NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Description of Business

Freight App, Inc. (“Fr8App”) (formerly known as “Freighthub, Inc.”), a Delaware corporation, was incorporated on October 26, 2015. On January 18, 2019, Freight App Mexico S.A De C.V. (“Fr8App Mexico”) (formerly known as “Freight Hub Mexico S.A. De C.V.”), a wholly owned subsidiary of Fr8App, was formed. On July 29, 2021, both companies filed their name change to Fr8App and Fr8App Mexico. Following the Merger described below, Fr8App continued its operation under the name Freight Technologies Inc. (“Fr8Tech”). Fr8Tech is a technology company offering a diverse portfolio of proprietary platform solutions powered by AI and machine learning to optimize and automate the supply chain process. Focused on addressing the distinct challenges within the supply chain ecosystem, the Company’s portfolio of solutions includes the Fr8App platform for seamless OTR B2B cross-border shipping across the USMCA region; Fr8Now, a specialized service for less-than-truckload (LTL) shipping; Fr8Fleet, a dedicated capacity service for enterprise clients in Mexico; Waavely, a digital platform for efficient ocean freight booking and management of container shipments between North America and ports worldwide and Fleet Rocket a nimble, scalable and cost-effective Transportation Management System (TMS) for brokers, shippers, and other logistics operator Together, each product is interconnected within a unified 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, brokerage support, transportation management, fleet management, and committed capacity solutions.

Merger with Hudson Capital

On December 13, 2021, Fr8App entered into a merger agreement (“Merger”) with Hudson Capital, Inc. (“Hudson Capital”), and ATW Master Fund II, L.P., as the representative of the stockholders of Fr8App (the “Stockholders’ Representative”) by which Hudson Capital acquire all the issued and outstanding securities of the Fr8App and assume Fr8App 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. Following the Merger, Hudson Capital continued as a British Virgin Islands (“BVI”) business company, and on May 26, 2022 it changed its name to Freight Technologies Inc. (“Fr8Tech”) and its ticker symbol to “FRGT”. Fr8App continues as a corporation incorporated in the State of Delaware.

Freight App, Inc., as related to activities in periods prior to the Merger is hereinafter referred to as Fr8App, and Fr8Tech, along with its wholly owned subsidiaries, are hereinafter referred to as the “Company”.

For financial accounting and reporting purposes under generally accepted accounting principles in the United States (“GAAP”), the Merger was accounted for as a reverse acquisition and recapitalization, with no goodwill or other intangible assets recorded. Under this method of accounting, Hudson Capital (legal acquirer) is treated as the acquired entity and Fr8App (legal acquiree) is deemed to have issued stock for the net assets and equity of Hudson Capital, consisting of mainly cash, accompanied simultaneously by recapitalization. The net assets of Hudson Capital are stated at historical cost, and accordingly the equity and net assets of Fr8App have not been adjusted to fair value. Consequently, the consolidated assets, liabilities and results of operations of the Company are the historical financial statements of Fr8App and Hudson Capital’s assets, liabilities and results of operations are consolidated with the assets, liabilities and results of operations of Fr8App beginning on the Merger date. Shares and earnings per share information prior to the Merger have been retroactively restated to reflect the exchange ratio established in the recapitalization.

Management evaluated the guidance contained in Accounting Standard Codification (“ASC”) Topic 805, Business Combinations (ASC 805) with respect to the identification of the acquirer in the merger and concluded, based on a consideration of the pertinent facts and circumstances as follows: The determination of the acquirer for accounting purposes was primarily based on the facts that, immediately following the Merger: (i) Fr8App’s existing stockholders owned a substantial majority of the voting rights in the combined company, (ii) Fr8App designated a majority of the members of the initial board of directors of the combined company, and (iii) Fr8App’s senior management holds all key positions in the senior management of the combined company.

FREIGHT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS