Fr8Tech's CEO Shares Open Letter Addressing Shareholders' Concerns
November 6, 2023
Freight Technologies, Inc. (Nasdaq: FRGT) (“Fr8Tech''), a technology company whose custom-developed Fr8App, an industry-leading freight-matching platform powered by AI and machine-learning offering a real-time portal for B2B cross-border shipping and domestic shipping within the USMCA region, has released an open letter from CEO Javier Selgas addressing concerns regarding recent fluctuations in stock values.
Dear Valued Fr8Tech Shareholders,
In recent times, we’ve received inquiries about the downward trajectory of our stock. Some of these messages have been less than cordial, if not deliberately offensive. As the CEO of Fr8Tech, I hold your concerns in the highest regard. My paramount duty is to steer our company toward the realization of our objectives, and as I will outline shortly, we are making substantial strides in that direction.
I must confess I share in the disappointment expressed regarding our stock's performance. It is my and our management team’s opinion that the market's valuation of our stock falls short of our company's actual worth. It's evident that, despite achieving significant corporate milestones, external factors have continued to exert downward pressure on our stock price. One of my key roles is to implement the company's business strategy, and as demonstrated in various previous communications to the public, the company consistently achieves substantial progress in this regard. I will provide an overview of some of these accomplishments in this message.
I share your frustration that the tireless efforts of Fr8Tech's dedicated team and our impressive accomplishments to date have been somewhat overshadowed by this disparity. It's important to emphasize our unwavering commitment to success, as exemplified by my and our Company CFO’s investment in FRGT underlining our steadfast faith in the company. As shown in our upcoming annual meeting proxy filing, we each received a significant portion of our compensation for 2022, $125,000 each, in the form of Ordinary Shares from the Company.
I have also heard concerns about possible illegal transacting on our Ordinary Shares. Rest assured, we will utilize all available means to combat any illicit trading practices affecting our stock, if any.
Allow me to share some recent highlights that underscore our commitment to growth:
Financial Milestones:
29% Quarter-over-Quarter Revenue Growth: In the second quarter of 2023, we achieved robust revenue growth, marking a substantial 29% increase compared to the preceding quarter. This impressive growth attests to our strong market positioning and effective execution of our business strategy. During this upcoming quarter, we expect an additional quarter/quarter performance with at least an 8% improvement (32% annualized). We will continue to work to make that even higher growth during the final quarter of the calendar year. All of this during a year in which average freight rates in the US during the first half of 2023 were anywhere from 15% to 25% lower than prior year periods and a decline of 34% from 2022’s high point to September 2023.
93% Year-over-Year Margin Increase: Our gross margin percentages during the first six months ended on June 30, 2023, have nearly doubled over the prior year, boasting a remarkable 93% year-over-year increase compared to the first half of 2022. This improvement reflects our successful implementation of sound cost management practices and operational efficiencies, including our decision to discontinue unprofitable segments in various lines. We anticipate our third-quarter margins to continue to demonstrate improvement on a y/y and a q/q basis.
$9.9 million in additional funding secured during 2023: We are confident that we are in a financial position to meet our growth objectives with the funding secured in January 2023 which was subsequently increased in April 2023 to $9.9 million of additional funding so far this year. We believe the funding we presently have in place is sufficient to get us to break-even performance on an EBITDA basis before the end of calendar 2024.
Coverage from one of the top stock analysts in this space, who continues to publish analyses that include target prices for our Ordinary Shares well above our present trading price. It is noteworthy that those targets incorporate assumptions of 100% conversion of all securities (preferred shares, convertible notes, and warrants/options) convertible into Ordinary Shares and issued to date.
Operational Success:
Product Innovation: Our dedication to innovation has resulted in the successful launch of our LTL offering, which has garnered a positive response from customers and industry experts alike. This is a seed that we have planted that we expect to nurture and grow over time and is a line of business that we expect will generate higher margins relative to sales than some of our legacy products.
Market Expansion: We have successfully expanded into new markets, creating additional revenue streams and diversifying our customer base, starting operations in El Paso, TX, and increasing the number of lanes going from/to Canada.
Sustainability Initiatives: Our commitment to sustainability has not only reduced our carbon footprint by reducing paper consumption and digitalizing processes but also resonated positively with environmentally-conscious consumers, setting us apart in the market.
Increased the number of our Fr8Fleet capacity: To reach record levels for our company during October 2023 while at the same time staffing a capable and professional carrier sales team with a stated objective of aggressively growing carriers on our platform, an important revenue-driving metric, and our Achilles heel for most of 2023. We will provide specific metrics on this very exciting expansion of our capacity soon.
AI Innovation for Supply Chain Excellence: In line with our commitment to innovation, earlier this year, we announced the establishment of a dedicated Artificial Intelligence (AI) department. This department, led by a team of seasoned experts in the field of AI, is poised to revolutionize the way we approach supply chain management. By harnessing the power of AI, we aim to develop cutting-edge functionalities and tools that will enhance efficiency and internal control, optimize logistics, and unlock unprecedented insights within the supply chain industry. We believe that this strategic initiative will not only solidify our position as industry leaders but also deliver long-term benefits to our stakeholders by streamlining operations, improving our internal control environment, reducing costs, and ensuring our supply chain remains agile in the face of ever-evolving challenges. This investment in AI underscores our unwavering dedication to staying at the forefront of technological advancements to deliver unparalleled value to our customers and investors.
Seamless Integration for Global Connectivity: We have completed numerous strategic integrations with GPS providers, leading tech logistics companies, and various other industry partners thereby expanding the reach and breadth of our systems operating environment. These integrations have not only expanded our global network but have also enriched our platform with advanced technological capabilities, providing our customers with unparalleled safety, convenience, and reliability. These collaborations enable us to offer real-time tracking, predictive analytics, and streamlined logistics solutions, solidifying our position as the go-to choice for cross-border shipping needs. We are excited about the potential these integrations unlock and are committed to further strengthening our global connectivity to meet the ever-evolving demands of the industry.
Joined AMACARGA: Fr8App is expanding its capabilities to cater to the growing demands of its clients importing on a maritime basis from Asia and Europe and requiring distribution throughout North America. We are adapting our innovative Fr8App platform to seamlessly integrate with marine shipping operations, providing a streamlined and efficient solution to meet the unique needs of maritime shipments. We expect to have more news to share on this exciting new line for our company soon.
Fr8App was cited in Google Maps Platform’s blog: As an example of how new technology can be adopted to create interactive and insightful visual experiences.
Expanding Our Footprint with Leading Enterprises: In the ever-evolving landscape of global logistics, we take great pride in the expansion of our customer base, which now includes prominent enterprise entities such as Kimberly Clark, Samsung, Whirlpool, Beat Box, and several other industry leaders whose names we are unable to disclose due to their corporate policies. While these leading enterprises bring vast volumes of shipments to our platform, we understand that building trust and forging lasting partnerships takes time. To solidify our position as their preferred logistics partner, we have embarked on an ambitious journey to seamlessly integrate our platform with their systems. This endeavor not only enhances operational efficiencies but also reinforces the digitalization of their processes. As we continue to deepen these integrations, we anticipate a substantial increase in the volume dedicated to our services. We are dedicated to ensuring that these partnerships are not only fruitful but also characterized by long-term commitment and mutual growth.
In closing, please know that Fr8Tech remains steadfast in its pursuit of innovation, growth, and investment in our Company’s people and technologies, particularly AI, throughout our platform and its supporting systems. We appreciate your continued support and trust in our vision. We plan to file our six-month financials later this fall and will provide a broad-based update at that time. Together, we will overcome the challenges we face and emerge stronger than ever.
Warm regards, Javier Selgas
CEO and Board Member
Freight Technologies, Inc.
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About Freight Technologies Inc.
Freight Technologies (Nasdaq: FRGT) (“Fr8Tech") is a technology company developing solutions to optimize and automate the supply chain process. Its wholly owned subsidiary, Freight App, Inc. (Fr8App), is a B2B cross-border shipping marketplace in the USMCA region powered by AI and machine learning. Focused on making shipping transparent and efficient, Fr8App provides carriers with increased growth opportunities and shippers with flexibility, visibility, and simplicity for the once-complex process of international over-the-road (OTR) shipping. Fr8App uses its proprietary technology 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, broker, transportation management, fleet management, and committed capacity solutions. The company is headquartered in Houston, Texas.
For more information, please visit fr8technologies.com.
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Freight Technologies' and Fr8App’s actual results may differ from their expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Freight Technologies’ and Fr8App’s expectations with respect to future performance and anticipated financial impacts of its acquisition of Fr8App.
These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from those discussed in the forward-looking statements. Most of these factors are outside Freight Technologies’ and Fr8App’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the impact of the COVID-19 pandemic on Fr8App’s business; (2) the inability to obtain or maintain the listing of Freight Technologies’ ordinary shares on Nasdaq; (3) the ability to recognize the anticipated benefits of the merger, which may be affected by, among other things, competition and the ability of Fr8App to grow, manage growth profitably and retain its key employees; (4) costs related to the merger; (5) changes in applicable laws or regulations; (6) the possibility that Freight Technologies or Fr8App may be adversely affected by other economic, business and/or competitive factors; (7) risks relating to the uncertainty of the projected financial information with respect to Fr8App; (8) risks related to the organic and inorganic growth of Fr8App’s business and the timing of expected business milestones; and (9) other risks and uncertainties identified, including those under “Risk Factors,” to be filed in Freight Technologies' other filings with the SEC. Freight Technologies cautions that the foregoing list of factors is not exclusive. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Freight Technologies and Fr8App caution readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Freight Technologies and Fr8App do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in their expectations or any change in events, conditions, or circumstances on which any such statement is based.
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