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

<p style="margin: 0"></p>

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

<p style="font: 10pt/0.05pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt/0.05pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: 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: 14pt"><b>UNITED
STATES</b></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"></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">&#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">&#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">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>

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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">&#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"></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">&#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"></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"></span></p>

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of principal executive offices, including zip code)</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">&#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"><b><span id="xdx_90F_edei--CityAreaCode_c20211101__20220131_zW07jwjinx29"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" name="dei:CityAreaCode">(833)</ix:nonNumeric></span>
<span id="xdx_907_edei--LocalPhoneNumber_c20211101__20220131_z7Sh5XuGOma5"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" name="dei:LocalPhoneNumber">452-4825</ix:nonNumeric></span></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"></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">&#160;(Registrant&#8217;s
telephone number, including area code)</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">&#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"><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">&#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">(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">&#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">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-family: Times New Roman, Times, Serif"></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">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid; width: 38%; padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title
    of each class&#9;</span></td>
    <td style="width: 1%; padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1pt solid; width: 29%; padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Trading
    Symbol(s)</span></td>
    <td style="width: 1%; padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1pt solid; width: 31%; padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name
    of each exchange on which registered</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_906_edei--Security12bTitle_c20211101__20220131_zbm7bsQtO8L9"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" name="dei:Security12bTitle">Common
    Stock, par value $0.001 per share</ix:nonNumeric></span></b></span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_902_edei--TradingSymbol_c20211101__20220131_zIkCYF3mnUAd"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" name="dei:TradingSymbol">KAVL</ix:nonNumeric></span></b></span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
    <span id="xdx_90C_edei--SecurityExchangeName_c20211101__20220131_zVs7tXPZO5z2"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" 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-family: 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"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">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_901_edei--EntityCurrentReportingStatus_c20211101__20220131_zyUYg09uSlAe"><span style="-sec-ix-hidden: xdx2ixbrl0030">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">&#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">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_903_edei--EntityInteractiveDataCurrent_c20211101__20220131_zIKh5Bq6hTT3"><span style="-sec-ix-hidden: xdx2ixbrl0031">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">&#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">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-family: Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="width: 30%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;Large Accelerated
filer</span></td>
<td style="width: 23%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td>
<td style="width: 24%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer</span></td>
<td style="width: 23%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td></tr>
<tr>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_906_edei--EntityFilerCategory_c20211101__20220131_z0HXW4jUrmSj"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory">Non-accelerated filer</ix:nonNumeric></span></span></td>
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Smaller reporting company</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_900_edei--EntitySmallBusiness_c20211101__20220131_zKasYcUzr1e1"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" format="ixt:booleantrue" name="dei:EntitySmallBusiness">&#9746;</ix:nonNumeric></span></span></td></tr>
<tr>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging growth company</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90B_edei--EntityEmergingGrowthCompany_c20211101__20220131_zOQUeeWFdp27"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" 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-family: 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">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_902_edei--EntityExTransitionPeriod_c20211101__20220131_zOg0oGqiAc32"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" 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">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">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__20220131_z7hZ9np8DM5j"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" 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">&#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">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">&#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">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">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><span id="xdx_90E_edei--EntityCommonStockSharesOutstanding_iI_c20220315_z7ynuo4k4mK7" title="Entity Common Stock, Shares Outstanding"><ix:nonFraction name="dei:EntityCommonStockSharesOutstanding" contextRef="AsOf2022-03-15" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">31,139,416</ix:nonFraction></span> shares
of common stock, $0.001 par value, outstanding as of March 15, 2022</span></p>

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

<!-- Field: Page; Sequence: 1 -->
    <div style="border-bottom: Black 2pt solid; margin-top: 6pt; margin-bottom: 6pt"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"></p></div>
    <div style="break-before: page; margin-top: 6pt; margin-bottom: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->

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

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="border-bottom: black 1pt solid; width: 9%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<b>Item</b></span></td>
    <td style="width: 82%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1pt solid; width: 9%; padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page</b></span></td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td colspan="2" style="padding-right: 1.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_001">Cautionary Note Concerning Forward-Looking Statements</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center">ii<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td></tr>
  <tr style="background-color: white">
    <td colspan="2" style="padding-right: 1.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART I</b></span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Financial Information</b></span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 1.</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial Statements</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_002">Unaudited Consolidated Balance Sheets</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center">F-1<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_003">Unaudited Consolidated Statements of Operations</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center">F-2</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_004">Unaudited Consolidated Statements of Changes in Stockholders&#8217; Equity</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center">F-3</td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_005">Unaudited Consolidated Statements of Cash Flows</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center">F-4</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_006">Notes to Unaudited Consolidated Financial Statements</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center">F-5</td></tr>
  <tr>
    <td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item
    2</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_007">Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations Corporate History</a></span></td>
    <td style="vertical-align: bottom; padding-right: 0.8pt; text-align: center">1</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_008">Liquidity and Capital Resources</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>3</td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_009">Results of Operations</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>4</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Off-Balance Sheet Arrangements</span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_010">Emerging Growth Company</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>4</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 3</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_011">Quantitative and Qualitative Disclosures about Market Risk</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>5</td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 4</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_012">Controls and Procedures</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>5</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART II</b></span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><a href="#a_013">Other Information</a></b></span></td>
    <td style="padding-right: 0.8pt; text-align: center">6<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 1.</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_014">Legal Proceedings</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>6</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 1A.</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_015">Risk Factors</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center">6<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 2.</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_016">Unregistered Sales of Equity Securities and Use of Proceeds</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>6</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 3</span></td>
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    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>6</td></tr>
  <tr>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 4</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_018">Mine Safety Disclosures</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>6</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 5</span></td>
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    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>6</td></tr>
  <tr>
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    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_020">Exhibits</a></span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>7</td></tr>
  <tr style="background-color: white">
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr>
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    <td style="padding-right: 0.8pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>9</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 10.8pt 0 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b><span id="a_001"></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">&#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">Certain
statements and information in this Quarterly Report on Form 10-Q for the three months ended January 31, 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;) determinations,
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 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-family: Times New Roman, Times, Serif">&#160;&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 10.8pt 0 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></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"><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">&#160;<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">&#160;<b>(Unaudited)</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">&#160;</span></p>

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<td style="padding: 0pt 0pt 0pt 20pt; text-align: left; text-indent: -10pt">&#160;</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td id="xdx_494_20220131" 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_49B_20211031" style="text-align: center">&#160;</td>
<td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
<td style="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt">&#160;</td>
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<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">ASSETS</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></tr>
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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></tr>
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<td style="width: 8%">&#160;</td>
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<td style="text-align: left">&#160;</td>
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<td style="text-align: left">&#160;</td>
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<td style="text-align: left">&#160;</td>
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<td style="text-align: left">&#160;</td>
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<td style="text-align: left">&#160;</td>
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<td>&#160;</td>
<td style="text-align: left">&#160;</td>
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<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Prepaid expenses</td>
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<td>&#160;</td>
<td style="text-align: left">&#160;</td>
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<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Income tax receivable</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReceivable" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,753,594</ix:nonFraction></td>
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<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReceivable" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,753,594</ix:nonFraction></td>
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<td style="padding: 0pt 0pt 0pt 20pt; text-align: left; text-indent: -10pt">Total current assets</td>
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<td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td>
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<td style="padding-bottom: 1pt">&#160;</td>
<td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td>
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<td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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>
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<td style="padding: 0pt 0pt 0pt 20pt; text-align: left; text-indent: -10pt">Right of use asset- operating lease</td>
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<td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td>
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<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>
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<td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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">&#160;</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">&#160;</td>
<td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr id="xdx_401_eus-gaap--Assets_iTI_mtCzTBU_zd9YhJ6bNAna" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt">TOTAL ASSETS</td>
<td style="padding-bottom: 2.5pt">&#160;</td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:Assets" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">23,814,453</ix:nonFraction></td>
<td style="padding-bottom: 2.5pt; text-align: left">&#160;</td>
<td style="padding-bottom: 2.5pt">&#160;</td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:Assets" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">30,190,520</ix:nonFraction></td>
<td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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--LiabilitiesAndStockholdersEquityAbstract_iB" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt">&#160;LIABILITIES AND 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 id="xdx_400_eus-gaap--LiabilitiesCurrentAbstract_i01B_z1c1Zoqx3fje" style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 20pt; text-align: left; text-indent: -10pt">CURRENT 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_402_eus-gaap--AccountsPayableCurrent_i02I_pp0p0_maCzXdz_zG8nTScC30T6" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Accounts payable</td>
<td>&#160;</td>
<td style="text-align: left">$</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:AccountsPayableCurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">180,017</ix:nonFraction></td>
<td style="text-align: left">&#160;</td>
<td>&#160;</td>
<td style="text-align: left">$</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:AccountsPayableCurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">242,829</ix:nonFraction></td>
<td style="text-align: left">&#160;</td></tr>
<tr id="xdx_406_eus-gaap--AccountsPayableRelatedPartiesCurrent_i02I_pp0p0_maCzXdz_zyePGCoGYoQ8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Accounts payable- related party</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:AccountsPayableRelatedPartiesCurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,129,759</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:AccountsPayableRelatedPartiesCurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">12,667,769</ix:nonFraction></td>
<td style="text-align: left">&#160;</td></tr>
<tr id="xdx_401_eus-gaap--AccruedLiabilitiesCurrent_i02I_maCzXdz_zGKwXQ0aFc6h" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Accrued expenses</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">374,412</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:AccruedLiabilitiesCurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">579,604</ix:nonFraction></td>
<td style="text-align: left">&#160;</td></tr>
<tr id="xdx_40F_eus-gaap--OperatingLeaseLiabilityCurrent_i02I_maCzXdz_zGxuzBQWRA4j" style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Operating lease obligation &#8211; short term</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">13,349</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:OperatingLeaseLiabilityCurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">13,020</ix:nonFraction></td>
<td style="text-align: left">&#160;</td></tr>
<tr id="xdx_404_eus-gaap--CustomerRefundLiabilityCurrent_i02I_maCzXdz_zlVqUoCfd9ii" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Customer refund due</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:CustomerRefundLiabilityCurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">147,690</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:CustomerRefundLiabilityCurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">316,800</ix:nonFraction></td>
<td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr id="xdx_400_eus-gaap--LiabilitiesCurrent_i01TI_mtCzXdz_maCzU88_zUTZRW8DblE7" style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 20pt; text-align: left; text-indent: -10pt">Total current liabilities</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:LiabilitiesCurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">9,845,227</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:LiabilitiesCurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">13,820,022</ix:nonFraction></td>
<td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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--LiabilitiesNoncurrentAbstract_i01B" style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 20pt; text-align: left; text-indent: -10pt">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_409_eus-gaap--OperatingLeaseLiabilityNoncurrent_i02I_maCzU88_zd0UIIei5U1b" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Operating lease obligation, net of current portion</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">42,686</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:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">46,185</ix:nonFraction></td>
<td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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_40D_eus-gaap--Liabilities_iTI_mtCzU88_maCzFrR_zvWXzKQyx1Bg" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt">TOTAL LIABILITIES</td>
<td style="padding-bottom: 1pt">&#160;</td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td>
<td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:Liabilities" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">9,887,913</ix:nonFraction></td>
<td style="padding-bottom: 1pt; text-align: left">&#160;</td>
<td style="padding-bottom: 1pt">&#160;</td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td>
<td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:Liabilities" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">13,866,207</ix:nonFraction></td>
<td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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: 0pt 0pt 0pt 20pt; text-align: left; text-indent: -10pt">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 style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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--PreferredStockValue_i01I_maCzuJ1_zkrgt9s0soMe" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Preferred stock <span id="xdx_902_eus-gaap--PreferredStockSharesAuthorized_iI_c20220131_zl45k8CLut12" title="Preferred stock, shares authorized"><span id="xdx_907_eus-gaap--PreferredStockSharesAuthorized_iI_c20211031_zYDktH9xFu32" title="Preferred stock, shares authorized"><ix:nonFraction name="us-gaap:PreferredStockSharesAuthorized" contextRef="AsOf2022-01-31" 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_908_eus-gaap--PreferredStockParOrStatedValuePerShare_c20220131__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="AsOf2022-01-31_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_906_eus-gaap--PreferredStockSharesAuthorized_c20220131__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="AsOf2022-01-31_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_901_eus-gaap--PreferredStockSharesIssued_c20220131__us-gaap--StatementClassOfStockAxis__us-gaap--SeriesAPreferredStockMember_pdd" title="Preferred stock, shares issued"><span id="xdx_90F_eus-gaap--PreferredStockSharesOutstanding_c20220131__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="AsOf2022-01-31_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesOutstanding" contextRef="AsOf2022-01-31_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 January 31, 2022 and October 31, 2021)</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
<td style="text-align: right"><ix:nonFraction name="us-gaap:PreferredStockValue" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,000</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:PreferredStockValue" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,000</ix:nonFraction></td>
<td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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--CommonStockValue_i01I_pp0p0_maCzuJ1_zrFyoq1PfKLk" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 30pt; text-indent: -10pt">Common stock ($<span id="xdx_90F_eus-gaap--CommonStockParOrStatedValuePerShare_c20220131_pdd" title="Common stock, par value"><span id="xdx_90E_eus-gaap--CommonStockParOrStatedValuePerShare_c20211031_pdd" title="Common stock, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.001</ix:nonFraction></ix:nonFraction></span></span> par value, <span id="xdx_90B_eus-gaap--CommonStockSharesAuthorized_c20220131_pdd" title="Common stock, shares authorized"><span id="xdx_90C_eus-gaap--CommonStockSharesAuthorized_c20211031_pdd" title="Common stock, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,000,000,000</ix:nonFraction></ix:nonFraction></span></span> shares authorized, <span id="xdx_905_eus-gaap--CommonStockSharesIssued_iI_c20220131_zPFFMK676qg1" title="Common stock, shares issued"><span id="xdx_903_eus-gaap--CommonStockSharesOutstanding_c20220131_pdd" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">30,236,696</ix:nonFraction></ix:nonFraction></span></span> and <span id="xdx_903_eus-gaap--CommonStockSharesIssued_c20211031_pdd" title="Common stock, shares issued"><span id="xdx_904_eus-gaap--CommonStockSharesOutstanding_iI_c20211031_zZ2EaTT4G5O4" title="Common stock, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">30,195,312</ix:nonFraction></ix:nonFraction></span></span> issued and outstanding as of January 31, 2022 and October 31, 2021, respectively)</td>
<td>&#160;</td>
<td style="text-align: left">&#160;</td>
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<td style="text-align: left">&#160;</td>
<td>&#160;</td>
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<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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_maCzuJ1_z07Kz2uFXvG4" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Additional paid-in capital</td>
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<td style="text-align: left">&#160;</td>
<td>&#160;</td>
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<td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt">&#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--RetainedEarningsAccumulatedDeficit_i01I_pp0p0_maCzuJ1_zcGCSLpAHTtg" style="vertical-align: bottom; background-color: White">
<td style="padding: 0pt 0pt 0pt 30pt; text-align: left; text-indent: -10pt">Accumulated deficit</td>
<td style="padding-bottom: 1pt">&#160;</td>
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<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt">&#160;</td>
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<td style="padding-bottom: 1pt">&#160;</td>
<td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td>
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<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>
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<td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
<tr id="xdx_403_eus-gaap--LiabilitiesAndStockholdersEquity_i01TI_pp0p0_mtCzFrR_zMFdi1WuQ6jh" style="vertical-align: bottom; background-color: White">
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<td style="padding-bottom: 2.5pt">&#160;</td>
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<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>
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<td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 32.4pt"><span style="font-family: 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">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">&#160;</p>

<p style="font: 10pt/5.4pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt/5.4pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"></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"><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">&#160;&#160;<b><span id="a_003"></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">&#160;<b>(Unaudited)</b></span></p>

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    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr id="xdx_401_eus-gaap--MarketingAndAdvertisingExpense_i01_pp0p0_maCzQXQ_zI11U5XSLc9j" style="vertical-align: bottom; background-color: White">
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    <td style="padding: 0pt 0pt 0pt 30pt; font-size: 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">General
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    <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:GeneralAndAdministrativeExpense" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">3,418,339</ix:nonFraction></span></td><td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_405_eus-gaap--OperatingExpenses_i01T_mtCzQXQ_msCzi7j_zkUgA5SBCnZd" style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; font-size: 10pt; font-weight: bold; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
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    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_40F_eus-gaap--NonoperatingIncomeExpenseAbstract_iB_ziNPX7pc3eY" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr id="xdx_401_eus-gaap--InvestmentIncomeNet_i01_d0_maCzNu4_zPPf8WJk6mPl" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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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"><b>&#160;</b>&#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">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"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 10.8pt 0 0"><span style="font-family: Times New Roman, Times, Serif"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 10.8pt 0 0"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: 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"></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"><b><span id="a_004"></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-family: Times New Roman, Times, Serif"></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"><b>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"></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"><b>(Unaudited)</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">&#160;</span></p>

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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">&#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"><b>Kaival
Brands Innovations Group, Inc.</b></span>&#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"><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"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif"><b>For
the Three Months Ended January 31, 2021 (Unaudited)</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">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom">
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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">&#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">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">&#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"></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"></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"></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">&#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">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-family: Times New Roman, Times, Serif"></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"><b><span id="a_005"></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">&#160;<b>(Unaudited)</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">&#160;</span></p>

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  <tr id="xdx_40F_eus-gaap--IncreaseDecreaseInAccountsPayable_i03_d0_maCzAD7_z0nJWal9JjHa" 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:IncreaseDecreaseInAccountsPayable" contextRef="From2020-11-012021-01-31" format="ixt:zerodash" decimals="0" unitRef="USD">&#8212;</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
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  <tr id="xdx_401_eus-gaap--IncreaseDecreaseInAccruedLiabilities_i03_maCzAD7_zqtAdzRTtrsg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">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="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">205,192</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Deferred revenue</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncreaseDecreaseInDeferredRevenue" contextRef="From2021-11-01to2022-01-31" format="ixt:zerodash" decimals="0" unitRef="USD">&#8212;</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:IncreaseDecreaseInDeferredRevenue" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">623,096</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_400_eus-gaap--IncreaseDecreaseInAccruedTaxesPayable_i03_d0_maCzAD7_zOojt5MUvt55" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_403_ecustom--IncreaseDecreaseInCustomerRefundDue_i03N_di0_msCzAD7_zEShEyMXRdci" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -10pt; padding-left: 20pt">Customer refund due</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="kavl:IncreaseDecreaseInCustomerRefundDue" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">169,110</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="kavl:IncreaseDecreaseInCustomerRefundDue" contextRef="From2020-11-012021-01-31" format="ixt:zerodash" decimals="0" sign="-" unitRef="USD">&#8212;</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--IncreaseDecreaseInOperatingLeaseLiability_i03_pp0p0_maCzAD7_zSeSWmL129Pe" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 20pt">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="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">3,170</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="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">3,196</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr id="xdx_40D_eus-gaap--NetCashProvidedByUsedInOperatingActivities_iT_pp0p0_mtCzAD7_maCzDaX_zQ8fL1Fbk8b1" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt">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="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">2,133,514</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="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">5,427,336</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -10pt; padding-left: 10pt">&#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--NetCashProvidedByUsedInFinancingActivitiesAbstract_iB_zzPdJyB0taxg" style="vertical-align: bottom; background-color: White">
    <td style="text-decoration: underline; font-weight: bold; text-align: left; text-indent: -10pt; padding-left: 10pt">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: rgb(204,238,255)">
    <td style="text-indent: -10pt; padding-left: 10pt">&#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_409_ecustom--SettledRsuSharesWithCash_i01N_di_msCzCXc_zep9lheDt8Pk" style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">(<ix:nonFraction name="kavl:SettledRsuSharesWithCash" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">35,759</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&#160;</td>
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  <tr id="xdx_402_eus-gaap--NetCashProvidedByUsedInFinancingActivities_i01T_pp0p0_mtCzCXc_maCzDaX_zl7zDmBRnUfl" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:NetCashProvidedByUsedInFinancingActivities" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" sign="-" unitRef="USD">35,759</ix:nonFraction></td><td style="text-align: left">)&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -10pt; padding-left: 10pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--CashAndCashEquivalentsPeriodIncreaseDecrease_iT_mtCzDaX_zsagZUtiVlRh" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -10pt; padding-left: 10pt">Net change in cash and restricted cash</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:CashAndCashEquivalentsPeriodIncreaseDecrease" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">2,169,273</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:CashAndCashEquivalentsPeriodIncreaseDecrease" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" sign="-" unitRef="USD">5,457,847</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_405_eus-gaap--CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents_iS_zbBftDqJy2O6" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; text-indent: -10pt; padding-left: 10pt">Beginning cash and restricted cash balance</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,825,235</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td><td style="padding-bottom: 1pt">&#160;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1pt solid; text-align: right"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2020-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">7,421,701</ix:nonFraction></td><td style="padding-bottom: 1pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents_iE_zCxAUBSqxjk9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt; text-indent: -10pt; padding-left: 10pt">Ending cash and restricted cash balance</td><td style="padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,655,962</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="AsOf2021-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,963,854</ix:nonFraction></td><td style="padding-bottom: 2.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -10pt; padding-left: 10pt">&#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>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 48.6pt"><span style="font-family: Times New Roman, Times, Serif"></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">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"><b>&#160;</b></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"><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"><b><span id="a_006"></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">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:BusinessDescriptionAndBasisOfPresentationTextBlock"><p id="xdx_80A_eus-gaap--BusinessDescriptionAndBasisOfPresentationTextBlock_zKQDd3vdBbf" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b>Note 1 &#8211;
<span id="xdx_829_z7C2tPQuKSG4">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">&#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">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">&#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"><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">&#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">The
Company is focused on growing and incubating innovative and profitable products into mature, dominant brands. In March 2020, the Company
commenced business operations as a result of becoming the exclusive distributor of certain electronic nicotine delivery systems (&#8220;ENDS&#8221;)
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">&#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">On
March 9, 2020, the Company entered into an exclusive distribution agreement (the &#8220;Distribution Agreement&#8221;) with Bidi, a related
party company, which Distribution Agreement was amended and restated on May 21, 2020 and again on April 20, 2021 (collectively, the &#8220;A&amp;R
Distribution Agreement&#8221;) in order to clarify some of the provisions. 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.</span></p>

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

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

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: 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">On
July 16, 2021, the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation with the Secretary
of State of the State of Delaware to effect a 1-for-12 reverse stock split (the &#8220;Reverse Stock Split&#8221;) of the shares of the
Company&#8217;s common stock, par value $<span id="xdx_905_ecustom--CommonStockParOrStatedValuesPerShare_iI_c20220131_z3ZAVa6cx43c" title="Common stock, par value"><ix:nonFraction name="kavl:CommonStockParOrStatedValuesPerShare" contextRef="AsOf2022-01-31" 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-family: Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 100%"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><i>Current
    Product Offerings</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">&#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">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; text-align: justify"><span style="font-family: 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">On
    July 14, 2021, the Company announced plans to launch its first Kaival-branded product, a Hemp CBD product. In addition to its Kaival-branded
    formulation, the Company anticipates that it will also provide white label, wholesale solutions for other product manufacturers through
    its subsidiary, Kaival Labs. The Company has not yet launched any Kaival-branded product, nor has it begun to provide white label
    wholesale solutions for other product manufacturers.</span></p>
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<ix:exclude><p id="xdx_23C_zCsYBHdv1ere" style="font: 10pt/0.05pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: none">&#160;</span></b></span></p>

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

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

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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"><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">&#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">As
of September 10, 2021, the FDA announced that it has taken action on over 93% of applications and issued Marketing Denial Orders (&#8220;MDOs&#8221;)
for more than 1,167,000 flavored ENDS products, while issuing zero marketing authorizations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">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&#174; Sticks, including its Arctic (menthol) BIDI&#174; Stick, which Bidi believes
the FDA mischaracterized as &#8220;flavored.&#8221; BIDI believes that because its Arctic BIDI&#174; Stick is menthol, it should not be
subject to the MDO. Bidi and the Company believe this position is aligned with the FDA&#8217;s public statements and press releases stating
that tobacco and menthol ENDS are not deemed flavored products subject to the MDOs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">As
a result, beginning in September 2021, Bidi pursued three avenues to challenge the MDO. First, on September 21, 2021, separate from the
judicial appeal of the MDO in its entirety, Bidi filed a 21 C.F.R. &#167; 10.75 internal FDA review request specifically of the decision
to include the Arctic (menthol) BIDI&#174; Stick in the MDO. The Company anticipates a decision from the FDA on the internal review in
the second or third quarter of 2022, although we cannot provide any assurances as to the timing or outcome.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">Separately,
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&#174; 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 the company&#8217;s comprehensive
applications, as required by the Tobacco Control Act, to determine whether the BIDI&#174; 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.
On February 1, 2022, 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, or 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 are currently scheduled for May 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">&#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">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">&#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">In
the event that the U.S. Court of Appeals issues for the Eleventh Circuit a ruling adverse to Bidi, or if the FDA otherwise chooses to
enforce against Bidi, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI&#174; Stick products in the United
States, thereby resulting in the Company being unable to distribute such products, 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">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p id="xdx_801_eus-gaap--SignificantAccountingPoliciesTextBlock_zfNAwPnATzAe" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>Note
2 &#8211; <span id="xdx_82D_ziDIRkrSG2Tb">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">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:ConsolidationPolicyTextBlock"><p id="xdx_842_eus-gaap--ConsolidationPolicyTextBlock_zDF1gAD5X759" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline"><span id="xdx_86E_zXWUhaMDeTkb">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">&#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">The
consolidated financial statements include the financial statements of the Company&#8217;s wholly-owned subsidiary, Kaival Labs. 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">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:BasisOfAccountingPolicyPolicyTextBlock"><p id="xdx_849_eus-gaap--BasisOfAccountingPolicyPolicyTextBlock_zXAMrU6ZBq9b" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline"><span id="xdx_867_zxroRdVNKuXg">Basis
of Presentation</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">&#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">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-family: Times New Roman, Times, Serif">&#160;</span></p>

<ix:exclude><p id="xdx_23F_zUPkmIZ43lrg" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></span></p></ix:exclude>

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<ix:exclude><p id="xdx_231_zJMZ10sIFDji" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></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">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:UseOfEstimates"><p id="xdx_84D_eus-gaap--UseOfEstimates_z1fMNAiYlNl" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline"><span id="xdx_861_zO2qyizBck2i">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">&#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">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">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock"><p id="xdx_84E_eus-gaap--CashAndCashEquivalentsPolicyTextBlock_zPdtwMNv4H0l" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline"><span id="xdx_863_zf8x01a69r2">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">&#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">The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
There were no cash equivalents at January 31, 2022 and October 31, 2021. Cash and restricted cash at January 31, 2022 and October 31,
2021 were $<span id="xdx_90F_eus-gaap--CashAndCashEquivalentsAtCarryingValue_iI_c20220131_zIOkoY1ANsX3" title="Cash and cash equivalents"><ix:nonFraction name="us-gaap:CashAndCashEquivalentsAtCarryingValue" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">5,655,962</ix:nonFraction></span> and $<span id="xdx_900_eus-gaap--CashAndCashEquivalentsAtCarryingValue_iI_c20211031_zzeNMWAKBig2" title="Cash and cash equivalents"><ix:nonFraction name="us-gaap:CashAndCashEquivalentsAtCarryingValue" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="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">&#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">Cash
and restricted consist of cash and cash held short-term in escrow as required. As of January 31, 2022, and October 31, 2021, the Company
had $<span id="xdx_905_eus-gaap--RestrictedCash_iI_c20220131_zKSs4CxzshPj" title="Restricted cash"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">65,542</ix:nonFraction></span> and $<span id="xdx_90C_eus-gaap--RestrictedCash_iI_c20211031_zBNjoo05MWSk" title="Restricted cash"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">65,007</ix:nonFraction></span> 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">&#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">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-family: 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"></span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:ScheduleOfRestrictedCashAndCashEquivalentsTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_899_eus-gaap--ScheduleOfRestrictedCashAndCashEquivalentsTextBlock_zDr8IKnaAEFh" 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="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; padding-right: 0pt; padding-left: 10pt; text-align: left; text-indent: -10pt"><span id="xdx_8BC_z50LBFUjm8Zi" style="display: none">Restrictions on Cash and Cash Equivalents</span></td>
<td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">&#160;</td>
<td id="xdx_499_20220131_zlAbD5Btzjk4" style="font: 10pt Times New Roman, Times, Serif; text-align: center">&#160;</td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">&#160;</td>
<td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: center">&#160;</td>
<td id="xdx_494_20211031_zVrP1yANMOUk" style="font: 10pt Times New Roman, Times, Serif; text-align: center">&#160;</td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
<td style="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">January
31,</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">October
31,</span></td></tr>
<tr style="vertical-align: bottom">
<td style="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td colspan="3" style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2022</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td colspan="3" style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2021</span></td></tr>
<tr id="xdx_409_eus-gaap--Cash_iI_pp0p0_maCCERCzlsj_zEwNFmq4INp" style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; padding: 0pt 0pt 0pt 10pt; width: 56%; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash</span></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 12%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:Cash" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,590,420</ix:nonFraction></span></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 12%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:Cash" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,760,228</ix:nonFraction></span></td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr id="xdx_40F_eus-gaap--RestrictedCash_iI_pp0p0_maCCERCzlsj_ziW1FazzDyY3" style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Restricted
cash<br />
</span></td>
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">65,542</ix:nonFraction></span></td>
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">65,007</ix:nonFraction></span></td>
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr id="xdx_40C_eus-gaap--CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents_iTI_pp0p0_mtCCERCzlsj_z7ayH6U14wle" style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: bold 10pt Times New Roman, Times, Serif; padding: 0pt 0pt 0pt 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
cash and restricted cash shown in statement of cash flows</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">5,655,962</ix:nonFraction></span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">7,825,235</ix:nonFraction></span></td>
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
</table>


</ix:nonNumeric><p id="xdx_8A7_zGJJHMmGNpf3" 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">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:AdvertisingCostsPolicyTextBlock"><p id="xdx_841_eus-gaap--AdvertisingCostsPolicyTextBlock_zWYBlNFPP9s7" 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"></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"></span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_866_zSmb8PNMF9Z6">Advertising
and Promotion</span> </b></span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.35pt"><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>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:ReceivablesPolicyTextBlock"><p id="xdx_840_eus-gaap--ReceivablesPolicyTextBlock_zXDs8N5n0l88" style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_868_z93MABrtufsc">Accounts
Receivable and Allowance for Doubtful Accounts</span> </b></span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 8.45pt; 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 January 31, 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_909_eus-gaap--AllowanceForDoubtfulAccountsReceivableCurrent_iI_do_c20211031_zq7jB1Wt9RZc" title="Allowance for doubtful accounts"><ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivableCurrent" contextRef="AsOf2021-10-31" format="ixt-sec:numwordsen" decimals="0" unitRef="USD">no</ix:nonFraction></span> allowance for doubtful accounts was required.
</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:InventoryPolicyTextBlock"><p id="xdx_843_eus-gaap--InventoryPolicyTextBlock_zYFMCpxujcpj" style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_864_zheg6ZjMJtL">Inventories</span>
</b></span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 8.45pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
product inventory is purchased from a related party, Bidi. Inventories are stated at the lower of cost and net realizable value. Cost
includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. The Company
determines cost based on the FIFO method. Net realizable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale. All inventories are purchased from a related party
as of October 31, 2021 and January 31, 2022, the inventories only consisted of finished goods, were significant, and were located in
four storage locations, one of which was a related party, Bidi, and the other location was with a customer/sub distributor, Favs Business
LLC (&#8220;Favs Business&#8221;). Based upon fiscal year 2021 inventory management procedures and their results, that have continued
through the quarter ended January 31, 2022, the Company has determined that no allowance for the inventory valuation was required at
January 31, 2022, nor October 31, 2021. </span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="kavl:InventoryDepositRelatedPartyPolicyTextBlock"><p id="xdx_840_ecustom--InventoryDepositRelatedPartyPolicyTextBlock_zpz25oQZHwO9" style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_zXfpLKh96cpg">Inventory
deposit related party</span> </b></span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 8.45pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 $2.9 million 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 February 2022. Once delivered the BIDI<sup>&#174;
</sup>Sticks to be distributed in the United Kingdom will be maintained in appropriate warehousing for distribution and sale. As of the
date these unaudited consolidated financial statements were issued, this has not been completed and no inventory has been transferred
to the Company; thus, this remains a deposit. The parties anticipate that such delivery will occur by the end of the second quarter of
2022 or beginning of the third quarter of 2022, dependent upon the timing of the launch of distribution in the United Kingdom. In the
event that delivery of the BIDI<sup>&#174;</sup> Sticks and corresponding launch of distribution in the United Kingdom is further delayed,
the parties intend that Bidi will return the inventory deposit to the Company.&#160;</span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 8.45pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 9pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p></ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:RevenueRecognitionPolicyTextBlock"><p id="xdx_84A_eus-gaap--RevenueRecognitionPolicyTextBlock_z7WCoO9bVrJ9" style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_868_zkdSj5lmfss8">Revenue
Recognition</span> </b></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">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. The Company has evaluated revenues recognized and
substantially all of our revenues were derived from sales of flavored BIDI&#174; Sticks, including the Arctic (menthol) BIDI&#174;
Stick, sales of which constituted approximately 12.5% and 19.9% of our total sales of BIDI&#174; Sticks for the fiscal quarters ended
January 31, 2022 and 2021, respectively. 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. At January 31, 2022, the value of the Products stored at Favs Business under the Consignment Agreement was
approximately $1,433,730.</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">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="kavl:DeferredRevenuePolicyTextBlock"><p id="xdx_84E_ecustom--DeferredRevenuePolicyTextBlock_z1rUeyoaIj31" style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_860_zMHl63fpTNO2">Deferred
Revenue</span> </b></span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 8.45pt; 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 January 31, 2022 and October 31, 2021, the Company had not received any deposits from customers, respectively, which would be included
with the Company&#8217;s current liabilities, if they existed. </span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:UtilityRevenueAndExpenseRecognitionPolicy"><p id="xdx_845_eus-gaap--UtilityRevenueAndExpenseRecognitionPolicy_z9Iv0ywMyVek" style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_zL3G6kiINVn">Customer
Refunds</span> </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8.8pt; 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 January 31, 2022 and October 31, 2021, the Company had customer refunds due in the amounts equal to approximately $147,690 and $316,800,
respectively, which was the result of one of the Company&#8217;s sub-distributor customers returning Product that had become defective
in storage. The approximately $147,690 due at January 31, 2022 represents the amount of the refund the Company will make to this customer.</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="kavl:ProductsRevenuePoliciesTextBlock"><p id="xdx_845_ecustom--ProductsRevenuePoliciesTextBlock_zhbX27cZzb96" style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_864_zVgIFobI3SD7">Products
Revenue</span> </b></span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7pt; 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: 9pt Times New Roman, Times, Serif; margin: 0 0 7pt; 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: 9pt Times New Roman, Times, Serif; margin: 0 0 8.45pt; 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>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="kavl:ConcentrationOfRevenuesAndAccountsReceivablePolicyTextBlock"><p id="xdx_84B_ecustom--ConcentrationOfRevenuesAndAccountsReceivablePolicyTextBlock_zwI6RkPDArUg" style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.95pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span id="xdx_863_zKSUHzC4Dxp4">Concentration
of Revenues and Accounts Receivable</span></i></b></span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 10.5pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the three months ended January 31, 2022, approximately 45%, or $1,287,180, of the revenue from the sale of Products was generated from
Favs Business, approximately 12%, or $352,554, of the revenue from the sale of Products was generated from Lakshmi Distributor Inc.,
doing business as C Store Master (&#8220;C Store Master&#8221;), and approximately 12%, or $332,595, of the revenue from the sale of
Products was generated from The H.T. Hackney Company. </span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Favs
Business and C Store Master had outstanding balances of approximately $374,400 and $282,414, respectively, which accounted for approximately
29% and 22%, respectively, of the total accounts receivable from customers as of January 31, 2022.</span></p>

<p style="font: 9pt Times New Roman, Times, Serif; margin: 0 0 7.1pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the three months ended January 31, 2021, approximately 37%, or $13,888,376, of the revenue from the sale of Products was generated from
Favs Business, approximately 18%, or $6,708,752, of the revenue from the sale of Products was generated from MMS Distribution, LLC (&#8220;MMS
Distro&#8221;), and approximately 13%, or $4,879,427, of the revenue from the sale of Products was generated from C Store Master. </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">Favs
Business, with an outstanding balance of approximately $8,601,200, and GPM Investment, LLC, with an outstanding balance of approximately
$1,262,985, accounted for approximately 68% and 10% of the total accounts receivable from customers, respectively, as of January 31,
2021.</span></p>

<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy"><p id="xdx_84B_eus-gaap--ShareBasedCompensationOptionAndIncentivePlansPolicy_zk4CtEMf8nF7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline"><span id="xdx_86E_zrKrBQ57XkW7">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">&#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">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">&#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">The
fair value of each option granted during the fiscal three month period ended January 31, 2022 and at October 31, 2021 was estimated on
the date of grant using the Black-Scholes-Merton option-pricing model with the weighted average assumptions in the following table:</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">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:ScheduleOfShareBasedPaymentAwardStockOptionsValuationAssumptionsTableTextBlock"><table cellspacing="0" cellpadding="0" id="xdx_89E_eus-gaap--ScheduleOfShareBasedPaymentAwardStockOptionsValuationAssumptionsTableTextBlock_zlKiPTtr522i" summary="xdx: Disclosure - Basis of Presentation and Significant Accounting Policies (Details - Black-Scholes option)" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span id="xdx_8B5_zlgYqsXzRX3e" style="display: none">Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions</span></td>
<td style="padding-right: 0.8pt">&#160;</td>
<td style="padding-right: 0.8pt">&#160;</td>
<td style="padding-right: 0.8pt; text-align: right">&#160;</td>
<td style="padding-right: 0.8pt">&#160;</td>
<td style="padding-right: 0.8pt">&#160;</td>
<td style="padding-right: 0.8pt">&#160;</td>
<td style="padding-right: 0.8pt; text-align: right">&#160;</td></tr>
<tr style="vertical-align: bottom">
<td style="padding: 0pt 0pt 0pt 10pt; width: 61%; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="width: 7%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: black 1pt solid; width: 1%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: black 1pt solid; width: 12%; padding-right: 0.8pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2022</b></span></td>
<td style="width: 1%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="width: 7%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: black 1pt solid; width: 1%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: black 1pt solid; width: 10%; padding-right: 0.8pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2021</b></span></td></tr>
<tr style="vertical-align: bottom; background-color: #CCECFF">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expected
dividend yield</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90B_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate_dp_c20211101__20220131_zX0Z3a9iYx3c" title="Expected dividend yield"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0</ix:nonFraction></span></span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate_dp_c20201101__20210131_z8h6SxKEIQPg" title="Expected dividend yield"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">0</ix:nonFraction></span>%</span></td></tr>
<tr style="vertical-align: bottom">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expected
option term (years)</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_901_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1_dtY_c20211101__20220131_zNLoGCKjAxki" title="Expected option term (years)"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1">10</ix:nonNumeric></span></span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90D_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1_dtY_c20201101__20210131_zayjxztwsMEb" title="Expected option term (years)"><ix:nonNumeric contextRef="From2020-11-012021-01-31" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageRemainingContractualTerm1">10</ix:nonNumeric></span> </span></td></tr>
<tr style="vertical-align: bottom; background-color: #CCECFF">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expected
volatility</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_dp_c20211101__20220131__srt--RangeAxis__srt--MinimumMember_zmzwPcS9LTla"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2021-11-012022-01-31_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">294.57</ix:nonFraction></span>%-<span id="xdx_90C_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_dp_c20211101__20220131__srt--RangeAxis__srt--MaximumMember_zroCUMCHVPIf"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2021-11-012022-01-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">301.53</ix:nonFraction></span></span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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<tr style="vertical-align: bottom">
<td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risk-free
interest rate</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_909_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_dp_c20201101__20210131__srt--RangeAxis__srt--MinimumMember_z5VTM5B9FHI3" title="Risk-free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2020-11-012021-01-31_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.19</ix:nonFraction></span>%-<span id="xdx_904_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate_dp_c20201101__20210131__srt--RangeAxis__srt--MaximumMember_zAtyiaXSGIVf" title="Risk-free interest rate"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRate" contextRef="From2020-11-012021-01-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.63</ix:nonFraction></span>%</span></td></tr>
</table>

</ix:nonNumeric><p id="xdx_8AC_zPz0xKmW83h4" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 32.4pt; background-color: white"><span style="font-family: 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">The
expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected volatility
was based on the volatility in the trading of the Common Stock. The assumed discount rate was the default risk-free ten-year interest
rate for U.S. Treasury bills. The Company stock option expense for the fiscal three months ended January 31, 2022 and for the fiscal
year October 31, 2021 was approximately $<span id="xdx_908_ecustom--StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpenses_c20211101__20220131_zUmih3cKMs5a" title="Stock option expense"><ix:nonFraction name="kavl:StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpenses" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">309,700</ix:nonFraction></span> and $<span id="xdx_90E_ecustom--StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpenses_c20201101__20210131_z2DqaQA7G3y3" title="Stock option expense"><ix:nonFraction name="kavl:StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxBenefitExpenses" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,773,947</ix:nonFraction></span>, 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">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">The Company&#8217;s
stock-based compensation for the fiscal three months ended January 31, 2022 and fiscal year October 31, 2021 was approximately $<span id="xdx_902_eus-gaap--ShareBasedCompensation_c20211101__20220131_pp0p0" title="Stock-based compensation"><ix:nonFraction name="us-gaap:ShareBasedCompensation" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">110,250</ix:nonFraction></span>
and $<span id="xdx_900_eus-gaap--ShareBasedCompensation_c20201101__20210131_pp0p0" title="Stock-based compensation"><ix:nonFraction name="us-gaap:ShareBasedCompensation" contextRef="From2020-11-012021-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,449,421</ix:nonFraction></span>, respectively.</span></p>

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

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_843_eus-gaap--IncomeTaxPolicyTextBlock_zLa6Vii6K2X7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><span id="xdx_86A_zzzDuRXuEb85">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">&#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">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">&#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">The
Company has Federal net operating loss (&#8220;NOL&#8221;) carryforwards of approximately $<span id="xdx_902_eus-gaap--OperatingIncomeLoss_c20211101__20220131_pp0p0" title="Net operating loss"><ix:nonFraction name="us-gaap:OperatingIncomeLoss" contextRef="From2021-11-01to2022-01-31" 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_903_eus-gaap--ValuationAllowanceDeferredTaxAssetChangeInAmount_c20211101__20220131_pp0p0" title="Valuation allowance"><ix:nonFraction name="us-gaap:ValuationAllowanceDeferredTaxAssetChangeInAmount" contextRef="From2021-11-01to2022-01-31" 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 three month period ended January
31, 2022, is necessary to reduce the deferred tax asset to the amount that will more likely than not be realized pursuant to ASC 740.</span></p>

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

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:FairValueOfFinancialInstrumentsPolicy"><p id="xdx_84E_eus-gaap--FairValueOfFinancialInstrumentsPolicy_z3tMj7lV9Qs4" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b><span id="xdx_863_ztffGbognyu5">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">&#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">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">&#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">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-family: Times New Roman, Times, Serif">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in; text-align: right"></td><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 106%">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 106%">Level
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="margin: 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in; text-align: right"></td><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 106%">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 106%">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 other means.</span></td>
</tr></table>

<p style="margin: 0">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in; text-align: right"></td><td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 106%">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 106%">Level
3 - Inputs that are both significant to the fair value measurement and unobservable.</span></td>
</tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">Fair
value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of January
31, 2022. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term
nature of these instruments. These financial instruments include cash, restricted cash, accounts receivable, inventory, accounts payable
and accrued expenses.</span></p>

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

<ix:exclude><p id="xdx_230_zbfCs0g2jiz1" 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:exclude>

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<ix:exclude><p id="xdx_23B_zkTxJln1UyVe" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"></span></p></ix:exclude>

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

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p></ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p id="xdx_849_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_zMwimYRUKxLk" 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"><b><span id="xdx_86C_zc6VUCyBNMNh">Recent
                                            Accounting Pronouncements</span></b></span></p>

<p style="font: 12pt 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: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"></p>

<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"></p>

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

</ix:nonNumeric></ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:SubstantialDoubtAboutGoingConcernTextBlock"><p id="xdx_80C_eus-gaap--SubstantialDoubtAboutGoingConcernTextBlock_zFtW6Swrpbdl" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b>Note 3 &#8211;
<span id="xdx_826_ztEVF1FOupA9">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">&#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">A
recent court ruling on behalf of Bidi in the U.S. Court of Appeals for the Eleventh Circuit, granted a judicial stay of the MDO previously
issued by the FDA to Bidi in September 2021. The ruling, issued on February 1, 2022, means that all BIDI<sup>&#174;</sup> Stick flavors
remain marketable by the Company in the United States, subject to the FDA&#8217;s enforcement discretion, while Bidi continues with its
merits case challenging the legality of the MDO. As the FDA has indicated that it is prioritizing enforcement against companies that
have not submitted PMTAs or who have MDOs in place, the Company views the risk of FDA enforcement against Bidi as low. Oral arguments
in the merits case are currently scheduled in May 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">&#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">If
the U.S. Court of Appeals for the Eleventh Circuit agrees with Bidi in the merits case, the Company anticipates that the FDA will be
compelled to place the flavored ENDS back into the PMTA scientific review process. If this is the outcome of the merits case, the Company
will be able to fully market and sell the Products, subject to the FDA&#8217;s enforcement discretion, until the scientific review process
is complete on each of Bidi&#8217;s PMTA for flavored ENDS and the FDA issues its decision on each.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">If
the U.S. Court of Appeals for the Eleventh Circuit disagrees with Bidi on the merits case, or if the FDA otherwise chooses to enforce
against Bidi, the Company will be forced to cease sales on the flavored ENDS in the United States market, leaving only the Tobacco and
Menthol (Arctic) ENDS products for sale in the United States (pending the outcome of the specific PMTA filings and the administrative
review request for the classification of &#8220;Arctic&#8221; as a standard menthol ENDS). If this is the outcome of the merits case,
this combined with the negative cash flows from operations, raises substantial doubt&#160;on the Company&#8217;s ability to 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">&#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">Management
plans to continue similar operations with increased marketing, which the Company believes will result in increased revenue and net income.
However, there is no assurance that management&#8217;s plan will be successful due to the current economic climate in the United States
and globally.</span></p>

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

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:LesseeOperatingLeasesTextBlock"><p id="xdx_803_eus-gaap--LesseeOperatingLeasesTextBlock_zgyfztP9368h" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>Note
4 &#8211; <span id="xdx_82F_zW9P0AOYLVwa">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">&#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">The
Company capitalizes all leased assets pursuant to ASU 2016-02, &#8220;Leases (Topic 842),&#8221; which requires lessees to recognize
right-of-use assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with
terms longer than 12 months and classified as either financing or operating leases. The Company excludes short-term leases having initial
terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over
the lease term. The Company adopted the standard in the fourth quarter of fiscal year 2020. The adoption of the amended ASU 2016-02 did
not have any impact on the Company&#8217;s previously reported financial statements in any prior period nor did it result in a cumulative
effect adjustment to retained earnings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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"><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"><b>&#160;</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">On
August 1, 2020, the Company began leasing office space for its main corporate office in Grant, Florida. The five-year lease
agreement is with a related party, Just Pick, LLC (&#8220;Just Pick&#8221;). 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. <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. The operating lease is for a term of <span id="xdx_903_eus-gaap--LesseeOperatingLeaseTermOfContract_iI_dtY_c20220131_zCeGw7bxvAX7" title="Lease term" style="display: none"><ix:nonNumeric contextRef="AsOf2022-01-31" format="ixt-sec:duryear" name="us-gaap:LesseeOperatingLeaseTermOfContract">5</ix:nonNumeric></span> five years, beginning August 1, 2020, with rent of $<span id="xdx_90E_eus-gaap--PaymentsForRent_c20211101__20220131_zc0RPtFLL3gh" title="Rent per month"><ix:nonFraction name="us-gaap:PaymentsForRent" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,000</ix:nonFraction></span>
payable monthly. 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. As the operating lease
does not provide for an implicit interest rate, we estimated a current borrowing rate of <span id="xdx_909_eus-gaap--LesseeOperatingLeaseDiscountRate_iI_dp_c20220131_zQHFRaE3mX2j" title="Current borrowing rate"><ix:nonFraction name="us-gaap:LesseeOperatingLeaseDiscountRate" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4.5</ix:nonFraction></span>% in determining the present value of
the lease. As of January 31, 2022 and October 31, 2021, the right-to-use (&#8220;ROU&#8221;) lease asset, net of accumulated
amortization, was approximately $<span id="xdx_901_eus-gaap--OperatingLeaseRightOfUseAsset_c20220131_pp0p0" title="Right to use lease asset"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAsset" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">51,955</ix:nonFraction></span> and $<span id="xdx_908_eus-gaap--OperatingLeaseRightOfUseAsset_iI_pp0p0_c20211031_zRWBr0unPWd5" 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_902_ecustom--RecognitionOfRouOperatingLease_c20211101__20220131_pp0p0" title="Recognition of ROU operating lease"><ix:nonFraction name="kavl:RecognitionOfRouOperatingLease" contextRef="From2021-11-01to2022-01-31" 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_903_ecustom--RecognitionOfRouLiability_pp0p0_c20201101__20211031_z6c3DCayOMWa" 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 three months ended January 31, 2022 was approximately $<span id="xdx_903_eus-gaap--OperatingLeaseRightOfUseAssetAmortizationExpense_pp0p0_c20211101__20220131_zRYBvLLuxrF7" title="Amortization expense for right to use asset"><ix:nonFraction name="us-gaap:OperatingLeaseRightOfUseAssetAmortizationExpense" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,649</ix:nonFraction></span> and no payments were made on the ROU liability. At
October 31, 2021, short-term ROU lease liability was approximately $<span id="xdx_902_eus-gaap--OperatingLeaseLiabilityCurrent_iI_pp0p0_c20211031_zyOZ7e2ccAuf" 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_903_eus-gaap--OperatingLeaseLiabilityNoncurrent_iI_pp0p0_c20211031_ztOe5waCxNek" 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_90B_ecustom--OperatingLeasesLiability_iI_pp0p0_c20211031_zw5ERBxfSIUg" 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 January 31, 2022, short-term ROU lease liability was approximately $<span id="xdx_901_eus-gaap--OperatingLeaseLiabilityCurrent_c20220131_pp0p0" title="Short-term ROU lease liability"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityCurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,349</ix:nonFraction></span> and long-term
liability was approximately $<span id="xdx_90D_eus-gaap--OperatingLeaseLiabilityNoncurrent_c20220131_pp0p0" title="Long term lease liability"><ix:nonFraction name="us-gaap:OperatingLeaseLiabilityNoncurrent" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">42,686</ix:nonFraction></span>, totaling approximately $<span id="xdx_905_eus-gaap--OperatingLeaseLiability_c20220131_pp0p0" title="Lease liability"><ix:nonFraction name="us-gaap:OperatingLeaseLiability" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">56,035</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">&#160;&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:ScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesTableTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_881_eus-gaap--ScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesTableTextBlock_z4j0FRnaUR4e" 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="padding: 0pt 0pt 0pt 10pt; font-size: 10pt; text-align: left; text-indent: -10pt"><span id="xdx_8B0_zG4z1ION6Qr4" 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 style="font-size: 10pt">&#160;</td>
    <td style="font-size: 10pt; text-align: left">&#160;</td><td style="font-size: 10pt; text-align: right">&#160;</td><td style="font-size: 10pt; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2022</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2023</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2024</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2025</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt 0pt 0pt 10pt; width: 35%; font-size: 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease
    payments</span></td><td style="width: 2%; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 1%; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_98C_eus-gaap--OperatingLeasesFutureMinimumPaymentsDueInTwoYears_c20220131_pp0p0" title="2021" style="width: 9%; font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeasesFutureMinimumPaymentsDueInTwoYears" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,500</ix:nonFraction></span></td><td style="width: 1%; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="width: 2%; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="width: 1%; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_98C_eus-gaap--OperatingLeasesFutureMinimumPaymentsDueInFourYears_c20220131_pp0p0" title="2023" style="width: 9%; font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeasesFutureMinimumPaymentsDueInFourYears" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">18,000</ix:nonFraction></span></td><td style="width: 1%; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="width: 2%; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 1%; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_989_eus-gaap--OperatingLeasesFutureMinimumPaymentsDueInFiveYears_c20220131_pp0p0" title="2024" style="width: 9%; font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeasesFutureMinimumPaymentsDueInFiveYears" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">13,500</ix:nonFraction></span></td><td style="width: 1%; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="width: 2%; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 1%; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_984_eus-gaap--OperatingLeasesFutureMinimumPaymentsDue_c20220131_pp0p0" title="Total" style="width: 9%; font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:OperatingLeasesFutureMinimumPaymentsDue" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">60,300</ix:nonFraction></span></td><td style="width: 1%; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; font-size: 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Less
    discount imputed interest</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td id="xdx_987_eus-gaap--LesseeOperatingLeaseLiabilityUndiscountedExcessAmount_iNI_pp0p0_di_c20220131_zqJIRgXESf25" title="Less discount" style="font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(<ix:nonFraction name="us-gaap:LesseeOperatingLeaseLiabilityUndiscountedExcessAmount" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">4,265</ix:nonFraction>)</span></td><td style="font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt 0pt 0pt 10pt; font-size: 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Present
    value of future payments</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; font-size: 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Less
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt 0pt 0pt 10pt; font-size: 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Long
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  </table></ix:nonNumeric>


<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"><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"><b>&#160;</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">On
November 1, 2021, the Company entered into a month-to-month lease agreement with Ranger Enterprises, LLC, located in Seymour, Indiana,
to store product inventory at this satellite location. The Company made four payments on this lease, totaling approximately $<span id="xdx_900_eus-gaap--OperatingLeaseExpense_c20211101__20220131_pp0p0" title="Operating lease expense"><ix:nonFraction name="us-gaap:OperatingLeaseExpense" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">10,139</ix:nonFraction></span>,
during the three months ended January 31, 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
one payment in the amount of approximately $<span id="xdx_90D_eus-gaap--LeaseholdImprovementsGross_iI_pp0p0_c20211215_zeu8bOS7h8H1" title="Lease amount"><ix:nonFraction name="us-gaap:LeaseholdImprovementsGross" contextRef="AsOf2021-12-15" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">10,713</ix:nonFraction></span> on December 15, 2021 for the rent on this lease during the three months ended January
31, 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">&#160;</span></p>

<ix:exclude><p id="xdx_237_zadCuGYaHFok" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></span></p></ix:exclude>

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<ix:exclude><p id="xdx_23A_zxfK8gEg7pAd" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></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">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock"><p id="xdx_804_eus-gaap--StockholdersEquityNoteDisclosureTextBlock_z7sLnm347awf" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>Note
5 &#8211; <span id="xdx_827_zbXWDXxIUXJk">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">&#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"><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">&#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">During
the three months ended January 31, 2022, approximately $<span id="xdx_908_eus-gaap--StockOptionPlanExpense_c20211101__20220131_zacww3wBuaN7" title="Stock options expenses"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">309,700</ix:nonFraction></span> of stock option expense was recognized and contributed an addition to
Additional Paid-In Capital. Also, during the three months ended January 31, 2022, on November 1, 2021, RSUs previously granted to employees
vested and shares of Common Stock were issued, which contributed approximately $<span id="xdx_90C_eus-gaap--AdditionalPaidInCapitalCommonStock_iI_c20220131__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_zpuoRndGmyw6" title="Additional paid-in capital"><ix:nonFraction name="us-gaap:AdditionalPaidInCapitalCommonStock" contextRef="AsOf2022-01-31_us-gaap_RestrictedStockUnitsRSUMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">74,451</ix:nonFraction></span> to Additional Paid-In Capital, resulting in a
total increase in Additional Paid-In Capital during the three months ended January 31, 2022 of approximately $<span id="xdx_900_eus-gaap--AdditionalPaidInCapitalCommonStock_iI_c20220131_zVpvygEY6Jrk"><ix:nonFraction name="us-gaap:AdditionalPaidInCapitalCommonStock" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD">384,151</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">&#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"><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">&#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">The
authorized preferred stock of the Company consists of <span id="xdx_90C_eus-gaap--PreferredStockSharesAuthorized_iI_c20210731_zcFMpuYj6AZe" title="Preferred stock, shares authorized"><ix:nonFraction name="us-gaap:PreferredStockSharesAuthorized" contextRef="AsOf2021-07-31" 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"><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"><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_904_ecustom--ReverseStockSplitDescription_c20211101__20220131" title="Reverse stock split description"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" 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_909_eus-gaap--PreferredStockSharesOutstanding_c20210731__us-gaap--AwardTypeAxis__us-gaap--SeriesAPreferredStockMember_pdd"><span id="xdx_907_eus-gaap--PreferredStockSharesIssued_iI_c20220131__us-gaap--AwardTypeAxis__us-gaap--SeriesAPreferredStockMember_zcsAbk7gT0q2" title="Preferred stock, shares issued"><ix:nonFraction name="us-gaap:PreferredStockSharesOutstanding" contextRef="AsOf2021-07-31_us-gaap_SeriesAPreferredStockMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:PreferredStockSharesIssued" contextRef="AsOf2022-01-31_us-gaap_SeriesAPreferredStockMember316805062" 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 January 31, 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">&#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"><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">&#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">The
Company implemented the Reverse Stock Split, effective prior to the opening of the market on Tuesday, July 20, 2021. The Revers<span style="font-size: 10pt">e
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 the <span id="xdx_906_eus-gaap--StockholdersEquityReverseStockSplit_c20210701__20210716" title="Reverse stock split"><ix:nonNumeric contextRef="From2021-07-012021-07-16" name="us-gaap:StockholdersEquityReverseStockSplit">1-for-12</ix:nonNumeric></span> ratio, 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></span></p>

<p style="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_901_eus-gaap--CommonStockSharesAuthorized_iI_c20210731_zQEi5DqR04jk"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2021-07-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,000,000,000</ix:nonFraction></span> shares with a par value of $<span id="xdx_902_eus-gaap--CommonStockParOrStatedValuePerShare_iI_c20210731_zweXm3AS6DEk"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2021-07-31" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">0.001</ix:nonFraction></span>. There were <span id="xdx_905_eus-gaap--CommonStockSharesOutstanding_iI_c20210731_zdRBMd30hEy5"><span id="xdx_900_eus-gaap--CommonStockSharesIssued_c20220131_pdd" title="Common stock shares, issued"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2021-07-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">30,236,696</ix:nonFraction></ix:nonFraction></span></span> shares of Common
Stock issued and outstanding as of January 31, 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">&#160;<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">&#160;</span></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-family: Times New Roman, Times, Serif; font-size: 10pt">As
part of the Company&#8217;s firm underwritten public offering during fiscal 2021, the Company issued warrants to purchase a total of
<span id="xdx_90F_ecustom--IssuanceOfWarrants_c20211031_pdd" 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_90F_ecustom--ExercisePricePerShare_c20211031_pdd" 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 the year 2026. During the year ended
October 31, 2021, warrants for <span id="xdx_906_ecustom--IssuanceOfWarrants_c20211031__us-gaap--StatementEquityComponentsAxis__us-gaap--WarrantMember_pdd" title="Issuance of warrants"><ix:nonFraction name="kavl:IssuanceOfWarrants" contextRef="AsOf2021-10-31_us-gaap_WarrantMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">879,828</ix:nonFraction></span> shares were exercised for $<span id="xdx_905_ecustom--WarrantsExercised_c20211031_pp0p0" title="Warrants exercised"><ix:nonFraction name="kavl:WarrantsExercised" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,665,113</ix:nonFraction></span>. No warrants were exercised during the three-month period
ended January 31, 2022. The aggregate intrinsic value of the outstanding Common Stock warrants as of January 31, 2022 and October 31,
2021 was $<span id="xdx_90E_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding_iI_c20211031_zDLNqTVF9ljl" title="Aggregate intrinsic value"><span id="xdx_905_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding_iI_c20220131_zxMBC8QNdqUd" title="Aggregate intrinsic value"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding" contextRef="AsOf2021-10-31" format="ixt:numdotdecimal" decimals="0" unitRef="USD"><ix:nonFraction name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardEquityInstrumentsOtherThanOptionsAggregateIntrinsicValueOutstanding" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="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_90A_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2_dtY_c20211101__20220131__us-gaap--StatementEquityComponentsAxis__custom--CommonStockWarrantsMember_zefonNqQXIqh" title="Weighted average remaining term"><ix:nonNumeric contextRef="From2021-11-012022-01-31_custom_CommonStockWarrantsMember" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2">4.68</ix:nonNumeric></span> years as of January 31, 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a summary of the stock warrant plan activity during the fiscal three months ended January 31, 2022 and the year ended October
31, 2021</span><span style="font-family: Times New Roman, Times, Serif">.</span></p>

<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock"><table cellpadding="0" cellspacing="0" id="xdx_88C_eus-gaap--ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock_zIuKRHiLFlya" 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 style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span id="xdx_8B4_zehPRahuOvOd" 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="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="7" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2022</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="7" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2021</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding: 0pt 0pt 0pt 10pt; text-align: center; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Number
    of Warrants</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="3" style="border-bottom: Black 1pt solid; font-size: 10pt; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Weighted
    Average Exercise Price</span></td><td style="font-size: 10pt; font-weight: bold; padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="padding: 0pt 0pt 0pt 20pt; font-size: 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Granted</span></td><td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 20pt; font-size: 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exercised</span></td><td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 20pt; font-size: 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Canceled,
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    <td style="font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td id="xdx_985_ecustom--NumberOfWarrantsCancelledForfeitedExpired_d0_c20211101__20220131__us-gaap--AwardTypeAxis__custom--WarrantsMember_zvVejrXliR49" title="Number of warrants, Cancelled, forfeited, expired" style="font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="kavl:NumberOfWarrantsCancelledForfeitedExpired" contextRef="From2021-11-012022-01-31_custom_WarrantsMember" format="ixt:zerodash" decimals="INF" unitRef="Shares">&#8212;</ix:nonFraction></span></td><td style="font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="border-bottom: Black 1pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="padding-bottom: 1pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="border-bottom: Black 1pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="padding-bottom: 1pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="padding-bottom: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="padding-bottom: 1pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 10pt; font-size: 10pt; text-align: left; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;Warrants
    Outstanding and Exercisable at End of Period</span></td><td style="font-size: 10pt; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_98F_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iE_c20211101__20220131__us-gaap--AwardTypeAxis__custom--WarrantsMember_zhTG3RR9eyPk" title="Weighted Average Exercise Price at Ending" style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice" contextRef="AsOf2022-01-31_custom_WarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.90</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td id="xdx_98F_eus-gaap--ClassOfWarrantOrRightOutstanding_iE_c20201101__20210131__us-gaap--AwardTypeAxis__custom--WarrantsMember_zX9lmQPRH3qi" title="Warrants Outstanding at Ending" style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:ClassOfWarrantOrRightOutstanding" contextRef="AsOf2021-01-31_custom_WarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">3,173,922</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font-size: 10pt; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</span></td><td id="xdx_98E_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iE_c20201101__20210131__us-gaap--AwardTypeAxis__custom--WarrantsMember_zCPQoXjklNH3" title="Weighted Average Exercise Price at Ending" style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice" contextRef="AsOf2021-01-31_custom_WarrantsMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.90</ix:nonFraction></span></td><td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#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"><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">&#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"></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">On
November 5, 2021, <span id="xdx_90A_ecustom--RestrictedStockUnitAwardsDescription_c20211101__20220131_zMkrLl1znY89" title="Restricted stock unit awards description"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" 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. As of January 31, 2022, there remained 437,917 unvested
RSUs with approximately $900,769 of related unvested compensation.</ix:nonNumeric></span></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">&#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"><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"><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">During
fiscal year 2021, the<span id="xdx_904_ecustom--StockOptionAwardsDescription_c20201101__20211031" title="Stock option awards, description"> <ix:nonNumeric contextRef="From2020-11-012021-10-31" name="kavl:StockOptionAwardsDescription">Company granted options exercisable for up to 150,000 shares of Common Stock of which 15,000 fully vested on March
17, 2021, 7,500 fully vested on June 30, 2021, 41,667 fully vested on December 1, 2021, 68,333 vest over the next 2 years on March 17,
2022, and 2023, and 17,500 vest over the next 2 years on June 30, 2022 and 2023. The options have exercise prices ranging from $9.12
to $28.68 per share. These options have a weighted average remaining life of 9.43 years as of October 31, 2021 and of 9.08 years as of
January 31, 2022. The options expire in the year 2031. On July 19, 2021, two of the stock option agreements, exercisable for an aggregate
of&#160;50,000 shares of Common Stock, were modified to accelerate the full vesting period from 3 years to 2 years. The Company granted
no new options during the three months ended January 31, 2022. The aggregate intrinsic value of these outstanding options as of October
31, 2021 and January 31, 2022 was $0.</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">&#160;</span></p>

<ix:exclude><p id="xdx_236_zZuC2JZno053" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></span></p></ix:exclude>

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<ix:exclude><p id="xdx_237_zrDWIiEkktWc" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></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">&#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">The
fair values of the options on the grant dates was approximately $<span id="xdx_909_ecustom--FairValuedOfOptionsGranted_pp0p0_c20211101__20220131_zdSc73obE489" title="Fair valued of options granted"><ix:nonFraction name="kavl:FairValuedOfOptionsGranted" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">3,088,002</ix:nonFraction></span> using a Black-Scholes option pricing model with the following
assumptions: stock price range of $<span id="xdx_902_eus-gaap--SharePrice_iI_c20220131_zYb105167fke"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">9.12</ix:nonFraction></span>&#160;to $<span id="xdx_90A_eus-gaap--SharePrice_iI_c20220131__srt--RangeAxis__srt--MaximumMember_z6SkCq3pWoXd" title="Stock price"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2022-01-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">27.36</ix:nonFraction></span> per share (based on the quoted trading price on the date of grant), volatility
range of <span id="xdx_903_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_dp_c20211101__20220131__srt--RangeAxis__srt--MinimumMember_z9pKFEFqNX5g"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2021-11-012022-01-31_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">294.57</ix:nonFraction>%</span>&#160;to <span id="xdx_900_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate_dp_c20211101__20220131__srt--RangeAxis__srt--MaximumMember_zpHCns8KbEQd"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRate" contextRef="From2021-11-012022-01-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">301.53</ix:nonFraction>%</span>, expected term of <span id="xdx_904_eus-gaap--SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1_dtY_c20211101__20220131_zV70B9r8Tdeg" title="Expected term"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1">10</ix:nonNumeric></span> years, and a risk-free interest rate range of <span id="xdx_909_ecustom--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRates_c20211101__20220131__srt--RangeAxis__srt--MinimumMember_zxPXx8nOe6se"><ix:nonFraction name="kavl:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRates" contextRef="From2021-11-012022-01-31_srt_MinimumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.19</ix:nonFraction>%</span> to <span id="xdx_901_ecustom--ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRates_c20211101__20220131__srt--RangeAxis__srt--MaximumMember_zcISxd2yCd67"><ix:nonFraction name="kavl:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRates" contextRef="From2021-11-012022-01-31_srt_MaximumMember" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">1.63</ix:nonFraction>%</span>. The Company is amortizing
the expense over the vesting terms of each option. The total stock option expense for the three months ended January 31, 2022 was approximately
$309,700. The fiscal year 2021 total unamortized stock option expense at October 31, 2021 was approximately $<span id="xdx_90C_eus-gaap--StockOptionPlanExpense_c20201101__20211031_pp0p0" title="Stock option expense"><ix:nonFraction name="us-gaap:StockOptionPlanExpense" contextRef="From2020-11-012021-10-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,314,056</ix:nonFraction></span>. The fiscal year
2022 unamortized stock option expense at January 31, 2022 was approximately $<span id="xdx_905_ecustom--UnamortizedStockOptionExpense_pp0p0_c20211101__20220131_zpdVdDIlVCO8" title="Unamortized stock option expense"><ix:nonFraction name="kavl:UnamortizedStockOptionExpense" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">1,004,356</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">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_801_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_zVnDQaZfLoa9" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>Note
6 &#8211; <span id="xdx_829_zDtg2hnnJwGh">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">&#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"><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">&#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">During
the three months ended January 31, 2022, the Company recognized revenue of approximately $<span id="xdx_90C_eus-gaap--RevenueFromRelatedParties_c20211101__20220131__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NirajkumarPatelMember_pp0p0" title="Revenue from related parties"><ix:nonFraction name="us-gaap:RevenueFromRelatedParties" contextRef="From2021-11-012022-01-31_custom_NirajkumarPatelMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">23,765</ix:nonFraction></span> from four companies owned by Nirajkumar
Patel, the Chief Executive Officer of the Company, and/or his wife. As of January 31, 2022, the Company has accounts receivable from
this related party in the amount of approximately $<span id="xdx_909_eus-gaap--Revenues_c20211101__20220131__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SevenCompaniesMember_pp0p0" title="Revenues"><ix:nonFraction name="us-gaap:Revenues" contextRef="From2021-11-012022-01-31_custom_SevenCompaniesMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">245</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">&#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">During
the three months ended January 31, 2021, the Company recognized revenue of approximately $<span id="xdx_902_eus-gaap--AccountsReceivableRelatedPartiesCurrent_c20210131_pp0p0" title="Accounts receivable from related parties"><ix:nonFraction name="us-gaap:AccountsReceivableRelatedPartiesCurrent" contextRef="AsOf2021-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">50,300</ix:nonFraction></span> from three companies owned by Nirajkumar
Patel, the Chief Executive Officer of the Company, and/or his wife.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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"><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">&#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">During
the three months ended January 31, 2022, the Company did not purchase Products from Bidi, a related party company that is also owned
by Nirajkumar Patel, the Company&#8217;s Chief Executive Officer. As of January 31, 2022, the Company had accounts payable to Bidi of
approximately $<span id="xdx_901_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_iI_pp0p0_c20220131__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BidiVaporMember_zPDJvULsaRAf" title="Accounts payable"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2022-01-31_custom_BidiVaporMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">9,129,759</ix:nonFraction></span> and Products valued at approximately $<span id="xdx_906_eus-gaap--ProceedsFromSaleOfProductiveAssets_c20211101__20220131__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MMSDistroMember_pp0p0" title="Sale of Products"><ix:nonFraction name="us-gaap:ProceedsFromSaleOfProductiveAssets" contextRef="From2021-11-012022-01-31_custom_MMSDistroMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">11,841,750</ix:nonFraction></span> were held in inventory.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">During
the three months ended January 31, 2021, the Company purchased Products of approximately $<span id="xdx_90D_eus-gaap--ProceedsFromSaleOfProductiveAssets_pp0p0_c20201101__20210131__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MMSDistroMember_zcSJCoslYdt1"><ix:nonFraction name="us-gaap:ProceedsFromSaleOfProductiveAssets" contextRef="From2020-11-012021-01-31_custom_MMSDistroMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">32,479,100</ix:nonFraction></span> from Bidi, a related party company.
As of January 31, 2021, the Company had accounts payable to Bidi of approximately $<span id="xdx_90C_eus-gaap--DueToRelatedPartiesCurrentAndNoncurrent_iI_pp0p0_c20210131__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BidiVaporMember_znfrleq1eike"><ix:nonFraction name="us-gaap:DueToRelatedPartiesCurrentAndNoncurrent" contextRef="AsOf2021-01-31_custom_BidiVaporMember" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">6,247,882</ix:nonFraction></span>. During the three months ended January 31,
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">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><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">&#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">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. During fiscal year 2021,
the Company was not charged for the leased space under the terms and conditions of the lease between the Company and Just Pick and was
not charged for the separate warehouse space provided by Just Pick; thus, no payments were made on the lease. During the three months
ended January 31, 2022, no payments were made on the lease because the Company continued to not be charged under the five-year lease
agreement for this office and storage space.</span></p>

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

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p id="xdx_80F_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_zLi3FAJqhC3" style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif"><b>Note 7 &#8211;
<span id="xdx_824_zRb83bWLLPu6">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">&#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">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 January 31, 2022 and January 31, 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">&#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"><i>Patent
Contribution 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">&#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">On
May 4, 2021, Next Generation Labs, LLC (&#8220;Next Generation&#8221;) notified the Company that a &#8220;reversion event&#8221; had
occurred under that certain Patent Contribution Agreement, dated September 28, 2020 (the &#8220;Patent Contribution Agreement&#8221;).
Pursuant to the Patent Contribution Agreement, Next Generation agreed to contribute certain patents, patent applications, and patent
data, described on Exhibit &#8220;A&#8221; of the Patent Contribution Agreement (the &#8220;Patents&#8221;), and to the Company and the
Company would subsequently transfer the Patents to Kaival Labs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">Pursuant
to the Patent Contribution Agreement, the Company agreed to pay Next Generation a purchase price of $3 million for the Patents (the &#8220;Purchase
Price&#8221;), which was expected to be paid over-time upon two events. First, the Company expected to pay part of the Purchase Price
from proceeds generated from a future securities offering (the &#8220;Offering Payment&#8221;). Additionally, on the first date that
Kaival Labs sold a product that was developed using any portion of the Patents or based on the Patents, the Company agreed to pay Next
Generation the difference between the Purchase Price and the Offering Payment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">Pursuant
to the terms of the Patent Contribution Agreement, the parties agreed that the Company would file a Form 1-A offering statement no later
than January 31, 2021, unless extended in writing by the Company in good faith to no later than March 15, 2021 (the &#8220;Filing Date&#8221;).
The Patent Contribution Agreement further provided that in the event the Company or Kaival Labs materially breached the terms of the
Patent Contribution Agreement and the material breach is not cured within fifteen (15) business days after Next Generation provides written
notice of such material breach, then a reversion event would occur, and the Patents would revert from Kaival Labs to Next Generation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">The
Company did not undertake a securities offering by filing a Form 1-A offering statement by the Filing Date. The Company attempted to
negotiate an amendment to the Patent Contribution Agreement, which would allow the Company additional time to undertake a securities
offering. However, on April 8, 2021, Next Generation notified the Company that it was in material breach of the Patent Contribution Agreement
and that the Company would have fifteen (15) business days, or April 30, 2021, to cure such breach. Ultimately, the Company decided not
to cure such breach within the requisite time and, on May 4, 2021, Next Generation notified the Company that a reversion event occurred.</span></p>

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

<ix:exclude><p id="xdx_23D_zgDGvfc1HX7b" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p></ix:exclude>

<ix:exclude><p id="xdx_235_z2s7klNAtQBh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></span></p></ix:exclude>

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<ix:exclude><p id="xdx_23C_zn8SjyxlYzh7" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></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">&#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">The
Company has completed the process of completing the necessary documentation to transfer the Patents from Kaival Labs to Next Generation.
Neither the Company, nor Kaival Labs, has developed or otherwise relied on the Patents to date and does not expect the reversion of the
Patents to materially affect the Company&#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">&#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"><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"><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">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__20220131" title="Bonus description"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" 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 January 31, 2021, the $75 million
and $100 million accumulated revenue targets were both achieved and the Company determined that the fair market value of the 13,750 shares,
or approximately $70,785, and the cash bonuses totaling $100,000 should be accrued at January 31, 2021.</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">&#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">During
the quarter ended January 31, 2022, the $<span id="xdx_90A_eus-gaap--DeferredRevenueLeasesAccumulatedAmortization_iI_pn3n3_dm_c20220131_zEvlgUaifMtc" title="Accumulated revenue"><ix:nonFraction name="us-gaap:DeferredRevenueLeasesAccumulatedAmortization" contextRef="AsOf2022-01-31" format="ixt:numdotdecimal" decimals="-3" scale="6" unitRef="USD">125</ix:nonFraction></span> million accumulated revenue targets were achieved and the Company determined that cash bonuses
totaling $<span id="xdx_903_ecustom--CashBonuses_pp0p0_c20211101__20220131_zz1IgtPPmakc" title="Cash bonuses"><ix:nonFraction name="kavl:CashBonuses" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">50,000</ix:nonFraction></span> should be accrued at January 31, 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">&#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"><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"><i>&#160;</i></span></p>

<p style="font: 10pt/10.8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">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/10.8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt/10.8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 2, 2020, the Company entered into the First
Amendment to the Service Agreement (the &#8220;First Amendment&#8221; and, collectively with the Service Agreement, the &#8220;Amended
Service Agreement&#8221;) with QuikfillRx. Effective as of March 16, 2021, the Company entered into the Second Amendment to Service Agreement
(the &#8220;Second Amendment&#8221; and, collectively with the Amended Service Agreement, the &#8220;Further Amended Service Agreement&#8221;)
with QuikfillRx. Pursuant to the terms of the Further Amended Service Agreement, the parties agreed to the following &#8220;General Compensation&#8221;
payments: (i) for the Services provided in</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">March 2020, <span id="xdx_90F_ecustom--GeneralCompensationDescription_c20211101__20220131" title="General Compensation"><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" 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) if the parties agree to extend the term
of the Further Amended Service Agreement beyond October 31, 2021, then for the period between November 1, 2021 and October 31, 2022, the
Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month; and (v) if the parties agree
to extend the term of the Further Amended Service Agreement beyond October 31, 2022, then for the period between November 1, 2022 and
October 31, 2021, the Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month.</ix:nonNumeric></span> 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:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</p>
<p style="font: 10pt/10.8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0">
<tr style="vertical-align: top">
<td style="width: 0.5in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
<td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
<td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">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="width: 0.5in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
<td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td>
<td><span style="font-family: Times New Roman, Times, Serif">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: 12pt Times New Roman, Times, Serif; margin: 0">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On March 17, 2021, the Company entered into a consulting agreement
with Russell Quick which granted stock options to purchase 41,667 shares of the Company&#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_904_ecustom--AcquiredQuqrterlyBonus_c20211101__20220131_pp0p0"><ix:nonFraction name="kavl:AcquiredQuqrterlyBonus" contextRef="From2021-11-01to2022-01-31" format="ixt:numdotdecimal" decimals="0" scale="0" unitRef="USD">34,524</ix:nonFraction> </span>for
a quarterly bonus payable to QuikfillRx, based on the Applicable Gross Quarterly Sales results of the three months ended January 31,
2022.</p>

<p style="font: 10pt/10.8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span><b>&#160;</b></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2021-11-01to2022-01-31" escape="true" name="us-gaap:SubsequentEventsTextBlock"><p id="xdx_80D_eus-gaap--SubsequentEventsTextBlock_zOn256TBEyI9" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>Note
8 &#8211; <span id="xdx_829_zQcj92BkPOP9">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">&#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"><b><i>Share-based
Compensation</i></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"><b>&#160;</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">On
February 4, 2022, the Company entered into a Consulting Agreement with Oakhill Europe Ltd (&#8220;Oakhill Europe&#8221;), pursuant to
which the <span id="xdx_90B_ecustom--ServicesDescription_c20220401__20220422__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--InflectionPartnersMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--TypeOfArrangementAxis__custom--ConsultingAgreementMember" title="Services description"><ix:nonNumeric contextRef="From2022-04-012022-04-22_custom_InflectionPartnersMember_us-gaap_SubsequentEventMember_custom_ConsultingAgreementMember" name="kavl:ServicesDescription">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 $15,000 monthly retainer, incentive compensation bonuses
of up to $175,000, and an incentive compensation bonus value of $75,000 paid in fully-vested non-qualified stock options, upon the achievement
of certain events.</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">&#160;&#160;</span></p>

<ix:exclude><p id="xdx_23D_zFeBgN3PLSz8" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></span></p></ix:exclude>

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    <!-- Field: /Page --></ix:exclude>

<ix:exclude><p id="xdx_23F_zW4kpd1YdUFh" style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"></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">&#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">On
February 5, 2022, the Company issued <span id="xdx_908_eus-gaap--SharesIssued_iI_c20220205__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zhNdmS6KbFH4"><ix:nonFraction name="us-gaap:SharesIssued" contextRef="AsOf2022-02-05_us-gaap_RestrictedStockUnitsRSUMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">61,250</ix:nonFraction></span> shares of Common Stock to 7 employees in accordance with the vesting schedules set forth
in RSU agreements previously entered into with such employees. Of the shares issued to employees, <span id="xdx_902_ecustom--OptionSharesGrantDate_c20220201__20220204__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--AwardTypeAxis__us-gaap--RestrictedStockUnitsRSUMember_zqRQ4lNAy6f7"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-02-012022-02-04_us-gaap_SubsequentEventMember_us-gaap_RestrictedStockUnitsRSUMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">24,058</ix:nonFraction></span> shares were withheld by the
Company to satisfy tax withholding obligations and/or satisfy cash settlement options to employees, equaling approximately $23,336.</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">&#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">On
February 27, 2022, the Company&#8217;s Compensation Committee (the &#8220;Committee&#8221;) and the Board approved the grant of a stock
option award to Mark Thoenes, Interim Chief Financial Officer, to acquire up to <span id="xdx_901_eus-gaap--SharesIssued_iI_c20220227__us-gaap--RelatedPartyTransactionAxis__custom--MarkThoenesMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zZarayBVPlAe" title="Common stock issued"><ix:nonFraction name="us-gaap:SharesIssued" contextRef="AsOf2022-02-27_custom_MarkThoenesMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">100,000</ix:nonFraction></span> shares of Common Stock under the Company&#8217;s
2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price of $<span id="xdx_90D_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20220227__us-gaap--RelatedPartyTransactionAxis__custom--MarkThoenesMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zvvms7FLSFRk" title="Option share price"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2022-02-27_custom_MarkThoenesMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.45</ix:nonFraction></span> per share, which equaled the closing
price of the Common Stock as of the date immediately prior to the grant date. At the grant date, <span id="xdx_901_ecustom--OptionSharesGrantDate_c20220201__20220227__us-gaap--RelatedPartyTransactionAxis__custom--MarkThoenesMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--DerivativeInstrumentRiskAxis__us-gaap--StockOptionMember_zYa4XJBHnnE3" title="Option shares grant date"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-02-012022-02-27_custom_MarkThoenesMember_us-gaap_SubsequentEventMember_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">50,000</ix:nonFraction></span> option shares became immediately
vested, with the remaining <span id="xdx_90F_ecustom--OptionSharesGrantDate_c20220201__20220227__us-gaap--RelatedPartyTransactionAxis__custom--MarkThoenesMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zOze645TQ3Zj"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-02-012022-02-27_custom_MarkThoenesMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">50,000</ix:nonFraction></span> option shares vesting on the one-year anniversary of the grant date. The option has a ten-year term.</span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&#160;</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">On
February 27, 2022, the Committee and the Board approved the grant of a stock option award to Russell Quick, as an independent consultant
providing strategic advising and negotiation assistance for potential international distribution agreements, to acquire up to 100,000
shares of Common Stock under the Company&#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. At the grant
date, 50,000 option shares became immediately vested, with the remaining 50,000 option shares vesting on the one-year anniversary of
the grant date. The option has a ten-year term.</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">&#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">On
March 5, 2022, the Committee and the Board approved the grant of a stock option award to Nirajkumar Patel, Chief Executive Officer, to
acquire up to <span id="xdx_90B_eus-gaap--SharesIssued_iI_c20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--RelatedPartyTransactionAxis__custom--NirajkumarPatelMember_ztyyOc4PeKw9"><ix:nonFraction name="us-gaap:SharesIssued" contextRef="AsOf2022-03-05_us-gaap_SubsequentEventMember_custom_NirajkumarPatelMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">600,000</ix:nonFraction></span> shares of Common Stock under the Company&#8217;s 2020 Stock and Incentive Compensation Plan. The option shares
are exercisable at a price of $<span id="xdx_904_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20220305__us-gaap--RelatedPartyTransactionAxis__custom--NirajkumarPatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_z72xY99Q2IGl"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2022-03-05_us-gaap_SubsequentEventMember_custom_NirajkumarPatelMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.85</ix:nonFraction></span> per share, which equaled the closing price of the Common Stock as of the date immediately prior to
the grant date. At the grant date, <span id="xdx_90E_ecustom--OptionSharesGrantDate_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--NirajkumarPatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--DerivativeInstrumentRiskAxis__us-gaap--StockOptionMember_zZgsAmIfJmT6"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-03-012022-03-05_custom_NirajkumarPatelMember_us-gaap_SubsequentEventMember_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">300,000</ix:nonFraction></span> option shares became immediately vested, with the remaining <span id="xdx_908_ecustom--OptionSharesGrantDate_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--NirajkumarPatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zXRzeakiCrn5"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-03-012022-03-05_custom_NirajkumarPatelMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">300,000</ix:nonFraction></span> option shares vesting
on the one-year anniversary of the grant date. The option has a ten-year term.</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">&#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">Previously,
the Company granted Mr. Patel <span id="xdx_908_eus-gaap--AmountOfDilutiveSecuritiesStockOptionsAndRestrictiveStockUnits_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--PatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zc6RoCfppp8h" title="Restrictive stock units"><ix:nonFraction name="us-gaap:AmountOfDilutiveSecuritiesStockOptionsAndRestrictiveStockUnits" contextRef="From2022-03-012022-03-05_custom_PatelMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">250,000</ix:nonFraction></span> RSUs , which vest over a three-year period (the &#8220;Patel Time Vesting RSUs&#8221;), and <span id="xdx_906_ecustom--TimeVestingRsus_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--PatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_z4LuYrQZGwXg" title="Time vesting RSUs"><ix:nonFraction name="kavl:TimeVestingRsus" contextRef="From2022-03-012022-03-05_custom_PatelMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">500,000</ix:nonFraction></span>&#160;RSUs
that vest only upon a change of control of the Company or if the Company achieves in excess of $1 billion in accumulated total gross
revenues (the &#8220;Patel Event Vesting RSUs&#8221;). On March 5, 2022, the Company and Mr. Patel agreed to terminate the (i)<span id="xdx_900_ecustom--UnvestedTimeVestingRsus_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--PatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zyKswYp53lg9" title="Unvested time vesting RSUs"> <ix:nonFraction name="kavl:UnvestedTimeVestingRsus" contextRef="From2022-03-012022-03-05_custom_PatelMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">120,833</ix:nonFraction></span>
unvested Patel Time Vesting RSUs and (ii) <span id="xdx_902_ecustom--UnvestedEventVestingRsus_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--PatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zhFVxR9v8s8e" title="Unvested event vesting RSUs"><ix:nonFraction name="kavl:UnvestedEventVestingRsus" contextRef="From2022-03-012022-03-05_custom_PatelMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">500,000</ix:nonFraction></span> unvested Patel Event Vesting RSUs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">On
March 5, 2022, the Committee and the Board approved the grant of stock option awards to Eric Mosser, Chief Operating Officer, to acquire
up to <span id="xdx_909_eus-gaap--SharesIssued_iI_c20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember_zA3dfsu8vhj1"><ix:nonFraction name="us-gaap:SharesIssued" contextRef="AsOf2022-03-05_us-gaap_SubsequentEventMember_custom_EricMosserMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">500,000</ix:nonFraction></span> shares of Common Stock under the Company&#8217;s 2020 Stock and Incentive Compensation Plan. The option shares are exercisable
at a price of $<span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20220305__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zTv1XdDNCpEa"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2022-03-05_us-gaap_SubsequentEventMember_custom_EricMosserMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.85</ix:nonFraction></span> per share, which equaled the closing price of the Common Stock as of the date immediately prior to the grant date.
At the grant date, <span id="xdx_90E_ecustom--OptionSharesGrantDate_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--DerivativeInstrumentRiskAxis__us-gaap--StockOptionMember_zv2hAKOcZt51"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-03-012022-03-05_custom_EricMosserMember_us-gaap_SubsequentEventMember_us-gaap_StockOptionMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">250,000</ix:nonFraction></span> option shares became immediately vested, with the remaining <span id="xdx_901_ecustom--OptionSharesGrantDate_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zFRnqsj6XaXl"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-03-012022-03-05_custom_EricMosserMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">250,000</ix:nonFraction></span> option shares vesting on the one-year
anniversary of the grant date. The option has a ten-year term.</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">&#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">Similarly,
the Company previously granted Mr. Mosser <span id="xdx_907_eus-gaap--AmountOfDilutiveSecuritiesStockOptionsAndRestrictiveStockUnits_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zpNl6HFKfC7a"><ix:nonFraction name="us-gaap:AmountOfDilutiveSecuritiesStockOptionsAndRestrictiveStockUnits" contextRef="From2022-03-012022-03-05_custom_EricMosserMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">250,000</ix:nonFraction></span> RSUs, which vest over a three-year period (the &#8220;Mosser Time Vesting RSUs&#8221;),
and <span id="xdx_90A_ecustom--TimeVestingRsus_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_z8vdXNozYM3f"><ix:nonFraction name="kavl:TimeVestingRsus" contextRef="From2022-03-012022-03-05_custom_EricMosserMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">333,334</ix:nonFraction></span> RSUs that vest only upon a change of control of the Company or if the Company achieves in excess of $1 billion in accumulated
total gross revenues (the &#8220;Mosser Event Vesting RSUs&#8221;). On March 5, 2022, the Company and Mr. Mosser agreed to terminate
the (i) <span id="xdx_900_ecustom--UnvestedTimeVestingRsus_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zDk938WHTmJ6"><ix:nonFraction name="kavl:UnvestedTimeVestingRsus" contextRef="From2022-03-012022-03-05_custom_EricMosserMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">120,833</ix:nonFraction></span> unvested Mosser Time Vesting RSUs and (ii) <span id="xdx_902_ecustom--UnvestedEventVestingRsus_c20220301__20220305__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_z4vZmg1tB9Ja"><ix:nonFraction name="kavl:UnvestedEventVestingRsus" contextRef="From2022-03-012022-03-05_custom_EricMosserMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">333,334</ix:nonFraction></span> unvested Mosser Event Vesting RSUs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">On
March 5, 2022, the Committee and the Board approved the grant of stock option awards to 5 employees, to acquire up to <span id="xdx_90D_eus-gaap--SharesIssued_iI_c20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zTW2CCFqfhh4"><ix:nonFraction name="us-gaap:SharesIssued" contextRef="AsOf2022-03-05_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">285,600</ix:nonFraction></span> shares
of Common Stock under the Company&#8217;s 2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price of
$<span id="xdx_905_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice_iI_c20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zewKPLhkcJph"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableWeightedAverageExercisePrice" contextRef="AsOf2022-03-05_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">2.85</ix:nonFraction></span> per share, which equaled the closing price of the Common Stock as of the date immediately prior to the grant date. At the grant
date, <span id="xdx_90C_ecustom--OptionSharesGrantDate_c20220301__20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zjQFoblYXfH1"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-03-012022-03-05_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">142,800</ix:nonFraction></span> option shares became immediately vested, with the remaining <span id="xdx_904_ecustom--OptionSharesGrantDate_c20220301__20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zCf1ih7DCY9c"><ix:nonFraction name="kavl:OptionSharesGrantDate" contextRef="From2022-03-012022-03-05_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">142,800</ix:nonFraction></span> option shares vesting on the one-year anniversary of
the grant date. The options have a ten-year term.</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">&#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">Previously,
we granted these 5 employees <span id="xdx_908_eus-gaap--AmountOfDilutiveSecuritiesStockOptionsAndRestrictiveStockUnits_c20220301__20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zOiwaWBYubG7"><ix:nonFraction name="us-gaap:AmountOfDilutiveSecuritiesStockOptionsAndRestrictiveStockUnits" contextRef="From2022-03-012022-03-05_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">317,499</ix:nonFraction></span> RSUs, which vest over a three-year period (the &#8220;Employee Vesting RSUs&#8221;), and <span id="xdx_90A_eus-gaap--AmountOfDilutiveSecuritiesStockOptionsAndRestrictiveStockUnits_c20220301__20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zYtBh9svEaBi"><ix:nonFraction name="us-gaap:AmountOfDilutiveSecuritiesStockOptionsAndRestrictiveStockUnits" contextRef="From2022-03-012022-03-05_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">317,499</ix:nonFraction></span>
RSUs that vest only upon a change of control of the Company or if the Company achieves in excess of $1 billion in accumulated total gross
revenues (the &#8220;Employee Event Vesting RSUs&#8221;). On March 5, 2022, the Company and the 5 employees each agreed to terminate
the (i) <span id="xdx_90A_ecustom--UnvestedTimeVestingRsus_c20220301__20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_za7Kd4ZHyBc4"><ix:nonFraction name="kavl:UnvestedTimeVestingRsus" contextRef="From2022-03-012022-03-05_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">135,001</ix:nonFraction></span> unvested Employee Time Vesting RSUs and (ii) <span id="xdx_909_ecustom--UnvestedEventVestingRsus_c20220301__20220305__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zgtK8lqoqOAb"><ix:nonFraction name="kavl:UnvestedEventVestingRsus" contextRef="From2022-03-012022-03-05_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">317,499</ix:nonFraction></span> unvested Employee Event Vesting RSUs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">On
March 9, 2022, the Committee approved an annual base salary equal to $<span id="xdx_90A_eus-gaap--SalariesAndWages_c20220301__20220309__us-gaap--RelatedPartyTransactionAxis__custom--PatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_z0CsQ0wEKAfi" title="Annual basis salary"><ix:nonFraction name="us-gaap:SalariesAndWages" contextRef="From2022-03-012022-03-09_custom_PatelMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">300,000</ix:nonFraction></span> for Mr. Patel and $<span id="xdx_904_eus-gaap--SalariesAndWages_c20220301__20220309__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zY5G9O2UMiAe"><ix:nonFraction name="us-gaap:SalariesAndWages" contextRef="From2022-03-012022-03-09_custom_EricMosserMember_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">240,000</ix:nonFraction></span> for Mr. Mosser. The annual base
salaries will be reviewed by the Committee on an annual basis.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">Further,
the Board previously approved a cash bonus award to <span id="xdx_90D_ecustom--CashBonusAwardDescription_c20220301__20220309__us-gaap--RelatedPartyTransactionAxis__custom--PatelMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zZaQsZCY4Uq9" title="Cash bonus award description"><ix:nonNumeric contextRef="From2022-03-012022-03-09_custom_PatelMember_us-gaap_SubsequentEventMember" name="kavl:CashBonusAwardDescription">(i) Mr. Patel equal to $30,000 for every $25 million in gross revenues generated
by us (the &#8220;Patel Cash Bonus Award&#8221;)</ix:nonNumeric></span> and <span id="xdx_906_ecustom--CashBonusAwardDescription_c20220301__20220309__us-gaap--RelatedPartyTransactionAxis__custom--EricMosserMember__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zP8KNmTziDI5"><ix:nonNumeric contextRef="From2022-03-012022-03-09_custom_EricMosserMember_us-gaap_SubsequentEventMember" name="kavl:CashBonusAwardDescription">(ii) Mr. Mosser equal to $20,000 for every $25 million in gross revenues generated
by us (the &#8220;Mosser Cash Bonus Award&#8221; and, together with the Patel Cash Bonus Award, the &#8220;Cash Bonus Awards&#8221;).</ix:nonNumeric></span>
On March 9, 2022, the Committee terminated the Cash Bonus Awards.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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">On February <span style="font-size: 10pt">28,
2022 and on March 3, 2022 the Company issued <span id="xdx_908_eus-gaap--ConversionOfStockSharesIssued1_c20220201__20220228__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zp6OZUWfSEMa" title="Issued shares"><ix:nonFraction name="us-gaap:ConversionOfStockSharesIssued1" contextRef="From2022-02-012022-02-28_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">10,000</ix:nonFraction></span> shares and <span id="xdx_90E_eus-gaap--ConversionOfStockSharesIssued1_c20220301__20220303__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_z68YI5NnAM1g"><ix:nonFraction name="us-gaap:ConversionOfStockSharesIssued1" contextRef="From2022-03-012022-03-03_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">2,963</ix:nonFraction></span> shares, respectively, of the Company&#8217;s Common Stock to Mr.
Rudy Singh as payment for the EDGAR filing services.</span></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><i>Warrants
Shares Exercised</i></b></span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Between
February 14, 2022 and March 1, 2022, <span id="xdx_90A_eus-gaap--ExcessStockSharesIssued_iI_c20220302__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_zlc7sSdmCsx6" title="Exercise of warrant shares"><ix:nonFraction name="us-gaap:ExcessStockSharesIssued" contextRef="AsOf2022-03-02_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">800,355</ix:nonFraction></span> shares of Common Stock were issued upon the exercise of warrants, and the Company received
approximately $<span id="xdx_90A_eus-gaap--LossContingencyReceivableProceeds_c20220214__20220302__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember_z41kigWOMYY" title="Warreant receiveds"><ix:nonFraction name="us-gaap:LossContingencyReceivableProceeds" contextRef="From2022-02-142022-03-02_us-gaap_SubsequentEventMember" format="ixt:numdotdecimal" decimals="0" unitRef="USD">1,520,693</ix:nonFraction></span> in proceeds.</span></p>

</ix:nonNumeric><p id="xdx_813_zJG6s1x44xJk" style="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>&#160;</b></span></p>

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<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 0 0 8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="a_007"></span>Item
2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations</b>&#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 months ended January 31, 2022 included under Item
1 &#8211; Financial Statements in this Quarterly Report and our audited Financial Statements and notes thereto for the ye</span><span style="font-family: Times New Roman, Times, Serif">ar
ended October 31, 2021 contained in 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>

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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"><b><span style="text-decoration: underline">Impact
of COVID-19</span></b></span></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">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>

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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">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>

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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"><b><span style="text-decoration: underline">Impact
of the FDA PMTA Decision</span></b></span></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">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 September 10, 2021, the FDA announced that it has taken action on over 93% of applications and issued MDOs for more than 1,167,000
flavored ENDS products, while issuing zero marketing authorizations.</span></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">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&#174; Sticks, including its Arctic (menthol) BIDI&#174; Stick, which Bidi believes
the FDA mischaracterized as &#8220;flavored.&#8221; BIDI believes that because its Arctic BIDI&#174; Stick is menthol, it should not be
subject to the MDO. Bidi and the Company believe this position is aligned with the FDA&#8217;s public statements and press releases stating
that tobacco and menthol ENDS are not deemed flavored products subject to the MDOs.</span></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">As
a result, beginning in September 2021, Bidi pursued three avenues to challenge the MDO. First, on September 21, 2021, separate from the
judicial appeal of the MDO in its entirety, Bidi filed a 21 C.F.R. &#167; 10.75 internal FDA review request specifically of the decision
to include the Arctic (menthol) BIDI&#174; Stick in the MDO. The Company anticipates a decision from the FDA on the internal review in
the second or third quarter of 2022, although we cannot provide any assurances as to the timing or outcome.</span></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">Separately,
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&#174; 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 Tobacco Control
Act, to determine whether the BIDI&#174; 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. On February 1, 2022, 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, or 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
are currently scheduled for May 2022.</span></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">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>

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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">In
the event that the U.S. Court of Appeals issues for the Eleventh Circuit a ruling adverse to Bidi, or if the FDA otherwise chooses to
enforce against Bidi, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI&#174; Stick products in the United
States, thereby resulting in the Company being unable to distribute such products, 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>

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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"><b><span style="text-decoration: underline">Future
Strategic Opportunities</span></b></span></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">In
addition to the continued domestic opportunity, we believe that international markets provide an exciting growth opportunity for us.
The estimated total addressable global market for ENDS products is approximately $36.7 billion. Bidi has received approval to market
and distribute products within 11 international markets, including the United Kingdom, France, Russia, and the Czech Republic. Bidi has
also secured significant intellectual property protections similar to those received in the United States from the European Union, China,
and several other regions and countries. It is also important to note that the nicotine formulation in the Bidi<sup>&#174;</sup> Stick
has been modified and approved at the 2% level to meet the criteria for distribution in the United Kingdom and Europe.</span></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">These
international market approvals Bidi has previously secured are for the full formulation lineup, including all flavors. Because the FDA&#8217;s
PMTA restrictions and guidelines do not pertain to international markets, Bidi intends to continue manufacturing its full product lineup,
for distribution by us in these international markets. Accordingly, in light of the pending MDO appeal and uncertainty regarding the
FDA&#8217;s review of the PMTA, as well as the ongoing threat of the FDA enforcement, Bidi intends to expedite the planned product launches
into foreign markets starting with the United Kingdom. We are also actively exploring potential partnerships with international distribution
companies in order to possibly expand Product distribution more rapidly in these international markets.</span></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"><b><span style="text-decoration: underline">Corporate
History</span></b></span></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">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>

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

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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"><b><span style="text-decoration: underline">Description
of Business</span></b></span></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">We
are focused on growing and incubating innovative and profitable products into mature, dominant brands. Pursuant to the A&amp;R 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
A&amp;R 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 and, once launched, of which there can be
no assurances, the &#8220;BIDI<sup>&#174;</sup> Pouch,&#8221; which provides a tobacco-derived nicotine formulation, containing natural
fibers and a chew-base filler.</span></p>

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

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">In
connection with the A&amp;R 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</span></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">We
process all sales made only to non-retail customers, 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.</span></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"><b><i>Current
Product Offerings</i></b></span></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">Pursuant
to the A&amp;R 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, or whose PMTAs have been refused acceptance or filing by the FDA, or whose PMTAs
remain subject to MDOs. All of our flavor options will continue to be available to the 11 European Markets we have received marketing
and distribution approvals. 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.</span></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">In
addition to the BIDI<sup>&#174;</sup> Stick, we anticipated launching distribution of the &#8220;BIDI<sup>&#174;</sup> Pouch,&#8221; initially
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 is now being placed on temporary hold domestically due
to the likelihood of the FDA enforcement of synthetic nicotine products as drugs, which will require a PMTA determination from the FDA.
More specifically, while the BIDI<sup>&#174;</sup> Pouch, which made with synthetic (tobacco-free) nicotine, would not fall within the
meaning of a tobacco product as set forth in the Food, Drug and Cosmetic Act (&#8220;FDCA&#8221;), the FDA could take the position that
such product is a drug. A drug is defined in Section 201(g) of the FDCA, in pertinent part, as &#8220;articles intended for use in the
diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals&#8221; (i.e., the &#8220;disease&#8221; or &#8220;therapeutic
benefit&#8221; prong) or &#8220;articles (other than food) intended to affect the structure or function of the body of man or other animals&#8221;
(i.e., the &#8220;structure/function&#8221; prong). Given nicotine&#8217;s well-known structure/function effect on the body there is
a chance the FDA will take the position that synthetic nicotine products, such as the BIDI<sup>&#174;</sup> Pouch, are subject to the
FDA&#8217;s drug authority and can only be marketed with an approved New Drug Application (even if no disease or therapeutic benefit
claims are made). Indeed, prior to the enactment of the Tobacco Control Act (the &#8220;Tobacco Control Act&#8221;), the FDA historically
took the position that any product with added nicotine (other than traditional tobacco products) was a drug, even when marketed for recreational
use and without specific claims of smoking cessation or other therapeutic benefit. It is, of course, illegal to distribute a drug without
the FDA&#8217;s approval.&#160;Given these concerns, 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.</span></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">On
July 14, 2021, we announced plans to launch our first Kaival-branded product, a Hemp CBD product. In addition to our Kaival-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.</span></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"><b><span style="text-decoration: underline">Going
Concern</span></b></span></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">A
recent court ruling on behalf of Bidi in the Eleventh Circuit Court of Appeals, granted a judicial stay of the MDO previously issued
by the FDA to Bidi in September 2021. The ruling, which was issued on February 1, 2022, 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. FDA has indicated that it is prioritizing enforcement against companies
that have either not submitted PMTAs, or whose PMTAs have been refused acceptance or filing by FDA, or whose PMTAs remain subject to
MDOs. Oral arguments in the merits case are currently scheduled in May 2022.</span></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">If
the Eleventh Circuit Court of Appeals agrees with Bidi in the merits case, we anticipate that the FDA will be compelled to place the
flavored ENDS back into the PMTA scientific review process. If this is the outcome of the merits case, 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 flavored ENDS and the FDA issues its decision on each.</span></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">If
the Eleventh Circuit Court of appeals disagrees with Bidi on the merits case, or if the FDA re-issues the MDO after completing its scientific
review process for each of Bidi&#8217;s PMTAs for its flavored ENDS, or if The DA otherwise chooses to enforce against Bidi, we will
be forced to cease sales on the flavored BIDI&#174; Sticks in the United States market, leaving only the Tobacco (Classic) and Menthol
(Arctic) BIDI&#174; Sticks products for sale in the United States (which, with respect to the Menthol (Arctic) BIDI&#174; Stick, depends
on the outcome of the specific PMTA filings and the administrative review request for the classification of &#8220;Arctic&#8221; as a
standard menthol ENDS). If this is the outcome of the merits case, this combined with a negative cash flow from operations, would raise
substantial doubt on our ability to continue as a going concern.</span></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">Management
plans to continue similar operations with increased marketing, which we believe will result in increased revenue and net income. 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.</span></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">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.</span></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"><b><span style="text-decoration: underline"><span id="a_008"></span>Liquidity
and Capital Resources</span></b></span></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">We
believe we have sufficient cash on hand as of March 17, 2022. However, we are awaiting the outcome of Bidi&#8217;s merit-based case pending
in the Eleventh Circuit Court of Appeals 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 January 31, 2022 that will result in or that are reasonably likely to materially increase or decrease
our current requirements for cash and resulting improved liquidity.</span></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">At
January 31, 2022, we had working capital of approximately $13.9 million and total cash of approximately $5.7 million.</span></p>

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

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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"><i>Cash
Flows:</i></span></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">Cash
flow used in operations was approximately $(2.1) million for the first three months of fiscal year 2022, compared to $(5.4) million used
in operations for the first three months of fiscal year 2021. The decrease in cash flow used in operations for the first three months
of fiscal year 2022 compared to the first three months of fiscal 2021 was primarily due to the use of cash resulting from a very significant
increase in accounts receivable of approximately ($11.3) million as the result of very significant sales that occurred during the first
three months of fiscal year 2021, offset to a lesser degree by the growth of accounts payable &#8211; related party of approximately
$4.8 million and stock based compensation of approximately $1.1 million.</span></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">Cash
flow used in financing activities was approximately $35,759 for the first three months of fiscal year 2022, compared to approximately
$30,511 for the first three months of fiscal year 2021. The cash used in financing activities for the first three months of fiscal year
of 2022 and fiscal year 2021 consisted of cash used for the settlement of RSUs issued to employees.</span></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"><b><span style="text-decoration: underline"><span id="a_009"></span>Results
of Operations</span></b></span></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"><b>Three
months ended January 31, 2022, compared to three months ended January 31, 2021</b></span></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"><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">&#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">Revenues,
net for the first quarter of fiscal year 2022 were approximately $2.8 million, compared to approximately $37.4 million in the same period
of the prior fiscal year.&#160;Revenues decreased in the first quarter of fiscal year 2022, generally due to (i) Bidi&#8217;s receipt
of the MDO, which limited our ability during the first quarter of fiscal year 2022 to sell flavored BIDI<sup>&#174;</sup> Sticks in the
United States and (ii) increased competition, which we believe was the result of the lack of enforcement by federal and state authorities
against sub-par and low-priced vaping products that continued to enter the market illegally without FDA authorization. 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 revenues to continue to resume an upward trajectory as renewed distribution ramps up and sales of flavored BIDI&#174; 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.</span></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"><i>Cost
of Revenue, net and Gross Profit (Loss):</i></span></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">Gross
loss in the first quarter of fiscal year 2022 was approximately ($700,000), or approximately (24.3%), of revenues, net, compared to approximately
$4.8 million gross profit, or approximately11.2%, of revenues, net, for the first quarter of fiscal year 2021. Total cost of revenue,
net was approximately $3.5 million, or approximately 124.3%, of revenue, net for the first quarter of fiscal year 2022, compared to approximately
$32.6 million, or approximately 87.2%, of revenue, net for the first 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 $854,000, resulting in an offset to revenue, net, during the first quarter of fiscal year 2022.</span></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"><i>Operating
Expenses:</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: 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">Total
operating expenses were approximately $2.1 million for the first quarter of fiscal year 2022, compared to approximately $4.4 million
for the first quarter of fiscal year 2021. For the first quarter of fiscal year 2022, operating expenses consisted primarily of advertising
and promotion fees of approximately $593,000, professional fees totaling approximately $481,000 and general and administrative expenses
of approximately $1.0 million. General and administrative expenses in the first quarter of fiscal year 2022 consisted primarily of salaries
and wages, stock option expense, insurance, lease expense, banking fees, business fees and state and franchise taxes. For the first quarter
of fiscal year 2021, operating expenses consisted primarily of advertising and promotion fees of approximately $958,000, professional
fees totaling approximately $2.5 million and, general and administrative expenses of approximately $942,000. General and administrative
expenses in the first 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 continue to increase while we increase the footprint of our business and
generate increased sales growth.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: 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"><i>Income
Taxes:</i></span></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">During
the first quarter of fiscal year 2022, we did not accrue for income taxes, due to the pre-tax loss of approximately ($2.8) million, compared
to a tax provision of approximately $106,000 for the first quarter of fiscal year 2021, due to the amount of pre-tax income for that
three-month period. The reduction from the first quarter of fiscal year 2021 was due to the pre-tax operating loss recognized during
the first quarter of fiscal year 2022.</span></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"><i>Net
Income (Loss):</i></span></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">As
a result of the items noted above, the net loss for the first quarter of fiscal year 2022 was approximately ($2.8) million, or ($0.09)
basic and diluted loss per share, compared to net income of approximately $0.3 million, or $0.01 basic and diluted earnings per share,
for the first quarter of fiscal year 2021. The decrease in net income for the first quarter of fiscal year 2022, as compared to the first
quarter of fiscal year 2021, is primarily attributable to the decreased revenues and increase in customer credits/discounts/rebates,
as noted above.</span></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"><b><span style="text-decoration: underline">Critical
Accounting Policies and Estimates</span></b></span></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">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 January 31, 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.</span></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"><b><span style="text-decoration: underline">Recently
Adopted Accounting Pronouncements</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">&#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">See
Note 2,&#160;<i>Basis of Presentation and Significant Accounting Policies</i>, to the unaudited Consolidated Financial Statements in
Item 1 of Part I of this Quarterly Report for a description of recent accounting pronouncements and accounting changes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline">&#160;</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"><b><span style="text-decoration: underline"></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"><b><span style="text-decoration: underline"><span id="a_010"></span>Emerging
Growth Company</span></b></span></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">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>

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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"><b><span id="a_011"></span>Item
3. Quantitative and Qualitative Disclosures About Market Risk</b></span></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">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>

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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"><b><span id="a_012"></span>Item
4. Controls and Procedures</b></span></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"><b><span style="text-decoration: underline">Evaluation
of Disclosure Controls and Procedures</span></b></span></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">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>

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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">Based
on our evaluation under the framework in COSO, our management concluded that our internal control over financial reporting remained ineffective
as of January 31, 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>

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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">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>

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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">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>

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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"><b><span style="text-decoration: underline">Changes
in Internal Control over Financial Reporting</span></b></span></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">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 there months ended January 31, 2022 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 10.8pt 0 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline"><span id="a_013"></span>PART
II OTHER INFORMATION</span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 10.8pt 0 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><span style="text-decoration: underline"></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"><b><span id="a_014"></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">&#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">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">&#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"><b><span id="a_015"></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">&#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">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">&#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"><b><span id="a_016"></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">&#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"><i>Share-based
Compensation</i></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"><i>&#160;</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">During
the three months ended January 31, 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">&#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">On
November 5, 2021, the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth
in RSU agreements previously entered into with such employees, resulting in the recognition of approximately $110,250 of share-based
compensation. Of the shares issued to employees, 19,866 shares were withheld by the Company to satisfy tax withholding obligations and/or
satisfy cash settlement options to employees, equaling approximately $35,759. As of January 31, 2022, there remained 437,917 unvested
RSUs with approximately $900,769 of related unvested compensation.</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">&#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">Following
the end of the three months ended January 31, 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">&#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">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"><span style="font-family: 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">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.</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">&#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">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">&#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">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.</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">&#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">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">&#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">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">&#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">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">&#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">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 Fiscal Year 2021 10K report.</span></p>

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

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

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><span id="a_017"></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">&#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">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">&#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"><b><span id="a_018"></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">&#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">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">&#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"><b><span id="a_019"></span>Item
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">&#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">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">&#160;</span></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"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 10.8pt 0 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b><span id="a_020"></span>Item
6. Exhibits</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 10.8pt 0 0; text-align: justify"><span style="font-family: 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">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">&#160;</span></p>

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

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="background-color: white">
<td style="border-bottom: black 1pt solid; vertical-align: bottom; width: 8%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit
Number</b></span></td>
<td style="width: 2%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; width: 90%; padding-right: 0.8pt"><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="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.1</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991619000052/articlesofinc.htm">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.</a></span></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991619000028/bylaws.htm">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.</a></span></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.3</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112219000386/e1427_3-1.htm">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.</a></span></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.4</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112219000386/e1427_3-2.htm">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.</a></span></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.5</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991620000101/designation31_82120.htm">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.</a></span></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.6</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001188/e2932_ex3-1.htm">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.</a></span></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.1</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1762239/000159991620000036/ex10_1.htm">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)</a></span></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.2</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991620000047/serviceagreement.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.3</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000618/e1968_10-1.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.4</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000344/e1848_10-1.htm">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)</a></span></td></tr>
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<p style="font: 10pt/10.8pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="vertical-align: top; width: 8%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.5</span></td>
    <td style="width: 2%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 90%; padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000374/e1864_10-1.htm">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)</a></span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.6</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000584/e1956_ex10-5.htm">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)</a></span></td></tr>
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    <td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000584/e1956_ex10-6.htm">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)</a></span></td></tr>
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<p style="font: 10pt/10.8pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<td style="vertical-align: top; width: 8%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.8</span></td>
<td style="width: 2%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="width: 90%; padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000584/e1956_ex10-7.htm">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)</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.9</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000159991620000101/shareagreement101_82120.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.10</span></td>
<td style="padding-right: 0.8pt"></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000618/e1968_10-2.htm">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.</a></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt; width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.11</span></td>
<td style="padding-right: 0.8pt; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify; width: 90%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112220000946/e2108_10-14.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt">&#160;</td>
<td style="padding-right: 0.8pt">&#160;</td>
<td style="padding-right: 0.8pt; text-align: justify">&#160;</td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;10.12</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221000625/e2658_10-1.htm">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)</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.13</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001071/e2861_ex10-18.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.14</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001071/e2861_ex10-19.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.15</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001119/e2888_ex10-1.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.16</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001119/e2888_ex10-2.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.17</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001232/e2943_ex10-1.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.18</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001232/e2943_ex10-2.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.19</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001232/e2943_ex10-3.htm">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.</a></span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.20</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112221001232/e2943_ex10-4.htm">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.</a>&#160; &#160;</span></td></tr>
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<td style="padding-right: 0.8pt">&#160;</td>
<td>&#160;</td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.21</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1762239/000173112222000410/e3595_ex10-1.htm">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.</a></span></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">31.1</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt; text-align: justify"><a href="e3615_ex31-1.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*</span></a></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">31.2</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><a href="e3615_ex31-2.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*</span></a></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32.1</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><a href="e3615_ex32-1.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Executive Officer pursuant to 18 U.S.C. Section 1350 of Chapter 63 of Title 18 of the United States Code*</span></a></td></tr>
<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32.2</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><a href="e3615_ex32-2.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 of Chapter 63 of Title 18 of the United States Code*</span></a></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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<td style="vertical-align: top; width: 8%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.INS</span></td>
<td style="width: 2%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="width: 90%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Instance
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.SCH</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.CAL</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.DEF</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension
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<tr style="background-color: White">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.LAB</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.PRE</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Presentation
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<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr style="background-color: rgb(204,238,255)">
<td style="vertical-align: top; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cover Page Interactive Data
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: 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"></span></p>

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

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: 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"></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">&#160;&#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"><b><span id="a_021"></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">&#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">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">&#160;&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td colspan="2" style="padding-right: 1.8pt"><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="width: 51%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="width: 5%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="width: 44%; padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
<tr>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date: March 17, 2022</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
<td style="border-bottom: black 1pt solid; padding-right: 0.8pt"><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 0pt 0pt 10pt; text-indent: -10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Nirajkumar Patel</span></td></tr>
<tr>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
<td style="padding-right: 0.8pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">President and Chief Executive
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    Mark Thoenes</i></span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p>

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

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

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

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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
January 31, 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:
31,139,416
shares
of common stock, $0.001 par value, outstanding as of March 15, 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-4
Notes to Unaudited Consolidated Financial Statements
F-5
Item
    2
Management's Discussion and Analysis of Financial Condition and Results of Operations Corporate History
1
Liquidity and Capital Resources
3
Results of Operations
4
Off-Balance Sheet Arrangements
Emerging Growth Company
4
Item 3
Quantitative and Qualitative Disclosures about Market Risk
5
Item 4
Controls and Procedures
5
PART II
Other Information
6
Item 1.
Legal Proceedings
6
Item 1A.
Risk Factors
6
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
6
Item 3
Defaults Upon Senior Securities
6
Item 4
Mine Safety Disclosures
6
Item 5
Other Information
6
Item 6
Exhibits
7
Signatures
9
i
CAUTIONARY
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain
statements and information in this Quarterly Report on Form 10-Q for the three months ended January 31, 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") determinations,
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 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)
January 31,
2022
October 31,
2021
ASSETS
CURRENT ASSETS:
Cash
$
5,590,420
$
7,760,228
Restricted Cash
65,542
65,007
Accounts receivable
1,296,204
1,985,186
Inventory deposit – related party
2,925,000
2,925,000
Inventories
11,841,750
15,326,370
Prepaid expenses
289,988
319,531
Income tax receivable
1,753,594
1,753,594
Total current assets
23,762,498
30,134,916
Right of use asset- operating lease
51,955
55,604
TOTAL ASSETS
$
23,814,453
$
30,190,520
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$
180,017
$
242,829
Accounts payable- related party
9,129,759
12,667,769
Accrued expenses
374,412
579,604
Operating lease obligation – short term
13,349
13,020
Customer refund due
147,690
316,800
Total current liabilities
9,845,227
13,820,022
LONG TERM LIABILITIES
Operating lease obligation, net of current portion
42,686
46,185
TOTAL LIABILITIES
$
9,887,913
$
13,866,207
STOCKHOLDERS' EQUITY:
Preferred stock
5,000,000
shares authorized; Series A Convertible Preferred stock ($
.001
par value,
3,000,000
shares authorized,
3,000,000
issued and outstanding as of January 31, 2022 and October 31, 2021)
3,000
3,000
Common stock ($
0.001
par value,
1,000,000,000
shares authorized,
30,236,696
and
30,195,312
issued and outstanding as of January 31, 2022 and October 31, 2021, respectively)
30,236
30,195
Additional paid-in capital
21,936,109
21,551,959
Accumulated deficit
(
8,042,805
)
(
5,260,841
)
Total Stockholders' Equity
13,926,540
16,324,313
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
$
23,814,453
$
30,190,520
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 January 31,
2022
2021
Revenues
Revenues,
    net
$
2,841,990
$
37,369,967
Revenues
    - related parties
23,765
50,300
Excise
    tax on products
(
23,872
)
(
58,748
)
Total
    revenues, net
2,841,883
37,361,519
Cost
    of revenue
Cost
    of revenue - related party
3,484,620
32,479,100
Cost
    of revenue - other
48,172
86,021
Total
    cost of revenue
3,532,792
32,565,121
Gross
    (loss) profit
(
690,909
)
4,796,398
Operating
    expenses
Advertising
    and Promotion
592,501
960,502
General
    & Administrative expenses
1,498,554
3,418,339
Total
    operating expenses
2,091,055
4,378,841
Other
    Income
Interest
    income
—
330
Total
    Other Income
—
330
Income
    (loss) before income taxes provision (benefit)
(
2,781,964
)
417,887
Provision
    (benefit) for income taxes
—
(
106,386
)
Net
    income (loss)
$
(
2,781,964
)
$
311,501
Net
    income (loss) per common share - basic and diluted
$
(
0.09
)
$
0.01
Weighted
    average number of common shares outstanding - basic and diluted
30,234,477
23,187,561
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 Three Months Ended January 31, 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 – RSU
—
—
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
)
(
2,781,804
)
Balances, January 31, 2022
3,000,000
$
3,000
30,236,696
$
30,236
$
21,936,109
$
(
8,042,805
)
$
13,926,540
Kaival
Brands Innovations Group, Inc.
Consolidated
Statement of Changes in Stockholders' Equity
For
the Three Months Ended January 31, 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
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
F-
3
Ka
ival
Brands Innovations Group, Inc.
Consolidated
Statements of Cash Flows
(Unaudited)
For the Three Months Ended January 31, 2022
For the Three Months Ended January 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income
$
(
2,781,964
)
$
311,501
Adjustment to reconcile net (loss) income to net cash used in operating activities:
Stock based compensation
110,250
1,111,296
Stock option expense
309,700
—
ROU operating lease expense
3,649
3,949
Changes in current assets and liabilities:
Accounts receivable
688,982
(
11,262,976
)
Accounts receivable – related parties
—
(
3,215
)
Prepaid expenses
29,543
—
Inventory
3,484,620
(
1,722
)
Accounts payable
(
62,812
)
—
Accounts payable – related party
(
3,538,010
)
4,838,321
Accrued expenses
(
205,192
)
95,390
Deferred revenue
—
(
623,096
)
Income tax accrual
—
106,385
Customer refund due
(
169,110
)
—
Right of use liabilities – operating lease
(
3,170
)
(
3,196
)
Net cash used in operating activities
(
2,133,514
)
(
5,427,336
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Settled RSU shares with cash
$
(
35,759
)
$
(
30,511
)
Cash flows used in financing activities
(
35,759
)
(
30,511
)
Net change in cash and restricted cash
$
(
2,169,273
)
$
(
5,457,847
)
Beginning cash and restricted cash balance
7,825,235
7,421,701
Ending cash and restricted cash balance
$
5,655,962
$
1,963,854
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid
$
—
$
—
Income taxes paid
$
106,385
$
—
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
F-
4
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 electronic nicotine delivery systems ("ENDS")
and related components (the "Products") manufactured by Bidi, a related party company that is also owned by Nirajkumar Patel,
the Chief Executive Officer of the Company.
On
March 9, 2020, the Company entered into an exclusive distribution agreement (the "Distribution Agreement") with Bidi, a related
party company, which Distribution Agreement was amended and restated on May 21, 2020 and again on April 20, 2021 (collectively, the "A&R
Distribution Agreement") in order to clarify some of the provisions. Pursuant to the A&R Distribution Agreement, Bidi granted
the Company an exclusive worldwide right to distribute the Products for sale and resale to both retail level customers and non-retail
level customers. Currently, the Products consist primarily of the "BIDI
®
Stick." The Company ceased all
retail/direct-to-consumer sales in February 2021.
In
connection with the A&R Distribution Agreement, the Company entered into non-exclusive sub-distribution agreements, some of which
were subsequently amended and restated by the parties in order to clarify certain provisions (all such agreements, as amended and restated,
are collectively referred to as the "A&R Sub-Distribution Agreements"), whereby the Company appointed the counterparties
as non-exclusive sub-distributors. Pursuant to the A&R Sub-Distribution Agreements, the sub-distributors agreed to purchase for resale
the Products in such quantities as they should need to properly service non-retail customers within the continental United States (the
"Territory").
On August 31,
2020, the Company formed Kaival Labs, Inc., a Delaware corporation (herein referred to as "Kaival Labs"), as a wholly owned
subsidiary of the Company.
On
July 16, 2021, the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation with the Secretary
of State of the State of Delaware to effect a 1-for-12 reverse stock split (the "Reverse Stock Split") of the shares of the
Company's common stock, par value $
0.001
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 Kaival-branded
    formulation, the Company anticipates that it will also provide white label, wholesale solutions for other product manufacturers through
    its subsidiary, Kaival Labs. The Company has not yet launched any Kaival-branded product, nor has it begun to provide white label
    wholesale solutions for other product manufacturers.
F-
5
COVID-19
Impact
In
January 2020, the World Health Organization (the "WHO") announced a global health emergency because of a new strain of coronavirus
("COVID-19") originating in Wuhan, China and the risks to the international community as the virus spread globally beyond
its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in global exposure.
The
Company's operations have not been significantly impacted. No impairments have been recorded and no triggering events or changes
in circumstances had occurred. While the spread of COVID-19 has slowed and social restrictions have largely been lifted, the full impact
of the COVID-19 pandemic continues to evolve and remains uncertain. As such, the full magnitude of the COVID-19 pandemic, and the resulting
impact, if any, on the Company's financial condition, liquidity, and future results of operations is uncertain. However, we have
encountered some logistical delays related to product launches and distribution in international markets. The Company was also indirectly
impacted by supply chain issues and regulatory oversight.
Impact
of the FDA PMTA Decision
As
of September 10, 2021, the FDA announced that it has taken action on over 93% of applications and issued Marketing Denial Orders ("MDOs")
for more than 1,167,000 flavored ENDS products, while issuing zero marketing authorizations.
Bidi,
along with nearly every other company in the ENDS industry, received a MDO for its non-tobacco flavored ENDS products. With respect to
Bidi, the MDO covered all non-tobacco flavored BIDI® Sticks, including its Arctic (menthol) BIDI® Stick, which Bidi believes
the FDA mischaracterized as "flavored." BIDI believes that because its Arctic BIDI® Stick is menthol, it should not be
subject to the MDO. Bidi and the Company believe this position is aligned with the FDA's public statements and press releases stating
that tobacco and menthol ENDS are not deemed flavored products subject to the MDOs.
As
a result, beginning in September 2021, Bidi pursued three avenues to challenge the MDO. First, on September 21, 2021, separate from the
judicial appeal of the MDO in its entirety, Bidi filed a 21 C.F.R. § 10.75 internal FDA review request specifically of the decision
to include the Arctic (menthol) BIDI® Stick in the MDO. The Company anticipates a decision from the FDA on the internal review in
the second or third quarter of 2022, although we cannot provide any assurances as to the timing or outcome.
Separately,
on September 29, 2021, Bidi petitioned the U.S. Court of Appeals for the Eleventh Circuit to review the FDA's denial of the PMTAs
for its non-tobacco flavored BIDI® Stick ENDS, arguing that it was arbitrary and capricious under the Administrative Procedure Act
("APA"), as well as
ultra vires
, for the FDA not to conduct any scientific review of the company's comprehensive
applications, as required by the Tobacco Control Act, 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 February 1, 2022, 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, or 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 are currently scheduled for May 2022.
Finally,
on October 14, 2021, Bidi requested that the FDA re-review the MDO and reconsider its position that Bidi did not include certain scientific
data in its applications sufficient to allow the PMTAs to proceed to scientific review. In light of this request, on October 22, 2021
pursuant to 21 C.F.R. § 10.35(a), the FDA issued an administrative stay of Bidi's MDO pending its re-review. Subsequently,
the FDA lifted its administrative stay on December 17, 2021. Following the lifting of the FDA's administrative stay, Bidi filed
a renewed motion to stay the MDO with the U.S. Court of Appeals for the Eleventh Circuit, which was granted on February 1, 2022.
In
the event that the U.S. Court of Appeals issues for the Eleventh Circuit a ruling adverse to Bidi, or if the FDA otherwise chooses to
enforce against Bidi, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI® Stick products in the United
States, thereby resulting in the Company being unable to distribute such products, the Company's business and financial condition
would be materially adversely affected. The Company cannot provide any assurances as to the timing or outcome of the merits-based case.
Note
2 –
Basis of Presentation and Significant Accounting Policies
Principles
of Consolidation
The
consolidated financial statements include the financial statements of the Company's wholly-owned subsidiary, Kaival Labs. Intercompany
transactions are eliminated.
Basis
of Presentation
The
accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America ("GAAP") and the rules of the Securities and Exchange Commission ("SEC")
and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's most recent
Annual Financial Statements filed with the SEC on Annual Report on Form 10-K on February 16, 2022 (the "2021 Annual Report").
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations for the interim period presented have been reflected herein. The results of operations for the
interim period are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements,
which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period,
as reported in the 2021 Annual Report have been omitted.
F-
6
Use of
Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order
to make the financial statements not misleading have been included. Actual results could differ from those estimates.
Cash and
Restricted Cash
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
There were no cash equivalents at January 31, 2022 and October 31, 2021. Cash and restricted cash at January 31, 2022 and October 31,
2021 were $
5,655,962
and $
7,825,235
, respectively.
Cash
and restricted consist of cash and cash held short-term in escrow as required. As of January 31, 2022, and October 31, 2021, the Company
had $
65,542
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.
January
31,
October
31,
2022
2021
Cash
$
5,590,420
$
7,760,228
Restricted
cash
65,542
65,007
Total
cash and restricted cash shown in statement of cash flows
$
5,655,962
$
7,825,235
Advertising
and Promotion
All
advertising, promotion and marketing expenses, including commissions, are expensed when incurred.
Accounts
Receivable and Allowance for Doubtful Accounts
Receivables
are stated at cost, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on management's
assessment of the collectability of accounts receivables. A considerable amount of judgment is required in assessing the amount of the
allowance and the Company considers the historical level of credit losses and collection history and applies percentages to aged receivable
categories. The Company makes judgments about the creditworthiness of debtors based on ongoing credit evaluations and monitors current
economic trends that might impact the level of credit losses in the future. If the financial condition of the debtors were to deteriorate,
resulting in their inability to make payments, a larger allowance may be required. As of January 31, 2022, based upon management's
assessment of the accounts receivable aging and the customers' payment history, the Company has determined that no allowance for
doubtful accounts was required. As of October 31, 2021, the Company also determined that
no
allowance for doubtful accounts was required.
Inventories
All
product inventory is purchased from a related party, Bidi. Inventories are stated at the lower of cost and net realizable value. Cost
includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. The Company
determines cost based on the FIFO method. Net realizable value is the estimated selling price in the ordinary course of business less
the estimated costs of completion and the estimated costs necessary to make the sale. All inventories are purchased from a related party
as of October 31, 2021 and January 31, 2022, the inventories only consisted of finished goods, were significant, and were located in
four storage locations, one of which was a related party, Bidi, and the other location was with a customer/sub distributor, Favs Business
LLC ("Favs Business"). Based upon fiscal year 2021 inventory management procedures and their results, that have continued
through the quarter ended January 31, 2022, the Company has determined that no allowance for the inventory valuation was required at
January 31, 2022, nor October 31, 2021.
Inventory
deposit related party
In
the fourth quarter of fiscal 2021, the Company placed an order for BIDI
®
Sticks in anticipation of the distribution launch
in the United Kingdom. In connection with this order, the Company paid $2.9 million 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 February 2022. Once delivered the BIDI
®
Sticks to be distributed in the United Kingdom will be maintained in appropriate warehousing for distribution and sale. As of the
date these unaudited consolidated financial statements were issued, this has not been completed and no inventory has been transferred
to the Company; thus, this remains a deposit. The parties anticipate that such delivery will occur by the end of the second quarter of
2022 or beginning of the third quarter of 2022, dependent upon the timing of the launch of distribution in the United Kingdom. In the
event that delivery of the BIDI
®
Sticks and corresponding launch of distribution in the United Kingdom is further delayed,
the parties intend that Bidi will return the inventory deposit to the Company.
F-
7
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. The Company has evaluated revenues recognized and
substantially all of our revenues were derived from sales of flavored BIDI® Sticks, including the Arctic (menthol) BIDI®
Stick, sales of which constituted approximately 12.5% and 19.9% of our total sales of BIDI® Sticks for the fiscal quarters ended
January 31, 2022 and 2021, respectively. 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. At January 31, 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 January 31, 2022 and October 31, 2021, the Company had not received any deposits from customers, respectively, which would be included
with the Company's current liabilities, if they existed.
Customer
Refunds
The
Company infrequently has a need to adjust the size of an order after it has been shipped, received and paid for, due to the customer
oversizing the order for more product that it can realistically sell at that time. If and when this occurs, the Company will ask the
customer to return the over allotted Products. Once received and inspected, the Company will issue a refund for the Product return. As
of January 31, 2022 and October 31, 2021, the Company had customer refunds due in the amounts equal to approximately $147,690 and $316,800,
respectively, which was the result of one of the Company's sub-distributor customers returning Product that had become defective
in storage. The approximately $147,690 due at January 31, 2022 represents the amount of the refund the Company will make to this customer.
Products
Revenue
The
Company generates revenue from the sale of the Products (as defined above) to non-retail customers. The Company recognizes revenue at
a point in time based on management's evaluation of when performance obligations under the terms of a contract with the customer
are satisfied and control of the Products has been transferred to the customer. In most situations, transfer of control is considered
complete when the Products have been shipped to the customer. The Company determines that a customer obtains control of the Product upon
shipment when title of such product and risk of loss transfer to the customer. The Company's shipping and handling costs are fulfillment
costs and such amounts are classified as part of cost of sales. The Company's sales arrangements for retail sales usually require
full prepayment before delivery of the Products. The advance payment is not considered a significant financing component because the
period between when the Company transfers a promised good to a customer and when the customer pays for that good is short. The Company
offers credit sales arrangements to non-retail (or wholesale) customers and monitors the collectability of each credit sale routinely.
Revenue
is measured by the transaction price, which is defined as the amount of consideration expected to be received in exchange for providing
goods to customers. The transaction price is adjusted for estimates of known or expected variable consideration, which includes refunds
and returns as well as incentive offers and promotional discounts on current orders. Estimates for sales returns are based on, among
other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity.
These estimates are established in the period of sale and reduce revenue in the period of the sale. Variable consideration related to
incentive offers and promotional programs are recorded as a reduction to revenue based on amounts the Company expects to collect. Estimates
are regularly updated and the impact of any adjustments are recognized in the period the adjustments are identified. In many cases, key
sales terms such as pricing and quantities ordered are established at the time an order is placed and incentives have very short-term
durations.
Amounts
billed and due from customers are short term in nature and are classified as receivables since payments are unconditional and only the
passage of time related to credit terms is required before payments are due. The Company does not grant payment financing terms greater
than one year. Payments received in advance of revenue recognition are recorded as deferred revenue.
Concentration
of Revenues and Accounts Receivable
For
the three months ended January 31, 2022, approximately 45%, or $1,287,180, of the revenue from the sale of Products was generated from
Favs Business, approximately 12%, or $352,554, of the revenue from the sale of Products was generated from Lakshmi Distributor Inc.,
doing business as C Store Master ("C Store Master"), and approximately 12%, or $332,595, of the revenue from the sale of
Products was generated from The H.T. Hackney Company.
Favs
Business and C Store Master had outstanding balances of approximately $374,400 and $282,414, respectively, which accounted for approximately
29% and 22%, respectively, of the total accounts receivable from customers as of January 31, 2022.
For
the three months ended January 31, 2021, approximately 37%, or $13,888,376, of the revenue from the sale of Products was generated from
Favs Business, approximately 18%, or $6,708,752, of the revenue from the sale of Products was generated from MMS Distribution, LLC ("MMS
Distro"), and approximately 13%, or $4,879,427, of the revenue from the sale of Products was generated from C Store Master.
Favs
Business, with an outstanding balance of approximately $8,601,200, and GPM Investment, LLC, with an outstanding balance of approximately
$1,262,985, accounted for approximately 68% and 10% of the total accounts receivable from customers, respectively, as of January 31,
2021.
F-
8
Share-Based
Compensation
The
Company measures the cost of services received in exchange for an award of equity instruments (share-based payments, or SBP) based on
the grant-date fair value of the award. That cost is recognized over the period during which a recipient is required to provide service
in exchange for the SBP award—the requisite service period (vesting period). For SBP awards subject to conditions, compensation
is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated
using the Black-Scholes-Merton option-pricing model. Compensation expense for SBP awards granted to nonemployees is remeasured each period
as the underlying options vest.
The
fair value of each option granted during the fiscal three month period ended January 31, 2022 and at October 31, 2021 was estimated on
the date of grant using the Black-Scholes-Merton option-pricing model with the weighted average assumptions in the following table:
2022
2021
Expected
dividend yield
0
%
0
%
Expected
option term (years)
10
10
Expected
volatility
294.57
%-
301.53
%
294.57
%-
301.53
Risk-free
interest rate
1.19
%-
1.63
%
1.19
%-
1.63
%
The
expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected volatility
was based on the volatility in the trading of the Common Stock. The assumed discount rate was the default risk-free ten-year interest
rate for U.S. Treasury bills. The Company stock option expense for the fiscal three months ended January 31, 2022 and for the fiscal
year October 31, 2021 was approximately $
309,700
and $
1,773,947
, respectively.
The Company's
stock-based compensation for the fiscal three months ended January 31, 2022 and fiscal year October 31, 2021 was approximately $
110,250
and $
9,449,421
, 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 three month period ended January
31, 2022, is necessary to reduce the deferred tax asset to the amount that will more likely than not be realized pursuant to ASC 740.
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:
●
Level
1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or
liabilities.
●
Level
2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets
or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g.,
interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
●
Level
3 - Inputs that are both significant to the fair value measurement and unobservable.
Fair
value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of January
31, 2022. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term
nature of these instruments. These financial instruments include cash, restricted cash, accounts receivable, inventory, accounts payable
and accrued expenses.
F-
9
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
A
recent court ruling on behalf of Bidi in the U.S. Court of Appeals for the Eleventh Circuit, granted a judicial stay of the MDO previously
issued by the FDA to Bidi in September 2021. The ruling, issued on February 1, 2022, means that all BIDI
®
Stick flavors
remain marketable by the Company in the United States, subject to the FDA's enforcement discretion, while Bidi continues with its
merits case challenging the legality of the MDO. As the FDA has indicated that it is prioritizing enforcement against companies that
have not submitted PMTAs or who have MDOs in place, the Company views the risk of FDA enforcement against Bidi as low. Oral arguments
in the merits case are currently scheduled in May 2022.
If
the U.S. Court of Appeals for the Eleventh Circuit agrees with Bidi in the merits case, the Company anticipates that the FDA will be
compelled to place the flavored ENDS back into the PMTA scientific review process. If this is the outcome of the merits case, the Company
will be able to fully market and sell the Products, subject to the FDA's enforcement discretion, until the scientific review process
is complete on each of Bidi's PMTA for flavored ENDS and the FDA issues its decision on each.
If
the U.S. Court of Appeals for the Eleventh Circuit disagrees with Bidi on the merits case, or if the FDA otherwise chooses to enforce
against Bidi, the Company will be forced to cease sales on the flavored ENDS in the United States market, leaving only the Tobacco and
Menthol (Arctic) ENDS products for sale in the United States (pending the outcome of the specific PMTA filings and the administrative
review request for the classification of "Arctic" as a standard menthol ENDS). If this is the outcome of the merits case,
this combined with the negative cash flows from operations, raises substantial doubt on the Company's ability to continue
as a going concern.
Management
plans to continue similar operations with increased marketing, which the Company believes will result in increased revenue and net income.
However, there is no assurance that management's plan will be successful due to the current economic climate in the United States
and globally.
These
consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets,
or the amounts and classification of liabilities that might be necessary in the event that we cannot continue as a going concern.
Note
4 –
Leases
The
Company capitalizes all leased assets pursuant to ASU 2016-02, "Leases (Topic 842)," which requires lessees to recognize
right-of-use assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with
terms longer than 12 months and classified as either financing or operating leases. The Company excludes short-term leases having initial
terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over
the lease term. The Company adopted the standard in the fourth quarter of fiscal year 2020. The adoption of the amended ASU 2016-02 did
not have any impact on the Company's previously reported financial statements in any prior period nor did it result in a cumulative
effect adjustment to retained earnings.
Office
Space
On
August 1, 2020, the Company began leasing office space for its main corporate office in Grant, Florida. The five-year lease
agreement is with a related party, Just Pick, LLC ("Just Pick"). The Company's Chief Executive Officer is an
officer of Just Pick. Prior to this, the Company utilized the home office space and warehouse of its management at no cost through
July 31, 2020.
T
he Company does not have financing leases and only one operating lease for
office space, with a related party. The operating lease is for a term of
five years, beginning August 1, 2020, with rent of $
1,000
payable monthly. 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. 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 January 31, 2022 and October 31, 2021, the right-to-use ("ROU") lease asset, net of accumulated
amortization, was approximately $
51,955
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 three months ended January 31, 2022 was approximately $
3,649
and no payments were made on 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 January 31, 2022, short-term ROU lease liability was approximately $
13,349
and long-term
liability was approximately $
42,686
, totaling approximately $
56,035
.
2022
2023
2024
2025
Total
Lease
    payments
$
13,500
$
15,300
$
18,000
$
13,500
$
60,300
Less
    discount imputed interest
(
4,265
)
Present
    value of future payments
56,035
Less
    current obligations
(
13,349
)
Long
    term lease obligations
$
42,686
Storage
Space
On
November 1, 2021, the Company entered into a month-to-month lease agreement with Ranger Enterprises, LLC, located in Seymour, Indiana,
to store product inventory at this satellite location. The Company made four payments on this lease, totaling approximately $
10,139
,
during the three months ended January 31, 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
one payment in the amount of approximately $
10,713
on December 15, 2021 for the rent on this lease during the three months ended January
31, 2022.
F-
10
Note
5 –
Stockholder Equity
Additional
Paid-In Capital
During
the three months ended January 31, 2022, approximately $
309,700
of stock option expense was recognized and contributed an addition to
Additional Paid-In Capital. Also, during the three months ended January 31, 2022, on November 1, 2021, RSUs previously granted to employees
vested and shares of Common Stock were issued, which contributed approximately $
74,451
to Additional Paid-In Capital, resulting in a
total increase in Additional Paid-In Capital during the three months ended January 31, 2022 of approximately $
384,151
.
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 January 31, 2022.
Common
Shares Issued
The
Company implemented the Reverse Stock Split, effective prior to the opening of the market on Tuesday, July 20, 2021. The Revers
e
Stock Split was implemented by the Company in support of its application to list on the Nasdaq Capital Market ("Nasdaq").
As a result of the Reverse Stock Split at the
1-for-12
ratio, 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.
The
authorized Common Stock of the Company consists of
1,000,000,000
shares with a par value of $
0.001
. There were
30,236,696
shares of Common
Stock issued and outstanding as of January 31, 2022.
Warrants
Shares Issued
As
part of the Company's firm underwritten public offering during fiscal 2021, the Company issued warrants to purchase a total of
4,053,750
shares of Common Stock at an exercise price of $
1.90
per share. These warrants expire in the year 2026. During the year ended
October 31, 2021, warrants for
879,828
shares were exercised for $
1,665,113
. No warrants were exercised during the three-month period
ended January 31, 2022. The aggregate intrinsic value of the outstanding Common Stock warrants as of January 31, 2022 and October 31,
2021 was $
0
. The weighted average remaining term of the outstanding Common Stock warrants is
4.68
years as of January 31, 2022.
The
following is a summary of the stock warrant plan activity during the fiscal three months ended January 31, 2022 and the year ended October
31, 2021
.
2022
2021
Number
    of Warrants
Weighted
    Average Exercise Price
Number
    of Warrants
Weighted
    Average Exercise Price
Warrants
    Outstanding at Beginning of the Period
3,173,922
$
1.90
—
$
1.90
Granted
—
—
4,053,750
1.90
Exercised
—
—
(
879,828
)
1.90
Canceled,
    forfeited, expired
—
—
—
1.90
Warrants
    Outstanding and Exercisable at End of Period
3,173,922
$
1.90
3,173,922
$
1.90
Restricted
Stock Unit Awards
On
November 5, 2021,
the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth
in RSU agreements previously entered into with such employees, resulting in the recognition of approximately $110,250 of share-based
compensation. Of the shares issued to employees, 19,866 shares were withheld by the Company to satisfy tax withholding obligations and/or
satisfy cash settlement options to employees, equaling approximately $35,759. As of January 31, 2022, there remained 437,917 unvested
RSUs with approximately $900,769 of related unvested compensation.
Stock
Options
During
fiscal year 2021, the
Company granted options exercisable for up to 150,000 shares of Common Stock of which 15,000 fully vested on March
17, 2021, 7,500 fully vested on June 30, 2021, 41,667 fully vested on December 1, 2021, 68,333 vest over the next 2 years on March 17,
2022, and 2023, and 17,500 vest over the next 2 years on June 30, 2022 and 2023. The options have exercise prices ranging from $9.12
to $28.68 per share. These options have a weighted average remaining life of 9.43 years as of October 31, 2021 and of 9.08 years as of
January 31, 2022. The options expire in the year 2031. On July 19, 2021, two of the stock option agreements, exercisable for an aggregate
of 50,000 shares of Common Stock, were modified to accelerate the full vesting period from 3 years to 2 years. The Company granted
no new options during the three months ended January 31, 2022. The aggregate intrinsic value of these outstanding options as of October
31, 2021 and January 31, 2022 was $0.
F-
11
The
fair values of the options on the grant dates was approximately $
3,088,002
using a Black-Scholes option pricing model with the following
assumptions: stock price range of $
9.12
to $
27.36
per share (based on the quoted trading price on the date of grant), volatility
range of
294.57
%
to
301.53
%
, expected term of
10
years, and a risk-free interest rate range of
1.19
%
to
1.63
%
. The Company is amortizing
the expense over the vesting terms of each option. The total stock option expense for the three months ended January 31, 2022 was approximately
$309,700. The fiscal year 2021 total unamortized stock option expense at October 31, 2021 was approximately $
1,314,056
. The fiscal year
2022 unamortized stock option expense at January 31, 2022 was approximately $
1,004,356
.
Note
6 –
Related-Party Transactions
Revenue
and Accounts Receivable
During
the three months ended January 31, 2022, the Company recognized revenue of approximately $
23,765
from four companies owned by Nirajkumar
Patel, the Chief Executive Officer of the Company, and/or his wife. As of January 31, 2022, the Company has accounts receivable from
this related party in the amount of approximately $
245
.
During
the three months ended January 31, 2021, the Company recognized revenue of approximately $
50,300
from three companies owned by Nirajkumar
Patel, the Chief Executive Officer of the Company, and/or his wife.
Concentration
Purchases and Accounts Payable
During
the three months ended January 31, 2022, the Company did not purchase Products from Bidi, a related party company that is also owned
by Nirajkumar Patel, the Company's Chief Executive Officer. As of January 31, 2022, the Company had accounts payable to Bidi of
approximately $
9,129,759
and Products valued at approximately $
11,841,750
were held in inventory.
During
the three months ended January 31, 2021, the Company purchased Products of approximately $
32,479,100
from Bidi, a related party company.
As of January 31, 2021, the Company had accounts payable to Bidi of approximately $
6,247,882
. During the three months ended January 31,
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. During fiscal year 2021,
the Company was not charged for the leased space under the terms and conditions of the lease between the Company and Just Pick and was
not charged for the separate warehouse space provided by Just Pick; thus, no payments were made on the lease. During the three months
ended January 31, 2022, no payments were made on the lease because the Company continued to not be charged under the five-year lease
agreement for this office and storage space.
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 January 31, 2022 and January 31, 2021 other than the below:
Patent
Contribution Agreement
On
May 4, 2021, Next Generation Labs, LLC ("Next Generation") notified the Company that a "reversion event" had
occurred under that certain Patent Contribution Agreement, dated September 28, 2020 (the "Patent Contribution Agreement").
Pursuant to the Patent Contribution Agreement, Next Generation agreed to contribute certain patents, patent applications, and patent
data, described on Exhibit "A" of the Patent Contribution Agreement (the "Patents"), and to the Company and the
Company would subsequently transfer the Patents to Kaival Labs.
Pursuant
to the Patent Contribution Agreement, the Company agreed to pay Next Generation a purchase price of $3 million for the Patents (the "Purchase
Price"), which was expected to be paid over-time upon two events. First, the Company expected to pay part of the Purchase Price
from proceeds generated from a future securities offering (the "Offering Payment"). Additionally, on the first date that
Kaival Labs sold a product that was developed using any portion of the Patents or based on the Patents, the Company agreed to pay Next
Generation the difference between the Purchase Price and the Offering Payment.
Pursuant
to the terms of the Patent Contribution Agreement, the parties agreed that the Company would file a Form 1-A offering statement no later
than January 31, 2021, unless extended in writing by the Company in good faith to no later than March 15, 2021 (the "Filing Date").
The Patent Contribution Agreement further provided that in the event the Company or Kaival Labs materially breached the terms of the
Patent Contribution Agreement and the material breach is not cured within fifteen (15) business days after Next Generation provides written
notice of such material breach, then a reversion event would occur, and the Patents would revert from Kaival Labs to Next Generation.
The
Company did not undertake a securities offering by filing a Form 1-A offering statement by the Filing Date. The Company attempted to
negotiate an amendment to the Patent Contribution Agreement, which would allow the Company additional time to undertake a securities
offering. However, on April 8, 2021, Next Generation notified the Company that it was in material breach of the Patent Contribution Agreement
and that the Company would have fifteen (15) business days, or April 30, 2021, to cure such breach. Ultimately, the Company decided not
to cure such breach within the requisite time and, on May 4, 2021, Next Generation notified the Company that a reversion event occurred.
F-
12
The
Company has completed the process of completing the necessary documentation to transfer the Patents from Kaival Labs to Next Generation.
Neither the Company, nor Kaival Labs, has developed or otherwise relied on the Patents to date and does not expect the reversion of the
Patents to materially affect the Company's business.
Cash
and Equity Bonus Awards
On
May 28, 2020, the Board approved cash bonus awards to each of the Company's Chief Executive Officer and its Chief Operating Officer.
With respect to the Chief Executive Officer, the Board approved a
cash bonus award equal to $30,000 for every $25 million in gross revenues
generated by the Company. With respect to the Chief Operating Officer, the Board approved a cash bonus award equal to $20,000 for every
$25 million in gross revenues generated by the Company. On May 28, 2020, the Board also approved an equity bonus award for each of the
Chief Executive Officer and the Chief Operating Officer. With respect to the Chief Executive Officer, the Board approved an award of
7,500 restricted shares of the Common Stock for every $50 million in accumulated gross revenues generated by the Company. With respect
to the Chief Operating Officer, the Board approved an award of 6,250 restricted shares of the Common Stock for every $50 million in accumulated
gross revenues generated by the Company. The Company's accumulated gross revenues will be evaluated on a quarterly basis, beginning
with the second quarter of fiscal year 2020. At October 31, 2020, the Company determined that the fair value of the equity bonus shares,
or $165,000, should be accrued as it was deemed likely that the $50 million revenue target would be met. The Company issued these shares
to the Chief Executive Officer and Chief Operating Office on January 1, 2021. During the quarter ended January 31, 2021, the $75 million
and $100 million accumulated revenue targets were both achieved and the Company determined that the fair market value of the 13,750 shares,
or approximately $70,785, and the cash bonuses totaling $100,000 should be accrued at January 31, 2021.
During
the quarter ended January 31, 2022, the $
125
million accumulated revenue targets were achieved and the Company determined that cash bonuses
totaling $
50,000
should be accrued at January 31, 2022.
Service
Agreement
On
March 31, 2020, the Company entered into a service agreement (the "Service Agreement") with QuikfillRx LLC, a Florida limited
liability company ("QuikfillRx"), whereby QuikfillRx provides the Company with certain services and support relating to sales
management, website development and design, graphics, content, public communication, social media, management and analytics, and market
and other research (collectively, the "Services"). The Services are provided by QuikfillRx as requested from time to time
by the Company.
On June 2, 2020, the Company entered into the First
Amendment to the Service Agreement (the "First Amendment" and, collectively with the Service Agreement, the "Amended
Service Agreement") with QuikfillRx. Effective as of March 16, 2021, the Company entered into the Second Amendment to Service Agreement
(the "Second Amendment" and, collectively with the Amended Service Agreement, the "Further Amended Service Agreement")
with QuikfillRx. Pursuant to the terms of the Further Amended Service Agreement, the parties agreed to the following "General Compensation"
payments: (i) for the Services provided in
March 2020,
the Company paid QuikfillRx an amount
equal to $86,000; (ii) for the Services provided in April 2020, the Company paid QuikfillRx an amount equal to $100,000; (iii) each calendar
month commencing May 2020 through October 2020, the Company paid QuikfillRx an amount equal to $125,000 per month for the Services to
be performed during such calendar month; (iv) for each calendar month between November 1, 2020 and October 31, 2021, the Company paid
QuikfillRx $125,000 per month for the Services to be performed during such calendar month; (iv) if the parties agree to extend the term
of the Further Amended Service Agreement beyond October 31, 2021, then for the period between November 1, 2021 and October 31, 2022, the
Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month; and (v) if the parties agree
to extend the term of the Further Amended Service Agreement beyond October 31, 2022, then for the period between November 1, 2022 and
October 31, 2021, the Company will pay QuikfillRx $150,000 per month for the Services to be performed during such calendar month.
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 which granted stock options to purchase 41,667 shares of the Company's common stock in exchange for
consulting services. The shares underlying the stock option fully vested on December 1, 2021. The exercise price per share is
$28.68. The Company recognized approximately $190,000 in expense to account for the stock options. Russell Quick is the Chief
Executive Officer of QuikfillRx. The Company accrued approximately $
34,524
for
a quarterly bonus payable to QuikfillRx, based on the Applicable Gross Quarterly Sales results of the three months ended January 31,
2022.
Note
8 –
Subsequent Events
Share-based
Compensation
On
February 4, 2022, the Company entered into a Consulting Agreement with Oakhill Europe Ltd ("Oakhill Europe"), pursuant to
which the
Company engaged Oakhill Europe to provide strategic advising and negotiation assistance for potential international distribution
agreements (collectively, the "Oakhill Services"), in exchange for a $15,000 monthly retainer, incentive compensation bonuses
of up to $175,000, and an incentive compensation bonus value of $75,000 paid in fully-vested non-qualified stock options, upon the achievement
of certain events.
F-
13
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. 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.
On
February 27, 2022, the Company's Compensation Committee (the "Committee") and the Board approved the grant of a stock
option award to Mark Thoenes, Interim Chief Financial Officer, to acquire up to
100,000
shares of Common Stock under the Company's
2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price of $
2.45
per share, which equaled the closing
price of the Common Stock as of the date immediately prior to the grant date. At the grant date,
50,000
option shares became immediately
vested, with the remaining
50,000
option shares vesting on the one-year anniversary of the grant date. The option has a ten-year term.
On
February 27, 2022, the Committee and the Board approved the grant of a stock option award to Russell Quick, as an independent consultant
providing strategic advising and negotiation assistance for potential international distribution agreements, to acquire up to 100,000
shares of Common Stock under the Company's 2020 Stock and Incentive Compensation Plan. The option shares are exercisable at a price
of $2.45 per share, which equaled the closing price of the Common Stock as of the date immediately prior to the grant date. At the grant
date, 50,000 option shares became immediately vested, with the remaining 50,000 option shares vesting on the one-year anniversary of
the grant date. The option has a ten-year term.
On
March 5, 2022, the Committee and the Board approved the grant of a stock option award to Nirajkumar Patel, Chief Executive Officer, to
acquire up to
600,000
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. At the grant date,
300,000
option shares became immediately vested, with the remaining
300,000
option shares vesting
on the one-year anniversary of the grant date. The option has a ten-year term.
Previously,
the Company granted Mr. Patel
250,000
RSUs , which vest over a three-year period (the "Patel Time Vesting RSUs"), and
500,000
RSUs
that vest only upon a change of control of the Company or if the Company achieves in excess of $1 billion in accumulated total gross
revenues (the "Patel Event Vesting RSUs"). On March 5, 2022, the Company and Mr. Patel agreed to terminate the (i)
120,833
unvested Patel Time Vesting RSUs and (ii)
500,000
unvested Patel Event Vesting RSUs.
On
March 5, 2022, the Committee and the Board approved the grant of stock option awards to Eric Mosser, Chief Operating Officer, to acquire
up to
500,000
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.
At the grant date,
250,000
option shares became immediately vested, with the remaining
250,000
option shares vesting on the one-year
anniversary of the grant date. The option has a ten-year term.
Similarly,
the Company previously granted Mr. Mosser
250,000
RSUs, which vest over a three-year period (the "Mosser Time Vesting RSUs"),
and
333,334
RSUs that vest only upon a change of control of the Company or if the Company achieves in excess of $1 billion in accumulated
total gross revenues (the "Mosser Event Vesting RSUs"). On March 5, 2022, the Company and Mr. Mosser agreed to terminate
the (i)
120,833
unvested Mosser Time Vesting RSUs and (ii)
333,334
unvested Mosser Event Vesting RSUs.
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. At the grant
date,
142,800
option shares became immediately vested, with the remaining
142,800
option shares vesting on the one-year anniversary of
the grant date. The options have a ten-year term.
Previously,
we granted these 5 employees
317,499
RSUs, which vest over a three-year period (the "Employee Vesting RSUs"), and
317,499
RSUs that vest only upon a change of control of the Company or if the Company achieves in excess of $1 billion in accumulated total gross
revenues (the "Employee Event Vesting RSUs"). On March 5, 2022, the Company and the 5 employees each agreed to terminate
the (i)
135,001
unvested Employee Time Vesting RSUs and (ii)
317,499
unvested Employee Event Vesting RSUs.
On
March 9, 2022, the Committee approved an annual base salary equal to $
300,000
for Mr. Patel and $
240,000
for Mr. Mosser. The annual base
salaries will be reviewed by the Committee on an annual basis.
Further,
the Board previously approved a cash bonus award to
(i) Mr. Patel equal to $30,000 for every $25 million in gross revenues generated
by us (the "Patel Cash Bonus Award")
and
(ii) Mr. Mosser equal to $20,000 for every $25 million in gross revenues generated
by us (the "Mosser Cash Bonus Award" and, together with the Patel Cash Bonus Award, the "Cash Bonus Awards").
On March 9, 2022, the Committee terminated the Cash Bonus Awards.
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.
Warrants
Shares Exercised
Between
February 14, 2022 and March 1, 2022,
800,355
shares of Common Stock were issued upon the exercise of warrants, and the Company received
approximately $
1,520,693
in proceeds.
F-
14
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 months ended January 31, 2022 included under Item
1 – Financial Statements in this Quarterly Report and our audited Financial Statements and notes thereto for the ye
ar
ended October 31, 2021 contained in 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 September 10, 2021, the FDA announced that it has taken action on over 93% of applications and issued MDOs for more than 1,167,000
flavored ENDS products, while issuing zero marketing authorizations.
Bidi,
along with nearly every other company in the ENDS industry, received a MDO for its non-tobacco flavored ENDS products. With respect to
Bidi, the MDO covered all non-tobacco flavored BIDI® Sticks, including its Arctic (menthol) BIDI® Stick, which Bidi believes
the FDA mischaracterized as "flavored." BIDI believes that because its Arctic BIDI® Stick is menthol, it should not be
subject to the MDO. Bidi and the Company believe this position is aligned with the FDA's public statements and press releases stating
that tobacco and menthol ENDS are not deemed flavored products subject to the MDOs.
As
a result, beginning in September 2021, Bidi pursued three avenues to challenge the MDO. First, on September 21, 2021, separate from the
judicial appeal of the MDO in its entirety, Bidi filed a 21 C.F.R. § 10.75 internal FDA review request specifically of the decision
to include the Arctic (menthol) BIDI® Stick in the MDO. The Company anticipates a decision from the FDA on the internal review in
the second or third quarter of 2022, although we cannot provide any assurances as to the timing or outcome.
Separately,
on September 29, 2021, Bidi petitioned the U.S. Court of Appeals for the Eleventh Circuit to review the FDA's denial of the PMTAs
for its non-tobacco flavored BIDI® Stick ENDS, arguing that it was arbitrary and capricious under the 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 Tobacco Control
Act, 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 February 1, 2022, 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, or 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
are currently scheduled for May 2022.
Finally,
on October 14, 2021, Bidi requested that the FDA re-review the MDO and reconsider its position that Bidi did not include certain scientific
data in its applications sufficient to allow the PMTAs to proceed to scientific review. In light of this request, on October 22, 2021
pursuant to 21 C.F.R. § 10.35(a), the FDA issued an administrative stay of Bidi's MDO pending its re-review. Subsequently,
the FDA lifted its administrative stay on December 17, 2021. Following the lifting of the FDA's administrative stay, Bidi filed
a renewed motion to stay the MDO with the U.S. Court of Appeals for the Eleventh Circuit, which was granted on February 1, 2022.
In
the event that the U.S. Court of Appeals issues for the Eleventh Circuit a ruling adverse to Bidi, or if the FDA otherwise chooses to
enforce against Bidi, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI® Stick products in the United
States, thereby resulting in the Company being unable to distribute such products, the Company's business and financial condition
would be materially adversely affected. The Company cannot provide any assurances as to the timing or outcome of the merits-based case.
Future
Strategic Opportunities
In
addition to the continued domestic opportunity, we believe that international markets provide an exciting growth opportunity for us.
The estimated total addressable global market for ENDS products is approximately $36.7 billion. Bidi has received approval to market
and distribute products within 11 international markets, including the United Kingdom, France, Russia, and the Czech Republic. Bidi has
also secured significant intellectual property protections similar to those received in the United States from the European Union, China,
and several other regions and countries. It is also important to note that the nicotine formulation in the Bidi
®
Stick
has been modified and approved at the 2% level to meet the criteria for distribution in the United Kingdom and Europe.
1
These
international market approvals Bidi has previously secured are for the full formulation lineup, including all flavors. Because the FDA's
PMTA restrictions and guidelines do not pertain to international markets, Bidi intends to continue manufacturing its full product lineup,
for distribution by us in these international markets. Accordingly, in light of the pending MDO appeal and uncertainty regarding the
FDA's review of the PMTA, as well as the ongoing threat of the FDA enforcement, Bidi intends to expedite the planned product launches
into foreign markets starting with the United Kingdom. We are also actively exploring potential partnerships with international distribution
companies in order to possibly expand Product distribution more rapidly in these international markets.
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.
Description
of Business
We
are focused on growing and incubating innovative and profitable products into mature, dominant brands. Pursuant to the A&R 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
A&R 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 and, once launched, of which there can be
no assurances, the "BIDI
®
Pouch," which provides a tobacco-derived nicotine formulation, containing natural
fibers and a chew-base filler.
In
connection with the A&R 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, 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 A&R 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, or whose PMTAs have been refused acceptance or filing by the FDA, or whose PMTAs
remain subject to MDOs. All of our flavor options will continue to be available to the 11 European Markets we have received marketing
and distribution approvals. 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 anticipated launching distribution of the "BIDI
®
Pouch," initially
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 is now being placed on temporary hold domestically due
to the likelihood of the FDA enforcement of synthetic nicotine products as drugs, which will require a PMTA determination from the FDA.
More specifically, while the BIDI
®
Pouch, which made with synthetic (tobacco-free) nicotine, would not fall within the
meaning of a tobacco product as set forth in the Food, Drug and Cosmetic Act ("FDCA"), the FDA could take the position that
such product is a drug. A drug is defined in Section 201(g) of the FDCA, in pertinent part, as "articles intended for use in the
diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals" (i.e., the "disease" or "therapeutic
benefit" prong) or "articles (other than food) intended to affect the structure or function of the body of man or other animals"
(i.e., the "structure/function" prong). Given nicotine's well-known structure/function effect on the body there is
a chance the FDA will take the position that synthetic nicotine products, such as the BIDI
®
Pouch, are subject to the
FDA's drug authority and can only be marketed with an approved New Drug Application (even if no disease or therapeutic benefit
claims are made). Indeed, prior to the enactment of the Tobacco Control Act (the "Tobacco Control Act"), the FDA historically
took the position that any product with added nicotine (other than traditional tobacco products) was a drug, even when marketed for recreational
use and without specific claims of smoking cessation or other therapeutic benefit. It is, of course, illegal to distribute a drug without
the FDA's approval. Given these concerns, 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.
2
On
July 14, 2021, we announced plans to launch our first Kaival-branded product, a Hemp CBD product. In addition to our Kaival-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.
Going
Concern
A
recent court ruling on behalf of Bidi in the Eleventh Circuit Court of Appeals, granted a judicial stay of the MDO previously issued
by the FDA to Bidi in September 2021. The ruling, which was issued on February 1, 2022, 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. FDA has indicated that it is prioritizing enforcement against companies
that have either not submitted PMTAs, or whose PMTAs have been refused acceptance or filing by FDA, or whose PMTAs remain subject to
MDOs. Oral arguments in the merits case are currently scheduled in May 2022.
If
the Eleventh Circuit Court of Appeals agrees with Bidi in the merits case, we anticipate that the FDA will be compelled to place the
flavored ENDS back into the PMTA scientific review process. If this is the outcome of the merits case, 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 flavored ENDS and the FDA issues its decision on each.
If
the Eleventh Circuit Court of appeals disagrees with Bidi on the merits case, or if the FDA re-issues the MDO after completing its scientific
review process for each of Bidi's PMTAs for its flavored ENDS, or if The DA otherwise chooses to enforce against Bidi, we will
be forced to cease sales on the flavored BIDI® Sticks in the United States market, leaving only the Tobacco (Classic) and Menthol
(Arctic) BIDI® Sticks products for sale in the United States (which, with respect to the Menthol (Arctic) BIDI® Stick, depends
on the outcome of the specific PMTA filings and the administrative review request for the classification of "Arctic" as a
standard menthol ENDS). If this is the outcome of the merits case, this combined with a negative cash flow from operations, would 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. 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 March 17, 2022. However, we are awaiting the outcome of Bidi's merit-based case pending
in the Eleventh Circuit Court of Appeals 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 January 31, 2022 that will result in or that are reasonably likely to materially increase or decrease
our current requirements for cash and resulting improved liquidity.
At
January 31, 2022, we had working capital of approximately $13.9 million and total cash of approximately $5.7 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 $(2.1) million for the first three months of fiscal year 2022, compared to $(5.4) million used
in operations for the first three months of fiscal year 2021. The decrease in cash flow used in operations for the first three months
of fiscal year 2022 compared to the first three months of fiscal 2021 was primarily due to the use of cash resulting from a very significant
increase in accounts receivable of approximately ($11.3) million as the result of very significant sales that occurred during the first
three months of fiscal year 2021, offset to a lesser degree by the growth of accounts payable – related party of approximately
$4.8 million and stock based compensation of approximately $1.1 million.
Cash
flow used in financing activities was approximately $35,759 for the first three months of fiscal year 2022, compared to approximately
$30,511 for the first three months of fiscal year 2021. The cash used in financing activities for the first three months of fiscal year
of 2022 and fiscal year 2021 consisted of cash used for the settlement of RSUs issued to employees.
3
Results
of Operations
Three
months ended January 31, 2022, compared to three months ended January 31, 2021
Revenues:
Revenues,
net for the first quarter of fiscal year 2022 were approximately $2.8 million, compared to approximately $37.4 million in the same period
of the prior fiscal year. Revenues decreased in the first quarter of fiscal year 2022, generally due to (i) Bidi's receipt
of the MDO, which limited our ability during the first quarter of fiscal year 2022 to sell flavored BIDI
®
Sticks in the
United States and (ii) increased competition, which we believe was the result of the lack of enforcement by federal and state authorities
against sub-par and low-priced vaping products that continued to enter the market illegally without FDA authorization. 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 revenues to continue to resume an upward trajectory 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, net and Gross Profit (Loss):
Gross
loss in the first quarter of fiscal year 2022 was approximately ($700,000), or approximately (24.3%), of revenues, net, compared to approximately
$4.8 million gross profit, or approximately11.2%, of revenues, net, for the first quarter of fiscal year 2021. Total cost of revenue,
net was approximately $3.5 million, or approximately 124.3%, of revenue, net for the first quarter of fiscal year 2022, compared to approximately
$32.6 million, or approximately 87.2%, of revenue, net for the first 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 $854,000, resulting in an offset to revenue, net, during the first quarter of fiscal year 2022.
Operating
Expenses:
Total
operating expenses were approximately $2.1 million for the first quarter of fiscal year 2022, compared to approximately $4.4 million
for the first quarter of fiscal year 2021. For the first quarter of fiscal year 2022, operating expenses consisted primarily of advertising
and promotion fees of approximately $593,000, professional fees totaling approximately $481,000 and general and administrative expenses
of approximately $1.0 million. General and administrative expenses in the first quarter of fiscal year 2022 consisted primarily of salaries
and wages, stock option expense, insurance, lease expense, banking fees, business fees and state and franchise taxes. For the first quarter
of fiscal year 2021, operating expenses consisted primarily of advertising and promotion fees of approximately $958,000, professional
fees totaling approximately $2.5 million and, general and administrative expenses of approximately $942,000. General and administrative
expenses in the first 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 continue to increase while we increase the footprint of our business and
generate increased sales growth.
Income
Taxes:
During
the first quarter of fiscal year 2022, we did not accrue for income taxes, due to the pre-tax loss of approximately ($2.8) million, compared
to a tax provision of approximately $106,000 for the first quarter of fiscal year 2021, due to the amount of pre-tax income for that
three-month period. The reduction from the first quarter of fiscal year 2021 was due to the pre-tax operating loss recognized during
the first quarter of fiscal year 2022.
Net
Income (Loss):
As
a result of the items noted above, the net loss for the first quarter of fiscal year 2022 was approximately ($2.8) million, or ($0.09)
basic and diluted loss per share, compared to net income of approximately $0.3 million, or $0.01 basic and diluted earnings per share,
for the first quarter of fiscal year 2021. The decrease in net income for the first quarter of fiscal year 2022, as compared to the first
quarter of fiscal year 2021, is primarily attributable to the decreased revenues and increase in customer credits/discounts/rebates,
as noted above.
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 January 31, 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.
Recently
Adopted Accounting Pronouncements
See
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 for a description of recent accounting pronouncements and accounting changes.
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.
4
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 January 31, 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 there months ended January 31, 2022 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
5
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
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
2. Unregistered Sales of Equity Securities and Use of Proceeds
Share-based
Compensation
During
the three months ended January 31, 2022, we issued the following securities as compensation to certain of our employees and consultants:
On
November 5, 2021, the Company issued 61,250 shares of Common Stock to 7 employees in accordance with the vesting schedules set forth
in RSU agreements previously entered into with such employees, resulting in the recognition of approximately $110,250 of share-based
compensation. Of the shares issued to employees, 19,866 shares were withheld by the Company to satisfy tax withholding obligations and/or
satisfy cash settlement options to employees, equaling approximately $35,759. As of January 31, 2022, there remained 437,917 unvested
RSUs with approximately $900,769 of related unvested compensation.
Following
the end of the three months ended January 31, 2022, we issued the following securities as compensation:
On
February 4, 2022, the Company entered into a Consulting Agreement with Oakhill Europe Ltd ("Oakhill Europe"), pursuant to
which the Company engaged Oakhill Europe to provide strategic advising and negotiation assistance for potential international distribution
agreements (collectively, the "Oakhill Services"), in exchange for a 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 Fiscal Year 2021 10K report.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Mine Safety Disclosures
None.
Item
5. Other Information
None.
6
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.
7
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.
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)(2) 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
8
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: March 17, 2022
By:
/s/
Nirajkumar Patel
Nirajkumar Patel
President and Chief Executive
Officer
Date: March
    17, 2022
By:
/s/
    Mark Thoenes
Mark Thoenes
Interim Chief Financial
    Officer
9