Business Context and Reporting Period
This Form 6-K filing by Hudson Capital Inc. (to be renamed Freight Technologies, Inc.) covers material events occurring on December 13 and 14, 2021. The filing details the termination of a prior merger agreement and the execution of a new definitive agreement to acquire Freight App, Inc. The transaction involves a complete change in corporate strategy, leadership, and corporate identity.
Key Financial Metrics and Transaction Terms
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, or debt levels for the reporting period. Instead, it outlines the financial structure of the proposed merger:
- Merger Consideration: Existing Freight App securities will convert into Hudson Capital securities. The total number of shares issued in the merger is projected to be 40,147,876 (down from an initial underlying count of 80,792,054 due to conversion mechanics).
- Contingent Consideration: Freight App stockholders may receive additional shares (3.33% of fully-diluted ordinary shares per period) if revenue thresholds of $25 million, $50 million, and $100 million are met in calendar years 2021, 2022, and 2023, respectively.
- Financing Requirement: A condition of closing is that Freight App must raise at least $7,000,000 concurrently with or prior to the closing.
- Securities Purchase: Hudson Capital agreed to sell a pre-funded warrant to purchase 431,000 ordinary shares to ATW Opportunities Master Fund, L.P. for an aggregate price of $862,000.
- Break-Up Fee: A fee of $500,000 is payable by the breaching party (either Hudson Capital or Freight App) if the agreement is terminated due to a material breach or refusal to consummate the merger.
- Indemnification Reserve: 20% of the Company's capital stock post-merger is reserved for potential indemnification claims, with a $700,000 deductible.
Material Changes Versus Prior Period
The filing represents a material strategic pivot from the prior period:
- Termination of Prior Deal: The October 10, 2020 Merger Agreement was terminated on December 13, 2021.
- Corporate Name Change: The company will change its name from Hudson Capital Inc. to Freight Technologies, Inc.
- Leadership Overhaul: All existing directors and executive officers (including CEO Warren Wang and CFO Hon Man Yun) are resigning. They are being replaced by a new board (Nicholas Adler, Marc Urbach, William Samuels, Javier Selgas) and new executives (Javier Selgas as CEO, Paul Freudenthaler as CFO).
- Withdrawal of Registrations: The company withdrew its Form S-1 and Form S-4 registration statements.
Guidance, Outlook, and Risks
Outlook and Conditions: The transaction is subject to customary closing conditions, including shareholder approval from both parties, no Material Adverse Effect, completion of the $7 million financing by Freight App, adoption of an equity incentive plan, and compliance with Nasdaq listing requirements. The closing deadline is March 31, 2022.
Risks and Contingencies:
- Financing Risk: Closing is contingent on Freight App securing $7 million in financing.
- Termination Risk: The agreement may be terminated if closing does not occur by March 31, 2022, or if a material breach is not cured within 15 days.
- Regulatory Risk: The issuance of securities relies on exemptions under Regulation D and existing Form F-3 registration statements.
Important Facts for Investor Verification
- Verify the successful completion of the $7,000,000 financing by Freight App, which is a mandatory closing condition.
- Confirm the approval of the merger by shareholders of both Hudson Capital and Freight App.
- Monitor the timeline for the name change to Freight Technologies, Inc. and the effective date of the new board and officer appointments.
- Review the specific terms of the contingent consideration to understand potential future dilution based on revenue targets.
- Check for any updates regarding the $862,000 securities purchase agreement with ATW Opportunities Master Fund, L.P.