Cover
Cover - shares | 3 Months Ended | |
Jan. 31, 2022 | Mar. 15, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jan. 31, 2022 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --10-31 | |
Entity File Number | 000-56016 | |
Entity Registrant Name | KAIVAL BRANDS INNOVATIONS GROUP, INC. | |
Entity Central Index Key | 0001762239 | |
Entity Tax Identification Number | 83-3492907 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 4460 Old Dixie Highway | |
Entity Address, City or Town | Grant | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 32949 | |
City Area Code | (833) | |
Local Phone Number | 452-4825 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | KAVL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 31,139,416 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Jan. 31, 2022 | Oct. 31, 2021 |
CURRENT ASSETS: | ||
Cash | $ 5,590,420 | $ 7,760,228 |
Restricted Cash | 65,542 | 65,007 |
Accounts receivable | 1,296,204 | 1,985,186 |
Inventory deposit – related party | 2,925,000 | 2,925,000 |
Inventories | 11,841,750 | 15,326,370 |
Prepaid expenses | 289,988 | 319,531 |
Income tax receivable | 1,753,594 | 1,753,594 |
Total current assets | 23,762,498 | 30,134,916 |
Right of use asset- operating lease | 51,955 | 55,604 |
TOTAL ASSETS | 23,814,453 | 30,190,520 |
CURRENT LIABILITIES: | ||
Accounts payable | 180,017 | 242,829 |
Accounts payable- related party | 9,129,759 | 12,667,769 |
Accrued expenses | 374,412 | 579,604 |
Operating lease obligation – short term | 13,349 | 13,020 |
Customer refund due | 147,690 | 316,800 |
Total current liabilities | 9,845,227 | 13,820,022 |
LONG TERM LIABILITIES | ||
Operating lease obligation, net of current portion | 42,686 | 46,185 |
TOTAL LIABILITIES | 9,887,913 | 13,866,207 |
STOCKHOLDERS’ EQUITY: | ||
Preferred stock 5,000,000 shares authorized; Series A Convertible Preferred stock ($.001 par value, 3,000,000 shares authorized, 3,000,000 issued and outstanding as of January 31, 2022 and October 31, 2021) | 3,000 | 3,000 |
Common stock ($0.001 par value, 1,000,000,000 shares authorized, 30,236,696 and 30,195,312 issued and outstanding as of January 31, 2022 and October 31, 2021, respectively) | 30,236 | 30,195 |
Additional paid-in capital | 21,936,109 | 21,551,959 |
Accumulated deficit | (8,042,805) | (5,260,841) |
Total Stockholders’ Equity | 13,926,540 | 16,324,313 |
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ 23,814,453 | $ 30,190,520 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jan. 31, 2022 | Oct. 31, 2021 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 30,236,696 | 30,195,312 |
Common stock, shares outstanding | 30,236,696 | 30,195,312 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 3,000,000 | 3,000,000 |
Preferred stock, shares outsanding | 3,000,000 | 3,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Revenues | ||
Revenues, net | $ 2,841,990 | $ 37,369,967 |
Revenues - related parties | 23,765 | 50,300 |
Excise tax on products | (23,872) | (58,748) |
Total revenues, net | 2,841,883 | 37,361,519 |
Cost of revenue | ||
Cost of revenue - related party | 3,484,620 | 32,479,100 |
Cost of revenue - other | 48,172 | 86,021 |
Total cost of revenue | 3,532,792 | 32,565,121 |
Gross (loss) profit | (690,909) | 4,796,398 |
Operating expenses | ||
Advertising and Promotion | 592,501 | 960,502 |
General & Administrative expenses | 1,498,554 | 3,418,339 |
Total operating expenses | 2,091,055 | 4,378,841 |
Other Income | ||
Interest income | 0 | 330 |
Total Other Income | 0 | 330 |
Income (loss) before income taxes provision (benefit) | (2,781,964) | 417,887 |
Provision (benefit) for income taxes | 0 | (106,386) |
Net income (loss) | $ (2,781,964) | $ 311,501 |
Net income (loss) per common share - basic and diluted | $ (0.09) | $ 0.01 |
Weighted average number of common shares outstanding - basic and diluted | 30,234,477 | 23,187,561 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholder's Equity (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Oct. 31, 2020 | $ 3,000 | $ 23,107 | $ 618,904 | $ 3,772,597 | $ 4,417,608 |
Balance at beginning (in shares) at Oct. 31, 2020 | 3,000,000 | 23,106,886 | |||
Issuance of common shares for employee compensation | $ 45 | 76,655 | 76,700 | ||
Issuance of common shares for employee compensation, (in shares) | 44,583 | ||||
Common shares settled and cancelled | $ (18) | (30,493) | (30,511) | ||
Common shares settled and cancelled (in shares) | (17,625) | ||||
Issuance of common shares for compensation | $ 172 | 1,034,424 | 1,034,596 | ||
Issuance of common shares for compensation (in shares) | 172,129 | ||||
Net income | 311,501 | 311,501 | |||
Ending balance, value at Jan. 31, 2021 | $ 3,000 | $ 23,306 | 1,699,490 | 4,084,098 | 5,809,894 |
Balance at end (in shares) at Jan. 31, 2021 | 3,000,000 | 23,305,973 | |||
Beginning balance, value at Oct. 31, 2021 | $ 3,000 | $ 30,195 | 21,551,959 | (5,260,841) | 16,324,313 |
Balance at beginning (in shares) at Oct. 31, 2021 | 3,000,000 | 30,195,312 | |||
Stock Issued for Services – RSU | $ 61 | 110,189 | 110,250 | ||
Stock Issued for Services RSU, (in shares) | 61,250 | ||||
Common shares settled and cancelled | $ (20) | (35,739) | (35,759) | ||
Common shares settled and cancelled (in shares) | (19,866) | ||||
Stock Option Expenses | 309,700 | 309,700 | |||
Net income | (2,781,964) | (2,781,804) | |||
Ending balance, value at Jan. 31, 2022 | $ 3,000 | $ 30,236 | $ 21,936,109 | $ (8,042,805) | $ 13,926,540 |
Balance at end (in shares) at Jan. 31, 2022 | 3,000,000 | 30,236,696 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net (loss) income | $ (2,781,964) | $ 311,501 |
Adjustment to reconcile net (loss) income to net cash used in operating activities: | ||
Stock based compensation | 110,250 | 1,111,296 |
Stock option expense | 309,700 | 0 |
ROU operating lease expense | 3,649 | 3,949 |
Changes in current assets and liabilities: | ||
Accounts receivable | 688,982 | (11,262,976) |
Accounts receivable – related parties | 0 | (3,215) |
Prepaid expenses | 29,543 | 0 |
Inventory | 3,484,620 | (1,722) |
Accounts payable | (62,812) | 0 |
Accounts payable – related party | (3,538,010) | 4,838,321 |
Accrued expenses | (205,192) | 95,390 |
Deferred revenue | 0 | (623,096) |
Income tax accrual | 0 | 106,385 |
Customer refund due | (169,110) | 0 |
Right of use liabilities – operating lease | (3,170) | (3,196) |
Net cash used in operating activities | (2,133,514) | (5,427,336) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Settled RSU shares with cash | (35,759) | (30,511) |
Cash flows used in financing activities | (35,759) | (30,511) |
Net change in cash and restricted cash | (2,169,273) | (5,457,847) |
Beginning cash and restricted cash balance | 7,825,235 | 7,421,701 |
Ending cash and restricted cash balance | 5,655,962 | 1,963,854 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest paid | 0 | 0 |
Income taxes paid | $ 106,385 | $ 0 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Jan. 31, 2022 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Note 1 – Organization and Description of Business Kaival Brands Innovations Group, Inc. (the “Company,” the “Registrant,” “we,” “us,” or “our”), formerly known as Quick Start Holdings, Inc., was incorporated on September 4, 2018 in the State of Delaware. Description of Business The Company is focused on growing and incubating innovative and profitable products into mature, dominant brands. In March 2020, the Company commenced business operations as a result of becoming the exclusive distributor of certain electronic nicotine delivery systems (“ENDS”) and related components (the “Products”) manufactured by Bidi, a related party company that is also owned by Nirajkumar Patel, the Chief Executive Officer of the Company. On March 9, 2020, the Company entered into an exclusive distribution agreement (the “Distribution Agreement”) with Bidi, a related party company, which Distribution Agreement was amended and restated on May 21, 2020 and again on April 20, 2021 (collectively, the “A&R Distribution Agreement”) in order to clarify some of the provisions. Pursuant to the A&R Distribution Agreement, Bidi granted the Company an exclusive worldwide right to distribute the Products for sale and resale to both retail level customers and non-retail level customers. Currently, the Products consist primarily of the “BIDI ® In connection with the A&R Distribution Agreement, the Company entered into non-exclusive sub-distribution agreements, some of which were subsequently amended and restated by the parties in order to clarify certain provisions (all such agreements, as amended and restated, are collectively referred to as the “A&R Sub-Distribution Agreements”), whereby the Company appointed the counterparties as non-exclusive sub-distributors. Pursuant to the A&R Sub-Distribution Agreements, the sub-distributors agreed to purchase for resale the Products in such quantities as they should need to properly service non-retail customers within the continental United States (the “Territory”). On August 31, 2020, the Company formed Kaival Labs, Inc., a Delaware corporation (herein referred to as “Kaival Labs”), as a wholly owned subsidiary of the Company. On July 16, 2021, the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-12 reverse stock split (the “Reverse Stock Split”) of the shares of the Company’s common stock, par value $ 0.001 Current Product Offerings Pursuant to the A&R Distribution Agreement, The Company sells and resells electronic nicotine delivery systems, which it may refer to herein as “ENDS Products”, or “e-cigarettes”, to non-retail level customers. The sole Product the Company resells is the “BIDI ® ® On July 14, 2021, the Company announced plans to launch its first Kaival-branded product, a Hemp CBD product. In addition to its Kaival-branded formulation, the Company anticipates that it will also provide white label, wholesale solutions for other product manufacturers through its subsidiary, Kaival Labs. The Company has not yet launched any Kaival-branded product, nor has it begun to provide white label wholesale solutions for other product manufacturers. COVID-19 Impact In January 2020, the World Health Organization (the “WHO”) announced a global health emergency because of a new strain of coronavirus (“COVID-19”) originating in Wuhan, China and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in global exposure. The Company’s operations have not been significantly impacted. No impairments have been recorded and no triggering events or changes in circumstances had occurred. While the spread of COVID-19 has slowed and social restrictions have largely been lifted, the full impact of the COVID-19 pandemic continues to evolve and remains uncertain. As such, the full magnitude of the COVID-19 pandemic, and the resulting impact, if any, on the Company’s financial condition, liquidity, and future results of operations is uncertain. However, we have encountered some logistical delays related to product launches and distribution in international markets. The Company was also indirectly impacted by supply chain issues and regulatory oversight. Impact of the FDA PMTA Decision As of September 10, 2021, the FDA announced that it has taken action on over 93% of applications and issued Marketing Denial Orders (“MDOs”) for more than 1,167,000 flavored ENDS products, while issuing zero marketing authorizations. Bidi, along with nearly every other company in the ENDS industry, received a MDO for its non-tobacco flavored ENDS products. With respect to Bidi, the MDO covered all non-tobacco flavored BIDI® Sticks, including its Arctic (menthol) BIDI® Stick, which Bidi believes the FDA mischaracterized as “flavored.” BIDI believes that because its Arctic BIDI® Stick is menthol, it should not be subject to the MDO. Bidi and the Company believe this position is aligned with the FDA’s public statements and press releases stating that tobacco and menthol ENDS are not deemed flavored products subject to the MDOs. As a result, beginning in September 2021, Bidi pursued three avenues to challenge the MDO. First, on September 21, 2021, separate from the judicial appeal of the MDO in its entirety, Bidi filed a 21 C.F.R. § 10.75 internal FDA review request specifically of the decision to include the Arctic (menthol) BIDI® Stick in the MDO. The Company anticipates a decision from the FDA on the internal review in the second or third quarter of 2022, although we cannot provide any assurances as to the timing or outcome. Separately, on September 29, 2021, Bidi petitioned the U.S. Court of Appeals for the Eleventh Circuit to review the FDA’s denial of the PMTAs for its non-tobacco flavored BIDI® Stick ENDS, arguing that it was arbitrary and capricious under the Administrative Procedure Act (“APA”), as well as ultra vires i.e., Finally, on October 14, 2021, Bidi requested that the FDA re-review the MDO and reconsider its position that Bidi did not include certain scientific data in its applications sufficient to allow the PMTAs to proceed to scientific review. In light of this request, on October 22, 2021 pursuant to 21 C.F.R. § 10.35(a), the FDA issued an administrative stay of Bidi’s MDO pending its re-review. Subsequently, the FDA lifted its administrative stay on December 17, 2021. Following the lifting of the FDA’s administrative stay, Bidi filed a renewed motion to stay the MDO with the U.S. Court of Appeals for the Eleventh Circuit, which was granted on February 1, 2022. In the event that the U.S. Court of Appeals issues for the Eleventh Circuit a ruling adverse to Bidi, or if the FDA otherwise chooses to enforce against Bidi, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI® Stick products in the United States, thereby resulting in the Company being unable to distribute such products, the Company’s business and financial condition would be materially adversely affected. The Company cannot provide any assurances as to the timing or outcome of the merits-based case. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Jan. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 2 – Basis of Presentation and Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the financial statements of the Company’s wholly-owned subsidiary, Kaival Labs. Intercompany transactions are eliminated. Basis of Presentation The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Annual Report on Form 10-K on February 16, 2022 (the “2021 Annual Report”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements, which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the 2021 Annual Report have been omitted. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates. Cash and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at January 31, 2022 and October 31, 2021. Cash and restricted cash at January 31, 2022 and October 31, 2021 were $ 5,655,962 7,825,235 Cash and restricted consist of cash and cash held short-term in escrow as required. As of January 31, 2022, and October 31, 2021, the Company had $ 65,542 65,007 The following table sets forth a reconciliation of cash, and restricted cash reported in the consolidated balance sheet and the consolidated statements of cash flows that agrees to the total of those amounts presented in the consolidated statements of cash flows. Restrictions on Cash and Cash Equivalents January 31, October 31, 2022 2021 Cash $ 5,590,420 $ 7,760,228 Restricted cash 65,542 65,007 Total cash and restricted cash shown in statement of cash flows $ 5,655,962 $ 7,825,235 Advertising and Promotion All advertising, promotion and marketing expenses, including commissions, are expensed when incurred. Accounts Receivable and Allowance for Doubtful Accounts Receivables are stated at cost, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of accounts receivables. A considerable amount of judgment is required in assessing the amount of the allowance and the Company considers the historical level of credit losses and collection history and applies percentages to aged receivable categories. The Company makes judgments about the creditworthiness of debtors based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the debtors were to deteriorate, resulting in their inability to make payments, a larger allowance may be required. As of January 31, 2022, based upon management’s assessment of the accounts receivable aging and the customers’ payment history, the Company has determined that no allowance for doubtful accounts was required. As of October 31, 2021, the Company also determined that no Inventories All product inventory is purchased from a related party, Bidi. Inventories are stated at the lower of cost and net realizable value. Cost includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. The Company determines cost based on the FIFO method. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. All inventories are purchased from a related party as of October 31, 2021 and January 31, 2022, the inventories only consisted of finished goods, were significant, and were located in four storage locations, one of which was a related party, Bidi, and the other location was with a customer/sub distributor, Favs Business LLC (“Favs Business”). Based upon fiscal year 2021 inventory management procedures and their results, that have continued through the quarter ended January 31, 2022, the Company has determined that no allowance for the inventory valuation was required at January 31, 2022, nor October 31, 2021. Inventory deposit related party In the fourth quarter of fiscal 2021, the Company placed an order for BIDI ® ® ® ® ® Revenue Recognition The Company adopted ASC 606, Revenue from Contracts with Customers Deferred Revenue The Company accepts partial payments for orders from wholesale customers, which it holds as deposits or deferred revenue, until the Company has received full payment and orders are shipped to the customer. Revenue for these orders is recognized at time of shipment to the customer. As of January 31, 2022 and October 31, 2021, the Company had not received any deposits from customers, respectively, which would be included with the Company’s current liabilities, if they existed. Customer Refunds The Company infrequently has a need to adjust the size of an order after it has been shipped, received and paid for, due to the customer oversizing the order for more product that it can realistically sell at that time. If and when this occurs, the Company will ask the customer to return the over allotted Products. Once received and inspected, the Company will issue a refund for the Product return. As of January 31, 2022 and October 31, 2021, the Company had customer refunds due in the amounts equal to approximately $147,690 and $316,800, respectively, which was the result of one of the Company’s sub-distributor customers returning Product that had become defective in storage. The approximately $147,690 due at January 31, 2022 represents the amount of the refund the Company will make to this customer. Products Revenue The Company generates revenue from the sale of the Products (as defined above) to non-retail customers. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and control of the Products has been transferred to the customer. In most situations, transfer of control is considered complete when the Products have been shipped to the customer. The Company determines that a customer obtains control of the Product upon shipment when title of such product and risk of loss transfer to the customer. The Company’s shipping and handling costs are fulfillment costs and such amounts are classified as part of cost of sales. The Company’s sales arrangements for retail sales usually require full prepayment before delivery of the Products. The advance payment is not considered a significant financing component because the period between when the Company transfers a promised good to a customer and when the customer pays for that good is short. The Company offers credit sales arrangements to non-retail (or wholesale) customers and monitors the collectability of each credit sale routinely. Revenue is measured by the transaction price, which is defined as the amount of consideration expected to be received in exchange for providing goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes refunds and returns as well as incentive offers and promotional discounts on current orders. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce revenue in the period of the sale. Variable consideration related to incentive offers and promotional programs are recorded as a reduction to revenue based on amounts the Company expects to collect. Estimates are regularly updated and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key sales terms such as pricing and quantities ordered are established at the time an order is placed and incentives have very short-term durations. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time related to credit terms is required before payments are due. The Company does not grant payment financing terms greater than one year. Payments received in advance of revenue recognition are recorded as deferred revenue. Concentration of Revenues and Accounts Receivable For the three months ended January 31, 2022, approximately 45%, or $1,287,180, of the revenue from the sale of Products was generated from Favs Business, approximately 12%, or $352,554, of the revenue from the sale of Products was generated from Lakshmi Distributor Inc., doing business as C Store Master (“C Store Master”), and approximately 12%, or $332,595, of the revenue from the sale of Products was generated from The H.T. Hackney Company. Favs Business and C Store Master had outstanding balances of approximately $374,400 and $282,414, respectively, which accounted for approximately 29% and 22%, respectively, of the total accounts receivable from customers as of January 31, 2022. For the three months ended January 31, 2021, approximately 37%, or $13,888,376, of the revenue from the sale of Products was generated from Favs Business, approximately 18%, or $6,708,752, of the revenue from the sale of Products was generated from MMS Distribution, LLC (“MMS Distro”), and approximately 13%, or $4,879,427, of the revenue from the sale of Products was generated from C Store Master. Favs Business, with an outstanding balance of approximately $8,601,200, and GPM Investment, LLC, with an outstanding balance of approximately $1,262,985, accounted for approximately 68% and 10% of the total accounts receivable from customers, respectively, as of January 31, 2021. Share-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments (share-based payments, or SBP) based on the grant-date fair value of the award. That cost is recognized over the period during which a recipient is required to provide service in exchange for the SBP award—the requisite service period (vesting period). For SBP awards subject to conditions, compensation is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated using the Black-Scholes-Merton option-pricing model. Compensation expense for SBP awards granted to nonemployees is remeasured each period as the underlying options vest. The fair value of each option granted during the fiscal three month period ended January 31, 2022 and at October 31, 2021 was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the weighted average assumptions in the following table: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions 2022 2021 Expected dividend yield 0 % 0 Expected option term (years) 10 10 Expected volatility 294.57 301.53 % 294.57 301.53 Risk-free interest rate 1.19 1.63 % 1.19 1.63 The expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected volatility was based on the volatility in the trading of the Common Stock. The assumed discount rate was the default risk-free ten-year interest rate for U.S. Treasury bills. The Company stock option expense for the fiscal three months ended January 31, 2022 and for the fiscal year October 31, 2021 was approximately $ 309,700 1,773,947 The Company’s stock-based compensation for the fiscal three months ended January 31, 2022 and fiscal year October 31, 2021 was approximately $ 110,250 9,449,421 Income Tax Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flow. The Company has Federal net operating loss (“NOL”) carryforwards of approximately $ 4,000,000 1,800,000 1,256,059 Fair Value of Financial Instruments The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. ASC 820, Fair Value Measurements and Disclosures ● Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 - Inputs that are both significant to the fair value measurement and unobservable. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of January 31, 2022. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, restricted cash, accounts receivable, inventory, accounts payable and accrued expenses. Recent Accounting Pronouncements The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements. |
Going Concern
Going Concern | 3 Months Ended |
Jan. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 3 – Going Concern A recent court ruling on behalf of Bidi in the U.S. Court of Appeals for the Eleventh Circuit, granted a judicial stay of the MDO previously issued by the FDA to Bidi in September 2021. The ruling, issued on February 1, 2022, means that all BIDI ® If the U.S. Court of Appeals for the Eleventh Circuit agrees with Bidi in the merits case, the Company anticipates that the FDA will be compelled to place the flavored ENDS back into the PMTA scientific review process. If this is the outcome of the merits case, the Company will be able to fully market and sell the Products, subject to the FDA’s enforcement discretion, until the scientific review process is complete on each of Bidi’s PMTA for flavored ENDS and the FDA issues its decision on each. If the U.S. Court of Appeals for the Eleventh Circuit disagrees with Bidi on the merits case, or if the FDA otherwise chooses to enforce against Bidi, the Company will be forced to cease sales on the flavored ENDS in the United States market, leaving only the Tobacco and Menthol (Arctic) ENDS products for sale in the United States (pending the outcome of the specific PMTA filings and the administrative review request for the classification of “Arctic” as a standard menthol ENDS). If this is the outcome of the merits case, this combined with the negative cash flows from operations, raises substantial doubt on the Company’s ability to continue as a going concern. Management plans to continue similar operations with increased marketing, which the Company believes will result in increased revenue and net income. However, there is no assurance that management’s plan will be successful due to the current economic climate in the United States and globally. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that we cannot continue as a going concern. |
Leases
Leases | 3 Months Ended |
Jan. 31, 2022 | |
Leases | |
Leases | Note 4 – Leases The Company capitalizes all leased assets pursuant to ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize right-of-use assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. The Company excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. The Company adopted the standard in the fourth quarter of fiscal year 2020. The adoption of the amended ASU 2016-02 did not have any impact on the Company’s previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings. Office Space On August 1, 2020, the Company began leasing office space for its main corporate office in Grant, Florida. The five-year lease agreement is with a related party, Just Pick, LLC (“Just Pick”). The Company’s Chief Executive Officer is an officer of Just Pick. Prior to this, the Company utilized the home office space and warehouse of its management at no cost through July 31, 2020. T 5 1,000 4.5 51,955 55,604 73,749 14,529 3,649 13,020 46,185 59,205 13,349 42,686 56,035 Schedule of Future Minimum Rental Payments for Operating Leases 2022 2023 2024 2025 Total Lease payments $ 13,500 $ 15,300 $ 18,000 $ 13,500 $ 60,300 Less discount imputed interest (4,265) Present value of future payments 56,035 Less current obligations (13,349) Long term lease obligations $ 42,686 Storage Space On November 1, 2021, the Company entered into a month-to-month lease agreement with Ranger Enterprises, LLC, located in Seymour, Indiana, to store product inventory at this satellite location. The Company made four payments on this lease, totaling approximately $ 10,139 10,713 |
Stockholder Equity
Stockholder Equity | 3 Months Ended |
Jan. 31, 2022 | |
Equity [Abstract] | |
Stockholder Equity | Note 5 – Stockholder Equity Additional Paid-In Capital During the three months ended January 31, 2022, approximately $ 309,700 74,451 384,151 Preferred Shares Issued The authorized preferred stock of the Company consists of 5,000,000 0.001 3,000,000 as a result of the Reverse Stock Split, the conversion rate was adjusted such that each share of the Series A Preferred Stock is convertible into approximately 8.33 shares of Common Stock 3,000,000 Common Shares Issued The Company implemented the Reverse Stock Split, effective prior to the opening of the market on Tuesday, July 20, 2021. The Revers e Stock Split was implemented by the Company in support of its application to list on the Nasdaq Capital Market (“Nasdaq”). As a result of the Reverse Stock Split at the 1-for-12 The authorized Common Stock of the Company consists of 1,000,000,000 0.001 30,236,696 Warrants Shares Issued As part of the Company’s firm underwritten public offering during fiscal 2021, the Company issued warrants to purchase a total of 4,053,750 1.90 879,828 1,665,113 0 4.68 The following is a summary of the stock warrant plan activity during the fiscal three months ended January 31, 2022 and the year ended October 31, 2021 . Share-based Payment Arrangement, Option, Activity 2022 2021 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Warrants Outstanding at Beginning of the Period 3,173,922 $ 1.90 — $ 1.90 Granted — — 4,053,750 1.90 Exercised — — (879,828 ) 1.90 Canceled, forfeited, expired — — — 1.90 Warrants Outstanding and Exercisable at End of Period 3,173,922 $ 1.90 3,173,922 $ 1.90 Restricted Stock Unit Awards On November 5, 2021, the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth in RSU agreements previously entered into with such employees, resulting in the recognition of approximately $110,250 of share-based compensation. Of the shares issued to employees, 19,866 shares were withheld by the Company to satisfy tax withholding obligations and/or satisfy cash settlement options to employees, equaling approximately $35,759. As of January 31, 2022, there remained 437,917 unvested RSUs with approximately $900,769 of related unvested compensation. Stock Options During fiscal year 2021, the Company granted options exercisable for up to 150,000 shares of Common Stock of which 15,000 fully vested on March 17, 2021, 7,500 fully vested on June 30, 2021, 41,667 fully vested on December 1, 2021, 68,333 vest over the next 2 years on March 17, 2022, and 2023, and 17,500 vest over the next 2 years on June 30, 2022 and 2023. The options have exercise prices ranging from $9.12 to $28.68 per share. These options have a weighted average remaining life of 9.43 years as of October 31, 2021 and of 9.08 years as of January 31, 2022. The options expire in the year 2031. On July 19, 2021, two of the stock option agreements, exercisable for an aggregate of 50,000 shares of Common Stock, were modified to accelerate the full vesting period from 3 years to 2 years. The Company granted no new options during the three months ended January 31, 2022. The aggregate intrinsic value of these outstanding options as of October 31, 2021 and January 31, 2022 was $0. The fair values of the options on the grant dates was approximately $ 3,088,002 9.12 27.36 294.57% 301.53% 10 1.19% 1.63% 1,314,056 1,004,356 |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Jan. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Note 6 – Related-Party Transactions Revenue and Accounts Receivable During the three months ended January 31, 2022, the Company recognized revenue of approximately $ 23,765 245 During the three months ended January 31, 2021, the Company recognized revenue of approximately $ 50,300 Concentration Purchases and Accounts Payable During the three months ended January 31, 2022, the Company did not purchase Products from Bidi, a related party company that is also owned by Nirajkumar Patel, the Company’s Chief Executive Officer. As of January 31, 2022, the Company had accounts payable to Bidi of approximately $ 9,129,759 11,841,750 During the three months ended January 31, 2021, the Company purchased Products of approximately $ 32,479,100 6,247,882 Leased Office Space and Storage Space On August 1, 2020, the Company began leasing office space for its main corporate office in Grant, Florida. The five-year lease agreement is with a related party, Just Pick. The Company’s Chief Executive Officer is an officer of Just Pick. During fiscal year 2021, the Company was not charged for the leased space under the terms and conditions of the lease between the Company and Just Pick and was not charged for the separate warehouse space provided by Just Pick; thus, no payments were made on the lease. During the three months ended January 31, 2022, no payments were made on the lease because the Company continued to not be charged under the five-year lease agreement for this office and storage space. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jan. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7 – Commitments and Contingencies The Company follows ASC 450-20, Los Contingencies, Patent Contribution Agreement On May 4, 2021, Next Generation Labs, LLC (“Next Generation”) notified the Company that a “reversion event” had occurred under that certain Patent Contribution Agreement, dated September 28, 2020 (the “Patent Contribution Agreement”). Pursuant to the Patent Contribution Agreement, Next Generation agreed to contribute certain patents, patent applications, and patent data, described on Exhibit “A” of the Patent Contribution Agreement (the “Patents”), and to the Company and the Company would subsequently transfer the Patents to Kaival Labs. Pursuant to the Patent Contribution Agreement, the Company agreed to pay Next Generation a purchase price of $3 million for the Patents (the “Purchase Price”), which was expected to be paid over-time upon two events. First, the Company expected to pay part of the Purchase Price from proceeds generated from a future securities offering (the “Offering Payment”). Additionally, on the first date that Kaival Labs sold a product that was developed using any portion of the Patents or based on the Patents, the Company agreed to pay Next Generation the difference between the Purchase Price and the Offering Payment. Pursuant to the terms of the Patent Contribution Agreement, the parties agreed that the Company would file a Form 1-A offering statement no later than January 31, 2021, unless extended in writing by the Company in good faith to no later than March 15, 2021 (the “Filing Date”). The Patent Contribution Agreement further provided that in the event the Company or Kaival Labs materially breached the terms of the Patent Contribution Agreement and the material breach is not cured within fifteen (15) business days after Next Generation provides written notice of such material breach, then a reversion event would occur, and the Patents would revert from Kaival Labs to Next Generation. The Company did not undertake a securities offering by filing a Form 1-A offering statement by the Filing Date. The Company attempted to negotiate an amendment to the Patent Contribution Agreement, which would allow the Company additional time to undertake a securities offering. However, on April 8, 2021, Next Generation notified the Company that it was in material breach of the Patent Contribution Agreement and that the Company would have fifteen (15) business days, or April 30, 2021, to cure such breach. Ultimately, the Company decided not to cure such breach within the requisite time and, on May 4, 2021, Next Generation notified the Company that a reversion event occurred. The Company has completed the process of completing the necessary documentation to transfer the Patents from Kaival Labs to Next Generation. Neither the Company, nor Kaival Labs, has developed or otherwise relied on the Patents to date and does not expect the reversion of the Patents to materially affect the Company’s business. Cash and Equity Bonus Awards On May 28, 2020, the Board approved cash bonus awards to each of the Company’s Chief Executive Officer and its Chief Operating Officer. With respect to the Chief Executive Officer, the Board approved a cash bonus award equal to $30,000 for every $25 million in gross revenues generated by the Company. With respect to the Chief Operating Officer, the Board approved a cash bonus award equal to $20,000 for every $25 million in gross revenues generated by the Company. On May 28, 2020, the Board also approved an equity bonus award for each of the Chief Executive Officer and the Chief Operating Officer. With respect to the Chief Executive Officer, the Board approved an award of 7,500 restricted shares of the Common Stock for every $50 million in accumulated gross revenues generated by the Company. With respect to the Chief Operating Officer, the Board approved an award of 6,250 restricted shares of the Common Stock for every $50 million in accumulated gross revenues generated by the Company. The Company’s accumulated gross revenues will be evaluated on a quarterly basis, beginning with the second quarter of fiscal year 2020. At October 31, 2020, the Company determined that the fair value of the equity bonus shares, or $165,000, should be accrued as it was deemed likely that the $50 million revenue target would be met. The Company issued these shares to the Chief Executive Officer and Chief Operating Office on January 1, 2021. During the quarter ended January 31, 2021, the $75 million and $100 million accumulated revenue targets were both achieved and the Company determined that the fair market value of the 13,750 shares, or approximately $70,785, and the cash bonuses totaling $100,000 should be accrued at January 31, 2021. During the quarter ended January 31, 2022, the $ 125 50,000 Service Agreement On March 31, 2020, the Company entered into a service agreement (the “Service Agreement”) with QuikfillRx LLC, a Florida limited liability company (“QuikfillRx”), whereby QuikfillRx provides the Company with certain services and support relating to sales management, website development and design, graphics, content, public communication, social media, management and analytics, and market and other research (collectively, the “Services”). The Services are provided by QuikfillRx as requested from time to time by the Company. On June 2, 2020, the Company entered into the First Amendment to the Service Agreement (the “First Amendment” and, collectively with the Service Agreement, the “Amended Service Agreement”) with QuikfillRx. Effective as of March 16, 2021, the Company entered into the Second Amendment to Service Agreement (the “Second Amendment” and, collectively with the Amended Service Agreement, the “Further Amended Service Agreement”) with QuikfillRx. Pursuant to the terms of the Further Amended Service Agreement, the parties agreed to the following “General Compensation” payments: (i) for the Services provided in March 2020, the Company paid QuikfillRx an amount equal to $86,000; (ii) for the Services provided in April 2020, the Company paid QuikfillRx an amount equal to $100,000; (iii) each calendar month commencing May 2020 through October 2020, the Company paid QuikfillRx an amount equal to $125,000 per month for the Services to be performed during such calendar month; (iv) for each calendar month between November 1, 2020 and October 31, 2021, the Company paid QuikfillRx $125,000 per month for the Services to be performed during such calendar month; (iv) if the parties agree to extend the term of the Further Amended Service Agreement beyond October 31, 2021, then for the period between November 1, 2021 and October 31, 2022, the Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month; and (v) if the parties agree to extend the term of the Further Amended Service Agreement beyond October 31, 2022, then for the period between November 1, 2022 and October 31, 2021, the Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month. ● An amount equal to 0.9% of the Applicable Gross Quarterly Sales (as defined in the Amended Service Agreement), which amount shall, at the Company’s option be paid in (a) cash or (b) shares of the Company’s common stock, or (c) a combination of cash and Common Stock. ● An amount equal to 0.27% of the Applicable Gross Quarterly Sales, which amount must be paid in cash. On March 17, 2021, the Company entered into a consulting agreement with Russell Quick which granted stock options to purchase 41,667 shares of the Company’s common stock in exchange for consulting services. The shares underlying the stock option fully vested on December 1, 2021. The exercise price per share is $28.68. The Company recognized approximately $190,000 in expense to account for the stock options. Russell Quick is the Chief Executive Officer of QuikfillRx. The Company accrued approximately $ 34,524 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jan. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 8 – Subsequent Events Share-based Compensation On February 4, 2022, the Company entered into a Consulting Agreement with Oakhill Europe Ltd (“Oakhill Europe”), pursuant to which the Company engaged Oakhill Europe to provide strategic advising and negotiation assistance for potential international distribution agreements (collectively, the “Oakhill Services”), in exchange for a $15,000 monthly retainer, incentive compensation bonuses of up to $175,000, and an incentive compensation bonus value of $75,000 paid in fully-vested non-qualified stock options, upon the achievement of certain events. On February 5, 2022, the Company issued 61,250 24,058 On February 27, 2022, the Company’s Compensation Committee (the “Committee”) and the Board approved the grant of a stock option award to Mark Thoenes, Interim Chief Financial Officer, to acquire up to 100,000 2.45 50,000 50,000 On February 27, 2022, the Committee and the Board approved the grant of a stock option award to Russell Quick, as an independent consultant providing strategic advising and negotiation assistance for potential international distribution agreements, to acquire up to 100,000 shares of Common Stock under the Company’s 2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price of $2.45 per share, which equaled the closing price of the Common Stock as of the date immediately prior to the grant date. At the grant date, 50,000 option shares became immediately vested, with the remaining 50,000 option shares vesting on the one-year anniversary of the grant date. The option has a ten-year term. On March 5, 2022, the Committee and the Board approved the grant of a stock option award to Nirajkumar Patel, Chief Executive Officer, to acquire up to 600,000 2.85 300,000 300,000 Previously, the Company granted Mr. Patel 250,000 500,000 120,833 500,000 On March 5, 2022, the Committee and the Board approved the grant of stock option awards to Eric Mosser, Chief Operating Officer, to acquire up to 500,000 2.85 250,000 250,000 Similarly, the Company previously granted Mr. Mosser 250,000 333,334 120,833 333,334 On March 5, 2022, the Committee and the Board approved the grant of stock option awards to 5 employees, to acquire up to 285,600 2.85 142,800 142,800 Previously, we granted these 5 employees 317,499 317,499 135,001 317,499 On March 9, 2022, the Committee approved an annual base salary equal to $ 300,000 240,000 Further, the Board previously approved a cash bonus award to (i) Mr. Patel equal to $30,000 for every $25 million in gross revenues generated by us (the “Patel Cash Bonus Award”) (ii) Mr. Mosser equal to $20,000 for every $25 million in gross revenues generated by us (the “Mosser Cash Bonus Award” and, together with the Patel Cash Bonus Award, the “Cash Bonus Awards”). On February 28, 2022 and on March 3, 2022 the Company issued 10,000 2,963 Warrants Shares Exercised Between February 14, 2022 and March 1, 2022, 800,355 1,520,693 |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Jan. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the financial statements of the Company’s wholly-owned subsidiary, Kaival Labs. Intercompany transactions are eliminated. |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Annual Report on Form 10-K on February 16, 2022 (the “2021 Annual Report”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements, which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the 2021 Annual Report have been omitted. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates. |
Cash and Restricted Cash | Cash and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at January 31, 2022 and October 31, 2021. Cash and restricted cash at January 31, 2022 and October 31, 2021 were $ 5,655,962 7,825,235 Cash and restricted consist of cash and cash held short-term in escrow as required. As of January 31, 2022, and October 31, 2021, the Company had $ 65,542 65,007 The following table sets forth a reconciliation of cash, and restricted cash reported in the consolidated balance sheet and the consolidated statements of cash flows that agrees to the total of those amounts presented in the consolidated statements of cash flows. Restrictions on Cash and Cash Equivalents January 31, October 31, 2022 2021 Cash $ 5,590,420 $ 7,760,228 Restricted cash 65,542 65,007 Total cash and restricted cash shown in statement of cash flows $ 5,655,962 $ 7,825,235 |
Advertising and Promotion | Advertising and Promotion All advertising, promotion and marketing expenses, including commissions, are expensed when incurred. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Receivables are stated at cost, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of accounts receivables. A considerable amount of judgment is required in assessing the amount of the allowance and the Company considers the historical level of credit losses and collection history and applies percentages to aged receivable categories. The Company makes judgments about the creditworthiness of debtors based on ongoing credit evaluations and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the debtors were to deteriorate, resulting in their inability to make payments, a larger allowance may be required. As of January 31, 2022, based upon management’s assessment of the accounts receivable aging and the customers’ payment history, the Company has determined that no allowance for doubtful accounts was required. As of October 31, 2021, the Company also determined that no |
Inventories | Inventories All product inventory is purchased from a related party, Bidi. Inventories are stated at the lower of cost and net realizable value. Cost includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. The Company determines cost based on the FIFO method. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. All inventories are purchased from a related party as of October 31, 2021 and January 31, 2022, the inventories only consisted of finished goods, were significant, and were located in four storage locations, one of which was a related party, Bidi, and the other location was with a customer/sub distributor, Favs Business LLC (“Favs Business”). Based upon fiscal year 2021 inventory management procedures and their results, that have continued through the quarter ended January 31, 2022, the Company has determined that no allowance for the inventory valuation was required at January 31, 2022, nor October 31, 2021. |
Inventory deposit related party | Inventory deposit related party In the fourth quarter of fiscal 2021, the Company placed an order for BIDI ® ® ® ® ® |
Revenue Recognition | Revenue Recognition The Company adopted ASC 606, Revenue from Contracts with Customers |
Deferred Revenue | Deferred Revenue The Company accepts partial payments for orders from wholesale customers, which it holds as deposits or deferred revenue, until the Company has received full payment and orders are shipped to the customer. Revenue for these orders is recognized at time of shipment to the customer. As of January 31, 2022 and October 31, 2021, the Company had not received any deposits from customers, respectively, which would be included with the Company’s current liabilities, if they existed. |
Customer Refunds | Customer Refunds The Company infrequently has a need to adjust the size of an order after it has been shipped, received and paid for, due to the customer oversizing the order for more product that it can realistically sell at that time. If and when this occurs, the Company will ask the customer to return the over allotted Products. Once received and inspected, the Company will issue a refund for the Product return. As of January 31, 2022 and October 31, 2021, the Company had customer refunds due in the amounts equal to approximately $147,690 and $316,800, respectively, which was the result of one of the Company’s sub-distributor customers returning Product that had become defective in storage. The approximately $147,690 due at January 31, 2022 represents the amount of the refund the Company will make to this customer. |
Products Revenue | Products Revenue The Company generates revenue from the sale of the Products (as defined above) to non-retail customers. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and control of the Products has been transferred to the customer. In most situations, transfer of control is considered complete when the Products have been shipped to the customer. The Company determines that a customer obtains control of the Product upon shipment when title of such product and risk of loss transfer to the customer. The Company’s shipping and handling costs are fulfillment costs and such amounts are classified as part of cost of sales. The Company’s sales arrangements for retail sales usually require full prepayment before delivery of the Products. The advance payment is not considered a significant financing component because the period between when the Company transfers a promised good to a customer and when the customer pays for that good is short. The Company offers credit sales arrangements to non-retail (or wholesale) customers and monitors the collectability of each credit sale routinely. Revenue is measured by the transaction price, which is defined as the amount of consideration expected to be received in exchange for providing goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes refunds and returns as well as incentive offers and promotional discounts on current orders. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce revenue in the period of the sale. Variable consideration related to incentive offers and promotional programs are recorded as a reduction to revenue based on amounts the Company expects to collect. Estimates are regularly updated and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key sales terms such as pricing and quantities ordered are established at the time an order is placed and incentives have very short-term durations. Amounts billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the passage of time related to credit terms is required before payments are due. The Company does not grant payment financing terms greater than one year. Payments received in advance of revenue recognition are recorded as deferred revenue. |
Concentration of Revenues and Accounts Receivable | Concentration of Revenues and Accounts Receivable For the three months ended January 31, 2022, approximately 45%, or $1,287,180, of the revenue from the sale of Products was generated from Favs Business, approximately 12%, or $352,554, of the revenue from the sale of Products was generated from Lakshmi Distributor Inc., doing business as C Store Master (“C Store Master”), and approximately 12%, or $332,595, of the revenue from the sale of Products was generated from The H.T. Hackney Company. Favs Business and C Store Master had outstanding balances of approximately $374,400 and $282,414, respectively, which accounted for approximately 29% and 22%, respectively, of the total accounts receivable from customers as of January 31, 2022. For the three months ended January 31, 2021, approximately 37%, or $13,888,376, of the revenue from the sale of Products was generated from Favs Business, approximately 18%, or $6,708,752, of the revenue from the sale of Products was generated from MMS Distribution, LLC (“MMS Distro”), and approximately 13%, or $4,879,427, of the revenue from the sale of Products was generated from C Store Master. Favs Business, with an outstanding balance of approximately $8,601,200, and GPM Investment, LLC, with an outstanding balance of approximately $1,262,985, accounted for approximately 68% and 10% of the total accounts receivable from customers, respectively, as of January 31, 2021. |
Share-Based Compensation | Share-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments (share-based payments, or SBP) based on the grant-date fair value of the award. That cost is recognized over the period during which a recipient is required to provide service in exchange for the SBP award—the requisite service period (vesting period). For SBP awards subject to conditions, compensation is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated using the Black-Scholes-Merton option-pricing model. Compensation expense for SBP awards granted to nonemployees is remeasured each period as the underlying options vest. The fair value of each option granted during the fiscal three month period ended January 31, 2022 and at October 31, 2021 was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the weighted average assumptions in the following table: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions 2022 2021 Expected dividend yield 0 % 0 Expected option term (years) 10 10 Expected volatility 294.57 301.53 % 294.57 301.53 Risk-free interest rate 1.19 1.63 % 1.19 1.63 The expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected volatility was based on the volatility in the trading of the Common Stock. The assumed discount rate was the default risk-free ten-year interest rate for U.S. Treasury bills. The Company stock option expense for the fiscal three months ended January 31, 2022 and for the fiscal year October 31, 2021 was approximately $ 309,700 1,773,947 The Company’s stock-based compensation for the fiscal three months ended January 31, 2022 and fiscal year October 31, 2021 was approximately $ 110,250 9,449,421 |
Income Tax | Income Tax Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flow. The Company has Federal net operating loss (“NOL”) carryforwards of approximately $ 4,000,000 1,800,000 1,256,059 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. ASC 820, Fair Value Measurements and Disclosures ● Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ● Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 - Inputs that are both significant to the fair value measurement and unobservable. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of January 31, 2022. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, restricted cash, accounts receivable, inventory, accounts payable and accrued expenses. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
Accounting Policies [Abstract] | |
Restrictions on Cash and Cash Equivalents | Restrictions on Cash and Cash Equivalents January 31, October 31, 2022 2021 Cash $ 5,590,420 $ 7,760,228 Restricted cash 65,542 65,007 Total cash and restricted cash shown in statement of cash flows $ 5,655,962 $ 7,825,235 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions 2022 2021 Expected dividend yield 0 % 0 Expected option term (years) 10 10 Expected volatility 294.57 301.53 % 294.57 301.53 Risk-free interest rate 1.19 1.63 % 1.19 1.63 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
Leases | |
Schedule of Future Minimum Rental Payments for Operating Leases | Schedule of Future Minimum Rental Payments for Operating Leases 2022 2023 2024 2025 Total Lease payments $ 13,500 $ 15,300 $ 18,000 $ 13,500 $ 60,300 Less discount imputed interest (4,265) Present value of future payments 56,035 Less current obligations (13,349) Long term lease obligations $ 42,686 |
Stockholder Equity (Tables)
Stockholder Equity (Tables) | 3 Months Ended |
Jan. 31, 2022 | |
Equity [Abstract] | |
Share-based Payment Arrangement, Option, Activity | Share-based Payment Arrangement, Option, Activity 2022 2021 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Warrants Outstanding at Beginning of the Period 3,173,922 $ 1.90 — $ 1.90 Granted — — 4,053,750 1.90 Exercised — — (879,828 ) 1.90 Canceled, forfeited, expired — — — 1.90 Warrants Outstanding and Exercisable at End of Period 3,173,922 $ 1.90 3,173,922 $ 1.90 |
Organization and Description _2
Organization and Description of Business (Details Narrative) | Jan. 31, 2022$ / shares |
Accounting Policies [Abstract] | |
Common stock, par value | $ 0.001 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Details - Restricted on Cash) - USD ($) | Jan. 31, 2022 | Oct. 31, 2021 | Jan. 31, 2021 | Oct. 31, 2020 |
Accounting Policies [Abstract] | ||||
Cash | $ 5,590,420 | $ 7,760,228 | ||
Restricted cash | 65,542 | 65,007 | ||
Total cash and restricted cash shown in statement of cash flows | $ 5,655,962 | $ 7,825,235 | $ 1,963,854 | $ 7,421,701 |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies (Details - Black-Scholes option) | 3 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Expected option term (years) | 10 years | 10 years |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Expected volatility | 294.57% | 294.57% |
Risk-free interest rate | 1.19% | 1.19% |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Expected volatility | 301.53% | 301.53% |
Risk-free interest rate | 1.63% | 1.63% |
Basis of Presentation and Sig_6
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Jan. 31, 2022 | Jan. 31, 2021 | Oct. 31, 2021 | |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 5,655,962 | $ 7,825,235 | |
Restricted cash | 65,542 | 65,007 | |
Allowance for doubtful accounts | $ 0 | ||
Stock option expense | 309,700 | $ 1,773,947 | |
Stock-based compensation | 110,250 | 9,449,421 | |
Net operating loss | 4,000,000 | $ 1,800,000 | |
Valuation allowance | $ 1,256,059 |
Leases (Details)
Leases (Details) | Jan. 31, 2022USD ($) |
Leases | |
2021 | $ 13,500 |
2022 | 15,300 |
2023 | 18,000 |
2024 | 13,500 |
Total | 60,300 |
Less discount | (4,265) |
Present value of future payments | 56,035 |
Less current obligations | (13,349) |
Long term lease obligations | $ 42,686 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2022 | Oct. 31, 2021 | Dec. 15, 2021 | |
Leases | |||
Lease term | 5 years | ||
Rent per month | $ 1,000 | ||
Current borrowing rate | 4.50% | ||
Right to use lease asset | $ 51,955 | $ 55,604 | |
Recognition of ROU operating lease | 73,749 | ||
Recognition of ROU liability | 14,529 | ||
Amortization expense for right to use asset | 3,649 | ||
Short-term ROU lease liability | 13,349 | 13,020 | |
Long term lease liability | 42,686 | 46,185 | |
Lease liability | $ 59,205 | ||
Lease liability | 56,035 | ||
Operating lease expense | $ 10,139 | ||
Lease amount | $ 10,713 |
Stockholder Equity (Details)
Stockholder Equity (Details) - Warrants [Member] - $ / shares | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | Oct. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Warrants Outstanding at Beginning | 3,173,922 | 0 | |
Weighted Average Exercise Price at Beginning | $ 1.90 | $ 1.90 | |
Number of warrants, Granted | 0 | 4,053,750 | |
Weighted Average Exercise Price, Granted | $ 0 | $ 1.90 | |
Number of warrants, Exercised | 0 | (879,828) | 0 |
Weighted Average Exercise Price, Exercised | $ 1.90 | ||
Number of warrants, Cancelled, forfeited, expired | 0 | 0 | |
Weighted Average Exercise Price, Cancelled, forfeited, expired | $ 1.90 | ||
Warrants Outstanding at Ending | 3,173,922 | 3,173,922 | 0 |
Weighted Average Exercise Price at Ending | $ 1.90 | $ 1.90 | $ 1.90 |
Stockholder Equity (Details Nar
Stockholder Equity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jul. 16, 2021 | Jan. 31, 2022 | Jan. 31, 2021 | Oct. 31, 2021 | Jul. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Stock option expense | $ 309,700 | $ 0 | $ 1,314,056 | ||
Additional paid-in capital | $ 384,151 | ||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | ||||
Reverse stock split description | as a result of the Reverse Stock Split, the conversion rate was adjusted such that each share of the Series A Preferred Stock is convertible into approximately 8.33 shares of Common Stock | ||||
Reverse stock split | 1-for-12 | ||||
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | ||
Common Stock, Shares, Outstanding | 30,236,696 | 30,195,312 | 30,236,696 | ||
Common stock shares, issued | 30,236,696 | 30,195,312 | |||
Issuance of warrants | 4,053,750 | ||||
Exercise price | $ 1.90 | ||||
Warrants exercised | $ 1,665,113 | ||||
Aggregate intrinsic value | $ 0 | $ 0 | |||
Restricted stock unit awards description | the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth in RSU agreements previously entered into with such employees, resulting in the recognition of approximately $110,250 of share-based compensation. Of the shares issued to employees, 19,866 shares were withheld by the Company to satisfy tax withholding obligations and/or satisfy cash settlement options to employees, equaling approximately $35,759. As of January 31, 2022, there remained 437,917 unvested RSUs with approximately $900,769 of related unvested compensation. | ||||
Stock option awards, description | Company granted options exercisable for up to 150,000 shares of Common Stock of which 15,000 fully vested on March 17, 2021, 7,500 fully vested on June 30, 2021, 41,667 fully vested on December 1, 2021, 68,333 vest over the next 2 years on March 17, 2022, and 2023, and 17,500 vest over the next 2 years on June 30, 2022 and 2023. The options have exercise prices ranging from $9.12 to $28.68 per share. These options have a weighted average remaining life of 9.43 years as of October 31, 2021 and of 9.08 years as of January 31, 2022. The options expire in the year 2031. On July 19, 2021, two of the stock option agreements, exercisable for an aggregate of 50,000 shares of Common Stock, were modified to accelerate the full vesting period from 3 years to 2 years. The Company granted no new options during the three months ended January 31, 2022. The aggregate intrinsic value of these outstanding options as of October 31, 2021 and January 31, 2022 was $0. | ||||
Fair valued of options granted | $ 3,088,002 | ||||
Stock price | $ 9.12 | ||||
Expected term | 10 years | ||||
Unamortized stock option expense | $ 1,004,356 | ||||
Maximum [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Stock price | $ 27.36 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 301.53% | 301.53% | |||
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRates] | 1.63% | ||||
Minimum [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 294.57% | 294.57% | |||
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRates] | 1.19% | ||||
Warrant [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Issuance of warrants | 879,828 | ||||
Common Stock Warrants [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Weighted average remaining term | 4 years 8 months 4 days | ||||
Restricted Stock Units (RSUs) [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Additional paid-in capital | $ 74,451 | ||||
Series A Preferred Stock [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Preferred stock, shares authorized | 3,000,000 | ||||
Preferred Stock, Shares Outstanding | 3,000,000 | ||||
Preferred stock, shares issued | 3,000,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Jan. 31, 2022 | Jan. 31, 2021 | |
Related Party Transaction [Line Items] | ||
Revenue from related parties | $ 23,765 | $ 50,300 |
Revenues | 2,841,883 | 37,361,519 |
Accounts receivable from related parties | 50,300 | |
Nirajkumar Patel [Member] | ||
Related Party Transaction [Line Items] | ||
Revenue from related parties | 23,765 | |
Seven Companies [Member] | ||
Related Party Transaction [Line Items] | ||
Revenues | 245 | |
Bidi Vapor [Member] | ||
Related Party Transaction [Line Items] | ||
Accounts payable | 9,129,759 | 6,247,882 |
M M S Distro [Member] | ||
Related Party Transaction [Line Items] | ||
Sale of Products | $ 11,841,750 | $ 32,479,100 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 3 Months Ended |
Jan. 31, 2022USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Bonus description | cash bonus award equal to $30,000 for every $25 million in gross revenues generated by the Company. With respect to the Chief Operating Officer, the Board approved a cash bonus award equal to $20,000 for every $25 million in gross revenues generated by the Company. On May 28, 2020, the Board also approved an equity bonus award for each of the Chief Executive Officer and the Chief Operating Officer. With respect to the Chief Executive Officer, the Board approved an award of 7,500 restricted shares of the Common Stock for every $50 million in accumulated gross revenues generated by the Company. With respect to the Chief Operating Officer, the Board approved an award of 6,250 restricted shares of the Common Stock for every $50 million in accumulated gross revenues generated by the Company. The Company’s accumulated gross revenues will be evaluated on a quarterly basis, beginning with the second quarter of fiscal year 2020. At October 31, 2020, the Company determined that the fair value of the equity bonus shares, or $165,000, should be accrued as it was deemed likely that the $50 million revenue target would be met. The Company issued these shares to the Chief Executive Officer and Chief Operating Office on January 1, 2021. During the quarter ended January 31, 2021, the $75 million and $100 million accumulated revenue targets were both achieved and the Company determined that the fair market value of the 13,750 shares, or approximately $70,785, and the cash bonuses totaling $100,000 should be accrued at January 31, 2021. |
Accumulated revenue | $ 125,000,000 |
Cash bonuses | $ 50,000 |
General Compensation | the Company paid QuikfillRx an amount equal to $86,000; (ii) for the Services provided in April 2020, the Company paid QuikfillRx an amount equal to $100,000; (iii) each calendar month commencing May 2020 through October 2020, the Company paid QuikfillRx an amount equal to $125,000 per month for the Services to be performed during such calendar month; (iv) for each calendar month between November 1, 2020 and October 31, 2021, the Company paid QuikfillRx $125,000 per month for the Services to be performed during such calendar month; (iv) if the parties agree to extend the term of the Further Amended Service Agreement beyond October 31, 2021, then for the period between November 1, 2021 and October 31, 2022, the Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month; and (v) if the parties agree to extend the term of the Further Amended Service Agreement beyond October 31, 2022, then for the period between November 1, 2022 and October 31, 2021, the Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month. |
Acquired quqrterly bonus | $ 34,524 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | Mar. 09, 2022 | Mar. 05, 2022 | Mar. 03, 2022 | Feb. 04, 2022 | Apr. 22, 2022 | Mar. 02, 2022 | Feb. 28, 2022 | Feb. 27, 2022 | Feb. 05, 2022 |
Subsequent Event [Line Items] | |||||||||
Common stock issued | 285,600 | ||||||||
Option shares grant date | 142,800 | ||||||||
Option share price | $ 2.85 | ||||||||
Restrictive stock units | $ 317,499 | ||||||||
Unvested time vesting RSUs | 135,001 | ||||||||
Unvested event vesting RSUs | 317,499 | ||||||||
Issued shares | 2,963 | 10,000 | |||||||
Exercise of warrant shares | 800,355 | ||||||||
Warreant receiveds | $ 1,520,693 | ||||||||
Mark Thoenes [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Common stock issued | 100,000 | ||||||||
Option shares grant date | 50,000 | ||||||||
Option share price | $ 2.45 | ||||||||
Mark Thoenes [Member] | Equity Option [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Option shares grant date | 50,000 | ||||||||
Nirajkumar Patel [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Common stock issued | 600,000 | ||||||||
Option shares grant date | 300,000 | ||||||||
Option share price | $ 2.85 | ||||||||
Nirajkumar Patel [Member] | Equity Option [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Option shares grant date | 300,000 | ||||||||
Patel [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Restrictive stock units | $ 250,000 | ||||||||
Time vesting RSUs | 500,000 | ||||||||
Unvested time vesting RSUs | 120,833 | ||||||||
Unvested event vesting RSUs | 500,000 | ||||||||
Annual basis salary | $ 300,000 | ||||||||
Cash bonus award description | (i) Mr. Patel equal to $30,000 for every $25 million in gross revenues generated by us (the “Patel Cash Bonus Award”) | ||||||||
Eric Mosser [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Common stock issued | 500,000 | ||||||||
Option shares grant date | 250,000 | ||||||||
Option share price | $ 2.85 | ||||||||
Restrictive stock units | $ 250,000 | ||||||||
Time vesting RSUs | 333,334 | ||||||||
Unvested time vesting RSUs | 120,833 | ||||||||
Unvested event vesting RSUs | 333,334 | ||||||||
Annual basis salary | $ 240,000 | ||||||||
Cash bonus award description | (ii) Mr. Mosser equal to $20,000 for every $25 million in gross revenues generated by us (the “Mosser Cash Bonus Award” and, together with the Patel Cash Bonus Award, the “Cash Bonus Awards”). | ||||||||
Eric Mosser [Member] | Equity Option [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Option shares grant date | 250,000 | ||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Common stock issued | 61,250 | ||||||||
Option shares grant date | 24,058 | ||||||||
Inflection Partners [Member] | Consulting Agreement [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Services description | Company engaged Oakhill Europe to provide strategic advising and negotiation assistance for potential international distribution agreements (collectively, the “Oakhill Services”), in exchange for a $15,000 monthly retainer, incentive compensation bonuses of up to $175,000, and an incentive compensation bonus value of $75,000 paid in fully-vested non-qualified stock options, upon the achievement of certain events. |