATTERS

Certain legal matters concerning this prospectus will be passed upon for us by Sichenzia Ross Ference LLP, New York, New York. The validity of the Ordinary Shares and other certain legal matters as to British Virgin Islands law will be passed upon for us by Maples & Calder. Certain legal matters as to Mexico law will be passed upon for us by SMPS Legal.

EXPERTS

The financial statements as of December 31, 2021, 2020 and 2019 and for the years then ended included in this prospectus have been so included in reliance upon the report of Centurion ZD CPA & Co., an independent registered public accounting firm, appearing elsewhere herein and in the registration statement, given on the authority of said firm as experts in auditing and accounting. The financial statements as of December 31, 2021 and 2020 and for the years then ended included in this prospectus for Fr8App have been so included in reliance upon the report of UHY LLP, an independent registered public accounting firm, appearing elsewhere herein and in the registration statement, given on the authority of said firm as experts in auditing and accounting. The report on the financial statements contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the Ordinary Shares was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant. Nor was any such person connected with the registrant as a promoter, managing or principal Underwriter, voting trustee, director, officer, or employee.

ENFORCEABILITY OF CIVIL LIABILITIES

British Virgin Islands

We are incorporated under the laws of the British Virgin Islands as a BVI business company limited by shares. We are incorporated in the British Virgin Islands because of certain benefits associated with being a British Virgin Islands entity. However, the British Virgin Islands has a less developed body of securities laws as compared to the United States and provides protections for investors to a lesser extent. In addition, British Virgin Islands companies may not have standing to sue before the federal courts of the United States.

Substantially all of our assets are located outside the United States. In addition, a majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or such persons or to enforce against them or against us, judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

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There is no statutory enforcement in the British Virgin Islands of judgments obtained in the U.S., however, the courts of the British Virgin Islands will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may be sued upon as a debt at common law so that no retrial of the issues would be necessary, provided that:

	●	the U.S. court issuing the judgment had jurisdiction in the matter and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process;

	●	the judgment is final and for a liquidated sum;

	●	the judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company;

	●	in obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court;

	●	recognition or enforcement of the judgment in the British Virgin Islands would not be contrary to public policy; and

	●	the proceedings pursuant to which judgment was obtained were not contrary to natural justice.

The British Virgin Islands courts are unlikely:

	●	to recognize or enforce against the Company, judgments of courts of the U.S. predicated upon the civil liability provisions of the securities laws of the U.S.; and

	●	to impose liabilities against the Company, predicated upon the certain civil liability provisions of the securities laws of the U.S. so far as the liabilities imposed by those provisions are penal in nature.

We have appointed Sichenzia Ross Ference LLP as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any State of the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

Mexico

There is doubt as to the enforceability in Mexico of civil liabilities based on the federal or state securities laws of the United States, either in an original action or in an action to enforce a judgment obtained in U.S. federal or state courts. The United States and Mexico currently do not have a treaty providing for the reciprocal recognition and enforcement of foreign judgments. Consequently, a final judgment for payment given by any federal or state court in the United States, whether or not predicated solely upon U.S. federal or state securities laws, would not automatically be enforceable in Mexico. A final judgment by a U.S. federal or state court in a properly decided case, however, may be recognized and enforced in Mexico in an action before a court of competent jurisdiction pursuant to Article 1347A of the Commerce Code, which provides, inter alia, that any judgment rendered outside Mexico may be enforced by Mexican courts, provided that:

●

such judgment is obtained in compliance with the legal requirements of the jurisdiction of the court rendering such judgment and in compliance with all legal requirements of the respective transaction documents;

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	●	such judgment is strictly for the payment of a certain sum of money, based on an in personam (as opposed to an in rem) action;
	●	the judge or court rendering the judgment was competent to hear and judge on the subject matter of the case in accordance with accepted principles of international law that are compatible with Mexican law. The foreign judge or court rendering the judgment would not be considered competent when the relevant documents include a jurisdiction clause in which the parties have submitted solely to the jurisdiction of Mexican courts;
	●	service of process is made personally on the defendant or on its duly appointed process agent;
	●	such judgment does not contravene Mexican law, public policy of Mexico, international treaties or agreements binding upon Mexico or generally accepted principles of international law;
	●	the applicable procedure under the laws of Mexico with respect to the enforcement of foreign judgments (including the issuance of a letter rogatory by the competent authority of such jurisdiction requesting enforcement of such judgment and the certification of such judgment as authentic by the corresponding authorities of such jurisdiction in accordance with the laws thereof) is complied with;
	●	the action in respect of which such judgment is rendered is not the subject matter of a lawsuit among the same parties, pending before a Mexican court;
	●	such judgment is final in the jurisdiction where obtained;
	●	the courts of such jurisdiction recognize the principles of reciprocity in connection with the enforcement of Mexican judgments in such jurisdiction; and
	●	such judgment fulfills the necessary requirements to be authentic.

Recognition of the Laws of New York in Judicial Proceedings in Mexico

Although the choice of the laws of New York to govern the guarantees would be recognized by the competent courts of Mexico, in case of a dispute before a Mexican court, the Mexican court would only recognize the substantive laws of New York and would apply the laws of Mexico with respect to procedural matters. Further, a Mexican court may refuse to apply and/or to enforce provisions governed by the laws of New York (as they apply to the guarantees) if the respective provision is contrary to the public policy of Mexico.

Judgments of Mexican Courts Enforcing the Obligations of Any Mexican Guarantors in Respect of the Notes Would Be Paid Only in Mexican Pesos

In the event that proceedings are brought against the Mexican guarantors in Mexico, either to enforce a judgment or as a result of an original action brought in Mexico, the Mexican guarantors would not be required to discharge those obligations in a currency other than Mexican currency. Under the Monetary Law of Mexico, an obligation, whether resulting from a judgment or by agreement, denominated in a currency other than Mexican currency, which is payable in Mexico, may be satisfied in Mexican currency at the rate of exchange in effect on the date on which payments are made. Such rate is currently determined by the Mexican Central Bank (Banco de México) and published every banking day in the Official Gazette of the Federation (Diario Oficial de la Federación). No separate action exists or is enforceable in Mexico for compensation for any shortfall.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION

Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to our directors, officers or persons controlling us, we have been advised that it is the SEC’s opinion that such indemnification is against public policy as expressed in such act and is, therefore, unenforceable.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form F-1 under the Securities Act with respect to the Ordinary Shares offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits filed therewith. For further information about us and the Ordinary Shares offered hereby, reference is made to the registration statement and the exhibits filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and in each instance we refer you to the copy of such contract or other document filed as an exhibit to the registration statement. However, statements in the prospectus contain the material provisions of such contracts, agreements and other documents. We currently do not file periodic reports with the SEC. Upon the closing of our initial public offering, we will be required to file periodic reports and other information with the SEC pursuant to the Exchange Act. A copy of the registration statement and the exhibits filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, NE, Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from that office. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains a website that contains reports, information statements and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.

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HUDSON CAPITAL INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page

Report of Independent Registered Public Accounting Firm (PCAOB ID: 2769)	F-2

Consolidated Balance Sheets as of December 31, 2021 and 2020	F-3

Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended December 31, 2021, 2020 and 2019	F-4

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019	F-5

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2021, 2020 and 2019	F-6

Notes to the Consolidated Financial Statements	F-7 - F-32

F-1

中正達會計師事務所

Centurion ZD CPA & Co.

Certified Public Accountants (Practising)

Unit 1304, 13/F., Two Harbourfront, 22 Tak Fung Street, Hunghom, Hong Kong

香港紅磡德豐街22號海濱廣場二期13樓1304室

Tel : (852) 2126 2388 Fax: (852) 2122 9078

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To:	The Board of Directors and Shareholders of Hudson Capital Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Hudson Capital Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

/s/ Centurion ZD CPA & Co.

Centurion ZD CPA & Co.

We have served as the Company’s auditor since 2020.

Hong Kong, China

April 29, 2022

PCAOB ID: 2769

F-2

HUDSON CAPITAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	2021			2020
	As of December 31,
	2021			2020
ASSETS
Current assets
Cash	$	221,312		$	3,274,287
Restricted cash in escrow
Accounts receivable, net		-			-
Accounts receivable – related party
Unbilled receivables
Prepaid expenses and other current assets
Other receivables		55,740			105,149
Loans to third parties, net		2,450,000			-
Prepayments		27,329			9,470
Due from related parties		-			81,756
Total Current Assets		2,754,381			3,470,662
Non-current assets
Property and Equipment, net		11,074			108,467
Intangible assets, net		-			806
Capitalized software, net
Other long-term assets
Long-term prepayment		-			3,031
Goodwill		-			-
Deferred Tax Assets		-			-
Security deposits
Total Assets	$	2,765,455		$	3,582,966

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accrued payroll	$	-		$	168,016
Accounts payable
Accounts payable – related party
Accrued expenses
Short-term borrowings
Notes payable, net
Convertible notes payable, net
Warrant liabilities
Advance from customers		-			-
Other payables and accruals		122,252			244,370
Due to related party		100			358,241
Taxes payable		-			1,053,249
Insurance financing payable
Total Current Liabilities		122,352			1,823,876
Provision of other liabilities		-			1,127,945
Deferred tax liabilities		-			-
Convertible notes payable, net – long term
Paycheck protection program – long term
Total Liabilities		122,352			2,951,821

COMMITMENTS AND CONTINGENCIES
Shareholders’ equity
Common Stock ($0.005* par value, unlimited shares authorized, 7,535,897 and 6,406,146 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively)		37,679			32,031
Preferred stock value
Additional paid in capital		36,524,982			32,931,128
Statutory reserve		3,032,854			3,032,854
Retained earnings		(36,683,506	)		(34,537,976	)
Accumulated other comprehensive loss		(268,906	)		(826,892	)
Total Shareholders’ Equity		2,643,103			631,145
Total Liabilities and Shareholders’ Equity	$	2,765,455		$	3,582,966

All of the VIE’s assets can be used to settle obligations of its primary beneficiary. Liabilities recognized as a result of consolidating the VIE do not represent additional claims on the Company’s general assets.

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.

See notes to the consolidated financial statements

F-3

HUDSON CAPITAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)


	Year Ended December 31, 2021			Year Ended December 31, 2020			Year Ended December 31, 2019

Revenue
- Third parties	$	-		$	618		$	1,366,417
- Related parties		-			-			-
Total revenue		-			618			1,366,417

Cost of revenues		-			-			123
Gross profit		-			618			1,366,294

Operating expenses
Cost of revenue (exclusive of depreciation and amortization shown separately below)
Compensation and employee benefits
Selling and marketing expenses		-			10,748			100,460
General and administrative expenses		2,495,308			4,123,108			1,893,499
Research & Development Expense		-			-			-
Donation expenses		-			-			-
Depreciation and amortization
Total Operating expenses		2,495,308			4,133,856			1,993,959
(Loss) income from operations		(2,495,308	)		(4,133,238	)		(627,665	)

Other income (expenses)
Interest income on bank deposit		5			14			666
Loss on disposal of a subsidiary		-			-			-
Other income (expenses)		349,023			38,870			(5,611,484	)
Interest income from loans to third parties		750			365,000			2,191,631
Impairment loss on loans to third parties and property and equipment		-			(5,345,999	)		(57,941,663	)
Interest expense, net
Gain (loss) from extinguishment of debt
Loss on initial issuance of private warrants
Change in fair value of warrant liabilities (See Note 12)
Total other (expenses) income, net		349,778			(4,942,115	)		(61,360,850	)

(Loss) Income before income tax expenses		(2,145,530	)		(9,075,353	)		(61,988,515	)
Income tax (benefit) expenses		-			-			7,243
Net (loss) income	$	(2,145,530	)	$	(9,075,353	)	$	(61,995,758	)
Change in redemption value of preferred stock
Net loss attributable to common stockholders
Other comprehensive (loss) income
Foreign currency translation (loss) gain		557,986			2,686,394			(365,258	)
Comprehensive (loss) Income	$	(1,587,544	)	$	(6,388,959	)	$	(62,361,016	)

Weighted average number of shares, basic and diluted		6,572,226			6,406,146			4,422,837^*	*
(Loss) per share, basic and diluted	$	(0.33	)	$	(1.42	)	$	(14.02	)*

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.

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

See notes to consolidated financial statements

F-4

HUDSON CAPITAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	2021			2020			2019
	Years ended December 31,
	2021			2020			2019
Cash flows from operating activities:
Net loss	$	(2,145,530	)	$	(9,075,353	)	$	(61,995,758	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,201			1,179			62,358
Amortization of debt issuance costs and debt discount
Share-based compensation
Non-cash interest
Accrued interest expense converted to equity
Loss on initial issuance of private warrants
Change in fair market value of warrant liabilities
Professional services performed in exchanged for common stock
Professional services performed in exchange for warrants
(Gain) Loss from extinguishment of debt
Deferred taxes		-			-			1,790,260
Loss on disposal of fixed assets		942			-			-
Impairment loss on loans to third parties		-			4,800,000			56,242,596
Impairment loss on fixed assets		-			-			-
Changes in operating assets and liabilities:		-			-			-
Accounts receivable		-			7,264			(1,450,857	)
Unbilled receivables
Account receivable – related party
Other receivables		49,409			541,541			2,782,583
Prepayments		(17,859	)		7,577			23,842
Prepaid expense and other assets
Due from related parties		(276,385	)		73,026			389,337
Long-term office rental deposit		-			-			-
Accrued payroll		(168,016	)		(453,467	)		80,431
Other payables and accruals		(122,118	)		42,901			(78,971	)
Tax payable		(1,053,249	)		67,054			202,515
Security deposits
Accounts Payable		-			-			-
Accounts payable – related party
Accrued expenses
Other Assets		-			-			-
Long-term prepayment		3,031			1,549			3,705
Estimated Liabilities		(1,127,945	)		168,064			971,268
Advance from customers		-			-			(94,688	)
Net cash (used in)/provided by operating activities		(4,854,519	)		(3,818,665	)		(1,071,379	)

Cash flows from investing activities:
Capitalization of software development costs
Purchases of property and equipment		(5,374	)		(108,095	)		-
Loans to third parties		(2,450,000	)		-			(200,000	)
Collection of loans to third parties		-			-			-
Proceeds on disposal of fixed assets		100,000			-			-
Net cash (used in)/provided by investing activities		(2,355,374	)		(108,095	)		(200,000	)

Cash flows from financing activities:
Proceeds from related party		-			-			(31,201	)
Repayment to a related party		-			-			-
Proceeds from convertible notes
Proceeds from the exercise of warrants
Proceeds from stock option exercise
Proceeds from notes payable, net of discounts
Repayment of insurance financing payable
Payment of loan origination cost
Repayment of short-term borrowings
Proceeds from short-term borrowings
Proceeds from paycheck protection program loan
Proceeds from shares and warrants placement (net of offering cost of $100,000 (2020: $222,000)		3,599,502			4,278,000			-
Net cash provided by/ (used in) financing activities		3,599,502			4,278,000			(31,201	)
Net increase in cash and cash equivalents
Effect of exchange rate changes on cash		557,416			2,909,480			(262,681	)
Net increase (decrease) in cash		(3,052,975	)		3,260,720			(1,565,261	)
Cash at beginning of year		3,274,287			13,567			1,578,828
Cash at end of year		221,312			3,274,287		$	13,567
Supplemental disclosure of cash flow information
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-
Non- cash investing activities
Deferred offering costs	$	-		$	-		$	-
Conversion of convertible debt to preferred stock
Change in redemption value of preferred stock
Financing of insurance premiums
Debt discount in connection with note payable

See notes to the consolidated financial statements

F-5

HUDSON CAPITAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Shares			Amount				Capital			Reserve		Earnings			Loss			Equity
																Accumulated
								Additional								other			Total
	Common Stock							Paid-in			Statutory		Retained			Comprehensive			Shareholders’
	Shares			Amount				Capital			Reserve		Earnings			Loss			Equity
Balance as of January 1, 2019		4,422,837	*	$	22,114	-	-	$	28,441,045		$	2,912,529	$	36,653,460		$	(3,148,028	)	$	64,881,120
Net (loss)					-				-					(61,995,758	)					(61,995,758	)
Appropriations of statutory reserves						-	-					37,401		(37,401	)
Foreign currency translation loss																	(365,258	)		(365,258	)
Balance as of December 31, 2019		4,422,837	*	$	22,114	-	-	$	28,441,045		$	2,949,930	$	(25,379,699	)	$	(3,513,286	)	$	2,520,104
Net (loss)					-				-					(9,075,353	)					(9,075,353	)
Appropriations of statutory reserves						-	-					82,924		(82,924	)					-
Proceeds from issuance of common stock		1,983,309	*		6,353	-	-		4,493,647											4,500,000
Reverse split adjustments		-			3,564				(3,564	)										-
Foreign currency translation loss																	2,686,394			2,686,394
Balance as of December 31, 2020		6,406,146		$	32,031	-	-	$	32,931,128		$	3,032,854	$	(32,537,976	)	$	(826,892	)	$	631,145
Net (loss)					-				-					(2,145,530	)					(2,145,530	)
Appropriations of statutory reserves						-	-					-		-						-
Proceeds from issuance of common stock		1,129,751			5,648				2,273,542											2,279,190
Proceeds from issuance of warrant						-	-		1,320,312											1,320,312
Foreign currency translation loss																	557,986			557,986
Balance as of December 31, 2021		7,538,897		$	37,679	-	-	$	36,524,982		$	3,032,854	$	(36,683,506	)	$	(268,906	)	$	2,643,103

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.

See notes to the consolidated financial statements

F-6

NOTE 1. ORGANIZATION AND PRINCIPAL ACTIVITIES

Hudson Capital Inc. (“HUSN” or the “Company”), formerly known as China Internet Nationwide Financial Services, Inc., incorporated in the British Virgin Islands (the “BVI”) on September 28, 2015, is engaged in the business of providing financial advisory services to meet the financial and capital needs of its clients, which comprise largely of small-to-medium sized enterprises, through the Company’s wholly-owned subsidiaries. On April 10, 2020, the board of directors of China Internet Nationwide Financial Services, Inc. (“CIFS”) resolved to change the Company’s name to “Hudson Capital Inc.” to re-brand the Company and better reflect the plans for its next phase of growth. The name change was effected with the British Virgin Islands Registrar of Corporate Affairs on April 23, 2020 and its name change and new ticker symbol on the Nasdaq was changed to HUSN with effect from May 8, 2020. The Company offers commercial payment advisory services, international corporate financing advisory services, intermediary bank loan advisory services and technical services. The Company’s wholly owned subsidiaries include: Hongkong Internet Financial Services Limited, (“HKIFS’) which was established in HongKong on October 7, 2015, and Beijing Yingxin Yijia Internet Technology Co., Ltd., (“Yingxin Yijia”) which was established on December 31, 2015 in Beijing, China by HKIFS. On September 2, 2019, Hong kong Shengqi technology limited(“HKSQ”) company became a shareholder of Beijing Yingxin Yijia. HKSQ was incorporated in Hong Kong on August 29, 2019. Mr. Lin Jianxin is a shareholder of HKSQ. On September 26, 2019, a series of agreements were entered into among HKIFS, HK Shengqi and its shareholders (the “VIE Agreements”). As a result of the VIE Agreements, HK become the primary beneficiary of HKSQ. HUSN is able to exercise control over Sheng Ying Xin and was entitled to substantially all of the economic benefits of Ying Xin Yi Jia through HKSQ, and HUSN treats Ying Xin Yi Jia as its variable interest entity (“VIE”) under U.S. GAAP. As a result, the results of operations, assets and liabilities of Ying Xin Yi Jia and its subsidiary (collectively “VIEs”) have been included in the accompanying consolidated financial statements.

Beijing Sheng Ying Xin Management Consulting Co., Ltd. (“Sheng Ying Xin”) was incorporated in Beijing, China on September 16, 2014. On December 29, 2016, Sheng Ying Xin incorporated Kashgar Sheng Yingxin Enterprise Consulting Co., Ltd. (“Kashgar SYX”) in the People’s Republic of China with registered capital of RMB5,000,000 (approximately $726,600), which capital has to be contributed in full by December 31, 2026. The legal representative of Kashgar SYX is Mr. Shaoyong Huang, who is also a 1% equity shareholder of Sheng Ying Xin.

HUSN is 60.22% owned by Mr. Jianxin Lin, who also owned 99% of Sheng Ying Xin directly and 1% of Sheng Ying Xin indirectly since its inception, September 16, 2014; Mr. Jianxin Lin is the former chief executive officer of both HUSN and Sheng Ying Xin. So HUSN and Sheng Ying Xin were considered to be under common control since September 28, 2015.

On April 26, 2016, a series of agreements were entered into among Yingxin Yijia, Sheng Ying Xin and its shareholders (the “VIE Agreements”). As a result of the VIE Agreements, Yingxin Yijia become the primary beneficiary of Sheng Ying Xin. HUSN is able to exercise control over Sheng Ying Xin and was entitled to substantially all of the economic benefits of Sheng Ying Xin through Yingxin Yijia, and HUSN treats Sheng Ying Xin as its variable interest entity (“VIE”) under U.S. GAAP. As a result, the results of operations, assets and liabilities of Sheng Ying Xin and its subsidiary (collectively “VIEs”) have been included in the accompanying consolidated financial statements.

Since HUSN and its subsidiaries were formed in 2015 and did not have significant operations since inception as well as HUSN and Sheng Ying Xin are under common control, the VIE Agreements dated April 26, 2016 were considered a capital transaction in substance. Accordingly, the consolidated balance sheets as of December 31, 2019 and 2018 include the accounts and balances of HUSN and its subsidiaries, Sheng Ying Xin and its subsidiaries at their respective carrying values. The consolidated statements of income and comprehensive income for the period from inception through September 28, 2015 were the historical operations of Sheng Ying Xin.

F-7

On July 28, 2017, HUSN completed its initial public offering (“IPO”) and issued 2,023,146 shares of common stock to investors at a price of $10.00 per share for a total of $20,231,460 before underwriting discounts and commissions and offering expenses of $1,262,562 and deferred issuing cost of $763,365. According to the underwriting agreement signed on May 9,2017, the Company issued warrants to the underwriter to purchase 91,042 ordinary shares upon the successful completion of the IPO at an exercise price of 120% of the IPO price, namely $12 dollars per share, and exercisable for two years. On November 21, 2017 the underwriter exercised all the warrants in connection with the IPO to purchase 91,042 shares. As of December 31, 2017 the number of shares issued and outstanding is 22,114,188.

On March 10, 2017, Sheng Ying Xin set up a wholly owned subsidiary Fu Hui (Shenzhen) Commercial Factoring Co., Ltd (“FuhuiSZ”) which mainly provides supply chain financing to commercial enterprises. On September 19, 2017 Sheng Ying Xin set up another wholly owned subsidiary Yingda Xincheng (Beijing) Insurance Broker Co., Ltd (“Yin Da Xin Cheng”) which mainly provides insurance brokerage services. On November 23, 2017, Sheng Ying Xin acquired a 100% equity interest in Beijing Anytrust Information Technology Co., Ltd (“Anytrust”) which mainly provides enterprise financial data services, including system management, application development, business intelligence and maintenance services. On September 25, 2019, Yin Da Xin Cheng carried out industrial and commercial deregistration.

On May 25, 2018, HKIFS set up a wholly owned subsidiary CIFS (Xiamen) Fianncial leasing company which mainly provides financial leasing services to commercial enterprises. Also on May 25, 2018, Sheng Yin Xin set up another wholly owned subsidiary Fuhui (Xiamen) Commercial Factoring Co., Ltd which mainly provides factoring services to commercial enterprises. On July 11, 2018 Sheng Ying Xin set up another wholly owned subsidiary Zhizhen Investment & Research (Beijing) Information Consulting Co., Ltd which mainly provides investment research services. On July 25, 2018, Sheng Ying Xin set up a wholly-owned subsidiary Hangzhou Yuchuang Investment Partnership (Limited Partnership) which is an investment vehicle for our strategic investing activities. On December 30, 2018, Sheng Yin Xin disposed Anytrust and transferred its equity interest in Anytrust to Mr. Jainxin Lin, the Company’s Chief Executive Officer and Chairman of the Board, with no consideration and incurred approximate loss of $2,062,000.

Accordingly, the results of operations, assets and liabilities of HKSQ, WFOE and Sheng Ying Xin have been included in the accompanying consolidated financial statements.

On April 9, 2020, we incorporated a New York subsidiary, Hudson Capital USA Inc.

On September 9, 2020, we incorporated a Delaware subsidiary, Hudson Capital Merger Sub I Inc.

On September 9, 2020, we incorporated a Delaware subsidiary, Hudson Capital Merger Sub II Inc.

F-8

As of December 31, 2021, the Company’s corporate structure is set forth below:

The following is a summary of the VIE agreements:

Exclusive Business Cooperation Agreement

Pursuant to the terms of the certain Exclusive Business Cooperation Agreement dated April 26, 2016, between Sheng Ying Xin and Yingxin Yijia (the “Exclusive Business Cooperation Agreement”), Yingxin Yijia is the exclusive technology services and consultancy service provider to Sheng Ying Xin. Sheng Ying Xin agreed to pay Yingxin Yijia all fees payable for technology services and consultancy service, the amount of which equals 100% of the net profit of Sheng Ying Xin. Any payment from Sheng Ying Xin to Yingxin Yijia must comply with applicable Chinese laws. Yingxin Yijia is also obligated to bears all losses of Sheng Ying Xin. Further, the parties agreed that Yingxin Yijia shall retain sole ownership of all intellectual property developed in connection with providing technology services to Sheng Ying Xin. The Exclusive Business Cooperation Agreement has a ten-year term. The term of these agreements may be extended if confirmed in writing by Yingxin Yijia, prior to the expiration of the term. The extended term shall be determined by Yingxin Yijia, and Sheng Ying Xin shall accept such extended term unconditionally.

Pursuant to the terms of the certain Exclusive Business Cooperation Agreement dated September 26, 2019, between HKIFS and HKSQ (the “Exclusive Business Cooperation Agreement”), HKIFS is the exclusive technology services and consultancy service provider to HKSQ. HKSQ agreed to pay HKIFS all fees payable for technology services and consultancy service, the amount of which equals 100% of the net profit of HKSQ. Any payment from HKSQ to HKIFS must comply with applicable Chinese laws. HKIFS is also obligated to bears all losses of HKSQ. Further, the parties agreed that HKIFS shall retain sole ownership of all intellectual property developed in connection with providing technology services to HKSQ. The Exclusive Business Cooperation Agreement has a ten-year term. The term of these agreements may be extended if confirmed in writing by HKIFS, prior to the expiration of the term. The extended term shall be determined by HKIFS, and HKSQ shall accept such extended term unconditionally.

F-9

Power of Attorney

Pursuant to the terms of a certain Power of Attorney Agreement dated April 26, 2016, among Yingxin Yijia and the shareholders of Sheng Ying Xin (the “Power of Attorney”), each of the shareholders of Sheng Ying Xin irrevocably appointed Yingxin Yijia as their proxy to exercise on each of such shareholder’s behalf all of their voting rights as shareholders pursuant to PRC law and the Articles of Association of Sheng Ying Xin, including the appointment and election of directors of Sheng Ying Xin. The term of the Power of Attorney is valid so long as such shareholder is a shareholder of Sheng Ying Xin.

Pursuant to the terms of a certain Power of Attorney Agreement dated September 26, 2019, among HKIFS and the shareholders of HKSQ (the “Power of Attorney”), each of the shareholders of HKSQ irrevocably appointed HIIFS as their proxy to exercise on each of such shareholder’s behalf all of their voting rights as shareholders pursuant to PRC law and the Articles of Association of HKSQ, including the appointment and election of directors of HKSQ. The term of the Power of Attorney is valid so long as such shareholder is a shareholder of HKSQ.

The contractual agreements between WFOE and Sheng Ying Xin essentially confer control and management as well as the economic benefits of Sheng Ying Xin onto WFOE. In spite of the shareholder change in WFOE, we are able to retain full control and management over Sheng Ying Xin and are still entitled to substantially all of the economic benefits of WFOE through the HKSQ VIE Agreements.

Exclusive Option Agreement

Pursuant to the terms of a certain Exclusive Option Agreement dated April 26, 2016, among Yingxin Yijia, Sheng Ying Xin and the shareholders of Sheng Ying Xin (the “Exclusive Option Agreement”), the shareholders of Sheng Ying Xin granted Yingxin Yijia an irrevocable and exclusive purchase option (the “Option”) to acquire Sheng Ying Xin’s equity interests and/or remaining assets, but only to the extent that the acquisition does not violate limitations imposed by PRC law on such transactions. Accordingly, the Option is exercisable at any time at Yingxin Yijia’s discretion so long as such exercise and subsequent acquisition of Sheng Ying Xin does not violate PRC law. The consideration for the exercise of the Option is RMB 1 in total. To the extent Sheng Ying Xin shareholders receive any of such consideration, the Option requires Sheng Ying Xin shareholders to transfer (and not retain) the same to Sheng Ying Xin or Yingxin Yijia. The Exclusive Option Agreement has a ten-year term. The term of these agreements may be extended if confirmed in writing by Yingxin Yijia, and if no written confirmation was obtained from Yingxin Yijia, the Exclusive Option Agreement will be automatically renewed, the term of the renewed agreement will be determined till Yingxin Yijia’s written confirmation.

Share Pledge Agreement

Pursuant to the terms of a certain Share Pledge Agreement dated April 26, 2016 among Yingxin Yijia and the shareholders of Sheng Ying Xin (the “Share Pledge Agreement”), the shareholders of Sheng Ying Xin pledged all of their equity interests in Sheng Ying Xin, including the proceeds thereof, to guarantee all of Yingxin Yijia’s rights and benefits under the Exclusive Business Cooperation agreement, the Power of Attorney and the Exclusive Option Agreement. Prior to termination of the Share Pledge Agreement, the pledged equity interests cannot be transferred without Yingxin Yijia’s prior written consent. All of the equity interest pledges with respect to the equity interests of Sheng Ying Xin according to the Share Pledge Agreement have been registered with the relevant office of the Administration for Industry and Commerce in China. The Share Pledge Agreement will be valid until all the payments related to the services provided by Yingxin Yijia to Sheng Ying Xin due under the Exclusive Business Cooperation Agreements have been fulfilled. Therefore, the Share Pledge Agreement shall only be terminated when the payments related to the ten-year Exclusive Business Cooperation Agreement are paid in full and Yingxin Yijia does not intend to extend the term of the Exclusive Business Cooperation Agreement.

F-10

Summarized below is the information related to the combined VIEs’ assets and liabilities as of December 31, 2021 and 2020, respectively:

	As of December 31, 2021		As of December 31, 2020

Current assets	$	-	$	48,287,298
Plant and equipment, net		-		373
Other non-current assets		-		3,836
Total assets		-		48,291,507
Total liabilities		-		(48,851,480	)
Net assets (liabilities)	$	-	$	(559,973	)

Summarized below is the information related to the financial performance of the VIEs reported in the Company’s consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2021, 2020 and 2019, respectively:

	Year ended December 31, 2021		Year ended December 31, 2020		Year ended December 31, 2019

Revenues	$	-	$	618	$	1,366,417
Cost of revenues	$	-	$	-	$	123
Total operating expenses	$	203,388	$	102,135	$	784,840
Net loss	$	149,536	$	248,314	$	53,859,306

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of presentation

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

(b) Principles of Consolidation

The consolidated financial statements include the financial statements of all the subsidiaries and VIEs of the Company. All transactions and balances between the Company and its subsidiaries and VIEs have been eliminated upon consolidation

(c) Foreign currency translation and transactions

The functional currency of HUSN, Hudson Capital USA Inc., Hudson Capital Merger Sub I Inc., Hudson Capital Merger Sub II Inc., HKIFS and HKSQ are in United States dollars (“US$” or “$”). The functional currency of Yingxin Yijia, CIFS (Xiamen) Financial Leasing, Sheng Ying Xin and its subsidiaries are Renminbi (“RMB”), and the PRC is the primary economic environment in which the Company operates.

F-11

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange differences are included in the determination of net income (loss) for the respective periods.

For financial reporting purposes, the financial statements of the Company’s PRC subsidiary and the financial statements of the VIEs are prepared using RMB and are translated into the Company’s reporting currency, the US$. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and Shareholders’ equity is translated at historical exchange rates except for the change in retained earnings during the year which is the result of the net income (loss). The cumulative translation adjustments are recorded in accumulated other comprehensive income (loss) in the accompanying consolidated statements of shareholders’ equity.

The exchange rates used are as follows:

December 31,

2021

December 31,

2020

RMB exchange rate at balance sheets dates,

6.3757

6.5249

	2021		2020		2019
	Year Ended December 31,
	2021		2020		2019

Average exchange rate for each year		6.4515		6.9010		6.8944

No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. The source of the exchange rates is generated from the People’s Bank of China.

(d) 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, and the fair value of identifiable assets and liabilities acquired through business combination.

F-12

(e) Cash

Cash and cash equivalents consist of cash on hand, cash on deposit and other highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased. The Company maintains cash with various financial institutions mainly in the US and PRC. As of December 31, 2021 and 2020, the Company had no cash equivalents.

(f) Accounts receivable and loans to third parties

Accounts receivable and loans to third parties are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts as needed. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable and loans receivable. The Company determines the allowance based on aging data, historical collection experience, customer specific facts and economic conditions. Based on management’s assessment of the collectability of the accounts receivable and loans to third party, allowance for loans to third party was $0 as of December 31, 2021, allowance for loans to third party was $41,782,173 as of December 31, 2020, allowance for loans to third party was $39,402,683 as of December 31, 2019, and, allowance for loans to third party was $7,119,594 as of December 31, 2018. The value-added tax receivable from customers included in the accounts receivable in the balance sheet were $0, $0, and $97,287 as of December 31, 2021, 2020 and 2019, respectively. The accounts receivable, except for the principal of factoring as of December 31, 2019 were 0.07% collected as of March 31, 2020.

(g) Property and Equipment

The Company records equipment at cost less accumulated depreciation. The Company computes depreciation using the straight-line method over the estimated useful lives of the assets with a 5% residual value for electronic equipment, and a 5% residual value for furniture and a 0% residual value for leasehold improvement.

Estimated useful lives of property and equipment:

		Useful Life
Furniture		10 years
Electronic equipment		3 years
Motor vehicle		5 years
Leasehold improvements		Shorter of life of asset or lease

The Company eliminates the cost and related accumulated depreciation of assets sold or otherwise retired from the accounts and includes any gain or loss in the statement of operations. The Company charges maintenance, repairs and minor renewals directly to expense as incurred.

(h) Intangible Assets

Intangible assets, comprising accounting software and big data platform, which are separable from the property and equipment, are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the assets.

F-13

(i) Impairment of Long-lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. For the year ended December 31, 2021, the Company did not recognize any impairment loss of its long-lived assets. For the year ended December 31, 2020, the Company did not recognize any impairment loss of its long-lived assets. For the year ended December 31, 2019, the Company did not recognize any impairment loss of its long-lived assets.

(j) Statutory Reserve

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).

Appropriations to the statutory surplus reserve is required to be at least 10% of the after tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of Board of Directors.

(k) Revenue recognition

The Company adopted ASC Topic 606, “Revenue from Contracts with Customers” effective January 1, 2019, applying the modified retrospective method.

In accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company’s services include commercial payment advisory services, intermediary bank loan advisory services, international corporate financing advisory services, technical services and factoring services.

For commercial payment advisory service after signing contracts with the client, the Company starts to identify and select banks and financial products and coordinates 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 will deposit cash with the bank or purchases wealth management products sold by the bank. After this step, the bank will issue 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 credit contract from the bank and when the Company receives a contract completion confirmation from the client.

F-14

For intermediary bank loan advisory services, the Company matches small-to-medium sized enterprises (“SMEs”) with financing sources. The Company charges 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 works with overseas banks to structure and provide clients with financing solutions to obtain facilities from overseas banks for the clients’ offshore affiliates. After signing the contract with the client, the Company will identify overseas banks and domestic banks, structure financing solutions and facilitate application processes. After the client provides security to the domestic bank, the domestic bank will issue a letter of guarantee to the overseas bank. The overseas bank will provide credit to the affiliate designated by the client. The Company’s service fee is a percentage of credit granted by the overseas bank to the offshore affiliate. The Company recognizes revenue after the offshore affiliate receives credit approval notice from the offshore bank and when the Company receives a contract completion confirmation from the client. The Company typically receives 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, the Company provides the clients with the technical services and charges a fee for the technical service. The Company recognizes revenue when the services are rendered.

For factoring services, generally after we checked the documents such as client information, contracts, invoices supporting the client’s credit worth, authenticity of the business contracts and the collectability of receivables, we will sign the factoring service contract with client. Upon signing the contract, we request the client to pay us the management fee which we record as revenue upon receipt. After signing the factoring contract, we will wire the factored amount to the client’s designated party, generally its suppliers, and will collect the amount over the contact period. At each month end we will record the factoring service revenue based on the service fee ratio and the amount we factored.

There is no claw back provisions or other guarantees. Full services fees are due upon the contract completion confirmation from the client.

(l) Taxation

The Company follows the guidance of ASC Topic 740 “Income taxes” and uses the assets and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets, if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in statement of operations and comprehensive income (loss) in the period that includes the enactment date.

F-15

The Company follows a more likely than not threshold and a two-step approach for the measurement of tax positions and financial statement recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including the resolution of related appeals or litigation process, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.

The Company has elected to classify interest related to an uncertain tax position (if and when required) to interest expense, and classify penalties related to an uncertain tax position (if and when required) as part of other expense in the consolidated statements of operations and comprehensive income (loss).

The tax authority of the PRC government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises had completed their relevant tax filings, hence the Company’s tax filings may not be finalized. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s tax filings which may lead to additional tax liabilities. The tax returns of the Company’s PRC subsidiaries and VIEs are subject to examination by the relevant tax authorities. According to the PRC Tax Administration Law on the Levying and Collection of Taxes, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB100,000. In the case of transfer pricing issues, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. The Company did not have any material interest or penalties associated with tax positions for the years ended December 31, 2021, 2020, and 2019 and did not have any significant unrecognized uncertain tax positions as of December 31, 2021, 2020 and 2019. The Company does not expect that the position of unrecognized tax benefits will significantly increase or decrease within 12 months of December 31, 2021.

(m) Cost of revenues

The Company’s cost of revenues mainly consists of revenue-generating staff costs.

(n) Research and development expenses

The Company accounts for expenses for the enhancement, maintenance and technical support for the Company’s Internet platforms and intellectual property that are used in its daily operations as research and development expenses. Research and development costs are charged to expense when incurred. No expenses for research and development for the years ended December 31, 2021, 2020 and 2019 were incurred.

(o) Comprehensive income (loss)

The Company presents comprehensive income (loss) in accordance with ASC 220, “Comprehensive Income”, which establishes standards for reporting and displaying comprehensive income (loss) and its components in the consolidated financial statements. Comprehensive income (loss) is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive income (loss), as presented in the Company’s consolidated balance sheets are the cumulative foreign currency translation adjustments.

F-16

(p) Earnings (loss) per Share

Earnings (loss) per share (“EPS”) are calculated in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common stock. The dilutive effect of outstanding common share warrants and options are reflected in the diluted earnings per share by application of the treasury stock method when the impact is dilutive. Potential common shares that have an anti-dilutive effect are excluded from the calculation of diluted EPS. There is no dilutive effect for the years ended December 31, 2021, 2020 and 2019.

(q) Fair Value of Financial Instruments

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

(r) Goodwill

Goodwill is the excess of the consideration transferred over the fair value of the acquired assets and assumed liabilities in a business combination.

The Company tests 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 decides, 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.

(s) Jobs Act accounting election

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows the Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, the financial statements may not be comparable to companies that comply with public company effective dates.

(t) Recently issued accounting standards

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”, which will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. The standard did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): simplifying the test for goodwill impairment”, the guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not the difference between the fair value and carrying amount of goodwill which was the step 2 test before. The ASU should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The standard did not have a material impact on our consolidated financial statements.

F-17

In August 2018, the FASB issued ASU 2018-13, “Changes to the Disclosure Requirements for Fair Value Measurement.” This standard eliminates the current requirement to disclose the amount or reason for transfers between level 1 and level 2 of the fair value hierarchy and the requirement to disclose the valuation methodology for level 3 fair value measurements. The standard includes additional disclosure requirements for level 3 fair value measurements, including the requirement to disclose the changes in unrealized gains and losses in other comprehensive income during the period and permits the disclosure of other relevant quantitative information for certain unobservable inputs. The new guidance is effective for interim and annual periods beginning after December 15, 2019. The standard did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Internal-Use Software — Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement.” This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement service contract with the guidance to capitalize implementation costs of internal use software. The ASU also requires that the costs for implementation activities during the application development phase be capitalized in a hosting arrangement service contract, and costs during the preliminary and post implementation phase are expensed. The new guidance is effective for interim and annual periods beginning after December 15, 2019. The standard did not have a material impact on our consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, (“ASU 2018-17”). ASU 2018-17 requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. Entities are required to apply the amendments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The standard did not have a material impact on our consolidated financial statements

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, (“ASU 2019-04”). ASU 2019-04 clarifies and improves areas of guidance related to the recently issued standards on credit losses (ASU 2016-13), hedging (ASU 2017-12), and recognition and measurement of financial instruments (ASU 2016-01). The amendments generally have the same effective dates as their related standards. If already adopted, the amendments of ASU 2016-01 and ASU 2016-13 are effective for fiscal years beginning after December 15, 2019 and the amendments of ASU 2017-12 are effective as of the beginning of the Company’s next annual reporting period; early adoption is permitted. The standard did not have a material impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. ASU 2019-12 will be effective for the Company in the first quarter of 2021. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company’s financial condition, results of operations, cash flows or disclosures.

F-18

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, (“ASU 2020-03”). ASU 2020-03 improves various financial instruments topics, including the CECL Standard. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments related to Issue 1, Issue 2, Issue 4 and Issue 5 were effective upon issuance of ASU 2020-03. The amendments related to Issue 3, Issue 6 and Issue 7 were effective for the Company beginning on January 1, 2020. The Company does not anticipate that the adoption of the new standard will have a material effect on its consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be applied anytime between the first quarter of 2020 and the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company’s financial condition, results of operations, cash flows and disclosures.

Other than the above, management does not believe that any of the recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

(u) Going Concern

The Company has suffered from losses from operation and significant accumulated deficits. It’s net loss for the year ended December 31, 2021, 2020 and 2019 were $2,145,530, $9,075,353 and $61,995,758, respectively, and turned the retained earnings as of December 31, 2018 to 2019 from $36,653,460 to (25,379,698). As of December 31, 2021 and 2020, the Company has cash and cash equivalents of $221,312 and $3,274,287, respectively and net cash used in operating activities during the year ended December 31, 2021 and 2020 were $4,854,519 and $3,818,665, respectively. As of December 31, 2020 and 2019, the Company has cash and cash equivalents of $3,274,287 and $13,567, respectively and net cash used in operating activities during the year ended December 31, 2020 and 2019 were $3,818,665 and $1,071,379, respectively. The Company comes to have insufficient cash flows generated from operations and provided for development. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The management determines that additional effort will be required to improve the operation so that the Company may generate more profits to sustain its continuous. The Company may explore the channels to raise additional capital or any opportunities to improve the cash flow in the years to come. The Company had raised $3,599,502 and $4,278,000 from share placement to improve the financial position and cash flow as of December 31 2021 and 2020, respectively.

F-19

NOTE 3. CASH

Cash consisted of the following:

SCHEDULE OF CASH

	As of December 31, 2021		As of December 31, 2020

Cash on hand	$	-	$	-
Cash in banks		221,312		3,274,287
Total cash	$	221,312	$	3,274,287

NOTE 4. OTHER RECEIVABLES

Other receivables consisted of the following:

SCHEDULE OF OTHER RECEIVABLES

	As of December 31, 2021		As of December 31, 2020
Interest receivable	$	750	$	-
Others		54,990		105,149
Total	$	55,740	$	105,149

Interest receivable represents interest income earned on loans to third parties (See Note 5).

NOTE 5. LOANS TO THIRD PARTIES

The Company lends their own funds to eligible third parties occasionally and receives interest income to better utilize the Company’s cash.

Loans to third parties consisted of direct loans and entrusted loan as follows:

SCHEDULE OF LOANS TO THIRD PARTIES

	As of December 31, 2021			As of December 31, 2020

Direct loans to third parties	$	14,650,000		$	12,200,000
Entrusted loans to third parties		36,782,173			36,782,173
Impairment on uncollectable loans		(48,982,173	)		(48,982,173	)
Total loans to third parties	$	2,450,000		$	-

Direct loans

The Company lends their own funds directly to third parties. Due to the COVID-19 pandemic, in year ended December 31, 2020, the Company has agreed to extend the due dates of the loans to A, B and C. The detailed direct loan information as of December 31, 2021 is as follows:

SCHEDULE OF DIRECT LOAN INFORMATION

Borrower	Amount		Annual Interest rate			Due dates (after extension)
A	$	4,000,000		5	%	Feb 7, 2021
B		5,000,000		15	%	Jan 28, 2019
C		3,000,000		5	%	Jan 6, 2021
C		200,000		5	%	Jun 26, 2021
D		1,500,000		0.17	%	Sep 16, 2022
D		950,000		0.17	%	Sep 28, 2022
Total	$	14,650,000

F-20

All the above loans to A, B and C were fully impaired as at December 31, 2021 and December 31, 2020 and no extension agreements were executed for them and are overdue.

On October 10, 2020, we entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), with Hudson Capital Merger Sub I, Inc., a Delaware corporation and our wholly-owned subsidiary (“Merger Sub I”), Hudson Capital Merger Sub II, Inc., a Delaware corporation and Merger Sub I’s wholly-owned subsidiary, Freight App, Inc. (formerly known as FreightHub, Inc.), a Delaware corporation (“Fr8 App”) 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 New Merger Agreement, Merger Sub I merged with and into Fr8 App, with Fr8 App 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 I and its Certificate of Incorporation and by-laws then in effect ceased, and the organizational documents of Fr8 App after the Merger is in the form as agreed by the Company and Fr8 App. As Borrower D is Fr8 App and the loan is becoming loan to related party after the Merger.

The Company lends their own funds directly to third parties. Due to the COVID-19 pandemic, the Company has agreed to extend the due dates of the loans and the detailed direct loan information as of December 31, 2020 is as follows:

Borrower	Amount		Annual Interest rate			Due dates (after extension)
A	$	4,000,000		5	%	Feb 7, 2021
B		5,000,000		15	%	Jan 28, 2019
C		3,000,000		5	%	Jan 6, 2021
C		200,000		5	%	Jun 26, 2021
Total	$	12,200,000

All the above loans were fully impaired as at December 31, 2020 and no extension agreements were executed for them and are overdue.

The interest income from such direct loans was $0, $365,000, and $422,284 for the years ended December 31, 2021, 2020, and 2019, respectively.

F-21

Entrusted loans

The Company also deposits (“entrust”) its funds in trust accounts with certain bank lenders, who will, in turn, make loans to borrowers.

The balance of entrusted loans as of December 31, 2021 was $36,782,173 to four borrowers. The detailed entrusted loan information as of December 31, 2021 is as follows:

SCHEDULE OF ENTRUSTED LOAN INFORMATION

Borrower	Amount		Annual Interest rate			Due dates
A	$	3,065,181		16	%	October 23, 2018
A		6,130,362		16	%	December 26, 2018
B		4,597,772		16	%	May 30, 2019
B		5,364,067		16	%	July 27, 2019
C		7,662,953		16	%	June 9, 2019
C		6,130,362		16	%	July 9, 2019
E		3,831,476		16	%	September 7, 2019
Total	$	36,782,173

The balance of entrusted loans as of December 31, 2020 was $36,782,173 to four borrowers. The detailed entrusted loan information as of December 31, 2020 is as follows:

Borrower	Amount		Annual Interest rate			Due dates
A	$	3,065,181		16	%	October 23, 2018
A		6,130,362		16	%	December 26, 2018
B		4,597,772		16	%	May 30, 2019
B		5,364,067		16	%	July 27, 2019
C		7,662,953		16	%	June 9, 2019
C		6,130,362		16	%	July 9, 2019
E		3,831,476		16	%	September 7, 2019
Total	$	36,782,173

The interest income from such entrusted loans was $0, $0, and $2,043,124 for the years ended December 31, 2021, 2020 and 2019.

F-22

NOTE 6. DUE FROM RELATED PARTIES

Due from related party consists of the following:

SCHEDULE OF DUE FROM RELATED PARTY

	As of December 31, 2021		As of December 31, 2020
Sheng Ying Xin (Beijing) Film Industry Co., Ltd.	$	-	$	46,416
Beijing ZhipingScience and Technology Development Co., Ltd.		-		30,214
Anytrust Information Technology Co., Ltd		-		5,126
Total due from related party	$	-	$	81,756

As of December 31, 2021 and December 31, 2020, the Company has related party receivable of $0 and $81,756, respectively, due to advances made on behalf of these related parties.

NOTE 7. PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT, NET

	As of December 31, 2021			As of December 31, 2020
Furniture	$	1,949		$	460
Electronic equipment		11,520			15,931
Motor vehicle		-			100,000
Leasehold improvement		-			-
Total property and equipment		13,469			116,391
Less: accumulated depreciation		(2,395	)		(7,924	)
Less: impairment		-			-
Property and equipment, net	$	11,074		$	108,467

Depreciation expense was $2,395, $703, and $60,910, respectively for the years ended December 31, 2021, 2020 and 2019.

NOTE 8. INTANGIBLE ASSETS, NET

The intangible assets consisted of the following:

SCHEDULE OF INTANGIBLE ASSETS

	As of December 31, 2021			As of December 31, 2020

Accounting software	$	7,650		$	7,650
Less: accumulated amortization		(7,650	)		(6,844	)
Intangible assets, net	$	-		$	806

Amortization expense was $806, $476 and $1,448, respectively, for the years ended December 31, 2021, 2020 and 2019.

F-23

NOTE 9. RELATED PARTY TRANSACTIONS

For the year ended December 31, 2021, the Company has entered into sublease agreement with PX Capital USA Inc. (“PX Capital”) for payment of rental of $112,100 for the period from January 1, 2021 to December 31, 2021. The Company has also entered into consultant agreement with PX Capital for the consultancy services rendered by PX Capital of $120,000 for the period from January 1, 2021 to December 31, 2021. The Company and PX Capital have common chief executive officer, Mr. Warren Wang.

For the year ended December 31, 2021, the Company has entered into agreement with Wave Sync Corp. (“Wave Sync”) for disposal of used motor vehicle of $100,000. For the year ended December 31, 2021, the Company purchased equity shares of $250,000 from Montis Digital Limited, a company incorporated in Gibraltar, and $500,000 from Archax Holdings Ltd., a company incorporated in the United Kingdom. The Company then sold all of the equity shares to Wave Sync for a total of $750,000. Montis Digital Limited and Archax Holdings Ltd. are not related parties of the Company. The Company and Wave Sync have common chief financial officer, Mr. Hon Man Yun.

For the year ended December 31, 2020, the Company has entered into sublease agreement with PX Capital USA Inc. (“PX Capital”) for payment of rental of $68,000 for the period from April 1, 2020 to December 31, 2020. The Company has also entered into consultant agreement with PX Capital for the consultancy services rendered by PX Capital of $80,000 for the period from April 1, 2020 to December 31, 2020. The Company and PX Capital have common chief executive officer, Mr. Warren Wang.

Due from related parties:

As of December 31, 2021, the Company has $0 related party receivables and $0 due to advances made on behalf of related parties.

Due to related party:

As of December 31, 2020 and 2019, the Company has related party payables of $358,241 and $279,925, respectively, due to Mr. Jianxin Lin the Company’s founder, former chairman of the board of directors and former chief executive officer and Mr Jinchi Xu the Company’s former director and chief financial officer, who lend funds for the Company’s operations. The payables are unsecured, non-interest bearing and due on demand.

NOTE 10. EMPLOYEE DEFINED CONTRIBUTION PLAN

DEFINED CONTRIBUTION PLAN

Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that the PRC subsidiaries and VIEs of the Company make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The employee benefits were expensed as contribution was made. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts for such contributions were approximately $0, $0, and $140,149 for the years ended December 31, 2021, 2020, and 2019, respectively.

F-24

NOTE 11. STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ DEFICIT

On June 23, 2020 and July 31, 2020, we closed on two registered direct offerings for the purchase and sale of 4,352,941 of the Company’s ordinary shares, at a purchase price of $0.85 per share, for an aggregate purchase price of approximately $3.7 million and the purchase and sale of 3,555,556 of the Company’s ordinary shares, at a purchase price of $0.45 per share, for an aggregate purchase price of approximately $1.6 million, respectively. Chardan Capital Markets LLC acted as placement agent in both offerings. The net proceeds to the Company from the offerings, after deducting placement agent fees and estimated offering expenses, were approximately $3.328 million and $1.39 million, respectively.

On October 26, 2020, we filed Amended and Restated Memorandum and Articles of Association with the Registrar of Corporate Affairs of the British Virgins Islands to effect a 5-for-1 reverse stock split (the “Reverse Split”) of our ordinary shares. As a result of the Reverse Split, every five (5) ordinary shares were automatically combined into one (1) ordinary share. In connection with the Reverse Split, our par value per share was increased from $0.001 to $0.005. The number of common stock outstanding has been changed accordingly.

On September 16, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with ATW Opportunities Master Fund, L.P. (“ATW”) pursuant to which the Company agreed to sell for an aggregate purchase price of $2,700,000, an aggregate of 630,000 ordinary shares, par value $0.005 (“Ordinary Shares”) of the Company and a pre-funded warrant (the “Warrant”) to purchase 650,000 Ordinary Shares (the “Securities Purchase”). The closing of the Securities Purchase will be subject to customary closing conditions. The net proceeds from the Securities Purchase, after expenses, will be approximately $2.6 million, of which $1.5 million will be used to fund a loan to Fr8App (the “Fr8App Loan”) evidenced by a promissory note issued by Fr8App to the Company dated September 16, 2021 (the “Promissory Note”). In connection with the Fr8App Loan, Fr8App also issued the Company a warrant (the “Fr8App Warrant”) to purchase certain securities of Fr8App in an aggregate value of $2,700,000. The Company agreed to assign the Fr8App Warrant it received from Fr8App thereunder to ATW and executed a Warrant Assignment Agreement on the same date. The effectiveness of the Fr8App Loan and the Fr8App Warrant is contingent on the closing of the Securities Purchase by ATW. The Securities Purchase was consummated on September 28, 2021.

Pursuant to the terms and provisions of the Purchase Agreement, the Warrant was paid in full amount and same as offering price of the Ordinary Shares. On February 14, 2022, the 650,000 Ordinary Shares have been issued for the effectiveness of the Warrant.

The warrants issued in the private placement described above are exercisable for a fixed number of shares, and are classified as equity instruments under ASC 815-40-25-10. The Company accounted for the warrants issued in the private placement based on the fair value method under ASC Topic 505, and the fair value of the warrants was calculated using the Black-Scholes model under the following assumptions: estimated life of 5 years, volatility of 99.91%, risk-free interest rate of 1.02% and dividend yield of 0%. No estimate of forfeitures was made as the Company has a short history of granting options and warrants. The fair value of the warrants issued to investors at grant date was $3,312,887.04.

SUMMARY OF FAIR VALUE AT GRANT DATE

Grant date	September 28, 2021
Share price at date of grant	$	5.26
Exercise price at date of grant	$	0.001
Volatility		99.91	%
Warrant life		5 years
Dividend yield		0	%
Risk-free interest rate		1.02	%
Average fair value at grant date	$	5.26

The following is a summary of the warrant activity for the year ended December 31, 2021:

SUMMARY OF WARRANT ACTIVITY

	Number of Warrants			Average Exercise Price		Weighted Average Remaining Contractual Term in Years
Outstanding at January 1, 2021		-			-		-
Exercisable at January 1, 2021		-			-		-
Granted		650,000			0.001		5.00
Exercised/surrendered		(499,751	)		0.001		4.75
Forfeited		-			-		-
Expired		-			-		-
Outstanding at December 31, 2021		150,249		$	0.001		4.74
Exercisable at December 31, 2021		150,249		$	0.001		4.74

F-25

NOTE 12. TAXATION

INCOME TAXES

a)	Corporate Income Taxes

HUSN is incorporated in the BVI. Under the current law of the BVI, HUSN is not subject to tax on income or capital gains. Additionally, if dividends are paid by HUSN to its shareholders, no BVI withholding tax will be imposed.

Hudson Capital USA Inc., Hudson Capital Merger Sub I Inc. and Hudson Capital Merger Sub II Inc. were incorporated in the United States and are subject to taxes in the United States. They have evaluated their respective income tax positions and have determined that they do not have any uncertain tax positions. They will recognize interest and penalties related to any uncertain tax positions through their income tax expense.

Hudson Capital Merger Sub I Inc. and Hudson Capital Merger Sub II Inc. are subject to franchise tax filing requirements in the State of Delaware.

HKIFS and HKSQ were incorporated in Hong Kong and does not conduct any substantial operations of its own. No provision for Hong Kong profits tax has been made in the financial statements as HKFS and HKSQ has no assessable profits for the years ended December 31, 2021, 2020 and 2019.

The HUSN’s PRC subsidiary, Yingxin Yijia, CIFS (Xiamen) Financial Leasing and its variable interest entities, Sheng Ying Xin and its subsidiaries being incorporated in the PRC, are governed by the income tax law of the PRC and are subject to PRC enterprise income tax (“EIT”). Effective from January 1, 2008, the EIT rate of PRC is 25%, and applies to both domestic and foreign invested enterprises. Kashgar Sheng Ying Xin, which was incorporated in Kashgar City, Xinjiang Autonomous Region in People’s Republic of China, is exempted from income tax from its inception to December 31, 2021 and is subject to a tax rate of 25% after December 31, 2021.

The components of the income tax expense are as follows:

	Year ended December 31, 2021		Year ended December 31, 2020		Year ended December 31, 2019

Current	$	-	$	-	$	7,243
Total Current	$	-	$	-	$	7,243
Deferred		-		-		-
Total	$	-	$	-	$	7,243

Reconciliation of the income tax expenses at the PRC statutory EIT rate of 25% for the years ended December 31, 2021, 2020, and 2019 and the Company’s effective income tax expenses is as follows:

SCHEDULE OF INCOME TAX RECONCILIATION

	Year ended December 31, 2021			Year ended December 31, 2020			Year ended December 31, 2019
(Loss) before income taxes	$	(2,145,530	)	$	(9,075,353	)	$	(61,988,515	)
PRC statutory EIT rate		25	%		25	%		25	%
Income tax (benefit) computed at statutory EIT rate		(536,383	)		(2,268,838	)		(15,497,129	)
Reconciling items:
Valuation allowance		-			-			1,798,398
Effect of tax holidays		-			109,630			93,455
Temporary difference		536,383			2,133,790			13,369,701
Permanent difference		-			25,418			242,818
Income tax (benefit) expense	$	-		$	-		$	7,243

F-26

b)	Deferred Taxes

Deferred income tax was measured using the enacted income tax rates for the periods in which they are expected to be reversed. Significant components of the Company’s deferred income tax assets and liabilities consist of follows:

	As of December 31, 2021		As of December 31, 2020

Deferred income tax assets
Net operating loss carry forwards	$	-	$	-
Total Deferred income tax assets		-		-
Less: Valuation allowance		-		-
Net deferred income tax assets	$	-	$	-

	As of December 31, 2021		As of December 31, 2020
Deferred income tax liabilities
Intangible assets from business combination	$	-	$	-
Total deferred income tax liabilities	$	-	$	-

The Company’s NOL was mainly from the Company’s VIE and subsidiaries’ cumulative net operating losses (“NOL”) of approximately $149,536 and $252,483 as of December 31, 2021 and 2020, respectively. Management considers projected future losses outweighs other factors and made a full allowance of related deferred tax assets.

c)	Taxes Payable

Yingxin Yijia, CIFS (Xiamen) Financial Leasing and its variable interest entities, Sheng Ying Xin and its subsidiaries, who provided services in China and therefore are subject to Chinese value-added tax (“VAT”). Sales revenue represents the invoiced value of services, net of the VAT. Since August 1, 2015, Sheng Ying Xin was classified as a general taxpayer with VAT of 6%. Kashgar Sheng Ying Xin is subject VAT of 4.5% (75% of general taxpayer’s rate of 6%), which is a tax holiday for enterprises established in Kashgar. Both FuhuiSZ and Anytrust are general taxpayers and subject to a 6% VAT rate. Yingda Xincheng was classified as a small-scale taxpayer and the VAT is at 3%. Furthermore, VAT payable of these four companies are subject to a 12% surtax, which includes urban maintenance and construction taxes and additional education fees.

Taxes payable consisted of the following:

SCHEDULE OF TAX PAYABLE

	As of December 31, 2021		As of December 31, 2020

Corporate income tax payable	$	-	$	805,117
Value added tax payable		-		202,395
Other surtaxes payable		-		45,737
Total	$	-	$	1,053,249

F-27

NOTE 13. (LOSS) EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share:

	For the years ended December, 31
	2021			2020			2019
Numerator:
Net (loss)	$	(2,145,530	)	$	(9,075,353	)	$	(61,995,758	)
Denominator:
Weighted average number of common stock outstanding-basic and diluted		6,572,226			6,406,146			4,422,837	*
(Loss) per share – basic and diluted	$	(0.33	)	$	(1.42	)	$	(14.02	)*

*	- The computation of basic and diluted share and EPS data was adjusted retroactively for all period presented to reflect the 5 to 1 reverse stock split change which was effective on October 29, 2020.

NOTE 14. CONCENTRATION OF RISK

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. As of December 31, 2021, 2020 and 2019, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located in Mainland China and Hong Kong, which management believes are of high credit quality.

Under PRC law, it is generally required that a commercial bank in the PRC that holds third party cash deposits protect the depositors’ rights over and interests in their deposited money. PRC banks are subject to a series of risk control regulatory standards, and PRC bank regulatory authorities are empowered to take over the operation and management of any PRC bank that faces a material credit crisis.

F-28

Currency convertibility risk

The significant part of the Company’s businesses is transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. These exchange control measures imposed by the PRC government authorities may restrict the ability of the Company’s PRC subsidiary and VIEs to transfer its net assets to the Company through loans, advances or cash dividends.

Concentration of customers

There was no revenue for the year ended December 31, 2021. No customers have outstanding accounts receivable balances as of December 31, 2021.

There was only one customer of total revenue for the year ended December 31, 2020, which was prepaid revenue recognised in 2020. No customers have outstanding accounts receivable balances as of December 31, 2020.

There was no customer whose revenue accounts for more than 10% of total revenue for the year ended December 31, 2019. Three customers have outstanding accounts receivable balances that accounts for 44.01%, 19.38% and 17.95% of the total accounts receivable balance as of December 31, 2019, respectively.

NOTE 15. COMMITMENTS AND CONTINGENCIES

The following table sets forth the Company’s office lease commitment as of December 31, 2021:


	Office Rental

Year ending December 31,
2022	$	-

Total	$	-

For the years ended December 31, 2021, 2020 and 2019, rental expenses under operating leases were approximately $112,100, $82,670, and $258,476, respectively.

For the year ended December 31, 2020, the Company has written back an accrued payroll for the Company’s VIEs amounting to $475,943 (RMB 3,105,476). There has been no claims 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 his outstanding salaries within one year after termination of the employment. Notwithstanding the foregoing, the Company cannot assure that the claimants have not lodged their claim(s) and such claim(s) has/have been delivered to our VIEs. Accordingly, the Company may be exposed to a potential but unlikely claim for $475,943 (RMB 3,105,476).

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.

F-29

NOTE 16. RESTRICTED NET ASSETS

RESTRICTED CASH IN ESCROW

Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiary and VIEs only from their retained earnings, if any, determined in accordance with PRC GAAP. In addition, the Company’s subsidiary and VIEs in China are required to make annual appropriations of 10% of after-tax profits to a general reserve fund or statutory reserve fund until such reserve has reached 50% of its registered capital based on the enterprise’s PRC statutory accounts. Paid in capital of the PRC subsidiary and VIEs included in the Company’s consolidated net assets are also non-distributable for dividend purposes. As a result of these PRC laws and regulations, the Company’s PRC subsidiary and VIEs are restricted in their abilities to transfer net assets to the Company in the form of dividends, loans or advances. As of December 31, 2021 and 2020, net assets restricted in the aggregate, which include paid-in capital and statutory reserve funds of the Company’s PRC subsidiary and VIEs that are included in the Company’s consolidated balance sheets, were $22,879,785 and $11,353,962, respectively. Even though the Company currently does not require any such dividends, loans or advances from the PRC subsidiary and VIEs for working capital and other funding purposes, the Company may in the future require additional cash resources from its PRC subsidiary and VIEs due to changes in business conditions, to fund future acquisitions and developments, or merely declare and pay dividends to or distributions to the Company’s shareholders.

The ability of our PRC subsidiaries to make dividends and other payments to us may also be restricted by changes in applicable foreign exchange and other laws and regulations.

Foreign currency exchange regulation in China is primarily governed by the following rules:

	●	Foreign Exchange Administration Rules (1996), as amended in August 2008, or the Exchange Rules;
	●	Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.

As of December 31, 2021 and 2020 there were approximately $17,228,887 and $16,976,571 accumulated losses in the aggregate, respectively, which were generated by our PRC subsidiaries and VIEs in Renminbi included in our consolidated balance sheets, aside from $22,879,785 and $11,353,962 of the paid-in capital and statutory reserve funds as of December 31, 2021 and 2020, that may be affected by increased restrictions on currency exchanges in the future and accordingly may further limit our PRC subsidiaries’ or VIEs’ ability to make dividends or other payments in U.S. dollars to us, in addition to the restricted net assets as of December 31, 2021 and 2020, respectively, as discussed above.

NOTE 17. REVERSE STOCK SPLIT

On October 13, 2020, our board of directors approved a 5:1 reverse split of our ordinary shares, which began trading on a split adjusted basis on October 29, 2020. As a result of the reverse share split, each five (5) pre-split shares automatically combined into one (1) ordinary share without any action on the part of the holders, and the number of outstanding ordinary shares was be reduced from 32,022,685 to 6,406,146. No fractional shares will be issued as a result of the reverse share split. Shareholders who otherwise would be entitled to a fractional share because they hold a number of ordinary shares not evenly divisible by the one (1) for five (5) reverse split ratio, will automatically be entitled to receive an additional fractional share to round up to the next whole share.

On October 29, 2020, the Company effected a reverse stock split of its common stock, pursuant to which every FIVE (5) shares of common stock outstanding before the reverse split were converted into ONE (1) share of common stock after the reverse split. According to ASC 260-10-55-12 the computation of basic and diluted share and earnings per share amounts for all periods presented herein was adjusted retroactively to reflect the reverse split change as if it had occurred at the beginning of the year 2018.

Also, see Significant events Note 18.

F-30

NOTE 18. SIGNIFICANT EVENTS

In December 2019, there was an outbreak of the novel coronavirus (COVID-19) in China that has since spread to many other regions of the world. The outbreak was subsequently labeled as a global pandemic by the World Health Organization in March 2020. It is anticipated that the COVID-19 outbreak may ultimately have a material adverse impact on the Company’s results of operations, financial position and cash flow in 2020 including, but not limited to:

Transportation delays and cost increases, more extensive travel restrictions, closures or disruptions of businesses and facilities or social, economic, political or labor instability in the affected areas, may impact the Company’s customers’ operations. Customers may not be able to repay their loans on time due to lack of capital.

The extent of the impact of COVID-19 on the Company’s operations and financial results depends on future developments and is highly uncertain due to the unknown duration and severity of the outbreak. The situation is changing rapidly and future impacts may materialize that are not yet known. The Company continues to monitor the situation closely and may implement further measures to provide additional financial flexibility and improve the Company’s cash position and liquidity.

On April 9, 2020, the Company entered into subscription agreements with three accredited investors for the sale and issuance of two million shares (2,000,000) ordinary shares of the Company, $0.001 par value per share (“Ordinary Shares”) at a per-share price of $0.40 for aggregate gross proceeds of $800,000 (the “Private Placement). The subscription agreements contain customary representations, warranties and agreements by the Company and customary conditions to closing. The Company closed the Private Placement on May 12, 2020 and intend to use the funds for working capital. No brokers or placement agents was involved. Our Private Placement is exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), in reliance on Section 4(a)(2) thereof and/or Rule 506 of Regulation D and Regulation S thereunder, each as promulgated by the Securities and Exchange Commission (the “Commission”).

In keeping with our plan to diversity our operations and rebrand ourselves, 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. On April 9, 2020, we incorporated a New York subsidiary, Hudson Capital USA Inc.

Our securities were transferred to the Capital Market at the opening of business on July 16, 2020.

On August 20, 2020, Mr. Jinchi Xu tendered his resignation as Chief our Financial Officer and director and on the same day, we appointed Mr. Hon Man Yun to succeed Mr. Xu as Chief Financial Officer and director.

On September 9, 2020, we incorporated Hudson Capital Merger Sub I Inc. in Delaware, which in turn incorporated Hudson Capital Merger Sub I Inc. in Delaware as a wholly-owned subsidiary.

F-31

In a bid to strategically adjust our business to diversify into new business opportunities, on October 10, 2020, we entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), with Hudson Capital Merger Sub I, Inc., a Delaware corporation and our wholly-owned subsidiary (“Merger Sub I”), Hudson Capital Merger Sub II, Inc., a Delaware corporation and Merger Sub I’s wholly-owned subsidiary, Freight App, Inc. (formerly known as FreightHub, Inc.), a Delaware corporation (“Fr8 App”) and ATW Master Fund II, L.P., as the representative of the stockholders of Fr8 App (the “Stockholders’ Representative”).

NOTE 19. SUBSEQUENT EVENTS

On February 9, 2022, Fr8App, ATW Opportunities together with certain existing stockholders of Fr8App (collectively, the “SPA Investors”) entered into an amended and restated Securities Purchase Agreement with the Company (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.

As part of the Merger, on February 9, 2022, the Company and ATW Opportunities Master Fund, L.P. (“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 upon closing of the Merger.

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 New Merger Agreement, Merger Sub I merged with and into Fr8 App, with Fr 8App 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 I and its Certificate of Incorporation and by-laws then in effect ceased, and the organizational documents of Fr8 App after the Merger is in the form as agreed by the Company and Fr8 App.

F-32

On February 14, 2022, the 650,000 Ordinary Shares have been issued for the effectiveness of the Warrant.

On February 14, 2022, the Company entered into a Stock Sale and Purchase Agreement with Wave Sync Corp. for selling all shares of Hudson Capital USA Inc. to Wave Sync. Corp. for $1 and the transaction was closed at February 16, 2022. The Company effected a 2.2 for 1 reverse stock split on its Ordinary Shares as of trading beginning on February 15, 2022.

In order to focus on its core business as a North American transportation logistics technology platform company and improving operations, the Company has decided to divest any non-core, non-performing businesses and to sell its wholly-owned subsidiary, Hong Kong Internet Financial Services (“HKIFS”), to private investors. On March 30, 2022, the Company entered into a Buough and Sold Note with a private investor and executed an Instrument of Transfer to transfer its one (1) shall in its wholly-owned Hong Kong subsidiary, Hongkong Internet Financial Services Limited (“HKIFS”) to the private investor for HK$1.

The divestment of HKIFS will result in the Company departing from its legacy People’s Republic of China financial advisory business and shifting its priorities towards being situated in geographical locations of its core businesses. The sale of HKIFS was completed on March 30, 2022 and included all of the prior operations, obligations and commitments related to its Chinese operations. The Company expects immaterial financial effects from the sale outside of incurring minimal legal expenses to assemble and formalize the transaction. Following is Hudson’s structure following the sale of HKIFS:

Except for the above mentioned matters, no other material events are required to be adjusted or disclosed as of the report date of the consolidated financial statements.

F-33

FREIGHT APP, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended DECEMBER 31, 2021 AND 2020

F-34

freight APP inc. and subsidiary

Table of Contents

	Page(s)
Report of Independent Registered Public Accounting Firm UHY LLP 1195	F-36
Consolidated Financial Statements
Consolidated Balance Sheets	F-37
Consolidated Statements of Operations and Comprehensive Loss	F-38
Consolidated Statements of Changes in Stockholders’ Deficit	F-39
Consolidated Statements of Cash Flows	F-40
Notes to Consolidated Financial Statements	F-41 - F-64

F-35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Freight App, Inc. and Subsidiary

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Freight App, Inc. and Subsidiary (the “Company”) as of December, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Emphasis of Matter Regarding Liquidity

As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses, negative cash flows from operations, and historically has relied on equity and debt financings for the development of its product and funding of its operating expenses. Management’s evaluation of these conditions, as well as management’s plans to mitigate these matters are described in Note 2. Our opinion is not modified with respect to this matter.

Emphasis of Matter Regarding Merger with Hudson Capital, Inc.

As discussed in Note 1 to the consolidated financial statements, the Company’s merger with Hudson Capital, Inc. closed on February 14, 2022. Our opinion is not modified with respect to this matter.

Basis for Opinion

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

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

We have served as the Company’s auditor since 2020

Melville, New York

March 31, 2022

F-36

FREIGHT APP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS


	December 31,
	2021			2020
ASSETS:
Current assets:
Cash and cash equivalents	$	3,152,993		$	2,766,491
Restricted cash in escrow		175,000			175,000
Accounts receivable, net		2,893,619			1,587,305
Accounts receivable – related party		-			24,010
Unbilled receivables		1,252,469			1,019,010
Prepaid expenses and other current assets		1,047,219			540,519
Total current assets		8,521,300			6,112,335

Intangible assets, net		7,985			8,797
Capitalized software, net		591,002			419,888
Property and equipment, net		53,449			56,119
Other long-term assets		107,106			-
Security deposits		7,818			7,818
Total assets	$	9,288,660		$	6,604,957

LIABILITIES AND STOCKHOLDERS’ DEFICIT:
Current liabilities:
Accounts payable	$	2,112,318		$	1,701,627
Accounts payable – related party		139,771			29,890
Accrued expenses		939,107			782,497
Short-term borrowings		1,731,881			1,300,015
Notes payable, net		446,774			-
Convertible notes payable, net		7,857,579			-
Warrant liabilities		4,951,306			-
Income tax payable		73,296			33,032
Insurance financing payable		8,120			-
Total current liabilities		18,260,152			3,847,061

Convertible notes payable, net – long term		-			3,790,212
Paycheck protection program – long term		-			114,700
Total liabilities		18,260,152			7,751,973

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT
Series A preferred stock, $.00001 par value, 30,050,652 shares authorized; 12,928,610 and 12,162,748 issued and outstanding at December 31, 2021 and 2020, respectively		129			122
Series seed preferred stock, $.00001 par value, 19,958 shares authorized; 12,175 issued and outstanding at December 31, 2021 and 2020		-			-
Preferred stock value
Common stock, $.00001 par value, 34,441,711 shares authorized; 1,284,970 voting and 80,000 non-voting issued and outstanding at December 31, 2021 and 1,204,985 voting 80,000 non-voting issued and outstanding at December 31, 2020		23			22
Additional paid-in capital		12,879,029			12,452,168
Accumulated deficit		(21,800,763	)		(13,599,958	)
Accumulated other comprehensive (loss) income		(49,910	)		630
Total stockholders’ deficit		(8,971,492	)		(1,147,016	)
Total Shareholders’ Equity		(8,971,492	)		(1,147,016	)
Total liabilities stockholders’ deficit	$	9,288,660		$	6,604,957

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

F-37

FREIGHT APP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	2021			2020
	Year Ended December 31,
	2021			2020
Revenue	$	21,474,151		$	9,205,941
Cost and expenses
Cost of revenue (exclusive of depreciation and amortization shown separately below)		19,558,807			8,411,570
Compensation and employee benefits		3,712,325			2,212,407
General and administrative		2,618,126			2,737,184
Sales and marketing		91,657			23,622
Depreciation and amortization		302,100			531,027
Total cost and expenses		26,283,015			13,915,810

Operating loss		(4,808,864	)		(4,709,869	)

Other expenses
Interest expense, net		(1,136,096	)		(334,170	)
Gain (loss) from extinguishment of debt		115,725			(784,886	)
Loss on initial issuance of private warrants		(2,829,065	)		-
Change in fair value of warrant liabilities (See Note 12)		497,759			-
Loss before provision for income taxes		(8,160,541	)		(5,828,925	)

Income tax expense		40,264			23,051

Net loss	$	(8,200,805	)	$	(5,851,976	)

Change in redemption value of preferred stock		-			(912,687	)

Net loss attributable to common stockholders	$	(8,200,805	)	$	(6,764,663	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.61	)	$	(0.85	)
Weighted average number of common shares		13,500,265			7,953,545

Other comprehensive (loss) gain
Foreign currency translation		(50,540	)		2,159

Comprehensive loss	$	(8,251,345	)	$	(5,849,817	)

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

F-38

FREIGHT APP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

		Voting Shares		Amount		Non-Voting Shares		Amount		Series Seed Shares		Amount		Series A Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Deficit
		Stockholders’ Deficit
		Common Stock								Preferred Stock
		Voting Shares		Amount		Non-Voting Shares		Amount		Series Seed Shares		Amount		Series A Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Deficit
Balance, January 1, 2020			82,657	$	10		80,000	$	1		12,175	$	-		-	$	-	$	416,147		$	(7,747,982	)	$	(1,529	)	$	(7,333,353	)
Issuance of preferred stock from conversion of convertible debt, net of issuance costs of $113,749(*)	^(*)		-		-		-		-		-		-		11,355,248		114		10,726,429			-			-			10,726,543
Change in redemption value of preferred stock			-		-		-		-		-		-		-		-		(912,687	)		-			-			(912,687	)
Issuance of Series A1-A and A2 stock for exercise of warrants (**)	^(**)		-		-		-		-		-		-		807,500		8		757,592			-			-			757,600
Issuance of common stock for exercise of stock options			1,753		-		-		-		-		-		-		-		438			-			-			438
Issuance of common stock in exchange of professional services			89,332		1		-		-		-		-		-		-		22,332			-			-			22,333
Issuance of common stock for issuance of convertible notes			1,031,243		10		-		-		-		-		-		-		242,209			-			-			242,219
Warrant issued in exchange of professional services			-		-		-		-		-		-		-		-		1,039,070			-			-			1,039,070
Share-based compensation			-		-		-		-		-		-		-		-		160,638			-			-			160,638
Foreign currency translation adjustment			-		-		-		-		-		-		-		-		-			-			2,159			2,159
Net loss			-		-		-		-		-		-		-		-		-			(5,851,976	)		-			(5,851,976	)
Balance, December 31, 2020			1,204,985		21		80,000		1		12,175		-		12,162,748		122		12,452,168			(13,599,958	)		630			(1,147,016	)
Issuance of stock upon vesting of restricted stock awards			79,985		1		-		-		-		-		-		-		(1	)		-			-			-
Share-based compensation			-		-		-		-		-		-		-		-		235,404			-			-			235,404
Issuance of Series A2 preferred stock in connection with exercise of warants			-		-		-		-		-		-		765,862		7		191,458			-			-			191,465
Foreign currency translation adjustment			-		-		-		-		-		-		-		-		-			-			(50,540	)		(50,540	)
Net loss			-		-		-		-		-		-		-		-		-			(8,200,805	)		-			(8,200,805	)
Balance, December 31, 2021			1,284,970	$	22		80,000	$	1		12,175	$	-		12,928,610	$	129	$	12,879,029		$	(21,800,763	)	$	(49,910	)	$	(8,971,492	)

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

(*)

Series A Preferred Shares were issued on May 14, 2020 and have been classified as mezzanine equity in the interim consolidated balance sheet at June 30, 2020 at their maximum redemption value due to Preferred A Shares being contingently redeemable upon the occurrence of an event that is outside of the issuer’s control. On December 31, 2020, the Company’s Certificate of Incorporation was amended, such that Company’s Preferred A Shares are no longer contingently redeemable upon the occurrence of an event that is outside of the issuer’s control and therefore the Series A Preferred Shares have been reclassified from mezzanine equity to permanent equity on December 31, 2020.

(**)

The warrants which are exercisable into Series A Preferred Shares were classified in preferred stock warrant liabilities in the consolidated balance sheet at June 30, 2020 due to Series A Preferred Shares holders’ control over the redemption of the shares. Due to the amendment of the Company’s certificate of incorporation on September 30, 2020 as described in the previous note, the warrants have been reclassified from warrant liabilities to additional paid-in capital as of December 31, 2020 (see also Note 18).

F-39

FREIGHT APP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	2021			2020
	Year Ended December 31,
	2021			2020
Cash flows from operating activities:
Net loss	$	(8,200,805	)	$	(5,851,976	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		302,100			531,027
Amortization of debt issuance costs and debt discount		592,874			39,150
Share-based compensation		235,404			160,638
Non-cash interest		313,404			43,813
Accrued interest expense converted to equity		-			156,918
Loss on initial issuance of private warrants		2,829,065			-
Change in fair market value of warrant liabilities		(497,759	)		-
Professional services performed in exchanged for common stock		-			22,333
Professional services performed in exchange for warrants		-			1,248,421
(Gain) Loss from extinguishment of debt		(115,678	)		784,886
Changes in operating assets and liabilities:
Accounts receivable		(1,309,208	)		(849,094	)
Unbilled receivables		(241,483	)		(869,629	)
Account receivable – related party		24,010			(17,410	)
Prepaid expense and other assets		(591,520	)		(468,726	)
Security deposits		-			5,918
Accounts payable		416,494			959,764
Accounts payable – related party		109,881			29,890
Accrued expenses		163,223			637,864
Income tax payable		40,264			23,051
Net cash used in operating activities		(5,929,734	)		(3,413,162	)
		(5,929,734	)		(3,413,162	)

Cash flows from investing activities:
Capitalization of software development costs		(457,874	)		(193,644	)
Purchases of property and equipment		(12,528	)		(34,009	)
Net cash used in investing activities		(470,402	)		(227,653	)

Cash flows from financing activities:
Proceeds from convertible notes		3,608,842			4,865,562
Proceeds from the exercise of warrants		191,457			439,500
Proceeds from stock option exercise		-			438
Proceeds from notes payable, net of discounts		2,620,000			-
Repayment of insurance financing payable		(18,946	)		-
Payment of loan origination cost		-			(100,000	)
Repayment of short-term borrowings		(19,273,922	)		(7,047,920	)
Proceeds from short-term borrowings		19,705,788			7,820,266
Proceeds from paycheck protection program loan		-			114,700
Net cash provided by financing activities		6,833,219			6,092,546
		6,833,219			6,092,546

Net increase in cash and cash equivalents		433,083			2,451,731

Effect of exchange rate changes on cash		(46,581	)		(876	)

Cash, cash equivalents and restricted cash at beginning of the period		2,941,491			490,636
Cash, cash equivalents and restricted cash at end of the period	$	3,327,993		$	2,941,491

Supplemental disclosure of cash flow information
Cash paid for interest	$	263,788		$	83,605
Supplemental disclosure of non-cash activity
Conversion of convertible debt to preferred stock	$	-		$	9,175,289
Change in redemption value of preferred stock	$	-		$	912,687
Financing of insurance premiums	$	27,066		$	-
Debt discount in connection with note payable	$	30,000		$	-
Reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet
Cash and cash equivalents	$	3,152,993		$	2,766,491
Restricted cash in escrow		175,000			175,000
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	3,327,993		$	2,941,491

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

F-40

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

General

Freight App, Inc. (“Freight App US”) (formerly known as “Freighthub, Inc.”), a Delaware corporation, was incorporated on October 26, 2015 for the purpose of arranging for pick-up, transport, and delivery of full truckload freight shipments. On January 18, 2019, Freight App Mexico S.A De C.V. (“Freight App Mexico”) (formerly known as “Freight Hub Mexico S.A. De C.V.”), a wholly owned subsidiary of Freight App Inc., was formed. On July 29, 2021, Freight App US and Freight App Mexico filed their name change. Freight App Inc., along with its wholly owned subsidiary, Freight App Mexico, are hereinafter referred to as the “Company”. The Company provides innovative digital freight matching technology that streamlines cross-border and domestic USA (from and to border cities) and domestic Mexico shipping, connecting shippers with a broad network of reliable carriers and drivers in Mexico, Canada, and the United States.

Merger

On October 10, 2020, the Company entered into an agreement and plan of merger with Hudson Capital, Inc. (“Hudson”), as amended on May 18, 2021. On December 13, 2021, the October 10, 2020 agreement and plan of merger was terminated and the Company entered into a new merger agreement (“Merger”) with Hudson and ATW Master Fund II, L.P., as the representative of the stockholders of the Company (the “Stockholders’ Representative”) by which Hudson acquires all the issued and outstanding securities of the Company and assume the Company as its direct, wholly–owned subsidiary.

The Merger closed on February 14, 2022 and a Certificate of Merger was filed with the Secretary of State for the State of Delaware, in accordance with the relevant provisions of Delaware Law.

As part of the Merger, on February 9, 2022, Hudson and ATW Opportunities Master Fund, L.P. (“ATW Opportunities”), together with certain investors (collectively, the “PIPE Investors”) entered into a Securities Purchase Agreement pursuant to which Hudson 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 Hudson’s ordinary shares, in a private placement for an aggregate purchase price of $3,500,000 upon closing of the Merger.

On February 9, 2022, the Company, ATW Opportunities together with certain existing stockholders of the Company (collectively, the “SPA Investors”) entered into an amended and restated Securities Purchase Agreement with Hudson (the “A&R SPA”) pursuant to which Hudson 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 Hudson’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.

All of the Company’s convertible notes were converted in February 2022 into Hudson’s equity in their entirety as a result of the Merger.

All shares of common stock, preferred stock, series seed, warrants and stock options of the Company issued and outstanding immediately prior to the merger were cancelled and converted into equivalent Hudson’s securities at an exchange ratio estimated at 1 to 1.26855 (“Exchange Ratio”). Upon the closing of the transaction, the Company shareholders own 81.1% of the combined company on a non-diluted basis.

The recent global pandemic outbreak, or COVID-19, continues to adversely impact commercial activity, globally and in the United States, and has contributed to significant volatility in financial markets. The outbreak could have a continued adverse impact on economic and market conditions, including business and financial services disruption. As of the date these consolidated financial statements were available to be issued, the effects of impact are unknown and the Company will continue to monitor the potential impact of COVID-19 on the Company’s consolidated financial statements.

F-41

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 2 – LIQUIDITY

The accompanying consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. The accompanying consolidated financial statements have been prepared on a basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements as of the year ended December 31, 2021, the Company has an accumulated deficit of $21,800,763 and working capital deficit of $9,738,852. At December 31, 2021, the Company had total debt of $12,359,531 and $3,152,993 of unrestricted cash on hand. The Company has historically met its cash needs through a combination of term loans, promissory notes, convertible notes, private placement offerings and sales of equity. The Company’s cash requirements are generally for operating activities.

The Company believes cash on hand and proceeds from the PIPE Investors as part of the Merger will allow the Company to continue as a going concern for the next twelve months from the issuance of these consolidated financial statements.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These consolidated financial statements and related notes are presented in accordance with generally accepted accounting principles in the United States (“GAAP”), expressed in U.S. dollars. In the opinion of the management, the accompanying consolidated financial statements reflect all normal recurring adjustments, which in the opinion of management, are necessary to present fairly the financial position, results of operations, and cash flows for the periods presented in accordance with GAAP. The accompanying consolidated financial statements include the accounts of Freight App US and its wholly owned subsidiary, Freight App Mexico. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, allowance for doubtful accounts, valuation of share-based compensation and warrants, fair value of the company’s stock, accrued expenses, useful lives of internally developed software and property and equipment, whether an arrangement is or contains a lease, the discount rate used for operating leases, fair value of financial instruments and warrant liabilities, income tax accruals and the valuation allowance for deferred income taxes. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash consists of funds held in bank accounts. Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less at the time of purchase and generally include money market accounts.

Concentrations of Credit Risk

The Company maintains cash accounts with various financial institutions. At times, balances in these accounts may exceed federally insured limits. Accounts at each institution within the United States (“US”) are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Additionally, a portion of the Company’s cash is deposited in non-US accounts. The funds are held with financial intuition that offer deposit insurance and bear specific country and regional risks. The amounts over the insured limits as of December 31, 2021 and 2020 was $2,661,919 and $2,249,070, respectively. No losses have been incurred to date on any deposit balances.

The financial instrument that potentially subjects the Company to concentration of credit risk is accounts receivable and unbilled receivables. At December 31, 2021, two customers accounted for 35% and 15% of the Company’s accounts receivable, respectively, and as of December 31, 2020, three customers accounted for 11%, 12% and 13% of the Company’s accounts receivable, respectively.

F-42

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

For the year ended December 31, 2021, one customer accounted for 37% of the Company’s revenues. For the year ended December 31, 2020, one customer accounted for 13% of the Company’s revenues.

Fair Value Measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used when available. Observable inputs are what market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are those that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

The three levels of the fair value hierarchy are described below:

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations that require inputs that are unobservable for the asset and liability in which there is little, if any, market activity.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, which include trade accounts receivable, unbilled receivables, accounts payable, accrued expenses, and debt at variable interest rates, approximate their fair values at December 31, 2021 and 2020, respectively, principally due to the short-term nature, maturities, or nature of interest rates of the above listed items.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the net invoiced amount, net of allowances for credit losses, and do not bear interest. Unbilled receivables include unbilled amounts for services rendered in the respective period but not yet billed to the customer until a future date, which typically occurs within one month, are recorded separately on the consolidated balance sheets. The allowance for credit losses is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable. In accordance with Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, the Company also considers reasonable and supportable forecasts of future economic conditions and their expected impact on customer collections in determining the allowance for credit losses. The Company determines expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, and our expectations of changes in macro-economic conditions, including the ongoing COVID-19 pandemic, that may impact the collectability of outstanding receivables. Balances are considered past due based on invoiced terms. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2021 and 2020, the allowance for credit losses was $77,483 and $0, respectively.

Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or circumstances exist that indicate the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets is measured by comparing the carrying amounts of the assets to the future undiscounted cash flows expected to be generated by the assets. If the asset or asset group is considered to be impaired, an impairment loss would be recorded to adjust the carrying amounts to the estimated fair value. Management has determined that no impairment of long-lived assets exists, and accordingly,

F-43

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

no adjustments to the carrying amounts of the Company’s long-lived assets have been made for the year ended December 31, 2021 and 2020.

Property and Equipment

Property and equipment consisting of office and computer equipment, furniture and leasehold improvements are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives, ranging between three to seven years.

		Useful Lives
Equipment		3 years
Furniture		7 years
Leasehold improvements		Shorter of useful life of asset or lease term

Capitalized Software

The Company complies with the guidance of ASC Topic 350-40, “Intangibles—Goodwill and Other—Internal Use Software”, in accounting for of its internally developed system projects that it utilizes to provide its services to customers. These system projects generally relate to software of the Company that is not intended for sale or otherwise marketed. Internal and external costs incurred during the preliminary project stage are expensed as they are incurred. Once a project has reached the development stage, the Company capitalizes direct internal and external costs until the software is substantially complete and ready for its intended use. Costs for upgrades and enhancements are capitalized, whereas, costs incurred for maintenance are expensed as incurred. These capitalized software costs are amortized on a project-by- project basis over the expected economic life of the underlying software on a straight-line basis, which is generally three years. Amortization commences when the software is available for its intended use.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Warrants classified as liabilities are recorded at fair value and are remeasured at each reporting date until settlement. Changes in fair value is recognized as a component of change in fair value of warrant liability in the consolidated statements of operations. The fair value of the warrant liabilities was estimated using a Black-Scholes option pricing formula. The warrant volatility assumption within the Black-Scholes model represents a Level 3 measurement within the fair value measurement hierarchy. Warrants classified as equity instruments are initially recognized at fair value and are not subsequently remeasured.

Advertising

Advertising costs are expensed as incurred. Advertising costs amounted to $421 and $10,257 for the years ended December 31, 2021 and 2020, respectively.

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FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

The Company accounts for income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating losses, tax credit and other carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates when the assets and liabilities are expected to be realized or settled. The Company regularly reviews deferred tax assets for realizability and establishes valuation allowances based on available evidence including historical operating losses, projected future taxable income, expected timing of the reversals of existing temporary differences, and appropriate tax planning strategies. If the Company’s assessment of the realizability of a deferred tax asset changes, an increase to a valuation allowance will result in a reduction of net earnings at that time, while the reduction of a valuation allowance will result in an increase of net earnings at that time.

The Company follows ASC Topic 740-10-65-1 in accounting for uncertainty in income taxes by prescribing rules for recognition, measurement and classification in financial statements of tax positions taken or expected to be in a tax return. This prescribes a two-step process for the financial statement measurement and recognition of a tax position. The first step involves the determination of whether it is more likely than not (greater than 50 percent likelihood) that a tax position will be sustained upon examination, based on the technical merits of the position. The second step requires that any tax position that meets the more likely than not recognition threshold be measured and recognized in the financial statements at the largest amount of benefit that is a greater than 50 percent likelihood of being realized upon ultimate settlement. This topic also provides guidance on the accounting for related interest and penalties, financial statement classification and disclosure. The Company’s policy is that any interest or penalties related to uncertain tax positions are recognized in income tax expense when incurred. The Company has no uncertain tax positions or related interest or penalties requiring accrual at December 31, 2021 and 2020.

Foreign Currency Translation

The financial statements of the Company’s subsidiary operating in Mexico are prepared to conform to U.S. GAAP and translated into U.S. Dollars by applying a current exchange rate. The local currency has been determined to be the functional currency. Assets and liabilities of non-U.S. operations are translated at period-end exchange rates. Items appearing in the consolidated statements of operations are translated using average exchange rates during each period. Translation gains and losses are reported in accumulated other comprehensive income (loss) as a component of stockholders’ equity (deficit).

Deferred Financing Costs and Debt Discount

Costs incurred in connection with obtaining certain financing are deferred and amortized on an effective interest method basis over the term of the related obligation. Debt discounts are also amortized using the effective interest method unless the interest method approximates the straight-line method. Amortization of such costs are included in interest expense, while the unamortized balances of deferred financing fees and debt discount are presented as reductions of the carrying value of the related debt.

Intangible Assets

Intangible assets include the Company’s domain name and are accounted for based on ASC Topic 350 “Intangibles – Goodwill and Other.” The Company’s intangible assets that have finite lives, consisting of intellectual property, are amortized over their useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If any indicators were present, the Company would test for recoverability by comparing the carrying amount of the asset to the net undiscounted cash flows expected to be generated from the asset. If those net undiscounted cash flows do not exceed the carrying amount (i.e., the asset is not recoverable), the Company would perform the next step, which is to determine the fair value of the asset and record an impairment loss, if any. The Company evaluates the useful lives for these intangible assets each reporting period to determine whether events and circumstances warrant a revision in their remaining useful lives.

F-45

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign Operations

Operations outside the United States include a wholly-owned subsidiary in Mexico. Foreign operations are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws, possible limitations on foreign investment and income repatriation, government price or foreign exchange controls, and restrictions on currency exchange.

Revenue Recognition

The Company’s revenues are accounted for under FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers.” The Company generates revenues primarily from shipments executed by the Company’s freight transportation brokerage services to shippers through the Company’s freight rideshare marketplace. Shippers contract with the Company to utilize the Company’s network of independent freight carriers to transport freight. Those shipments are the Company’s performance obligation, arising under contracts the Company has entered into with customers that define the price for each shipment and payment terms. The Company’s acceptance of the shipment request establishes enforceable rights and obligations for each contract. By accepting the shipper’s order, the Company has responsibility for transportation of the shipment from origin to destination. Under such contracts, revenue is recognized when obligations are satisfied, which occurs over time with the transit of shipments from origin to destination. This is appropriate as the customer simultaneously receives and consumes the benefits as the Company performs its obligation. The Company determines revenue in-transit using the input method, under which revenue is recognized based on the duration of time that has lapsed from the departure date (start of transportation services) to the arrival date (completion of transportation services). Measurement of revenue in-transit requires the application of significant judgement. The Company calculates the estimated percentage of an order’s transit time that is complete at period end and apply that percentage of completion of the order’s estimated revenue. Revenue is measured as the amount of consideration the Company expects to receive in exchange for providing services. Accessorial charges for fuel surcharge, loading and unloading, stop charges, and other immaterial charges are part of the consideration received for the single performance obligation of delivering shipments.

Payment for the Company’s services is generally due within 30 to 45 days upon delivery of the shipment. Contracts entered into with customers do not contain material financing components.

The Company’s contracts with customers have a duration of one year or less and do not require any significant start-up costs, and as such, costs incurred to obtain contracts associated with these contracts are expensed as incurred.

Through the Company’s freight brokerage services, the Company is responsible for identifying and directing independent freight carriers to transport the shipper’s goods. The transportation of the loads is outsourced to third-party carriers. The Company is a principal in these arrangements, and therefore records revenue associated with these contracts on a gross basis. The Company controls the service and has primary responsibility to meet the customer’s requirements. The Company invoices and collects from its customers and also maintains discretion over pricing. Additionally, the Company is responsible for selection of third-party transportation providers to the extent used to satisfy customer freight requirements.

The timing of revenue recognition, billings, cash collections, and allowance for doubtful accounts results in billed and unbilled receivables on the Company’s consolidated balance sheet. The Company receives the unconditional right to bill when shipments are delivered to their destination.

Convertible Debt

The Company evaluates convertible debt to determine the impact (if any) of 1) embedded conversion option; 2) beneficial conversion feature; 3) bifurcation; 4) derivative liability; and 5) fair value adjustments and other expenses thereto. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC Topic 470, “Debt” (“ASC 470”), the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).

F-46

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Conventional convertible debt is a financial instrument in which the holder may only realize the value of the conversion option by exercising the option and receiving the entire proceeds in a fixed number of shares or the equivalent amount of cash. Conventional convertible debt, for which the fair value option is not elected at issuance, is accounted for as straight debt with no accounting recognition of the embedded equity option.

The convertible debt the Company issued prior to 2020, had the following typical characteristics for a conventional convertible debt:

	●	The debt security is convertible into the common stock of the issuer at a specified price at the option of the holder.
	●	The debt security was sold at a price or has a value at issuance not significantly in excess of the face amount.
	●	It bears an interest rate that is lower than the Company would obtain for nonconvertible debt.
	●	If converted, the Company must deliver shares of its stock to the investor (i.e., physical settlement). There is no cash conversion feature by which the convertible debt can be settled in full or in part in cash upon conversion.
	●	The initial conversion price of the security is greater than the market value of the common stock at time of issuance and there is no beneficial conversion feature (“BCF”) upon issuance to be bifurcated and separately accounted for.

Since the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company accounts for convertible debt instruments in accordance with ASC 470-20, Debt with Conversion and Other Options.

Share-Based Compensation

The Company accounts for share-based awards, including stock options and restricted stock awards, issued to employees in accordance with ASC Topic 718, “Compensation—Stock Compensation”. In addition, the Company issues stock options to non-employees in exchange for consulting services and accounts for these in accordance with the provisions of ASC 718, as amended by ASU 2018-07. Compensation expense is measured at the grant, based on the calculated fair value of the award, and recognized as an expense over the requisite service period, which is generally the vesting period of the grant.

For modification of stock compensation awards, the Company records the incremental fair value of the modified award as share-based compensation on the date of modification for vested awards or over the remaining vesting period for unvested awards. The incremental compensation is the excess of the fair value of the modified award on the date of modification over the fair value of the original award immediately before the modification. In addition, the Company records the remaining unrecognized compensation cost for the original cost for the original award on the modification date over the remaining vesting period for unvested awards.

For options granted to non-employees, the expected life of the option used is the contractual term of each such option. All other assumptions used to calculate the grant date fair value are generally consistent with the assumptions used for options granted to employees.

For purposes of calculating share-based compensation, the Company estimates the fair value of stock options using a Black-Scholes option-pricing model. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by the Company’s stock price, which is determined by a third party 409(a) valuation, and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends.

F-47

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The expected volatility is primarily based on the historical volatility of peer company data while the expected life of the stock options is based on historical and other economic data trended into the future. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected option term. The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts. If factors change and the Company employs different assumptions, share-based compensation expense may differ significantly from what has been recorded in the past. If there is a difference between the assumptions used in determining share-based compensation expense and the actual factors which become known over time, specifically with respect to anticipated forfeitures, the Company may change the input factors used in determining share-based compensation costs for future grants. These changes, if any, may materially impact the Company’s results of operations in the period such changes are made.

Incremental compensation costs arising from subsequent modifications of awards after the grant date are recognized when incurred. In addition, the Company accounts for forfeitures of awards as they occur. For share-based awards that vest based on performance conditions, expense is recognized when it is probable that the conditions will be met.

The fair value of options and share awards granted under the stock option plan during the years ended December 31, 2021 and 2020 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions for grants:

SUMMARY OF FAIR VALUE AT GRANT DATE

	2021			2020
Risk-free interest rates		0.986	%		0.20	%
Expected life of options		5 years			5 years
Expected volatility		78.50	%		104.20	%
Expected dividend yield		0.00	%		0.00	%

Earnings Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of outstanding common shares for the period, considering the effect of participating securities series A preferred stock and series seed preferred stock. Diluted earnings (loss) per share are calculated by dividing net earnings (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when they are anti-dilutive, common stock equivalents, if any, are not considered in the computation. At December 31, 2021 and 2020, there were 1,542,828 and 1,685,827 common share equivalents, respectively, excluding 2020 Bridge Notes and the 2021 Bridge Notes which were issued at a conversion price determinable at certain future events and not at specified conversion price (see Note 11). For the years ended December 31, 2021 and 2020, these potential shares were excluded from the shares used to calculate diluted loss per share as their effect would have been antidilutive.

Segments

Operating segments are defined as components of an entity for which separate financial information is available. The Company reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in one operating and one reportable segment. The Company presents financial information about its operating segment and geographical areas in Note 15 to the consolidated financial statements.

F-48

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires lessees to recognize assets and liabilities in the balance sheet for rights and obligations created by leases with terms of more than twelve months. Lessor accounting will not be fundamentally changed; however, some changes may be required to align and conform to lessee guidance. In July 2018, the FASB issued ASU 2018-10 Leases (Topic 842), Codification Improvements and ASU 2018-11 Leases (Topic 842), Targeted Improvements, to provide additional guidance for the adoption of Topic 842. ASU 2018-10 clarifies certain provisions and correct unintended applications of the guidance such as the application of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to earnings rather than to stockholders’ equity. ASU 2018-11 provides an alternative transition method and practical expedient for separating contract components for the adoption of Topic 842. For private entities the new standard applies to fiscal years starting after December 15, 2021, and to interim periods within fiscal years beginning after December 15, 2022. The Company adopted ASU No. 2016-02 on January 1, 2020 and the adoption of this guidance did not have a material impact on its consolidated financial statements.

In November 2019, the FASB issued ASU No. 2019-08 “Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements – Share-Based Consideration Payable to a Customer.” ASU No. 2019-08 amends and clarifies ASU No. 2018-07, which was adopted by the Company on January 1, 2019, to require that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. For entities that have already adopted the amendments in ASU No. 2018-07, the amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted. This guidance is applicable to the Company’s fiscal year beginning January 1, 2020. The Company adopted ASU No. 2019-08 on January 1, 2020 and the adoption of this guidance did not have a material impact on its consolidated financial statements.

In April 2019, the FASB issued ASU No. 2019-04 “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” ASU No. 2019-04 was issued as part of the FASB’s ongoing project to improve upon its ASC, and to clarify and improve areas of guidance related to recently issued standards on credit losses, hedging, and recognition and measurement. This guidance contains several effective dates but is applicable to the Company’s fiscal year beginning January 1, 2020. The Company adopted ASU No. 2019-04 on January 1, 2020 and the adoption of this guidance did not have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU No. 2019-12 is intended to simplify various aspects related to accounting for income taxes, eliminates certain exceptions to the general principles in ASC Topic 740 related to intra-period tax allocation, simplifies when companies recognize deferred taxes in an interim period, and clarifies certain aspects of the current guidance to promote consistent application. This guidance is effective for public business entities for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years, with early adoption permitted. This guidance is applicable to the Company’s fiscal year beginning January 1, 2021. The Company adopted ASU No. 2019-12 on January 1, 2021 and the adoption of this guidance did not have a material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was within the scope of those models before the adoption of ASU 2020-06. ASU 2020-06 also requires that the effect of potential share settlement be included in the diluted EPS calculation when an instrument may be settled in cash or shares. This amendment removes current guidance that allows an entity to rebut this presumption if it has a history or policy of cash settlement.

F-49

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Furthermore, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share, the treasury stock method will be no longer available. In addition, ASU 2020-06 clarifies that an average market price should be used to calculate the diluted EPS denominator in cases in which the exercise prices may change on the basis of an entity’s share price or changes in the entity’s share price may affect the number of shares that may be used to settle a financial instrument and that an entity should use the weighted-average share count from each quarter when calculating the year-to-date weighted-average share. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU No. 2020-04 provides guidance on optional expedients for a limited time to ease the operational burden in accounting for (or recognizing the effects of) reference rate reform (LIBOR) on financial reporting. This guidance is effective upon the ASUs issuance on March 12, 2020 and companies may elect to apply the amendments prospectively through December 31, 2022. The Company’s credit facilities already contain comparable alternative reference rates that would automatically take effect upon the LIBOR phase out, and it is also reviewing its commercial contracts that may utilize LIBOR as a reference rate. The Company is currently evaluating the potential effects of this guidance on its consolidated financial statements.

NOTE 4 – RESTRICTED CASH IN ESCROW

An amount of $175,000 is being held in escrow to be used to pay an advisor in connection with the transactions contemplated by in the Merger (See Note 1). This amount was released form escrow at the time of the Merger.

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following at:

SCHEDULE OF PLANT AND EQUIPMENT, NET

	December 31, 2021			December 31, 2020
Equipment	$	92,873		$	79,413
Furniture and fixtures		9,517			9,517
Leasehold improvements		4,759			4,759
Total cost		107,149			93,689
Accumulated depreciation		(53,700	)		(37,570	)
Property and equipment, net	$	53,449		$	56,119

Depreciation expense for the years ended December 31, 2021 and 2020 was $16,130 and $14,230, respectively.

NOTE 6 – CAPITALIZED SOFTWARE

Capitalized software consists of the following at:

SCHEDULE OF CAPITALIZED SOFTWARE

	December 31, 2021			December 31, 2020
Capitalized software	$	2,548,817		$	2,338,367
Accumulated amortization		(2,203,548	)		(1,918,479	)
Net carrying amount		345,269			419,888
Capitalized software in-process		245,733			-
Capitalized software, net	$	591,002		$	419,888

Amortization expense for the years ended December 31, 2021 and 2020 was $285,069 and $515,985, respectively.

F-50

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 6 – CAPITALIZED SOFTWARE (CONTINUED)

Estimated amortization for capitalized software for future periods is as follows:

Year Ended December 31,
2022	$	203,191
2023		103,964
2024		38,114
TOTAL	$	345,269

NOTE 7 – ACCRUED EXPENSES

Accrued expenses consist of the following at:

SCHEDULE OF ACCRUED EXPENSES

	December 31, 2021		December 31, 2020
Accrued payroll	$	289,408	$	120,926
Accrued value added tax		30,374		17,956
Accrued cost of revenue		603,332		489,071
Accrued professional services		12,466		136,017
Other accrued liabilities		3,527		18,527
Total accrued expenses	$	939,107	$	782,497

NOTE 8 – SHARE-BASED COMPENSATION

The Company has a Stock Incentive Plan (the “Plan”) under which the Company may grant restricted stock awards and stock options for up to 3,500,000 common shares. Both incentive stock options and non-qualified stock options expire ten years from the date of the grant.

Stock Options

The following table summarizes stock option activity:

SUMMARY OF ABOUT STOCK OPTION ACTIVITY

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at January 1, 2020		94,753		$	0.52
Granted		1,662,716			0.25
Forfeited/Expired		(189,853	)		0.38
Exercised		(1,753	)		0.25
Balance at December 31, 2020		1,565,863			0.25		5.92		-
Granted		1,185,308			1.45
Forfeited/Expired		(8,839	)		0.25
Exercised		-			-
Balance at December 31, 2021		2,742,332			0.77		6.58	$	854,217
Exercisable at December 31, 2021		1,527,994		$	0.53		4.93		$ 640,828.

F-51

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 8 – SHARE-BASED COMPENSATION (CONTINUED)

The following table summarizes the Company’s non-vested stock options.

SUMMARY OF NON-VESTED STOCK OPTION

	Non-vested Options Outstanding			Weighted-Average Grant Date Fair Value
At January 1, 2020		51,462		$	0.25
Options granted		1,662,716			0.25
Options forfeited/cancelled		(189,853	)		0.25
Options exercised		(1,753	)		-
Options vested		(860,034	)		0.15
At December 31, 2020		662,538			0.19
Options granted		1,185,308			0.26
Options forfeited/cancelled		(8,839	)		0.19
Options exercised		-			-
Options vested		(624,668	)		0.29
At December 31, 2021		1,214,339		$	0.34

For the years ended December 31, 2021 and 2020, the Company recognized $171,500 and $160,638 of stock compensation expense, respectively, relating to vested stock options. As of December 31, 2021, there was $418,077 of unrecognized stock compensation expense related to non-vested stock options granted under the Plan, which is expected to be recognized over a weighted-average period of four years.

Restricted Stock Awards

From time-to-time the Company issues time-based restricted stock awards (“RSAs”) under the Plan. The fair value of the nonvested shares are measured at the market price of a share on the date of grant and will be recognized as share-based compensation expense over the requisite service period. Grants vest over a period ranging from one to four years based on continued employment or service. The shares of common stock underlying the RSAs are not considered issued and outstanding until vested.

The following table summarizes the restricted stock awards activity:

SUMMARY OF RESTRICTED STOCK AWARDS

	Restricted Stock Awards			Weighted-Average Grant Date Fair Value Per Share
At December 31, 2020		-		$	-
Granted		175,332			0.80
Forfeited		(5,000	)		0.80
Exercised		-			-
Vested		(78,631	)		0.80
Outstanding non-vested at December 31, 2021		91,701		$	0.80

For the year ended December 31, 2021, the Company recognized $63,905 of stock compensation expense relating to RSAs. As of December 31, 2021, there was $73,361 of unrecognized share-based compensation expense related to non-vested RSAs, which is expected to be recognized over a weighted average period of three years.

F-52

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 9 – SHORT-TERM BORROWINGS

On March 7, 2019, the Company entered into a short-term promissory note (“2019 Note”) with a lender (the “2019 Note Lender”) which provides the Company a revolving line of credit up to $1,000,000. On September 1, 2021, the note was amended to increase the maximum principal amount that could be advanced withdrawn under the line of credit to $3,000,000. The borrowing base of the revolving line of credit is limited to 80% of eligible accounts receivable. Under the revolving line of credit, if the aggregate principal amount of the outstanding advances exceeds the applicable borrowing base, the Company must repay the lender an amount equal to the difference between the outstanding principal balance of the revolving line of credit and the borrowing base. The note requires monthly payments of interest, beginning May 1, 2019. Interest accrues on the outstanding principal at a rate equal to Prime Rate as set out in the Wall Street Journal from time to time with a floor of 3.25% per annum. The interest rate as of December 31, 2021 was 5.25%. The 2019 Note matures on July 31, 2023.

The Company incurred interest expense relating to the short-term borrowings in the amount of $263,788 and $90,332 for the years ended December 31, 2021 and 2020, respectively.

NOTE 10 – PAYCHECK PROTECTION PROGRAM – LONG TERM

On May 6, 2020, the Company received the proceeds from a loan in the amount of $114,700 (the “PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Company accounted for the PPP Loan as a financial liability in accordance with Accounting Standards Codification (“ASC”) Topic 470 Debt. The PPP Loan matures on May 6, 2022 and bears interest at a fixed rate of 1.00% per annum. Loan payments, which includes principal and interest are deferred to August 20, 2021, which is 10 months after the loan forgiveness covered period.

Accordingly, the PPP Loan was recognized as long-term debt in the Company’s consolidated balance sheets. There is no prepayment penalty. Under the terms of the PPP, all or a portion of the principal may be forgiven if the PPP Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent, and utilities. No assurance was provided that the Company will obtain forgiveness of the PPP Loan in whole or in part. With respect to any portion of the PPP Loan that is not forgiven, the PPP Loan would be subject to customary provisions for a loan of this type, including customary events of default relating to, among other things, payment defaults and breaches of the provisions of the PPP Loan.

On March 22, 2021, the PPP loan was forgiven in whole, which included principal of $114,700 and accrued interest of $978. The total amount forgiven of $115,678 is recorded as a gain from extinguishment of debt in the accompanying consolidated statements of operations.

NOTE 11 – CONVERTIBLE DEBT

2020 Bridge Notes

On October 7, 2020, the Company entered into a note purchase agreement (the “2020 Bridge Notes”) with certain existing shareholders and investors pursuant to which the Company issued bridge notes in the aggregate principal amount of $4,004,421 (the “Bridge Financing”). All bridge notes will mature on the date that is two years from the closing date of the bridge financing. Interest on the bridge notes will accrue at an annual rate of 5% over two-year term of the bridge notes and is payable by the Company (i) at maturity, (ii) upon acceleration of the indebtedness in the case of an event of default, (iii) in connection with any prepayment of the bridge notes by the Company or, (iv) in connection with any conversion of the bridge notes through the issuance of shares of the capital stock of the Company in exchange for accrued and unpaid interest owing at the time of conversion. Each note is convertible into conversion shares pursuant to one of the following: 1. Automatic Private Investment in Public Equity (“PIPE”) financing conversion, 2. Optional next equity financing conversion; 3. Optional corporate transaction conversion; 4. Optional maturity conversion. There is no pre-determined conversion price in any of the above under the note purchase agreements, but rather, the applicable conversion price in connection with any conversion of the 2020 Bridge Notes will be determined by reference to a formula that includes a 50% discount to the per share price or value of the Company’s shares, as the case may be, implied by the event in connection with which, or at the time at which, conversion occurs.

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FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 11 – CONVERTIBLE DEBT (CONTINUED)

Under the note purchase agreement, the Company agreed to issue to each purchaser, at the time of such purchaser’s purchase of a note pursuant to the agreement (whether at the initial closing or at a subsequent closing), and for no additional consideration to be paid by such purchaser, 257.5261 shares of the Company’s common stock for each $1,000 principal amount of notes purchased by such purchaser. The Company issued 1,031,243 of common stock in connection with the 2020 Bridge Notes (see Note 18).

Both the 2020 Bridge Notes and the common stock are not remeasured at fair value and the proceeds from the 2020 Bridge Notes were allocated between common stock and the bridge note debt based on the relative fair value, and $242,219 was allocated to the common stock and was recorded as a discount for the 2020 Bridge Notes, amortized as interest over the term of the 2020 Bridge Notes.

In addition, the Company incurred $50,000 of transaction fees with one of the lenders for administering the Bridge Financing. These fees were included in the lender’s bridge note and were recorded as debt issuance costs and will be amortized over the term of the 2020 Bridge Notes.

2021 Bridge Notes

In 2021, the Company entered into three note purchase agreements with an existing shareholder pursuant to which the Company issued in January 2021, May 2021, and July 2021 bridge notes in the aggregate principal amount of $1,000,000, $1,608,842, and $1,000,000, respectively (the “2021 Bridge Notes”). The 2021 Bridge Notes will mature on October 7, 2022. Interest on the notes will accrue at an annual rate of 5% over the term of the notes and is payable by the Company (i) at maturity, (ii) upon acceleration of the indebtedness in the case of an event of default, (iii) in connection with any prepayment of the note by the Company or, (iv) in connection with any conversion of the note through the issuance of shares of the capital stock of the Company in exchange for accrued and unpaid interest owed at the time of conversion. The 2021 Bridge Notes are convertible into conversion shares pursuant to one of the following: 1. Automatic PIPE financing conversion, 2. Optional next equity financing conversion; 3. Optional corporate transaction conversion; 4. Optional maturity conversion. There is no pre-determined conversion price in any of the above under the note purchase agreement, but rather, the applicable conversion price in connection with any conversion of the 2021 Bridge Notes will be determined by reference to a formula that includes a 20% to 25% discount to the per share price or value of the Company’s shares, as the case may be, implied by the event in connection with which, or at the time at which, conversion occurs.

Since the Company’s shares are not publicly traded and the conversion of both the 2020 Bridge Notes and the 2021 Bridge Notes are determinable at future certain events, the conversion features cannot be determined as beneficial, and as such, no beneficial conversion feature can be bifurcated and separately accounted for. In addition, the embedded conversion feature meets the scope exception for derivatives as it is indexed to the entity’s own stock which is classified within stockholders’ equity (deficit) as there are no net settlement provisions.

The Company recorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $312,426 and $200,731 for the years ended December 31, 2021 and 2020, respectively. Amortization of convertible note issuance costs for the years ended December 31, 2021 and 2020 was $24,996 and $10,828, respectively. Amortization of convertible note discounts for the years ended December 31, 2021 and 2020 was $121,104 and $28,322, respectively.

The aggregate balance of the convertible notes payable is as follows at:

SCHEDULE OF CONVERTIBLE NOTES PAYABLE

	December 31, 2021			December 31, 2020
Convertible notes payable	$	7,613,292		$	4,004,421
Accrued interest		356,238			43,842
Less: unamortized deferred financing costs		(19,158	)		(44,154	)
Less: unamortized discount		(92,793	)		(213,897	)
Convertible note payable, net	$	7,857,579		$	3,790,212

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FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 11 – CONVERTIBLE DEBT (CONTINUED)

The outstanding balance of the convertible notes principal and accrued interest at December 31, 2021 relates to both the 2020 Bridge Notes and 2021 Bridge Notes and mature on the October 7, 2022. All of the convertible notes, including principal and accrued interest, were converted in February 2022 into Hudson’s equity as a result of the Merger.

NOTE 12 – NOTES PAYABLE

On September 16, 2021, the Company entered into a promissory note with Hudson (the “September Promissory Note”), for the amount of $1,500,000 with maturity date of September 16, 2022. Interest on the September Promissory Note accrues at a rate of 0.17% per annum. In connection with the September Promissory Note, the Company also issued warrants to Hudson to purchase certain securities of the Company (the “September Warrant Securities”) (see Note 17). Hudson assigned the warrants it received from the Company to ATW Partners Opportunities Management, LLC an affiliate of a shareholder of the Company (“ATW”) and executed a Warrant Assignment Agreement on September 16, 2021 (see Note 16). The Company measured the fair value of the warrants at the issuance date to be $2,692,396 and allocated an amount of $1,500,000 to be recorded as a debt discount that will be amortized over the term of the September Promissory Note. The transaction is deemed to be a financing transaction and the excess fair value over the proceeds received from the September Promissory Note in the amount of $1,192,396 was recorded in other expense on the accompanying consolidated statements of operations.

On December 29, 2021, the Company entered into a promissory note with ATW pursuant to which the Company issued in notes in the aggregate principal amount of $200,000 discounted by $30,000 for net proceeds of $170,000 (the “First December Promissory Note”). The promissory note will mature on October 7, 2022 and interest will accrue at an annual rate of 0.33% over the term of the note.

On December 29, 2021, in connection with an contemporaneous investment in Hudson funded by ATW, the Company entered a promissory note with Hudson (the “Second December Promissory Note”), for the amount of $950,000 with maturity date of September 28, 2022. Interest on the Second December Promissory Note accrues at a rate of 0.17% per annum.

In connection with the First and the Second December Promissory Notes and the contemporaneous investment by ATW in Hudson, the Company also issued warrants to ATW to purchase certain securities of the Company (the “Warrant Securities”) (see Note 17). The Company measured the fair value of the warrants at the issuance date to be $2,756,669 and allocated an amount of $1,120,000 to be recorded as a debt discount that will be amortized over the term of the two notes payable. The transaction is deemed to be a financing transaction and the excess fair value over the proceeds received from the two notes payable in the amount of $1,636,669 was recorded in other expense on the accompanying consolidated statements of operations.

During the year ended December 31, 2021, amortization of debt discount was recorded to interest expense in the amount of $446,774.

The aggregate balance of the note payable is as follows:

SCHEDULE OF NOTE PAYABLE

	December 31, 2021
Notes payable	$	2,650,000
Less: unamortized discount		(2,203,226	)
Notes payable, net	$	446,774

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FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 13 – INCOME TAXES

Income tax expense consists of the following components:

	December 31, 2021		December 31, 2020
Current
Federal	$	-	$	-
State		-		-
Foreign		40,264		23,051
Total Current		40,264		23,051
		-		-
Deferred
Federal	$	-	$	-
State		-		-
Total Deferred		-		-

Income tax expense	$	40,264	$	23,051

The Company’s provision for income taxes for the years ended December 31, 2021 and 2020 is based on the estimated annual effective tax rate, plus discrete items. The following table presents the provision for income taxes and the effective tax rates for and years ended December 31, 2021 and 2020:

	December 31, 2021			December 31, 2020
Loss before income tax provision	$	(8,160,541	)	$	(5,828,925	)
Income tax provision		40,264			23,051
Effective tax rate		-0.49	%		-0.40	%

The difference between the Company’s effective tax rate for and years ended December 31, 2021 and 2020 and the US statutory rate of 21% primarily relates to nondeductible expenses, state income taxes (net of federal benefit), a net increase in valuation allowances and certain discrete items.

Reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:

	December 31, 2021
Income tax expense (benefit) at federal statutory rate	$	(1,713,714	)	21.00	%
State and local income taxes net of federal tax benefit		(21,754	)	0.27	%
Change in valuation allowance		2,295,280		-28.13	%
Return to provision adjustments		5,119		-0.06	%
Permanent differences		(528,281	)	6.47	%
Other - net		3,614		-0.04	%
Income tax expense (benefit)	$	40,264		-0.49	%

F-56

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 13 – INCOME TAXES (CONTINUED)

At December 31, 2021 and December 31, 2020, the Company had federal net operating losses (“NOLs”) in the amount of $22,135,733 and $12,892,095 respectively, which are offset fully by a valuation allowance. These NOLs expire from 2035 to 2037 or have indefinite lives as follows. However, the Tax Cuts & Jobs Act of 2017 limits the amount of net operating loss utilized each year after December 31, 2020 to 80% of taxable income.

12/31/2035	$	35,945
12/31/2036		836,622
12/31/2037		1,922,017
Indefinite		19,341,149
Total	$	22,135,733

The Company is in process of evaluating the effects that a change in ownership under Internal Revenue Code Section 382 may limit the potential utilization of its NOLs going forward.

Temporary differences which give rise to a significant portion of deferred tax assets are as follows:

SCHEDULE OF DEFERRED TAX ASSET

	December 31, 2021			December 31, 2020
Accrued expenses	$	214,397		$	9,456
Fixed and intangible assets		(75,900	)		(93,694	)
Allowance for doubtful accounts		16,678			-
Warrant amortization		96,165			-
Net operating loss - Federal		4,648,504			2,707,117
Net operating loss - States		134,113			115,798
Deferred tax asset, gross		5,033,957			2,738,677
Less: Valuation allowance		(5,033,957	)		(2,738,677	)
Net deferred tax asset	$	-		$	-

In making this determination, the Company is required to give significant weight to evidence that can be objectively verified. It is generally difficult to conclude that a valuation allowance is not needed when there is significant negative evidence, such as cumulative losses in recent years. Forecasts of future taxable income are considered to be less objective than past results. At December 31, 2021 and December 31, 2020, the Company maintains a full valuation allowance against its deferred tax assets.

Income tax expense is recorded using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between amounts reported for income tax purposes and financial statement purposes, using current tax rates. A valuation allowance is recognized if it is anticipated that some or all of a deferred tax asset will not be realized. The Company must assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent that the Company believes that recovery is not likely, it must establish a valuation allowance. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets.

None of the Company’s Federal or state income tax returns are currently under examination by the Internal Revenue Service (“IRS”) or state authorities. However, the 2017-2020 remain open to examination as the statute of limitations has not yet expired.

F-57

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 14 – LEASES

In 2020, the Company entered into various short-term lease commitments ranging from three to six months for office workspace in New York. The monthly rental cost ranged from $800 to $2,000.

In January 2020, the Company entered into a lease agreement for 7 workstations in Mexico for a term of 12 months and expired on December 31, 2020. In November 2020, the Company entered into a lease agreement for 14 workstations in Mexico for a term of 12 months and expired on October 31, 2021. In November 2021, the Company entered into a lease agreement for 62 workstations in Mexico for a term of 12 months and will expire on October 31, 2022. The rental cost for the years ended December 31, 2021 and 2020, was approximately $110,000 and 67,000, respectively.

NOTE 15 – SEGMENT INFORMATION

Geographic long-lived asset information presented below is based on the physical location of the assets at the end of year. Long-lived assets including intangible assets, capitalized software, property and equipment and security deposits, by geographic region, are as follows at:

SCHEDULE OF SEGMENT LONG-LIVED ASSETS

	December 31, 2021		December 31, 2020
United States	$	369,706	$	452,891
Mexico		290,548		39,731
Total long-lived assets	$	660,254	$	492,622

The following table summarizes the Company’s total revenue by geographic area based on the billing address of the customers:

	2021		2020
	Year Ended December 31,
	2021		2020
United States	$	20,156,744	$	8,738,661
Mexico		1,317,407		467,280
Total revenue	$	21,474,151	$	9,205,941

NOTE 16 – RELATED PARTY TRANSACTIONS

The Company received consulting, accounting and recruiting services from various shareholders. The total cost of these services for the years ended December 31, 2021 and 2020 were $350,000 and $353,000, respectively. The accounts payable to these various shareholders as of December 31, 2021 and December 31, 2020 were $140,000 and $30,000, respectively.

The Company also provided freight services to a customer owned by a shareholder. The accounts receivable from this certain customer as of December 31, 2021 and December 31, 2020 was $0 and $24,000 respectively. The revenue of these services for the years ended December 31, 2021 and 2020 was $99,000 and $164,000, respectively.

In 2021, the Company issued various warrants to ATW, an affiliate of a shareholder and entered into various promissory notes with shareholders. (See Note 12 and 17).

F-58

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 17 – WARRANTS

On November 9, 2015, the Company issued 9,050 common stock warrants to two founders with an exercise price of $5.00. The warrants expire and are no longer exercisable at the earlier of the tenth anniversary of the date the warrants were issued or the date the Company is acquired by another entity.

Under the terms of a short-term borrowing agreement signed in 2017, the lender had a right to invest up to the greater of (i) $250,000 or (ii) an amount that would maintain Lender’s pro rata ownership in the Company under the same terms provided to other investors. On November 15, 2018, the Company and the lender agreed on the terms of the right to invest by granting the lender a warrant to purchase up to 7,224 series seed preferred shares of the Company at an exercise price of $10.38 per share. The warrants expire and are no longer exercisable at the tenth anniversary of the date the warrants were issued. The warrant shall be automatically exchanged for shares in the event of a change of control.

On August 26, 2020, the Company issued a warrant to an affiliate of a shareholder to purchase up to 765,862 Series A2 preferred shares at an exercise price of $0.25 in exchange for professional services. Effective December 31, 2020, this warrant was cancelled and a replacement warrant to purchase up to 765,862 Series A2 preferred shares at an exercise price of $0.25 was issued to an affiliate of the original warrant holder. The Company estimated the fair value of the warrants to be $1,039,070 based on a Black-Scholes valuation and recorded it as professional fees and included it in additional paid-in capital as of December 31, 2020. The warrants expire on August 26, 2027. On December 17, 2021, the warrants were exercised (see Note 19).

The following assumptions were used when calculating the issuance date fair value:

SUMMARY OF FAIR VALUE AT GRANT DATE

Exercise price of the warrants	$	0.25
Expected life of the warrants		7 years
Current value of the underlying share	$	1.45
Expected volatility		101.70	%
Expected dividend yield		0.00	%
Risk-free interest rates		0.22	%

The table below summarizes the Company’s warrant activities:

SUMMARY OF WARRANT ACTIVITY

	Number of Common Shares Warrants		Number of Series Seed Shares Warrants		Number of Series A Shares Warrants			Exercise Price Range Per Share		Weighted Average Exercise Price
Balance at December 31, 2019		9,050		7,224		-		$	5.00 to 10.38	$	7.39
Granted		-		-		1,573,362			0.00001 to 0.60		0.40
Forfeited		-		-		-			-		-
Exercised		-		-		(807,500	)		0.00001 to 0.60		0.54
Balance at December 31, 2020		9,050		7,224		765,862			0.00001 to 10.38		0.40
Forfeited		-		-		-			-		-
Exercised		-		-		(765,862	)		0.25		0.25
Balance at December 31, 2021		9,050		7,224		-		$	0.00001 to 10.38	$	7.39

F-59

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 17 – WARRANTS (CONTINUED)

Warrant Liabilities

The Company’s warrant liabilities contained unobservable inputs that reflected the Company’s own assumptions in which there was little, if any, market activity as of the measurement date. Accordingly, the Company’s warrant liabilities are measured on a recurring basis using unobservable inputs and were classified as level 3 measurements.

In connection with the September Promissory Note, on September 16, 2021 the Company also issued the September Warrant Securities to Hudson to purchase certain securities of the Company. Hudson assigned the warrants it received from the Company to ATW, an affiliate of a shareholder and executed a Warrant Assignment Agreement on September 16, 2021 (see Note 12). Pursuant to the terms of the warrant agreement, upon closing of the Merger, the warrant will be automatically deemed exercised and the Company will issue 1,891,928 shares of the Company’s Series A3 Preferred Stock and warrants to purchase 1,891,928 shares of Series A3 Preferred Stock at an exercise price of $1.125 based on the Exchange Ratio of 1.26855.

The warrant agreement includes additional optional exercise triggers upon certain financing transactions if the Merger is not completed. In addition, if the warrants are not exercised prior to October 7, 2022 under any of the additional optional exercise triggers, then at any time on or after October 7, 2022, the warrant holder may elect to exercise a warrant to purchase up to a number of September Warrant Securities equal to the quotient obtained by dividing (A) $2,700,000 (“September Warrant Value”), by (B) 75% of the fair market value of a share of the most senior class of equity securities of the Company outstanding at the time of exercise as determined by mutual agreement. If the warrant has not been exercised in full by October 7, 2023, the warrant shall automatically be exercised by instructing the Company to withhold a number of Warrant Securities then issuable upon exercise of the warrant with an aggregate fair market value as of the exercise date equal to the exercise price of $0.01 multiplied by the number of September Warrant Securities as determined by the September Warrant Value.

The warrants are considered an unconditional obligation to issue variable number of the Company’s shares for a fixed monetary amount known at inception. As such, the warrants are recorded as a liability until exercised.

The Company measured the fair value of the warrants to be $2,692,396, comprised of $1,703,782 fair value of Series A3 Preferred Stock, and $988,614 fair value of Series A3 Preferred Stock warrants based on a Black-Scholes option pricing model. The Company recorded the fair value of the warrant on inception date on September 16, 2021 as a liability and the excess fair value over the proceeds received from the September Promissory Note in the amount of $1,192,396 was recorded in other expenses on the accompanying consolidated statements of operations. The Company remeasured the fair value on December 31, 2021 and the periodic change in fair value, which amounted to $497,759, is reflected in change of fair value of warrant liabilities within the consolidated statements of operations.

The following assumptions were used when calculating the fair value of the A3 Warrants:

SUMMARY OF FAIR VALUE AT GRANT DATE

Exercise price of the warrants	$0.01-$1.125
Expected life of the warrants	0.3-7 years
Current value of the underlying Series A3 Preferred Stock	$0.75-$0.82
Expected volatility	58.5%-71.3	%
Expected dividend yield	0.00	%
Risk-free interest rates	0.02%-1.44	%

On December 29, 2021, the Company issued warrants to an affiliate of a shareholder in connection with the First and Second December Promissory Note (see Note 12). Pursuant to the terms of the warrant agreement, upon closing of the Merger (see Note 12), the warrant will be automatically deemed exercised and the Company will issue 2,376,439 shares of the Company’s Series A3 Preferred Stock and warrants to purchase 2,376,439 shares of Series A3 Preferred Stock at an exercise price of $1.125 based on the Exchange Ratio of 1.26855 (“December Warrant Securities”).

F-60

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 17 – WARRANTS (CONTINUED)

The warrant agreement includes additional optional exercise triggers upon certain financing transactions if the Merger is not completed. In addition, if the warrants are not exercised prior to December 29, 2022 under any of the additional optional exercise triggers, then at any time on or after December 29, 2022, the warrant holder may elect to exercise a warrant to purchase up to a number of December Warrant Securities equal to the quotient obtained by dividing (A) $3,391,452 (“December Warrant Value”), by (B) 75% of the fair market value of a share of the most senior class of equity securities of the Company outstanding at the time of exercise as determined by mutual agreement. If the warrant has not been exercised in full by October 7, 2023, the warrant shall automatically be exercised by instructing the Company to withhold a number of Warrant Securities then issuable upon exercise of the warrant with an aggregate fair market value as of the exercise date equal to the exercise price of $0.01 multiplied by the number of the December Warrant Securities as determined by the December Warrant Value.

The Company measured the fair value of the warrants to be $2,756,669, comprised of $1,758,565 fair value of Series A3 Preferred Stock, and $998,104 fair value of Series A3 Preferred Stock warrants based on a Black-Scholes option pricing model. The Company recorded the fair value of the warrant on inception date as a liability on the consolidated balance sheet as of December 31, 2021 and the excess fair value over the proceeds received from the First and Second December Promissory Note in the amount of $1,636,669 was recorded in other expense on the accompanying consolidated statements of operations.

The following assumptions were used when calculating the fair value of the A3 Warrants:

SUMMARY OF FAIR VALUE AT GRANT DATE

Exercise price of the warrants	$	0.01-1.125
Contractual life of the warrants		0.3-7 years
Current value of the underlying Series A3 Preferred Stock	$	0.80
Expected volatility		66.6%-71.3%
Expected dividend yield		0.00	%
Risk-free interest rates		0.02%-1.44%

NOTE 18 - DEFINED CONTRIBUTION PLAN

The Company has a defined contribution plan covering eligible employees with at least two months of service. The Company fully matches employee contributions up to 3% of total compensation, plus 50% of contributions that exceed that amount up to 5% of total compensation. Total expense for the years ended December 31, 2021 and 2020, was $29,477 and $15,304, respectively.

NOTE 19 – STOCKHOLDERS’ DEFICIT

Prior to the closing of the Merger with Hudson, the Company’s authorized capitalization consisted of (i) 68,437,031 shares of Common stock, $0.00001 par value per share (“Common Stock”), (ii) 80,000 shares of Non-Voting Common Stock, $0.00001 par value per share (“Non-Voting Common Stock”), and (iii) 60,437,031 shares of Preferred Stock, $0.00001 par value per share (“Preferred Stock”), of which 19,958 shares were designated as Series Seed Preferred Stock, $0.00001 par value per share (“Series Seed Preferred Stock”), 7,991,078 were designated as Series A1-A Preferred Stock, $0.00001 par value per share (“Series A1-A Preferred Stock”), 3,167,474 shares were designated as Series A1-B Preferred Stock, $0.00001 par value per share (“Series A1-B Preferred Stock” and together with the Series A1-A Preferred Stock, the “Series A1 Preferred Stock”), 2,258,521 shares were designated as Series A2 Preferred Stock, $0.00001 par value per share (“Series A2 Preferred Stock”), 46,000,000 shares were designated as Series A3 Preferred Stock, $0.00001 par value per share (“Series A3 Preferred Stock”), and 1,000,000 shares were designated as Series A4 Preferred Stock, $0.00001 par value per share (the “Series A4 Preferred Stock”).

F-61

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 19 – STOCKHOLDERS’ DEFICIT (CONTINUED)

Holders of Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings). On any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders or by written consent in lieu of meeting, each holder of outstanding shares of Preferred Stock are entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder were convertible as of the record date for determining stockholders entitled to vote on such matter. Except as specifically indicated in the Company’s Fourth Amended and Restated Certificate of Incorporation (as amended, the “Restated Charter”) the holders of Preferred Stock voted together with the holders of Common Stock, as a single class and on an as-converted to Common Stock basis. The Non-Voting Common Stock was not entitled to vote on any matters presented to the stockholders of the Company for their action or consideration. The Restated Charter also included certain customary preferred stock protective provisions which gave a specified majority of the outstanding shares of Series A2 Preferred Stock the right to approve certain customary fundamental actions by the Company.

The holders of record of the Common Stock and Preferred Stock, voting together as a single class, were entitled to elect the directors of the Company.

The Restated Charter contained certain restrictions on the Company’s ability to pay dividends on its Common Stock without also simultaneously paying dividends on the Preferred Stock.

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 stockholders or, in the case of a Deemed Liquidation Event (as defined in the Restated Charter) the consideration or proceeds available for distribution, as the case may be, were to be distributed to the holders of Series A4 Preferred Stock, Series A3 Preferred Stock, Series A2 Preferred Stock, Series A1 Preferred Stock, Series Seed Preferred Stock, Common Stock and Non-Voting Common Stock, pro rata based on the number of shared held by each such holder, treating for this purpose all such shares as if they had been converted to Common Stock pursuant to the terms of the Restated Charter immediately prior to such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event. No share of Common Stock, Non-Voting Common Stock or Preferred Stock enjoyed a liquidation preference of priority with respect to any such distributions.

Each share of Preferred Stock was convertible, at the option of the holder thereof, at any time and from time to time and without the payment of additional consideration by the holder thereof, into such number of shares of Common Stock as is determined by dividing the Reference Price (as defined below) of such share of Preferred Stock by the Conversion Price (as defined below) of such share of Preferred Stock. The “Series A4 Conversion Price” and “Series A4 Reference Price” were both initially equal to $2.25. The “Series A3 Conversion Price” and “Series A3 Reference Price” were both initially equal to $4.23. The “Series A2 Conversion Price” and “Series A2 Reference Price” were both initially equal to $1.80. The “Series A1-A Conversion Price” and “Series A1-A Reference Price” were both initially equal to $1.20. The “Series A1-B Conversion Price” and “Series A1-B Reference Price” were both initially equal to $1.50 and the “Series Seed Conversion Price” and “Series Seed Reference Price” were both initially equal to $20.7626. Accordingly, all shares of Preferred Stock were convertible to Common Stock on a one-to-one basis. The Restated Charter provided for customary broad-based weighted-average anti-dilution adjustments to the Series A2 Conversion Price or the Series A1-A Conversion Price in the event of issuances or deemed issuances of Common Stock at prices below the effective Series A2 Conversion Price or Series A1-A Conversion Price. The conversion prices of all Preferred Stock were also subject to other customary adjustments in the case of certain dividends, distributions, stock splits, stock combinations, reorganizations and similar transactions effecting the Common Stock. All outstanding shares of Preferred Stock were also subject to mandatory conversion to Common Stock upon election of the requisite majority of holders of Series A2 Preferred Stock or an initial public offering of the Company’s common stock meeting certain specified qualification.

On May 19, 2020, the Company entered into a Series A Preferred Stock Purchase Agreement (the “Purchase Agreement”), with holders of the Company’s then-outstanding convertible notes. Under the Purchase Agreement, on May 19, 2020, the convertible notes were converted to 7,152,551 Series A1-A, 2,977,544 Series A1-B and 1,225,153 Series A2 preferred shares at par value of $0.00001 per share for a total carrying costs of $10,726,543.

F-62

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 19 – STOCKHOLDERS’ DEFICIT (CONTINUED

On July 31, 2020, the Company issued 605,777.5 Series A1-A and 126,722.5 Series A2 preferred shares upon the exercise of warrant to purchase shares of stock and an exercise price of $0.60 per share under the terms of the respective warrant agreement for a total consideration of approximately $440,000.

On August 24, 2020, the Company issued 75,000 Series A2 preferred shares upon the exercise of warrant to purchase shares of stock under the terms of the respective warrant agreement for a total consideration of $0.

On August 26, 2020, the Company issued 60,000 voting common shares for professional services performed in the amount of $15,000.

On August 26, 2020, the Company issued 29,332 voting common shares for professional services performed in the amount of $7,333.

On October 7, 2020, the Company issued 1,031,243 voting common shares to each purchaser of bridge notes based on 257.5261 shares for each $1,000 principal amount of notes purchased for a total consideration $0 (see Note 11).

On February 18, 2021, the Company filed its Restated Charter. On July 30, 2021, this was amended by the Company, further amended on August 19, 2021 and further amended on September 20, 2021.

On December 17, 2021, the Company issued 765,862 Series A2 preferred shares upon the exercise of warrant to purchase shares of stock and an exercise price of $0.25 per share under the terms of the respective warrant agreement for a total consideration of $191,466.

The different classes of preferred stock issued are set forth below:

SCHEDULE OF PREFERRED STOCK ISSUED

	December 31, 2021		December 31, 2020
Series A1-A Preferred Shares		7,758,328		7,758,328
Series A2 Preferred Shares		2,192,738		1,426,876
Series A1-B Preferred Shares		2,977,544		2,977,544
Total		12,928,610		12,162,748

NOTE 20 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through [DATE], the date that the consolidated financial statements were available for issuance.

On February 2, 2022, the Company amended its Fourth Charter to increase the amount of authorized share to 68,437,031 shares of common stock, 80,000 shares of non-voting common stock and 60,437,031 shares of preferred stock.

The different classes of preferred stock authorized are set forth below:

SCHEDULE OF PREFERRED STOCK AUTHORIZED

Type of Shares	Number of Shares Authorized
Series Seed Preferred Shares		19,958
Series A1-A Preferred Shares		7,991,078
Series A1-B Preferred Shares		3,167,474
Series A2 Preferred Shares		2,258,521
Series A4 Preferred Shares		1,000,000
Series A3 Preferred Shares		46,000,000
Total		60,437,031

F-63

FREIGHT APP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 20 - SUBSEQUENT EVENTS (CONTINUED)

As described in Note 1, the Merger between the Company and Hudson Capital Inc. was closed on February 14, 2022, including the closing of the private placement for net proceeds of $3,500,000. All of the Company’s convertible notes in the amount of $7,857,579 (as of December 31, 2021) were converted.

Pursuant to the terms of the September Warrant Securities, upon closing of the Merger, the warrant securities were exercised and the Company issued 1,891,928 shares of its Series A3 Preferred Stock and warrants to purchase 1,891,928 shares of Series A3 Preferred Stock at an exercise price of $1.125 based on the Exchange Ratio of 1.26855 (see Note 17).

Pursuant to the terms of the December Warrant Securities, upon closing of the Merger the warrant securities were exercised and the Company issued 2,376,439 shares of its Series A3 Preferred Stock and warrants to purchase 2,376,439 shares of Series A3 Preferred Stock at an exercise price of $1.125 based on the Exchange Ratio of 1.26855 (see Note 17).

In order to focus on its core business as a North American transportation logistics technology platform company and improving operations, Hudson Capital Inc. (“Hudson”) has decided to divest any non-core, non-performing businesses and to sell its wholly-owned subsidiary, Hong Kong Internet Financial Services (“HKIFS”), to private investors. The divestment of HKIFS will result in Hudson departing from its legacy People’s Republic of China financial advisory business and shifting its priorities towards being situated in geographical locations of its core businesses. The sale of HKIFS was completed on March 30, 2022 for a nominal consideration, and included all of the prior operations, obligations and commitments related to its Chinese operations. Hudson expects immaterial financial effects from the sale outside of incurring minimal legal expenses to assemble and formalize the transaction.

F-64

19,147,688 Ordinary Shares

FREIGHT TECHNOLOGIES, INC.

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