Freight Technologies, Inc. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing; the provided filing text does not give a clear Q4-only financial breakdown. Financial statements are audited and prepared under U.S. GAAP. Unless noted otherwise, amounts below are U.S. dollars.
Business context
Freight Technologies operates a digital freight brokerage and logistics business focused on the U.S.-Mexico-Canada region. Its offerings include Fr8App (full truckload brokerage), Fr8Fleet (dedicated capacity) and Fr8Now (less-than-truckload, launched in Mexico in Q1 2023). The company reports one operating and reportable segment. Its financial history reflects Fr8App following the 2022 reverse acquisition; the legacy financial-services business was divested in 2022.
Key financial metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $17.06 million | $25.89 million |
| Gross profit / margin | $1.35 million / 7.9% | $2.26 million / 8.7% |
| Operating loss | $8.26 million | $7.06 million |
| Net loss | $9.33 million | $8.19 million |
| Net cash used in operations | $5.79 million | $8.47 million |
| Cash and cash equivalents, year-end | $1.56 million | $1.01 million |
| Total assets, year-end | $10.68 million | $10.42 million |
| Current liabilities, year-end | $7.81 million | $7.28 million |
| Short-term borrowings, year-end | $2.82 million | $3.35 million |
| Long-term convertible notes, year-end fair value | $0.24 million | None reported |
| Working capital, year-end | $1.96 million | Not stated in the filing text as a comparable figure |
FY2023 financing cash flows provided $6.80 million, principally from convertible-note proceeds; investing activities used $0.36 million. The filing reports an accumulated deficit of $39.3 million and stockholders’ equity of $2.63 million at year-end. Interest expense, net, was $0.81 million.
Material changes versus FY2022
- Revenue fell $8.83 million, or 34.1%. Management attributed the decrease to reducing low-margin, high-volume business, losing a customer after a carrier-related issue, and weaker spot activity amid carrier-capacity constraints and lower U.S. market rates.
- Cost of revenue declined 33.5%, roughly in line with revenue, but gross margin narrowed by 0.8 percentage points to 7.9%, which management attributed primarily to mix and initial costs for dedicated-capacity services.
- Compensation and benefits rose 20.2% to $5.96 million, including stock compensation and hiring. General and administrative expense fell 11.2% to $3.16 million, while sales and marketing declined 85.6% to $0.08 million.
- Operating loss increased by approximately $1.20 million and net loss increased by approximately $1.14 million, despite lower revenue and lower total expenses.
- Operating cash outflow improved by $2.68 million, but remained substantial. Cash increased by $0.55 million, supported by financing rather than operating cash generation.
- Revenue from dedicated capacity was $3.59 million, up from $2.42 million; brokerage revenue fell to $13.47 million from $23.47 million. U.S.-billed revenue declined to $9.87 million, while Mexico-billed revenue increased to $7.19 million.
Outlook, risks and unusual items
- Going concern: The auditor’s report and management state that recurring losses, negative operating cash flows, accumulated deficit and dependence on external financing raise substantial doubt about the company’s ability to continue as a going concern for the next 12 months. Management expects to draw on available facilities and seek additional debt or equity financing; availability and terms are not assured. Failure to obtain capital could force operating reductions or asset disposals.
- Debt and dilution: The company had a revolving credit facility of up to $5 million, with $2.82 million drawn at year-end and maturity extended to January 31, 2025. A 2023 convertible-note facility with Freight Opportunities, LLC provided $7.68 million in cash proceeds during the year and was substantially converted to preferred and ordinary shares; warrants were also issued. The remaining note was measured at fair value using a Level 3 model. A subsequent $750,000 one-year loan from Freight Opportunities closed on March 11, 2024, at 8% annual interest.
- Revenue and receivables concentration: One customer represented 33% of FY2023 revenue and 66% of year-end accounts receivable. Customer losses, delayed collections or disputes could materially affect revenue and liquidity.
- Internal controls: Management concluded disclosure controls and internal control over financial reporting were ineffective at December 31, 2023. Disclosed weaknesses included lack of internal audit resources and documented control processes, and ineffective or untimely revenue reconciliations for a dedicated-capacity agreement. Remediation was underway, with completion expected in the first half of 2024; effectiveness had not yet been established.
- Operating risks: Key exposures include trucking-market cyclicality, carrier and driver capacity, fuel and interest-rate volatility, Mexican-peso exchange movements, cross-border trade or regulatory changes, competition, cybersecurity and dependence on continued platform adoption. Management sees nearshoring and regional trade as opportunities but provides no quantified revenue or earnings guidance in the filing.
- Other notable items: The company settled litigation with BG Strategic Advisors in October 2023; terms were confidential and claims were dismissed with prejudice. A 10-for-1 reverse stock split took effect February 5, 2024. The filing reports no dividends planned for the foreseeable future.
Most important facts for investors to verify
- Whether the company can secure sufficient committed financing and meet obligations as they fall due, including the revolving facility’s borrowing-base conditions and maturity.
- Subsequent-period cash burn, collections and the credit quality of the customer representing 66% of year-end receivables.
- Whether internal-control remediation was completed and tested effectively, particularly controls over dedicated-capacity revenue recognition and reconciliations.
- The fully diluted share count and potential dilution from preferred shares, convertible instruments and warrants; the filing describes substantial equity-linked securities and a concentrated financing relationship with Freight Opportunities.
- Whether Fr8Fleet and Fr8Now growth can offset declining brokerage revenue while improving gross margins and reducing dependence on manual brokerage support.
- Reconcile share-count and warrant disclosures across the filing, which include multiple reverse splits and securities with differing conversion terms.