FRGT.NASDAQFreight Technologies, INC
10-Q: Freight Technologies Reports Q1 2025 Results, Revenue Declines Slightly Amid Cost-Cutting Efforts
Sentiment:
Quarterly Report
Freight Technologies, Inc. (FRGT) reports a slight decrease in revenue for Q1 2025, accompanied by reduced operating losses due to cost-cutting measures and a shift towards higher-margin business.
Capital raiseThe company issued 2,311,248 Series A4 preferred shares for $5.2 million payable in FET Tokens.The company entered into an agreement for the issuance of convertible notes through a facility of up to USD $ 20 million with an institutional investor, earmarked for purchasing Official Trump Tokens ($TRUMP).On May 2, 2025, pursuant to the financing, the Company issued two notes in the aggregate principal amount of USD $ 1 million.On May 9, 2025, the Company issued two additional notes for an aggregate amount of $ 1 million, bringing the total amount of notes issued under the facility to $ 2 million.
Worse than expectedRevenue decreased by 4.4% year-over-year.
Summary
- Freight Technologies, Inc. (FRGT) reported a decrease in revenue for the three months ended March 31, 2025, totaling $4.1 million compared to $4.28 million in the same period of 2024.
- The company's operating loss decreased from $2.08 million in Q1 2024 to $1.46 million in Q1 2025.
- Net loss for the quarter was $1.6 million, or $0.73 per share, compared to a net loss of $2.25 million, or $10.76 per share, in the prior year.
- The decrease in operating loss was attributed to reduced costs of revenue, compensation, and general and administrative expenses.
- The company's cash and cash equivalents increased to $416,476 as of March 31, 2025, from $204,032 at the end of 2024.
- The company has an accumulated deficit of $46.5 million and net working capital of $349,251.
- Management expresses substantial doubt about the company's ability to continue as a going concern within the next twelve months without additional funding.
- The company issued 2,311,248 Series A4 preferred shares for $5.2 million payable in FET Tokens.
- Subsequent to the quarter, the company entered into an agreement for the issuance of convertible notes through a facility of up to USD $ 20 million with an institutional investor, earmarked for purchasing Official Trump Tokens ($TRUMP).
Sentiment
Score: 4
Explanation: The sentiment is slightly negative due to the revenue decline and going concern uncertainty, despite some improvements in cost management. The company's future is highly dependent on securing additional funding.
Positives
- Operating loss decreased by $619,645 year-over-year, indicating improved operational efficiency.
- Compensation and employee benefits expenses decreased by 13.7% due to headcount reduction.
- General and administrative expenses decreased by 18.4% due to lower spending on professional services and insurance.
- The company secured $3.0 million in funding through the issuance of Series A4 preferred shares.
- Cash and cash equivalents increased by $212,444 from the end of 2024.
Negatives
- Revenue decreased by 4.4% year-over-year.
- The company has an accumulated deficit of $46.5 million.
- Management expresses substantial doubt about the company's ability to continue as a going concern without additional funding.
- The company has negative cash flows from operations.
- The company's combined accounts receivable and unbilled receivable balance of $5.9 million at March 31, 2025, increased by $1.8 million or 45.1% from 2025 $4.1 million at December 31, 2024, primarily due to lower collections compared to the prior quarter.
Risks
- The company's ability to continue as a going concern is dependent on securing additional funding.
- The company faces risks related to market volatility, liquidity constraints, and regulatory uncertainty associated with holding FET tokens.
- A slowdown in economic activity in North America could negatively impact the demand for the company's services.
- The company's reliance on a single customer for a significant portion of its revenue and accounts receivable poses a concentration risk.
- The company's future success depends on its ability to adapt to technological shifts in the industry and maintain a competitive edge.
Future Outlook
The company projects that it will need to draw additional funds on its existing facilities and need additional capital to fund its current operations and capital investment requirements until the Company scales to a revenue level that permits cash self-sufficiency.
Industry Context
The report acknowledges the growing interest in digital freight matching platforms and the shift towards more abundant and secure sources of freight capacity available in a digital marketplace. The near-shoring phenomenon continues to point towards more freight crossing over the U.S. border with Mexico and a lesser extent, Canada, as manufacturers and producers seek to move operations closer to customers.
Legal Proceedings
- As of March 31, 2025, the Company did not have any pending legal actions.
Stakeholder Impact
- Shareholders face potential dilution from future equity issuances.
- Employees may be affected by potential cost-cutting measures or scaling back of operations.
- Customers may experience changes in service offerings or pricing.
- Suppliers and creditors face increased risk due to the company's going concern uncertainty.
Next Steps
- The company intends to use the net cash proceeds from the February 3, 2025 Offering for working capital and corporate purposes.
- The Company will be obliged to pay certain liquidated damages to the investors if the Company fails to file the Registration Statement when required, fails to file or cause the Registration Statement to be declared effective by the SEC when required, or fails to maintain the effectiveness of the Registration Statement pursuant to the Securities Purchase Agreement.
Key Dates
| Date | Description |
|---|---|
| 2015-10-26 | Freight App, Inc. (Fr8App) was incorporated. |
| 2019-01-18 | Freight App Mexico S.A De C.V. (Fr8App Mexico) was formed. |
| 2019-03-07 | Date of original short-term promissory note (2019 Note). |
| 2022-02-14 | The Company merged with Hudson Capital Inc. |
| 2023-01-03 | The Company and Freight Opportunities LLC (the Noteholder) entered into a Securities Purchase Agreement pursuant to which the Company issued to the Noteholder a convertible promissory note in the principal amount of up to $ 6,593,407 (the 2023 Convertible Note or the Note). |
| 2024-01-01 | Start of the period for At The Market (ATM) Offering Agreement to offer and sell shares of our Common Stock having an aggregate offering price of up to $ 2,300 . |
| 2024-02-05 | The Company effected a one for ten reverse stock split. |
| 2024-03-11 | The Company entered into a Term Note Purchase Agreement with Freight Opportunities LLC to secure a term loan of $ 750,000 . |
| 2024-05-24 | The 2019 Note was amended to temporarily increase the maximum principal amount that could be advanced withdrawn under the line of credit to $ 5,250,000 until June 30, 2024. |
| 2024-06-04 | The Company executed another Term Note Purchase Agreement with Freight Opportunities LLC, resulting in an additional term loan of $ 125,000 . |
| 2024-06-12 | On June 12, 2024, in connection with the offering of the Shares, the Company effected a restructuring of par value of ordinary shares (the Restructuring of Par Value) and filed an Amended and Restated Memorandum and Articles of Association with the Registrar of Corporate Affairs in the British Virgin Islands, to decrease the par value of the Companys ordinary shares outstanding from $ 1.10 per share to no par value each. |
| 2024-09-03 | The Company entered into a Cancellation Agreement with Freight Opportunities, LLC to cancel the principal and interest outstanding under the Term Note Purchase Agreement of $ 905,861 . |
| 2024-09-25 | The Company effected a one for twenty-five reverse stock split. |
| 2025-02-03 | The Company completed a private placement with certain investors, wherein a total of 1,540,832 Series A4 preferred shares of the Company, par value $ 0.0001 per share (the Preferred Shares), with each investor receiving 770,416 Preferred Shares, for a total purchase price of approximately $ 3,000,000 (the Offering). |
| 2025-03-31 | End of the reporting period for the Q1 2025 results. |
| 2025-03-31 | The Company entered into a Securities Purchase Agreement, dated as of March 31 2025 with Fetch Compute, Inc. wherein the Company sold and the Purchaser purchased 2,311,248 Series A4 preferred shares of the Company, par value $ 0.0001 per share for a total purchase price of approximately $ 5,200,000 payable in 11,300,000 FET Tokens. |
| 2025-04-29 | O n April 29, 2025 the Company entered into an agreement for the issuance of convertible notes through a facility of up to USD $ 20 million with an institutional investor. |
| 2025-05-02 | On May 2, 2025, pursuant to the financing, the Company issued two notes in the aggregate principal amount of USD $ 1 million. |
| 2025-05-09 | On May 9, 2025, the Company issued two additional notes for an aggregate amount of $ 1 million, bringing the total amount of notes issued under the facility to $ 2 million. |
| 2025-05-15 | Date through which management has evaluated subsequent events. |
Keywords
freight, logistics, technology, transportation, cross-border, USMCA, Fr8App, revenue, financial results, Q1 2025
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