{"url_path":"/sec/frgt/10-k/2026/item-15","section_key":"item-15","section_title":"Item 15 CONTROLS AND PROCEDURES","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-14","source_url":"https://www.sec.gov/Archives/edgar/data/1687542/0001493152-26-023206-index.html","accession_number":"0001493152-26-023206","cik":"0001687542","ticker":"FRGT","issuer_name":"Freight Technologies, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1687542/0001493152-26-023206-index.html","primary_entity_key":"0001687542","primary_entity_name":"Freight Technologies, Inc."},"word_count":1320,"has_tables":true,"body_markdown":"ITEM\n15. CONTROLS AND PROCEDURES\n\n \n\n**Disclosure\nControls and Procedures**\n\n \n\nOur\nmanagement are responsible for establishing and maintaining our disclosure controls and procedures. These controls and procedures were\ndesigned to ensure that information that we are required to disclose in the reports that we file under the Exchange Act is recorded,\nprocessed, summarized and reported within the time periods specified in the applicable rules and forms of the SEC, and that it is accumulated\nand communicated to our management as appropriate to allow timely decisions regarding required disclosure.\n\n \n\nAs\nrequired by Rule 13a-15 under the Exchange Act, management has evaluated the effectiveness of our disclosure controls and procedures\nas of the end of the period covered by this report. Disclosure controls and procedures refer to controls and other procedures designed\nto ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized\nand reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without\nlimitations, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or\nsubmit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial\nofficers, or persons performing similar functions, as appropriate to allow timely decisions regarding our required disclosures.\n\n \n\nBased\non the foregoing, our principal executive officer and principal financial officer have concluded that as of December 31, 2025, our disclosure\ncontrols and procedures were not effective as a result of the material weaknesses in our internal control over financial reporting described\nbelow.\n\n \n\n**Management’s\nAnnual Report on Internal Control over Financial Reporting**\n\n \n\nThe\nCompany’s internal control over financials reporting includes those policies and procedures that:\n\n \n\n●\n\nPertain\nto the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;\n\n●\nProvide\nreasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with\nU.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our\ndirectors; and\n\n●\nProvide\nreasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that\ncould have a material effect on the financial statements.\n\n \n\nA\nmaterial weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is\na reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected\non a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting\nthat is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s\nfinancial reporting.\n\n \n\nBecause\nof its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of\nany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions\nor because the degree of compliance with policies or procedures may deteriorate. Under the supervision and with the participation of\nour management, including our CEO and CFO, we conducted an assessment of the effectiveness of our internal control over financial reporting\nas of December 31, 2025.\n\n \n\nThe\nassessment was based on criteria established in the framework Internal Control - Integrated Framework (2013), issued by the Committee\nof Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management determined that, as of December 31,\n2025, we did not maintain effective internal control over financial reporting due to the existence of the following significant deficiency\nand material weakness:\n\n \n\n●\n\nLack\nof a functional internal audit department or personnel that monitors the consistencies of the preventive internal control procedures\nand, as a result, the Company may not be able to discover the existence of problems and prevent the problematic behavior in internal\ncontrols; and\n\n \n \n\n●\nFor\nrevenue related to dedicated capacity for the year ended December 31, 2025, invoice and fulfilment reconciliations with the customer\nand general ledger entries related to dedicated service invoices and adjustments thereto were not always completed in a timely manner\nfor internal reporting purposes.\n\n \n\n72\n\n \n\n \n\n**Remediation**\n\n \n\nSince\nbecoming a publicly-trade public, management has continuously worked to improve the Company’s internal controls. Our management\nhas carried out and is continuing to undertake the following actions to remediate the material weakness and deficiency described above:\n\n \n\n●\nEngaged\nan external SOX 404 implementation firm in 2023 to assist in improving the Company’s controls, which included a deep-dive assessment\nof all policies and procedures and targeted actions to mitigate all weaknesses and deficiencies and bring all our internal controls\ncompliant with SOX 404;\n\n \n \n\n●\n\nStrengthen\ndesignated roles and/or certain employees for ongoing maintenance of internal control policies and procedures, including enforcing\nexisting policies, maintaining evidence of task and requirement completion, and updated process documentation, guidelines and communications\nto employees as necessary;\n\n \n \n\n●\nContinue\nongoing training initiatives to ensure daily activities and practices of all employees are in alignment with our internal controls\nand US GAAP and compliant with established policies and procedures;\n\n \n\n●\n\nHire\nfinance professionals with strong SOX and internal control backgrounds; and\n\n \n \n\n●\n\nImplement\nsystem enhancements and new applications that are aligned with our focus on creating strong internal controls, as well as complete\nand accurate financial information.\n\n \n\nOver\nthe past year, management made significant progress with identifying, documenting, implementing and testing many controls to address\npreviously identified material weaknesses and significant deficiencies. The effect cover core Company processes including: order-to-cash,\nprocure-to-pay, hire-to-retire, information technology general controls, record-to-report, taxes, treasury & cash management, and\ncorporate governance. The Company is continuing to review, test and updated its controls to ensure they remain effective.\n\n \n\nHowever,\nwe cannot provide any assurance that these remediation efforts are and will be successful or that our internal control over financial\nreporting will be effective as a result of these efforts. In addition, as we continue to evaluate and work to improve our internal controls\nover financial reporting related to the identified material weakness, management may determine to take additional measures to address\ncontrol deficiencies or determine to modify the remediation plan described above.\n\n \n\n**Inherent\nLimitation on the Effectiveness of Internal Control**\n\n \n\nThe\neffectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including\nthe exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate\nmisconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed\nand operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future\nperiods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance\nwith the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate\nfor our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial\nreporting.\n\n \n\n**Attestation\nReport of Independent Registered Public Accounting Firm**\n\n \n\nThis\nAnnual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation\nreport of the Company’s registered public accounting firm because the Company is neither\nan “accelerated filer” nor a “large accelerated filer” as those terms are defined by the SEC.\n\n \n\n**Changes\nin Internal Controls over Financial Reporting**\n\n \n\nManagement\nis committed to improving the internal controls over financial reporting and will undertake consistent improvements or enhancements on\nan ongoing basis. Except as described above, there were no changes in our internal controls over financial reporting during our twelve\nmonths ended December 31, 2025 that have materially affected, or are reasonably likely to material affect, our internal control over\nfinancial reporting.\n\n** **\n\n****\n\n73"}