Fr8Tech(FRGT) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Q2 2025 financials show positive equity and net income from crypto gains, despite operational losses and 'going concern' warning Condensed Consolidated Balance Sheets June 30, 2025 balance sheet shows total assets at $17.1 million, driven by $8.4 million in cryptocurrencies, shifting stockholders' equity to positive $8.8 million Condensed Consolidated Balance Sheet Highlights (in USD) | Financial Metric | June 30, 2025 (unaudited) | December 31, 2024 (audited) | | :--- | :--- | :--- | | Total Current Assets | $8,097,136 | $5,049,546 | | Cryptocurrencies | $8,376,410 | $0 | | Total Assets | $17,060,367 | $5,690,245 | | Total Current Liabilities | $8,276,987 | $6,345,005 | | Total Liabilities | $8,276,987 | $6,345,005 | | Total Stockholders' Equity (Deficit) | $8,783,380 | ($654,760) | - The company's financial position shifted from a stockholders' deficit of $654,760 at the end of 2024 to a positive stockholders' equity of $8,783,380 by June 30, 2025[11] - A new asset class, Cryptocurrencies, valued at $8,376,410, was added to the balance sheet during the first half of 2025[11] Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Q2 2025 saw a net income of $649,238 due to a $2.4 million unrealized gain on cryptocurrency, despite revenue decline and operating loss, narrowing the six-month net loss Statement of Operations Summary (in USD) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,989,910 | $3,837,842 | $7,090,550 | $8,125,602 | | Operating Loss | ($1,470,971) | ($1,704,951) | ($2,935,072) | ($3,788,697) | | Unrealized gain on cryptocurrency | $2,427,754 | $0 | $2,427,754 | $0 | | Net Income (Loss) | $649,238 | ($1,954,556) | ($952,808) | ($4,211,006) | | Basic EPS | $0.38 | ($24.66) | ($0.85) | ($63.75) | Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) Stockholders' equity dramatically improved from a $654,760 deficit to $8.78 million positive equity by June 30, 2025, driven by preferred stock issuances for cash and cryptocurrency - Stockholders' equity increased from a deficit of $(654,760) on December 31, 2024, to a positive balance of $8,783,380 on June 30, 2025[16] - Key financing activities in the first six months of 2025 included issuing preferred stock for $3.0 million in cash and $5.2 million in cryptocurrency[16] Condensed Consolidated Statements of Cash Flows Six months ended June 30, 2025, saw $5.04 million net cash used in operations and $0.98 million in investing, offset by $6.41 million from financing, resulting in a cash increase Cash Flow Summary (in USD) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($5,039,217) | ($4,857,126) | | Net cash used in investing activities | ($984,831) | ($173,879) | | Net cash provided by financing activities | $6,407,563 | $3,923,593 | | Net increase (decrease) in cash | $383,515 | ($1,107,412) | | Cash at end of period | $586,658 | $460,576 | Notes to Unaudited Financial Statements Notes detail the company's supply chain platform business, 'going concern' warning due to $45.9 million deficit, significant customer concentration, and $8.3 million cryptocurrency acquisition - The company's business focuses on AI and machine learning-powered platform solutions to optimize the supply chain process, including services for over-the-road, ocean freight, and less-than-truckload shipping[23] - Management has determined that the company's liquidity condition raises substantial doubt about its ability to continue as a going concern, citing an accumulated deficit of $(45,869,587) and negative working capital of $(179,851)[24][27] - The company has significant customer concentration risk, with one customer accounting for 48% of revenues for the six months ended June 30, 2025, and 69% of accounts receivable at that date[34][35] - The company acquired significant cryptocurrency holdings in 2025, including 11.7 million FET tokens and 45.7 thousand Official Trump coins, with a total fair market value of $8,376,410 as of June 30, 2025[80][81][84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 13% revenue decrease, narrowed operating loss due to cost cuts, ongoing 'going concern' warning, and recent capital raises including a $20 million crypto facility - Revenue for the six months ended June 30, 2025, decreased by 13% year-over-year to $7.1 million, primarily due to lower dedicated capacity revenue and a stronger US dollar[155] - Operating expenses were reduced, with compensation and employee benefits down 16% due to headcount reductions, contributing to a smaller operating loss compared to the prior year[157] - The company's liquidity condition raises substantial doubt about its ability to continue as a going concern, with an accumulated deficit of $45.9 million and negative working capital of $179,851 as of June 30, 2025[169][172] - Recent financing activities include raising $3.0 million from Series A4 preferred shares in February 2025, establishing a $20 million convertible note facility in April 2025 for purchasing cryptocurrency, and raising an additional $0.5 million in August 2025[165] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable to the company for this reporting period - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[182] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[183] - No changes occurred in the internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[184] PART II OTHER INFORMATION Item 1. Legal Proceedings The company reports no material pending legal proceedings or significant developments in existing litigation during the six months ended June 30, 2025 - As of June 30, 2025, the Company is not a party to any material pending legal proceedings[186] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes from the risk factors disclosed in the 2024 Annual Report on Form 10-K are reported[187] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not sell any previously undisclosed unregistered equity securities or repurchase ordinary shares during the first six months of 2025 - The company did not sell any unregistered equity securities during the six months ended June 30, 2025, that were not previously disclosed in a Form 8-K[188] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - There were no defaults upon senior securities[190] Item 4. Mine Safety Disclosures This section is not applicable to the company - This item is not applicable[191] Item 5. Other Information No information required for Form 8-K was left unreported, and no directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter - No information was required to be disclosed in a Current Report on Form 8-K during the quarter but was not reported[192] Item 6. Exhibits This section lists exhibits filed, including organizational documents, securities agreements, and officer certifications - Exhibits filed include the Amended and Restated Memorandum and Articles of Association, a Securities Purchase Agreement from April 2025, and officer certifications pursuant to the Sarbanes-Oxley Act[194]