What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-02-12 compared with 2020-01-27 · 413 added, 161 removed, 51 unchanged (92% of the section changed)

10 unchanged sentences

with and into USSE Delaware, Inc., a Delaware corporation (“USSE

Delaware”

or “Predecessor”), with USSE Delaware as the surviving entity (the “Re-domestication Merger”).

Each share of USSE Corp.’s capital stock issued and outstanding immediately prior to the effective date of the Re-domestication

Merger was automatically converted into one fully paid and nonassessable share of USSE Delaware.

Delaware”), with USSE Delaware as the surviving entity (the “Re-domestication Merger”).

Each share of USSE Corp.’s

capital stock issued and outstanding immediately prior to the effective date of the Re-domestication Merger was automatically converted

into one fully paid and nonassessable share of USSE Delaware.

Immediately following the Re-domestication

9 unchanged sentences

On September 4, 2018, USSE Delaware acquired

1,000 shares of common stock of the Company, which represented 100% of the Company’s then-outstanding shares of common stock,

for no consideration, resulting in the Company becoming a wholly-owned subsidiary of USSE Delaware.

Also, immediately prior to

the Holding Company Reorganization (as defined below), USSE Merger Sub, Inc., a Delaware corporation (“USSE Merger Sub”),

was our wholly-owned subsidiary.

Effective on September 19, 2018 (the “Effective

1,000 shares of our common stock, which represented 100% of our then-outstanding shares of common stock, for no consideration,

resulting in us becoming a wholly-owned subsidiary of USSE Delaware.

Also, immediately prior to the Holding Company Reorganization

(as defined below), USSE Merger Sub, Inc., a Delaware corporation (“USSE Merger Sub”), was our wholly-owned subsidiary.

On September 19, 2018 (the “Effective

Time”), and in accordance with the provisions set forth in Section 251(g) of the Delaware General Corporation Law (“DGCL”),

USSE Merger Sub, an indirect wholly-owned subsidiary of USSE Delaware and the Company’s direct wholly-owned subsidiary, merged

with an into USSE Delaware, our then parent (the “Holding Company Reorganization”).

USSE Delaware was the surviving

corporation and our wholly-owned subsidiary.

USSE Merger Sub, an indirect wholly-owned subsidiary of USSE Delaware and our direct wholly-owned subsidiary, merged with and into

USSE Delaware, our then parent (the “Holding Company Reorganization”).

USSE Delaware was the surviving corporation

and our wholly-owned subsidiary.

USSE Delaware also changed its name to USSE Corp.

3 unchanged sentences

issued and outstanding immediately prior to the Effective Time of the Holding Company Reorganization was automatically converted

into one validly issued, fully paid, and non-assessable share of the Company’s common stock.

Additionally, each share

of USSE Delaware’s preferred stock issued and outstanding immediately prior to the Effective Time was converted into one

validly issued, fully paid, and non-assessable share of the Company’s preferred stock, having the same designations, rights,

powers, and preferences, and the qualifications, limitation, and restrictions thereof, as the corresponding share of USSE Delaware’s

preferred stock.

Each share of the Company’s common stock issued and outstanding and held by USSE Delaware immediately

prior to the Effective Time was cancelled.

This resulted in the Company being authorized

to issue up to 1,005,000,000 shares, which consisted of:

(i) 1,000,000,000 shares of common stock, par value $0.001 per share of

which 66,397,574 shares were issued and outstanding;

(ii) 5,000,000 shares of preferred stock, par value $0.001 per share, of which

(a) 1,000,000 shares were designated as Convertible Series A, all of which were issued and outstanding;

and (b) 500,000 shares

were designated as Convertible Series B, of which 71,700 shares of Convertible Series B preferred stock were issued and outstanding.

into one validly issued, fully paid, and non-assessable share of our common stock.

Additionally, each share of USSE Delaware’s

preferred stock issued and outstanding immediately prior to the Effective Time was converted into one validly issued, fully paid,

and non-assessable share of our preferred stock, having the same designations, rights, powers, and preferences, and the qualifications,

limitation, and restrictions thereof, as the corresponding share of USSE Delaware’s preferred stock.

Each share of our

common stock issued and outstanding and held by USSE Delaware immediately prior to the Effective Time was cancelled.

This resulted in us being authorized to issue

up to 1,005,000,000 shares, which consisted of:

(i) 1,000,000,000 shares of common stock, par value $0.001 per share of which 66,397,574

shares were issued and outstanding;

(ii) 5,000,000 shares of preferred stock, par value $0.001 per share, of which (a) 1,000,000

shares were designated as Convertible Series A, all of which were issued and outstanding;

and (b) 500,000 shares were designated

as Convertible Series B, of which 71,700 shares of Convertible Series B preferred stock were issued and outstanding.

Post-Holding Company Reorganization

On October 19, 2018, the Company issued 500,000,000

On October 19, 2018, we issued 500,000,000

shares of restricted common stock and 400,000 shares of Convertible Series B preferred stock to GMRZ Holdings LLC, a Nevada limited

liability company (“GMRZ”), for services rendered to the Company.

liability company (“GMRZ”), for services rendered to us.

Commensurate with the filing of our Amended

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22, 2018, the Convertible Series A and Series B preferred stock were removed from the status of authorized but unissued preferred

On February 6, 2019, the Company entered into

a non-binding Share Purchase Agreement (the “Agreement”) by and among the Company, GMRZ, and Kaival Holdings, LLC (formerly

known as Kaival Brands Innovations Group, LLC), a Delaware limited liability company (“KH”), pursuant to which, on

February 20, 2019, GMRZ sold 504,000,000 shares of the Company’s restricted common stock, representing approximately 88.06

percent of the Company’s issued and outstanding shares of common stock, to KH, and KH paid GMRZ consideration in the amount

set forth in the Agreement (the “Purchase Price”).

The consummation of the transactions contemplated by the Agreement

resulted in a change in control of the Company, with KH becoming the Company’s largest controlling stockholder.

members of KH are Nirajkumar Patel and Eric Mosser.

The Purchase Price was paid with personal funds of the members of KH.

On February 6, 2019, we entered into a non-binding

Share Purchase Agreement (the “Agreement”) by and among GMRZ, Kaival Holdings, LLC (formerly known as Kaival Brands

Innovations Group, LLC), a Delaware limited liability company (“KH”), and us, pursuant to which, on February 20, 2019,

GMRZ sold 504,000,000 shares of the Company’s 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 Agreement (the “Purchase

Price”).

The consummation of the transactions contemplated by the Agreement resulted in a change in control of us, with KH

becoming our largest controlling stockholder.

The sole voting members of KH are Nirajkumar Patel and Eric Mosser.

Price was paid with personal funds of the members of KH.

Effective July 12, 2019, we changed our corporate

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We were the surviving entity.

To effectuate the merger, we filed Certificate of Ownership

and Merger with the Secretary of State of the State of Delaware on June 20, 2019 and a Certificate of Correction with the Secretary

of State of the State of Delaware on July 15, 2019.

The merger became effective at 5:00 PM Eastern Time on July 12, 2019 with

the State of Delaware and, for purposes of the quotation of our common stock on the OTC Markets Group, Inc.’s Pink®

Open Market (the “OTC Pink”), effective at the open of the market on July 15, 2019.

Our board of directors approved

the merger, which resulted in the name change on that date.

In accordance with Section 253 of the Delaware General Corporation

Law, stockholder approval of the merger was not required.

Business Summary

Since inception, we have been engaged in limited

organizational efforts;

however, we intend to commence business operations in the near term.

Currently, we are exploring and evaluating

various business opportunities, which may include entering into distribution or other contractual arrangements, or acquiring the

assets of an existing company.

We anticipate exploring potential business opportunities within the electronic cigarettes and vaporizers

and CBD industries as a result of our management’s prior and current business experience within such industries.

date of this Report, the Company has not entered into any definitive agreements with any party;

however, we have engaged in discussions

with various parties regarding potential business opportunities.

Our principal business objective for the next 12 months and beyond

such time will be to achieve long-term growth potential through a combination with a business or commencement of business operations,

rather than immediate, short-term earnings.

In the event that management is unable to otherwise

commence business operations, and determines that it is necessary to engage in one or more business combinations, we may consider

a business that has recently commenced operations, including an entity without an established record of sales or earnings, is in

need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established

business that may be experiencing financial or operating difficulties and is in need of additional capital.

Our management believes

that the public company status that results from a combination with us could provide such company greater access to the capital

markets, increase its visibility in the investment community, and offer the opportunity to utilize our stock to make acquisitions.

However, there is no assurance that we will have greater access to capital due to our public company status and, therefore, a business

combination with an operating company in need of additional capital may expose us to additional risks and challenges, including

risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies.

addition, we may commence business operations or combine with an entity in an industry characterized by a high level of risk and,

although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance

that we will properly ascertain or assess all significant risks.

In the alternative, a business combination

may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires

to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense,

and loss of voting control that may occur in a public offering.

We do not anticipate paying a finder’s fee, either in cash

or through the issuance of securities, for the consummation of any business acquisition.

We intend to search for business opportunities

by contacting various sources including, but not limited to, our affiliates, lenders, investment banking firms, private equity

funds, financial advisors and similar persons, accounting firms, and attorneys notwithstanding us contacting any business directly.

The approximate number of persons or entities that will be contacted is unknown and dependent on whether any opportunities are

presented by the sources that we contact.

However, there is no assurance that we will identify any viable business opportunities.

The risks we may face if we are unable to commence

business operations, if such business operations are unsuccessful, if we are unable to acquire or merger with another entity, or

if such acquisition or merger is unsuccessful, include, but are not limited to, difficulty in achieving future financing, continuing

operations, bankruptcy, litigation, and increasing business operations on a limited or no budget.

We do not currently engage in any business

activities that provide cash flow.

The costs of investigating and analyzing business combinations and opportunities for the next

12 months and beyond such time will be paid with money in our treasury, if any, or with additional amounts, as necessary, to be

loaned to or invested in us by our stockholders, management, or other investors.

At this time, we are entirely reliant upon cash

contributions made by our officers and directors to pay for any and all expenses.

During the next 12 months we anticipate incurring

costs related to the filing of Exchange Act reports (legal, accounting, and auditing fees) in the amount of approximately $25,000,

We believe we will be able to meet the costs of filing Exchange Act reports during the next 12 months through use of funds

to be loaned to or invested in us by Mr.

Nirajkumar Patel and Mr.

Eric Mosser, our officers and directors, or other stockholders

or investors;

however, to date, we have had no discussions with these parties regarding funding and no funding commitment for future

expenses has been obtained.

If in the future we need funds to pay expenses, we will consider these and other yet to be identified

options for raising funds and/or paying expenses.

However, there is no guarantee that such additional funds will be made available

to us or on terms that are favorable to us.

Obviously, if our officers and directors, or other stockholders or investors do not

loan or invest sufficient funds, then we will not be able to meet our reporting obligations.

If we pursue any mergers or acquisitions, we

anticipate incurring expenses of approximately between $10,000 and $20,000, or more, to pay for legal fees and audit fees.

enter into a business combination with a target entity, we will attempt to require the target company to pay the acquisition related

fees and expenses as a condition precedent to such an agreement.

Share Cancellation and Exchange Agreement

On August 19, 2020, we entered into a Share

Cancellation and Exchange Agreement (the “Share Cancellation and Exchange Agreement”) with our controlling stockholder,

Pursuant to the Share Cancellation and Exchange

Agreement, KH returned to us 300,000,000 shares of our common stock (the “Cancellation Shares”), which Cancellation

Shares were cancelled and retired by us.

Following such cancellation, KH owns 204,000,000 shares of our common stock.

August 19, 2020, we filed a Certificate of Designation of Preferences, Rights, and Limitations of the Series A Preferred

Stock (the “Series A Certificate of Designation”) with the Secretary of State of the State of Delaware, which

authorized a total of 3,000,000 shares, par value $0.01 per share, of Series A Preferred Stock (the “Series A Preferred

Stock ”).

series of preferred stock, whether now or hereafter designated, may by their respective terms have a preference over the

Series A Preferred Stock in respect of distribution upon liquidation, dividends, or any other right or matter.

The number of

shares so designated is three million (3,000,000) shares, par value $0.001 per share, and such amount cannot be

increased except by the favorable vote or the written consent of the holders of at least a majority of the issued and

outstanding shares of Series A Preferred Stock or by a resolution of our Board of Directors (our “Board”).

number of shares of Series A Preferred Stock may be decreased by the written consent of the holders of at least a majority of

the issued and outstanding shares of Series A Preferred Stock or by a resolution of our

provided, however, that no decrease will reduce the number of shares of Series A Preferred Stock to a

number less than the number of the shares then outstanding plus the number of shares issuable upon exercise of outstanding

rights, options, or warrants or upon conversion of outstanding securities issued by us.

The holders of the Series A Preferred

Stock do not have any preferential dividend rights and will be entitled to receive dividends, if any, only if,

when, and as declared by our Board in its sole and absolute discretion.

The holders of the Series A Preferred Stock have no

voting rights.

At any time on or after November 1, 2023, each share of Series A Preferred Stock is convertible, at the option

of the holder thereof.

Notwithstanding the foregoing, the holders of Series A Preferred Stock will be entitled to convert

their shares of Series A Preferred Stock prior to November 1, 2023 if any of the following events occur:

(i) a Change of

Control (as defined in the Certificate of Designation) or (ii) any other event as determined and agreed to by us and by

the holders holding a majority of the issued and outstanding shares of Series A Preferred Stock.

Each share of the Series A

Preferred Stock is convertible into one hundred shares of common stock, par value $0.001 per share.

In exchange for the Cancellation Shares, we

issued 3,000,000 shares (the “Preferred Shares”) of our newly designated Series A Preferred Stock to KH.

of the Cancellation Shares and the issuance of the Preferred Shares was intended to comply with Section 3(a)(9) of the Securities

Act , in that the issuance was exempt from the registration requirements of the Act because the exchange of the Cancellation Shares

for the Preferred Shares was an exchange between us, as issuer, with an existing stockholder, and no commission or other remuneration

was paid or given directly for the exchange.

On August 31, 2020, we formed Kaival Labs,

Inc., a Delaware corporation (“Kaival Labs”), as our wholly owned subsidiary.

Business Information

Description of Business

We are focused on growing and incubating innovative

and profitable products into mature, dominant brands.

In March 2020, we commenced business operations as a result of becoming the

exclusive distributor of certain electronic nicotine delivery systems and related components (the “Products”) manufactured

by Bidi Vapor, LLC (“Bidi”), a Florida limited liability company, and a related party company that is also owned by

Nirajkumar Patel, our Chief Executive Officer and Chief Financial Officer.

On March 9, 2020, we 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 (the “A&R Distribution Agreement”).

Pursuant to the A&R Distribution

Agreement, Bidi granted to us an exclusive worldwide right to distribute the Products for sale and resale to both retail level

customers and non-retail level customers.

In connection with the A&R Distribution

Agreement, we 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 sub-distribution agreements, as amended and restated, are collectively

referred to as the “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 continental United States (the “Territory”).

September 28, 2020, we entered into a patent contribution agreement (the “Patent Contribution Agreement”) with Kaival

Labs, our wholly owned subsidiary, and Next Generation Labs, LLC, a California limited liability company (“Next Generation”),

whereby Next Generation will contribute

certain patents, patent applications, and patent data (collectively, the “Patents”) to us, which we plan to then subsequently

transfer to Kaival Labs.

Pursuant to the Patent Contribution

Agreement, we agreed to pay Next Generation a purchase price of $3 million for the Patents (the “Purchase

Price”), which is expected to be paid overtime upon two events.

First, we expect 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 sells a product that was developed using any portion of the Patents or based on the Patents, we will pay

Next Generation the difference between the Purchase Price and the Offering Payment.

Labs has also agreed to pay Next Generation a quarterly royalty equal to fifteen percent (15%) of the profits from sales of a product

that was developed using any portion of the Patents or based on the Patents ,

on an accrued basis.

Finally, we agreed to pay all of the applicable costs associated with obtaining product approval(s) from the

United States Food and Drug Administration.

As of the date of this Report, none of the

Patents have been transferred, no payments have been made to Next Generation, and none of the triggering events under the Patent

Contribution Agreement have occurred.

Product Offerings

Pursuant to the A&R Distribution Agreement,

we sell and resell electronic nicotine delivery systems, which we may refer to herein as “ENDS Products”, or “e-cigarettes”,

to both retail level customers and non-retail level customers.

Our primary Product we resell is the “Bidi Stick,”

disposable, tamper-resistant ENDS Product that comes in a variety of flavor options.

In addition to the Bidi Stick, we also recently

launched distribution of the “Bidi Pouch”

in February 2021.

The Bidi Pouch provides a tobacco-free nicotine formulation,

which contains natural fibers and a chew-base filler in six different flavors.

We do not manufacture any of the products we resell.

The Bidi Stick and Bidi Pouch are manufactured by Bidi, a related party company.

Pursuant to the terms of the A&R Distribution

Agreement, Bidi provides us with all branding, logos, and marketing materials to be utilized by us in connection with our marketing

and promotion of the Products.

We process all sales made to retail customers

and non-retail customers, with all sales to retail customers to be made through the website, www.bidivapor.com.

We provide all

customer service and support at our own expense.

Bidi sets the minimum prices for all sales made by us.

With respect to sales to

non-retail customers, we submit purchase orders to Bidi, Bidi delivers the Products to us, and we ship the Products directly to

these non-retail customers.

In the case of retail customers, we maintain adequate inventory levels of the Products in order to

meet these customers’

demand, and deliver the Products sold to these retail customers.

In addition to our current product offerings,

Bidi launched its recycling program, Bidi Cares, in the spring of 2020 that provides an opportunity for its adult (21+) customers

to recycle their Bidi Sticks and be rewarded with a free Bidi Stick after recycling ten used Bidi Sticks.

Each Bidi Stick contains

UL 8139 Certified batteries, which are high-quality, recyclable batteries that are distinguishable from batteries used in other

ENDS Products.

Bidi invests in recyclable batteries as a more sustainable solution to reduce electronic waste.

Marketing Strategy

Currently, we market and place our Products

into national distribution channels through long-standing industry relationships in accordance with the A&R Distribution Agreement.

We process all sales made to retail customers and non-retail customers, with all sales to retail customers made through the website,

www.bidivapor.com.

Our long-term marketing strategy remains based

on our commitment to preventing underage access to our Products.

As such, we steer away from social media marketing, and, instead,

are more focused on ground-level marketing and advertising within authorized retailer locations ( i.e .

advertisement on retail

partners’

back-bar tobacco products area).

Part of this ground-level marketing effort focuses on supporting our authorized

partner stores and distributors in spreading brand awareness of our Products to their adult (21+) consumer base by providing in-store

marketing materials.

Additionally, we supplement these efforts with informational videos on Bidi’s fight against underage

access to vape products and content on what makes the Bidi Stick and the Bidi Pouch unique, among other types of content.

stores also have access to online informative videos about the Bidi story, which can be used to educate and assist in training

all of their staff members about the core values of Bidi.

the recycling initiative to the commitment to preventing underage vaping, and stand against the illicit market of vapor products,

we believe that together with Bidi, we are taking the necessary steps to ensure that our partners are aligned with our community

also attends trade shows at established expos throughout the United States, such as the National Association for Convenience Stores

(NACS) Show held in the fourth quarter of calendar year 2020.

Bidi anticipates attending additional trade shows in calendar year

Further, Bidi has a dedicated marketing team that focuses on these marketing efforts and more.

Throughout fiscal 2020, we significantly increased

the distribution of the Bidi Stick through national retailers, which we believe will continue to grow significantly in fiscal 2021.

In March 2020, we entered into an agreement with Lakshmi Distributer Inc., doing business as C Store Master (“C Store Master”),

which currently distributes to Circle K convenience stores.

With this relationship, we expanded our distribution footprint to more

than 5,000 Circle K locations during fiscal 2020.

Currently, our distribution footprint includes more than 30,000 retail stores,

including Circle K and 7 ELEVEN locations across the country.

Our Products are also accessible through the digital delivery service

mobile applicable, GoPuff, in more than 50 cities across the U.S.

We expect that in the third or fourth quarter

of fiscal 2021, we will launch distribution of the Products in Europe, which will further expand our distribution footprint.

As of the date of this Report we have eight

employees, all of whom are full time, including our officers and directors.

In addition to our officers and directors, we have

employees who fulfill the roles of sales staff, information technology, web development, warehouse staff and account management.

All of our employees are eligible to enroll, or have already enrolled, in our medical plan.

and Government Regulation Related to our Operations

We are a retail and wholesale distributor of

pre-packaged products, namely the Bidi Stick, an e-cigarette that comes in a variety of flavors, designed and manufactured by Bidi.

Bidi is a related third party that sells us the Products that we resell to other retailers and wholesalers, which include, but

are not limited to, C Store Master, who distributes to Circle K convenience stores, and 7-Eleven convenience stores.

we are only a retailer and wholesale distributor of the Bidi Stick and Bidi Pouch, we believe that we are only subject to Federal,

state, and international laws pertaining to a distributor, not a manufacturer, of ENDS Products.

Our business is dependent entirely on the resale

of the Products provided by Bidi;

thus, there is a significant risk that our business could be materially adversely affected if

Bidi, as the manufacture, does not properly abide by any Federal, state, or international laws that regulate ENDS Products.

lapse in production or availability of the Products from Bidi would hamper our ability to operate as we would be limited in our

ability to supply our customers if our inventory ran low, or ceased to exist entirely.

As a manufacturer of ENDS Products, Bidi is

responsible for abiding by and following various rules and regulations pertaining to the manufacturing of the ENDS Products we

sell and any lapse in abiding by any pertinent rules and regulations may negatively impact our ability to operate.

As a distributor,

we are also subject to various rules and regulations.

Some of the below may not directly apply to us at this time due to the nature

of our present operations.

These rules and regulations include, but are not limited to, the following:

Food and Drug Administration (the “FDA”)

and Related Regulations Relating to ENDS Products

Effective August 8, 2016, the

FDA’s regulatory authority under The Family Smoking Prevention and Tobacco Control Act (the “Tobacco Control

Act”) was extended to all remaining tobacco products, including:

(i) certain “new generation”

(such as electronic cigarettes, vaporizers and e-liquids) and their components or parts (such as tanks, coils and batteries);

(ii) cigars and their components or parts (such as cigar tobacco);

(iii) pipe tobacco;

(iv) hookah products;

or (v) any other

tobacco product “newly deemed”

These “deeming regulations”

apply to all products made or

derived from tobacco intended for human consumption, but excluding accessories of tobacco products (such as lighters).

The deeming regulations require (i) products

be registered with the FDA and that products include ingredient listings;

(ii) newly deemed products be marketed only after FDA

review and approval;

(iii) products only make direct and implied claims of reduced risk if the FDA approves after finding that

scientific evidence supports the claim and that marketing the product will benefit public health as a whole;

(iv) sellers of such

products refrain from distributing free samples;

(v) sellers of such products implement minimum age and identification restrictions

to prevent sales to individuals under age 18;

(vi) packaging of and advertisements for products include prescribed health warnings;

and (vii) sellers refrain from selling the products in vending machines, unless the machine is located in a facility that never

admits youth.

We, along with Bidi, must comply with these regulations.

Any lapse in compliance by us, or Bidi, could hamper our

ability to operate, which would adversely affect our results of operations.

Newly deemed tobacco products are also

subject to the other requirements of the Tobacco Control Act, such as the products cannot be adulterated or misbranded.

could in the future promulgate good manufacturing practice regulations for these and our other Products, which could have a material

adverse impact on Bidi’s ability to, and the cost to, manufacture our Products, which would adversely affect our financial

condition and results of operations.

Failure to comply with the Tobacco Control

Act and or with any FDA regulatory requirements could result in litigation, criminal convictions or significant financial penalties

and could impair our ability to market and sell our electronic and vaporizer products.

At present, we are unable to predict whether

the Tobacco Control Act will impact our Products to a greater degree than competitors in the industry, thus affecting our competitive

State and Local Regulations

As a retail seller and/or wholesale distributor

of e-cigarette and related products, we must follow several state and local regulations.

Individual U.S.

state laws and regulations

concerning e-cigarette and related products are also relatively new and developing.

Currently, certain state laws on the subject

of e-cigarette and related products serve to define and/or tax tobacco products or e-cigarette and related products, restrict access

to youth and/or retail sale, require a license to sell such products, ban e-cigarette use in certain public spaces, and require

child resistant packaging on products containing e-liquids.

As a distributor, we hold all required state licenses and permits,

and pay all applicable state e-cigarette and related products excise taxes.

We work closely with Bidi to ensure that it is compliant

with any manufacturer specific state requirements, such as any warning requirements ( e.g., California Proposition 65).

Excise Taxes on Vapor Products

Vapor products are currently subject to

excise taxes at the state and local level.

Currently, approximately 28 states, plus various jurisdictions, impose a tax on

vapor products.

During 2020, approximately 11 states passed or implemented legislation to begin taxing vapor or related products.

We anticipate that state and localities will likely continue to impose new excise taxes on these products and / or increase existing

excise taxes for the purpose of funding various legislative initiatives, filling revenue shortfalls, and / or to reduce consumption.

In addition, while vapor products are not currently subject to excise tax at the federal level, legislation to impose excise taxes

at the federal level has been introduced in the past and could potentially be adopted in the future.

Any future enactment

of excise tax increases at the federal, state or local level could potentially result in lower consumption, a shift in sales to

discount brands, illicit trade channels or alternatives as consumers seek lower priced products, any of which could result in a

decline of our shipment volume, revenue, and profit.

International Regulations and Pertinent Information

The World Health Organization’s

Framework Convention on Tobacco Control (“FCTC”) is the first international public health treaty that establishes a

global agenda to reduce initiation of tobacco use and regulate tobacco in an effort to encourage tobacco cessation.

Over 170 governments

worldwide have ratified the FCTC.

The FCTC has led to increased efforts to reduce the supply and demand of tobacco products and

to encourage governments to further regulate the tobacco industry.

The tobacco industry expects significant regulatory developments

to take place over the next few years, driven principally by the FCTC.

Regulatory initiatives that have been proposed, introduced,

or enacted include:

the levying of substantial and increasing tax and duty charges;

restrictions or bans on advertising, marketing, and sponsorship;

the display of larger health warnings, graphic health warnings, and other labeling requirements;

restrictions on packaging design, including the use of colors and generic packaging;

restrictions or bans on the display of tobacco product packaging at the point of sale, and restrictions or bans on cigarette vending machines;

requirements regarding testing, disclosure, and performance standards for tar, nicotine, carbon monoxide, and other smoke constituents levels;

requirements regarding testing, disclosure, and use of tobacco product ingredients;

increased restrictions on smoking in public and workplaces and, in some instances, in private places and outdoors;

elimination of duty-free allowances for travelers;

encouraging litigation against tobacco companies.

becomes a signatory to the FCTC

and/or national laws are enacted in the U.S.

that reflect the major elements of the FCTC, our business, results of operations and

financial condition could be materially and adversely affected.

Environmental Laws

may be subject to federal, state, and local environmental laws and regulations.

Compliance with these provisions has not had nor

do we expect such compliance will have, any material adverse effect upon our capital expenditures, financial condition, or competitive

We believe that we are not subject to any material costs for compliance with any environmental laws.

Our primary goals during the next 12 months

(i) continue to significantly grow revenues and (ii) add the necessary infrastructure and partners appropriate for

a multi-hundred-million-dollar revenue company.

We believe that distribution growth through availability of the Products in retail

stores, new product offerings, and continued branding efforts will lead to further significant market share gains resulting in

accelerated revenue growth.

We have also added four new service providers

to further support our anticipated growth, improve our operations, and increase stockholder awareness.

We engaged a global leader

in executive recruitment to bolster our Corporate Suite Management Team.

We also expanded our legal team to assist us in our corporate

governance efforts and goal to up-list to Nasdaq in the near-term.

Additionally, we migrated vendor relationships

We engaged Fiserv, a global provider of financial services technology.

By integrating Fiserv and its services, we believe

that we are not only providing the most secure and efficient transaction possible for our customers, but also reducing processing

fees and, in turn, provides cost-savings to both the company and its valued customers.

We also engaged Insperity, a global leader

in human resources and benefits management, to assist with the development and ongoing management of HR Compliance, employee benefits,

employer liability management, co-development and implementation of employee training and development programs, and employee administration

We are committed

to recognizing excellence throughout the organization.

As such, throughout fiscal 2021, we anticipate continuing to execute on

our strategy of developing our brand, securing future growth and creating optimal value to stockholders.

Because we solely distribute Bidi’s

Products, which comprises all of our business operations, Bidi’s competitors in the e-cigarette and vaping industry are indirect

competitors of ours.

Many of these competitors in the e-cigarette and vaping industry are better capitalized than we are and have

access to greater resources, financial and otherwise.

We believe that our ability, and Bidi’s ability, to effectively compete

in the industry and acquire a strong market position is, and will continue to be, in large part due to the growing recognition

of the Bidi brand name, the perceived quality of each of our Products, and the ongoing efforts of our sales, marketing, and distribution

We, through Bidi, compete against, just to name a few, what we refer to as “big tobacco”

companies, including

Altria Group, Inc.

(formerly Philip Morris);

British American Tobacco p.l.c.

(formerly Reynolds);

Swedish Match;

Swisher International;

and manufacturers including U.K.

based Imperial Brands, PLC.

“Big tobacco”

has substantially greater resources, and

a customer base that has historically demonstrated loyalty to their brands, which can pose a significant hurdle to competitors

operating in the same, or similar, industries.

Competition in the e-cigarette and vaping

industry is based upon not only brand quality and positioning but also on price, packaging, promotion, and retail availability

and visibility.

Given the decreasing prevalence and public acceptance of cigarette consumption, the “big tobacco”

continue to demonstrate an increased interest and participation in other/additional tobacco industries/markets.

As such, we consider

the “big tobacco”

companies to be our primary competitors at this point in time, but it is our belief that we have

the capability to compete successfully.

on Goldman Sachs' Equity Research Report through November 28, 2020 on the Nielsen data for total nicotine volumes (the "Goldman

Report"), the Bidi Stick was the second largest disposable ENDS Product based on retail sales for the 52-week period ending

on November 28, 2020.

The Bidi Stick has increased its absolute-dollar market share of the disposable ENDS market share from 7.4%

during the 52-week period ending on October 27, 2020 to 24.2% of retail sales during the 52-week period ending on November 28,

According to the Goldman Report, total dollar sales growth has surged to 1,845% to lead the category for the 12-week period

ended November 28, 2020.

We believe our growth underscores the unique customer experience the Bidi Stick provides.

Intellectual Property

Currently, as of the date of this Report, we

have no intellectual property rights.

We rely on certain intellectual property rights, including logos, trademarks, and trade

names, of Bidi that were granted to us pursuant to the A&R Distribution Agreement to be used in connection with the marketing,

advertisement, and sale of the Products.

We also indirectly rely on Bidi’s intellectual property rights related to the Products,

such as patents.

If a third-party challenged Bidi’s patents, or infringed upon such rights, our business would be materially

adversely affected.

28, 2020, we entered into the Patent Contribution Agreement with Kaival Labs, our wholly owned subsidiary, and Next Generation

Labs, LLC, whereby Next Generation will contribute

the Patents to us, which we plan to subsequently transfer to Kaival Labs.

As of the date of this Report, none of the Patents

have been transferred, no payments have been made and none of the triggering events under the Patent Contribution Agreement have

Emerging Growth Company

We are an emerging growth company (“EGC”),

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 reporting and disclosure rules of the Securities

and Exchange Commission (the “SEC”).

We have 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.

As a result of this election, our financial statements may not be comparable to companies that comply with public company effective

“Blank Check”

and Shell Company

We, based on current and proposed business

activities, are a "blank check"

The SEC defines a "blank check"

company as "any development

stage company that is issuing a penny stock, within the meaning of Section 3(a)(51)-1 of the Exchange Act, and that has no specific

business plan or purpose, or has indicated that its business plan is to engage in a merger or acquisition with an unidentified

company or companies or other entity or person."

Pursuant to Rule 12b-2 promulgated under the Exchange Act, we also qualify

as a shell company, because we have no or nominal assets (other than cash) and no or nominal operations.

In addition, many states

have enacted statutes, rules, and regulations limiting the sale of securities of "blank check"

companies in their respective

jurisdictions.

We presently have no employees apart from our management, which consists of two individuals, Mr.

Nirajkumar Patel and Mr.

Our officers and directors are engaged in outside business activities and anticipate that they will devote to

our business approximately five (5) hours per week until the acquisition of a successful business opportunity has been identified,

or we otherwise commence business operations.

We expect no significant changes in the number of our employees other than such

changes, if any, incident to a business combination or commencement of business operations.

We are an emerging growth

company (“EGC”), 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 reporting and

disclosure rules of the Securities and Exchange Commission (the “SEC”).

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.

Risk Factors.

The Company qualifies as a smaller reporting company, as defined by Item 10 of Regulation S-K and, thus, is not required to

provide the information required by this Item.

We qualify as a smaller reporting company, as defined by Item 10

of Regulation S-K and, thus, are not required to provide the information required by this Item.

Unresolved Staff Comments.

We currently neither rent nor own any properties.

We currently have no policy with respect to investments or interests in

real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.

We currently utilize the home office space and equipment of our management at no cost.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business