High-Trend International Group 6-K, filed Oct 30, 2024
High-Trend International Group (HTCO)
About this 6-K
High-Trend International Group filed this 6-K on October 30, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of October 2024
Commission File Number 001-41573
CARAVELLE INTERNATIONAL GROUP
(Translation of registrant’s name into English)
Office Unit 1125,
11/F, Lee Garden One,
33 Hysan Ave,
Causeway Bay, Hong Kong
+852 38481700
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Non-Reliance on Previously Issued Financial Statements
On October 30, 2024, Caravelle International Group’s (the “Company’s”) management and the audit committee of the Board of Directors (the “Audit Committee”) concluded that the Company’s (i) previously issued unaudited and unreviewed condensed consolidated Balance Sheets as of April 30, 2023 and Statement of Operations and Comprehensive Income (Loss) for the six months ended April 30, 2023 (the “Non-Reliance Periods”) included in the Company’s Report on Form 6- K filed on February 29, 2024 should be restated and accordingly, should no longer be relied upon.
Similarly, any previously furnished or filed reports, related earnings releases, investor presentations or similar communications of the Company describing the Company’s financial results as of and for the Non-Reliance Periods should no longer be relied upon.
Background
During the interim review of the Company’s financial results for the six months ended April 30, 2024 and 2023, the Audit Committee and management concluded there were errors identified in the previously disclosed the balance sheet as of April 30, 2023 and the operating results for the six months ended April 30, 2023 due to inappropriate consolidation and lack of appropriate cutoff procedures on revenue, costs and expenses during the period end close. The impacts of these restatements are as follow:
Restated Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) for the Six Months Ended April 30, 2023.
| For the Six Months Ended April 30, 2023 | ||||||||||||
| Previously reported | Effect of restatement | Restated | ||||||||||
| Revenue | ||||||||||||
| Ocean freight revenue | $ | 45,093,336 | $ | 4,236,957 | $ | 49,330,293 | ||||||
| Vessel service revenue | 8,800 | 206,318 | 215,118 | |||||||||
| Total revenue | 45,102,136 | 4,443,275 | 49,545,411 | |||||||||
| Cost of revenues | 41,713,652 | 12,526,618 | 54,240,270 | |||||||||
| Gross profit (loss) | 3,388,484 | (8,083,343 | ) | (4,694,859 | ) | |||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | 2,023,855 | 79,464 | 2,103,319 | |||||||||
| Total operating expenses | 2,023,855 | 79,464 | 2,103,319 | |||||||||
| Income (loss) from operations | 1,364,629 | (8,162,807 | ) | (6,798,178 | ) | |||||||
| Other Income (Expense) | ||||||||||||
| Interest income | 942 | 12 | 954 | |||||||||
| Interest expense | (51,992 | ) | (5,046 | ) | (57,038 | ) | ||||||
| Other income (expense), net | 36,124 | (230,353 | ) | (194,229 | ) | |||||||
| Total other expense, net | (14,926 | ) | (235,387 | ) | (250,313 | ) | ||||||
| Income (loss) before income taxes | 1,349,703 | (8,398,194 | ) | (7,048,491 | ) | |||||||
| Provision for income taxes | - | 2,542 | 2,542 | |||||||||
| Net income (loss) | 1,349,703 | (8,400,736 | ) | (7,051,033 | ) | |||||||
| Less: Net income (loss) attributable to non-controlling interests | 611,750 | (3,343,984 | ) | (2,732,234 | ) | |||||||
| Net income (loss) attributable to the Company | $ | 737,953 | $ | (5,056,752 | ) | $ | (4,318,799 | ) | ||||
| Comprehensive income(loss) | 1,349,703 | (8,400,736 | ) | (7,051,033 | ) | |||||||
| Less: Comprehensive income (loss) attributable to non-controlling interests | 611,750 | (3,343,984 | ) | (2,732,234 | ) | |||||||
| Comprehensive income (loss) attributable to the Company | $ | 737,953 | $ | (5,056,752 | ) | $ | (4,318,799 | ) | ||||
| Earnings (loss) per share attributable to the Company - Basic and diluted* | $ | 0.01 | $ | (0.09 | ) | $ | (0.08 | ) | ||||
| Weighted Average Number of Shares Outstanding - Basic and diluted* | 50,000,000 | 2,068,190 | 52,068,190 | |||||||||
1
Unaudited Condensed Consolidated Balance Sheets as of April 30, 2023.
| As of April 30, 2023 | ||||||||||||
| Previously reported | Effect of restatement | Restated | ||||||||||
| ASSETS | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 9,618,961 | $ | (14,303 | ) | $ | 9,604,658 | |||||
| Accounts receivable | 1,120,891 | (461,104 | ) | 659,787 | ||||||||
| Prepayments and other current assets | 20,247,842 | (18,413,811 | ) | 1,834,031 | ||||||||
| Total Current Assets | 30,987,694 | (18,889,218 | ) | 12,098,476 | ||||||||
| Property and equipment, net | 593,781 | (10,753 | ) | 583,028 | ||||||||
| Prepayment and other non-current assets | 1,513,809 | (667,101 | ) | 846,708 | ||||||||
| Operating lease right of use asset, net | - | 189,039 | 189,039 | |||||||||
| Total Assets | $ | 33,095,284 | $ | (19,378,033 | ) | $ | 13,717,251 | |||||
| LIABILITIES AND EQUITY (DEFICIT) | ||||||||||||
| Current Liabilities: | ||||||||||||
| Current maturity of long-term bank loan | $ | 290,835 | $ | 1,081,202 | $ | 1,372,037 | ||||||
| Accounts payable | 467,040 | (84,107 | ) | 382,933 | ||||||||
| Advance from customers | 14,646,609 | (10,537,701 | ) | 4,108,908 | ||||||||
| Accrued expenses and other liabilities | 2,695,541 | (1,077,135 | ) | 1,618,406 | ||||||||
| Operating lease liability-current | - | 124,500 | 124,500 | |||||||||
| Taxes payable | 3,549 | 52,612 | 56,161 | |||||||||
| Due to related parties | 3,126,270 | (230,718 | ) | 2,895,552 | ||||||||
| Total Current Liabilities | 21,229,844 | (10,671,347 | ) | 10,558,497 | ||||||||
| Long-term bank loans | 2,491,167 | (859,033 | ) | 1,632,134 | ||||||||
| Operating lease liability-noncurrent | - | 64,538 | 64,538 | |||||||||
| Deferred tax liability | 217 | - | 217 | |||||||||
| Total Liabilities | 23,721,228 | (11,465,842 | ) | 12,255,386 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| Total Equity (deficit): | ||||||||||||
| Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 52,774,579 and 50,000,000 shares issued and outstanding at April 30, 2023 | 5,000 | 278 | 5,278 | |||||||||
| Additional paid-in capital | 152,550 | (609,733 | ) | (457,183 | ) | |||||||
| Retained earnings | 3,114,651 | (3,056,752 | ) | 57,899 | ||||||||
| Total Shareholders’ Equity (Deficit) | 3,272,201 | (3,666,207 | ) | (394,006 | ) | |||||||
| Non-controlling interest | 6,101,855 | (4,245,984 | ) | 1,855,871 | ||||||||
| Total Equity (Deficit) | 9,374,056 | (7,912,191 | ) | 1,461,865 | ||||||||
| Total Liabilities and Equity (Deficit) | $ | 33,095,284 | $ | (19,378,033 | ) | $ | 13,717,251 | |||||
2
As part of its consideration of the accounting issues, the Company has and will continue to assess the underlying internal control deficiencies that enabled the errors to occur and not be prevented or detected on a timely basis. The Company takes financial reporting matters seriously and is committed to upholding high standards of corporate governance and internal controls. Accordingly, the Company has instituted remediation measures and is considering and will continue to consider additional measures, as appropriate. The remediation measures have included, the following:
| (i) | To ensure that our executive officers, operational personnel and accounting group fully understand the Company’s commitment to establishing an effective control environment, the Company has undertaken communications that establish our expectations regarding internal controls and applicable accounting standards and financial reporting requirements. In connection with this, the Company has conducted a number of training sessions for the entire accounting group and our senior management personnel regarding the importance of the Company establishing and maintaining an effective control environment and financial reporting responsibilities. Management intends to include these principles as an ongoing component of our new hire training and other employee training courses. |
| (ii) | Management plans to increase the size, qualifications and organization of our accounting personnel. The Company has established or strengthened several accounting functions focused on key areas of our business, including but not limited to proper periodic cutoff procedures on revenue, cost and expenses during the periodic accounting close process. In addition, the Company will incorporate controls designed to improve the coordination between the business department and accounting personnel to ensure the completeness of the financial information for the periodic financial reporting. |
| (iii) | In our efforts toward remediation of our material weaknesses around consolidation, management have developed policies, procedures and controls over the timely preparation of consolidation, reconciliations of accounts and the related documentation during each period end accounting close and financial reporting process. In connection with the implementation of these policies, procedures and controls, we have improved our training regarding our consolidation and account reconciliation processes and have adopted review procedures. |
Management is improving its processes of reviewing financial statements, increasing communications with independent accounting professionals and implementing additional procedures to ensure that the review of the Company’s financial statements is supported by sufficient documentation to determine accuracy.
Forward-Looking Statements
This Form 6-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements contained in this Form 6-K that do not relate to matters of historical fact should be considered forward-looking, including statements regarding the expected impact of the restatement of the Company’s financial statements, and the remediation of the Company’s material weakness in internal control over financial reporting. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many important factors could cause actual future events to differ materially from the forward-looking statements in this Form 6-K, include, but is not limited to, the Company’s ability to remediate its material weaknesses; and various factors relating to its business, operations and financial performance. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described under the caption “Risk Factors” in the Company’s Annual Report on Form 20-F for the fiscal year ended October 31, 2023, as such factors may be updated from time to time in its other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These filings identify and address other important risks and uncertainties that could cause the Company’s actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and, except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.
3
CARAVELLE INTERNATIONAL GROUP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| As of April 30, 2023 | As of October 31, 2022 | |||||||
| (Restated) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 9,604,658 | $ | 21,572,336 | ||||
| Accounts receivable | 659,787 | 3,955,311 | ||||||
| Prepayments and other current assets | 1,834,031 | 6,949,397 | ||||||
| Due from related parties | - | 951,655 | ||||||
| Total Current Assets | 12,098,476 | 33,428,699 | ||||||
| Property and equipment, net | 583,028 | 604,126 | ||||||
| Prepayment and other non-current assets | 846,708 | 1,538,591 | ||||||
| Operating lease right of use asset, net | 189,039 | - | ||||||
| Total Assets | $ | 13,717,251 | $ | 35,571,416 | ||||
| LIABILITIES AND DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Current maturity of long-term bank loan | $ | 1,372,037 | $ | 880,631 | ||||
| Accounts payable | 382,933 | 750,471 | ||||||
| Advance from customers | 4,108,908 | 10,067,278 | ||||||
| Accrued expenses and other liabilities | 1,618,406 | 8,492,923 | ||||||
| Operating lease liability-current | 124,500 | - | ||||||
| Taxes payable | 56,161 | 10,939 | ||||||
| Due to related parties | 2,895,552 | 2,976,902 | ||||||
| Total Current Liabilities | 10,558,497 | 23,179,144 | ||||||
| Long-term bank loans | 1,632,134 | 2,366,626 | ||||||
| Operating lease liability-noncurrent | 64,538 | - | ||||||
| Deferred tax liability | 217 | 1,293 | ||||||
| Total Liabilities | 12,255,386 | 25,547,063 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| Total Equity: | ||||||||
| Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 52,774,579 and 50,000,000 shares issued and outstanding as of April 30, 2023 and October 31, 2022, respectively | 5,278 | 5,000 | ||||||
| Additional paid-in capital | (457,183 | ) | 152,550 | |||||
| Accumulated deficit | 57,899 | 4,376,698 | ||||||
| Total Shareholders’ Deficit | (394,006 | ) | 4,534,248 | |||||
| Non-controlling interest | 1,855,871 | 5,490,105 | ||||||
| Total Equity | 1,461,865 | 10,024,353 | ||||||
| Total Liabilities and Deficit | $ | 13,717,251 | $ | 35,571,416 | ||||
4
CARAVELLE INTERNATIONAL GROUP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS AND
COMPREHENSIVE LOSS
| For the Six Months Ended | ||||||||
| April 30, 2023 | April 30, 2022 | |||||||
| (Restated) | ||||||||
| Revenue | ||||||||
| Ocean freight revenue | $ | 49,330,293 | $ | 88,960,921 | ||||
| Vessel service revenue | 215,118 | 7,711,755 | ||||||
| Total revenue | 49,545,411 | 96,672,676 | ||||||
| Cost of revenues | 54,240,270 | 74,882,496 | ||||||
| Gross profit (loss) | (4,694,859 | ) | 21,790,180 | |||||
| Operating expenses: | ||||||||
| Selling expenses | - | 16,341 | ||||||
| General and administrative expenses | 2,103,319 | 1,639,146 | ||||||
| Total operating expenses | 2,103,319 | 1,655,487 | ||||||
| Income (loss) from operations | (6,798,178 | ) | 20,134,693 | |||||
| Other income (Expense) | ||||||||
| Interest income | 954 | - | ||||||
| Interest expense | (57,038 | ) | (51,370 | ) | ||||
| Other income (expense), net | (194,229 | ) | 71,645 | |||||
| Total other expense, net | (250,313 | ) | 20,275 | |||||
| Income (loss) before income taxes | (7,048,491 | ) | 20,154,968 | |||||
| Provision for income taxes | 2,542 | 645 | ||||||
| Net income (loss) | (7,051,033 | ) | 20,154,323 | |||||
| Less: Net income (loss) attributable to non-controlling interests | (2,732,234 | ) | 9,519,262 | |||||
| Net income (loss) attributable to the Company | $ | (4,318,799 | ) | $ | 10,635,061 | |||
| Comprehensive income (loss) | (7,051,033 | ) | 20,154,323 | |||||
| Less: Comprehensive income (loss) attributable to non-controlling interests | (2,732,234 | ) | 9,519,262 | |||||
| Comprehensive income (loss) attributable to the Company | $ | (4,318,799 | ) | $ | 10,635,061 | |||
| (Loss) earnings per share attributable to the Company - Basic and diluted* | $ | (0.08 | ) | $ | 0.21 | |||
| Weighted Average Shares Outstanding - Basic and diluted* | 52,068,190 | 50,000,000 | ||||||
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: October 30, 2024 | CARAVELLE INTERNATIONAL GROUP | |
| By: | /s/ Hanxi Chang | |
| Hanxi Chang | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
6