(CapitalWatch, Aug. 17, New York | Opinion) Remember that shady Chinese stock "CIFS"? That China Internet Nationwide Financial Services Inc. which in late 2017 was accused by Muddy Waters for only being in business on paper and whose founder was apparently wanted in China for investigation? The same CIFS that rebranded into Hudson Capital in 2020 with the ticker "HUSN"?
Well, the company is now trading as Freight Technologies Inc. (Nasdaq: FRGT), and remains in the pink sheets, and it has just filed to resell some shares held by unaffiliated shareholders. The merger between Freight Tech and Hudson Capital closed in February 2022, and the ticker changed to "FRGT" in May – thus, the company bought into a U.S. listing position.
But how good is a listing handed down from a failed stock?
The operator of Fr8App plans to become "the top digital freight matching broker in the Mexican domestic market as well as U.S-Mexico and Mexico-U.S. cross-border markets."
In its filings, Freight Tech says it provides third-party logistics services and transport management solutions with a focus on "cross-border traffic across the Mexico-U.S. border, the U.S.-Canada border, and domestic shipments within each of these three countries."
Formerly positioned as a subsidiary of Hudson Capital, Freight Tech noted that it no longer operates in the financial advisory space and no longer has any presence or holdings outside of North America. It is also run by a team of specialists operating in the U.S., Spanish, Canadian, and Mexican markets.
However, the company called its former largest shareholder, also the head of CIFS, Jianxin Lin, a key member of its management team. Another key member is the former chairman and CEO, Jinchi Xu – according to Freight Tech, the two "have extensive experience in the financial service industry and important relationships with borrowers, banks and lending institutions for our business."
While Freight Tech mentions these names as advantageous connections, they may not be a good thing – at least, not in the eyes of U.S. investors, who watched CIFS stock lose 90% of its value in 2018 after allegations of fraud. Among allegations against China Internet Finance, the aforementioned Jianxin Lin took money from the public funds of CIFS, manipulated the CIFS stock price by buying its own shares, and bribed the auditing agency to deceive the U.S. SEC.
To be fair, I'll add here that CIFS had denied the allegations and urged investors not to trust the media and "malicious investment institutions."
When the name was changed to Hudson Capital, Lin remained onboard as the majority shareholder.
Now, Freight Tech employs UHY LLP as its independent public accounting firm. UHY is based in Michigan and inspected by the U.S. PCAOB on a regular basis, which is a must according to the Holding Foreign Companies Accountable Act enacted in 2021. Fr8App has headquarters in Texas and in Monterrey, Mexico, and is now led by CEO Javier Selgas.
In a May report, Freight Tech wrote: "Fr8App reported preliminary revenue of $5.3 million for Q1 2022, up from $4.8 million for Q1 2021. With the Q1 year-over-year revenue growth, record monthly sales for April, and positive loads carried trend, management reiterated its 2022 revenue guidance of approximately $40 million."
Selgas said in the statement that he hopes for the stabilization of gas prices and margin improvement.
Since the February merger, FRGT shares tanked 65%. On Tuesday, the microcap company closed at $2.08 per share; its market cap was at $30.2 million and its average trading volume was 836,154, per Yahoo Finance.
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