Cover
Cover - shares | 3 Months Ended | |
Jan. 31, 2024 | Mar. 25, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jan. 31, 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
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-Valkaria | |
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 $0.001 per share | |
Trading Symbol | KAVL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 2,863,002 |
Consolidated Balance Sheets (U
Consolidated Balance Sheets (Unaudited) - USD ($) | Jan. 31, 2024 | Oct. 31, 2023 |
CURRENT ASSETS: | ||
Cash | $ 591,293 | $ 533,659 |
Accounts receivable, net | 743,961 | 1,869,276 |
Inventories, net | 2,058,070 | 4,071,824 |
Inventory deposit – related party | 273,060 | 0 |
Prepaid expenses | 369,027 | 430,668 |
Total current assets | 4,035,411 | 6,905,427 |
Fixed assets, net | 2,668 | 2,842 |
Intangible assets, net | 11,271,710 | 11,468,309 |
Right of use asset- operating lease | 959,594 | 1,008,428 |
TOTAL ASSETS | 16,269,383 | 19,385,006 |
CURRENT LIABILITIES: | ||
Accounts payable | 304,595 | 374,332 |
Accounts payable- related party | 1,413,691 | 2,474,817 |
Loans payable, net | 821,889 | 799,471 |
Accrued expenses | 695,442 | 736,194 |
Customer deposits | 50,000 | 0 |
Customer refund due | 229,548 | 392,406 |
Operating lease obligation – short term | 189,329 | 184,568 |
Total current liabilities | 3,704,494 | 4,961,788 |
LONG TERM LIABILITIES | ||
Operating lease obligation, net of current portion | 817,106 | 866,207 |
TOTAL LIABILITIES | 4,521,600 | 5,827,995 |
STOCKHOLDERS’ EQUITY: | ||
Common stock ($0.001 par value, 1,000,000,000 shares authorized, 2,863,002 and 2,793,386 issued and outstanding as of January 31, 2024, and October 31, 2023, respectively) | 2,863 | 2,793 |
Additional paid-in capital | 44,621,654 | 44,317,266 |
Accumulated deficit | (32,877,634) | (30,763,948) |
Total Stockholders’ Equity | 11,747,783 | 13,557,011 |
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | 16,269,383 | 19,385,006 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS’ EQUITY: | ||
Preferred stock value | 0 | 0 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS’ EQUITY: | ||
Preferred stock value | $ 900 | $ 900 |
Consolidated Balance Sheets _2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jan. 31, 2024 | Oct. 31, 2023 |
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 | 2,863,002 | 2,793,386 |
Common stock, shares outstanding | 2,863,002 | 2,793,386 |
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 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B 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 | 900,000 | 900,000 |
Preferred stock, shares outstanding | 900,000 | 900,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Revenues | ||
Revenues, net | $ 2,991,280 | $ 2,435,835 |
Revenues - related parties | 1,900 | 3,085 |
Royalty revenue | 240,000 | 105,572 |
Excise tax on products | (21,607) | (18,574) |
Total revenues, net | 3,211,573 | 2,525,918 |
Cost of revenue | ||
Cost of revenue - related party | 2,013,435 | 1,985,800 |
Total cost of revenue | 2,013,435 | 1,985,800 |
Gross profit | 1,198,138 | 540,118 |
Operating expenses | ||
Advertising and promotions | 404,892 | 588,910 |
General and administrative expenses | 2,507,868 | 2,958,069 |
Total operating expenses | 2,912,760 | 3,546,979 |
Other income | ||
Loss on extinguishment of debt | (98,432) | 0 |
Interest (expense) income, net | (299,917) | 11,952 |
Total other (expense) income | (398,349) | 11,952 |
Loss before income taxes provision | (2,112,971) | (2,994,909) |
Provision (benefit from) for income taxes | (715) | 0 |
Net loss | (2,113,686) | (2,994,909) |
Preferred stock dividend | (67,500) | 0 |
Net loss attributable to common shareholder | $ (2,181,186) | $ (2,994,909) |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Income Statement [Abstract] | ||
Net loss per common share, basic | $ (0.76) | $ (1.12) |
Net loss per common share, diluted | $ (0.76) | $ (1.12) |
Weighted average number of common shares outstanding, basic | 2,854,850 | 2,674,719 |
Weighted average number of common shares outstanding, diluted | 2,854,850 | 2,674,719 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Series B Preferred Stocks [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Oct. 31, 2022 | $ 2,675 | $ 29,429,281 | $ (19,631,176) | $ 9,800,780 | |
Beginning balance, shares at Oct. 31, 2022 | 2,674,718 | ||||
Stock option expense | 1,435,787 | 1,435,787 | |||
Net loss | (2,994,909) | (2,994,909) | |||
Ending balance, value at Jan. 31, 2023 | $ 2,675 | 30,865,068 | (22,626,085) | 8,241,658 | |
Ending balance, shares at Jan. 31, 2023 | 2,674,718 | ||||
Beginning balance, value at Oct. 31, 2023 | $ 900 | $ 2,793 | 44,317,266 | (30,763,948) | 13,557,011 |
Beginning balance, shares at Oct. 31, 2023 | 900,000 | 2,793,386 | |||
Rounding from reverse split | $ 53 | (53) | |||
Rounding from reverse split, shares | 52,949 | ||||
Common shares issued for services | $ 17 | 61,983 | 62,000 | ||
Common shares issued for services, shares | 16,667 | ||||
Preferred stock dividend | (67,500) | (67,500) | |||
Preferred stock dividend, shares | |||||
Stock option expense | 309,958 | 309,958 | |||
Net loss | (2,113,686) | (2,113,686) | |||
Ending balance, value at Jan. 31, 2024 | $ 900 | $ 2,863 | $ 44,621,654 | $ (32,877,634) | $ 11,747,783 |
Ending balance, shares at Jan. 31, 2024 | 900,000 | 2,863,002 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (2,113,686) | $ (2,994,909) |
Adjustment to reconcile net loss to net cash (used in) provided by operating activities: | ||
Stock based compensation | 62,000 | 0 |
Depreciation and amortization | 196,773 | 116 |
Amortization of debt discount | 111,239 | 0 |
Loss on extinguishment of debt | 98,432 | 0 |
Stock option expense | 309,958 | 1,435,787 |
ROU operating lease expense | 48,834 | 46,949 |
Write-off inventory | 319 | 0 |
Changes in current assets and liabilities: | ||
Accounts receivable | 1,125,315 | 56,315 |
Other receivable – related party | 0 | 194,590 |
Prepaid expenses | 61,641 | 109,786 |
Inventory | 2,013,435 | (2,521,766) |
Inventory deposit – related party | (273,060) | 0 |
Income tax receivable | 0 | 1,607,302 |
Accounts payable | (69,737) | 41,242 |
Accounts payable – related party | (1,061,126) | 2,350,787 |
Accrued expenses | (108,252) | (423,704) |
Deferred revenue | 0 | (105,572) |
Customer deposits | 50,000 | (32,875) |
Customer refund due | (162,858) | 366,956 |
Right of use liabilities – operating lease | (44,340) | (39,789) |
Net cash provided by operating activities | 244,887 | 91,215 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for equipment | 0 | (3,480) |
Net cash used in investing activities | 0 | (3,480) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from loan payables | 1,106,731 | 0 |
Payments on loan payables | (1,293,984) | 0 |
Net cash used in financing activities | (187,253) | 0 |
Net change in cash | 57,634 | 87,735 |
Beginning cash balance | 533,659 | 3,685,893 |
Ending cash balance | 591,293 | 3,773,628 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest paid | 111,239 | 0 |
Income taxes paid | 0 | 0 |
NON-CASH TRANSACTIONS | ||
Preferred stock dividend | $ 67,500 | $ 0 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Jan. 31, 2024 | |
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. Current Description of Business The Company is focused on growing and incubating innovative and profitable products into mature, dominant brands. On March 9, 2020, the Company entered into an exclusive distribution agreement (the “Distribution Agreement”) of certain electronic nicotine delivery systems (“ENDS”) and related components (the “Products”) with Bidi Vapor, LLC, a Florida limited liability company (“Bidi”), a related party company that is also owned by Nirajkumar Patel, the Chief Executive Officer and director of the Company . The Distribution Agreement was amended and restated on May 21, 2020, again on April 20, 2021, again on June 10, 2022, and again on November 17, 2022 (collectively the “A&R Distribution Agreement”), in order to clarify some of the provisions and memorialize the Company’s current business relationship with Bidi. Pursuant to the A&R Distribution Agreement, Bidi granted the Company an exclusive worldwide right to distribute the Products for sale and resale to non-retail level customers. Currently, the Products consist primarily of the “Bidi Stick 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, for the purpose of developing Company-branded and white-label products and services. The Company has not yet launched any Kaival-branded product, nor has it begun to provide white label wholesale solutions for other product manufacturers. On March 11, 2022, the Company formed Kaival Brands International, LLC, a Delaware limited liability company (herein referred to as “KBI”), as a wholly owned subsidiary of the Company, for the purpose of entering into an international licensing agreement with Philip Morris Products S.A. (“PMPSA”), a wholly owned affiliate of Philip Morris International Inc. (“PMI”). On June 13, 2022, the Company’s wholly owned subsidiary, KBI, entered into the PMI License Agreement with PMPSA, a wholly owned affiliate of PMI, for the development and distribution of ENDS products in certain markets outside of the United States, subject to market (or regulatory) assessment. The PMI License Agreement grants to PMPSA a license of certain intellectual property rights relating to Bidi’s ENDS device, known as the BIDI® Stick in the United States, as well as potentially newly developed devices, to permit PMPSA to manufacture, promote, sell, and distribute such ENDS device and newly developed devices, in international markets, outside of the United States. 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® Stick,” a disposable, tamper-resistant ENDS product that comes in a variety of flavor options for adult cigarette smokers. The Company does not manufacture any of the Products it resells. The BIDI® Stick is manufactured by Bidi. Pursuant to the terms of the A&R Distribution Agreement, Bidi provides the Company with all branding, logos, and marketing materials to be utilized by the Company in connection with its marketing and promotion of the Products. Impact of the FDA PMTA Decision and Subsequent Court Actions In September 2021, in connection with the PMTA process, the FDA effectively “banned” flavored ENDS by denying nearly all then-pending PMTAs for such products. Following the issuance of Marketing Denial Orders (“MDO”), manufacturers are required to stop selling non-tobacco flavored ENDS products. 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. As a result, beginning in September 2021, Bidi pursued multiple 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 supervisory review request specifically of the decision to include the Arctic (menthol) BIDI® Stick in the MDO. In May 2022, the FDA issued a determination that it views the Arctic BIDI® Stick as a non-tobacco flavored ENDS product, and not strictly a menthol flavored product. On September 29, 2021, Bidi petitioned the U.S. Court of Appeals for the Eleventh Circuit (the “11th Circuit”) to review the FDA’s denial of the comprehensive 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, for the FDA not to conduct any scientific review of Bidi’s comprehensive applications, as required by the Tobacco Control Act (“TCA”), to determine whether the BIDI® Sticks are “appropriate for the protection of the public health”. Bidi further argued that the FDA violated due process and the APA by failing to provide fair notice of the FDA’s new requirement for ENDS companies to conduct long-term comparative smoking cessation studies for their flavored products, and that the FDA should have gone through the notice and comment rulemaking process for this requirement. 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, permitting the Company to continue sales. Subsequently, the FDA decided not to rescind the MDO and 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 11th Circuit. On February 1, 2022, the appellate court granted Bidi’s motion to stay (i.e., put on hold) the MDO, again allowing the Company to continue sales pending the litigation on the merits. Oral arguments in the merits-based proceeding were held on May 17, 2022. On August 23, 2022, the U.S. Court of Appeals for the Eleventh Circuit set aside the MDO issued to the non-tobacco flavored BIDI® Sticks and remanded Bidi’s back to the FDA for further review. Specifically, the Court held that the MDO was “arbitrary and capricious” in violation of the Administrative Procedure Act (“APA”) because FDA failed to consider the relevant evidence before it, specifically Bidi’s aggressive and comprehensive marketing and sales-access-restrictions plans designed to prevent youth appeal and access. The opinion further found indicated that the FDA did not properly review the data and evidence that it has long made clear are critical to the appropriate for the protection of the public health (“APPH”) standard for PMTAs set forth in the Tobacco Control Act including, in Bidi’s case, “product information, scientific safety testing, literature reviews, consumer insight surveys, and details about the company’s youth access prevention measures, distribution channels, and adult-focused marketing practices,” which “target only existing adult vapor product users, including current adult smokers,” as well as our retailer monitoring program and state-of-the-art anti-counterfeit authentication system. Because a MDO must be based on a consideration of the relevant factors, such as the marketing and sales-access-restrictions plans, the denial order was deemed arbitrary and capricious, and vacated by the FDA. The FDA did not appeal to the 11th Circuit’s decision. The FDA had until October 7, 2022 (45 days from the August 23, 2022, decision) to either request a panel rehearing or a rehearing “en banc” (a review by the entire 11th Circuit, not just the 3-judge panel that issued the decision), and until November 21, 2022 (90 days after the decision) to seek review of the decision by the U.S. Supreme Court. No request for a rehearing was filed, and no petition for a writ of certiorari was made to the Supreme Court. In the meantime, the Company anticipates continued ability to market and sell the non-tobacco flavored BIDI® Sticks, subject to the FDA’s enforcement discretion, for the duration of the PMTA scientific review. Separately, on or about May 13, 2022, the FDA placed the tobacco-flavored Classic BIDI® Stick into the final Phase III scientific review. In March 2023, FDA issued a deficiency letter regarding the Classic BIDI® Stick PMTA, to which Bidi submitted in June 2023. Subsequently, on January 22, 2024, FDA issued a MDO for the Classic BIDI® Stick. On January 26, 2024, Bidi filed a petition for review of the MDO with the 11th Circuit Court of Appeals, followed by a motion to stay the MDO. Bidi is arguing, among other things, that the MDO was arbitrary and capricious in violation of the Administrative Procedure Act. On February 2, 2024, Bidi filed for a Stay Pending Review, which the court denied on February 18, 2024. The case is now proceeding on the merits, with Bidi’s opening merits brief due on April 15 , 2024 . The Company cannot provide any assurances as to the timing or outcome. Unless the th Risks and Uncertainties FDA has indicated that it is prioritizing enforcement of unauthorized ENDS against companies (1) that never submitted PMTAs, (2) whose PMTAs have been refused acceptance or filing by the FDA, (3) whose PMTAs remain subject to MDOs, and (4) that are continuing to market unauthorized synthetic nicotine products after the July 13, 2022, cutoff. Subject to FDA’s enforcement discretion, until the scientific review process is complete on each of Bidi’s PMTAs, the Company views the risk of FDA enforcement against Bidi as low, and is no longer marketing the Classic BIDI® Stick per the MDO. The Company anticipates FDA will move forward with a review of Bidi’s PMTA on remand, as directed by the Court; however, the Company cannot provide any assurances as to the timing or outcome. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Jan. 31, 2024 | |
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 subsidiaries, Kaival Labs and Kaival Brands International. 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 audited financial statements contained within the Company’s Annual Report on Form 10-K, filed with the SEC on February 14, 2024 (the “2023 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 fiscal 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 2023 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 Cash Equivalents 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 The F ederal Deposit Insurance Corporation 250,000 191,341 252,586 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 receivable. 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, 2024, and October 31, 2023, 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 is required. On January 22, 2024, the FDA issued an MDO on Bidi Vapor’s “Classic” BIDI ® Stick PMTA. The Company evaluated the impact of this MDO to the financial statements and recorded an estimated accrual for potential customer returns of the “Classic” products of $ 113,243 2024, and October 31, which is included in accrued expenses in the consolidated balance sheet. Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of purchases of inventories, accounts payable, accounts receivable, and revenue. The Company performs periodic credit evaluations of its customers and generally does not require collateral on trade receivables. Historically, the Company has not experienced significant credit losses. 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 first-in, first-out (“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. As of January 31, 2024, and October 31, 2023, the inventories only consisted of finished goods and were located in three locations: the Company’s main warehouse located in Florida and two customer warehouses whose service agreements are on a consignment basis with the Company. On January 22, 2024, the FDA issued an MDO on Bidi Vapor’s “Classic” BIDI ® Stick PMTA. The Company evaluated the impact of this MDO to the financial statements and recognized a full reserve for all remaining “Classic” products on hand amounting to $ 381,512 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 the time of shipment to the customer. As of January 31, 2024, and October 31, 2023, the Company had $ 50,000 none Customer Refunds In the normal course of business, the Company issues credits for product returns and certain customer incentives related to rebates, discounts and promotions. When such credits exceed amounts receivable from customers, the Company recognizes such excess amounts as customer refunds which will be applied against future product purchases. As of January 31, 2024, and October 31, 2023, the Company had customer refunds due in the amounts equal to $ 229,548 and $ 392,406 , respectively. Products Revenue The Company generates products 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 determined that a customer obtains control of the Product upon shipment when title of such product and risk of loss transfer to the customer. However, when the Company enters a consignment agreement with a new customer, once it ships and delivers the requested amount of ordered Products to its distribution center for its retail sales locations, the Company retains ownership of the delivered Products until they are delivered to the actual retail stores (as opposed to the Company’s consignment customer). The Company’s shipping and handling costs are fulfillment costs, and such amounts are classified as part of cost of sales. 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 receivable 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, as noted above. Royalty Revenue On June 13, 2022, KBI entered into the PMI License Agreement with PMPSA, effective as of May 13, 2022 (the “PMI Commencement Date”). Pursuant to the PMI License Agreement, KBI granted PMPSA an exclusive irrevocable license to use its technology, documentation, and intellectual property to make, distribute, and sell disposable nicotine e-cigarettes Products based on the intellectual property in certain international markets set forth in the PMI License Agreement (the “PMI Markets”). The Company has the exclusive international distribution rights to the Products and, in order to allow KBI to fulfill its obligations set forth in the PMI License Agreement, has contributed the international distribution rights for the PMI Markets to KBI as set forth in a Capital Contribution Agreement, dated June 10, 2022. The sublicense granted to PMPSA is exclusive in the PMI Markets and neither KBI nor any of its affiliates can sell, promote, use, or distribute any competing products in the PMI Markets for the duration of the term of the PMI License Agreement and any Sell-Out Period (as defined in the PMI License Agreement). PMSPA will be responsible for any regulatory filings necessary to sell the Products in the PMI Markets. Both KBI and PMPSA agree to work together in the registration and maintenance of the Intellectual Property, but KBI will bear all cost and expense to implement the registration strategy. Finally, PMPSA has agreed to potential future development services with KBI in the PMI Markets and has been granted certain rights with respect to potential future products. The initial term of the PMI License Agreement is five (5) years and automatically renews for an additional five-year period unless PMPSA has failed to meet the agreed upon minimum key performance indicators set forth in the PMI License Agreement, in which case the PMI License Agreement will automatically terminate at the end of the initial license term. In consideration for the grant of the licensed rights, PMPSA agreed to pay to KBI a royalty equal to a percentage of the base price of the first sale of each unit of Product manufactured. In addition, before the launch of the first product in a market and each anniversary of such launch, PMPSA agrees to pre-pay to KBI a guaranteed minimum royalty based on the estimated royalties payable by PMPSA to KBI in relation to all markets in the twelve (12)-month period following the first launch or each successive anniversary of the first launch, subject to an aggregate maximum guaranteed royalty payment for all markets for each applicable twelve (12)-month period. PMPSA may require modification of certain products to be sold under the PMI Licensing Agreement to be modified for a PMI Market. Pursuant to the PMI Licensing Agreement, PMPSA has absolute discretion over sales, marketing, product branding and packaging pertaining to sales in the PMI Markets, as well as the right to select the specific PMI Markets in which to launch commercialization and determine what product types are to be promoted in each market, subject to sales and marketing plans and annual business plans set by PMPSA and certain expansion criteria agreed between PMPSA and KBI. Royalty revenue earned from the PMI License Agreement is recognized in the period the sales of the Product manufactured occurs. The PMI License Agreement contains customary representations, warranties, covenants, and indemnification provisions; however, KBI’s liability under the PMI License Agreement is capped at the greater of: (i) Ten Million Dollars ($ 10,000,000 30,000,000 On June 10, 2022, Bidi entered into a License Agreement (the “KBI License Agreement”) with KBI, pursuant to which KBI has the exclusive irrevocable license to use Bidi’s licensed intellectual property to the extent necessary for KBI to fulfill its obligations set forth in the PMI Licensing Agreement. Such irrevocable license includes: (i) the right of KBI to grant sub-licenses to PMPSA under the PMI License Agreement for the express purposes set forth in the PMI License Agreement, but for no other purpose; (ii) the right of KBI to grant to PMPSA the right to grant sub-sub-licenses in the manner set forth in the PMI License Agreement, but for no other purpose; and (iii) certain branding rights to the extent (but only to the extent) necessary to permit KBI to perform its obligations to PMPSA as set forth in the PMI License Agreement. On August 12, 2023, the Company executed and entered into a Deed of Amendment No. 1 (the “PMI License Amendment”) with PMPSA, Bidi and KBI. Pursuant to the PMI License Amendment (which has an effective date of June 30, 2023), the following material changes have been made to the PMI License Agreement: 1. Royalty Rate. The royalty paid by PMPSA to KBI will no longer be based on sales price of the Product being sold, but rather on the volume of liquid contained within Product being sold. The royalty will be on a sliding scale of between $0.08 to $0.16 per sale based on the volume of liquid contained in the Product, increasing to between $0.10 to $0.20 per sale upon meeting certain sales milestones. 2. Elimination of Certain Potential Royalty Adjustments. Certain potential adjustments to the royalties receivable by KBI as provided for in the PMI License Agreement have been eliminated. 3. Guaranteed Royalty. The guaranteed royalty payment owed to KBI under the PMI License Agreement has been eliminated. Instead, royalties will be paid on a quarterly basis going-forward based on actual sales. Any unpaid guaranteed royalty has been cancelled. 4. Insurance Tail Requirements. KBI’s requirement to keep certain tail insurance after the expiration or termination of the PMI Licensing Agreement was reduced from 6 years to 2 years. 5. Markets. The identification of the PMI Markets that PMI may enter has been expanded to cover certain additional territories. 6. Net Reconciliation Payment to KBI. As a result of the changes to the PMI License Agreement described in paragraphs 1 thought 3 above, the value of such changes was calculated and reconciled as of the date of commencement of the PMI Licensing Agreement through June 30, 2023. On September 8, 2023, the Company received the Net Reconciliation Payment from PMPSA of $ 134,981 The KBI License Agreement provides that KBI shall pay Bidi license fees equivalent to 50% of the adjusted earned royalty payments, after any offsets due to jointly agreed costs such development costs incurred for entry to specific international markets. During the year ended October 31, 2023, the Company paid license fees of approximately $150,000 to Bidi. As of January 31, 2024, no additional license fees are owed to Bidi As of October 31, 2023, amounts receivable from PMPSA in connection with the PMI License Agreement totaled $ 1,002,196 289,672 712,524 322,845 240,000 Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period, without consideration of potential common stock equivalents. Diluted net income (loss) per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding plus common share equivalents from conversion of dilutive stock options and warrants using the treasury method and preferred stock using the as-converted method, except when antidilutive. In the event of a net loss, the effects of all potentially dilutive shares are excluded from the diluted net loss per share calculation as their inclusion would be antidilutive. Concentration of Revenues and Accounts Receivable For the three months ended January 31, 2024, (i) 17% or $ 511,192 ® 474,378 417,740 For the three months ended January 31, 2023, (i) 25% or $ 599,201 ® 432,000 372,518 QuikTrip Corporation, with an outstanding balance of $ 180,294 43 Share-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments (share-based payments, referred to herein as “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 performance 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. The fair value of each option granted during the fiscal three-month period ended January 31, 2024, and January 31, 2023, 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 assumptions As of January As of January 31, 2024 31, 2023 Expected dividend yield 0 % 0 % Expected option term (years) 6.25 10 10 Expected volatility 255.35 280.34 % 275.68 % Risk-free interest rate 3.69 4.08 % 4.12 % 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 Company’s common stock. The assumed discount rate was the default risk-free ten-year interest rate for U.S. Treasury bills. 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, 2024 and October 31, 2023 . 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, accounts receivable, accounts payable and accrued expenses. As of January 31, 2024 and October 31, 2023, the Company did not have any financial assets or liabilities measured and recorded at fair value on a recurring basis. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective November 1, 2023 and determined that the update applied to accounts receivable. The adoption did not have a material effect on our consolidated financial statements and did not significantly impact the Company’s accounting policies or estimation methods related to the allowance for doubtful accounts. |
Going Concern
Going Concern | 3 Months Ended |
Jan. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 3 – Going Concern The accompanying financial statements of the Company are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued. In accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements – Going Concern The Company will need significant additional funds to satisfy its outstanding payables, fund its working capital, and fully implement its business plan as the Company seeks to grow its revenues . In addition, the Company’s ability to continue as a going concern is adversely affected by the uncertainty surrounding Bidi’s PMTA process with FDA and outcome of Bidi’s petition with the 11th Circuit Court of Appeals regarding the FDA’s January 2024 MDO relating to Classic Bidi® Stick as well as the Company’s significant recurring losses and present need for additional funding. All of these factors raise substantial doubt regarding the Company’s ability to continue as a going concern Management plans to continue similar operations with increased marketing and enhanced efforts to increase sales, which the Company believes will result in increased revenue and ultimately net income. However, there is no assurance that the Company’s plans will be able to generate expected or greater amounts of revenues or ever achieve profitability due to the factors listed above as well as the regulation and public perception of ENDS products and the various other risks faced by the Company. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these or other risks or uncertainties. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Jan. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 4 – Intangible Assets The Company’s intangible assets include patents and technology. The cost and accumulated amortization of the intangible assets amounted to $ 11,795,975 524,265 11,795,975 327,666 15.0 14.3 14.6 The Company recognized amortization expense of $ 196,599 none Future amortization expense of intangible assets is as follows: Schedule of future expense of intangible assets 2024 $ 589,799 2025 786,398 2026 786,398 2027 786,398 2028 786,398 Thereafter 7,536,319 Total $ 11,271,710 |
Loans Payable
Loans Payable | 3 Months Ended |
Jan. 31, 2024 | |
Debt Disclosure [Abstract] | |
Loans Payable | Note 5 – Loans Payable On May 9, 2023, the Company entered into two loan agreements which are collateralized by all assets of the Company until the loans are repaid in full. As illustrated in the following table, under the terms of these agreements, the Company received the disclosed Purchase Price and agreed to repay the disclosed Purchase Amount, which is collected by the lenders at the disclosed weekly payment rate. The Company’s former Chief Executive Officer, Eric Mosser personally guarantees the performance of these loans. These loans were fully paid on December 4, 2023, upon their maturity. On November 29, 2023, the Company entered into two loan agreements which are collateralized by all assets of the Company until the loans are repaid in full. As illustrated in the following table, under the terms of these agreements, the Company received the disclosed Purchase Price and agreed to repay the disclosed Purchase Amount, which is collected by the lenders at the disclosed weekly payment rate. The Company’s former Chief Executive Officer, Eric Mosser personally guarantees the performance of these loans. The Company has accounted for these agreements as loans under ASC 860 because while we provided rights to current and future receipts, we still had control over the receipts. The difference between the Purchase Amount and the Purchase Price is imputed interest that is recorded as interest expense when paid. The following table shows our loan agreements as of January 31, 2024 Schedule of loan agreements Inception Date Purchase Price Purchased Amount Outstanding Balance Payment frequency Payment Rate Deferred Finance Fees November 29, 2023 $ 600,000 $ 864,000 $ 402,832 Weekly 30,857 $ 25,739 November 29, 2023 600,000 864,000 381,057 Weekly 30,857 26,086 $ 1,200,000 $ 1,728,000 $ 783,889 $ 51,825 The following table shows our loan agreements as of October 31, 2023: Inception Date Purchase Price Purchased Amount Outstanding Balance Payment frequency Payment Rate Deferred Finance Fees May 9, 2023 $ 400,000 $ 580,000 $ 53,709 Weekly 20,714 $ 3,434 May 9, 2023 400,000 580,000 80,467 Weekly 20,714 5,247 $ 800,000 $ 1,160,000 $ 134,176 $ 8,681 On August 9, 2023, the Company entered into a Securities Purchase Agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”), pursuant to which the Company sold a Promissory Note in the principal amount of $650,000 (the “Note”) to AJB in a private transaction for a purchase price of $585,000 (giving effect to original issue discount of $65,000). The Note matures on February 8, 2024 (the “Maturity Date”) and bears interest at the rate of 10% per annum. Interest shall be payable on a monthly basis beginning on the date that is one month following the date of issuance of the Note. Provided no event of default (as defined in the Note) is in effect as of the Maturity Date, the Company may elect to extend the Maturity Date for a period of six (6) months. Pursuant to the terms of the SPA, the Company paid a commitment fee to AJB in the form of 19,048 38,273 122,273 0 513,295 0 136,705 Under the SPA, the Company has the right to repurchase half of the Commitment Fee Shares if the Note is repaid in full prior to maturity. On December 1, 2023, the Company fully paid the loan balance in advance of the maturity date. In connections with the repayment of the Note, the Company agreed that AJB would be permitted to retain all of the Commitment Fee Shares. The Company recognized $ 98,432 On May 20, 2023, the Company obtained a nine-month loan from Westfield Bank to finance the annual D&O insurance. The principal amount was $ 342,001 7.79 38,000 152,000 |
Leases
Leases | 3 Months Ended |
Jan. 31, 2024 | |
Leases | |
Leases | Note 6 – Leases The Company capitalizes all leased assets pursuant to ASU 2016-02, Leases (Topic 842) T Certain of the Company’s leases, have and may in the future, include renewal options, which have been and might be in the future, included in the calculation of the lease liabilities and right of use assets when the Company is reasonably certain to exercise the option. Office and Storage Space On June 10, 2022, the Company entered into a Lease Agreement (the “2022 Lease”) with Just Pick for approximately 21,332 rentable square feet combined in the office building and warehouse located at 4460 Old Dixie Highway, Grant-Valkaria, Florida 32949 (the “Premises”), together with all improvements thereon. The Company must pay Just Pick base rent equal to $ 17,777 18,666 19,554 20,443 22,221 23,999 4.5 48,834 46,949 Cash flow information related to leases was as follows: Schedule of cash flow information related to leases January 31, 2024 January 31, 2023 Other Lease Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ (48,340 ) $ (46,949 ) The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets as of January 31, 2024, and October 31, 2023: Schedule of lease-related assets and liabilities Lease Position January 31, 2024 October 31, 2023 Operating Leases Operating lease right-of-use assets $ 959,594 $ 1,008,428 Right of use liability operating lease current portion $ 189,329 $ 184,568 Right of use liability operating lease long term 817,106 866,207 Total operating lease liabilities $ 1,006,435 $ 1,050,775 The following table provides the maturities of lease liabilities on January 31, 2024: Schedule of operating lease liability maturity Operating Leases Maturity of Lease Liabilities on January 31, 2024 2024 172,137 2025 238,800 2026 253,614 2027 274,946 2028 and thereafter 175,989 Total future undiscounted lease payments $ 1,115,486 Less: Interest (109,051 ) Present value of lease liabilities $ 1,006,435 At January 31, 2024, the Company had no additional leases which had not yet commenced. |
Stockholders_ Equity
Stockholders’ Equity | 3 Months Ended |
Jan. 31, 2024 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 7 – Stockholders’ Equity Series B Convertible Preferred Stock The Company issued 900,000 15 15 The Majority Holders have the ability to cause a voluntary conversion of the Series B Preferred Stock into Common Stock at a conversion rate of 0.3968 shares of Common Stock per share of Series B Preferred Stock which may only occur on or after the following dates 18-month, 24 month, 36, month, 48 months, and 60 month anniversary of the original issuance date; and only up to 180,000 shares of Series B Preferred Stock on each of these dates. Reverse Stock Split On January 22, 2024, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to affect a 1-for-21 reverse stock split Common Stock During the three months ended January 31, 2024, the Company issued 52,949 During the three months ended January 31, 2024, the Company issued 16,667 The fair value was $ 62,000 based on the closing price of the common stock on the termination date and recorded as stock-based compensation. Stock Options Summary of stock options information is as follows: Schedule of stock options Weighted Aggregate Aggregate Exercise Price Average Number Exercise Price Range Exercise Price Outstanding, October 31, 2023 449,106 $ 14,081,408 $ 10.08 602.28 $ 31.36 Granted 8,811 78,038 2.81 11.76 8.86 Exercised — — — — Cancelled, forfeited, or expired (154,762 ) (3,206,669 ) 20.72 20.72 Outstanding, January 31, 2024 303,155 $ 10,952,777 $ 10.08 602.28 $ 36.13 Exercisable, January 31, 2024 163,204 $ 8,732,962 $ 12.87 602.28 $ 53.51 During the three months ended January 31, 2024, and 2023, the Company recognized $ 309,958 1,435,787 3,594,567 8.76 0 On January 19, 2024, non-qualified stock options exercisable for up to 5,953 70,007 11.76 280.34 10 3.69 On January 29, 2024, non-qualified stock options exercisable for up to 2,858 8,018 2.81 255.35 10 4.08 Warrants Warrant information as of the periods indicated is as follows: Schedule of warrant information Weighted Aggregate Aggregate Exercise Price Average Number Exercise Price Range Exercise Price Outstanding, October 31, 2023 242,548 $ 13,946,006 $ 12.39 126 $ 57.51 Granted — — — — Exercised — — — — Cancelled, forfeited, or expired (36,912 ) (544,025 ) 12.39 15.33 14.74 Outstanding, January 31, 2024 205,636 $ 13,404,980 $ 39.00 126.00 $ 65.19 Exercisable, January 31, 2024 205,636 $ 13,404,980 $ 39.00 126.00 $ 65.19 The weighted average remaining contractual life is approximately 2.97 |
Related-Party Transactions
Related-Party Transactions | 3 Months Ended |
Jan. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Note 8 – Related-Party Transactions In March 2020, the Company commenced business operations as a result of becoming the exclusive distributor of certain ENDS and related components (the “Products”) manufactured by Bidi, a related party company that is also owned by Nirajkumar Patel, the Chief Executive Officer and a director of the Company. Revenue and Accounts Receivable During the three months ended January 31, 2024, the Company recognized revenue of $ 1,900 During the three months ended January 31, 2023, the Company recognized revenue of $ 3,085 Concentration of Purchases and Accounts Payable During the three months ended January 31, 2024, 100% of the inventories of Products, consisting solely of the BIDI® Stick, were purchased from Bidi, a related party controlled by Nirajkumar Patel, in the amount of $ 273,060 . This amount reflects the deposit paid for inventory on order. As of January 31, 2024, the Company had accounts payable to Bidi of $ 1,413,691 and Products valued at $ 2,058,070 were held in inventory. During the three months ended January 31, 2023, 100% of the inventories of Products, consisting solely of the BIDI® Stick, were purchased from Bidi, a related party controlled by Nirajkumar Patel, in the amount of $ 3,697,210 2,350,787 The KBI License agreement provides that KBI shall pay Bidi license fees equivalent to 50% of the adjusted earned royalty payments, after any offsets due to jointly agreed costs such development costs incurred for entry to specific international markets. As of January 31, 2024 and October 31, 2023, no additional license fees are owed to Bidi. As of January 31, 2024, the Company has a payable to Bidi $ 138,692 for reimbursement of insurance expense. As of October 31, 2023, the Company has a payable to Bidi of $ 712,524 240,802 Leased Office Space and Storage Space The Company capitalizes all leased assets pursuant to ASU 2016-02, Leases (Topic 842) |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jan. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9 – Commitments and Contingencies The Company follows ASC 450-20, Los Contingencies, QuikfillRx Service Agreement Amendment Effective as of November 9, 2022, the Company entered into its latest amendment to the Service Agreement with QuikfillRx (collectively with prior amendments, the “Amended Service Agreement”). The November 9, 2022 amendment to the Service Agreement was captioned as the “Fourth Amendment” although it was the fifth amendment to the Service Agreement. Pursuant to the Amended Service Agreement: (a) the term of the Amended Service Agreement was extended (unless earlier terminated pursuant to the terms of the Amended Service Agreement) from November 1, 2022 (the “Effective Date”) until October 31, 2025, following which the term shall automatically renew for successive one (1) year periods beginning November 1, 2025; (b) QuikfillRx agreed to change its “doing business as” name to “Kaival Marketing Services” within thirty (30) days following the Effective Date; (c) it was provided that either party may terminate the Amended Service Agreement without cause upon not less than ninety (90) days prior written notice to the other party; (d) QuikfillRx was granted a one-time, fully vested, ten-year non-qualified option award to purchase up to 250,000 shares of Company common stock with an exercise price of $0.9869 per share (the closing price of the Company’s common stock on November 9, 2022)”)., which option grant was memorialized pursuant to a Nonqualified Option Agreement, dated November 9, 2022, between the Company and QuikfillRx; and (e) the parties agreed to revise the compensation for services as follows: (i) payment of $125,000 per month; (ii) bonus equivalent to 0.27% of the applicable gross quarterly sales and (iii) a grant of 3,000,000 nonqualified stock options to purchase shares of Company common stock which shall vest based on achievement of certain net revenue and profit margin targets up to $180,000,000 in total net revenues over a period of 3 years. The Company accrued $ 0 28,318 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jan. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 – Subsequent Events Stock Options Transactions On February 8, 2024 (the “Grant Date”), Barry M. Hopkins former Chief Executive Officer, received a 10-year incentive stock option grant to purchase 63,881 shares of Common Stock in partial consideration of his employment services to the Company. The exercise price of such grant option is $5.25 per share equal to the fair market value of the Issuer’s common stock on November 9, 2023, which is the effective date of the Reporting Person’s Mr. Hopkins’ employment agreement with the Issuer Company. The option shall vest over four years. One-quarter of the option shall vest on the first anniversary of the grant date and afterward shall vest monthly at the rate of 1/36 per month until fully vested. On February 22, 2024, Barry M. Hopkins resigned from the company. Termination of QuikfillRx Service Agreement Amendment On February 21, 2024, the Company terminated the agreement and all amendments with QuikFill Rx dba Kaival Marketing Services. Per the termination, Kaival was required to pay $ 80,000 |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Jan. 31, 2024 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the financial statements of the Company’s wholly-owned subsidiaries, Kaival Labs and Kaival Brands International. 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 audited financial statements contained within the Company’s Annual Report on Form 10-K, filed with the SEC on February 14, 2024 (the “2023 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 fiscal 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 2023 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 Cash Equivalents | Cash and Cash Equivalents 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 The F ederal Deposit Insurance Corporation 250,000 191,341 252,586 |
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 receivable. 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, 2024, and October 31, 2023, 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 is required. On January 22, 2024, the FDA issued an MDO on Bidi Vapor’s “Classic” BIDI ® Stick PMTA. The Company evaluated the impact of this MDO to the financial statements and recorded an estimated accrual for potential customer returns of the “Classic” products of $ 113,243 2024, and October 31, which is included in accrued expenses in the consolidated balance sheet. |
Credit Risk | Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of purchases of inventories, accounts payable, accounts receivable, and revenue. The Company performs periodic credit evaluations of its customers and generally does not require collateral on trade receivables. Historically, the Company has not experienced significant credit losses. |
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 first-in, first-out (“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. As of January 31, 2024, and October 31, 2023, the inventories only consisted of finished goods and were located in three locations: the Company’s main warehouse located in Florida and two customer warehouses whose service agreements are on a consignment basis with the Company. On January 22, 2024, the FDA issued an MDO on Bidi Vapor’s “Classic” BIDI ® Stick PMTA. The Company evaluated the impact of this MDO to the financial statements and recognized a full reserve for all remaining “Classic” products on hand amounting to $ 381,512 |
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 the time of shipment to the customer. As of January 31, 2024, and October 31, 2023, the Company had $ 50,000 none |
Customer Refunds | Customer Refunds In the normal course of business, the Company issues credits for product returns and certain customer incentives related to rebates, discounts and promotions. When such credits exceed amounts receivable from customers, the Company recognizes such excess amounts as customer refunds which will be applied against future product purchases. As of January 31, 2024, and October 31, 2023, the Company had customer refunds due in the amounts equal to $ 229,548 and $ 392,406 , respectively. |
Products Revenue | Products Revenue The Company generates products 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 determined that a customer obtains control of the Product upon shipment when title of such product and risk of loss transfer to the customer. However, when the Company enters a consignment agreement with a new customer, once it ships and delivers the requested amount of ordered Products to its distribution center for its retail sales locations, the Company retains ownership of the delivered Products until they are delivered to the actual retail stores (as opposed to the Company’s consignment customer). The Company’s shipping and handling costs are fulfillment costs, and such amounts are classified as part of cost of sales. 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 receivable 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, as noted above. |
Royalty Revenue | Royalty Revenue On June 13, 2022, KBI entered into the PMI License Agreement with PMPSA, effective as of May 13, 2022 (the “PMI Commencement Date”). Pursuant to the PMI License Agreement, KBI granted PMPSA an exclusive irrevocable license to use its technology, documentation, and intellectual property to make, distribute, and sell disposable nicotine e-cigarettes Products based on the intellectual property in certain international markets set forth in the PMI License Agreement (the “PMI Markets”). The Company has the exclusive international distribution rights to the Products and, in order to allow KBI to fulfill its obligations set forth in the PMI License Agreement, has contributed the international distribution rights for the PMI Markets to KBI as set forth in a Capital Contribution Agreement, dated June 10, 2022. The sublicense granted to PMPSA is exclusive in the PMI Markets and neither KBI nor any of its affiliates can sell, promote, use, or distribute any competing products in the PMI Markets for the duration of the term of the PMI License Agreement and any Sell-Out Period (as defined in the PMI License Agreement). PMSPA will be responsible for any regulatory filings necessary to sell the Products in the PMI Markets. Both KBI and PMPSA agree to work together in the registration and maintenance of the Intellectual Property, but KBI will bear all cost and expense to implement the registration strategy. Finally, PMPSA has agreed to potential future development services with KBI in the PMI Markets and has been granted certain rights with respect to potential future products. The initial term of the PMI License Agreement is five (5) years and automatically renews for an additional five-year period unless PMPSA has failed to meet the agreed upon minimum key performance indicators set forth in the PMI License Agreement, in which case the PMI License Agreement will automatically terminate at the end of the initial license term. In consideration for the grant of the licensed rights, PMPSA agreed to pay to KBI a royalty equal to a percentage of the base price of the first sale of each unit of Product manufactured. In addition, before the launch of the first product in a market and each anniversary of such launch, PMPSA agrees to pre-pay to KBI a guaranteed minimum royalty based on the estimated royalties payable by PMPSA to KBI in relation to all markets in the twelve (12)-month period following the first launch or each successive anniversary of the first launch, subject to an aggregate maximum guaranteed royalty payment for all markets for each applicable twelve (12)-month period. PMPSA may require modification of certain products to be sold under the PMI Licensing Agreement to be modified for a PMI Market. Pursuant to the PMI Licensing Agreement, PMPSA has absolute discretion over sales, marketing, product branding and packaging pertaining to sales in the PMI Markets, as well as the right to select the specific PMI Markets in which to launch commercialization and determine what product types are to be promoted in each market, subject to sales and marketing plans and annual business plans set by PMPSA and certain expansion criteria agreed between PMPSA and KBI. Royalty revenue earned from the PMI License Agreement is recognized in the period the sales of the Product manufactured occurs. The PMI License Agreement contains customary representations, warranties, covenants, and indemnification provisions; however, KBI’s liability under the PMI License Agreement is capped at the greater of: (i) Ten Million Dollars ($ 10,000,000 30,000,000 On June 10, 2022, Bidi entered into a License Agreement (the “KBI License Agreement”) with KBI, pursuant to which KBI has the exclusive irrevocable license to use Bidi’s licensed intellectual property to the extent necessary for KBI to fulfill its obligations set forth in the PMI Licensing Agreement. Such irrevocable license includes: (i) the right of KBI to grant sub-licenses to PMPSA under the PMI License Agreement for the express purposes set forth in the PMI License Agreement, but for no other purpose; (ii) the right of KBI to grant to PMPSA the right to grant sub-sub-licenses in the manner set forth in the PMI License Agreement, but for no other purpose; and (iii) certain branding rights to the extent (but only to the extent) necessary to permit KBI to perform its obligations to PMPSA as set forth in the PMI License Agreement. On August 12, 2023, the Company executed and entered into a Deed of Amendment No. 1 (the “PMI License Amendment”) with PMPSA, Bidi and KBI. Pursuant to the PMI License Amendment (which has an effective date of June 30, 2023), the following material changes have been made to the PMI License Agreement: 1. Royalty Rate. The royalty paid by PMPSA to KBI will no longer be based on sales price of the Product being sold, but rather on the volume of liquid contained within Product being sold. The royalty will be on a sliding scale of between $0.08 to $0.16 per sale based on the volume of liquid contained in the Product, increasing to between $0.10 to $0.20 per sale upon meeting certain sales milestones. 2. Elimination of Certain Potential Royalty Adjustments. Certain potential adjustments to the royalties receivable by KBI as provided for in the PMI License Agreement have been eliminated. 3. Guaranteed Royalty. The guaranteed royalty payment owed to KBI under the PMI License Agreement has been eliminated. Instead, royalties will be paid on a quarterly basis going-forward based on actual sales. Any unpaid guaranteed royalty has been cancelled. 4. Insurance Tail Requirements. KBI’s requirement to keep certain tail insurance after the expiration or termination of the PMI Licensing Agreement was reduced from 6 years to 2 years. 5. Markets. The identification of the PMI Markets that PMI may enter has been expanded to cover certain additional territories. 6. Net Reconciliation Payment to KBI. As a result of the changes to the PMI License Agreement described in paragraphs 1 thought 3 above, the value of such changes was calculated and reconciled as of the date of commencement of the PMI Licensing Agreement through June 30, 2023. On September 8, 2023, the Company received the Net Reconciliation Payment from PMPSA of $ 134,981 The KBI License Agreement provides that KBI shall pay Bidi license fees equivalent to 50% of the adjusted earned royalty payments, after any offsets due to jointly agreed costs such development costs incurred for entry to specific international markets. During the year ended October 31, 2023, the Company paid license fees of approximately $150,000 to Bidi. As of January 31, 2024, no additional license fees are owed to Bidi As of October 31, 2023, amounts receivable from PMPSA in connection with the PMI License Agreement totaled $ 1,002,196 289,672 712,524 322,845 240,000 |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period, without consideration of potential common stock equivalents. Diluted net income (loss) per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding plus common share equivalents from conversion of dilutive stock options and warrants using the treasury method and preferred stock using the as-converted method, except when antidilutive. In the event of a net loss, the effects of all potentially dilutive shares are excluded from the diluted net loss per share calculation as their inclusion would be antidilutive. |
Concentration of Revenues and Accounts Receivable | Concentration of Revenues and Accounts Receivable For the three months ended January 31, 2024, (i) 17% or $ 511,192 ® 474,378 417,740 For the three months ended January 31, 2023, (i) 25% or $ 599,201 ® 432,000 372,518 QuikTrip Corporation, with an outstanding balance of $ 180,294 43 |
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, referred to herein as “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 performance 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. The fair value of each option granted during the fiscal three-month period ended January 31, 2024, and January 31, 2023, 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 assumptions As of January As of January 31, 2024 31, 2023 Expected dividend yield 0 % 0 % Expected option term (years) 6.25 10 10 Expected volatility 255.35 280.34 % 275.68 % Risk-free interest rate 3.69 4.08 % 4.12 % 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 Company’s common stock. The assumed discount rate was the default risk-free ten-year interest rate for U.S. Treasury bills. |
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, 2024 and October 31, 2023 . 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, accounts receivable, accounts payable and accrued expenses. As of January 31, 2024 and October 31, 2023, the Company did not have any financial assets or liabilities measured and recorded at fair value on a recurring basis. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective November 1, 2023 and determined that the update applied to accounts receivable. The adoption did not have a material effect on our consolidated financial statements and did not significantly impact the Company’s accounting policies or estimation methods related to the allowance for doubtful accounts. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of assumptions | Schedule of assumptions As of January As of January 31, 2024 31, 2023 Expected dividend yield 0 % 0 % Expected option term (years) 6.25 10 10 Expected volatility 255.35 280.34 % 275.68 % Risk-free interest rate 3.69 4.08 % 4.12 % |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of future expense of intangible assets | Schedule of future expense of intangible assets 2024 $ 589,799 2025 786,398 2026 786,398 2027 786,398 2028 786,398 Thereafter 7,536,319 Total $ 11,271,710 |
Loans Payable (Tables)
Loans Payable (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of loan agreements | Schedule of loan agreements Inception Date Purchase Price Purchased Amount Outstanding Balance Payment frequency Payment Rate Deferred Finance Fees November 29, 2023 $ 600,000 $ 864,000 $ 402,832 Weekly 30,857 $ 25,739 November 29, 2023 600,000 864,000 381,057 Weekly 30,857 26,086 $ 1,200,000 $ 1,728,000 $ 783,889 $ 51,825 The following table shows our loan agreements as of October 31, 2023: Inception Date Purchase Price Purchased Amount Outstanding Balance Payment frequency Payment Rate Deferred Finance Fees May 9, 2023 $ 400,000 $ 580,000 $ 53,709 Weekly 20,714 $ 3,434 May 9, 2023 400,000 580,000 80,467 Weekly 20,714 5,247 $ 800,000 $ 1,160,000 $ 134,176 $ 8,681 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Leases | |
Schedule of cash flow information related to leases | Schedule of cash flow information related to leases January 31, 2024 January 31, 2023 Other Lease Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ (48,340 ) $ (46,949 ) |
Schedule of lease-related assets and liabilities | Schedule of lease-related assets and liabilities Lease Position January 31, 2024 October 31, 2023 Operating Leases Operating lease right-of-use assets $ 959,594 $ 1,008,428 Right of use liability operating lease current portion $ 189,329 $ 184,568 Right of use liability operating lease long term 817,106 866,207 Total operating lease liabilities $ 1,006,435 $ 1,050,775 |
Schedule of operating lease liability maturity | Schedule of operating lease liability maturity Operating Leases Maturity of Lease Liabilities on January 31, 2024 2024 172,137 2025 238,800 2026 253,614 2027 274,946 2028 and thereafter 175,989 Total future undiscounted lease payments $ 1,115,486 Less: Interest (109,051 ) Present value of lease liabilities $ 1,006,435 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 3 Months Ended |
Jan. 31, 2024 | |
Equity [Abstract] | |
Schedule of stock options | Schedule of stock options Weighted Aggregate Aggregate Exercise Price Average Number Exercise Price Range Exercise Price Outstanding, October 31, 2023 449,106 $ 14,081,408 $ 10.08 602.28 $ 31.36 Granted 8,811 78,038 2.81 11.76 8.86 Exercised — — — — Cancelled, forfeited, or expired (154,762 ) (3,206,669 ) 20.72 20.72 Outstanding, January 31, 2024 303,155 $ 10,952,777 $ 10.08 602.28 $ 36.13 Exercisable, January 31, 2024 163,204 $ 8,732,962 $ 12.87 602.28 $ 53.51 |
Schedule of warrant information | Schedule of warrant information Weighted Aggregate Aggregate Exercise Price Average Number Exercise Price Range Exercise Price Outstanding, October 31, 2023 242,548 $ 13,946,006 $ 12.39 126 $ 57.51 Granted — — — — Exercised — — — — Cancelled, forfeited, or expired (36,912 ) (544,025 ) 12.39 15.33 14.74 Outstanding, January 31, 2024 205,636 $ 13,404,980 $ 39.00 126.00 $ 65.19 Exercisable, January 31, 2024 205,636 $ 13,404,980 $ 39.00 126.00 $ 65.19 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Details 1) | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Property, Plant and Equipment [Line Items] | ||
Expected dividend yield | 0% | 0% |
Expected option term (years) | 10 years | |
Expected volatility | 275.68% | |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Expected option term (years) | 6 years 3 months | |
Expected volatility | 255.35% | |
Risk-free interest rate | 3.69% | 4.12% |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Expected option term (years) | 10 years | |
Expected volatility | 280.34% | |
Risk-free interest rate | 4.08% |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |||
Sep. 08, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | Oct. 31, 2023 | |
Product Information [Line Items] | ||||
Cash equivalents | $ 0 | $ 0 | ||
Depositor FDIC insured bank | 250,000 | |||
Uninsured cash and cash equivalents | 191,341 | 252,586 | ||
Accrued expenses | 113,243 | |||
Inventory reserves | 381,512 | 381,512 | ||
Deposits from customers | 50,000 | 0 | ||
Customer refund due | $ 229,548 | 392,406 | ||
Description of royalty rate | The royalty paid by PMPSA to KBI will no longer be based on sales price of the Product being sold, but rather on the volume of liquid contained within Product being sold. The royalty will be on a sliding scale of between $0.08 to $0.16 per sale based on the volume of liquid contained in the Product, increasing to between $0.10 to $0.20 per sale upon meeting certain sales milestones. | |||
Revenue not from contract with customer | $ 511,192 | $ 599,201 | ||
Revenue from sale | 474,378 | 432,000 | ||
Accounts Receivable [Member] | Quik Trip Corporation [Member] | ||||
Product Information [Line Items] | ||||
Outstanding balance | $ 180,294 | |||
Accounts Receivable [Member] | Quik Trip [Member] | Product Concentration Risk [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk percentage | 43% | |||
BIDI Stick [Member] | ||||
Product Information [Line Items] | ||||
Revenue not from contract with customer | $ 417,740 | $ 372,518 | ||
P M I License Agreement [Member] | ||||
Product Information [Line Items] | ||||
Liabilities | 10,000,000 | |||
Royalty payment | 30,000,000 | |||
P M I License Agreement [Member] | P M P S A [Member] | ||||
Product Information [Line Items] | ||||
Royalty payment received | $ 134,981 | |||
License agreement amount | 1,002,196 | |||
Royalty amount | 289,672 | |||
Reimbursement amount | $ 712,524 | |||
License agreement amount | 322,845 | |||
Royalties | $ 240,000 |
Intangible Assets (Details)
Intangible Assets (Details) | Jan. 31, 2024 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 | $ 589,799 |
2025 | 786,398 |
2026 | 786,398 |
2027 | 786,398 |
2028 | 786,398 |
Thereafter | 7,536,319 |
Total | $ 11,271,710 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | Oct. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Cost of intangible assets | $ 11,795,975 | $ 11,795,975 | |
Accumulated amortization of intangible asset | $ 524,265 | $ 327,666 | |
Intangible assets useful life | 15 years | ||
Weighted average remaining useful life | 14 years 3 months 18 days | 14 years 7 months 6 days | |
Amortization expense | $ 196,599 | $ 0 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Jan. 31, 2024 | Oct. 31, 2023 |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Purchase Price | $ 1,200,000 | $ 800,000 |
Purchased Amount | 1,728,000 | 1,160,000 |
Outstanding Balance | 783,889 | 134,176 |
Deferred Finance Fees | 51,825 | 8,681 |
November 292023 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Purchase Price | 600,000 | |
Purchased Amount | 864,000 | |
Outstanding Balance | 402,832 | |
Payment Rate | 30,857 | |
Deferred Finance Fees | 25,739 | |
November 292023 One [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Purchase Price | 600,000 | |
Purchased Amount | 864,000 | |
Outstanding Balance | 381,057 | |
Payment Rate | 30,857 | |
Deferred Finance Fees | $ 26,086 | |
May 92023 [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Purchase Price | 400,000 | |
Purchased Amount | 580,000 | |
Outstanding Balance | 53,709 | |
Payment Rate | 20,714 | |
Deferred Finance Fees | 3,434 | |
May 92023 One [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Purchase Price | 400,000 | |
Purchased Amount | 580,000 | |
Outstanding Balance | 80,467 | |
Payment Rate | 20,714 | |
Deferred Finance Fees | $ 5,247 |
Loans Payable (Details Narrativ
Loans Payable (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2024 | Oct. 31, 2023 | May 20, 2023 | |
Debt Instrument [Line Items] | |||
Commitment fee shares | 19,048 | ||
Amortization expense | $ 38,273 | $ 122,273 | |
Carrying value of loan | 0 | 0 | |
Unamortized debt discount and issuance costs | 513,295 | 136,705 | |
Loss on extinguishment of debt | 98,432 | ||
Promissory note principal amount | 783,889 | 134,176 | |
Westfield Bank [Member] | |||
Debt Instrument [Line Items] | |||
Promissory note principal amount | $ 342,001 | ||
Interest rate | 7.79% | ||
Loan, reamaining balance | $ 38,000 | $ 152,000 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ (48,340) | $ (46,949) |
Leases (Details 1)
Leases (Details 1) - USD ($) | Jan. 31, 2024 | Oct. 31, 2023 |
Operating Leases | ||
Operating lease right-of-use assets | $ 959,594 | $ 1,008,428 |
Right of use liability operating lease current portion | 189,329 | 184,568 |
Right of use liability operating lease long term | 817,106 | 866,207 |
Total operating lease liabilities | $ 1,006,435 | $ 1,050,775 |
Leases (Details 2)
Leases (Details 2) - USD ($) | Jan. 31, 2024 | Oct. 31, 2023 |
Leases | ||
2024 | $ 172,137 | |
2025 | 238,800 | |
2026 | 253,614 | |
2027 | 274,946 | |
2028 and thereafter | 175,989 | |
Total future undiscounted lease payments | 1,115,486 | |
Less: Interest | (109,051) | |
Present value of lease liabilities | $ 1,006,435 | $ 1,050,775 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Lessee, Lease, Description [Line Items] | ||
Operating lease discount rate | 4.50% | |
Office And Storage Space [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease expense | $ 48,834 | $ 46,949 |
Year One [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Payment for rent | 17,777 | |
Year Two [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Payment for rent | 18,666 | |
Year Three [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Payment for rent | 19,554 | |
Year Four [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Payment for rent | 20,443 | |
Year Five [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Payment for rent | 22,221 | |
Year Six [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Payment for rent | $ 23,999 |
Stockholders' Equity (Details )
Stockholders' Equity (Details ) - Equity Option [Member] | 3 Months Ended |
Jan. 31, 2024 USD ($) $ / shares shares | |
Offsetting Assets [Line Items] | |
Aggregate number of shares outstanding, Beginning | shares | 449,106 |
Aggregate exercise price outstanding, Beginning | $ | $ 14,081,408 |
Weighted average exercise price outstanding, Beginning | $ 31.36 |
Aggregate number of shares, Granted | shares | 8,811 |
Aggregate exercise price, Granted | $ | $ 78,038 |
Weighted average exercise price, Granted | $ 8.86 |
Aggregate number of shares, Exercised | shares | 0 |
Aggregate exercise price, Exercised | $ | $ 0 |
Exercise price range, Exercised | $ 0 |
Weighted average exercise price, Exercised | $ 0 |
Aggregate number of shares, Cancelled forfeited or expired | shares | (154,762) |
Aggregate exercise price, Cancelled forfeited or expired | $ | $ (3,206,669) |
Exercise price range, Cancelled forfeited or expired | $ 20.72 |
Weighted average exercise price, Cancelled forfeited or expired | $ 20.72 |
Aggregate number of shares outstanding, Ending | shares | 303,155 |
Aggregate exercise price outstanding, Ending | $ | $ 10,952,777 |
Aggregate number of shares, Exercisable | shares | 163,204 |
Aggregate exercise price, Exercisable | $ | $ 8,732,962 |
Weighted average exercise price, Exercisable | $ 53.51 |
Minimum [Member] | |
Offsetting Assets [Line Items] | |
Exercise price range outstanding, Beginning | 10.08 |
Exercise price range, Granted | 2.81 |
Exercise price range outstanding, Ending | 10.08 |
Weighted average exercise price outstanding, Ending | 36.13 |
Exercise price range,Exercisable | 12.87 |
Maximum [Member] | |
Offsetting Assets [Line Items] | |
Exercise price range outstanding, Beginning | 602.28 |
Exercise price range, Granted | 11.76 |
Exercise price range outstanding, Ending | 602.28 |
Exercise price range,Exercisable | $ 602.28 |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - Warrant [Member] | 3 Months Ended |
Jan. 31, 2024 USD ($) $ / shares shares | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Aggregate number of shares outstanding, Beginning | shares | 242,548 |
Aggregate exercise price outstanding, Beginning | $ | $ 13,946,006 |
Weighted average exercise price outstanding, Beginning | $ 57.51 |
Aggregate number of shares, Granted | shares | 0 |
Aggregate exercise price, Granted | $ | $ 0 |
Exercise price range, Granted | $ 0 |
Weighted average exercise price, Granted | $ 0 |
Aggregate number of shares, Exercised | shares | 0 |
Aggregate exercise price, Exercised | $ | $ 0 |
Exercise price range, Exercised | $ 0 |
Weighted average exercise price, Exercised | $ 0 |
Aggregate number of shares, Cancelled forfeited or expired | shares | (36,912) |
Aggregate exercise price, Cancelled forfeited or expired | $ | $ (544,025) |
Weighted average exercise price, Cancelled forfeited or expired | $ 14.74 |
Aggregate number of shares outstanding, Ending | shares | 205,636 |
Aggregate exercise price outstanding, Ending | $ | $ 13,404,980 |
Weighted average exercise price outstanding, Ending | $ 65.19 |
Aggregate number of shares, Exercisable | shares | 205,636 |
Aggregate exercise price, Exercisable | $ | $ 13,404,980 |
Weighted average exercise price, Exercisable | $ 65.19 |
Minimum [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Exercise price range outstanding, Beginning | 12.39 |
Exercise price range, Cancelled forfeited or expired | 12.39 |
Exercise price range outstanding, Ending | 39 |
Exercise price range, Exercisable | 39 |
Maximum [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Exercise price range outstanding, Beginning | 126 |
Exercise price range, Cancelled forfeited or expired | 15.33 |
Exercise price range outstanding, Ending | 126 |
Exercise price range, Exercisable | $ 126 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 3 Months Ended | |||||
Jan. 29, 2024 | Jan. 22, 2024 | Jan. 09, 2024 | Jan. 31, 2024 | Jan. 31, 2023 | Oct. 31, 2023 | |
Class of Stock [Line Items] | ||||||
Reverse stock split | 1-for-21 reverse stock split | |||||
Rounding from reverse split, shares | 52,949 | |||||
Common stock shares, issued | 16,667 | |||||
Stock-based compensation | $ 62,000 | |||||
Stock option expense | 309,958 | $ 1,435,787 | ||||
Unrecognized expenses | $ 3,594,567 | |||||
Weighted average remaining contractual life | 8 years 9 months 3 days | |||||
Aggregate intrinsic value | $ 0 | |||||
Volatility rate | 275.68% | |||||
Common Stock Warrants [Member] | ||||||
Class of Stock [Line Items] | ||||||
Weighted average remaining life | 2 years 11 months 19 days | |||||
Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock option expense | ||||||
One Board [Member] | Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock options exercisable | 5,953 | |||||
Fire value granted | $ 70,007 | |||||
Stock price | $ 11.76 | |||||
Volatility rate | 280.34% | |||||
Expected term | 10 years | |||||
Risk-free interest rate | 3.69% | |||||
One Employee [Member] | Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock options exercisable | 2,858 | |||||
Fire value granted | $ 8,018 | |||||
Stock price | $ 2.81 | |||||
Volatility rate | 255.35% | |||||
Expected term | 10 years | |||||
Risk-free interest rate | 4.08% | |||||
Equity Option [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock option expense | $ 309,958 | $ 1,435,787 | ||||
Series B Preferred Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock, shares issued | 900,000 | 900,000 | ||||
Preferred stock redemption price per share | $ 15 | |||||
Preferred stock liquidation preference per share | $ 15 | |||||
Preferred stock, conversion basis | The Majority Holders have the ability to cause a voluntary conversion of the Series B Preferred Stock into Common Stock at a conversion rate of 0.3968 shares of Common Stock per share of Series B Preferred Stock which may only occur on or after the following dates 18-month, 24 month, 36, month, 48 months, and 60 month anniversary of the original issuance date; and only up to 180,000 shares of Series B Preferred Stock on each of these dates. |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Oct. 31, 2023 | |
Related Party Transaction [Line Items] | |||
Revenue | $ 1,900 | $ 3,085 | |
Inventory quality control expenses | 273,060 | 3,697,210 | |
K B I License Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
License fee | 0 | $ 0 | |
Ceded Premiums Payable | 138,692 | 240,802 | |
Non-recurring engineering costs | $ 712,524 | ||
Nirajkumar Patel [Member] | |||
Related Party Transaction [Line Items] | |||
Revenue | 1,900 | 3,085 | |
Bidi Vapor [Member] | |||
Related Party Transaction [Line Items] | |||
Accounts payable | 1,413,691 | $ 2,350,787 | |
Proceeds from Sale of Productive Assets | $ 2,058,070 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Service agreement description | (i) payment of $125,000 per month; (ii) bonus equivalent to 0.27% of the applicable gross quarterly sales and (iii) a grant of 3,000,000 nonqualified stock options to purchase shares of Company common stock which shall vest based on achievement of certain net revenue and profit margin targets up to $180,000,000 in total net revenues over a period of 3 years. | |
Sale of products | $ 0 | $ 28,318 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Feb. 21, 2024 USD ($) |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Payment on service agreement | $ 80,000 |