Business Context and Reporting Period
This Form 6-K is filed by Hudson Capital Inc. (a British Virgin Islands company) for the month of October 2020. The filing discloses the entry into a definitive Merger Agreement on October 10, 2020, with FreightHub, Inc. The transaction involves a redomestication of Hudson Capital to Delaware, a spinoff of its existing business, and a merger with FreightHub. Upon closing, the combined entity will be named Freight Technologies, Inc.
Key Financial Metrics and Transaction Terms
The filing does not provide historical revenue, profit, cash flow, or debt metrics for Hudson Capital or FreightHub. Key financial terms of the transaction include:
- Exchange Ratio: Each share of FreightHub common stock converts into 11.8924291 shares of Merger Sub I common stock.
- Ownership Structure: Post-merger, FreightHub stockholders will own approximately 85.7% of the combined company (non-diluted basis), while Hudson Capital shareholders will own approximately 14.3%.
- Financing Condition: Closing is contingent on FreightHub raising at least $7,000,000 concurrently with or prior to the closing.
- Break-Up Fee: A fee of $500,000 is payable by the breaching party to the non-breaching party if the agreement is terminated due to a material breach or refusal to consummate.
- Reverse Split: Hudson Capital approved a 5:1 reverse split of its ordinary shares, reducing outstanding shares from 32,022,685 to 6,404,537, effective October 29, 2020.
Material Changes and Contingent Consideration
The primary material change is the proposed acquisition of FreightHub. The agreement includes contingent consideration based on future revenue performance:
- Revenue Milestones: FreightHub stockholders are entitled to additional shares if revenue thresholds of $25 million, $50 million, and $100 million are achieved in calendar years ending December 31, 2021, 2022, and 2023, respectively.
- Contingent Shares: For each threshold met, stockholders receive 3.33% of the fully-diluted common stock of the combined company.
- Change of Control: If a change of control occurs before December 31, 2023, stockholders receive an amount equal to 10% of the fully-diluted common stock, less any previously issued contingent shares.
Guidance, Risks, and Closing Conditions
Closing Conditions: The transaction requires shareholder approval from both Hudson Capital and FreightHub, satisfaction of Nasdaq listing requirements, completion of the $7 million financing, and no Material Adverse Effect on either party. The agreement may be terminated if closing does not occur by February 1, 2021.
Risks and Uncertainties: The filing highlights significant risks including the impact of the COVID-19 pandemic, failure to obtain regulatory or shareholder approvals, inability to maintain Nasdaq listing, and the uncertainty of FreightHub's projected financial information. The filing contains forward-looking statements regarding future performance and the anticipated benefits of the merger.
Investor Verification Checklist
- Verify the successful completion of the required $7,000,000 financing by FreightHub.
- Confirm shareholder approval outcomes for both Hudson Capital and FreightHub.
- Monitor the status of the 5:1 reverse split and the new CUSIP number for Hudson Capital shares.
- Review the upcoming Form S-4 registration statement for detailed risk factors and proxy voting instructions.
- Assess the likelihood of meeting the contingent revenue milestones ($25M, $50M, $100M) for 2021-2023.