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<p style="margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="margin: 0"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<!-- Field: Rule-Page --><div style="text-align: left; margin-top: 12pt; margin-bottom: 3pt"><div style="border-top: Black 2pt solid; border-bottom: Black 1pt solid; font-size: 1pt; width: 100%">&#160;</div></div><!-- Field: /Rule-Page -->

<p style="margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 14pt Times New Roman, Times, Serif"><b>UNITED
STATES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 14pt Times New Roman, Times, Serif"><b>SECURITIES
AND EXCHANGE COMMISSION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 12pt Times New Roman, Times, Serif"><b>Washington,
D.C. 20549</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 18pt Times New Roman, Times, Serif"><b>FORM
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">OR</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center"><span style="font: 12pt Times New Roman, Times, Serif"><span id="xdx_902_edei--DocumentTransitionReport_c20211101__20220430_zDEy6tMYwvhj"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt:booleanfalse" name="dei:DocumentTransitionReport">&#9744;</ix:nonNumeric></span>
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Commission
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;(Address
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>N/A</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Former
name, former address, and former fiscal year, if changed since last report)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities
registered pursuant to Section 12(b) of the Act:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; padding: 0; width: 40%; text-align: center; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif">Title of each class </span></td>
<td style="padding: 0; width: 1%; text-align: center; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="border-bottom: black 1pt solid; padding: 0; width: 28%; text-align: center; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif">Trading Symbol(s)</span></td>
<td style="padding: 0; width: 1%; text-align: center; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="border-bottom: black 1pt solid; padding: 0; width: 30%; text-align: center; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif">Name of each exchange on which registered</span></td></tr>
<tr style="background-color: #CCEEFF">
<td style="padding: 0; text-align: center; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif"><b><span id="xdx_909_edei--Security12bTitle_c20211101__20220430_zPvKVA1NE7Si"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" name="dei:Security12bTitle">Common Stock, par value $0.001 per share</ix:nonNumeric></span></b></span></td>
<td style="padding: 0; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0; text-align: center; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif"><b><span id="xdx_900_edei--TradingSymbol_c20211101__20220430_zNPy1IPLUHb9"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" name="dei:TradingSymbol">KAVL</ix:nonNumeric></span></b></span></td>
<td style="padding: 0; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0; text-align: center; text-indent: 0"><span style="font: 10pt Times New Roman, Times, Serif"><b>The <span id="xdx_903_edei--SecurityExchangeName_c20211101__20220430_zUafpPD9Vjad"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt-sec:exchnameen" name="dei:SecurityExchangeName">Nasdaq</ix:nonNumeric></span> Stock Market, LLC</b></span></td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. <span id="xdx_90B_edei--EntityCurrentReportingStatus_c20211101__20220430_zBPTKpv82BHd"><span style="-sec-ix-hidden: xdx2ixbrl0032">YES</span></span> &#9746; NO &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (&#167;232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was
required to submit such files). <span id="xdx_90E_edei--EntityInteractiveDataCurrent_c20211101__20220430_zyNRU7NWlWL9"><span style="-sec-ix-hidden: xdx2ixbrl0033">YES</span></span> &#9746; NO &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer,&#8221;
&#8220;smaller reporting company,&#8221; and &#8220;emerging growth company&#8221; in Rule 12b-2 of the Exchange Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="padding: 0pt; width: 31%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large
Accelerated filer</span></td>
<td style="padding: 0pt; width: 23%; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#9744;</span></td>
<td style="padding: 0pt; width: 23%; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Accelerated filer</span></td>
<td style="padding: 0pt; width: 23%; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#9744;</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_90B_edei--EntityFilerCategory_c20211101__20220430_z1MvM1Hfxzoj"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory">Non-accelerated filer</ix:nonNumeric></span></span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#9746;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Smaller reporting company</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_90B_edei--EntitySmallBusiness_c20211101__20220430_zzYWFf1bItQ2"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt:booleantrue" name="dei:EntitySmallBusiness">&#9746;</ix:nonNumeric></span></span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Emerging growth company</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><span id="xdx_900_edei--EntityEmergingGrowthCompany_c20211101__20220430_zIuNSahbxqd1"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt:booleantrue" name="dei:EntityEmergingGrowthCompany">&#9746;</ix:nonNumeric></span></span></td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act <span id="xdx_901_edei--EntityExTransitionPeriod_c20211101__20220430_zseXNvBCDVil"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt:booleanfalse" name="dei:EntityExTransitionPeriod">&#9744;</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Calibri, Helvetica, Sans-Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES &#9744; <span id="xdx_90F_edei--EntityShellCompany_c20211101__20220430_zmdS1UG3IEMh"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt:booleanfalse" name="dei:EntityShellCompany">NO</ix:nonNumeric></span> &#9746;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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    <div style="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">APPLICABLE
ONLY TO CORPORATE ISSUERS:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
the number of shares outstanding of each of the issuer&#8217;s classes of common stock, as of the latest practicable date:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90C_edei--EntityCommonStockSharesOutstanding_iI_c20220613_zdcJfoNuAbZk" title="Entity Common Stock, Shares Outstanding"><ix:nonFraction name="dei:EntityCommonStockSharesOutstanding" contextRef="AsOf2022-06-13" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">31,166,090</ix:nonFraction></span>
shares of common stock, $0.001 par value, outstanding as of June 13, 2022</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

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    <div style="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"><tr><td style="text-align: center; width: 100%">&#160;</td></tr></table></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>KAIVAL
BRANDS INNOVATIONS GROUP, INC.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FORM
10-Q</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>TABLE
OF CONTENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="border-bottom: black 1pt solid; padding: 0pt; width: 9%; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;<b>Item</b></span></td>
<td style="padding: 0pt; width: 82%; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="border-bottom: black 1pt solid; padding: 0pt; width: 9%; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b>Page</b></span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr>
<td colspan="2" style="padding: 0pt; text-indent: 0pt"><a href="#a_021"><span style="font: 10pt Times New Roman, Times, Serif">Cautionary Note Concerning Forward-Looking Statements</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">ii</span></td></tr>
<tr style="background-color: white">
<td colspan="2" style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b>PART I</b></span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b>Financial Information</b></span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 1.</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Financial Statements</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_001"><span style="font: 10pt Times New Roman, Times, Serif">Unaudited Consolidated Balance Sheets</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">F-1</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_002"><span style="font: 10pt Times New Roman, Times, Serif">Unaudited Consolidated Statements of Operations</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">F-2</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_003"><span style="font: 10pt Times New Roman, Times, Serif">Unaudited Consolidated Statements of Changes in Stockholders&#8217; Equity</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">F-3</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_004"><span style="font: 10pt Times New Roman, Times, Serif">Unaudited Consolidated Statements of Cash Flows</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">F-5</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_005"><span style="font: 10pt Times New Roman, Times, Serif">Notes to Unaudited Consolidated Financial Statements</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">F-6</span></td></tr>
<tr>
<td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 2</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_006"><span style="font: 10pt Times New Roman, Times, Serif">Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations</span></a></td>
<td style="padding: 0pt; vertical-align: bottom; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">1</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_007"><span style="font: 10pt Times New Roman, Times, Serif">Liquidity and Capital Resources</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">3</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_008"><span style="font: 10pt Times New Roman, Times, Serif">Results of Operations</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">3</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Off-Balance Sheet Arrangements</span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_009"><span style="font: 10pt Times New Roman, Times, Serif">Emerging Growth Company</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">5</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 3</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_010"><span style="font: 10pt Times New Roman, Times, Serif">Quantitative and Qualitative Disclosures about Market Risk</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">6</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 4</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_011"><span style="font: 10pt Times New Roman, Times, Serif">Controls and Procedures</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">6</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b>PART II</b></span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_012"><span style="font: 10pt Times New Roman, Times, Serif"><b>Other Information</b></span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">7</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 1.</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_013"><span style="font: 10pt Times New Roman, Times, Serif">Legal Proceedings</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">7</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 1A.</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_014"><span style="font: 10pt Times New Roman, Times, Serif">Risk Factors</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">7</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 2.</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_015"><span style="font: 10pt Times New Roman, Times, Serif">Unregistered Sales of Equity Securities and Use of Proceeds</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">7</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 3</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_016"><span style="font: 10pt Times New Roman, Times, Serif">Defaults Upon Senior Securities</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">7</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 4</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_017"><span style="font: 10pt Times New Roman, Times, Serif">Mine Safety Disclosures</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">7</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 5</span></td>
<td style="padding: 0pt; text-indent: 0pt"><a href="#a_018"><span style="font: 10pt Times New Roman, Times, Serif">Other Information</span></a></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">7</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">Item 6</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><a href="#a_019">Exhibits</a></span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">8</span></td></tr>
<tr style="background-color: white">
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></td></tr>
<tr>
<td colspan="2" style="padding: 0pt; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif"><b><a href="#a_020">Signatures</a></b></span></td>
<td style="padding: 0pt; text-align: center; text-indent: 0pt"><span style="font: 10pt Times New Roman, Times, Serif">9</span></td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_021"></span>CAUTIONARY
NOTE CONCERNING FORWARD-LOOKING STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
statements and information in this Quarterly Report on Form 10-Q for the three and six months ended April 30, 2022 (the &#8220;Quarterly
Report&#8221;) may constitute &#8220;forward-looking statements&#8221; within the meaning of Section 27A of the Securities Act of 1933,
as amended (the &#8220;Securities Act&#8221;), Section 21E of the Securities Exchange Act of 1934, as amended (the &#8220;Exchange Act&#8221;),
and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, which address activities,
events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures,
business strategy, statements related to the expected effects on our business from the novel coronavirus (&#8220;COVID-19&#8221;) pandemic,
our ability to obtain the products we distribute from Bidi Vapor, LLC (&#8220;Bidi&#8221;), the timing and outcome of Bidi&#8217;s appeal
of the U.S. Food and Drug Administration&#8217;s (the &#8220;FDA&#8221;) Premarket Tobacco Product Application (&#8220;PMTA&#8221;) marketing
authorization denials for Bidi&#8217;s non-tobacco flavored products, the scope of future FDA enforcement of regulations in the electronic
nicotine delivery system (&#8220;ENDS&#8221;), the FDA&#8217;s approach to the regulation and enforcement of synthetic nicotine and our
competitors&#8217; use of the substance in their products to avoid the PMTA requirements, the impact of black-market goods on our business,
the success of the agreement with Philip Morris Products S.A. (&#8220;PMPSA&#8221;), a wholly owned affiliate of Philip Morris International
Inc. (&#8220;PMI&#8221;) related to the international distribution of the BIDI<sup>&#174;</sup> Stick, the demand for the products we
distribute, anticipated product performance, market and industry expectations, significant changes in our relationships with our distributors
or sub-distributors, changes in government regulation or laws that affect our business, and circumstances or developments that may make
us unable to implement or realize the anticipated benefits, or that may increase the costs of our current and planned business initiatives,
and other similar matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such
as &#8220;may&#8221; &#8220;will,&#8221; &#8220;should,&#8221; &#8220;expect,&#8221; &#8220;plan,&#8221; &#8220;anticipate,&#8221; &#8220;believe,&#8221;
&#8220;estimate,&#8221; &#8220;predict,&#8221; &#8220;potential,&#8221; or &#8220;continue,&#8221; or other comparable terminology. These
forward-looking statements are based largely on our current expectations and assumptions and are subject to a number of risks and uncertainties,
many of which are beyond our control. These statements are subject to many risks, uncertainties, and other important factors that could
cause actual future results to differ materially from those expressed in the forward-looking statements including, but not limited to,
the duration and scope of the COVID-19 pandemic and impact on the demand for the products we distribute; our ability to obtain the products
from the manufacturer; actions governments, businesses, and individuals take in response to the pandemic, including restrictions on onsite
commercial interactions; the impact of the COVID-19 pandemic and action taken in response to the pandemic on global and regional economies
and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and
a worsening of global economic conditions or low levels of economic growth; our inability to sustain profitable sales growth; changes
in government regulations or laws that affect our business; significant changes in our relationships with our distributor or sub-distributors;
and circumstances or developments that may make us unable to implement or realize the anticipated benefits, or that may increase the
costs, of our current and planned business initiatives. In light of these risks and uncertainties, all of the forward-looking statements
made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated
by us will be realized. We undertake no obligation to update or revise any of the forward-looking statements contained herein.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Kaival
Brands Innovations Group, Inc.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;<b><span id="a_001"></span>Consolidated
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
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<tr id="xdx_40C_eus-gaap--LiabilitiesAndStockholdersEquityAbstract_iB" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_405_eus-gaap--LiabilitiesCurrentAbstract_i01B_zaRD0U5gXjtj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_405_eus-gaap--AccountsPayableCurrent_i02I_maCzMoT_zVvsfktfw4Jj" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_403_eus-gaap--AccountsPayableRelatedPartiesCurrent_i02I_maCzMoT_zH18TxMevQgc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_400_eus-gaap--AccruedLiabilitiesCurrent_i02I_maCzMoT_z1cCCR46DG1e" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_40F_eus-gaap--OperatingLeaseLiabilityCurrent_i02I_pp0p0_maCzMoT_z5mwRs5xmkz2" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_405_eus-gaap--CustomerRefundLiabilityCurrent_i02I_maCzMoT_zkSSlc5beD42" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_404_eus-gaap--LiabilitiesCurrent_i01TI_mtCzMoT_maCzXzY_z5fBqCHO4ba1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_400_eus-gaap--LiabilitiesNoncurrentAbstract_i01B_z4NBYh4zHB5f" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0 0 0 20pt; text-align: left">LONG TERM LIABILITIES</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40F_eus-gaap--OperatingLeaseLiabilityNoncurrent_i02I_maCzXzY_zq0ODhAkaal2" style="vertical-align: bottom; background-color: White">
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_403_eus-gaap--Liabilities_iTI_mtCzXzY_maCzi5m_zToh9bcaT6Na" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">TOTAL LIABILITIES</td><td style="padding-bottom: 1pt">&#160;</td>
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_407_eus-gaap--StockholdersEquityAbstract_iB" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt; text-align: left">STOCKHOLDERS&#8217; EQUITY:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_401_eus-gaap--PreferredStockValue_i01I_maCz3jf_z0gy07gGy4ig" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 30pt; text-align: left">Preferred stock <span id="xdx_904_eus-gaap--PreferredStockSharesAuthorized_c20220430_pdd" title="Preferred stock, shares authorized"><span id="xdx_901_eus-gaap--PreferredStockSharesAuthorized_c20211031_pdd" title="Preferred stock, shares authorized"><ix:nonFraction name="us-gaap:PreferredStockSharesAuthorized" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesAuthorized" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">5,000,000</ix:nonFraction></ix:nonFraction></span></span> shares authorized; Series A Convertible Preferred stock ($<span id="xdx_90A_eus-gaap--PreferredStockParOrStatedValuePerShare_c20220430__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, par value"><span id="xdx_909_eus-gaap--PreferredStockParOrStatedValuePerShare_c20211031__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, par value"><ix:nonFraction name="us-gaap:PreferredStockParOrStatedValuePerShare" contextRef="AsOf2022-04-30_us-gaap_SeriesAPreferredStockMember" decimals="INF" unitRef="USDPShares"><ix:nonFraction name="us-gaap:PreferredStockParOrStatedValuePerShare" contextRef="AsOf2021-10-31_us-gaap_SeriesAPreferredStockMember" decimals="INF" unitRef="USDPShares">.001</ix:nonFraction></ix:nonFraction></span></span> par value, <span id="xdx_90B_eus-gaap--PreferredStockSharesAuthorized_c20220430__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares authorized"><span id="xdx_905_eus-gaap--PreferredStockSharesAuthorized_c20211031__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares authorized"><ix:nonFraction name="us-gaap:PreferredStockSharesAuthorized" contextRef="AsOf2022-04-30_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesAuthorized" contextRef="AsOf2021-10-31_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,000,000</ix:nonFraction></ix:nonFraction></span></span> shares authorized, <span id="xdx_903_eus-gaap--PreferredStockSharesIssued_c20220430__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares issued"><span id="xdx_900_eus-gaap--PreferredStockSharesOutstanding_c20220430__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares outsanding"><span id="xdx_906_eus-gaap--PreferredStockSharesIssued_c20211031__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares issued"><span id="xdx_90E_eus-gaap--PreferredStockSharesOutstanding_c20211031__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares outsanding"><ix:nonFraction name="us-gaap:PreferredStockSharesIssued" contextRef="AsOf2022-04-30_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesOutstanding" contextRef="AsOf2022-04-30_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesIssued" contextRef="AsOf2021-10-31_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesOutstanding" contextRef="AsOf2021-10-31_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,000,000</ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction></span></span></span></span> issued and outstanding as of April 30, 2022 and October 31, 2021)</td><td>&#160;</td>
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40B_eus-gaap--CommonStockValue_i01I_maCz3jf_zL2PY8D7pCG8" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:CommonStockValue" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">31,166</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:CommonStockValue" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">30,195</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40F_eus-gaap--AdditionalPaidInCapital_i01I_maCz3jf_zucY9VALbYs5" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 30pt; text-align: left">Additional paid-in capital</td><td>&#160;</td>
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_400_eus-gaap--RetainedEarningsAccumulatedDeficit_i01I_maCz3jf_zf4xlmN2JbG" style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 29.15pt"><span style="font: 10pt Times New Roman, Times, Serif">&#9;&#160;&#9;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these unaudited consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<!-- Field: Page; Sequence: 5; Options: NewSection -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Kaival
Brands Innovations Group, Inc.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b><span id="a_002"></span>Consolidated
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

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<tr id="xdx_409_ecustom--CostOfRevenueRelatedParty_i01_maCz4UU_zj7Xh98Vw2L8" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_402_eus-gaap--GrossProfit_i01T_mtCzM9m_maCzgNi_zaJDG7bnfyNi" style="vertical-align: bottom; background-color: White">
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_404_eus-gaap--OperatingExpensesAbstract_iB_z5UoB8CPT1l6" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<tr id="xdx_40B_eus-gaap--MarketingAndAdvertisingExpense_i01_maCzO4z_zXtr19T0vwZ5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_404_eus-gaap--GeneralAndAdministrativeExpense_i01_maCzO4z_zk8m0k4eGn3g" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt; text-align: left">General &amp; Administrative expenses</td><td style="padding-bottom: 1pt">&#160;</td>
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<tr id="xdx_406_eus-gaap--OperatingExpenses_i01T_mtCzO4z_msCzgNi_zNb9VPNw5BLg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_402_eus-gaap--NonoperatingIncomeExpenseAbstract_iB_zXSQYiwy1ZIa" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40C_eus-gaap--InvestmentIncomeNet_i01_maCz8tj_zW4QVf92c0H9" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Interest income</td><td style="padding-bottom: 1pt">&#160;</td>
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    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:InvestmentIncomeNet" contextRef="From2021-02-012021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">46</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0245">&#8212;</span></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
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<tr id="xdx_402_eus-gaap--NonoperatingIncomeExpense_i01T_mtCz8tj_maCzgNi_zGimndkZPL6b" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:NonoperatingIncomeExpense" contextRef="From2021-02-012021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">46</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0251">&#8212;</span></td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40E_eus-gaap--IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest_i01T_mtCzgNi_maCzVjj_zFvZrJXwlLWg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2022-02-012022-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">5,017,967</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2021-02-012021-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">4,072,169</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td>
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<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_401_eus-gaap--IncomeTaxExpenseBenefit_i01N_di_msCzVjj_z2UE4b0nsrB7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Provision for income taxes</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2022-02-012022-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">5,807</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left"></td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2021-02-012021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">186,758</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">5,807</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left"></td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">293,144</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_401_eus-gaap--NetIncomeLossAvailableToCommonStockholdersBasic_iT_mtCzVjj_zjzwc1U1NK27" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Net income (loss)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic" contextRef="From2022-02-012022-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">5,012,160</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic" contextRef="From2021-02-012021-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">4,258,927</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(<ix:nonFraction name="us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">7,794,124</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40F_ecustom--NetIncomeLossPerCommonShareBasicAndDiluted_zl29bC6RTzJk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>&#160;&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these unaudited consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<!-- Field: Page; Sequence: 6 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Kaival
Brands Innovations Group, Inc.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b><span id="a_003"></span>Consolidated
Statements of Changes in Stockholders&#8217; Equity</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>For
the Six Months Ended April 30, 2022</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

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<tr id="xdx_404_eus-gaap--StockIssuedDuringPeriodValueIssuedForServices_i_pp0p0" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_430_c20220201__20220430_eus-gaap--StockholdersEquity_iS_z2scux0vNHpj" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_403_ecustom--CommonSharesSettledAndCancelled_zMqm32jFrFJj" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_40C_eus-gaap--StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpense_zuctZiLs7Gga" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_403_eus-gaap--ProfitLoss_z83fa0o6aCO" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_439_c20220201__20220430_eus-gaap--StockholdersEquity_iE_zGAF4iMDi0I5" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold">Balances, April, 30, 2022</td><td style="padding-bottom: 2.5pt">&#160;</td>
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</table>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these unaudited consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<!-- Field: Page; Sequence: 7 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Kaival
Brands Innovations Group, Inc.</b>&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>Consolidated
Statement of Changes in Stockholders&#8217; Equity</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>For
the Six Months Ended April 30, 2021 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
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    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Par Value Common Shares</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Additional Paid-in Capital</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Retained Earnings</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Total</td></tr>
<tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="3" style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="3" style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="3" style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="3" style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="3" style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="3" style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="3" style="text-align: center">&#160;</td></tr>
<tr id="xdx_43B_c20201101__20210131_eus-gaap--StockholdersEquity_iS_zH44GI5RYUJg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 37%; font-weight: bold">Balances, October 31, 2020</td><td style="width: 2%">&#160;</td>
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<tr id="xdx_408_ecustom--IssuanceOfCommonSharesForEmployeeCompensation_iP3us-gaap--SharesOutstanding_zB4qH8NkGMN9" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Issuance of common shares for employee compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0381">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="kavl:IssuanceOfCommonSharesForEmployeeCompensation" contextRef="From2020-11-012021-01-31_us-gaap_AdditionalPaidInCapitalMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">76,655</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0384">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="kavl:IssuanceOfCommonSharesForEmployeeCompensation" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">76,700</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_406_ecustom--CommonSharesSettledAndCancelled_i_pp0p0" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Common shares settled and cancelled</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8212;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0389">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="kavl:CommonSharesSettledAndCancelled" contextRef="From2020-11-012021-01-31_us-gaap_CommonStockMember" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">18</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0392">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<tr id="xdx_403_eus-gaap--StockGrantedDuringPeriodValueSharebasedCompensation_iP3custom--CommonSharesSettledAndCancelledInShares_zHOt3NFuJ4Pg" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Issuance of common shares for compensation</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0397">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_eus-gaap--StockIssuedDuringPeriodSharesShareBasedCompensation_iP3us-gaap--StockGrantedDuringPeriodValueSharebasedCompensation_c20201101__20210131__us-gaap--StatementEquityComponentsAxis__us-gaap--CommonStockMember_zFu6mkMKJrrl" title="Issuance of common shares for compensation (in shares)" style="text-align: right"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesShareBasedCompensation" contextRef="From2020-11-012021-01-31_us-gaap_CommonStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">172,129</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:StockGrantedDuringPeriodValueSharebasedCompensation" contextRef="From2020-11-012021-01-31_us-gaap_CommonStockMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">172</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:StockGrantedDuringPeriodValueSharebasedCompensation" contextRef="From2020-11-012021-01-31_us-gaap_AdditionalPaidInCapitalMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,034,424</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0400">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:StockGrantedDuringPeriodValueSharebasedCompensation" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,034,596</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_403_eus-gaap--ProfitLoss_znOD1ChcCTr8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Net income</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0405">&#8212;</span></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0406">&#8212;</span></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0407">&#8212;</span></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2020-11-012021-01-31_us-gaap_RetainedEarningsMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">311,501</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:ProfitLoss" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">311,501</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr id="xdx_431_c20210201__20210430_eus-gaap--StockholdersEquity_iS_zhPgw20Mtlr1" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold">Balances, January 31, 2021</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td id="xdx_988_eus-gaap--SharesOutstanding_iS_c20210201__20210430__us-gaap--StatementEquityComponentsAxis__us-gaap--PreferredStockMember_z63jvw5Su1qg" title="Balance at beginning (in shares)" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:SharesOutstanding" contextRef="AsOf2021-01-31_us-gaap_PreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,000,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:StockholdersEquity" contextRef="AsOf2021-01-31_us-gaap_PreferredStockMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,000</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&#160;</td><td id="xdx_988_eus-gaap--SharesOutstanding_iS_c20210201__20210430__us-gaap--StatementEquityComponentsAxis__us-gaap--CommonStockMember_zz6A3hHWnM18" title="Balance at beginning (in shares)" style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:SharesOutstanding" contextRef="AsOf2021-01-31_us-gaap_CommonStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">23,305,973</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:StockholdersEquity" contextRef="AsOf2021-01-31_us-gaap_CommonStockMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">23,306</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:StockholdersEquity" contextRef="AsOf2021-01-31_us-gaap_AdditionalPaidInCapitalMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,699,490</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:StockholdersEquity" contextRef="AsOf2021-01-31_us-gaap_RetainedEarningsMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,084,098</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
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</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr id="xdx_406_eus-gaap--StockIssuedDuringPeriodValueIssuedForServices_z8oSggY9o5q9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 37%; text-align: left">Issuance of common shares for employee compensation</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 5%; text-align: right">&#8212;</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 5%; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0421">&#8212;</span></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 5%; text-align: right"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueIssuedForServices" contextRef="From2021-02-012021-04-30_us-gaap_AdditionalPaidInCapitalMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">647,396</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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<tr id="xdx_406_ecustom--CommonSharesSettledAndCancelled_zyjBJPRMeaJl" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_409_eus-gaap--StockGrantedDuringPeriodValueSharebasedCompensation_zhDtz8qAXNrc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_406_eus-gaap--StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpense_zKYcEgT9IGpi" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_406_eus-gaap--ProfitLoss_zq80bnubE55h" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">&#8212;</td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
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<tr id="xdx_438_c20210201__20210430_eus-gaap--StockholdersEquity_iE_zV2e1nNzIgw2" style="vertical-align: bottom; background-color: White">
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</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these unaudited consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<!-- Field: Page; Sequence: 8 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">Ka<b>ival
Brands Innovations Group, Inc.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b><span id="a_004"></span>Consolidated
Statements of Cash Flows</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<b>(Unaudited)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<table cellpadding="0" cellspacing="0" id="xdx_307_112_zPL4KsrWILq1" summary="xdx: Statement - Consolidated Statements of Cash Flows  (Unaudited)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_490_20211101_20220430" style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_49F_20201101_20210430" style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
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<tr id="xdx_40D_eus-gaap--NetCashProvidedByUsedInOperatingActivitiesAbstract_iB_zMEEf0If1aV6" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-decoration: underline; font-weight: bold; text-align: left">CASH FLOWS FROM OPERATING ACTIVITIES</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40B_eus-gaap--NetIncomeLoss_i01_maCzUUB_z9tj35xY0Fk8" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_400_eus-gaap--AdjustmentsToReconcileNetIncomeLossToCashProvidedByUsedInOperatingActivitiesAbstract_i01B_zDibngBqWuMj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40E_eus-gaap--AllocatedShareBasedCompensationExpense_i02_maCzUUB_zjKIWUKUeANb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0 0 0 20pt; text-align: left">Stock based compensation</td><td>&#160;</td>
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<tr id="xdx_402_ecustom--StockOptionPlanExpenses_i02_maCzUUB_zBFazi0JLIJl" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt; text-align: left">Stock option expense</td><td>&#160;</td>
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<tr id="xdx_40E_ecustom--RouOperatingLeaseExpense_i02_maCzUUB_zp7JlTP33ksc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0 0 0 20pt; text-align: left">ROU operating lease expense</td><td>&#160;</td>
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<tr id="xdx_409_eus-gaap--IncreaseDecreaseInOperatingCapitalAbstract_i02B_zhgCQiaAkfEe" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_401_eus-gaap--IncreaseDecreaseInAccountsReceivable_i03N_di_msCzUUB_zQEhJy3b0klb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_401_eus-gaap--IncreaseDecreaseInAccountsReceivableRelatedParties_i03N_pp0p0_di0_msCzUUB_zwO8E777r5nk" style="vertical-align: bottom; background-color: White">
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<tr id="xdx_406_eus-gaap--IncreaseDecreaseInPrepaidExpense_i03N_di_msCzUUB_z8zAzMT6bJcg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0 0 0 20pt; text-align: left">Prepaid expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInPrepaidExpense" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">56,360</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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<tr id="xdx_403_ecustom--IncreaseDecreaseInInventoryDepositRelatedParty_i03_maCzUUB_zG4ztucIjNak" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt; text-align: left">Inventory deposit &#8211; related party&#160;</td><td>&#160;</td>
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<tr id="xdx_40E_eus-gaap--IncreaseDecreaseInInventories_i03N_di_msCzUUB_zOqIN3astsbd" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_402_eus-gaap--IncreaseDecreaseInAccountsPayable_i03_maCzUUB_z7E0Mkt1q92d" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt; text-align: left">Accounts payable</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsPayable" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">272,509</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_403_eus-gaap--IncreaseDecreaseInAccountsPayableRelatedParties_i03_pp0p0_maCzUUB_zd266zrjmQJj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0 0 0 20pt; text-align: left">Accounts payable &#8211; related party</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccountsPayableRelatedParties" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">9,273,010</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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<tr id="xdx_401_eus-gaap--IncreaseDecreaseInAccruedLiabilities_i03_maCzUUB_zPnyyVcbaEH6" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt; text-align: left">Accrued expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">112,525</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedLiabilities" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">37,854</ix:nonFraction></td><td style="text-align: left">)</td></tr>
<tr id="xdx_407_eus-gaap--IncreaseDecreaseInDeferredRevenue_i03_maCzUUB_zL7Z7IGRGj69" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0 0 0 20pt; text-align: left">Deferred revenue</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0512">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInDeferredRevenue" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">623,096</ix:nonFraction></td><td style="text-align: left">)</td></tr>
<tr id="xdx_404_eus-gaap--IncreaseDecreaseInAccruedTaxesPayable_i03_maCzUUB_zybESdNKfyL3" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt; text-align: left">Income tax accrual</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0515">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInAccruedTaxesPayable" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">756,078</ix:nonFraction></td><td style="text-align: left">)</td></tr>
<tr id="xdx_40A_ecustom--IncreaseDecreaseInCustomerRefundDue_i03N_di_msCzUUB_zeeaKLQ5Nt3e" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="kavl:IncreaseDecreaseInCustomerRefundDue" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">314,418</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0519">&#8212;</span></td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_401_eus-gaap--IncreaseDecreaseInOperatingLeaseLiability_i03_pp0p0_maCzUUB_zL7JTeMGDs8g" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt; text-align: left">Right of use liabilities &#8211; operating lease</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInOperatingLeaseLiability" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">6,345</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:IncreaseDecreaseInOperatingLeaseLiability" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">6,345</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr id="xdx_40E_eus-gaap--NetCashProvidedByUsedInOperatingActivities_iT_mtCzUUB_maCzIUI_zFUlci4NzVEh" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0 0 0 10pt; text-align: left">Net cash used in operating activities</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInOperatingActivities" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">4,604,571</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInOperatingActivities" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">5,203,059</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40C_eus-gaap--NetCashProvidedByUsedInFinancingActivitiesAbstract_iB_zLrpow8TwDxj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-decoration: underline; font-weight: bold; text-align: left">CASH FLOWS FROM FINANCING ACTIVITIES:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40A_eus-gaap--ProceedsFromWarrantExercises_i01_maCzbvd_z4XCefFmH6W4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Stock warrant exercises</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ProceedsFromWarrantExercises" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,566,190</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0531">&#8212;</span></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr id="xdx_40B_ecustom--SettledRsusWithCash_i01N_di_msCzbvd_zX6wD5Pu31Q9" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Settled RSUs with cash</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="kavl:SettledRsusWithCash" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">59,817</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="kavl:SettledRsusWithCash" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">77,975</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr id="xdx_40B_eus-gaap--NetCashProvidedByUsedInFinancingActivities_i01T_mtCzbvd_maCzIUI_z62XpLcQ807d" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Cash flows provided by (used in) financing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:NetCashProvidedByUsedInFinancingActivities" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,506,373</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInFinancingActivities" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">77,975</ix:nonFraction></td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_408_eus-gaap--CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseExcludingExchangeRateEffect_iT_mtCzIUI_zbKzhATRwebe" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Net change in cash and restricted cash</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseExcludingExchangeRateEffect" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">3,098,198</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left"></td><td style="text-align: right">(<ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseExcludingExchangeRateEffect" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">5,281,034</ix:nonFraction></td><td style="text-align: left">)</td></tr>
<tr id="xdx_408_eus-gaap--CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents_iS_zb2TS6YKzNt4" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Beginning cash and restricted cash balance</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,825,235</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2020-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,421,701</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr id="xdx_409_eus-gaap--CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents_iE_zx02SB50BgEi" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Ending cash and restricted cash balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">4,727,037</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,140,667</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40E_eus-gaap--SupplementalCashFlowInformationAbstract_iB_zNP2GRwmXrql" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-decoration: underline; font-weight: bold; text-align: left">SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr id="xdx_400_eus-gaap--InterestPaidNet_i01_zWflxAmDgh9e" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Interest paid</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 43.7pt"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these unaudited consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font: 10pt Times New Roman, Times, Serif"><b>KAIVAL
BRANDS INNOVATIONS GROUP, INC.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_005"></span>&#160;Notes
to Unaudited Consolidated Financial Statements</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:BusinessDescriptionAndBasisOfPresentationTextBlock"><p id="xdx_801_eus-gaap--BusinessDescriptionAndBasisOfPresentationTextBlock_zYbVsdPZ4RXi" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
1 &#8211; <span id="xdx_828_zrF5dXgrqxH3">Organization and Description of Business</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Kaival
Brands Innovations Group, Inc. (the &#8220;Company,&#8221; the &#8220;Registrant,&#8221; &#8220;we,&#8221; &#8220;us,&#8221; or &#8220;our&#8221;),
formerly known as Quick Start Holdings, Inc., was incorporated on September 4, 2018 in the State of Delaware.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Description
of Business</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is focused on growing and incubating innovative and profitable products into mature, dominant brands. In March 2020, the Company
commenced business operations as a result of becoming the exclusive distributor of certain ENDS and related components (the &#8220;Products&#8221;)
manufactured by Bidi, a related party company that is also owned by Nirajkumar Patel, the Chief Executive Officer of the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 9, 2020, the Company entered into an exclusive distribution agreement (the &#8220;Distribution Agreement&#8221;) with Bidi, which
Distribution Agreement was amended and restated on May 21, 2020 and again on April 20, 2021 (collectively, the &#8220;A&amp;R Distribution
Agreement&#8221;). Pursuant to the A&amp;R Distribution Agreement, Bidi granted the Company an exclusive worldwide right to distribute
the Products for sale and resale to both retail level customers and non-retail level customers.&#160;Currently, the Products consist
primarily of the &#8220;BIDI<sup>&#174;</sup> Stick.&#8221; The Company ceased all retail/direct-to-consumer sales in February 2021. Subsequent
to April 30, 2022, the Company entered into a third amended and restated exclusive distribution agreement (the &#8220;Third A&amp;R Distribution
Agreement&#8221;). For additional information, see Note 8, <i>Subsequent Events</i>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the A&amp;R Distribution Agreement, the Company entered into non-exclusive sub-distribution agreements, some of which
were subsequently amended and restated by the parties in order to clarify certain provisions (all such agreements, as amended and restated,
are collectively referred to as the &#8220;A&amp;R Sub-Distribution Agreements&#8221;), whereby the Company appointed the counterparties
as non-exclusive sub-distributors. Pursuant to the A&amp;R Sub-Distribution Agreements, the sub-distributors agreed to purchase for resale
the Products in such quantities as they should need to properly service non-retail customers within the continental United States (the
&#8220;Territory&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 31, 2020, the Company formed Kaival Labs, Inc., a Delaware corporation (herein referred to as &#8220;Kaival Labs&#8221;), as a
wholly owned subsidiary of the Company. On March 11,&#160;2022, the Company formed Kaival Brands International, LLC, a Delaware limited
liability company (herein referred to as &#8220;KBI&#8221;), as a wholly owned subsidiary of the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 16, 2021, the Company filed a Certificate of Amendment to the Restated Certificate of Incorporation, as amended, with the
Secretary of State of the State of Delaware to effect a 1-for-12 reverse stock split (the &#8220;Reverse Stock Split&#8221;) of the
shares of the Company&#8217;s common stock, par value $<span id="xdx_907_ecustom--CommonStockParOrStatedValuesPerShare_iI_c20220430_zjrdEeHS5pw3" title="Common stock, par value"><ix:nonFraction name="kavl:CommonStockParOrStatedValuesPerShare" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.001</ix:nonFraction></span>
per share (the &#8220;Common Stock&#8221;). The Reverse Stock Split was effective as of 12:01 a.m. Eastern time on July 20, 2021. No
fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares of Common Stock that would have
otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole number. In connection with the Reverse Stock
Split, the Board of Directors (the &#8220;Board&#8221;) approved appropriate and proportional adjustments to all outstanding
securities or other rights convertible or exercisable into shares of Common Stock, including, without limitation, all preferred
stock, warrants, options, and other equity compensation rights. All historical share and per-share amounts reflected throughout our
consolidated financial statements and other financial information in this Quarterly Report have been adjusted to reflect the Reverse
Stock Split as if the split occurred as of the earliest period presented. The par value per share of the Common Stock was not
affected by the Reverse Stock Split.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="padding: 0pt; width: 100%; text-indent: 0pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.8pt 0 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Current
                            Product Offerings</i></b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.8pt 0 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.8pt 0 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
    to the A&amp;R Distribution Agreement, the Company sells and resells electronic nicotine delivery systems, which it may refer to
    herein as &#8220;ENDS Products&#8221;, or &#8220;e-cigarettes&#8221;, to&#160;non-retail level customers. The sole Product the Company
    resells is the &#8220;BIDI<sup>&#174;</sup> Stick,&#8221; 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<sup>&#174;</sup> Stick
    is manufactured by Bidi. Pursuant to the terms of the A&amp;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.</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.8pt 0 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0.8pt 0 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">On
July 14, 2021, the Company announced plans to launch its first Kaival-branded product, a Hemp CBD product. In addition to its
branded formulation, the Company anticipates that it will also provide white label, wholesale solutions for other product manufacturers
through its subsidiary, Kaival Labs. The Company has not yet launched any branded product, nor has it begun to provide white label
wholesale solutions for other product manufacturers.</span>&#160;</p></td></tr>
  </table>
<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">COVID-19
Impact</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2020, the World Health Organization (the &#8220;WHO&#8221;) announced a global health emergency because of a new strain of coronavirus
(&#8220;COVID-19&#8221;) originating in Wuhan, China and the risks to the international community as the virus spread globally beyond
its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in global exposure.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s operations have not been directly impacted by COVID-19. However, we have encountered some logistical delays related
to product launches and distribution in international markets. The Company was also indirectly impacted by supply chain issues and
regulatory oversight. No impairments have been recorded and no triggering events or changes in circumstances had occurred. While the
spread of COVID-19 has slowed and social restrictions have been largely lifted, the full impact of the COVID-19 pandemic continues
to evolve and remains uncertain, particularly as new variants of the virus emerge. As such, the full magnitude of the COVID-19
pandemic, and the resulting impact, if any, on the Company&#8217;s financial condition, liquidity, and future results of operations
is uncertain.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Impact
of the FDA PMTA Decision</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of March 2022, the FDA announced that it has taken action on over 99% of applications and issued Marketing Denial Orders (&#8220;MDOs&#8221;)
for more than 1,167,000 non-tobacco flavored ENDS products, while issuing zero marketing authorizations for such products.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">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<sup>&#174;</sup> Sticks, including its Arctic (menthol) BIDI<sup>&#174;</sup> Stick. As a result, beginning in September 2021, Bidi
pursued multiple avenues to challenge the MDO.&#160;&#160;First, on September 21, 2021, separate from the judicial appeal of the MDO in
its entirety, Bidi filed a 21 C.F.R. &#167; 10.75 internal FDA review request specifically of the decision to include the Arctic (menthol)
BIDI<sup>&#174; </sup>Stick in the MDO. In May 2022, the FDA issued a determination that it views the Arctic BIDI<sup>&#174;</sup> Stick
as a flavored ENDS product.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On September 29, 2021, Bidi petitioned the U.S. Court
of Appeals for the Eleventh Circuit to review the FDA&#8217;s denial of the PMTAs for its non-tobacco flavored BIDI<sup>&#174;</sup> Stick
ENDS, arguing that it was arbitrary and capricious under the Administrative Procedure Act (&#8220;APA&#8221;), as well as <i>ultra vires</i>,
for the FDA not to conduct any scientific review of Bidi&#8217;s comprehensive applications, as required by the Tobacco Control Act (&#8220;TCA&#8221;),
to determine whether the BIDI<sup>&#174;</sup> Sticks are &#8220;appropriate for the protection of the public health&#8221;. Bidi further
argued that the FDA violated due process and the APA by failing to provide fair notice of the FDA&#8217;s new requirement for ENDS companies
to conduct long-term comparative smoking cessation studies for their flavored products.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finally,
on October 14, 2021, Bidi requested that the FDA re-review the MDO and reconsider its position that Bidi did not include certain scientific
data in its applications sufficient to allow the PMTAs to proceed to scientific review. In light of this request, on October 22, 2021,
pursuant to 21 C.F.R. &#167; 10.35(a), the FDA issued an administrative stay of Bidi&#8217;s MDO pending its re-review. Subsequently,
the FDA lifted its administrative stay on December 17, 2021. Following the lifting of the FDA&#8217;s administrative stay, Bidi filed
a renewed motion to stay the MDO with the U.S. Court of Appeals for the Eleventh Circuit, which was granted on February 1, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 1, 2022, the U.S. Court of Appeals for
the Eleventh Circuit granted Bidi&#8217;s motion to stay (<i>i.e.,</i> put on hold) the MDO, pending the litigation on the merits. The
court-ordered stay means that the MDO is not legally in force. Accordingly, we anticipate being able to continue marketing and selling
the Products, subject to the FDA&#8217;s enforcement discretion, while Bidi continues with its merits case challenging the legality of
the MDO. The FDA has indicated that it is prioritizing enforcement against companies that have not submitted PMTAs, whose PMTAs have been
refused acceptance or filing by the FDA, or whose PMTAs remain subject to MDOs. Oral arguments in the merits-based proceeding were held
on May 17, 2022.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the event that the U.S. Court of Appeals for the Eleventh Circuit issues a ruling adverse to Bidi, or if the FDA otherwise chooses to
enforce the MDO against Bidi, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI<sup>&#174;</sup> Stick
products in the United States, thereby resulting in the Company being unable to distribute such products, and the Company&#8217;s business
and financial condition would be materially adversely affected. The Company cannot provide any assurances as to the timing or outcome
of the merits-based case.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p id="xdx_805_eus-gaap--SignificantAccountingPoliciesTextBlock_zU16LxT786Bl" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
2 &#8211; <span id="xdx_824_ztQ5hFViU3g9">Basis of Presentation and Significant Accounting Policies</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:ConsolidationPolicyTextBlock"><p id="xdx_849_eus-gaap--ConsolidationPolicyTextBlock_z1zjgWhQVOMc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="xdx_86D_zWYHZucRj3E4">Principles
of Consolidation</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
consolidated financial statements include the financial statements of the Company&#8217;s wholly-owned subsidiaries, Kaival Labs, Inc.
and Kaival Brands International, LLC. Intercompany transactions are eliminated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:BasisOfAccountingPolicyPolicyTextBlock"><p id="xdx_84D_eus-gaap--BasisOfAccountingPolicyPolicyTextBlock_zRBOcMD6Ywda" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="xdx_86C_znpOj3evFGY5">Basis
of Presentation</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 (&#8220;GAAP&#8221;) and the rules of the Securities and Exchange Commission (&#8220;SEC&#8221;)
and should be read in conjunction with the audited financial statements and notes thereto contained in the Company&#8217;s most recent
Annual Financial Statements filed with the SEC on Annual Report on Form 10-K on February 16, 2022 (the &#8220;2021 Annual Report&#8221;).
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations for the interim period presented have been reflected herein. The results of operations for the
interim period are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements,
which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period,
as reported in the 2021 Annual Report have been omitted.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<ix:exclude><p id="xdx_234_z52ypSMQyiQd" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p></ix:exclude>

<ix:exclude><!-- Field: Page; Sequence: 11 -->
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<ix:exclude><p id="xdx_231_z6f64wSqpYSi" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p></ix:exclude>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:UseOfEstimates"><p id="xdx_84C_eus-gaap--UseOfEstimates_zKdj8zOTPpdk" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="xdx_869_zRCZgCjGsNGb">Use
of Estimates</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock"><p id="xdx_843_eus-gaap--CashAndCashEquivalentsPolicyTextBlock_z2XCPbO3VbF7" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="xdx_86E_zVaWKLenkZak">Cash
and Restricted Cash</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
There were no cash equivalents at April 30, 2022 and October 31, 2021. Cash and restricted cash at April 30, 2022 and October 31, 2021
were $<span id="xdx_90A_eus-gaap--CashAndCashEquivalentsAtCarryingValue_c20220430_pp0p0" title="Cash and cash equivalents"><ix:nonFraction name="us-gaap:CashAndCashEquivalentsAtCarryingValue" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,727,037</ix:nonFraction></span> and $<span id="xdx_909_eus-gaap--CashAndCashEquivalentsAtCarryingValue_c20211031_pp0p0" title="Cash and cash equivalents"><ix:nonFraction name="us-gaap:CashAndCashEquivalentsAtCarryingValue" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,825,235</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Restricted
cash consists of cash held in short-term&#160;escrow as required. As of April 30, 2022, and October 31, 2021, the Company had $<span id="xdx_908_eus-gaap--RestrictedCash_c20220430_pp0p0" title="Restricted cash"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">65,542</ix:nonFraction></span>
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in restricted cash, respectively, for amounts held in escrow.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth a reconciliation of cash, and restricted cash reported in the consolidated balance sheet and the consolidated
statements of cash flows that agrees to the total of those amounts presented in the consolidated statements of cash flows.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:ScheduleOfRestrictedCashAndCashEquivalentsTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_89A_eus-gaap--ScheduleOfRestrictedCashAndCashEquivalentsTextBlock_zfl5ES7Ft2Zj" summary="xdx: Disclosure - Basis of Presentation and Significant Accounting Policies (Details - Restricted on Cash)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-top: 0; padding-right: 0"><span id="xdx_8B3_zRBZmmeHicG4" style="display: none">Restrictions on Cash and Cash Equivalents</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_490_20220430_z9BxbgiLrw6i" style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_495_20211031_z9dCPhHuRK69" style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><p style="margin-top: 0; margin-bottom: 0">April 30,</p>
                                                                  <p style="margin-top: 0; margin-bottom: 0">2022</p></td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">October 31, 2021</td></tr>
<tr id="xdx_400_eus-gaap--Cash_iI_pp0p0_maCCERCzukr_zomyXRS0ukGf" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 56%">Cash</td><td style="width: 8%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:Cash" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,661,495</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 8%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:Cash" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,760,228</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
<tr id="xdx_40C_eus-gaap--RestrictedCash_iI_pp0p0_maCCERCzukr_zVt2Mj5LV133" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Restricted cash</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">65,542</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">65,007</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr id="xdx_407_eus-gaap--RestrictedCashAndCashEquivalents_iTI_pp0p0_mtCCERCzukr_z3GnubH8Gkt5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Total cash and restricted cash shown in statement of cash flows</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="us-gaap:RestrictedCashAndCashEquivalents" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,727,037</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction name="us-gaap:RestrictedCashAndCashEquivalents" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,825,235</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
</table>




</ix:nonNumeric><p id="xdx_8A8_zZjScqMjeID4" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:AdvertisingCostsPolicyTextBlock"><p id="xdx_848_eus-gaap--AdvertisingCostsPolicyTextBlock_zZHHMP6l8Nrl" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_862_zsRF0lAyNdrf">Advertising
and Promotion</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
advertising, promotion and marketing expenses, including commissions, are expensed when incurred.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:ReceivablesPolicyTextBlock"><p id="xdx_843_eus-gaap--ReceivablesPolicyTextBlock_zgui6NquQSp4" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86E_zOwSiVZlC47">Accounts
Receivable and Allowance for Doubtful Accounts</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Receivables
are stated at cost, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on management&#8217;s
assessment of the collectability of accounts receivables. A considerable amount of judgment is required in assessing the amount of the
allowance and the Company considers the historical level of credit losses and collection history and applies percentages to aged receivable
categories. The Company makes judgments about the creditworthiness of debtors based on ongoing credit evaluations and monitors current
economic trends that might impact the level of credit losses in the future. If the financial condition of the debtors were to deteriorate,
resulting in their inability to make payments, a larger allowance may be required. As of April 30, 2022, based upon management&#8217;s
assessment of the accounts receivable aging and the customers&#8217; payment history, the Company has determined that no allowance for
doubtful accounts was required. As of October 31, 2021, the Company also determined that <span id="xdx_905_eus-gaap--AllowanceForDoubtfulAccountsReceivableCurrent_iI_pp0p0_do_c20211031_zeXtVMQUhZ0h" title="Allowance for doubtful accounts"><ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivableCurrent" contextRef="AsOf2021-10-31" format="ixt-sec:numwordsen" decimals="0" scale="0" unitRef="USD">no</ix:nonFraction></span> allowance for doubtful accounts was required.&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:InventoryPolicyTextBlock"><p id="xdx_845_eus-gaap--InventoryPolicyTextBlock_zRJuyAXNNJX9" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86B_z91a5EYWqmme">Inventories</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
are stated at the lower of cost and net realizable value. Cost includes all costs of purchase and other costs incurred in bringing the
inventories to their present location and condition. The Company determines cost based on the FIFO method. Net realizable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to
make the sale. All inventories (i) were purchased from Bidi, a related party, as of October 31, 2021 and April 30, 2022, (ii) only consisted
of finished goods, (iii) were significant, and (iv) were located in three storage warehouses: (1) the primary leased warehouse, which
is owned by a related party, Just Pick, LLC (&#8220;Just Pick&#8221;), (2) a customer/sub distributor warehouse, which is owned by Favs
Business LLC (&#8220;Favs Business&#8221;), and (3) a third-party logistics services warehouse, which is owned by Ranger Enterprises,
LLC (&#8220;Ranger&#8221;). Based upon fiscal year 2021 inventory management procedures and their results, that have continued through
the quarter ended April 30, 2022, the Company has determined that no allowance for the inventory valuation was required at April 30,
2022, nor October 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="kavl:InventoryDepositRelatedPartyPolicyTextBlock"><p id="xdx_84F_ecustom--InventoryDepositRelatedPartyPolicyTextBlock_zfAzO7mV9QUh" style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0pt"><span id="xdx_86F_zG6qob70u5Uk" style="font-family: Times New Roman, Times, Serif; font-size: 9pt"><b>Inventory
deposit related party</b></span></p>

<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 7.6pt 0 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 9pt"><b></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin-right: 0; margin-left: 0">In the fourth quarter of fiscal
2021, the Company placed an order for BIDI<sup>&#174;</sup> Sticks in anticipation of the distribution launch in the United Kingdom. In
connection with this order, the Company paid $2,925,000 from its capital financing raise to Bidi, a related party, in advance to have
the BIDI<sup>&#174;</sup> Sticks manufactured in compliance with the regulatory product requirements in the United Kingdom, which differs
from the regulatory product requirements in the United States. The parties originally contemplated that delivery of the BIDI<sup>&#174;
</sup>Sticks to the Company would occur by the end of April 2022. On April 29, 2022, the Company and Bidi agreed to cancel the order due
to an internal change of approach to international distribution, and Bidi agreed to credit the $<span id="xdx_909_eus-gaap--AccountsPayableOtherCurrent_iI_c20220429_zAMasQE8WLM" title="Accounts payable"><ix:nonFraction name="us-gaap:AccountsPayableOtherCurrent" contextRef="AsOf2022-04-29" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,925,000</ix:nonFraction></span> against the accounts payable
balance owed by the Company to Bidi. As of April 30, 2022, the Company has on its balance sheet a zero balance for inventory deposits
and inventory deposits related party.&#160;</p>
<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 7.6pt 0 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 9pt"><b></b></span><span style="font-family: Calibri, Helvetica, Sans-Serif; font-size: 8pt">&#160;&#160;&#160;</span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<ix:exclude><p id="xdx_238_zgCD31koIg55" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p></ix:exclude>

<ix:exclude><!-- Field: Page; Sequence: 12 -->
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<ix:exclude><p id="xdx_238_zx9hoUEIUdE7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p></ix:exclude>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:RevenueRecognitionPolicyTextBlock"><p id="xdx_841_eus-gaap--RevenueRecognitionPolicyTextBlock_zgnK2NCzV23d" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86B_zdFvBUSx2Hlh">Revenue
Recognition</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company adopted ASC 606, <i>Revenue from Contracts with Customers</i> (Topic 606) (&#8220;ASC 606&#8221;), in the second quarter of fiscal
year 2020, as this was the first quarter that the Company generated revenues. Under ASC 606, the Company recognizes revenue when a customer
obtains control of promised goods, in an amount that reflects the consideration that the Company expects to receive in exchange for the
goods. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps:
(1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price;
(4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies
a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect
the consideration it is entitled to in exchange for the goods it transfers to the customer. Under ASC 606, disaggregated revenue from
contracts with customers depicts the nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors.
On October 31, 2021, the Company and one of its customers, Favs Business, entered into a Consignment Agreement. As of October 31, 2021,
the value of the Products stored at Favs Business under the Consignment Agreement was approximately $<span id="xdx_902_ecustom--ConsignmentAgreementAmount_iI_c20211031_z3roO77ZW9Ck" title="Consignment agreement amount"><ix:nonFraction name="kavl:ConsignmentAgreementAmount" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,556,930</ix:nonFraction></span>. As of April 30, 2022,
the value of the Products stored at Favs Business under the Consignment Agreement was approximately $<span id="xdx_90B_ecustom--ConsignmentAgreementAmount_iI_c20220430_zIXp2A0eCRdl"><ix:nonFraction name="kavl:ConsignmentAgreementAmount" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,433,730</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="kavl:DeferredRevenuePolicyTextBlock"><p id="xdx_841_ecustom--DeferredRevenuePolicyTextBlock_zDxlbN4KEyh4" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_862_z6bKNLEx78k3">Deferred
Revenue</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company accepts partial payments for orders from wholesale customers, which it holds as deposits or deferred revenue, until the Company
has received full payment and orders are shipped to the customer. Revenue for these orders is recognized at time of shipment to the customer.
As of April 30, 2022, the Company had received $<span id="xdx_905_eus-gaap--ContractWithCustomerLiabilityCurrent_iI_c20220430_zvlbSyEM6VS7" title="Deposits"><ix:nonFraction name="us-gaap:ContractWithCustomerLiabilityCurrent" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,382</ix:nonFraction></span> in deposits from customers, included with the Company&#8217;s current liabilities.
As of October 31, 2021, the Company had not received any deposits from customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:UtilityRevenueAndExpenseRecognitionPolicy"><p id="xdx_840_eus-gaap--UtilityRevenueAndExpenseRecognitionPolicy_z9KpYG7SisPj" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_868_zGcHczq5deHk">Customer
Refunds</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company infrequently has a need to adjust the size of an order after it has been shipped, received, and paid for, due to the customer
oversizing the order for more product that it can realistically sell at that time. If and when this occurs, the Company will ask the
customer to return the over allotted Products. Once received and inspected, the Company will issue a refund for the Product return. As
of April 30, 2022 and October 31, 2021, the Company had customer refunds due in the amounts equal to approximately $<span id="xdx_906_ecustom--RefundsDueAmounts_iI_c20220430_z55XW59zX1s5" title="Refunds due amounts"><ix:nonFraction name="kavl:RefundsDueAmounts" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">0</ix:nonFraction></span> and $<span id="xdx_909_ecustom--RefundsDueAmounts_iI_c20211031_zRfDtupl78G1"><ix:nonFraction name="kavl:RefundsDueAmounts" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">316,800</ix:nonFraction></span>, respectively,
which refund was the result of one of the Company&#8217;s sub-distributor customers returning Products that had become defective in storage.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="kavl:ProductsRevenuePoliciesTextBlock"><p id="xdx_84A_ecustom--ProductsRevenuePoliciesTextBlock_zO0Hz3CY9842" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86A_zr8K39zM9EO9">Products
Revenue</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company generates revenue from the sale of the Products (as defined above) to non-retail customers. The Company recognizes revenue at
a point in time based on management&#8217;s evaluation of when performance obligations under the terms of a contract with the customer
are satisfied and control of the Products has been transferred to the customer. In most situations, transfer of control is considered
complete when the Products have been shipped to the customer. The Company determines that a customer obtains control of the Product upon
shipment when title of such product and risk of loss transfer to the customer. The Company&#8217;s shipping and handling costs are fulfillment
costs and such amounts are classified as part of cost of sales. The Company&#8217;s sales arrangements for retail sales usually require
full prepayment before delivery of the Products. The advance payment is not considered a significant financing component because the
period between when the Company transfers a promised good to a customer and when the customer pays for that good is short. The Company
offers credit sales arrangements to non-retail (or wholesale) customers and monitors the collectability of each credit sale routinely.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amounts
billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the
passage of time related to credit terms is required before payments are due. The Company does not grant payment financing terms greater
than one year. Payments received in advance of revenue recognition are recorded as deferred revenue.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="kavl:ConcentrationOfRevenuesAndAccountsReceivablePolicyTextBlock"><p id="xdx_849_ecustom--ConcentrationOfRevenuesAndAccountsReceivablePolicyTextBlock_zkZuTxLfRB44" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span id="xdx_867_z5q8ZX1tlhIi">Concentration
of Revenues and Accounts Receivable</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the six months ended April 30, 2022, approximately 40%, or $<span id="xdx_90C_eus-gaap--RevenueNotFromContractWithCustomerOther_c20211101__20220430_zPpytimg5cx3"><ix:nonFraction name="us-gaap:RevenueNotFromContractWithCustomerOther" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,366,200</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">,
of the revenue from the sale of Products was generated from Favs Business, and approximately 15%, or $<span id="xdx_90B_ecustom--RevenueFromSale_c20211101__20220430_z90FefBosnHa"><ix:nonFraction name="kavl:RevenueFromSale" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">877,264</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">,
of the revenue from the sale of Products was generated from The H.T. Hackney Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Favs Business had an outstanding balance of approximately
$<span id="xdx_900_ecustom--OutstandingBalance_c20211101__20220430__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--RelatedPartyTransactionAxis__custom--FavsMember_zrHHHlQx5pCe" title="Outstanding balance"><ix:nonFraction name="kavl:OutstandingBalance" contextRef="From2021-11-012022-04-30_us-gaap_AccountsReceivableMember_custom_FavsMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">305,430</ix:nonFraction></span>, which accounted for approximately 26% of the Company&#8217;s total accounts receivable from customers as of April 30, 2022.
The H.T. Hackney Company had an outstanding balance of approximately $<span id="xdx_90B_ecustom--OutstandingBalance_c20211101__20220430__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--RelatedPartyTransactionAxis__custom--HackneyMember_zaHxIn9bPtQg"><ix:nonFraction name="kavl:OutstandingBalance" contextRef="From2021-11-012022-04-30_us-gaap_AccountsReceivableMember_custom_HackneyMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">297,629</ix:nonFraction></span>, which accounted for approximately 25% of the Company&#8217;s
total accounts receivable from customers as of April 30, 2022.&#160; Grocery Supply Warehouse had an outstanding balance of $<span id="xdx_903_ecustom--OutstandingBalance_c20211101__20220430__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--RelatedPartyTransactionAxis__srt--WarehouseMember_z8mpeiqEGuK"><ix:nonFraction name="kavl:OutstandingBalance" contextRef="From2021-11-012022-04-30_us-gaap_AccountsReceivableMember_srt_WarehouseMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">163,163</ix:nonFraction></span>,
which accounting for approximately 14% of the Company&#8217;s total accounts receivable from customers as of April 30, 2022. Finally,
MMS Distribution, LLC (&#8220;MMS Distro&#8221;) had an outstanding balance of approximately $<span id="xdx_906_ecustom--OutstandingBalance_c20211101__20220430__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember__us-gaap--RelatedPartyTransactionAxis__custom--MMSDistroMember_zae36V6NYbXf"><ix:nonFraction name="kavl:OutstandingBalance" contextRef="From2021-11-012022-04-30_us-gaap_AccountsReceivableMember_custom_MMSDistroMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">116,444</ix:nonFraction></span>, which accounted for approximately
10% of the Company&#8217;s total accounts receivable from customers as of April 30, 2022.&#160;&#160;&#160;&#160;&#160;</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the six months ended April 30, 2021, approximately 33%, or $<span id="xdx_90C_eus-gaap--RevenueNotFromContractWithCustomerOther_c20201101__20210430_z3dbJ8xnSjTd"><ix:nonFraction name="us-gaap:RevenueNotFromContractWithCustomerOther" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">18,129,136</ix:nonFraction></span>, of the revenue from the sale of Products was generated from Favs
Business, approximately 16%, or $<span id="xdx_90B_ecustom--RevenueFromSale_c20201101__20210430_zmOLtIK1d7B9"><ix:nonFraction name="kavl:RevenueFromSale" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">9,069,455</ix:nonFraction></span>, of the revenue from the sale of Products was generated from MMS
Distro, and approximately 12%, or $<span id="xdx_900_ecustom--RevenueFromSale_c20201101__20210430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MMSDistributionMember_z2vdJ9kMsWli"><ix:nonFraction name="kavl:RevenueFromSale" contextRef="From2020-11-012021-04-30_custom_MMSDistributionMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">6,820,132</ix:nonFraction></span>, of the revenue from the sale of Products was generated from C Store Master (&#8220;C
Store Master&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Favs
Business, with an outstanding balance of approximately $<span id="xdx_90F_eus-gaap--RevenueNotFromContractWithCustomerOther_c20201101__20210430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--GPMInvestmentLLCMember_zjmIC7YvAvfk"><ix:nonFraction name="us-gaap:RevenueNotFromContractWithCustomerOther" contextRef="From2020-11-012021-04-30_custom_GPMInvestmentLLCMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">8,590,200</ix:nonFraction></span>, and GPM Investment, LLC, with an outstanding balance of approximately
$<span id="xdx_90C_ecustom--RevenueFromSale_c20201101__20210430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--GPMInvestmentLLCMember_z75MxDejyDU4"><ix:nonFraction name="kavl:RevenueFromSale" contextRef="From2020-11-012021-04-30_custom_GPMInvestmentLLCMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,482,553</ix:nonFraction></span>, accounted for approximately 47% and 14% of the total accounts receivable from customers, respectively, as of April 30, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<ix:exclude><p id="xdx_230_zfgSAJSuUlz5" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p></ix:exclude>

<ix:exclude><!-- Field: Page; Sequence: 13 -->
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<ix:exclude><p id="xdx_233_zjJPX0TiNyD7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p></ix:exclude>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy"><p id="xdx_84A_eus-gaap--ShareBasedCompensationOptionAndIncentivePlansPolicy_zxz9ZaAUc9wk" style="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="xdx_86A_zUt6nC6x4sbj">Share-Based
Compensation</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company measures the cost of services received in exchange for an award of equity instruments (share-based payments, or SBP) based on
the grant-date fair value of the award. That cost is recognized over the period during which a recipient is required to provide service
in exchange for the SBP award&#8212;the requisite service period (vesting period). For SBP awards subject to conditions, compensation
is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated
using the Black-Scholes-Merton option-pricing model. Compensation expense for SBP awards granted to nonemployees is remeasured each period
as the underlying options vest.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair value of each option granted during the fiscal six-month period ended April 30, 2022 and at October 31, 2021 was estimated on the
date of grant using the Black-Scholes-Merton option-pricing model with the weighted average assumptions in the following table:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

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<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span id="xdx_8BF_z3YpHiNtsp4d" style="display: none">Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 56%; text-align: left">Expected dividend yield</td><td style="width: 8%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right"><span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate_dp_c20201101__20210430_zdwzj1MeUdr8" title="Expected dividend yield"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate" contextRef="From2020-11-012021-04-30" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0</ix:nonFraction></span></td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Expected option term (years)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90C_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1_dtY_c20211101__20220430_z6lg327NOFC3" title="Expected option term (years)"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1">10</ix:nonNumeric></span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_909_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1_dtY_c20201101__20210430_zsuzw3SGbbcf" title="Expected option term (years)"><ix:nonNumeric contextRef="From2020-11-012021-04-30" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1">10</ix:nonNumeric></span></td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 29.15pt; background-color: white"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected volatility
was based on the volatility in the trading of the Common Stock. The assumed discount rate was the default risk-free ten-year interest
rate for U.S. Treasury bills. The Company&#8217;s stock option expense for the fiscal three and six months ended April 30, 2022 was $<span id="xdx_90F_ecustom--StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpenses_pp0p0_c20220201__20220430_zZaRL6n4B1yk"><ix:nonFraction name="kavl:StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpenses" contextRef="From2022-02-012022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,616,193</ix:nonFraction>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">and $<span id="xdx_901_ecustom--StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpenses_pp0p0_c20210201__20210430_zwpBU6gkiTjc"><ix:nonFraction name="kavl:StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpenses" contextRef="From2021-02-012021-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,925,892</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">,
respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s stock-based compensation for the fiscal three and six months ended April 30, 2022 was $<span id="xdx_908_eus-gaap--ShareBasedCompensation_pp0p0_c20220201__20220430_ziyAtCWYhGz2"><ix:nonFraction name="us-gaap:ShareBasedCompensation" contextRef="From2022-02-012022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">110,189</ix:nonFraction>
</span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">and $<span id="xdx_90F_eus-gaap--ShareBasedCompensation_pp0p0_c20210201__20210430_zIBhX3I85UY6"><ix:nonFraction name="us-gaap:ShareBasedCompensation" contextRef="From2021-02-012021-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">190,416</ix:nonFraction></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">,
respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_844_eus-gaap--IncomeTaxPolicyTextBlock_zfd90bfZ5v44" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_zXTPyAOuQo34">Income
Tax</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Income
taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and
income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating
losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. The
Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments
that will result in a material adverse effect on the Company&#8217;s financial condition, results of operations, or cash flow.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has Federal net operating loss (&#8220;NOL&#8221;) carryforwards of approximately $<span id="xdx_900_eus-gaap--OperatingIncomeLoss_c20211101__20220430_pp0p0" title="Net operating loss"><ix:nonFraction name="us-gaap:OperatingIncomeLoss" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,000,000</ix:nonFraction></span> and state NOL carryforwards of approximately
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federal and state tax returns for the 2018 and 2019 tax years generally remain subject to examination by U.S. and various state authorities.
A valuation allowance is recorded to reduce the deferred tax asset if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax asset will not be realized. After evaluation of the evidence, management determined that
a valuation allowance of approximately $<span id="xdx_901_eus-gaap--ValuationAllowanceDeferredTaxAssetChangeInAmount_c20211101__20220430_pp0p0" title="Valuation allowance"><ix:nonFraction name="us-gaap:ValuationAllowanceDeferredTaxAssetChangeInAmount" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,256,059</ix:nonFraction></span> for the year ended on October 31, 2021, and the fiscal six-month period ended April
30, 2022, is necessary to reduce the deferred tax asset to the amount that will more likely than not be realized pursuant to ASU 2019-12,
<i>Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes</i>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has completed its federal and state tax
returns for the 2020 tax year and intends on filing them shortly. Given the federal and state NOLs, the Company anticipates that its 2020
tax returns will report that it is eligible to apply those NOLs against the federal and state taxes it paid in 2019. The Company anticipates
federal and state tax refunds of approximately $<span id="xdx_909_eus-gaap--CurrentFederalTaxExpenseBenefit_c20211101__20220430_zw47AqBR4Bld"><ix:nonFraction name="us-gaap:CurrentFederalTaxExpenseBenefit" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,600,000</ix:nonFraction></span> and $<span id="xdx_90E_eus-gaap--CurrentStateAndLocalTaxExpenseBenefit_c20211101__20220430_z4c5EXIsSbg3"><ix:nonFraction name="us-gaap:CurrentStateAndLocalTaxExpenseBenefit" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">146,000</ix:nonFraction></span>, respectively, and expects to collect the refunds in the current
fiscal year.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the six months ended April 30, 2022, the Company
generated no taxable income and, thus, no federal or state income taxes are accrued for fiscal year 2022.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:FairValueOfFinancialInstrumentsPolicy"><p id="xdx_84F_eus-gaap--FairValueOfFinancialInstrumentsPolicy_zlN0qNewVnpg" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_864_zEAvNHyJTyb4">Fair
Value of Financial Instruments</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ASC
820,&#160;<i>Fair Value Measurements and Disclosures</i> (&#8220;ASC 820&#8221;), defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy
that distinguishes between (1)&#160;market participant assumptions developed based on market data obtained from independent sources (observable
inputs) and (2)&#160;an entity&#8217;s own assumptions about market participant assumptions developed based on the best information available
in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). The three levels of the fair value hierarchy are described below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<ix:exclude><p id="xdx_234_zkNuCi6FvCG8" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p></ix:exclude>

<ix:exclude><!-- Field: Page; Sequence: 14 -->
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<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
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    1 &#8211; Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets
    or liabilities.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
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    <td style="padding: 0pt; width: 95%; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
    2 &#8211; 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
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fair
value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of April
30, 2022. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term
nature of these instruments. These financial instruments include cash, restricted cash, accounts receivable, inventory, accounts payable
and accrued expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p id="xdx_847_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_zjnOllgBy82a" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_864_zPUyG406CXG1">Recent
Accounting Pronouncements</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted,
would have a material effect on the accompanying financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric></ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:SubstantialDoubtAboutGoingConcernTextBlock"><p id="xdx_801_eus-gaap--SubstantialDoubtAboutGoingConcernTextBlock_zJ5KRnAVypie" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
3 &#8211; <span id="xdx_828_z9mGZUSd1681">Going Concern</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In February 2022, the U.S. Court of Appeals for the
Eleventh Circuit granted Bidi a judicial stay of the MDO previously issued by the FDA. The ruling means that the MDO is not legally in
force pending the outcome of litigation on the merits of Bidi&#8217;s challenge to the MDO. Accordingly, we anticipate being able to continue
marketing and selling the Products, subject to the FDA&#8217;s enforcement discretion, while Bidi continues with its merits case challenging
the legality of the MDO. The FDA has indicated that it is prioritizing enforcement against companies that have not submitted PMTAs, whose
PMTAs have been refused acceptance or filing by the FDA, or whose PMTAs remain subject to MDOs. Oral arguments in the merits case were
held on May 17, 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">If the U.S. Court of Appeals for the Eleventh Circuit
rules in Bidi&#8217;s favor in the merits case, the Company anticipates that the FDA will be compelled to place the non-tobacco flavored
ENDS back into the PMTA scientific review process. If this is the outcome of the merits case, the Company anticipates being able to continue
marketing and selling the Products, subject to the FDA&#8217;s enforcement discretion, until the scientific review process is complete
on each of Bidi&#8217;s PMTA for non-tobacco flavored ENDS and the FDA issues its decision on each.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">If the U.S. Court of Appeals for the Eleventh Circuit
does not rule in Bidi&#8217;s favor on the merits case, if the FDA re-issues the MDO after completing its scientific review process for
each of Bidi&#8217;s PMTAs for its non-tobacco flavored ENDS, or if the FDA otherwise chooses to enforce the MDO against Bidi, the Company
will be forced to cease sales of the non-tobacco flavored BIDI<sup>&#174;</sup> Sticks in the United States market, leaving only the Tobacco
(Classic) BIDI<sup>&#174;</sup> Sticks for sale in the United States. If this is the outcome of the merits case, this combined with a
negative cash flow from operations, raises substantial doubt on our ability to continue as a going concern.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management plans to continue similar operations with
increased marketing, which the Company believes will result in increased revenue and net income. Further, after the end of the three and
six months ended April 30, 2022, the Company&#8217;s wholly owned subsidiary, KBI, entered into an international licensing agreement with
PMPSA, which the Company expects will generate additional revenues. However, there is no assurance that management&#8217;s plan will be
successful due to the current economic climate in the United States and globally.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets,
or the amounts and classification of liabilities that might be necessary in the event that we cannot continue as a going concern.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:LesseeOperatingLeasesTextBlock"><p id="xdx_807_eus-gaap--LesseeOperatingLeasesTextBlock_z5erIJuQlur6" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
4 &#8211; <span id="xdx_820_zRBdvCgNNwpa">Leases</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company capitalizes all leased assets pursuant to ASU 2016-02, <i>Leases (Topic 842)</i> (&#8220;Topic 842&#8221;), which requires lessees
to recognize right-of-use (&#8220;ROU&#8221;) assets and lease liability, initially measured at present value of the lease payments,
on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. The Company
excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent
expense on a straight-line basis over the lease term. The Company adopted the standard in the fourth quarter of fiscal year 2020. The
adoption of Topic 842 did not have any impact on the Company&#8217;s previously reported financial statements in any prior period nor
did it result in a cumulative effect adjustment to retained earnings. <span style="color: #3C4043">T</span>he Company does not have financing
leases and only one operating lease for office space, with a related party. Certain of the Company&#8217;s leases include renewal options
and have not been included in the calculation of the lease liabilities and right of use assets as the Company is not reasonably certain
to exercise the option.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Office
Space</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 1, 2020, the Company began leasing office space for its main corporate office in Grant, Florida. The five-year lease
agreement is with a related party, Just Pick. The Company&#8217;s Chief Executive Officer is an officer of Just Pick. Prior to this,
the Company utilized the home office space and warehouse of its management at no cost through July 31, 2020. The operating lease is
for a term of five <span id="xdx_909_eus-gaap--LesseeOperatingLeaseTermOfContract_iI_dtY_c20220430_zUprmwYqOqQb" title="Lease term" style="display: none"><ix:nonNumeric contextRef="AsOf2022-04-30" format="ixt-sec:duryear" name="us-gaap:LesseeOperatingLeaseTermOfContract">5</ix:nonNumeric></span> years, beginning August 1, 2020, with rent of $<span id="xdx_908_eus-gaap--PaymentsForRent_c20211101__20220430_pp0p0" title="Rent per month"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,000</ix:nonFraction></span> payable monthly. As the operating lease does not provide
for an implicit interest rate, we estimated a current borrowing rate of <span id="xdx_908_eus-gaap--LesseeOperatingLeaseDiscountRate_iI_dp_c20220430_zIX7e2N3IHJh" title="Current borrowing rate"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseDiscountRate" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4.5</ix:nonFraction></span>% in determining the present value of the
lease.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of April 30, 2022 and October 31, 2021, the ROU lease asset, net of accumulated amortization, was approximately $<span id="xdx_903_eus-gaap--OperatingLeaseRightOfUseAsset_c20220430_pp0p0" title="Right to use lease asset"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">48,299</ix:nonFraction></span>
and $<span id="xdx_900_eus-gaap--OperatingLeaseRightOfUseAsset_c20211031_pp0p0" title="Right to use lease asset"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">55,604</ix:nonFraction></span>,
respectively. The initial recognition of the ROU operating lease was approximately $<span id="xdx_907_ecustom--RecognitionOfRouOperatingLease_pp0p0_c20211101__20220430_zhVAqoKMIrG4" title="Recognition of ROU operating lease"><ix:nonFraction name="kavl:RecognitionOfRouOperatingLease" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">73,749</ix:nonFraction></span>
for both the ROU asset and ROU liability. The amortization expense for ROU asset for the twelve months ended October 31, 2021 was
approximately $<span id="xdx_90C_ecustom--RecognitionOfRouLiability_pp0p0_c20201101__20211031_zmVNsFiRXSO4" title="Recognition of ROU liability"><ix:nonFraction name="kavl:RecognitionOfRouLiability" contextRef="From2020-11-012021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">14,529</ix:nonFraction></span>
and no payments were made on the ROU liability. The amortization expense for the ROU asset for the six months ended April 30, 2022
was approximately $<span id="xdx_901_eus-gaap--OperatingLeaseRightOfUseAssetAmortizationExpense_c20211101__20220430_pp0p0" title="Amortization expense for right to use asset"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAssetAmortizationExpense" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,305</ix:nonFraction></span>
and resulted in a change in the ROU liability. At October 31, 2021, short-term ROU lease liability was approximately $<span id="xdx_900_eus-gaap--OperatingLeaseLiabilityCurrent_c20211031_pp0p0" title="Short-term ROU lease liability"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,020</ix:nonFraction></span>
and long-term liability was approximately $<span id="xdx_90E_eus-gaap--OperatingLeaseLiabilityNoncurrent_c20211031_pp0p0" title="Long term lease liability"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">46,185</ix:nonFraction></span>,
totaling approximately $<span id="xdx_908_ecustom--OperatingLeasesLiability_pp0p0_c20211031_zDxcLXBo87T1" title="Lease liability"><ix:nonFraction name="kavl:OperatingLeasesLiability" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">59,205</ix:nonFraction></span>.
At April 30, 2022, short-term ROU lease liability was approximately $<span id="xdx_907_eus-gaap--OperatingLeaseLiabilityCurrent_c20220430_pp0p0" title="Short-term ROU lease liability"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,680</ix:nonFraction></span>
and long-term liability was approximately $<span></span><span id="xdx_903_eus-gaap--OperatingLeaseLiabilityNoncurrent_c20220430_pp0p0"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">39,180</ix:nonFraction></span>
totaling approximately $<span id="xdx_907_eus-gaap--OperatingLeaseLiability_c20220430_pp0p0" title="Lease liability"><ix:nonFraction name="us-gaap:OperatingLeaseLiability" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">52,860</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:ScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesTableTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_887_eus-gaap--ScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesTableTextBlock_zhdrRFVCWZu9" summary="xdx: Disclosure - Leases (Details)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span id="xdx_8B2_zBIMO3Lchxki" style="display: none">Schedule of Future Minimum Rental Payments for Operating Leases</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2022</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2025</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Total</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 35%; text-align: left">Lease payments</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_988_eus-gaap--OperatingLeasesFutureMinimumPaymentsDueInTwoYears_iI_pp0p0_c20220430_zPP860GNrhLd" title="2022" style="width: 9%; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeasesFutureMinimumPaymentsDueInTwoYears" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,400</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--OperatingLeasesFutureMinimumPaymentsDueInThreeYears_iI_pp0p0_c20220430_zPbiLtBQD0gj" title="2023" style="width: 9%; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeasesFutureMinimumPaymentsDueInThreeYears" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">15,000</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_980_eus-gaap--OperatingLeasesFutureMinimumPaymentsDueInFourYears_iI_pp0p0_c20220430_zULD8KAks1O7" title="2024" style="width: 9%; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeasesFutureMinimumPaymentsDueInFourYears" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">18,000</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td id="xdx_984_eus-gaap--OperatingLeasesFutureMinimumPaymentsDue_iI_pp0p0_c20220430_zXSCvLrwR3Uk" title="Total" style="width: 9%; text-align: right"><ix:nonFraction name="us-gaap:OperatingLeasesFutureMinimumPaymentsDue" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">61,400</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Less discount imputed interest</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_eus-gaap--LesseeOperatingLeaseLiabilityUndiscountedExcessAmount_iNI_pp0p0_di_c20220430_zbBKHqRaUZj7" title="Less discount imputed interest" style="text-align: right">(<ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityUndiscountedExcessAmount" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">8,540</ix:nonFraction></td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Present value of future payments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_987_eus-gaap--OperatingLeaseLiability_c20220430_pp0p0" title="Present value of future payments" style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiability" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">52,860</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Less current obligations</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98A_ecustom--OperatingLeasesLiabilityCurrent_iNI_pp0p0_di_c20220430_zuXucXfb2w7a" title="Less current obligations" style="text-align: right">(<ix:nonFraction name="kavl:OperatingLeasesLiabilityCurrent" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,680</ix:nonFraction></td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Long term lease obligations</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td id="xdx_984_ecustom--OperatingLeasesLiabilityNoncurrent_iI_pp0p0_c20220430_zwUlbFpgBqYd" title="Long term lease obligations" style="text-align: right"><ix:nonFraction name="kavl:OperatingLeasesLiabilityNoncurrent" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">39,180</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
</table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

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<ix:exclude><p id="xdx_23D_z8WFwMGxDpz3" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Storage
Space</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 1, 2021, the Company entered into a month-to-month lease agreement with Ranger Enterprises, LLC, located in Seymour, Indiana,
to store product inventory at this satellite location. The Company made seven payments on this lease, totaling approximately $<span id="xdx_906_eus-gaap--OperatingLeaseExpense_c20211101__20220430_pp0p0" title="Operating lease expense"><ix:nonFraction name="us-gaap:OperatingLeaseExpense" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">15,451</ix:nonFraction></span>,
during the six months ended April 30, 2022. On November 11, 2021, the Company entered into a month-to-month lease agreement with FFE
Solutions Group, located in Salt Lake City Utah, to store additional product inventory at this satellite location. The Company made five
payments in the amount of approximately $<span id="xdx_90F_eus-gaap--LeaseholdImprovementsGross_c20211215_pp0p0" title="Lease amount"><ix:nonFraction name="us-gaap:LeaseholdImprovementsGross" contextRef="AsOf2021-12-15" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">19,108</ix:nonFraction></span> for the rent on this lease during the six months ended April 30, 2022. The Company terminated
the lease with FFE Solutions Group on April 29, 2022 after returning all inventory previously stored at this location.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
additional information regarding leases as of the date these unaudited consolidated financial statements were issued, please see Note
8, <i>Subsequent Events</i>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock"><p id="xdx_805_eus-gaap--StockholdersEquityNoteDisclosureTextBlock_zgXrQju3mrw" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
5 &#8211; <span id="xdx_824_zex7ewpaRFD6">Stockholder Equity</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Additional
Paid-In Capital</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the six months ended April 30, 2022, approximately $<span id="xdx_900_eus-gaap--StockOptionPlanExpense_c20211101__20220430_pp0p0" title="Stock option expense"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">2,925,892</ix:nonFraction></span> of stock option expense was recognized and contributed to Additional
Paid-In Capital. Also, during the six months ended April 30, 2022, on November 5, 2021 and February 5, 2022, restricted stock units (&#8220;RSUs&#8221;)
previously granted to employees vested and shares of Common Stock were issued, which contributed approximately $<span id="xdx_907_eus-gaap--AdditionalPaidInCapitalCommonStock_c20220430__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_pp0p0" title="Additional paid-in capital"><ix:nonFraction name="us-gaap:AdditionalPaidInCapitalCommonStock" contextRef="AsOf2022-04-30_us-gaap_RestrictedStockUnitsRSUMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">130,502</ix:nonFraction></span> to Additional
Paid-In Capital. Additionally, during the six months ended April 30, 2022, warrants of the Company were exercised for shares of Common
Stock resulting in a further contribution to Additional Paid-in Capital of approximately $<span id="xdx_906_eus-gaap--AdditionalPaidInCapitalCommonStock_iI_pp0p0_c20220430__us-gaap--AwardTypeAxis__custom--WarrantsMember_zAdErOiWhitc" title="Additional paid-in capital"><ix:nonFraction name="us-gaap:AdditionalPaidInCapitalCommonStock" contextRef="AsOf2022-04-30_custom_WarrantsMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,565,316</ix:nonFraction></span>. All of these contributions resulted
in a total increase in Additional Paid-In Capital during the six months ended April 30, 2022 of approximately $<span id="xdx_905_eus-gaap--AdditionalPaidInCapitalCommonStock_c20220430_pp0p0" title="Additional paid-in capital"><ix:nonFraction name="us-gaap:AdditionalPaidInCapitalCommonStock" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,621,710</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Preferred
Shares Issued</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
authorized preferred stock of the Company consists of <span id="xdx_904_eus-gaap--PreferredStockSharesAuthorized_iI_c20220430_zSo4epvZ2K75" title="Preferred stock, shares authorized"><ix:nonFraction name="us-gaap:PreferredStockSharesAuthorized" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">5,000,000</ix:nonFraction></span> shares with a par value of $<span id="xdx_90F_eus-gaap--PreferredStockParOrStatedValuePerShare_c20210731_pdd" title="Preferred Stock, Par or Stated Value Per Share"><ix:nonFraction name="us-gaap:PreferredStockParOrStatedValuePerShare" contextRef="AsOf2021-07-31" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.001</ix:nonFraction></span> per share, of which <span id="xdx_902_eus-gaap--PreferredStockSharesAuthorized_c20210731__us-gaap--AwardTypeAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares authorized"><ix:nonFraction name="us-gaap:PreferredStockSharesAuthorized" contextRef="AsOf2021-07-31_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,000,000</ix:nonFraction></span> shares
were designated as Series A Convertible Preferred Stock (the &#8220;Series A Preferred Stock&#8221;). Each share of the Series A Preferred
Stock was initially convertible into 100 shares of Common Stock; however, <span id="xdx_90B_ecustom--ReverseStockSplitDescription_c20211101__20220430_zfVyWRJ1btX6" title="Reverse stock split description"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" name="kavl:ReverseStockSplitDescription">as a result of the Reverse Stock Split, the conversion rate
was adjusted such that each share of the Series A Preferred Stock is convertible into approximately 8.33 shares of Common Stock</ix:nonNumeric></span>. All
<span id="xdx_904_eus-gaap--PreferredStockSharesIssued_c20220430__us-gaap--AwardTypeAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares issued"><span id="xdx_909_eus-gaap--PreferredStockSharesOutstanding_c20210731__us-gaap--AwardTypeAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred Stock, Shares Outstanding"><ix:nonFraction name="us-gaap:PreferredStockSharesIssued" contextRef="AsOf2022-04-30_us-gaap_SeriesAPreferredStockMember209242156" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesOutstanding" contextRef="AsOf2021-07-31_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,000,000</ix:nonFraction></ix:nonFraction></span></span> shares of Series A Preferred Stock were issued and outstanding as of April 30, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Common
Shares Issued</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company implemented the Reverse Stock Split, effective prior to the opening of the market on July 20, 2021. The Reverse Stock Split was
implemented by the Company in support of its application to list on the Nasdaq Capital Market (&#8220;Nasdaq&#8221;). As a result of
the Reverse Stock Split at a ratio of <span id="xdx_906_eus-gaap--StockholdersEquityReverseStockSplit_c20210701__20210716"><ix:nonNumeric contextRef="From2021-07-012021-07-16" name="us-gaap:StockholdersEquityReverseStockSplit">1-for-12</ix:nonNumeric></span></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">,
every 12 shares of the Common Stock were exchanged for one share of the Common Stock. The Company has retroactively adjusted all share
amounts and per share data herein to give effect to the Reverse Stock Split.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the three months ended April 30, 2022, stockholders of the Company exercised warrants to purchase approximately <span id="xdx_90E_ecustom--ExerciseOfCommonStockWarrant_c20220201__20220430_zbMJ4XMye939" title="Exercise of common stock warrants"><ix:nonFraction name="kavl:ExerciseOfCommonStockWarrant" contextRef="From2022-02-012022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">873,286</ix:nonFraction></span> shares of the
Company&#8217;s Common Stock.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
authorized Common Stock of the Company consists of <span id="xdx_907_eus-gaap--CommonStockSharesAuthorized_iI_c20220430_zqz3emL8mxU9" title="Common Stock, Shares Authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,000,000,000</ix:nonFraction></span> shares with a par value of $<span id="xdx_907_eus-gaap--CommonStockParOrStatedValuePerShare_iI_c20220430_zC83AW1HJXe9" title="Common Stock, Par or Stated Value Per Share"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.001</ix:nonFraction></span> per share. There were 31,166,090 shares
of Common Stock issued and outstanding as of April 30, 2022. There were 30,195,312 shares of the Common Stock issued and outstanding
as of October 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Warrants
Shares Issued</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As part of the Company&#8217;s underwritten public
offering during fiscal 2021, the Company issued warrants to purchase a total of <span id="xdx_903_ecustom--IssuanceOfWarrants_iI_c20211031_zuikgz57Xt98" title="Issuance of warrants"><ix:nonFraction name="kavl:IssuanceOfWarrants" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">4,053,750</ix:nonFraction></span> shares of Common Stock at an exercise price
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ended April 30, 2022 for net proceeds of $<span id="xdx_903_ecustom--WarrantsExercised_iI_pp0p0_c20220430_z8xFuTmJbwIl" title="Warrants exercised"><ix:nonFraction name="kavl:WarrantsExercised" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,566,190</ix:nonFraction></span>. The aggregate intrinsic value of the outstanding Common Stock warrants as of April
30, 2022 and October 31, 2021 was $<span id="xdx_90A_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding_iI_pp0p0_c20220430_zxw7GTIWuR2a" title="Aggregate intrinsic value"><span id="xdx_90E_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding_c20211031_pp0p0"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">0</ix:nonFraction></ix:nonFraction></span></span>. The weighted average remaining term of the outstanding Common Stock warrants is <span id="xdx_90C_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2_dtY_c20211101__20220430__us-gaap--StatementEquityComponentsAxis__custom--CommonStockWarrantsMember_zlJTM6ZlAPpi" title="Weighted average remaining term"><ix:nonNumeric contextRef="From2021-11-012022-04-30_custom_CommonStockWarrantsMember" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2">4.50</ix:nonNumeric></span> years as of
April 30, 2022.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of the stock warrant activity during the fiscal six months ended April 30, 2022 and the year ended October 31,
2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_887_eus-gaap--ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock_zrI5fVHeIz3g" summary="xdx: Disclosure - Stockholder Equity (Details)" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom; background-color: White">
    <td><span id="xdx_8B4_z7bqrtgPDppi" style="display: none">Share-based Payment Arrangement, Option, Activity</span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="7" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Six Months Ended April 30, 2022</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="7" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Year Ended October 31, 2021</td></tr>
<tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Number of Warrants</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Weighted Average Exercise Price</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Number of Warrants</td><td style="font-weight: bold; padding-bottom: 1pt">&#160;</td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Weighted Average Exercise Price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 40%; text-align: left">&#160;Warrants Outstanding at Beginning of the Period</td><td style="width: 3%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td id="xdx_98A_eus-gaap--ClassOfWarrantOrRightOutstanding_iS_c20211101__20220430__us-gaap--AwardTypeAxis__custom--WarrantsMember_z0oKxkYHnzhc" title="Warrants Outstanding at Beginning" style="width: 10%; text-align: right"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightOutstanding" contextRef="AsOf2021-10-31_custom_WarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,173,922</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 3%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td id="xdx_988_eus-gaap--ClassOfWarrantOrRightOutstanding_iS_c20201101__20211031__us-gaap--AwardTypeAxis__custom--WarrantsMember_zahyzIGUAnod" title="Warrants Outstanding at Beginning" style="width: 10%; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0793">&#8212;</span></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 3%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td id="xdx_988_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iS_c20201101__20211031__us-gaap--AwardTypeAxis__custom--WarrantsMember_zQuHtphrpVuf" title="Weighted Average Exercise Price at Beginning" style="width: 10%; text-align: right"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice" contextRef="AsOf2020-10-31_custom_WarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.90</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0 0 0 20pt">Granted</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_989_ecustom--NumberOfWarrantsGranted_c20211101__20220430__us-gaap--AwardTypeAxis__custom--WarrantsMember_zoQb0RBCLFdg" title="Number of warrants, Granted" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0797">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_c20211101__20220430__us-gaap--AwardTypeAxis__custom--WarrantsMember_pdd" title="Weighted Average Exercise Price, Granted" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0799">&#8212;</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_982_ecustom--NumberOfWarrantsGranted_c20201101__20211031__us-gaap--AwardTypeAxis__custom--WarrantsMember_z9BHkzcsdp1c" title="Number of warrants, Granted" style="text-align: right"><ix:nonFraction name="kavl:NumberOfWarrantsGranted" contextRef="From2020-11-012021-10-31_custom_WarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">4,053,750</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_988_eus-gaap--ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice_c20201101__20211031__us-gaap--AwardTypeAxis__custom--WarrantsMember_z4UFi8vWcQAb" title="Weighted Average Exercise Price, Granted" style="text-align: right"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" contextRef="From2020-11-012021-10-31_custom_WarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.90</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0 0 0 20pt">Exercised</td><td>&#160;</td>
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<tr style="vertical-align: bottom; background-color: White">
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr style="vertical-align: bottom; background-color: White">
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</table></ix:nonNumeric>


<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<ix:exclude><!-- Field: Page; Sequence: 16 -->
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<ix:exclude><p id="xdx_23D_zBAzWN1sSJnh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Restricted
Stock Unit Awards</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 5, 2021, <span id="xdx_90B_ecustom--RestrictedStockUnitAwardsDescription_c20211101__20220430" title="Restricted stock unit awards description"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" name="kavl:RestrictedStockUnitAwardsDescription">the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth
in RSU agreements previously entered into with such employees, resulting in the recognition of approximately $110,250 of share-based
compensation. Of the shares issued to employees, 19,866 shares were withheld by the Company to satisfy tax withholding obligations and/or
satisfy cash settlement options to employees, equaling approximately $35,759.</ix:nonNumeric> </span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 5, 2022, <span id="xdx_90D_ecustom--RestrictedStockUnitAwardsDescription_c20220201__20220205_zE2UWHB3EJXl"><ix:nonNumeric contextRef="From2022-02-012022-02-05" name="kavl:RestrictedStockUnitAwardsDescription">the
Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth in RSU agreements previously
entered into with such employees, resulting in the recognition of approximately $65,538 of share-based compensation. Of the shares issued
to employees, 24,058 shares were withheld by the Company to satisfy tax withholding obligations and/or satisfy cash settlement options
to employees, equaling approximately $24,058. On March 4, 2022, the Company&#8217;s Board approved the termination of the RSU agreements
with the consent of the employees. At the time these agreements were terminated, there remained 1,230,833 unvested RSUs with approximately
$4,457,875 of related unvested compensation.</ix:nonNumeric></span></span> <span style="font: normal 10pt Times New Roman, Times, Serif">See
</span><span style="font: normal 10pt Times New Roman, Times, Serif"><i>Common Stock Compensation Transition
Plan</i> <span style="font-style: normal">below for additional details.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222"><span style="font: 10pt Times New Roman, Times, Serif"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222">Additionally,
during the three months ended April 30, 2022, the Company issued<span id="xdx_905_ecustom--RestrictedCommonStock_c20211101__20220430_zgQw4QsioOGc" title="Restricted Common Stock"> <ix:nonFraction name="kavl:RestrictedCommonStock" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">18,160</ix:nonFraction> </span>shares of restricted Common Stock to two vendors who provide
legal and advertising and promotions services to the Company. Those vendors preferred to be paid in shares of restricted Common
Stock instead of cash for the services they performed and billed the Company.</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222">.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white; color: #222222"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Stock
Options</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
fiscal year 2021, <span id="xdx_90F_ecustom--StockOptionAwardsDescription_c20201101__20211031_z6pdsQV62Tsf" title="Stock option awards, description"><ix:nonNumeric contextRef="From2020-11-012021-10-31" name="kavl:StockOptionAwardsDescription">the Company granted options exercisable for up to 150,000 shares of Common Stock of which 15,000 fully vested on March
17, 2021, 7,500 fully vested on June 30, 2021, 41,667 fully vested on December 1, 2021, 68,333 vested on March 17, 2022, 68,333 vest
on March 17, 2023, and 17,500 vest over the next 2 years on June 30, 2022 and 2023. The options have exercise prices ranging from $9.12
to $28.68 per share. These options have a weighted average remaining life of 9.43 years as of October 31, 2021 and of 8.92 years as of
April 30, 2022. The options expire in the year 2031. On July 19, 2021, two of the stock option agreements, exercisable for an aggregate
of&#160;50,000 shares of Common Stock, were modified to accelerate the full vesting period from 3 years to 2 years</ix:nonNumeric></span>.</span>&#160;As of April 30, 2022, the amortized expense and unamortized expense of these stock options was $<span id="xdx_909_ecustom--AmortizedExpense_c20211101__20220430_zH8UUHQp4Q47" title="Amortized expense"><ix:nonFraction name="kavl:AmortizedExpense" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,044,517</ix:nonFraction></span>
and $<span id="xdx_902_eus-gaap--UnamortizedDebtIssuanceExpense_iI_c20220430_zNKeQKn1bpHk" title="Unamortized expense"><ix:nonFraction name="us-gaap:UnamortizedDebtIssuanceExpense" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,065,217</ix:nonFraction></span>, respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company granted new options during the three months ended April 30, 2022. On February 27, 2022, non-qualified stock options exercisable
for up to <span id="xdx_902_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExpirationsInPeriod_c20220201__20220227__us-gaap--AwardTypeAxis__us-gaap--CommonStockMember_zdere2I0W7M6" title="Stock options exercised"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExpirationsInPeriod" contextRef="From2022-02-012022-02-27_us-gaap_CommonStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000</ix:nonFraction></span> shares of Common Stock were awarded to two consultants of the Company. <span>These stock options
have a ten-year term from the grant date, with one-half of the shares vesting on the grant date and the remaining one-half of the shares
vesting on the first anniversary of the grant date. The stock options exercisable for an aggregate of up to <span id="xdx_90D_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExpirationsInPeriod_c20220201__20220227_zugvhgtWNKS2"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExpirationsInPeriod" contextRef="From2022-02-012022-02-27" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">200,000</ix:nonFraction></span> shares of Common
Stock had a fair market value of $<span id="xdx_90F_eus-gaap--SharePrice_iI_c20220227_zfklWerAp1O4" title="Fair market value"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2022-02-27" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.45</ix:nonFraction></span> per share, which represents the closing price of the Company&#8217;s Common Stock on the grant
date. The amortization expense and unamortized expense for these stock options for the three months ended April 30, 2022 </span>was&#160;$<span id="xdx_90D_eus-gaap--AdjustmentForAmortization_c20210201__20220430_z7t8gdVYllAi"><ix:nonFraction name="us-gaap:AdjustmentForAmortization" contextRef="From2021-02-012022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">285,832</ix:nonFraction></span>&#160;<span style="color: #222222">and
$<span id="xdx_901_ecustom--UnamortizedStockOptionExpense_c20210201__20220430_zLjsciZbdkak"><ix:nonFraction name="kavl:UnamortizedStockOptionExpense" contextRef="From2021-02-012022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">204,167</ix:nonFraction></span>.</span></span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; color: #222222"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
aggregate intrinsic value of these outstanding options as of October 31, 2021 and April 30, 2022 was $<span id="xdx_907_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iI_c20220430_zv93t7w9Q7l2" title="Intrinsic value"><span id="xdx_907_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iI_c20211031_zyYIFzdiPtX7" title="Intrinsic value"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">0</ix:nonFraction></ix:nonFraction></span></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Common
Stock Compensation Transition Plan</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the second quarter of fiscal year 2021 the
Board and executive management began cost reduction discussions, including the reduction of non-cash items such as equity compensation
awards. Those discussions stalled primarily due to the focus on other corporate events of significant value.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the first and second fiscal quarters of 2022, the
Board resumed serious discussions, assessments, and evaluations regarding the equity compensation awarded to its officers and employees.
The Board ultimately approved a stock option program for equity awards granted to its officers and employees. The Compensation Committee
spent considerable time, effort, and resources designing this program, which was finalized in February 2022 and approved in March 2022.
While evaluating and designing this program, the Compensation Committee did not utilize any aspects of value to the employees or other
features. Therefore, the termination of the RSU program and the newly adopted stock option program were developed completely independent
of each other and terminated and implemented, respectively, distinctly and simultaneously. <span style="background-color: white">Management
concluded under ASC 718 these transactions are a cancelation and replacement whereby total compensation cost measured at the date of a
cancellation and replacement is the portion of the grant-date fair value of the original award for which the service is expected to be
rendered at that date plus the incremental cost resulting from the cancellation and replacement. Incremental cost is measured as the excess
of the fair value of the replacement award over the fair value of the cancelled award at the cancellation date in which there was none
since the fair value of the replacement award was less than the fair value of the canceled award.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The outcomes of this decision and the transition
on March 4, 2022 resulting in: (i) the termination of the RSU program for all executive officers and employees, consisting of 1,230,833
unvested RSUs  and (ii) the implementation a new stock option program for executive officers and employees. The stock options
granted pursuant to the program will have ten-year terms from the grant date, with one-half of the shares vesting on the grant
date and the remaining one-half of the shares vesting on the first anniversary of the grant date. Stock options exercisable for
up to an aggregate of 1,385,600 shares of Common Stock were granted to the executive officers and employees with a fair market
value of $2.85 per share, which was calculated using the Black Scholes method.</p>



<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; color: #222222"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; color: #222222"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The amortization expense and unamortized expense for
these stock options for the three months ended April 30, 2022 was $<span id="xdx_906_eus-gaap--AdjustmentForAmortization_c20220201__20220430__us-gaap--AwardTypeAxis__us-gaap--StockOptionMember_zaCP6zrYy19g" title="Amortization expense for these stock options"><ix:nonFraction name="us-gaap:AdjustmentForAmortization" contextRef="From2022-02-012022-04-30_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">2,303,533</ix:nonFraction></span> and $<span id="xdx_901_ecustom--UnamortizedStockOptionExpense_pp0p0_c20211101__20220430_zm8kY9HNXA5j"><ix:nonFraction name="kavl:UnamortizedStockOptionExpense" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,645,395</ix:nonFraction></span>. The aggregate intrinsic value
of these outstanding options as of October 31, 2021 and April 30, 2022 was $<span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iI_c20211031__us-gaap--AwardTypeAxis__us-gaap--StockOptionMember_zg5KFiZgmNjd" title="Aggregate intrinsic value"><span id="xdx_903_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue_iI_c20220430__us-gaap--AwardTypeAxis__us-gaap--StockOptionMember_z6Rb2SGE28u1"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue" contextRef="AsOf2021-10-31_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue" contextRef="AsOf2022-04-30_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">0</ix:nonFraction></ix:nonFraction></span></span>.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; color: #222222"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; color: #222222"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:exclude><p id="xdx_231_ztq88uA351cd" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p></ix:exclude>

<ix:exclude><!-- Field: Page; Sequence: 17 -->
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<ix:exclude><p id="xdx_23D_zNU0223d5wdc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair values of the options on the grant
dates, as noted above, were approximately $3,948,948 using a Black-Scholes option pricing model with the following assumptions:
stock price $2.85 per share (based on the quoted trading price on the date of grant), volatility range of 294.55%, expected term
of 10 years, and a risk-free interest rate range of&#160;1.62%. The Company is amortizing the expense over the vesting terms of each
option. The total stock option expense for the three and six months ended April 30, 2022 was approximately $2,303,533. The fiscal
year 2022 unamortized stock option expense at April 30, 2022 was approximately $1,645,395.</p>



<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-size: 10pt"></span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_807_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_zed9KBLYL85h" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
6 &#8211; <span id="xdx_82C_zz1dgH5qhrGe">Related-Party Transactions</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Revenue
and Accounts Receivable</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>



<p style="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the six months ended April 30, 2022, the Company recognized revenue of approximately $<span id="xdx_90E_eus-gaap--RevenueFromRelatedParties_c20211101__20220430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NirajkumarPatelMember_pp0p0" title="Revenue from related parties"><ix:nonFraction name="us-gaap:RevenueFromRelatedParties" contextRef="From2021-11-012022-04-30_custom_NirajkumarPatelMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">31,150</ix:nonFraction></span> from four companies owned by Nirajkumar Patel, the Chief Executive Officer of
the Company, and/or his wife. There was no accounts receivable balance for these transactions as of April 30, 2022.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the six months ended April 30, 2021, the Company recognized revenue of approximately $<span id="xdx_90D_eus-gaap--AccountsReceivableRelatedPartiesCurrent_c20210430_pp0p0" title="Accounts receivable from related parties"><ix:nonFraction name="us-gaap:AccountsReceivableRelatedPartiesCurrent" contextRef="AsOf2021-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">61,545</ix:nonFraction></span> from three companies owned by Nirajkumar
Patel, the Chief Executive Officer of the Company, and/or his wife. The accounts receivable balance for these transactions was $<span id="xdx_90B_eus-gaap--Revenues_c20211101__20220430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SevenCompaniesMember_pp0p0" title="Revenues"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2021-11-012022-04-30_custom_SevenCompaniesMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">765</ix:nonFraction></span> as of April 30, 2021.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Concentration
Purchases and Accounts Payable</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 11pt Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the six months ended April 30, 2022, the Company did not purchase Products from Bidi, a related party. Sales of Products during the
first six months of fiscal year 2022 were drawn from the inventory purchase made on September 6, 2021. As of April 30, 2022, the
Company had accounts payable to Bidi of approximately $<span id="xdx_90C_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_c20220430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BidiVaporMember_pp0p0" title="Accounts payable"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2022-04-30_custom_BidiVaporMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,394,759</ix:nonFraction></span>
and Products valued at approximately $<span id="xdx_904_eus-gaap--ProceedsFromSaleOfProductiveAssets_c20211101__20220430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MMSDistroMember_pp0p0" title="Sale of Products"><ix:nonFraction name="us-gaap:ProceedsFromSaleOfProductiveAssets" contextRef="From2021-11-012022-04-30_custom_MMSDistroMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,214,320</ix:nonFraction></span>
were held in inventory.&#160;&#160;</span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the six months ended April 30, 2021, the Company purchased Products of approximately $<span id="xdx_906_eus-gaap--ProceedsFromSaleOfProductiveAssets_c20201101__20210430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MMSDistroMember_pp0p0" title="Sale of Products"><ix:nonFraction name="us-gaap:ProceedsFromSaleOfProductiveAssets" contextRef="From2020-11-012021-04-30_custom_MMSDistroMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">75,065,602</ix:nonFraction></span> from Bidi, a related party.
As of April 30, 2021, the Company had accounts payable to Bidi of approximately $<span id="xdx_90F_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_c20210430__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BidiVaporMember_pp0p0" title="Accounts payable"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-04-30_custom_BidiVaporMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">38,001,633</ix:nonFraction></span>. During the six months ended April 30, 2021,
100% of all Product purchases were made by the Company from Bidi.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Leased
Office Space and Storage Space</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 1, 2020, the Company began leasing office
space for its main corporate office in Grant, Florida. The five-year lease agreement is with a related party, Just Pick. The Company&#8217;s
Chief Executive Officer is an officer of Just Pick. The liability for rent not paid from the beginning of the lease through April 30,
2022 is $<span id="xdx_906_eus-gaap--AccruedRentCurrent_iI_c20220430_z4HFkbrLHndb" title="Liability for rent"><ix:nonFraction name="us-gaap:AccruedRentCurrent" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">21,900</ix:nonFraction></span>.</p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
additional information regarding leases as of the date these unaudited consolidated financial statements were issued, please see Note
8, <i>Subsequent Events</i>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p id="xdx_806_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_z4P5b0wi0o2f" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
7 &#8211; <span id="xdx_822_z4oDNATVehJi">Commitments and Contingencies</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows ASC 450-20,&#160;<i>Los</i>s<i>&#160;Contingencies,&#160;</i>to report accounting for contingencies. Liabilities for
loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable
that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies
as of April 30, 2022 and April 30, 2021 other than the below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Cash
and Equity Bonus Awards</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 28, 2020, the Board approved cash bonus awards to each of the Company&#8217;s Chief Executive Officer and its Chief Operating Officer.
With respect to the Chief Executive Officer, the Board approved a <span id="xdx_906_ecustom--BonusDescription_c20211101__20220430_zjeyZCRJJsrk" title="Bonus description"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" name="kavl:BonusDescription">cash bonus award equal to $30,000 for every $25 million in gross revenues
generated by the Company. With respect to the Chief Operating Officer, the Board approved a cash bonus award equal to $20,000 for every
$25 million in gross revenues generated by the Company. On May 28, 2020, the Board also approved an equity bonus award for each of the
Chief Executive Officer and the Chief Operating Officer. With respect to the Chief Executive Officer, the Board approved an award of
7,500 restricted shares of the Common Stock for every $50 million in accumulated gross revenues generated by the Company. With respect
to the Chief Operating Officer, the Board approved an award of 6,250 restricted shares of the Common Stock for every $50 million in accumulated
gross revenues generated by the Company. The Company&#8217;s accumulated gross revenues will be evaluated on a quarterly basis, beginning
with the second quarter of fiscal year 2020. At October 31, 2020, the Company determined that the fair value of the equity bonus shares,
or $165,000, should be accrued as it was deemed likely that the $50 million revenue target would be met. The Company issued these shares
to the Chief Executive Officer and Chief Operating Office on January 1, 2021. During the quarter ended April 30, 2021, the $75 million
and $100 million accumulated revenue targets were both achieved and the Company determined that the fair market value of the 13,750 shares,
or approximately $70,785, and the cash bonuses totaling $100,000 should be accrued at April 30, 2021.</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the quarter ended April 30, 2022, the $<span id="xdx_907_eus-gaap--DeferredRevenueLeasesAccumulatedAmortization_iI_dm_c20220430_z0lXyXReJUF5" title="Accumulated revenue"><ix:nonFraction name="us-gaap:DeferredRevenueLeasesAccumulatedAmortization" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="3" unitRef="USD">125</ix:nonFraction></span> million accumulated revenue targets were achieved and the Company determined that cash bonuses
totaling $<span id="xdx_900_ecustom--CashBonuses_c20211101__20220430_zcKPrelhk2e3" title="Cash bonuses"><ix:nonFraction name="kavl:CashBonuses" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" unitRef="USD">50,000</ix:nonFraction></span> should be accrued at April 30, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 4, 2022, the Board terminated all future cash and equity bonus awards for the Company&#8217;s Chief Executive Officer and its
Chief Operating Officer.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Service
Agreement</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 31, 2020, the Company entered into a service agreement (the &#8220;Service Agreement&#8221;) with QuikfillRx LLC, a Florida limited
liability company (&#8220;QuikfillRx&#8221;), whereby QuikfillRx provides the Company with certain services and support relating to sales
management, website development and design, graphics, content, public communication, social media, management and analytics, and market
and other research (collectively, the &#8220;Services&#8221;). The Services are provided by QuikfillRx as requested from time to time
by the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:exclude><p id="xdx_238_zdOuVZmON4Ub" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p></ix:exclude>

<ix:exclude><!-- Field: Page; Sequence: 18 -->
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<ix:exclude><p id="xdx_23F_zkYbUoVJPE71" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 2, 2020, the Company entered into the First Amendment to the Service Agreement (the &#8220;First Amendment) with QuikfillRx.
Effective as of March 16, 2021, the Company entered into the Second Amendment to Service Agreement (the &#8220;Second
Amendment&#8221;) with QuikfillRx. Effective as of September 17, 2021, the Company entered into the Third Amendment to the Service
Agreement (the &#8220;Third Agreement&#8221; and, collectively with the First Amendment, Second Amendment, and the Service
Agreement, the &#8220;Amended Service Agreement&#8221;) with QuikfillRx. Pursuant to the terms of the Amended Service Agreement, the
parties agreed to the following &#8220;General Compensation&#8221; payments: (i) for the Services provided in March 2020, <span id="xdx_909_ecustom--GeneralCompensationDescription_c20211101__20220430_zVQ5UxFXU84j"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" name="kavl:GeneralCompensationDescription">the
Company paid QuikfillRx an amount equal to $86,000; (ii) for the Services provided in April 2020, the Company paid QuikfillRx an
amount equal to $100,000; (iii) each calendar month commencing May 2020 through October 2020, the Company paid QuikfillRx an amount
equal to $125,000 per month for the Services to be performed during such calendar month; (iv) for each calendar month between
November 1, 2020 and October 31, 2021, the Company paid QuikfillRx $125,000 per month for the Services to be performed during such
calendar month; (iv) for the
period between November 1, 2021 and October 31, 2022, the Company will pay QuikfillRx $150,000 per month for the Services to be
performed during such calendar month; and (v) if the parties agree to extend the term of the Amended Service Agreement beyond
October 31, 2022, then for the period between November 1, 2022 and October 31, 2021, the Company will pay QuikfillRx $150,000 per
month for the Services to be performed during such calendar month.</ix:nonNumeric></span></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 1, 2021, the parties agreed to extend the term for an additional one-year period. In addition, the Company will pay the
following quarterly bonuses:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="padding: 0pt; width: 5%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; width: 2%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="padding: 0pt; width: 93%; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
    amount equal to 0.9% of the Applicable Gross Quarterly Sales (as defined in the Amended Service Agreement), which amount shall, at
    the Company&#8217;s option be paid in (a) cash or (b) shares of the Company&#8217;s common stock, or (c) a combination of cash and
    Common Stock.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An amount equal to 0.27%
    of the Applicable Gross Quarterly Sales, which amount must be paid in cash.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 17, 2021, the Company entered into a consulting agreement with Russell
Quick, pursuant to which the Company granted stock options exercisable for up to 41,667 shares of the Company&#8217;s Common Stock in
exchange for consulting services. The shares underlying the stock option fully vested on December 1, 2021. The exercise price per share is $28.68. The Company recognized approximately $190,000 in expense to account for the stock options.
Russell Quick is the Chief Executive Officer of QuikfillRx. The Company accrued approximately $<span id="xdx_901_ecustom--AcquiredQuqrterlyBonus_pp0n3_c20211101__20220430_zDT8jWYApTJe" title="Acquired quqrterly bonus"><ix:nonFraction name="kavl:AcquiredQuqrterlyBonus" contextRef="From2021-11-01to2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="3" unitRef="USD">35,803</ix:nonFraction></span> for a quarterly bonus payable to
QuikfillRx, based on the Applicable Gross Quarterly Sales results of the three months ended April 30, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" escape="true" name="us-gaap:SubsequentEventsTextBlock"><p id="xdx_80A_eus-gaap--SubsequentEventsTextBlock_zy8O2x9beyv2" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
8 &#8211; <span id="xdx_82E_zC1pbv7bBAka">Subsequent Events</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Third
Amended and Restated Distribution Agreement</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 10, 2022, the Company entered into the Third A&amp;R Distribution Agreement with Bidi, which amended and restated the A&amp;R Distribution
Agreement (collectively, the &#8220;Distribution Agreement&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Third A&amp;R Distribution Agreement modifies various terms and provisions to reflect the terms of the PMI Licensing Agreement (as defined
below) and also modify the terms between the Company and Bidi. Pursuant to the Third A&amp;R Distribution Agreement, Bidi granted the
Company, and its designees, an exclusive right to distribute electronic and non-electronic nicotine delivery systems and related components
(other than certain excluded products) for sale and resale to both retail level customers and non-retail level customers worldwide, subject
to a carve-out for, and exclusion, of the PMI Markets (as defined below). The Third A&amp;R Distribution Agreement has a term of ten
years and automatically renews for a successive ten-year term, unless earlier terminated pursuant its terms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Exercise of Stock Warrants</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As part of the Company&#8217;s underwritten public
offering during fiscal 2021, the Company issued warrants to purchase a total of <span id="xdx_904_ecustom--IssuanceOfWarrants_iI_c20211031_zsjJNZanuA2j" title="Issuance of warrants"><ix:nonFraction name="kavl:IssuanceOfWarrants" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">4,053,750</ix:nonFraction></span> shares of Common Stock at an exercise price
of $<span id="xdx_905_ecustom--ExercisePricePerShare_iI_c20211031_zT47iE2a9fud" title="Exercise price"><ix:nonFraction name="kavl:ExercisePricePerShare" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.90</ix:nonFraction></span> per share. These warrants expire in 2026. Warrants for <span id="xdx_90D_ecustom--IssuanceOfWarrants_iI_c20220614__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_ziJb6vz1VKtc"><ix:nonFraction name="kavl:IssuanceOfWarrants" contextRef="AsOf2022-06-14_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,000</ix:nonFraction></span> shares of Common Stock were exercised on June 14, 2022 for net proceeds
of $<span id="xdx_909_ecustom--WarrantsExercised_iI_c20220614__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zg7FJxLGuTD" title="Warrants exercised"><ix:nonFraction name="kavl:WarrantsExercised" contextRef="AsOf2022-06-14_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,700</ix:nonFraction></span>. The aggregate intrinsic value of the outstanding Common Stock warrants as of April 30, 2022 and October 31, 2021 was $<span id="xdx_905_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding_iI_pp0p0_c20211031_z27em5xniu1k" title="Aggregate intrinsic value"><span id="xdx_902_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding_iI_pp0p0_c20220430_zCEePE6IT82k"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding" contextRef="AsOf2022-04-30" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">0</ix:nonFraction></ix:nonFraction></span></span>. The
weighted average remaining term of the outstanding Common Stock warrants is <span id="xdx_90E_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2_dtY_c20211101__20220430_zyxBSFWibjOc" title="Weighted average remaining term"><ix:nonNumeric contextRef="From2021-11-01to2022-04-30" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2">4.50</ix:nonNumeric></span> years as of April 30, 2022.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span>&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Lease
Agreement</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 10, 2022, the Company entered into a Lease Agreement (the &#8220;2022 Lease&#8221;) with Just Pick for approximately <span id="xdx_902_eus-gaap--NetRentableArea_iI_uSqrt_c20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zM4IVJporRT9" title="Rentable area"><ix:nonFraction name="us-gaap:NetRentableArea" contextRef="AsOf2022-06-10_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Sqrt">21,332</ix:nonFraction></span> rentable
square feet combined in the office building and warehouse located at 4460 Old Dixie Highway, Grant Valkaria, Florida 32949 (the &#8220;Premises&#8221;),
together with all improvements thereon. Just Pick is considered a related party to the Company because the Company&#8217;s Chief Executive
Officer and director, Mr. Nirajkumar Patel, owns and controls the Just Pick.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
anticipated commencement date of the 2022 Lease is June 10, 2022 (the &#8220;Commencement Date&#8221;). The term of the Lease is one
(<span id="xdx_900_eus-gaap--LesseeOperatingLeaseRenewalTerm_iI_dtY_c20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__srt--RangeAxis__srt--MinimumMember_zOtt6UkB2EM6" title="Lease term"><ix:nonNumeric contextRef="AsOf2022-06-10_us-gaap_SubsequentEventMember_srt_MinimumMember" format="ixt-sec:duryear" name="us-gaap:LesseeOperatingLeaseRenewalTerm">1</ix:nonNumeric></span>) year (the &#8220;Lease Term&#8221;), with one automatic renewal period for a five-year term. The Company, in its sole and absolute
discretion, has the option to extend the automatic renewal for an additional five (<span id="xdx_903_eus-gaap--LesseeOperatingLeaseRenewalTerm_iI_dtY_c20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__srt--RangeAxis__srt--MaximumMember_zsWWMKooGO3b"><ix:nonNumeric contextRef="AsOf2022-06-10_us-gaap_SubsequentEventMember_srt_MaximumMember" format="ixt-sec:duryear" name="us-gaap:LesseeOperatingLeaseRenewalTerm">5</ix:nonNumeric></span>) year period immediately following the first renewal
term.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company must pay Just Pick base rent equal to $<span id="xdx_90A_eus-gaap--PaymentsForRent_c20220601__20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--LeaseContractualTermAxis__custom--YearOneMember_zbKL4E5WDk22" title="Rent paid"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2022-06-012022-06-10_us-gaap_SubsequentEventMember_custom_YearOneMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">17,776</ix:nonFraction></span>.67 per month during the first year of the Lease Term. Thereafter, the monthly base
rent will be increased annually with a monthly base rent of $<span id="xdx_900_eus-gaap--PaymentsForRent_c20220601__20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--LeaseContractualTermAxis__custom--YearTwoMember_zIIYT0TUXAP1"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2022-06-012022-06-10_us-gaap_SubsequentEventMember_custom_YearTwoMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">18,665</ix:nonFraction></span>.50 in the second year, $<span id="xdx_903_eus-gaap--PaymentsForRent_c20220601__20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--LeaseContractualTermAxis__custom--YearThreeMember_z7nS8IKiYlrg"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2022-06-012022-06-10_us-gaap_SubsequentEventMember_custom_YearThreeMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">19,554</ix:nonFraction></span>.33 in the third year, $<span id="xdx_907_eus-gaap--PaymentsForRent_c20220601__20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--LeaseContractualTermAxis__custom--YearFourMember_zY0uvF3AKGm7"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2022-06-012022-06-10_us-gaap_SubsequentEventMember_custom_YearFourMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">20,443</ix:nonFraction></span>.17 in
the fourth year, $<span id="xdx_902_eus-gaap--PaymentsForRent_c20220601__20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--LeaseContractualTermAxis__custom--YearFiveMember_zUlnGk57Or2a"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2022-06-012022-06-10_us-gaap_SubsequentEventMember_custom_YearFiveMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">22,220</ix:nonFraction></span>.83 in the fifth year, $<span id="xdx_909_eus-gaap--PaymentsForRent_c20220601__20220610__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--LeaseContractualTermAxis__custom--YearSixMember_zZmzpE1sbA9d"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2022-06-012022-06-10_us-gaap_SubsequentEventMember_custom_YearSixMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">23,998</ix:nonFraction></span>.50 in the sixth year, and one twelfth (1/12th) of the market annual rent for the
seventh through eleventh years, if appliable. In addition to the base rent, the Company must pay one hundred percent (100%) of operating
expenses, insurance costs, and taxes for each calendar year during the Lease term.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
changes, alterations, additions, or improvements to the Premises made by the Company becomes the property of Just Pick unless prior to
the 2022 Lease expiration, the Company removes such improvements and restores the Premises to the same condition as existed on the Commencement
Date.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
2022 Lease contains customary representations, warranties, covenants, indemnification provisions, default provisions, and termination
provisions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:exclude><p id="xdx_23E_zYHXYllV0Z76" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p></ix:exclude>

<ix:exclude><!-- Field: Page; Sequence: 19 -->
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<ix:exclude><p id="xdx_23A_zzc59wg9pPz3" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>License
Agreement</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 10, 2022, Bidi entered into a License Agreement (the &#8220;License Agreement&#8221;) with KBI, pursuant to which KBI has the exclusive
irrevocable license to use Bidi&#8217;s licensed intellectual property to the extent necessary for KBI to fulfill its obligations set
forth in the Deed of Licensing Agreement (the &#8220;PMI License Agreement&#8221;), by and between KBI and PMPSA. 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the License Agreement, if at any time, KBI receives any license of PMPSA intellectual property from PMPSA or any of its affiliates
in the manner contemplated by the PMI License Agreement, KBI will grant Bidi an irrevocable sub-license of all right, title, and interest
of KBI in and to that PMPSA intellectual property. In addition, Bidi and KBI agree that any amount payable and all net royalties payable
to KBI under the PMI License Agreement will be apportioned equally among Bidi and KBI in a manner such that each will ultimately receive
fifty percent (50%) thereof.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
License Agreement contains customary representations, warranties, covenants, and indemnification provisions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Deed
of Licensing Agreement</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 13, 2022 KBI entered into the PMI License Agreement with PMPSA, effective as of May 13, 2022 (the &#8220;PMI Commencement Date&#8221;).
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 &#8220;PMI Markets&#8221;). 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
consideration for the grant of the licensed rights, PMPSA agreed to pay to KBI a royalty equal to 2.00% to 3.50% 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 equal to twenty percent (20%) of 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 of One Million Dollars ($<span id="xdx_90A_eus-gaap--PaymentsForRoyalties_c20220601__20220613__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zDbxfRI8z6T1" title="Royalty payment"><ix:nonFraction name="us-gaap:PaymentsForRoyalties" contextRef="From2022-06-012022-06-13_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,000,000</ix:nonFraction></span>) 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PMI License Agreement contains customary representations, warranties, covenants, and indemnification provisions; however, KBI&#8217;s
liability under the PMI License Agreement is capped at the greater of: (i) Ten Million Dollars ($10,000,000); or (ii) an amount equal
to the total of the royalties due to KBI (but not yet paid) plus the royalties (including the guaranteed royalty payment) paid to KBI
pursuant to the PMI License Agreement during the immediately preceding twelve (12) consecutive months, provided that such amount shall
not exceed Thirty Million Dollars ($30,000,000).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the PMI License Agreement, the Company, Bidi, and PMPSA also entered into a deed of letter (&#8220;Deed of Letter&#8221;)
to require specific performance of the duties and obligations set forth in the PMI License Agreement if KBI is unable or fails to sublicense
the intellectual property to PMPSA pursuant to the PMI License Agreement and/or is unable or fails to perform certain of its obligations
or grant the rights pursuant to the PMI License Agreement. In addition, the Company, Bidi, and PMPSA entered into a guarantee (&#8220;Guarantee&#8221;),
whereby each of the Company and Bidi guarantees to PMPSA up to 50% of all of KBI&#8217;s monetary obligations set forth in the PMI License
Agreement if KBI fails to perform or discharge certain of its obligations in the PMI License Agreement.</span></p>

</ix:nonNumeric><p id="xdx_819_zwfKw4NXgLG9" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_006"></span>Item
2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management&#8217;s
Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of the financial statements
with a narrative report on our financial condition, results of operations, and liquidity. This discussion and analysis should be read
in conjunction with the unaudited Financial Statements and notes thereto for the three and six months ended April 30, 2022 included under
Item 1 &#8211; Financial Statements in this Quarterly Report and our audited Financial Statements and notes thereto for the year ended
October 31, 2021 contained in the 2021 Annual Report. The following discussion contains forward-looking statements that involve risks
and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual results could differ materially
from those discussed in the forward-looking statements. Please also see the cautionary language at the beginning of this Quarterly Report
regarding forward-looking statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Impact
of COVID-19</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2020, the WHO declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure. COVID-19 continues
to spread throughout the world, including the United States. Our business operations, which commenced during this pandemic, continue
to be operational; however, we were indirectly negatively impacted by COVID-19.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
were indirectly impacted by supply chain issues and regulatory oversight. First, COVID-19 impacted Bidi&#8217;s ability to quality test
and develop its new product, the BIDI<sup>&#174;</sup> Pouch, in line with its targeted release date, which negatively impacted our ability
to begin distribution of the BIDI<sup>&#174;</sup> Pouch. Secondly, we believe that many retailers and distributers relaxed their compliance
standards as an indirect result of COVID-19 for two reasons: (i) government enforcement of regulations was very limited due to imposed
social restrictions, resulting in less in-person monitor enforcement by government officials and (ii) retail stores experienced light
foot traffic from customers due to COVID-19 restrictions and fears, which resulted in relaxed compliance in an effort to generate revenue.
We believe this relaxation of standards by certain retailers significantly impacted our revenues.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Impact
of the FDA PMTA Decision</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
September 2021, in connection with the PMTA process, the FDA effectively &#8220;banned&#8221; flavored ENDS by denying nearly all
then-pending PMTAs for such products. Following the issuance of an MDO, manufacturers are required to stop selling non-tobacco
flavored ENDS product. As of March 2022, the FDA announced that it has taken action on over 99% of applications and issued MDOs for
more than 1,167,000 non-tobacco flavored ENDS products, while issuing zero marketing authorizations for such 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<sup>&#174;</sup> Sticks, including its Arctic (menthol) BIDI<sup>&#174;</sup>
Stick.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. &#167; 10.75 internal FDA review request specifically of the decision
to include the Arctic (menthol) BIDI<sup>&#174;</sup> Stick in the MDO. In May 2022, the FDA issued a determination that it views the
Arctic BIDI<sup>&#174;</sup> Stick as a flavored ENDS product.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On September 29, 2021, Bidi petitioned the U.S. Court
of Appeals for the Eleventh Circuit to review the FDA&#8217;s denial of the PMTAs for its non-tobacco flavored BIDI<sup>&#174;</sup> Stick
ENDS, arguing that it was arbitrary and capricious under the APA, as well as <i>ultra vires</i>, for the FDA not to conduct any scientific
review of the company&#8217;s comprehensive applications, as required by the TCA, to determine whether the BIDI<sup>&#174;</sup> Sticks
are &#8220;appropriate for the protection of the public health&#8221;. Bidi further argued that the FDA violated due process and the APA
by failing to provide fair notice of the FDA&#8217;s new requirement for ENDS companies to conduct long-term comparative smoking cessation
studies for their flavored products.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. &#167; 10.35(a), the FDA issued an administrative stay of Bidi&#8217;s MDO pending its re-review. Subsequently,
the FDA lifted its administrative stay on December 17, 2021. Following the lifting of the FDA&#8217;s administrative stay, Bidi filed
a renewed motion to stay the MDO with the U.S. Court of Appeals for the Eleventh Circuit.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 1, 2022, the U.S. Court of Appeals for
the Eleventh Circuit granted Bidi&#8217;s motion to stay (<i>i.e.,</i> put on hold) the MDO, pending the litigation on the merits. The
court-ordered stay means that the MDO is not legally in force. Accordingly, we anticipate being able to continue marketing and selling
the Products, subject to the FDA&#8217;s enforcement discretion, while Bidi continues with its merits case challenging the legality of
the MDO. The FDA has indicated that it is prioritizing enforcement against companies that have either not submitted PMTAs, whose PMTAs
have been refused acceptance or filing by the FDA, or whose PMTAs remain subject to MDOs.&#160;Oral arguments in the merits-based proceeding
were held on May 17, 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the event that the U.S. Court of Appeals for the
Eleventh Circuit issues a ruling adverse to Bidi, or if the FDA otherwise chooses to enforce the MDO against Bidi, Bidi will be forced
to cease the continued sale of its non-tobacco flavored BIDI<sup>&#174;</sup> Sticks in the United States, thereby resulting in us being
unable to distribute such Products, and our business and financial condition would be materially adversely affected. We cannot provide
any assurances as to the timing or outcome of the merits-based case.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Corporate
History</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
were incorporated on September 4, 2018 in the State of Delaware. Effective July 12, 2019, we changed our corporate name from Quick Start
Holdings, Inc. to Kaival Brands Innovations Group, Inc. The name change was effected through a parent/subsidiary short-form merger of
Kaival Brands Innovations Group, Inc., our wholly-owned Delaware subsidiary formed solely for the purpose of the name change, with and
into us. We were the surviving entity.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Change
of Control</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 6, 2019, we entered into a Share Purchase Agreement (the &#8220;Share Purchase Agreement&#8221;), by and among us, GMRZ Holdings
LLC, a Nevada limited liability company (&#8220;GMRZ&#8221;), our then-controlling stockholder, and Kaival Holdings, LLC, a Delaware
limited liability company (&#8220;KH&#8221;), pursuant to which, on February 20, 2019, GMRZ sold 504,000,000 shares of our restricted
common stock, representing approximately 88.06 percent of our then issued and outstanding shares of common stock, to KH, and KH paid
GMRZ consideration in the amount set forth in the Share Purchase Agreement. The consummation of the transactions contemplated by the
Share Purchase Agreement resulted in a change in control, with KH becoming our largest controlling stockholder. Nirajkumar Patel and
Eric Mosser are the sole voting members of KH.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Description
of Business</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We are focused on growing and incubating innovative
and profitable products into mature, dominant brands. Pursuant to the Distribution Agreement, Bidi granted us an exclusive worldwide right
to distribute the Products for sale and resale to both retail level customers and non-retail level customers.&#160;We ceased all retail/direct-to-consumer
sales in February 2021.&#160;Pursuant to the terms of the Distribution Agreement, Bidi provides us with all the branding, logos, and marketing
materials to be utilized by us in connection with our marking and promotion of the Products. We do not manufacture any of the Products
we resell. Currently, the Products consist of the &#8220;BIDI<sup>&#174; </sup>Stick,&#8221; a disposable, tamper-resistant ENDS Product.
In June 2022, we entered into the Third A&amp;R Distribution Agreement, which, among other items, modifies various terms and provisions
to reflect the terms of the PMI Licensing Agreement. Pursuant to the Third A&amp;R Distribution Agreement, the exclusive right to distribute
the Products is subject to a carve-out for, and exclusion, of the PMI Markets.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In connection with the Distribution Agreement, we
entered into Sub-Distribution Agreements, whereby we appointed the counterparties as non-exclusive sub-distributors. Pursuant to the Sub-Distribution
Agreements, the sub-distributors agreed to purchase for resale the Products in such quantities as they should need to properly service
non-retail customers within the Territory</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We process all sales made only to non-retail customers
in the United States, with all sales to non-retail customers made through Bidi&#8217;s age-restricted website, www.wholesale.bidivapor.com.
We ceased all retail/direct-to-consumer sales in February 2021 in order to better ensure youth access prevention and to comply with the
Prevent All Cigarette Trafficking (&#8220;PACT&#8221;) Act. We provide all customer service and support at our own expense. Bidi sets
the minimum prices for all sales made by us. We maintain adequate inventory levels of the Products in order to meet the demands of our
non-retail customers, and deliver the Products sold to these customers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Current Product Offerings</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Pursuant to the Distribution Agreement, we sell and
resell ENDS Products, also referred to as (&#8220;e-cigarettes&#8221;), to non-retail level customers. Our primary Product we resell is
the &#8220;BIDI<sup>&#174;</sup> Stick,&#8221; a disposable, tamper-resistant ENDS product that comes in a variety of flavor options for
adult cigarette smokers. The court-ordered stay means that the MDO is not legally in force. Accordingly, we anticipate being able to continue
marketing and selling the Products, subject to the FDA&#8217;s enforcement discretion, while Bidi continues with its merits case challenging
the legality of the MDO. The FDA has indicated that it is prioritizing enforcement against companies that have either not submitted PMTAs,
whose PMTAs have been refused acceptance or filing by the FDA, or whose PMTAs remain subject to MDOs. We are wholly dependent on Bidi
to supply the BIDI&#174; Sticks to us for distribution. Accordingly, any supply or other issues that impact Bidi, indirectly impacts us
and our ability to operate our business.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In addition to the BIDI<sup>&#174;</sup> Stick, we
originally anticipated launching the distribution of the &#8220;BIDI<sup>&#174;</sup> Pouch&#8221; outside of the United States. The initial
planned February 2021 roll-out of the BIDI<sup>&#174;</sup> Pouch was delayed due to COVID-19 based manufacturing and supply chain constraints.
Due to these complications, and in effort to prevent future bottlenecks, Bidi decided to move manufacturing in-house. In 2021, Bidi modified
the planned formulation of the BIDI<sup>&#174;</sup> Pouch. The original BIDI<sup>&#174; </sup>Pouch formulation intended to utilize a
tobacco-free (synthetic) nicotine formulation, along with natural fibers and a chew-base filler in six different flavors. However, the
BIDI<sup>&#174;</sup> Pouch product was placed on temporary hold domestically in anticipation of the FDA&#8217;s enforcement of synthetic
nicotine products as either unauthorized drugs under Section 201(g) of the Food, Drug and Cosmetic Act (&#8220;FDCA&#8221;) or as tobacco
products under new FDA authority. On March&#160;15, 2022, the FDA Center for Tobacco Products (&#8220;CTP&#8221;) was given the authority
to regulate products containing non-tobacco derived synthetic nicotine after President Biden signed the Omnibus Budget Bill (H.R. 2741).
Pursuant to the new legislation, which included a rider amending the definition of a &#8220;tobacco product&#8221; in the FDCA to include
products containing nicotine from any source, synthetic nicotine products became subject to the TCA requirements for tobacco products,
including the requirement for premarket authorization. Given these developments, Bidi has decided not to launch the synthetic-nicotine
BIDI<sup>&#174;</sup> Pouch at this time, but will instead seek a PMTA marketing authorization from the FDA for the BIDI<sup>&#174;</sup>
Pouch made with tobacco-derived nicotine.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 14, 2021, we announced plans to launch our
first Kaival-branded product, a Hemp CBD product. In addition to our branded formulation, we anticipate that we will also provide white
label, wholesale solutions for other product manufacturers through our subsidiary, Kaival Labs. However, as of the date of this Quarterly
Report, we have not launched any Kaival-branded products, nor have we begun to offer white label, wholesale solutions to other product
manufacturers.&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>PMI Licensing Agreement and International Distribution</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&#160;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 13, 2022, we, through our 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&#8217;s ENDS device, known as the BIDI&#174; 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</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="text-decoration: underline"><b>Going
Concern</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In February 2022, the U.S. Court of Appeals for the
Eleventh Circuit granted Bidi a judicial stay of the MDO previously issued by the FDA to Bidi in September 2021. The ruling means that
the MDO is not legally in force. Accordingly, we anticipate being able to continue marketing and selling the Products, subject to the
FDA&#8217;s enforcement discretion, while Bidi continues with its merits case challenging the legality of the MDO. The FDA has indicated
that it is prioritizing enforcement against companies that have either not submitted PMTAs, whose PMTAs have been refused acceptance or
filing by the FDA, or whose PMTAs remain subject to MDOs. Oral arguments in the merits case were held on May 17, 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">If the U.S. Court of Appeals for the Eleventh Circuit
rules in favor of Bidi in the merits case, we anticipate that the FDA will be compelled to place the non-tobacco flavored ENDS back into
the PMTA scientific review process. If this is the outcome of the merits case, we anticipate being able to continue marketing and selling
the Products, subject to the FDA&#8217;s enforcement discretion, until the scientific review process is complete on each of Bidi&#8217;s
PMTA for the non-tobacco flavored ENDS and the FDA issues its decision on each.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">If the U.S. Court of Appeals for the Eleventh Circuit
rules against Bidi on the merits case, if the FDA re-issues the MDO after completing its scientific review process for each of Bidi&#8217;s
PMTAs for its non-tobacco flavored ENDS, or if the FDA otherwise chooses to enforce the MDO against Bidi, we will be forced to cease sales
on the non-tobacco flavored BIDI<sup>&#174;</sup> Sticks in the United States market, leaving only the Tobacco (Classic) BIDI<sup>&#174;</sup>
Sticks product for sale in the United States. If this is the outcome of the merits case, this combined with a negative cash flow from
operations may raise substantial doubt on our ability to continue as a going concern.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Management plans to continue similar operations with
increased marketing, which we believe will result in increased revenue and net income. Further, we believe that the PMI License Agreement
will generate additional revenues through royalties paid by PMPSA. However, there is no assurance that management&#8217;s plan will be
successful due to the current economic climate in the United States and globally.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The unaudited consolidated financial statements filed
as part of this Quarterly Report do not include any adjustments relating to the recoverability and classification of recorded assets,
or the amounts and classification of liabilities that might be necessary in the event that we cannot continue as a going concern.</p>
<p style="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="a_007"></span>Liquidity
and Capital Resources</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe we have sufficient cash on hand as of June 13, 2022. However, we are awaiting the outcome of Bidi&#8217;s merit-based case pending
in the U.S. Court of Appeals for the Eleventh Circuit with respect to the MDO issued by the FDA in September 2021. If the Eleventh Circuit
Court of Appeals rules against Bidi, our business and financial condition will be materially adversely affected, including our ability
to generate revenues and our liquidity. Other than the ongoing MDO matters, we have no known current demands or commitments and are not
aware of any events or uncertainties as of April 30, 2022 that will result in or that are reasonably likely to materially increase or
decrease our current requirements for cash.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At April 30, 2022, we had working capital of approximately
$13.1 million and total cash of approximately $4.7 million.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
intend to generally rely on cash from operations and equity and debt offerings, to the extent necessary and available, to satisfy our
liquidity needs. There are a number of factors that could result in the need to raise additional funds, including a decline in revenue
or a lack of anticipated sales growth and increased costs. Our efforts are directed toward generating positive cash flow and profitability.
If these efforts are not successful, we may need to raise additional capital. Should capital not be available to us at reasonable terms,
other actions may become necessary in addition to cost control measures and continued efforts to increase sales. These actions may include
exploring strategic options for the sale of the Company, the creation of joint ventures or strategic alliances under which we will pursue
business opportunities, or other alternatives. We believe we have the financial resources to weather any short-term impacts of the FDA&#8217;s
PMTA process and Bidi&#8217;s receipt of a MDO from the FDA; however, an extended impact, or a negative ruling in Bidi&#8217;s merits-based
litigation case or the FDA ultimately not approving Bidi&#8217;s PMTA if it is re-evaluated could have a material and adverse effect
on our sales, earnings, and liquidity. At this time, we do not foresee the need for further strategic financing for the next twelve months,
given the financing we completed in September 2021, as indicated below, and our continual sales efforts and results.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
September 2021, we completed a firm commitment underwritten offering, which offering was made pursuant to our Registration Statement
on Form S-3 (File No. 333-258339) (the &#8220;Registration Statement&#8221;). The SEC declared the Registration Statement effective on
August 10, 2021. We sold 4,700,000 shares of our Common Stock and warrants to purchase an additional 3,525,000 shares of our Common Stock.
We sold each share of our Common Stock and warrants to purchase 0.75 shares of our Common Stock at a combined public offering price of
$1.70. We also granted the underwriter the option to purchase an additional 705,000 shares of our Common Stock and warrants to purchase
an additional 528,750 shares of our Common Stock. We received net proceeds from the offering of approximately $8.3 million. We have also
received approximately $1.7 million&#160;from the exercise of the warrants. We used the proceeds for general corporate purposes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Cash
Flows:</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Cash flow used in operations was approximately
$(4.6) million for the first six months of fiscal year 2022, compared to $(5.2) million used in operations for the first six months
of fiscal year 2021. The decrease in cash flow used in operations for the first six months of fiscal year 2022 compared to the
first six months of fiscal 2021 was primarily due to decrease in stock-based compensation, accounts receivable, and accounts payable.</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>



<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The net cash flow provided by financing activities
was approximately $1.5 million for the first six months of fiscal year 2022, compared to cash flow used in financing activities of approximately
$78,000 for the first six months of fiscal year 2021. Cash provided by financing activities during the first six months of fiscal year
2022 resulted from the exercise of warrants by various stockholders. The cash used in financing activities for the first six months of
fiscal year of 2022 and fiscal year 2021 consisted of cash used for the settlement of RSUs issued to employees.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="a_008"></span>Results
of Operations</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Three
months ended April 30, 2022, compared to three months ended April 30, 2021</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Revenues:</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenues for the second quarter of fiscal year 2022
were approximately $3.1 million, compared to approximately $18.1 million in the same period of the prior fiscal year.&#160;In February
2022, Bidi was granted a judicial stay on the MDO previously issued by the FDA prohibiting the marketing and sale of non-tobacco flavored
BIDI<sup>&#174;</sup> Sticks, which had significantly impacted our revenues in previous quarters. As a result of the grant of the judicial
stay of the MDO, our revenues increased in the second quarter of fiscal 2022, as compared to first quarter of fiscal 2022. We expect this
trend to continue as renewed distribution ramps up and sales of non-tobacco flavored BIDI<sup>&#174;</sup> Sticks increase, subject to
the court ruling in Bidi&#8217;s favor in the pending merits-based case, and subject to the FDA&#8217;s enforcement discretion.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">With respect to synthetic nicotine vaping products,
on March 15, 2022, the FDA was given the authority to regulate products containing non-tobacco derived synthetic nicotine after President
Biden signed the Omnibus Budget Bill (H.R. 2741). Pursuant to the new legislation, which amended the definition of a &#8220;tobacco product&#8221;
in the FDCA to include products containing nicotine from any source, manufacturers of all currently marketed synthetic nicotine products
were required to submit a PMTA by May 14, 2022 to remain on the market. Products that do not receive PMTA authorization (i.e., a Marketing
Grant Order or &#8220;MGO&#8221;) within 60 days (i.e., by July 13, 2022) and that remain on the market thereafter will be in violation
of the statute and subject to FDA enforcement. We anticipate that if the FDA begins enforcement against illegally-marketed or synthetic-nicotine
vaping products, there may be an increased demand for compliant and legal vaping products, such as the BIDI<sup>&#174;</sup> Stick.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>






<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Cost
of Revenue, net and Gross Profit (Loss):</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Gross profit in the second quarter of fiscal year
2022 was approximately $387,700, or approximately 12.7%, of revenues, net, compared to approximately $6.3 million gross profit, or approximately
34.6%, of revenues, net, for the second quarter of fiscal year 2021. Total cost of revenue, net was approximately $2.7 million, or approximately
87.3%, of revenue, net for the second quarter of fiscal year 2022, compared to approximately $11.9 million, or approximately 65.4%, of
revenue, net for the second quarter of fiscal year 2021. The decrease in gross profit is primarily driven by the decrease in overall sales
and the recognition of accumulated year-to-date credits/discounts/rebates given to customers, totaling approximately $499,000, resulting
in an offset to revenue, net, during the second quarter of fiscal year 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><i>Operating Expenses:</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><i></i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Total operating expenses were approximately $5.4 million
for the second quarter of fiscal year 2022, compared to approximately $10.4 million for the second quarter of fiscal year 2021. For the
second quarter of fiscal year 2022, operating expenses consisted primarily of advertising and promotion fees of approximately $761,000,
stock-based compensation expense of approximately $2.5 million, professional fees of approximately $163,000, and all other general and
administrative expenses of approximately $2.0 million. General and administrative expenses in the second quarter of fiscal year 2022 consisted
primarily of salaries and wages, stock option expense, insurance, lease expense, project expenses, banking fees, business fees and state
and franchise taxes. For the second quarter of fiscal year 2021, operating expenses were approximately $10.4 million, consisting primarily
of advertising and promotion fees of approximately $801,000, professional fees totaling approximately $7.3 million, and all other general
and administrative expenses of approximately $2.3 million. General and administrative expenses in the second quarter of fiscal year 2021
consisted primarily of salaries and wages, insurance, banking fees, business fees, and other service fees. We expect future operating
expenses to increase while we increase the footprint of our business and generate increased sales growth.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Income Taxes:</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the second quarter of fiscal year 2022, we
did not accrue a tax provision for income taxes, due to the pre-tax loss of approximately ($5.1) million, compared to a tax provision
of approximately $187,000 for the second quarter of fiscal year 2021, due to the amount of pre-tax income for that three-month period.
However, we did report a tax benefit of approximately $5,800 during fiscal year 2022. The reduction from the second quarter of fiscal
year 2021 was due to the pre-tax operating loss recognized during the second quarter of fiscal year 2022.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><i></i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Net Loss:</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As a result of the items noted above, the net loss
for the second quarter of fiscal year 2022 was approximately ($5.0) million, or ($0.16) basic and diluted loss per share, compared to
a net loss of approximately ($4.3) million, or ($0.18) basic and diluted earnings per share, for the second quarter of fiscal year 2021.
The increase in the net loss for the second quarter of fiscal year 2022, as compared to the second quarter of fiscal year 2021, is primarily
attributable to the decreased revenues and increase in customer credits/discounts/rebates, as noted above.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Six months ended April 30, 2022, compared to six
months ended April 30, 2021</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Revenues:</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenues for the first six months of fiscal year 2022
were approximately $6.0 million, compared to $55.5 million in the same period of the prior fiscal year. Revenues decreased in the first
six months of fiscal year 2022 compared to fiscal year 2021, generally due to (i) Bidi&#8217;s receipt of the MDO, which limited our ability
during the first six months of fiscal year 2022 to sell flavored BIDI<sup>&#174; </sup>Sticks in the United States and (ii) increased
competition. A recent court ruling in favor of Bidi granted a judicial stay on the MDO previously issued by the FDA banning the marketing
and sale of flavored BIDI<sup>&#174;</sup> Sticks, amongst banning these flavored sticks with other industry competitors. As a result
of the judicial stay of Bidi&#8217;s MDO, we have begun to experience an upward trajectory of revenues as renewed distribution ramps up
and sales of flavored BIDI<sup>&#174;</sup> Sticks products increase, which sales remain subject to FDA&#8217;s enforcement discretion
(and assuming that Bidi is successful in its currently pending merits-based case). We also anticipate that if the FDA begins enforcement
against illegally-marketed or synthetic-nicotine vaping products, there may be an increased demand for compliant and legal vaping products,
such as the BIDI<sup>&#174;</sup> Stick.&#160;&#160;&#160;&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Cost of Revenue and Gross Profit (Loss):</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Gross loss in the first six months of fiscal year
2022 was approximately ($303,000), compared to gross profit of approximately $11.1 million profit for the first six months of fiscal year
2021. Total cost of revenue was approximately $6.2 million for the first six months of fiscal year 2022, compared to $44.4 million for
the first six months of fiscal year 2021. The decrease in gross profit is primarily driven by the decrease in overall sales and the recognition
of accumulated year-to-date credits, discounts, and rebates given to customers, totaling approximately $1.4 million, resulting in an offset
to revenue, net, during the six months ended April 30, 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Operating Expenses:</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Total operating expenses were approximately $7.5 million
for the first six months of fiscal year 2022, compared to approximately $14.7 million for the first six months of fiscal year 2021. For
the first six months of fiscal year 2022, operating expenses consisted of commissions paid pursuant to the Amended Service Agreement of
approximately $1.4 million and general and administrative expense consisting of amortized stock option expense of approximately $2.8 million,
professional fees of approximately $1.4 million, salaries and wages of approximately $939,000, and all other general and administrative
expenses of approximately $1.0 million. General and administrative expenses in the first six months of fiscal year 2022 consisted primarily
of legal fees, salaries, other professional fees, merchant fees, and other service fees. Total operating expenses for the first six months
of fiscal year 2021 were approximately $14.7 million. These operating expenses consisted primarily of advertising and promotion fees of
approximately $1.8 million; professional fees of approximately $9.7 million; salary, wages, commissions, and bonuses of approximately
$1.8 million; stock-based compensation expense of approximately $580,000; professional fees of approximately $163,000; and general and
administrative expenses of approximately $820,000, which consisted primarily of insurance, banking fees, merchant fees, business fess
and other service fees.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font: 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Income
Taxes:</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i></i></span></p>

<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-size: 10pt">During the first six
months of fiscal year 2022, we did not accrue a tax provision for income taxes</span><span style="font-size: 8pt">&#160;&#160;</span><span style="font-size: 10pt">,
due to the pre-tax loss of approximately ($7.8) million. However, we did report a tax benefit of approximately $5,800 during fiscal year
2022. During the first six months of fiscal year 2021, we accrued a tax provision of approximately $293,100 related to tax liabilities
for </span><span style="font-size: 9pt">fiscal year 2020.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Net Income (Loss):</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>&#160;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Net loss for the first six months of fiscal year 2022
was approximately ($7.8) million, or $(0.25) basic and diluted earnings per share, compared to net loss for the first six months of fiscal
year 2021, which was approximately ($3.9) million, or $(0.17) basic and diluted earnings per share. The increase in the net loss for the
first six months of fiscal year 2022, as compared to the first six months of fiscal year 2021, is primarily attributable to the decreased
revenues and increase in customer credits/discounts/rebates.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-size: 10pt">Weighted-average shares
of Common Stock outstanding were 23,511,959 and 23,368,691 for the first six months of fiscal year 2022 and 2021, respectively.</span><span style="font-size: 8pt">&#160;&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="text-decoration: underline"><b>Critical
Accounting Policies and Estimates</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Other than the policy changes disclosed in Note 2,&#160;<i>Basis
of Presentation and Significant Accounting Policies,&#160;</i>to the unaudited Consolidated Financial Statements in Item 1 of Part I of
this Quarterly Report, there have been no material changes to our critical accounting policies and estimates during the three months ended
April 30, 2022 from those disclosed in Item 7, Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations,
of our 2021 Annual Report for the year ended October 31, 2021.</p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="a_009"></span>Emerging
Growth Company</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an &#8220;emerging growth company,&#8221; that is exempt from certain financial disclosure and governance requirements for up to
five years as defined in the Jumpstart Our Business Startups Act of 2012 (the &#8220;JOBS Act&#8221;). The JOBS Act eases restrictions
on the sale of securities and increases the number of stockholders a company must have before becoming subject to the SEC&#8217;s reporting
and disclosure rules. We have not elected to use the extended transition period for complying with new or revised accounting standards
under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_010"></span>Item
3. Quantitative and Qualitative Disclosures About Market Risk</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a &#8220;smaller reporting company&#8221; as defined by Item 10 of Regulation S-K, the Company is not required to provide the information
required by this Item.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_011"></span>Item
4. Controls and Procedures</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Evaluation
of Disclosure Controls and Procedures</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
management is responsible for establishing and maintaining adequate internal control over our financial reporting (as defined in Rule
13a-15(f) under the Exchange Act). Internal control over financial reporting is a process, including policies and procedures, designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
reporting purposes in accordance with U.S. generally accepted accounting principles. Our management assessed our internal control over
financial reporting using the criteria in Internal Control &#8211; Integrated Framework (2013 Framework), issued by the Committee of
Sponsoring Organizations of the Treadway Commission (&#8220;COSO&#8221;). A system of internal control over financial reporting is designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
on our evaluation under the framework in COSO, our management concluded that our internal control over financial reporting remained ineffective
as of April 30, 2022 based on such criteria. Material weaknesses existed in the design or operation of certain of our internal controls
over financial reporting that adversely affect our internal controls. A material weakness is a significant deficiency, or combination
of deficiencies, in internal control over financial reporting that results in more than a remote likelihood that a material misstatement
of the annual or interim financial statements may not be prevented or detected. Management determined that&#160;there was a lack of resources
to provide segregation of duties consistent with control objectives, the lack of sufficient and consistent real time remote communications,
and the lack of a fully developed formal review process that includes multiple levels of review over financial disclosure and reporting
processes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
weaknesses and the related risks are not uncommon in a company of our size because of the limitations in the location, size and number
of our staff. To address these material weaknesses, and subject to the receipt of additional financing or cash flows, we have undertaken
certain remediation measures to date to address the material weaknesses described in this Quarterly Report, including implementing procedures
pursuant to which we can ensure segregation of duties and hire additional resources to ensure appropriate review and oversight, as well
as more timely formal communications processes, more diligent review and approval of all disbursements and more timely review of all
banking transactions sales orders and inventory management.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met under all potential conditions, regardless of how remote, and may not prevent or detect all errors and all
fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of a simple error or mistake. Our internal control over financial reporting is designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Changes
in Internal Control over Financial Reporting</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
have been no changes in our internal control over financial reporting (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of
the Exchange Act) that have occurred during the fiscal three months ended April 30, 2022 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span id="a_012"></span>PART
II OTHER INFORMATION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_013"></span>Item
1. Legal Proceedings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
are no material pending legal proceedings as defined by Item 103 of Regulation S-K, to which we are a party or of which any of our property
is the subject, other than ordinary routine litigation incidental to the Company&#8217;s business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_014"></span>Item
1A. Risk Factors</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business, operations, and financial condition are subject to various risks and uncertainties. The risk factors described in Part I, &#8220;Item
1A. Risk Factors&#8221; in the 2021 Annual Report, for the year ended October 31, 2021, should be carefully considered, together with
the other information contained or incorporated by reference in this Quarterly Report and in our other filings with the SEC in connection
with evaluating us, our business, and the forward-looking statements contained in this Quarterly Report. During the quarter ended April
30, 2022, there have been no material changes from the risk factors previously disclosed under Part I, &#8220;Item 1A. Risk Factors&#8221;
in the 2021 Annual Report, for the year ended October 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_015"></span>Item
2. Unregistered Sales of Equity Securities and Use of Proceeds</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Share-based
Compensation</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the three months ended April 30, 2022, we issued the following securities as compensation to certain of our employees and consultants:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 4, 2022, the Company entered into a Consulting Agreement with Oakhill Europe Ltd (&#8220;Oakhill Europe&#8221;), pursuant to
which the Company engaged Oakhill Europe to provide strategic advising and negotiation assistance for potential international distribution
agreements (collectively, the &#8220;Oakhill Services&#8221;), in exchange for a cash monthly retainer, incentive compensation bonuses,
and an incentive compensation bonus value of $75,000 paid in fully-vested non-qualified stock options, upon the achievement of certain
events.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">On February 5, 2022,
the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth in RSU agreements
previously entered into with such employees. The RSUs were a portion of the compensation paid to such employees for their services
to us. Of the shares issued to employees, 24,058 shares were withheld by the Company to satisfy tax withholding obligations and/or
satisfy cash settlement options to employees, equaling approximately $23,336. The issuances were exempt from the registration requirements
of the Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;) by virtue of Section 4(a) (2) thereof as a transaction
not involving a public offering.</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 27, 2022, the Company granted a stock option award to Mark Thoenes, Interim Chief Financial Officer, to acquire up to 100,000
shares of Common Stock under the Company&#8217;s 2020 Stock and Incentive Compensation Plan, as partial compensation for Mr. Thoenes&#8217;
services. The option shares are exercisable at a price of $2.45 per share, which equaled the closing price of the Common Stock as of
the date immediately prior to the grant date. The issuances were exempt from the registration requirements of the Securities Act by virtue
of Section 4(a)(2) thereof as a transaction not involving a public offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">On February 27, 2022,
the Company granted a stock option award to Russell Quick, as an independent consultant providing strategic advising and negotiation
assistance for potential international distribution agreements, to acquire up to 100,000 shares of Common Stock under the Company&#8217;s
2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price of $2.45 per share, which equaled the
closing price of the Common Stock as of the date immediately prior to the grant date. The issuances were exempt from the registration
requirements of the Securities Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font: 10pt Times New Roman, Times, Serif"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 5, 2022, the Company granted a stock option award to Nirajkumar Patel, Chief Executive Officer, to acquire up to 600,000 shares
of Common Stock under the Company&#8217;s 2020 Stock and Incentive Compensation Plan, as partial compensation for Mr. Patel&#8217;s services
as Chief Executive Officer. The option shares are exercisable at a price of $2.85 per share, which equaled the closing price of the Common
Stock as of the date immediately prior to the grant date. The issuances were exempt from the registration requirements of the Securities
Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 5, 2022, the Company granted stock option awards to Eric Mosser, Chief Operating Officer, to acquire up to 500,000 shares of Common
Stock under the Company&#8217;s 2020 Stock and Incentive Compensation Plan, as partial compensation for Mr. Patel&#8217;s services as
Chief Operating Officer. The option shares are exercisable at a price of $2.85 per share, which equaled the closing price of the Common
Stock as of the date immediately prior to the grant date. The issuances were exempt from the registration requirements of the Securities
Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 5, 2022, the Committee and the Board approved the grant of stock option awards to 5 employees, to acquire up to 285,600 shares
of Common Stock under the Company&#8217;s 2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price of
$2.85 per share, which equaled the closing price of the Common Stock as of the date immediately prior to the grant date. The issuances
were exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof as a transaction not involving
a public offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 28, 2022 and on March 3, 2022 the
Company issued 10,000 shares and 2,963 shares, respectively, of the Company&#8217;s Common Stock to Mr. Rudy Singh as payment for
the EDGAR filing services performed for the filing of the Company&#8217;s Annual Report on Form 10-K for the year ended October
31, 2021. The issuances were exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof
as a transaction not involving a public offering.</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Following
the end of the three months ended April 30, 2022, we issued the following securities as compensation:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 18, 2022, the Company granted a stock option award to Russell Quick, pursuant to a previously executed independent consultant agreement
that renewed on December 1, 2022, to acquire up to 500,000 shares of Common Stock under the Company&#8217;s 2020 Stock and Incentive
Compensation Plan. The option shares are exercisable at a price of $1.03 per share, which equaled the closing price of the Common Stock
as of the date immediately prior to the grant date. The issuances were exempt from the registration requirements of the Securities Act
by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_016"></span>Item
3. Defaults Upon Senior Securities</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_017"></span>Item
4. Mine Safety Disclosures</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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5. Other Information</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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6. Exhibits</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following exhibits are filed herewith as a part of this Quarterly Report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr style="background-color: white">
    <td style="border-bottom: black 1pt solid; padding: 0pt; vertical-align: bottom; width: 8%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit
    Number</b></span></td>
    <td style="padding: 0pt; width: 2%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1pt solid; padding: 0pt; vertical-align: bottom; width: 90%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Description</b></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.1</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991619000052/articlesofinc.htm"><span style="font-family: Times New Roman, Times, Serif">Restated
    Certificate of Incorporation, which was filed as Exhibit 3.1 to our Registration Statement on Form 10-12G filed with the Securities
    and Exchange Commission on March 25, 2019, and is incorporated herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991619000028/qshi_form1012ga1.htm"><span style="font-family: Times New Roman, Times, Serif">Bylaws,
    which were filed as Exhibit 3.2 to our Registration Statement on Form 10-12G filed with the Securities and Exchange Commission on
    February 19, 2019, and is incorporated herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.3</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112219000386/e1427_3-1.htm"><span style="font-family: Times New Roman, Times, Serif">Certificate
    of Ownership and Merger, as filed with the Secretary of State of the State of Delaware on June 20, 2019, which was filed as Exhibit
    3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 15, 2019, and is incorporated herein
    by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.4</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112219000386/e1427_3-2.htm"><span style="font-family: Times New Roman, Times, Serif">Certificate
    of Correction, as filed with the Secretary of State of the State of Delaware on July 15, 2019, which was filed as Exhibit 3.2 to
    our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 15, 2019, and is incorporated herein by
    reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.5</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991620000101/designation31_82120.htm"><span style="font-family: Times New Roman, Times, Serif">Certificate
    of Designation of the Preferences, Rights, and Limitations of the Series A Preferred Stock, as filed with the Secretary of State
    of the State of Delaware on August 19, 2020, which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities
    and Exchange Commission on August 21, 2020, and is incorporated herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.6</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001188/e2932_ex3-1.htm"><span style="font-family: Times New Roman, Times, Serif">Certificate
    of Amendment to the Amended and Restated Certificate of Incorporation of Kaival Brands Innovations Group, Inc., effective July 20,
    2021, which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July
    20, 2021, and is incorporated herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.1</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991620000036/ex10_1.htm"><span style="font-family: Times New Roman, Times, Serif">Exclusive
    Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Bidi Vapor LLC, dated March 9, 2020, which was filed
    as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2020, and is incorporated
    herein by reference thereto. (1)</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.2</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991620000047/serviceagreement.htm"><span style="font-family: Times New Roman, Times, Serif">Service
    Agreement by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, dated March 31, 2020, which was filed as Exhibit
    10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2020, and is incorporated herein
    by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.3</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000618/e1968_10-1.htm"><span style="font-family: Times New Roman, Times, Serif">First
    Amendment to Service Agreement by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, dated June 2, 2020, which
    was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 3, 2020, and
    is incorporated herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.4</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000344/e1848_10-1.htm"><span style="font-family: Times New Roman, Times, Serif">Non-Exclusive
    Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Favs Business, LLC, dated April 3, 2020, which
    was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 6, 2020, and
    is incorporated herein by reference thereto. (1)</span></a></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="padding: 0pt; vertical-align: top; width: 8%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.5</span></td>
    <td style="padding: 0pt; width: 2%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; width: 90%; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000374/e1864_10-1.htm"><span style="font-family: Times New Roman, Times, Serif">Non-Exclusive
    Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Colonial Wholesale Distributing Inc., dated April
    11, 2020, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on
    April 13, 2020, and is incorporated herein by reference thereto. (1)</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.6</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000584/e1956_ex10-5.htm"><span style="font-family: Times New Roman, Times, Serif">Amended
    and Restated Exclusive Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Bidi Vapor LLC, dated May
    21, 2020, which was filed as Exhibit 10.5 to our Form 10-Q filed with the Securities and Exchange Commission on May 27, 2020, and
    is incorporated herein by reference thereto. (1)</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.7</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000584/e1956_ex10-6.htm"><span style="font-family: Times New Roman, Times, Serif">Amended
    and Restated Non-Exclusive Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Favs Business, LLC,
    dated May 21, 2020, which was filed as Exhibit 10.6 to our Form 10-Q filed with the Securities and Exchange Commission on May 27,
    2020, and is incorporated herein by reference thereto. (1)</span></a></span></td></tr>

<tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt">&#160;</td>
    <td style="padding: 0pt; text-indent: 0pt">&#160;</td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt">&#160;</td></tr>
<tr>
    <td style="padding: 0pt; vertical-align: top; width: 8%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.8</span></td>
    <td style="padding: 0pt; width: 2%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; width: 90%; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000584/e1956_ex10-7.htm"><span style="font-family: Times New Roman, Times, Serif">Amended
    and Restated Non-Exclusive Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Colonial Wholesale
    Distributing Inc., dated May 25, 2020, which was filed as Exhibit 10.7 to our Form 10-Q filed with the Securities and Exchange Commission
    on May 27, 2020, and is incorporated herein by reference thereto. (1)</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.9</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991620000101/shareagreement101_82120.htm"><span style="font-family: Times New Roman, Times, Serif">Share
    Cancellation and Exchange Agreement, by and between the Company and Kaival Holdings, LLC, dated August 19, 2020, which was filed
    as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2020, and is incorporated
    herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-size: 10pt">&#160;&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
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    Agreement by and between Kaival Brands Innovations Group, Inc., and Just Pick, LLC, dated July 15, 2020, filed as Exhibit 10.14 to
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;10.12</span></td>
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    Amended and Restated Exclusive Distribution Agreement, by and between Kaival Brands Innovations Group, Inc. and Bidi Vapor, LLC,
    dated April 20, 2021, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.13</span></td>
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    Agreement, by and between Kaival Brands Innovations Group, Inc. and Russell Quick, dated March 16, 2021, which was filed as Exhibit
    10.18 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 21, 2021, and is incorporated
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.14</span></td>
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr>
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    Director Agreement, dated June 30, 2021, by and between the Company and George Chuang, which was filed as Exhibit 10.1 to our Current
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.16</span></td>
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    Agreement, dated June 14, 2021, by and between the Company and Mark Thoenes, which was filed as Exhibit 10.2 to our Current Report
    on Form 8-K filed with the Securities and Exchange Commission on July 1, 2021, and is incorporated herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.17</span></td>
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    and Restated Independent Director Agreement, dated March 29, 2021, by and between the Company and Roger Brooks, which was filed as
    Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2021, and is incorporated
    herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.18</span></td>
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    and Restated Independent Direct Agreement, dated March 29, 2021, by and between the Company and Paul Reuter, which was filed as Exhibit
    10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2021, and is incorporated herein
    by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.19</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001232/e2943_ex10-3.htm"><span style="font-family: Times New Roman, Times, Serif">Amendment
    to Amended and Restated Independent Director Agreement, dated July 19, 2021, by and between the Company and Roger Brooks, which was
    filed as Exhibit 10.3 to our Current Report on Form 8-K filed with Securities and Exchange Commission on July 23, 2021, and is incorporated
    herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.20</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001232/e2943_ex10-4.htm"><span style="font-family: Times New Roman, Times, Serif">Amendment
    to Amended and Restated Independent Director Agreement, dated July 19, 2021, by and between the Company and Paul Reuter, which was
    filed as Exhibit 10.4 to our Current Report on Form 8-K filed with Securities and Exchange Commission on July 23, 2021, and is incorporated
    herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.21</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112222000410/e3595_ex10-1.htm"><span style="font-family: Times New Roman, Times, Serif">Form
    of Non-Qualified Stock Option, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange
    Commission on March 10, 2022, and is incorporated herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.22</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112222001007/e3797_ex10-1.htm"><span style="font-family: Times New Roman, Times, Serif">Amended
    and Restated 2020 Stock and Incentive Compensation Plan, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed
    with the Securities and Exchange Commission on May 26, 2022, and is incorporated herein by reference thereto.</span></a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.23</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.24</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.25</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="background-color: white">
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="background-color: white">
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  <tr style="background-color: white">
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">31.1</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">31.2</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="e3829_ex31-2.htm">Certification
    of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*</a></span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32.1</span></td>
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32.2</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="padding: 0pt; vertical-align: top; width: 8%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.INS</span></td>
    <td style="padding: 0pt; width: 2%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; width: 90%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Instance Document*</span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL
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  <tr style="background-color: white">
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL
    Taxonomy Extension Definition Linkbase Document*</span></td></tr>
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
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    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL
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  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding: 0pt; vertical-align: top; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cover Page Interactive
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr style="background-color: white">
    <td style="padding: 0pt; vertical-align: top; width: 5%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
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furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request;&#160;<i>provided,
however,</i>&#160;that the Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended, for any Schedule or Exhibit so furnished</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*filed
herewith</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_020"></span>SIGNATURES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td colspan="2" style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>KAIVAL
BRANDS INNOVATIONS GROUP, INC.</b></span></td></tr>
<tr>
<td style="padding: 0pt 0 0; width: 50%; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt 0 0; width: 5%; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt 0 0; width: 45%; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date: June 21,
2022</span></td>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
<td style="border-bottom: Black 1pt solid; padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
Nirajkumar Patel</i></span></td></tr>
<tr>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Nirajkumar Patel</span></td></tr>
<tr>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt 0 0; text-indent: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">President and
Chief Executive Officer</span></td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 29.15pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="padding: 0pt; width: 50%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date:
June 21, 2022</span></td>
<td style="padding: 0pt; width: 5%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
<td style="border-bottom: Black 1pt solid; padding: 0pt; width: 45%; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
Mark Thoenes</i></span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mark Thoenes</span></td></tr>
<tr>
<td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interim Chief Financial
Officer</span></td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p>







































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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
☒
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended
April 30, 2022
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ___________ to ____________
Commission
file number
000-56016
KAIVAL BRANDS INNOVATIONS GROUP, INC.
(Exact
name of registrant as specified in its charter)
delaware
83-3492907
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
4460 Old Dixie Highway
Grant
,
Florida
32949
(Address
of principal executive offices, including zip code)
(833)
452-4825
(Registrant's
telephone number, including area code)
N/A
(Former
name, former address, and former fiscal year, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
KAVL
The
Nasdaq
Stock Market, LLC
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES
☒ NO ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was
required to submit such files).
YES
☒ NO ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large
Accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐
NO
☒
APPLICABLE
ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
31,166,090
shares of common stock, $0.001 par value, outstanding as of June 13, 2022
KAIVAL
BRANDS INNOVATIONS GROUP, INC.
FORM
10-Q
TABLE
OF CONTENTS
Item
Page
Cautionary Note Concerning Forward-Looking Statements
ii
PART I
Financial Information
Item 1.
Financial Statements
Unaudited Consolidated Balance Sheets
F-1
Unaudited Consolidated Statements of Operations
F-2
Unaudited Consolidated Statements of Changes in Stockholders' Equity
F-3
Unaudited Consolidated Statements of Cash Flows
F-5
Notes to Unaudited Consolidated Financial Statements
F-6
Item 2
Management's Discussion and Analysis of Financial Condition and Results of Operations
1
Liquidity and Capital Resources
3
Results of Operations
3
Off-Balance Sheet Arrangements
Emerging Growth Company
5
Item 3
Quantitative and Qualitative Disclosures about Market Risk
6
Item 4
Controls and Procedures
6
PART II
Other Information
7
Item 1.
Legal Proceedings
7
Item 1A.
Risk Factors
7
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
7
Item 3
Defaults Upon Senior Securities
7
Item 4
Mine Safety Disclosures
7
Item 5
Other Information
7
Item 6
Exhibits
8
Signatures
9
i
CAUTIONARY
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain
statements and information in this Quarterly Report on Form 10-Q for the three and six months ended April 30, 2022 (the "Quarterly
Report") may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933,
as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, which address activities,
events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures,
business strategy, statements related to the expected effects on our business from the novel coronavirus ("COVID-19") pandemic,
our ability to obtain the products we distribute from Bidi Vapor, LLC ("Bidi"), the timing and outcome of Bidi's appeal
of the U.S. Food and Drug Administration's (the "FDA") Premarket Tobacco Product Application ("PMTA") marketing
authorization denials for Bidi's non-tobacco flavored products, the scope of future FDA enforcement of regulations in the electronic
nicotine delivery system ("ENDS"), the FDA's approach to the regulation and enforcement of synthetic nicotine and our
competitors' use of the substance in their products to avoid the PMTA requirements, the impact of black-market goods on our business,
the success of the agreement with Philip Morris Products S.A. ("PMPSA"), a wholly owned affiliate of Philip Morris International
Inc. ("PMI") related to the international distribution of the BIDI
®
Stick, the demand for the products we
distribute, anticipated product performance, market and industry expectations, significant changes in our relationships with our distributors
or sub-distributors, changes in government regulation or laws that affect our business, and circumstances or developments that may make
us unable to implement or realize the anticipated benefits, or that may increase the costs of our current and planned business initiatives,
and other similar matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such
as "may" "will," "should," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," or "continue," or other comparable terminology. These
forward-looking statements are based largely on our current expectations and assumptions and are subject to a number of risks and uncertainties,
many of which are beyond our control. These statements are subject to many risks, uncertainties, and other important factors that could
cause actual future results to differ materially from those expressed in the forward-looking statements including, but not limited to,
the duration and scope of the COVID-19 pandemic and impact on the demand for the products we distribute; our ability to obtain the products
from the manufacturer; actions governments, businesses, and individuals take in response to the pandemic, including restrictions on onsite
commercial interactions; the impact of the COVID-19 pandemic and action taken in response to the pandemic on global and regional economies
and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and
a worsening of global economic conditions or low levels of economic growth; our inability to sustain profitable sales growth; changes
in government regulations or laws that affect our business; significant changes in our relationships with our distributor or sub-distributors;
and circumstances or developments that may make us unable to implement or realize the anticipated benefits, or that may increase the
costs, of our current and planned business initiatives. In light of these risks and uncertainties, all of the forward-looking statements
made herein are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated
by us will be realized. We undertake no obligation to update or revise any of the forward-looking statements contained herein.
ii
Kaival
Brands Innovations Group, Inc.
Consolidated
Balance Sheets
(Unaudited)
April 30,
2022
October 31,
2021
ASSETS
CURRENT ASSETS:
Cash
$
4,661,495
$
7,760,228
Restricted Cash
65,542
65,007
Accounts receivable
1,175,583
1,985,186
Inventory deposit – related party
—
2,925,000
Inventories
9,214,320
15,326,370
Prepaid expenses
375,891
319,531
Income tax receivable
1,753,594
1,753,594
Total current assets
17,246,425
30,134,916
Right of use asset- operating lease
48,299
55,604
TOTAL ASSETS
$
17,294,724
$
30,190,520
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$
224,774
$
242,829
Accounts payable- related party
3,394,759
12,667,769
Accrued expenses
467,079
579,604
Operating lease obligation – short term
13,680
13,020
Customer refund due
2,382
316,800
Total current liabilities
4,102,674
13,820,022
LONG TERM LIABILITIES
Operating lease obligation, net of current portion
39,180
46,185
TOTAL LIABILITIES
4,141,854
13,866,207
STOCKHOLDERS' EQUITY:
Preferred stock
5,000,000
shares authorized; Series A Convertible Preferred stock ($
.001
par value,
3,000,000
shares authorized,
3,000,000
issued and outstanding as of April 30, 2022 and October 31, 2021)
3,000
3,000
Common stock ($
0.001
par value,
1,000,000,000
shares authorized,
31,166,090
and
30,195,312
issued and outstanding as of April 30, 2022 and October 31, 2021, respectively)
31,166
30,195
Additional paid-in capital
26,173,669
21,551,959
Accumulated deficit
(
13,054,965
)
(
5,260,841
)
Total Stockholders' Equity
13,152,870
16,324,313
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
$
17,294,724
$
30,190,520
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
F-
1
Kaival
Brands Innovations Group, Inc.
Consolidated
Statements of Operations
(Unaudited)
For the Three Months   Ended April 30,
For the Six Months
Ended April 30,
2022
2021
2022
2021
Revenues
Revenues, net
$
3,099,751
$
18,752,086
$
5,965,506
$
56,122,053
Revenues - related parties
—
11,245
—
61,545
Excise tax on products
(
39,727
)
(
614,252
)
(
63,599
)
(
673,000
)
Total revenues
3,060,024
18,149,079
5,901,907
55,510,598
Cost of revenue
Cost of revenue - related party
2,627,430
11,792,353
6,112,050
44,271,453
Cost of revenue - other
44,925
70,247
93,097
156,268
Total cost of revenue
2,672,355
11,862,600
6,205,147
44,427,721
Gross profit
387,669
6,286,479
(
303,240
)
11,082,877
Operating expenses
Advertising and Promotion
761,069
800,685
1,353,570
1,761,187
General & Administrative expenses
4,644,567
9,558,009
6,143,121
12,976,348
Total operating expenses
5,405,636
10,358,694
7,496,691
14,737,535
Other Income
Interest income
—
46
—
376
Total Other Income
—
46
—
—
Income (loss) before income taxes provision
(
5,017,967
)
(
4,072,169
)
(
7,799,931
)
(
3,654,282
)
Provision for income taxes
5,807
(
186,758
)
5,807
(
293,144
)
Net income (loss)
$
(
5,012,160
)
$
(
4,258,927
)
$
(
7,794,124
)
$
(
3,947,426
)
Net income (loss) per common share - basic and diluted
$
(
0.16
)
$
(
0.18
)
$
(
0.25
)
$
(
0.17
)
Weighted average number of common shares outstanding - basic and diluted
30,701,393
23,511,959
30,680,701
23,368,691
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
F-
2
Kaival
Brands Innovations Group, Inc.
Consolidated
Statements of Changes in Stockholders' Equity
For
the Six Months Ended April 30, 2022
(Unaudited)
Convertible Preferred Shares (Series A)
Par Value Convertible Preferred Shares (Series A)
Common Shares
Par Value Common Shares
Additional Paid-in Capital
Accumulated Deficit
Total
Balances, October 31, 2021
3,000,000
$
3,000
30,195,312
$
30,195
$
21,551,959
$
(
5,260,841
)
$
16,324,313
Stock Issued for Services – RSUs
—
—
61,250
61
110,189
—
110,250
Common shares settled and cancelled
—
—
(
19,866
)
(
20
)
(
35,739
)
—
(
35,759
)
Stock Option Expenses
—
—
—
—
309,700
—
309,700
Net income
—
—
—
—
—
(
2,781,964
)
(
2,781,964
)
Balances, January, 31, 2022
3,000,000
$
3,000
30,236,696
$
30,236
$
21,936,109
$
(
8,042,805
)
$
13,926,540
Stock Issued for Services – RSUs
—
—
80,166
80
80,086
—
80,166
Common shares settled and cancelled
—
—
(
24,058
)
(
24
)
(
24,034
)
—
(
24,058
)
Exercise of common stock warrants
—
—
873,286
874
1,565,316
—
1,566,190
Stock Option Expenses
—
—
—
—
2,616,192
—
2,616,192
Net income
—
—
—
—
—
(
5,012,160
)
(
5,012,160
)
Balances, April, 30, 2022
3,000,000
$
3,000
31,166,090
$
31,166
$
26,173,669
$
(
13,054,965
)
$
13,152,870
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
F-
3
Kaival
Brands Innovations Group, Inc.
Consolidated
Statement of Changes in Stockholders' Equity
For
the Six Months Ended April 30, 2021
(Unaudited)
Convertible Preferred Shares (Series A)
Par Value Convertible Preferred Shares (Series A)
Common Shares
Par Value Common Shares
Additional Paid-in Capital
Retained Earnings
Total
Balances, October 31, 2020
3,000,000
$
3,000
23,106,886
$
23,107
$
618,904
$
3,772,597
$
4,417,608
Issuance of common shares for employee compensation
—
—
44,583
45
76,655
—
76,700
Common shares settled and cancelled
—
—
(
17,625
)
(
18
)
(
30,493
)
—
(
30,511
)
Issuance of common shares for compensation
—
—
172,129
172
1,034,424
—
1,034,596
Net income
—
—
—
—
—
311,501
311,501
Balances, January 31, 2021
3,000,000
$
3,000
23,305,973
$
23,306
$
1,699,490
$
4,084,098
$
5,809,894
Issuance of common shares for employee compensation
—
—
64,583
65
647,396
—
647,461
Common shares settled and cancelled
—
—
(
20,505
)
(
21
)
(
47,443
)
—
(
47,464
)
Issuance of common shares for compensation
—
—
216,924
217
6,494,338
—
6,494,555
Stock Option Expenses
—
—
—
—
579,699
—
579,699
Net income
—
—
—
—
—
(
4,258,927
)
(
4,258,927
)
Balances, April, 30, 2021
3,000,000
$
3,000
23,566,975
$
23,567
$
9,373,480
$
(
174,829
)
$
9,225,218
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
F-
4
Ka
ival
Brands Innovations Group, Inc.
Consolidated
Statements of Cash Flows
(Unaudited)
For the Six Months Ended April 30, 2022
For the Six Months Ended April 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income
$
(
7,794,124
)
$
(
3,947,426
)
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Stock based compensation
190,416
8,253,312
Stock option expense
2,925,892
579,699
ROU operating lease expense
7,305
7,905
Changes in current assets and liabilities:
Accounts receivable
809,603
(
16,734,585
)
Accounts receivable – related parties
—
14,595
Prepaid expenses
(
56,360
)
(
30,000
)
Inventory deposit – related party
2,925,000
—
Inventory
6,112,050
(
28,787,767
)
Accounts payable
(
18,055
)
272,509
Accounts payable – related party
(
9,273,010
)
36,592,072
Accrued expenses
(
112,525
)
(
37,854
)
Deferred revenue
—
(
623,096
)
Income tax accrual
—
(
756,078
)
Customer refund due
(
314,418
)
—
Right of use liabilities – operating lease
(
6,345
)
(
6,345
)
Net cash used in operating activities
(
4,604,571
)
(
5,203,059
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock warrant exercises
1,566,190
—
Settled RSUs with cash
(
59,817
)
(
77,975
)
Cash flows provided by (used in) financing activities
1,506,373
(
77,975
)
Net change in cash and restricted cash
(
3,098,198
)
(
5,281,034
)
Beginning cash and restricted cash balance
7,825,235
7,421,701
Ending cash and restricted cash balance
$
4,727,037
$
2,140,667
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid
$
—
$
—
Income taxes paid
$
—
$
106,385
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
F-
5
KAIVAL
BRANDS INNOVATIONS GROUP, INC.
Notes
to Unaudited Consolidated Financial Statements
Note
1 –
Organization and Description of Business
Kaival
Brands Innovations Group, Inc. (the "Company," the "Registrant," "we," "us," or "our"),
formerly known as Quick Start Holdings, Inc., was incorporated on September 4, 2018 in the State of Delaware.
Description
of Business
The
Company is focused on growing and incubating innovative and profitable products into mature, dominant brands. In March 2020, the Company
commenced business operations as a result of becoming the exclusive distributor of certain ENDS and related components (the "Products")
manufactured by Bidi, a related party company that is also owned by Nirajkumar Patel, the Chief Executive Officer of the Company.
On
March 9, 2020, the Company entered into an exclusive distribution agreement (the "Distribution Agreement") with Bidi, which
Distribution Agreement was amended and restated on May 21, 2020 and again on April 20, 2021 (collectively, the "A&R Distribution
Agreement"). Pursuant to the A&R Distribution Agreement, Bidi granted the Company an exclusive worldwide right to distribute
the Products for sale and resale to both retail level customers and non-retail level customers. Currently, the Products consist
primarily of the "BIDI
®
Stick." The Company ceased all retail/direct-to-consumer sales in February 2021. Subsequent
to April 30, 2022, the Company entered into a third amended and restated exclusive distribution agreement (the "Third A&R Distribution
Agreement"). For additional information, see Note 8,
Subsequent Events
.
In
connection with the A&R Distribution Agreement, the Company entered into non-exclusive sub-distribution agreements, some of which
were subsequently amended and restated by the parties in order to clarify certain provisions (all such agreements, as amended and restated,
are collectively referred to as the "A&R Sub-Distribution Agreements"), whereby the Company appointed the counterparties
as non-exclusive sub-distributors. Pursuant to the A&R Sub-Distribution Agreements, the sub-distributors agreed to purchase for resale
the Products in such quantities as they should need to properly service non-retail customers within the continental United States (the
"Territory").
On
August 31, 2020, the Company formed Kaival Labs, Inc., a Delaware corporation (herein referred to as "Kaival Labs"), as a
wholly owned subsidiary of the Company. On 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.
On
July 16, 2021, the Company filed a Certificate of Amendment to the Restated Certificate of Incorporation, as amended, with the
Secretary of State of the State of Delaware to effect a 1-for-12 reverse stock split (the "Reverse Stock Split") of the
shares of the Company's common stock, par value $
0.001
per share (the "Common Stock"). The Reverse Stock Split was effective as of 12:01 a.m. Eastern time on July 20, 2021. No
fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares of Common Stock that would have
otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole number. In connection with the Reverse Stock
Split, the Board of Directors (the "Board") approved appropriate and proportional adjustments to all outstanding
securities or other rights convertible or exercisable into shares of Common Stock, including, without limitation, all preferred
stock, warrants, options, and other equity compensation rights. All historical share and per-share amounts reflected throughout our
consolidated financial statements and other financial information in this Quarterly Report have been adjusted to reflect the Reverse
Stock Split as if the split occurred as of the earliest period presented. The par value per share of the Common Stock was not
affected by the Reverse Stock Split.
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.
On
July 14, 2021, the Company announced plans to launch its first Kaival-branded product, a Hemp CBD product. In addition to its
branded formulation, the Company anticipates that it will also provide white label, wholesale solutions for other product manufacturers
through its subsidiary, Kaival Labs. The Company has not yet launched any branded product, nor has it begun to provide white label
wholesale solutions for other product manufacturers.
F-
6
COVID-19
Impact
In
January 2020, the World Health Organization (the "WHO") announced a global health emergency because of a new strain of coronavirus
("COVID-19") originating in Wuhan, China and the risks to the international community as the virus spread globally beyond
its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in global exposure.
The
Company's operations have not been directly impacted by COVID-19. However, we have encountered some logistical delays related
to product launches and distribution in international markets. The Company was also indirectly impacted by supply chain issues and
regulatory oversight. No impairments have been recorded and no triggering events or changes in circumstances had occurred. While the
spread of COVID-19 has slowed and social restrictions have been largely lifted, the full impact of the COVID-19 pandemic continues
to evolve and remains uncertain, particularly as new variants of the virus emerge. As such, the full magnitude of the COVID-19
pandemic, and the resulting impact, if any, on the Company's financial condition, liquidity, and future results of operations
is uncertain.
Impact
of the FDA PMTA Decision
As
of March 2022, the FDA announced that it has taken action on over 99% of applications and issued Marketing Denial Orders ("MDOs")
for more than 1,167,000 non-tobacco flavored ENDS products, while issuing zero marketing authorizations for such 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 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 flavored ENDS product.
On September 29, 2021, Bidi petitioned the U.S. Court
of Appeals for the Eleventh Circuit to review the FDA's denial of the PMTAs for its non-tobacco flavored BIDI
®
Stick
ENDS, arguing that it was arbitrary and capricious under the Administrative Procedure Act ("APA"), as well as
ultra vires
,
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.
Finally,
on October 14, 2021, Bidi requested that the FDA re-review the MDO and reconsider its position that Bidi did not include certain scientific
data in its applications sufficient to allow the PMTAs to proceed to scientific review. In light of this request, on October 22, 2021,
pursuant to 21 C.F.R. § 10.35(a), the FDA issued an administrative stay of Bidi's MDO pending its re-review. Subsequently,
the FDA lifted its administrative stay on December 17, 2021. Following the lifting of the FDA's administrative stay, Bidi filed
a renewed motion to stay the MDO with the U.S. Court of Appeals for the Eleventh Circuit, which was granted on February 1, 2022.
On February 1, 2022, the U.S. Court of Appeals for
the Eleventh Circuit granted Bidi's motion to stay (
i.e.,
put on hold) the MDO, pending the litigation on the merits. The
court-ordered stay means that the MDO is not legally in force. Accordingly, we anticipate being able to continue marketing and selling
the Products, subject to the FDA's enforcement discretion, while Bidi continues with its merits case challenging the legality of
the MDO. The FDA has indicated that it is prioritizing enforcement against companies that have not submitted PMTAs, whose PMTAs have been
refused acceptance or filing by the FDA, or whose PMTAs remain subject to MDOs. Oral arguments in the merits-based proceeding were held
on May 17, 2022.
In
the event that the U.S. Court of Appeals for the Eleventh Circuit issues a ruling adverse to Bidi, or if the FDA otherwise chooses to
enforce the MDO against Bidi, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI
®
Stick
products in the United States, thereby resulting in the Company being unable to distribute such products, and the Company's business
and financial condition would be materially adversely affected. The Company cannot provide any assurances as to the timing or outcome
of the merits-based case.
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, Inc.
and Kaival Brands International, LLC. Intercompany transactions are eliminated.
Basis
of Presentation
The
accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America ("GAAP") and the rules of the Securities and Exchange Commission ("SEC")
and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's most recent
Annual Financial Statements filed with the SEC on Annual Report on Form 10-K on February 16, 2022 (the "2021 Annual Report").
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations for the interim period presented have been reflected herein. The results of operations for the
interim period are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements,
which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period,
as reported in the 2021 Annual Report have been omitted.
F-
7
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order
to make the financial statements not misleading have been included. Actual results could differ from those estimates.
Cash
and Restricted Cash
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
There were no cash equivalents at April 30, 2022 and October 31, 2021. Cash and restricted cash at April 30, 2022 and October 31, 2021
were $
4,727,037
and $
7,825,235
, respectively.
Restricted
cash consists of cash held in short-term escrow as required. As of April 30, 2022, and October 31, 2021, the Company had $
65,542
and $
65,007
in restricted cash, respectively, for amounts held in escrow.
The
following table sets forth a reconciliation of cash, and restricted cash reported in the consolidated balance sheet and the consolidated
statements of cash flows that agrees to the total of those amounts presented in the consolidated statements of cash flows.
April 30,
2022
October 31, 2021
Cash
$
4,661,495
$
7,760,228
Restricted cash
65,542
65,007
Total cash and restricted cash shown in statement of cash flows
$
4,727,037
$
7,825,235
Advertising
and Promotion
All
advertising, promotion and marketing expenses, including commissions, are expensed when incurred.
Accounts
Receivable and Allowance for Doubtful Accounts
Receivables
are stated at cost, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on management's
assessment of the collectability of accounts receivables. A considerable amount of judgment is required in assessing the amount of the
allowance and the Company considers the historical level of credit losses and collection history and applies percentages to aged receivable
categories. The Company makes judgments about the creditworthiness of debtors based on ongoing credit evaluations and monitors current
economic trends that might impact the level of credit losses in the future. If the financial condition of the debtors were to deteriorate,
resulting in their inability to make payments, a larger allowance may be required. As of April 30, 2022, based upon management's
assessment of the accounts receivable aging and the customers' payment history, the Company has determined that no allowance for
doubtful accounts was required. As of October 31, 2021, the Company also determined that
no
allowance for doubtful accounts was required.
Inventories
Inventories
are stated at the lower of cost and net realizable value. Cost includes all costs of purchase and other costs incurred in bringing the
inventories to their present location and condition. The Company determines cost based on the FIFO method. Net realizable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to
make the sale. All inventories (i) were purchased from Bidi, a related party, as of October 31, 2021 and April 30, 2022, (ii) only consisted
of finished goods, (iii) were significant, and (iv) were located in three storage warehouses: (1) the primary leased warehouse, which
is owned by a related party, Just Pick, LLC ("Just Pick"), (2) a customer/sub distributor warehouse, which is owned by Favs
Business LLC ("Favs Business"), and (3) a third-party logistics services warehouse, which is owned by Ranger Enterprises,
LLC ("Ranger"). Based upon fiscal year 2021 inventory management procedures and their results, that have continued through
the quarter ended April 30, 2022, the Company has determined that no allowance for the inventory valuation was required at April 30,
2022, nor October 31, 2021.
Inventory
deposit related party
In the fourth quarter of fiscal
2021, the Company placed an order for BIDI
®
Sticks in anticipation of the distribution launch in the United Kingdom. In
connection with this order, the Company paid $2,925,000 from its capital financing raise to Bidi, a related party, in advance to have
the BIDI
®
Sticks manufactured in compliance with the regulatory product requirements in the United Kingdom, which differs
from the regulatory product requirements in the United States. The parties originally contemplated that delivery of the BIDI
®
Sticks to the Company would occur by the end of April 2022. On April 29, 2022, the Company and Bidi agreed to cancel the order due
to an internal change of approach to international distribution, and Bidi agreed to credit the $
2,925,000
against the accounts payable
balance owed by the Company to Bidi. As of April 30, 2022, the Company has on its balance sheet a zero balance for inventory deposits
and inventory deposits related party.
F-
8
Revenue
Recognition
The
Company adopted ASC 606,
Revenue from Contracts with Customers
(Topic 606) ("ASC 606"), in the second quarter of fiscal
year 2020, as this was the first quarter that the Company generated revenues. Under ASC 606, the Company recognizes revenue when a customer
obtains control of promised goods, in an amount that reflects the consideration that the Company expects to receive in exchange for the
goods. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps:
(1) identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price;
(4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies
a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect
the consideration it is entitled to in exchange for the goods it transfers to the customer. Under ASC 606, disaggregated revenue from
contracts with customers depicts the nature, amount, timing, and uncertainty of revenue and cash flows affected by economic factors.
On October 31, 2021, the Company and one of its customers, Favs Business, entered into a Consignment Agreement. As of October 31, 2021,
the value of the Products stored at Favs Business under the Consignment Agreement was approximately $
2,556,930
. As of April 30, 2022,
the value of the Products stored at Favs Business under the Consignment Agreement was approximately $
1,433,730
.
Deferred
Revenue
The
Company accepts partial payments for orders from wholesale customers, which it holds as deposits or deferred revenue, until the Company
has received full payment and orders are shipped to the customer. Revenue for these orders is recognized at time of shipment to the customer.
As of April 30, 2022, the Company had received $
2,382
in deposits from customers, included with the Company's current liabilities.
As of October 31, 2021, the Company had not received any deposits from customers.
Customer
Refunds
The
Company infrequently has a need to adjust the size of an order after it has been shipped, received, and paid for, due to the customer
oversizing the order for more product that it can realistically sell at that time. If and when this occurs, the Company will ask the
customer to return the over allotted Products. Once received and inspected, the Company will issue a refund for the Product return. As
of April 30, 2022 and October 31, 2021, the Company had customer refunds due in the amounts equal to approximately $
0
and $
316,800
, respectively,
which refund was the result of one of the Company's sub-distributor customers returning Products that had become defective in storage.
Products
Revenue
The
Company generates revenue from the sale of the Products (as defined above) to non-retail customers. The Company recognizes revenue at
a point in time based on management's evaluation of when performance obligations under the terms of a contract with the customer
are satisfied and control of the Products has been transferred to the customer. In most situations, transfer of control is considered
complete when the Products have been shipped to the customer. The Company determines that a customer obtains control of the Product upon
shipment when title of such product and risk of loss transfer to the customer. The Company's shipping and handling costs are fulfillment
costs and such amounts are classified as part of cost of sales. The Company's sales arrangements for retail sales usually require
full prepayment before delivery of the Products. The advance payment is not considered a significant financing component because the
period between when the Company transfers a promised good to a customer and when the customer pays for that good is short. The Company
offers credit sales arrangements to non-retail (or wholesale) customers and monitors the collectability of each credit sale routinely.
Revenue
is measured by the transaction price, which is defined as the amount of consideration expected to be received in exchange for providing
goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes refunds
and returns as well as incentive offers and promotional discounts on current orders. Estimates for sales returns are based on, among
other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity.
These estimates are established in the period of sale and reduce revenue in the period of the sale. Variable consideration related to
incentive offers and promotional programs are recorded as a reduction to revenue based on amounts the Company expects to collect. Estimates
are regularly updated and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key
sales terms such as pricing and quantities ordered are established at the time an order is placed and incentives have very short-term
durations.
Amounts
billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the
passage of time related to credit terms is required before payments are due. The Company does not grant payment financing terms greater
than one year. Payments received in advance of revenue recognition are recorded as deferred revenue.
Concentration
of Revenues and Accounts Receivable
For
the six months ended April 30, 2022, approximately 40%, or $
2,366,200
,
of the revenue from the sale of Products was generated from Favs Business, and approximately 15%, or $
877,264
,
of the revenue from the sale of Products was generated from The H.T. Hackney Company.
Favs Business had an outstanding balance of approximately
$
305,430
, which accounted for approximately 26% of the Company's total accounts receivable from customers as of April 30, 2022.
The H.T. Hackney Company had an outstanding balance of approximately $
297,629
, which accounted for approximately 25% of the Company's
total accounts receivable from customers as of April 30, 2022.  Grocery Supply Warehouse had an outstanding balance of $
163,163
,
which accounting for approximately 14% of the Company's total accounts receivable from customers as of April 30, 2022. Finally,
MMS Distribution, LLC ("MMS Distro") had an outstanding balance of approximately $
116,444
, which accounted for approximately
10% of the Company's total accounts receivable from customers as of April 30, 2022.
For
the six months ended April 30, 2021, approximately 33%, or $
18,129,136
, of the revenue from the sale of Products was generated from Favs
Business, approximately 16%, or $
9,069,455
, of the revenue from the sale of Products was generated from MMS
Distro, and approximately 12%, or $
6,820,132
, of the revenue from the sale of Products was generated from C Store Master ("C
Store Master").
Favs
Business, with an outstanding balance of approximately $
8,590,200
, and GPM Investment, LLC, with an outstanding balance of approximately
$
2,482,553
, accounted for approximately 47% and 14% of the total accounts receivable from customers, respectively, as of April 30, 2021.
F-
9
Share-Based
Compensation
The
Company measures the cost of services received in exchange for an award of equity instruments (share-based payments, or SBP) based on
the grant-date fair value of the award. That cost is recognized over the period during which a recipient is required to provide service
in exchange for the SBP award—the requisite service period (vesting period). For SBP awards subject to conditions, compensation
is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated
using the Black-Scholes-Merton option-pricing model. Compensation expense for SBP awards granted to nonemployees is remeasured each period
as the underlying options vest.
The
fair value of each option granted during the fiscal six-month period ended April 30, 2022 and at October 31, 2021 was estimated on the
date of grant using the Black-Scholes-Merton option-pricing model with the weighted average assumptions in the following table:
As of April 30, 2022
As of October 31, 2021
Expected dividend yield
0
%
0
%
Expected option term (years)
10
10
Expected volatility
294.55
%-
301.53
%
294.55
%-
301.53
Risk-free interest rate
1.19
%-
1.62
%
1.19
%-
1.62
%
The
expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected volatility
was based on the volatility in the trading of the Common Stock. The assumed discount rate was the default risk-free ten-year interest
rate for U.S. Treasury bills. The Company's stock option expense for the fiscal three and six months ended April 30, 2022 was $
2,616,193
and $
2,925,892
,
respectively.
The
Company's stock-based compensation for the fiscal three and six months ended April 30, 2022 was $
110,189
and $
190,416
,
respectively.
Income
Tax
Income
taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred
taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and
income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating
losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. The
Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments
that will result in a material adverse effect on the Company's financial condition, results of operations, or cash flow.
The
Company has Federal net operating loss ("NOL") carryforwards of approximately $
4,000,000
and state NOL carryforwards of approximately
$
1,800,000
. With the changes instituted by the CARES Act, the Federal NOLs have an indefinite life and will not expire. The Company's
federal and state tax returns for the 2018 and 2019 tax years generally remain subject to examination by U.S. and various state authorities.
A valuation allowance is recorded to reduce the deferred tax asset if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax asset will not be realized. After evaluation of the evidence, management determined that
a valuation allowance of approximately $
1,256,059
for the year ended on October 31, 2021, and the fiscal six-month period ended April
30, 2022, is necessary to reduce the deferred tax asset to the amount that will more likely than not be realized pursuant to ASU 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
.
The Company has completed its federal and state tax
returns for the 2020 tax year and intends on filing them shortly. Given the federal and state NOLs, the Company anticipates that its 2020
tax returns will report that it is eligible to apply those NOLs against the federal and state taxes it paid in 2019. The Company anticipates
federal and state tax refunds of approximately $
1,600,000
and $
146,000
, respectively, and expects to collect the refunds in the current
fiscal year.
During the six months ended April 30, 2022, the Company
generated no taxable income and, thus, no federal or state income taxes are accrued for fiscal year 2022.
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
("ASC 820"), defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy
that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable
inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available
in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). The three levels of the fair value hierarchy are described below:
F-
10
●
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 April
30, 2022. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term
nature of these instruments. These financial instruments include cash, restricted cash, accounts receivable, inventory, accounts payable
and accrued expenses.
Recent
Accounting Pronouncements
The
Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted,
would have a material effect on the accompanying financial statements.
Note
3 –
Going Concern
In February 2022, the U.S. Court of Appeals for the
Eleventh Circuit granted Bidi a judicial stay of the MDO previously issued by the FDA. The ruling means that the MDO is not legally in
force pending the outcome of litigation on the merits of Bidi's challenge to the MDO. Accordingly, we anticipate being able to continue
marketing and selling the Products, subject to the FDA's enforcement discretion, while Bidi continues with its merits case challenging
the legality of the MDO. The FDA has indicated that it is prioritizing enforcement against companies that have not submitted PMTAs, whose
PMTAs have been refused acceptance or filing by the FDA, or whose PMTAs remain subject to MDOs. Oral arguments in the merits case were
held on May 17, 2022.
If the U.S. Court of Appeals for the Eleventh Circuit
rules in Bidi's favor in the merits case, the Company anticipates that the FDA will be compelled to place the non-tobacco flavored
ENDS back into the PMTA scientific review process. If this is the outcome of the merits case, the Company anticipates being able to continue
marketing and selling the Products, subject to the FDA's enforcement discretion, until the scientific review process is complete
on each of Bidi's PMTA for non-tobacco flavored ENDS and the FDA issues its decision on each.
If the U.S. Court of Appeals for the Eleventh Circuit
does not rule in Bidi's favor on the merits case, if the FDA re-issues the MDO after completing its scientific review process for
each of Bidi's PMTAs for its non-tobacco flavored ENDS, or if the FDA otherwise chooses to enforce the MDO against Bidi, the Company
will be forced to cease sales of the non-tobacco flavored BIDI
®
Sticks in the United States market, leaving only the Tobacco
(Classic) BIDI
®
Sticks for sale in the United States. If this is the outcome of the merits case, this combined with a
negative cash flow from operations, raises substantial doubt on our ability to continue as a going concern.
Management plans to continue similar operations with
increased marketing, which the Company believes will result in increased revenue and net income. Further, after the end of the three and
six months ended April 30, 2022, the Company's wholly owned subsidiary, KBI, entered into an international licensing agreement with
PMPSA, which the Company expects will generate additional revenues. However, there is no assurance that management's plan will be
successful due to the current economic climate in the United States and globally.
These
consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets,
or the amounts and classification of liabilities that might be necessary in the event that we cannot continue as a going concern.
Note
4 –
Leases
The
Company capitalizes all leased assets pursuant to ASU 2016-02,
Leases (Topic 842)
("Topic 842"), which requires lessees
to recognize right-of-use ("ROU") assets and lease liability, initially measured at present value of the lease payments,
on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. The Company
excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent
expense on a straight-line basis over the lease term. The Company adopted the standard in the fourth quarter of fiscal year 2020. The
adoption of Topic 842 did not have any impact on the Company's previously reported financial statements in any prior period nor
did it result in a cumulative effect adjustment to retained earnings.
T
he Company does not have financing
leases and only one operating lease for office space, with a related party. Certain of the Company's leases include renewal options
and have not been included in the calculation of the lease liabilities and right of use assets as the Company is not reasonably certain
to exercise the option.
Office
Space
On
August 1, 2020, the Company began leasing office space for its main corporate office in Grant, Florida. The five-year lease
agreement is with a related party, Just Pick. The Company's Chief Executive Officer is an officer of Just Pick. Prior to this,
the Company utilized the home office space and warehouse of its management at no cost through July 31, 2020. The operating lease is
for a term of five
years, beginning August 1, 2020, with rent of $
1,000
payable monthly. As the operating lease does not provide
for an implicit interest rate, we estimated a current borrowing rate of
4.5
% in determining the present value of the
lease.
As
of April 30, 2022 and October 31, 2021, the ROU lease asset, net of accumulated amortization, was approximately $
48,299
and $
55,604
,
respectively. The initial recognition of the ROU operating lease was approximately $
73,749
for both the ROU asset and ROU liability. The amortization expense for ROU asset for the twelve months ended October 31, 2021 was
approximately $
14,529
and no payments were made on the ROU liability. The amortization expense for the ROU asset for the six months ended April 30, 2022
was approximately $
7,305
and resulted in a change in the ROU liability. At October 31, 2021, short-term ROU lease liability was approximately $
13,020
and long-term liability was approximately $
46,185
,
totaling approximately $
59,205
.
At April 30, 2022, short-term ROU lease liability was approximately $
13,680
and long-term liability was approximately $
39,180
totaling approximately $
52,860
.
2022
2023
2024
2025
Total
Lease payments
$
13,400
$
15,000
$
18,000
$
15,000
$
61,400
Less discount imputed interest
(
8,540
)
Present value of future payments
52,860
Less current obligations
(
13,680
)
Long term lease obligations
$
39,180
F-
11
Storage
Space
On
November 1, 2021, the Company entered into a month-to-month lease agreement with Ranger Enterprises, LLC, located in Seymour, Indiana,
to store product inventory at this satellite location. The Company made seven payments on this lease, totaling approximately $
15,451
,
during the six months ended April 30, 2022. On November 11, 2021, the Company entered into a month-to-month lease agreement with FFE
Solutions Group, located in Salt Lake City Utah, to store additional product inventory at this satellite location. The Company made five
payments in the amount of approximately $
19,108
for the rent on this lease during the six months ended April 30, 2022. The Company terminated
the lease with FFE Solutions Group on April 29, 2022 after returning all inventory previously stored at this location.
For
additional information regarding leases as of the date these unaudited consolidated financial statements were issued, please see Note
8,
Subsequent Events
.
Note
5 –
Stockholder Equity
Additional
Paid-In Capital
During
the six months ended April 30, 2022, approximately $
2,925,892
of stock option expense was recognized and contributed to Additional
Paid-In Capital. Also, during the six months ended April 30, 2022, on November 5, 2021 and February 5, 2022, restricted stock units ("RSUs")
previously granted to employees vested and shares of Common Stock were issued, which contributed approximately $
130,502
to Additional
Paid-In Capital. Additionally, during the six months ended April 30, 2022, warrants of the Company were exercised for shares of Common
Stock resulting in a further contribution to Additional Paid-in Capital of approximately $
1,565,316
. All of these contributions resulted
in a total increase in Additional Paid-In Capital during the six months ended April 30, 2022 of approximately $
4,621,710
.
Preferred
Shares Issued
The
authorized preferred stock of the Company consists of
5,000,000
shares with a par value of $
0.001
per share, of which
3,000,000
shares
were designated as Series A Convertible Preferred Stock (the "Series A Preferred Stock"). Each share of the Series A Preferred
Stock was initially convertible into 100 shares of Common Stock; however,
as a result of the Reverse Stock Split, the conversion rate
was adjusted such that each share of the Series A Preferred Stock is convertible into approximately 8.33 shares of Common Stock
. All
3,000,000
shares of Series A Preferred Stock were issued and outstanding as of April 30, 2022.
Common
Shares Issued
The
Company implemented the Reverse Stock Split, effective prior to the opening of the market on July 20, 2021. The Reverse Stock Split was
implemented by the Company in support of its application to list on the Nasdaq Capital Market ("Nasdaq"). As a result of
the Reverse Stock Split at a ratio of
1-for-12
,
every 12 shares of the Common Stock were exchanged for one share of the Common Stock. The Company has retroactively adjusted all share
amounts and per share data herein to give effect to the Reverse Stock Split.
During
the three months ended April 30, 2022, stockholders of the Company exercised warrants to purchase approximately
873,286
shares of the
Company's Common Stock.
The
authorized Common Stock of the Company consists of
1,000,000,000
shares with a par value of $
0.001
per share. There were 31,166,090 shares
of Common Stock issued and outstanding as of April 30, 2022. There were 30,195,312 shares of the Common Stock issued and outstanding
as of October 31, 2021.
Warrants
Shares Issued
As part of the Company's underwritten public
offering during fiscal 2021, the Company issued warrants to purchase a total of
4,053,750
shares of Common Stock at an exercise price
of $
1.90
per share. These warrants expire in 2026. Warrants for
873,326
shares of Common Stock were exercised during the six-month period
ended April 30, 2022 for net proceeds of $
1,566,190
. The aggregate intrinsic value of the outstanding Common Stock warrants as of April
30, 2022 and October 31, 2021 was $
0
. The weighted average remaining term of the outstanding Common Stock warrants is
4.50
years as of
April 30, 2022.
The
following is a summary of the stock warrant activity during the fiscal six months ended April 30, 2022 and the year ended October 31,
2021.
Six Months Ended April 30, 2022
Year Ended October 31, 2021
Number of Warrants
Weighted Average Exercise Price
Number of Warrants
Weighted Average Exercise Price
Warrants Outstanding at Beginning of the Period
3,173,922
$
1.90
—
$
1.90
Granted
—
—
4,053,750
1.90
Exercised
(
873,286
)
1.90
(
879,828
)
1.90
Canceled, forfeited, expired
—
—
—
1.90
Warrants Outstanding and Exercisable at End of Period
2,300,636
$
1.90
3,173,922
$
1.90
F-
12
Restricted
Stock Unit Awards
On
November 5, 2021,
the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth
in RSU agreements previously entered into with such employees, resulting in the recognition of approximately $110,250 of share-based
compensation. Of the shares issued to employees, 19,866 shares were withheld by the Company to satisfy tax withholding obligations and/or
satisfy cash settlement options to employees, equaling approximately $35,759.
On
February 5, 2022,
the
Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth in RSU agreements previously
entered into with such employees, resulting in the recognition of approximately $65,538 of share-based compensation. Of the shares issued
to employees, 24,058 shares were withheld by the Company to satisfy tax withholding obligations and/or satisfy cash settlement options
to employees, equaling approximately $24,058. On March 4, 2022, the Company's Board approved the termination of the RSU agreements
with the consent of the employees. At the time these agreements were terminated, there remained 1,230,833 unvested RSUs with approximately
$4,457,875 of related unvested compensation.
See
Common Stock Compensation Transition
Plan
below for additional details.
Additionally,
during the three months ended April 30, 2022, the Company issued
18,160
shares of restricted Common Stock to two vendors who provide
legal and advertising and promotions services to the Company. Those vendors preferred to be paid in shares of restricted Common
Stock instead of cash for the services they performed and billed the Company.
.
Stock
Options
During
fiscal year 2021,
the Company granted options exercisable for up to 150,000 shares of Common Stock of which 15,000 fully vested on March
17, 2021, 7,500 fully vested on June 30, 2021, 41,667 fully vested on December 1, 2021, 68,333 vested on March 17, 2022, 68,333 vest
on March 17, 2023, and 17,500 vest over the next 2 years on June 30, 2022 and 2023. The options have exercise prices ranging from $9.12
to $28.68 per share. These options have a weighted average remaining life of 9.43 years as of October 31, 2021 and of 8.92 years as of
April 30, 2022. The options expire in the year 2031. On July 19, 2021, two of the stock option agreements, exercisable for an aggregate
of 50,000 shares of Common Stock, were modified to accelerate the full vesting period from 3 years to 2 years
.
As of April 30, 2022, the amortized expense and unamortized expense of these stock options was $
1,044,517
and $
1,065,217
, respectively.
The
Company granted new options during the three months ended April 30, 2022. On February 27, 2022, non-qualified stock options exercisable
for up to
100,000
shares of Common Stock were awarded to two consultants of the Company.
These stock options
have a ten-year term from the grant date, with one-half of the shares vesting on the grant date and the remaining one-half of the shares
vesting on the first anniversary of the grant date. The stock options exercisable for an aggregate of up to
200,000
shares of Common
Stock had a fair market value of $
2.45
per share, which represents the closing price of the Company's Common Stock on the grant
date. The amortization expense and unamortized expense for these stock options for the three months ended April 30, 2022
was $
285,832
and
$
204,167
.
The
aggregate intrinsic value of these outstanding options as of October 31, 2021 and April 30, 2022 was $
0
.
Common
Stock Compensation Transition Plan
During the second quarter of fiscal year 2021 the
Board and executive management began cost reduction discussions, including the reduction of non-cash items such as equity compensation
awards. Those discussions stalled primarily due to the focus on other corporate events of significant value.
In the first and second fiscal quarters of 2022, the
Board resumed serious discussions, assessments, and evaluations regarding the equity compensation awarded to its officers and employees.
The Board ultimately approved a stock option program for equity awards granted to its officers and employees. The Compensation Committee
spent considerable time, effort, and resources designing this program, which was finalized in February 2022 and approved in March 2022.
While evaluating and designing this program, the Compensation Committee did not utilize any aspects of value to the employees or other
features. Therefore, the termination of the RSU program and the newly adopted stock option program were developed completely independent
of each other and terminated and implemented, respectively, distinctly and simultaneously.
Management
concluded under ASC 718 these transactions are a cancelation and replacement whereby total compensation cost measured at the date of a
cancellation and replacement is the portion of the grant-date fair value of the original award for which the service is expected to be
rendered at that date plus the incremental cost resulting from the cancellation and replacement. Incremental cost is measured as the excess
of the fair value of the replacement award over the fair value of the cancelled award at the cancellation date in which there was none
since the fair value of the replacement award was less than the fair value of the canceled award.
The outcomes of this decision and the transition
on March 4, 2022 resulting in: (i) the termination of the RSU program for all executive officers and employees, consisting of 1,230,833
unvested RSUs  and (ii) the implementation a new stock option program for executive officers and employees. The stock options
granted pursuant to the program will have ten-year terms from the grant date, with one-half of the shares vesting on the grant
date and the remaining one-half of the shares vesting on the first anniversary of the grant date. Stock options exercisable for
up to an aggregate of 1,385,600 shares of Common Stock were granted to the executive officers and employees with a fair market
value of $2.85 per share, which was calculated using the Black Scholes method.
The amortization expense and unamortized expense for
these stock options for the three months ended April 30, 2022 was $
2,303,533
and $
1,645,395
. The aggregate intrinsic value
of these outstanding options as of October 31, 2021 and April 30, 2022 was $
0
.
F-
13
The fair values of the options on the grant
dates, as noted above, were approximately $3,948,948 using a Black-Scholes option pricing model with the following assumptions:
stock price $2.85 per share (based on the quoted trading price on the date of grant), volatility range of 294.55%, expected term
of 10 years, and a risk-free interest rate range of 1.62%. The Company is amortizing the expense over the vesting terms of each
option. The total stock option expense for the three and six months ended April 30, 2022 was approximately $2,303,533. The fiscal
year 2022 unamortized stock option expense at April 30, 2022 was approximately $1,645,395.
Note
6 –
Related-Party Transactions
Revenue
and Accounts Receivable
During
the six months ended April 30, 2022, the Company recognized revenue of approximately $
31,150
from four companies owned by Nirajkumar Patel, the Chief Executive Officer of
the Company, and/or his wife. There was no accounts receivable balance for these transactions as of April 30, 2022.
During
the six months ended April 30, 2021, the Company recognized revenue of approximately $
61,545
from three companies owned by Nirajkumar
Patel, the Chief Executive Officer of the Company, and/or his wife. The accounts receivable balance for these transactions was $
765
as of April 30, 2021.
Concentration
Purchases and Accounts Payable
During
the six months ended April 30, 2022, the Company did not purchase Products from Bidi, a related party. Sales of Products during the
first six months of fiscal year 2022 were drawn from the inventory purchase made on September 6, 2021. As of April 30, 2022, the
Company had accounts payable to Bidi of approximately $
3,394,759
and Products valued at approximately $
9,214,320
were held in inventory.
During
the six months ended April 30, 2021, the Company purchased Products of approximately $
75,065,602
from Bidi, a related party.
As of April 30, 2021, the Company had accounts payable to Bidi of approximately $
38,001,633
. During the six months ended April 30, 2021,
100% of all Product purchases were made by the Company from Bidi.
Leased
Office Space and Storage Space
On August 1, 2020, the Company began leasing office
space for its main corporate office in Grant, Florida. The five-year lease agreement is with a related party, Just Pick. The Company's
Chief Executive Officer is an officer of Just Pick. The liability for rent not paid from the beginning of the lease through April 30,
2022 is $
21,900
.
For
additional information regarding leases as of the date these unaudited consolidated financial statements were issued, please see Note
8,
Subsequent Events
.
Note
7 –
Commitments and Contingencies
The
Company follows ASC 450-20,
Los
s
Contingencies,
to report accounting for contingencies. Liabilities for
loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable
that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no commitments or contingencies
as of April 30, 2022 and April 30, 2021 other than the below:
Cash
and Equity Bonus Awards
On
May 28, 2020, the Board approved cash bonus awards to each of the Company's Chief Executive Officer and its Chief Operating Officer.
With respect to the Chief Executive Officer, the Board approved a
cash bonus award equal to $30,000 for every $25 million in gross revenues
generated by the Company. With respect to the Chief Operating Officer, the Board approved a cash bonus award equal to $20,000 for every
$25 million in gross revenues generated by the Company. On May 28, 2020, the Board also approved an equity bonus award for each of the
Chief Executive Officer and the Chief Operating Officer. With respect to the Chief Executive Officer, the Board approved an award of
7,500 restricted shares of the Common Stock for every $50 million in accumulated gross revenues generated by the Company. With respect
to the Chief Operating Officer, the Board approved an award of 6,250 restricted shares of the Common Stock for every $50 million in accumulated
gross revenues generated by the Company. The Company's accumulated gross revenues will be evaluated on a quarterly basis, beginning
with the second quarter of fiscal year 2020. At October 31, 2020, the Company determined that the fair value of the equity bonus shares,
or $165,000, should be accrued as it was deemed likely that the $50 million revenue target would be met. The Company issued these shares
to the Chief Executive Officer and Chief Operating Office on January 1, 2021. During the quarter ended April 30, 2021, the $75 million
and $100 million accumulated revenue targets were both achieved and the Company determined that the fair market value of the 13,750 shares,
or approximately $70,785, and the cash bonuses totaling $100,000 should be accrued at April 30, 2021.
During
the quarter ended April 30, 2022, the $
125
million accumulated revenue targets were achieved and the Company determined that cash bonuses
totaling $
50,000
should be accrued at April 30, 2022.
On
March 4, 2022, the Board terminated all future cash and equity bonus awards for the Company's Chief Executive Officer and its
Chief Operating Officer.
Service
Agreement
On
March 31, 2020, the Company entered into a service agreement (the "Service Agreement") with QuikfillRx LLC, a Florida limited
liability company ("QuikfillRx"), whereby QuikfillRx provides the Company with certain services and support relating to sales
management, website development and design, graphics, content, public communication, social media, management and analytics, and market
and other research (collectively, the "Services"). The Services are provided by QuikfillRx as requested from time to time
by the Company.
F-
14
On
June 2, 2020, the Company entered into the First Amendment to the Service Agreement (the "First Amendment) with QuikfillRx.
Effective as of March 16, 2021, the Company entered into the Second Amendment to Service Agreement (the "Second
Amendment") with QuikfillRx. Effective as of September 17, 2021, the Company entered into the Third Amendment to the Service
Agreement (the "Third Agreement" and, collectively with the First Amendment, Second Amendment, and the Service
Agreement, the "Amended Service Agreement") with QuikfillRx. Pursuant to the terms of the Amended Service Agreement, the
parties agreed to the following "General Compensation" payments: (i) for the Services provided in March 2020,
the
Company paid QuikfillRx an amount equal to $86,000; (ii) for the Services provided in April 2020, the Company paid QuikfillRx an
amount equal to $100,000; (iii) each calendar month commencing May 2020 through October 2020, the Company paid QuikfillRx an amount
equal to $125,000 per month for the Services to be performed during such calendar month; (iv) for each calendar month between
November 1, 2020 and October 31, 2021, the Company paid QuikfillRx $125,000 per month for the Services to be performed during such
calendar month; (iv) for the
period between November 1, 2021 and October 31, 2022, the Company will pay QuikfillRx $150,000 per month for the Services to be
performed during such calendar month; and (v) if the parties agree to extend the term of the Amended Service Agreement beyond
October 31, 2022, then for the period between November 1, 2022 and October 31, 2021, the Company will pay QuikfillRx $150,000 per
month for the Services to be performed during such calendar month.
On
November 1, 2021, the parties agreed to extend the term for an additional one-year period. In addition, the Company will pay the
following quarterly bonuses:
●
An
    amount equal to 0.9% of the Applicable Gross Quarterly Sales (as defined in the Amended Service Agreement), which amount shall, at
    the Company's option be paid in (a) cash or (b) shares of the Company's common stock, or (c) a combination of cash and
    Common Stock.
●
An amount equal to 0.27%
    of the Applicable Gross Quarterly Sales, which amount must be paid in cash.
On
March 17, 2021, the Company entered into a consulting agreement with Russell
Quick, pursuant to which the Company granted stock options exercisable for up to 41,667 shares of the Company's Common Stock in
exchange for consulting services. The shares underlying the stock option fully vested on December 1, 2021. The exercise price per share is $28.68. The Company recognized approximately $190,000 in expense to account for the stock options.
Russell Quick is the Chief Executive Officer of QuikfillRx. The Company accrued approximately $
35,803
for a quarterly bonus payable to
QuikfillRx, based on the Applicable Gross Quarterly Sales results of the three months ended April 30, 2022.
Note
8 –
Subsequent Events
Third
Amended and Restated Distribution Agreement
On
June 10, 2022, the Company entered into the Third A&R Distribution Agreement with Bidi, which amended and restated the A&R Distribution
Agreement (collectively, the "Distribution Agreement").
The
Third A&R Distribution Agreement modifies various terms and provisions to reflect the terms of the PMI Licensing Agreement (as defined
below) and also modify the terms between the Company and Bidi. Pursuant to the Third A&R Distribution Agreement, Bidi granted the
Company, and its designees, an exclusive right to distribute electronic and non-electronic nicotine delivery systems and related components
(other than certain excluded products) for sale and resale to both retail level customers and non-retail level customers worldwide, subject
to a carve-out for, and exclusion, of the PMI Markets (as defined below). The Third A&R Distribution Agreement has a term of ten
years and automatically renews for a successive ten-year term, unless earlier terminated pursuant its terms.
Exercise of Stock Warrants
As part of the Company's underwritten public
offering during fiscal 2021, the Company issued warrants to purchase a total of
4,053,750
shares of Common Stock at an exercise price
of $
1.90
per share. These warrants expire in 2026. Warrants for
3,000
shares of Common Stock were exercised on June 14, 2022 for net proceeds
of $
5,700
. The aggregate intrinsic value of the outstanding Common Stock warrants as of April 30, 2022 and October 31, 2021 was $
0
. The
weighted average remaining term of the outstanding Common Stock warrants is
4.50
years as of April 30, 2022.
Lease
Agreement
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. Just Pick is considered a related party to the Company because the Company's Chief Executive
Officer and director, Mr. Nirajkumar Patel, owns and controls the Just Pick.
The
anticipated commencement date of the 2022 Lease is June 10, 2022 (the "Commencement Date"). The term of the Lease is one
(
1
) year (the "Lease Term"), with one automatic renewal period for a five-year term. The Company, in its sole and absolute
discretion, has the option to extend the automatic renewal for an additional five (
5
) year period immediately following the first renewal
term.
The
Company must pay Just Pick base rent equal to $
17,776
.67 per month during the first year of the Lease Term. Thereafter, the monthly base
rent will be increased annually with a monthly base rent of $
18,665
.50 in the second year, $
19,554
.33 in the third year, $
20,443
.17 in
the fourth year, $
22,220
.83 in the fifth year, $
23,998
.50 in the sixth year, and one twelfth (1/12th) of the market annual rent for the
seventh through eleventh years, if appliable. In addition to the base rent, the Company must pay one hundred percent (100%) of operating
expenses, insurance costs, and taxes for each calendar year during the Lease term.
Any
changes, alterations, additions, or improvements to the Premises made by the Company becomes the property of Just Pick unless prior to
the 2022 Lease expiration, the Company removes such improvements and restores the Premises to the same condition as existed on the Commencement
Date.
The
2022 Lease contains customary representations, warranties, covenants, indemnification provisions, default provisions, and termination
provisions.
F-
15
License
Agreement
On
June 10, 2022, Bidi entered into a License Agreement (the "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 Deed of Licensing Agreement (the "PMI License Agreement"), by and between KBI and PMPSA. 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.
Pursuant
to the License Agreement, if at any time, KBI receives any license of PMPSA intellectual property from PMPSA or any of its affiliates
in the manner contemplated by the PMI License Agreement, KBI will grant Bidi an irrevocable sub-license of all right, title, and interest
of KBI in and to that PMPSA intellectual property. In addition, Bidi and KBI agree that any amount payable and all net royalties payable
to KBI under the PMI License Agreement will be apportioned equally among Bidi and KBI in a manner such that each will ultimately receive
fifty percent (50%) thereof.
The
License Agreement contains customary representations, warranties, covenants, and indemnification provisions.
Deed
of Licensing Agreement
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 2.00% to 3.50% 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 equal to twenty percent (20%) of 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 of One Million Dollars ($
1,000,000
) 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.
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); or (ii) an amount equal
to the total of the royalties due to KBI (but not yet paid) plus the royalties (including the guaranteed royalty payment) paid to KBI
pursuant to the PMI License Agreement during the immediately preceding twelve (12) consecutive months, provided that such amount shall
not exceed Thirty Million Dollars ($30,000,000).
In
connection with the PMI License Agreement, the Company, Bidi, and PMPSA also entered into a deed of letter ("Deed of Letter")
to require specific performance of the duties and obligations set forth in the PMI License Agreement if KBI is unable or fails to sublicense
the intellectual property to PMPSA pursuant to the PMI License Agreement and/or is unable or fails to perform certain of its obligations
or grant the rights pursuant to the PMI License Agreement. In addition, the Company, Bidi, and PMPSA entered into a guarantee ("Guarantee"),
whereby each of the Company and Bidi guarantees to PMPSA up to 50% of all of KBI's monetary obligations set forth in the PMI License
Agreement if KBI fails to perform or discharge certain of its obligations in the PMI License Agreement.
F-
16
Item
2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's
Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of the financial statements
with a narrative report on our financial condition, results of operations, and liquidity. This discussion and analysis should be read
in conjunction with the unaudited Financial Statements and notes thereto for the three and six months ended April 30, 2022 included under
Item 1 – Financial Statements in this Quarterly Report and our audited Financial Statements and notes thereto for the year ended
October 31, 2021 contained in the 2021 Annual Report. The following discussion contains forward-looking statements that involve risks
and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual results could differ materially
from those discussed in the forward-looking statements. Please also see the cautionary language at the beginning of this Quarterly Report
regarding forward-looking statements.
Impact
of COVID-19
In
March 2020, the WHO declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure. COVID-19 continues
to spread throughout the world, including the United States. Our business operations, which commenced during this pandemic, continue
to be operational; however, we were indirectly negatively impacted by COVID-19.
We
were indirectly impacted by supply chain issues and regulatory oversight. First, COVID-19 impacted Bidi's ability to quality test
and develop its new product, the BIDI
®
Pouch, in line with its targeted release date, which negatively impacted our ability
to begin distribution of the BIDI
®
Pouch. Secondly, we believe that many retailers and distributers relaxed their compliance
standards as an indirect result of COVID-19 for two reasons: (i) government enforcement of regulations was very limited due to imposed
social restrictions, resulting in less in-person monitor enforcement by government officials and (ii) retail stores experienced light
foot traffic from customers due to COVID-19 restrictions and fears, which resulted in relaxed compliance in an effort to generate revenue.
We believe this relaxation of standards by certain retailers significantly impacted our revenues.
Impact
of the FDA PMTA Decision
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 an MDO, manufacturers are required to stop selling non-tobacco
flavored ENDS product. As of March 2022, the FDA announced that it has taken action on over 99% of applications and issued MDOs for
more than 1,167,000 non-tobacco flavored ENDS products, while issuing zero marketing authorizations for such 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 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 flavored ENDS product.
On September 29, 2021, Bidi petitioned the U.S. Court
of Appeals for the Eleventh Circuit to review the FDA's denial of the PMTAs for its non-tobacco flavored BIDI
®
Stick
ENDS, arguing that it was arbitrary and capricious under the APA, as well as
ultra vires
, for the FDA not to conduct any scientific
review of the company's comprehensive applications, as required by the 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.
On
October 14, 2021, Bidi requested that the FDA re-review the MDO and reconsider its position that Bidi did not include certain scientific
data in its applications sufficient to allow the PMTAs to proceed to scientific review. In light of this request, on October 22, 2021
pursuant to 21 C.F.R. § 10.35(a), the FDA issued an administrative stay of Bidi's MDO pending its re-review. Subsequently,
the FDA lifted its administrative stay on December 17, 2021. Following the lifting of the FDA's administrative stay, Bidi filed
a renewed motion to stay the MDO with the U.S. Court of Appeals for the Eleventh Circuit.
On February 1, 2022, the U.S. Court of Appeals for
the Eleventh Circuit granted Bidi's motion to stay (
i.e.,
put on hold) the MDO, pending the litigation on the merits. The
court-ordered stay means that the MDO is not legally in force. Accordingly, we anticipate being able to continue marketing and selling
the Products, subject to the FDA's enforcement discretion, while Bidi continues with its merits case challenging the legality of
the MDO. The FDA has indicated that it is prioritizing enforcement against companies that have either not submitted PMTAs, whose PMTAs
have been refused acceptance or filing by the FDA, or whose PMTAs remain subject to MDOs. Oral arguments in the merits-based proceeding
were held on May 17, 2022.
In the event that the U.S. Court of Appeals for the
Eleventh Circuit issues a ruling adverse to Bidi, or if the FDA otherwise chooses to enforce the MDO against Bidi, Bidi will be forced
to cease the continued sale of its non-tobacco flavored BIDI
®
Sticks in the United States, thereby resulting in us being
unable to distribute such Products, and our business and financial condition would be materially adversely affected. We cannot provide
any assurances as to the timing or outcome of the merits-based case.
Corporate
History
We
were incorporated on September 4, 2018 in the State of Delaware. Effective July 12, 2019, we changed our corporate name from Quick Start
Holdings, Inc. to Kaival Brands Innovations Group, Inc. The name change was effected through a parent/subsidiary short-form merger of
Kaival Brands Innovations Group, Inc., our wholly-owned Delaware subsidiary formed solely for the purpose of the name change, with and
into us. We were the surviving entity.
Change
of Control
On
February 6, 2019, we entered into a Share Purchase Agreement (the "Share Purchase Agreement"), by and among us, GMRZ Holdings
LLC, a Nevada limited liability company ("GMRZ"), our then-controlling stockholder, and Kaival Holdings, LLC, a Delaware
limited liability company ("KH"), pursuant to which, on February 20, 2019, GMRZ sold 504,000,000 shares of our restricted
common stock, representing approximately 88.06 percent of our then issued and outstanding shares of common stock, to KH, and KH paid
GMRZ consideration in the amount set forth in the Share Purchase Agreement. The consummation of the transactions contemplated by the
Share Purchase Agreement resulted in a change in control, with KH becoming our largest controlling stockholder. Nirajkumar Patel and
Eric Mosser are the sole voting members of KH.
1
Description
of Business
We are focused on growing and incubating innovative
and profitable products into mature, dominant brands. Pursuant to the Distribution Agreement, Bidi granted us an exclusive worldwide right
to distribute the Products for sale and resale to both retail level customers and non-retail level customers. We ceased all retail/direct-to-consumer
sales in February 2021. Pursuant to the terms of the Distribution Agreement, Bidi provides us with all the branding, logos, and marketing
materials to be utilized by us in connection with our marking and promotion of the Products. We do not manufacture any of the Products
we resell. Currently, the Products consist of the "BIDI
®
Stick," a disposable, tamper-resistant ENDS Product.
In June 2022, we entered into the Third A&R Distribution Agreement, which, among other items, modifies various terms and provisions
to reflect the terms of the PMI Licensing Agreement. Pursuant to the Third A&R Distribution Agreement, the exclusive right to distribute
the Products is subject to a carve-out for, and exclusion, of the PMI Markets.
In connection with the Distribution Agreement, we
entered into Sub-Distribution Agreements, whereby we appointed the counterparties as non-exclusive sub-distributors. Pursuant to the Sub-Distribution
Agreements, the sub-distributors agreed to purchase for resale the Products in such quantities as they should need to properly service
non-retail customers within the Territory
We process all sales made only to non-retail customers
in the United States, with all sales to non-retail customers made through Bidi's age-restricted website, www.wholesale.bidivapor.com.
We ceased all retail/direct-to-consumer sales in February 2021 in order to better ensure youth access prevention and to comply with the
Prevent All Cigarette Trafficking ("PACT") Act. We provide all customer service and support at our own expense. Bidi sets
the minimum prices for all sales made by us. We maintain adequate inventory levels of the Products in order to meet the demands of our
non-retail customers, and deliver the Products sold to these customers.
Current Product Offerings
Pursuant to the Distribution Agreement, we sell and
resell ENDS Products, also referred to as ("e-cigarettes"), to non-retail level customers. Our primary Product we resell is
the "BIDI
®
Stick," a disposable, tamper-resistant ENDS product that comes in a variety of flavor options for
adult cigarette smokers. The court-ordered stay means that the MDO is not legally in force. Accordingly, we anticipate being able to continue
marketing and selling the Products, subject to the FDA's enforcement discretion, while Bidi continues with its merits case challenging
the legality of the MDO. The FDA has indicated that it is prioritizing enforcement against companies that have either not submitted PMTAs,
whose PMTAs have been refused acceptance or filing by the FDA, or whose PMTAs remain subject to MDOs. We are wholly dependent on Bidi
to supply the BIDI® Sticks to us for distribution. Accordingly, any supply or other issues that impact Bidi, indirectly impacts us
and our ability to operate our business.
In addition to the BIDI
®
Stick, we
originally anticipated launching the distribution of the "BIDI
®
Pouch" outside of the United States. The initial
planned February 2021 roll-out of the BIDI
®
Pouch was delayed due to COVID-19 based manufacturing and supply chain constraints.
Due to these complications, and in effort to prevent future bottlenecks, Bidi decided to move manufacturing in-house. In 2021, Bidi modified
the planned formulation of the BIDI
®
Pouch. The original BIDI
®
Pouch formulation intended to utilize a
tobacco-free (synthetic) nicotine formulation, along with natural fibers and a chew-base filler in six different flavors. However, the
BIDI
®
Pouch product was placed on temporary hold domestically in anticipation of the FDA's enforcement of synthetic
nicotine products as either unauthorized drugs under Section 201(g) of the Food, Drug and Cosmetic Act ("FDCA") or as tobacco
products under new FDA authority. On March 15, 2022, the FDA Center for Tobacco Products ("CTP") was given the authority
to regulate products containing non-tobacco derived synthetic nicotine after President Biden signed the Omnibus Budget Bill (H.R. 2741).
Pursuant to the new legislation, which included a rider amending the definition of a "tobacco product" in the FDCA to include
products containing nicotine from any source, synthetic nicotine products became subject to the TCA requirements for tobacco products,
including the requirement for premarket authorization. Given these developments, Bidi has decided not to launch the synthetic-nicotine
BIDI
®
Pouch at this time, but will instead seek a PMTA marketing authorization from the FDA for the BIDI
®
Pouch made with tobacco-derived nicotine.
On July 14, 2021, we announced plans to launch our
first Kaival-branded product, a Hemp CBD product. In addition to our branded formulation, we anticipate that we will also provide white
label, wholesale solutions for other product manufacturers through our subsidiary, Kaival Labs. However, as of the date of this Quarterly
Report, we have not launched any Kaival-branded products, nor have we begun to offer white label, wholesale solutions to other product
manufacturers.
PMI Licensing Agreement and International Distribution
On June 13, 2022, we, through our 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
Going
Concern
In February 2022, the U.S. Court of Appeals for the
Eleventh Circuit granted Bidi a judicial stay of the MDO previously issued by the FDA to Bidi in September 2021. The ruling means that
the MDO is not legally in force. Accordingly, we anticipate being able to continue marketing and selling the Products, subject to the
FDA's enforcement discretion, while Bidi continues with its merits case challenging the legality of the MDO. The FDA has indicated
that it is prioritizing enforcement against companies that have either not submitted PMTAs, whose PMTAs have been refused acceptance or
filing by the FDA, or whose PMTAs remain subject to MDOs. Oral arguments in the merits case were held on May 17, 2022.
If the U.S. Court of Appeals for the Eleventh Circuit
rules in favor of Bidi in the merits case, we anticipate that the FDA will be compelled to place the non-tobacco flavored ENDS back into
the PMTA scientific review process. If this is the outcome of the merits case, we anticipate being able to continue marketing and selling
the Products, subject to the FDA's enforcement discretion, until the scientific review process is complete on each of Bidi's
PMTA for the non-tobacco flavored ENDS and the FDA issues its decision on each.
2
If the U.S. Court of Appeals for the Eleventh Circuit
rules against Bidi on the merits case, if the FDA re-issues the MDO after completing its scientific review process for each of Bidi's
PMTAs for its non-tobacco flavored ENDS, or if the FDA otherwise chooses to enforce the MDO against Bidi, we will be forced to cease sales
on the non-tobacco flavored BIDI
®
Sticks in the United States market, leaving only the Tobacco (Classic) BIDI
®
Sticks product for sale in the United States. If this is the outcome of the merits case, this combined with a negative cash flow from
operations may raise substantial doubt on our ability to continue as a going concern.
Management plans to continue similar operations with
increased marketing, which we believe will result in increased revenue and net income. Further, we believe that the PMI License Agreement
will generate additional revenues through royalties paid by PMPSA. However, there is no assurance that management's plan will be
successful due to the current economic climate in the United States and globally.
The unaudited consolidated financial statements filed
as part of this Quarterly Report do not include any adjustments relating to the recoverability and classification of recorded assets,
or the amounts and classification of liabilities that might be necessary in the event that we cannot continue as a going concern.
Liquidity
and Capital Resources
We
believe we have sufficient cash on hand as of June 13, 2022. However, we are awaiting the outcome of Bidi's merit-based case pending
in the U.S. Court of Appeals for the Eleventh Circuit with respect to the MDO issued by the FDA in September 2021. If the Eleventh Circuit
Court of Appeals rules against Bidi, our business and financial condition will be materially adversely affected, including our ability
to generate revenues and our liquidity. Other than the ongoing MDO matters, we have no known current demands or commitments and are not
aware of any events or uncertainties as of April 30, 2022 that will result in or that are reasonably likely to materially increase or
decrease our current requirements for cash.
At April 30, 2022, we had working capital of approximately
$13.1 million and total cash of approximately $4.7 million.
We
intend to generally rely on cash from operations and equity and debt offerings, to the extent necessary and available, to satisfy our
liquidity needs. There are a number of factors that could result in the need to raise additional funds, including a decline in revenue
or a lack of anticipated sales growth and increased costs. Our efforts are directed toward generating positive cash flow and profitability.
If these efforts are not successful, we may need to raise additional capital. Should capital not be available to us at reasonable terms,
other actions may become necessary in addition to cost control measures and continued efforts to increase sales. These actions may include
exploring strategic options for the sale of the Company, the creation of joint ventures or strategic alliances under which we will pursue
business opportunities, or other alternatives. We believe we have the financial resources to weather any short-term impacts of the FDA's
PMTA process and Bidi's receipt of a MDO from the FDA; however, an extended impact, or a negative ruling in Bidi's merits-based
litigation case or the FDA ultimately not approving Bidi's PMTA if it is re-evaluated could have a material and adverse effect
on our sales, earnings, and liquidity. At this time, we do not foresee the need for further strategic financing for the next twelve months,
given the financing we completed in September 2021, as indicated below, and our continual sales efforts and results.
In
September 2021, we completed a firm commitment underwritten offering, which offering was made pursuant to our Registration Statement
on Form S-3 (File No. 333-258339) (the "Registration Statement"). The SEC declared the Registration Statement effective on
August 10, 2021. We sold 4,700,000 shares of our Common Stock and warrants to purchase an additional 3,525,000 shares of our Common Stock.
We sold each share of our Common Stock and warrants to purchase 0.75 shares of our Common Stock at a combined public offering price of
$1.70. We also granted the underwriter the option to purchase an additional 705,000 shares of our Common Stock and warrants to purchase
an additional 528,750 shares of our Common Stock. We received net proceeds from the offering of approximately $8.3 million. We have also
received approximately $1.7 million from the exercise of the warrants. We used the proceeds for general corporate purposes.
Cash
Flows:
Cash flow used in operations was approximately
$(4.6) million for the first six months of fiscal year 2022, compared to $(5.2) million used in operations for the first six months
of fiscal year 2021. The decrease in cash flow used in operations for the first six months of fiscal year 2022 compared to the
first six months of fiscal 2021 was primarily due to decrease in stock-based compensation, accounts receivable, and accounts payable.
The net cash flow provided by financing activities
was approximately $1.5 million for the first six months of fiscal year 2022, compared to cash flow used in financing activities of approximately
$78,000 for the first six months of fiscal year 2021. Cash provided by financing activities during the first six months of fiscal year
2022 resulted from the exercise of warrants by various stockholders. The cash used in financing activities for the first six months of
fiscal year of 2022 and fiscal year 2021 consisted of cash used for the settlement of RSUs issued to employees.
Results
of Operations
Three
months ended April 30, 2022, compared to three months ended April 30, 2021
Revenues:
Revenues for the second quarter of fiscal year 2022
were approximately $3.1 million, compared to approximately $18.1 million in the same period of the prior fiscal year. In February
2022, Bidi was granted a judicial stay on the MDO previously issued by the FDA prohibiting the marketing and sale of non-tobacco flavored
BIDI
®
Sticks, which had significantly impacted our revenues in previous quarters. As a result of the grant of the judicial
stay of the MDO, our revenues increased in the second quarter of fiscal 2022, as compared to first quarter of fiscal 2022. We expect this
trend to continue as renewed distribution ramps up and sales of non-tobacco flavored BIDI
®
Sticks increase, subject to
the court ruling in Bidi's favor in the pending merits-based case, and subject to the FDA's enforcement discretion.
With respect to synthetic nicotine vaping products,
on March 15, 2022, the FDA was given the authority to regulate products containing non-tobacco derived synthetic nicotine after President
Biden signed the Omnibus Budget Bill (H.R. 2741). Pursuant to the new legislation, which amended the definition of a "tobacco product"
in the FDCA to include products containing nicotine from any source, manufacturers of all currently marketed synthetic nicotine products
were required to submit a PMTA by May 14, 2022 to remain on the market. Products that do not receive PMTA authorization (i.e., a Marketing
Grant Order or "MGO") within 60 days (i.e., by July 13, 2022) and that remain on the market thereafter will be in violation
of the statute and subject to FDA enforcement. We anticipate that if the FDA begins enforcement against illegally-marketed or synthetic-nicotine
vaping products, there may be an increased demand for compliant and legal vaping products, such as the BIDI
®
Stick.
3
Cost
of Revenue, net and Gross Profit (Loss):
Gross profit in the second quarter of fiscal year
2022 was approximately $387,700, or approximately 12.7%, of revenues, net, compared to approximately $6.3 million gross profit, or approximately
34.6%, of revenues, net, for the second quarter of fiscal year 2021. Total cost of revenue, net was approximately $2.7 million, or approximately
87.3%, of revenue, net for the second quarter of fiscal year 2022, compared to approximately $11.9 million, or approximately 65.4%, of
revenue, net for the second quarter of fiscal year 2021. The decrease in gross profit is primarily driven by the decrease in overall sales
and the recognition of accumulated year-to-date credits/discounts/rebates given to customers, totaling approximately $499,000, resulting
in an offset to revenue, net, during the second quarter of fiscal year 2022.
Operating Expenses:
Total operating expenses were approximately $5.4 million
for the second quarter of fiscal year 2022, compared to approximately $10.4 million for the second quarter of fiscal year 2021. For the
second quarter of fiscal year 2022, operating expenses consisted primarily of advertising and promotion fees of approximately $761,000,
stock-based compensation expense of approximately $2.5 million, professional fees of approximately $163,000, and all other general and
administrative expenses of approximately $2.0 million. General and administrative expenses in the second quarter of fiscal year 2022 consisted
primarily of salaries and wages, stock option expense, insurance, lease expense, project expenses, banking fees, business fees and state
and franchise taxes. For the second quarter of fiscal year 2021, operating expenses were approximately $10.4 million, consisting primarily
of advertising and promotion fees of approximately $801,000, professional fees totaling approximately $7.3 million, and all other general
and administrative expenses of approximately $2.3 million. General and administrative expenses in the second quarter of fiscal year 2021
consisted primarily of salaries and wages, insurance, banking fees, business fees, and other service fees. We expect future operating
expenses to increase while we increase the footprint of our business and generate increased sales growth.
Income Taxes:
During the second quarter of fiscal year 2022, we
did not accrue a tax provision for income taxes, due to the pre-tax loss of approximately ($5.1) million, compared to a tax provision
of approximately $187,000 for the second quarter of fiscal year 2021, due to the amount of pre-tax income for that three-month period.
However, we did report a tax benefit of approximately $5,800 during fiscal year 2022. The reduction from the second quarter of fiscal
year 2021 was due to the pre-tax operating loss recognized during the second quarter of fiscal year 2022.
Net Loss:
As a result of the items noted above, the net loss
for the second quarter of fiscal year 2022 was approximately ($5.0) million, or ($0.16) basic and diluted loss per share, compared to
a net loss of approximately ($4.3) million, or ($0.18) basic and diluted earnings per share, for the second quarter of fiscal year 2021.
The increase in the net loss for the second quarter of fiscal year 2022, as compared to the second quarter of fiscal year 2021, is primarily
attributable to the decreased revenues and increase in customer credits/discounts/rebates, as noted above.
Six months ended April 30, 2022, compared to six
months ended April 30, 2021
Revenues:
Revenues for the first six months of fiscal year 2022
were approximately $6.0 million, compared to $55.5 million in the same period of the prior fiscal year. Revenues decreased in the first
six months of fiscal year 2022 compared to fiscal year 2021, generally due to (i) Bidi's receipt of the MDO, which limited our ability
during the first six months of fiscal year 2022 to sell flavored BIDI
®
Sticks in the United States and (ii) increased
competition. A recent court ruling in favor of Bidi granted a judicial stay on the MDO previously issued by the FDA banning the marketing
and sale of flavored BIDI
®
Sticks, amongst banning these flavored sticks with other industry competitors. As a result
of the judicial stay of Bidi's MDO, we have begun to experience an upward trajectory of revenues as renewed distribution ramps up
and sales of flavored BIDI
®
Sticks products increase, which sales remain subject to FDA's enforcement discretion
(and assuming that Bidi is successful in its currently pending merits-based case). We also anticipate that if the FDA begins enforcement
against illegally-marketed or synthetic-nicotine vaping products, there may be an increased demand for compliant and legal vaping products,
such as the BIDI
®
Stick.
Cost of Revenue and Gross Profit (Loss):
Gross loss in the first six months of fiscal year
2022 was approximately ($303,000), compared to gross profit of approximately $11.1 million profit for the first six months of fiscal year
2021. Total cost of revenue was approximately $6.2 million for the first six months of fiscal year 2022, compared to $44.4 million for
the first six months of fiscal year 2021. The decrease in gross profit is primarily driven by the decrease in overall sales and the recognition
of accumulated year-to-date credits, discounts, and rebates given to customers, totaling approximately $1.4 million, resulting in an offset
to revenue, net, during the six months ended April 30, 2022.
Operating Expenses:
Total operating expenses were approximately $7.5 million
for the first six months of fiscal year 2022, compared to approximately $14.7 million for the first six months of fiscal year 2021. For
the first six months of fiscal year 2022, operating expenses consisted of commissions paid pursuant to the Amended Service Agreement of
approximately $1.4 million and general and administrative expense consisting of amortized stock option expense of approximately $2.8 million,
professional fees of approximately $1.4 million, salaries and wages of approximately $939,000, and all other general and administrative
expenses of approximately $1.0 million. General and administrative expenses in the first six months of fiscal year 2022 consisted primarily
of legal fees, salaries, other professional fees, merchant fees, and other service fees. Total operating expenses for the first six months
of fiscal year 2021 were approximately $14.7 million. These operating expenses consisted primarily of advertising and promotion fees of
approximately $1.8 million; professional fees of approximately $9.7 million; salary, wages, commissions, and bonuses of approximately
$1.8 million; stock-based compensation expense of approximately $580,000; professional fees of approximately $163,000; and general and
administrative expenses of approximately $820,000, which consisted primarily of insurance, banking fees, merchant fees, business fess
and other service fees.
4
Income
Taxes:
During the first six
months of fiscal year 2022, we did not accrue a tax provision for income taxes
,
due to the pre-tax loss of approximately ($7.8) million. However, we did report a tax benefit of approximately $5,800 during fiscal year
2022. During the first six months of fiscal year 2021, we accrued a tax provision of approximately $293,100 related to tax liabilities
for
fiscal year 2020.
Net Income (Loss):
Net loss for the first six months of fiscal year 2022
was approximately ($7.8) million, or $(0.25) basic and diluted earnings per share, compared to net loss for the first six months of fiscal
year 2021, which was approximately ($3.9) million, or $(0.17) basic and diluted earnings per share. The increase in the net loss for the
first six months of fiscal year 2022, as compared to the first six months of fiscal year 2021, is primarily attributable to the decreased
revenues and increase in customer credits/discounts/rebates.
Weighted-average shares
of Common Stock outstanding were 23,511,959 and 23,368,691 for the first six months of fiscal year 2022 and 2021, respectively.
Critical
Accounting Policies and Estimates
Other than the policy changes disclosed in Note 2,
Basis
of Presentation and Significant Accounting Policies,
to the unaudited Consolidated Financial Statements in Item 1 of Part I of
this Quarterly Report, there have been no material changes to our critical accounting policies and estimates during the three months ended
April 30, 2022 from those disclosed in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations,
of our 2021 Annual Report for the year ended October 31, 2021.
Emerging
Growth Company
We
are an "emerging growth company," that is exempt from certain financial disclosure and governance requirements for up to
five years as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). The JOBS Act eases restrictions
on the sale of securities and increases the number of stockholders a company must have before becoming subject to the SEC's reporting
and disclosure rules. We have not elected to use the extended transition period for complying with new or revised accounting standards
under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies.
5
Item
3. Quantitative and Qualitative Disclosures About Market Risk
As
a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide the information
required by this Item.
Item
4. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Our
management is responsible for establishing and maintaining adequate internal control over our financial reporting (as defined in Rule
13a-15(f) under the Exchange Act). Internal control over financial reporting is a process, including policies and procedures, designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
reporting purposes in accordance with U.S. generally accepted accounting principles. Our management assessed our internal control over
financial reporting using the criteria in Internal Control – Integrated Framework (2013 Framework), issued by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO"). A system of internal control over financial reporting is designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements.
Based
on our evaluation under the framework in COSO, our management concluded that our internal control over financial reporting remained ineffective
as of April 30, 2022 based on such criteria. Material weaknesses existed in the design or operation of certain of our internal controls
over financial reporting that adversely affect our internal controls. A material weakness is a significant deficiency, or combination
of deficiencies, in internal control over financial reporting that results in more than a remote likelihood that a material misstatement
of the annual or interim financial statements may not be prevented or detected. Management determined that there was a lack of resources
to provide segregation of duties consistent with control objectives, the lack of sufficient and consistent real time remote communications,
and the lack of a fully developed formal review process that includes multiple levels of review over financial disclosure and reporting
processes.
The
weaknesses and the related risks are not uncommon in a company of our size because of the limitations in the location, size and number
of our staff. To address these material weaknesses, and subject to the receipt of additional financing or cash flows, we have undertaken
certain remediation measures to date to address the material weaknesses described in this Quarterly Report, including implementing procedures
pursuant to which we can ensure segregation of duties and hire additional resources to ensure appropriate review and oversight, as well
as more timely formal communications processes, more diligent review and approval of all disbursements and more timely review of all
banking transactions sales orders and inventory management.
A
control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met under all potential conditions, regardless of how remote, and may not prevent or detect all errors and all
fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of a simple error or mistake. Our internal control over financial reporting is designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles
Changes
in Internal Control over Financial Reporting
There
have been no changes in our internal control over financial reporting (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of
the Exchange Act) that have occurred during the fiscal three months ended April 30, 2022 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
6
PART
II OTHER INFORMATION
Item
1. Legal Proceedings
There
are no material pending legal proceedings as defined by Item 103 of Regulation S-K, to which we are a party or of which any of our property
is the subject, other than ordinary routine litigation incidental to the Company's business.
Item
1A. Risk Factors
Our
business, operations, and financial condition are subject to various risks and uncertainties. The risk factors described in Part I, "Item
1A. Risk Factors" in the 2021 Annual Report, for the year ended October 31, 2021, should be carefully considered, together with
the other information contained or incorporated by reference in this Quarterly Report and in our other filings with the SEC in connection
with evaluating us, our business, and the forward-looking statements contained in this Quarterly Report. During the quarter ended April
30, 2022, there have been no material changes from the risk factors previously disclosed under Part I, "Item 1A. Risk Factors"
in the 2021 Annual Report, for the year ended October 31, 2021.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
Share-based
Compensation
During
the three months ended April 30, 2022, we issued the following securities as compensation to certain of our employees and consultants:
On
February 4, 2022, the Company entered into a Consulting Agreement with Oakhill Europe Ltd ("Oakhill Europe"), pursuant to
which the Company engaged Oakhill Europe to provide strategic advising and negotiation assistance for potential international distribution
agreements (collectively, the "Oakhill Services"), in exchange for a cash monthly retainer, incentive compensation bonuses,
and an incentive compensation bonus value of $75,000 paid in fully-vested non-qualified stock options, upon the achievement of certain
events.
On February 5, 2022,
the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth in RSU agreements
previously entered into with such employees. The RSUs were a portion of the compensation paid to such employees for their services
to us. Of the shares issued to employees, 24,058 shares were withheld by the Company to satisfy tax withholding obligations and/or
satisfy cash settlement options to employees, equaling approximately $23,336. The issuances were exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act") by virtue of Section 4(a) (2) thereof as a transaction
not involving a public offering.
On
February 27, 2022, the Company granted a stock option award to Mark Thoenes, Interim Chief Financial Officer, to acquire up to 100,000
shares of Common Stock under the Company's 2020 Stock and Incentive Compensation Plan, as partial compensation for Mr. Thoenes'
services. The option shares are exercisable at a price of $2.45 per share, which equaled the closing price of the Common Stock as of
the date immediately prior to the grant date. The issuances were exempt from the registration requirements of the Securities Act by virtue
of Section 4(a)(2) thereof as a transaction not involving a public offering.
On February 27, 2022,
the Company granted a stock option award to Russell Quick, as an independent consultant providing strategic advising and negotiation
assistance for potential international distribution agreements, to acquire up to 100,000 shares of Common Stock under the Company's
2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price of $2.45 per share, which equaled the
closing price of the Common Stock as of the date immediately prior to the grant date. The issuances were exempt from the registration
requirements of the Securities Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.
On
March 5, 2022, the Company granted a stock option award to Nirajkumar Patel, Chief Executive Officer, to acquire up to 600,000 shares
of Common Stock under the Company's 2020 Stock and Incentive Compensation Plan, as partial compensation for Mr. Patel's services
as Chief Executive Officer. The option shares are exercisable at a price of $2.85 per share, which equaled the closing price of the Common
Stock as of the date immediately prior to the grant date. The issuances were exempt from the registration requirements of the Securities
Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.
On
March 5, 2022, the Company granted stock option awards to Eric Mosser, Chief Operating Officer, to acquire up to 500,000 shares of Common
Stock under the Company's 2020 Stock and Incentive Compensation Plan, as partial compensation for Mr. Patel's services as
Chief Operating Officer. The option shares are exercisable at a price of $2.85 per share, which equaled the closing price of the Common
Stock as of the date immediately prior to the grant date. The issuances were exempt from the registration requirements of the Securities
Act by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.
On
March 5, 2022, the Committee and the Board approved the grant of stock option awards to 5 employees, to acquire up to 285,600 shares
of Common Stock under the Company's 2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price of
$2.85 per share, which equaled the closing price of the Common Stock as of the date immediately prior to the grant date. The issuances
were exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof as a transaction not involving
a public offering.
On February 28, 2022 and on March 3, 2022 the
Company issued 10,000 shares and 2,963 shares, respectively, of the Company's Common Stock to Mr. Rudy Singh as payment for
the EDGAR filing services performed for the filing of the Company's Annual Report on Form 10-K for the year ended October
31, 2021. The issuances were exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) thereof
as a transaction not involving a public offering.
Following
the end of the three months ended April 30, 2022, we issued the following securities as compensation:
On
May 18, 2022, the Company granted a stock option award to Russell Quick, pursuant to a previously executed independent consultant agreement
that renewed on December 1, 2022, to acquire up to 500,000 shares of Common Stock under the Company's 2020 Stock and Incentive
Compensation Plan. The option shares are exercisable at a price of $1.03 per share, which equaled the closing price of the Common Stock
as of the date immediately prior to the grant date. The issuances were exempt from the registration requirements of the Securities Act
by virtue of Section 4(a)(2) thereof as a transaction not involving a public offering.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Mine Safety Disclosures
None.
Item
5. Other Information
None.
7
Item
6. Exhibits
The
following exhibits are filed herewith as a part of this Quarterly Report.
Exhibit
    Number
Description
3.1
Restated
    Certificate of Incorporation, which was filed as Exhibit 3.1 to our Registration Statement on Form 10-12G filed with the Securities
    and Exchange Commission on March 25, 2019, and is incorporated herein by reference thereto.
3.2
Bylaws,
    which were filed as Exhibit 3.2 to our Registration Statement on Form 10-12G filed with the Securities and Exchange Commission on
    February 19, 2019, and is incorporated herein by reference thereto.
3.3
Certificate
    of Ownership and Merger, as filed with the Secretary of State of the State of Delaware on June 20, 2019, which was filed as Exhibit
    3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 15, 2019, and is incorporated herein
    by reference thereto.
3.4
Certificate
    of Correction, as filed with the Secretary of State of the State of Delaware on July 15, 2019, which was filed as Exhibit 3.2 to
    our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 15, 2019, and is incorporated herein by
    reference thereto.
3.5
Certificate
    of Designation of the Preferences, Rights, and Limitations of the Series A Preferred Stock, as filed with the Secretary of State
    of the State of Delaware on August 19, 2020, which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities
    and Exchange Commission on August 21, 2020, and is incorporated herein by reference thereto.
3.6
Certificate
    of Amendment to the Amended and Restated Certificate of Incorporation of Kaival Brands Innovations Group, Inc., effective July 20,
    2021, which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July
    20, 2021, and is incorporated herein by reference thereto.
10.1
Exclusive
    Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Bidi Vapor LLC, dated March 9, 2020, which was filed
    as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2020, and is incorporated
    herein by reference thereto. (1)
10.2
Service
    Agreement by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, dated March 31, 2020, which was filed as Exhibit
    10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2020, and is incorporated herein
    by reference thereto.
10.3
First
    Amendment to Service Agreement by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, dated June 2, 2020, which
    was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 3, 2020, and
    is incorporated herein by reference thereto.
10.4
Non-Exclusive
    Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Favs Business, LLC, dated April 3, 2020, which
    was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 6, 2020, and
    is incorporated herein by reference thereto. (1)
10.5
Non-Exclusive
    Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Colonial Wholesale Distributing Inc., dated April
    11, 2020, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on
    April 13, 2020, and is incorporated herein by reference thereto. (1)
10.6
Amended
    and Restated Exclusive Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Bidi Vapor LLC, dated May
    21, 2020, which was filed as Exhibit 10.5 to our Form 10-Q filed with the Securities and Exchange Commission on May 27, 2020, and
    is incorporated herein by reference thereto. (1)
10.7
Amended
    and Restated Non-Exclusive Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Favs Business, LLC,
    dated May 21, 2020, which was filed as Exhibit 10.6 to our Form 10-Q filed with the Securities and Exchange Commission on May 27,
    2020, and is incorporated herein by reference thereto. (1)
10.8
Amended
    and Restated Non-Exclusive Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Colonial Wholesale
    Distributing Inc., dated May 25, 2020, which was filed as Exhibit 10.7 to our Form 10-Q filed with the Securities and Exchange Commission
    on May 27, 2020, and is incorporated herein by reference thereto. (1)
10.9
Share
    Cancellation and Exchange Agreement, by and between the Company and Kaival Holdings, LLC, dated August 19, 2020, which was filed
    as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2020, and is incorporated
    herein by reference thereto.
10.10
2020
    Stock and Incentive Compensation Plan, which was filed as Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities
    and Exchange Commission on June 3, 2020, and is incorporated herein by reference thereto.
8
10.11
Lease
    Agreement by and between Kaival Brands Innovations Group, Inc., and Just Pick, LLC, dated July 15, 2020, filed as Exhibit 10.14 to
    our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on September 14, 2020, and is incorporated herein
    by reference thereto.
10.12
Second
    Amended and Restated Exclusive Distribution Agreement, by and between Kaival Brands Innovations Group, Inc. and Bidi Vapor, LLC,
    dated April 20, 2021, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission
    on April 21, 2021, and is incorporated herein by reference thereto. (1)
10.13
Consulting
    Agreement, by and between Kaival Brands Innovations Group, Inc. and Russell Quick, dated March 16, 2021, which was filed as Exhibit
    10.18 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 21, 2021, and is incorporated
    herein by reference thereto.
10.14
Second
    Amendment to Service Agreement, by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, effective as of March 16,
    2021, which was filed as Exhibit 10.19 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on
    June 21, 2021, and is incorporated herein by reference thereto.
10.15
Independent
    Director Agreement, dated June 30, 2021, by and between the Company and George Chuang, which was filed as Exhibit 10.1 to our Current
    Report on Form 8-K filed with the Securities and Exchange Commission on July 1, 2021, and is incorporated herein by reference thereto.
10.16
Consulting
    Agreement, dated June 14, 2021, by and between the Company and Mark Thoenes, which was filed as Exhibit 10.2 to our Current Report
    on Form 8-K filed with the Securities and Exchange Commission on July 1, 2021, and is incorporated herein by reference thereto.
10.17
Amended
    and Restated Independent Director Agreement, dated March 29, 2021, by and between the Company and Roger Brooks, which was filed as
    Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2021, and is incorporated
    herein by reference thereto.
10.18
Amended
    and Restated Independent Direct Agreement, dated March 29, 2021, by and between the Company and Paul Reuter, which was filed as Exhibit
    10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 23, 2021, and is incorporated herein
    by reference thereto.
10.19
Amendment
    to Amended and Restated Independent Director Agreement, dated July 19, 2021, by and between the Company and Roger Brooks, which was
    filed as Exhibit 10.3 to our Current Report on Form 8-K filed with Securities and Exchange Commission on July 23, 2021, and is incorporated
    herein by reference thereto.
10.20
Amendment
    to Amended and Restated Independent Director Agreement, dated July 19, 2021, by and between the Company and Paul Reuter, which was
    filed as Exhibit 10.4 to our Current Report on Form 8-K filed with Securities and Exchange Commission on July 23, 2021, and is incorporated
    herein by reference thereto.
10.21
Form
    of Non-Qualified Stock Option, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange
    Commission on March 10, 2022, and is incorporated herein by reference thereto.
10.22
Amended
    and Restated 2020 Stock and Incentive Compensation Plan, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed
    with the Securities and Exchange Commission on May 26, 2022, and is incorporated herein by reference thereto.
10.23
Third Amended and Restated Distribution Agreement by and between the Company and Bidi Vapor, LLC, dated June 10, 2022.(1)*
10.24
Lease Agreement by and between the Company and Just Pick, LLC, dated June 10, 2022.*
10.25
License Agreement by and between the Company and Bidi Vapor, LLC, dated June 10, 2022.(1)*
10.26
Deed of Licensing Agreement by and between Kaival Brands International, LLC and Philip Morris Products S.A., dated as of June 13, 2022.(1)*
31.1
Certification
    of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*
31.2
Certification
    of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*
32.1
Chief
    Executive Officer pursuant to 18 U.S.C. Section 1350 of Chapter 63 of Title 18 of the United States Code*
32.2
Certification
    of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 of Chapter 63 of Title 18 of the United States Code*
101.INS
Inline
    XBRL Instance Document*
101.SCH
Inline XBRL
    Taxonomy Extension Schema Document*
101.CAL
Inline XBRL
    Taxonomy Extension Calculation Linkbase Document*
101.DEF
Inline XBRL
    Taxonomy Extension Definition Linkbase Document*
101.LAB
Inline XBRL
    Taxonomy Extension Label Linkbase Document*
101.PRE
Inline XBRL
    Taxonomy Presentation Linkbase Document*
104
Cover Page Interactive
    Data File (formatted as Inline XBRL and contained in Exhibit 101)*
(1)
Schedules and Exhibits omitted pursuant to Item 601(b) (10) (iv) of Regulation S-K. The Company agrees to
furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request;
provided,
however,
that the Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended, for any Schedule or Exhibit so furnished
*filed
herewith
9
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
KAIVAL
BRANDS INNOVATIONS GROUP, INC.
Date: June 21,
2022
By:
/s/
Nirajkumar Patel
Nirajkumar Patel
President and
Chief Executive Officer
Date:
June 21, 2022
By:
/s/
Mark Thoenes
Mark Thoenes
Interim Chief Financial
Officer
10