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Item 5. Market for Registrant’s Common Equity

2021-02-12 compared with 2020-01-27 · 230 added, 148 removed, 41 unchanged (90% of the section changed)

2 unchanged sentences

Market Information

Our common stock is quoted on the OTC Pink

under the symbol “KAVL.”

There is currently a limited trading market in the Company’s shares of common stock.

Our common stock is quoted on the OTC Markets

Group Inc.’s (the “OTCM”) OTCQB®

Venture Market (the “OTCQB”) under the symbol “KAVL.”

There is currently a limited trading market in the shares of our common stock.

Set forth below are the range of high and low

bid closing bid prices for the periods indicated as reported by the OTC Markets Group Inc.

The market quotations reflect inter-dealer

prices, without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.

bid closing bid prices for the periods indicated as reported by the OTCM.

The market quotations reflect inter-dealer prices, without

retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.

Quarter Ended

April 30, 2021 (1)

January 31, 2021

October 31, 2020

1 unchanged sentence

April 30, 2020

January 31, 2020

October 31, 2019

(1) From the period November 5, 2018 (the date our common stock first was quoted on the OTC Pink) through January 31, 2019.

(2) From September 4, 2018 (inception) through October 31, 2018, our common stock was not quoted on the OTC Pink;

price data is available.

On January 21, 2020, the closing bid price of our common stock as reported by the OTC Markets Group

was $0.014 per share.

of January 21, 2020 ,

we had 572,364,574 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.

approximately 176 stockholders of record.

July 31, 2019

April 30, 2019

January 31, 2019

Though February 11, 2021.

As of October 31, 2020, we had 277,282,630

shares of common stock issued and outstanding and 3,000,000 shares of Series A Preferred Stock issued and outstanding.

As of October

31, 2020, we had approximately 176 stockholders of record.

As of February 11, 2021, we have 166 stockholders of record, 279,171,677

shares of our common stock issued and outstanding, and 3,000,000 shares of Series A Preferred Stock

issued and outstanding.

Dividends and Share Repurchases

We have not paid any dividends to our stockholders

There are no restrictions, which would limit our ability to pay dividends on common equity or that are likely to do so in the future.

Issuer Purchases of Equity Securities

Equity Compensation Plan Information

We do not have any equity compensation plans,

either approved or not approved, by our security holders.

and do not intend to pay cash dividends on our common stock for the foreseeable future.

Any future determination related to dividend

policy will be made at the discretion of our Board.

Also, there are no restrictions, which would limit our ability to pay dividends

on common stock

Recent Sales of Unregistered Securities;

1 unchanged sentence

Registered Securities

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 for services rendered to us.

Each share of Series B Preferred Stock was convertible into ten (10) shares of our common stock.

The Series B Preferred Stock was

converted into shares of common stock in October 2018.

Such shares were issued pursuant to Section 4(a)(2) of the Securities

Act in that the issuance of shares by us did not involve a public offering.

The offering did not qualify as a public offering due

to the insubstantial number of persons involved in the deal, the size of the offering, the manner of the offering, and the number

of shares offered.

We did not undertake an offering in which we sold a high number of shares to a high number of investors.

addition, this stockholder had the necessary investment intent as required by Section 4(a)(2) of the Securities Act since it agreed

to and received share certificates bearing a legend stating that such shares are restricted.

This restriction ensures that these

shares would not be immediately redistributed into the market and, therefore, could not be part of a public offering.

an analysis of the above factors, we believe we met the requirements to qualify for the exemption from registration pursuant to

Section 4(a)(2) of the Securities Act for this transaction.

During the year ended October 31, 2020, 3,674,056

shares of our common stock were issued to QuikfillRx, LLC, a Florida limited liability company (“QuikfillRx”) as compensation

for marketing and promotion services rendered to us.

During the year ended October 31, 2020, 150,000

shares of our common stock were issued to Uptick Capital Partners as compensation for consulting services rendered to us.

During the year ended October 31, 2020, 1,094,000

shares of our common stock were issued to seven of our employees as employee bonus compensation.

We withheld 226,000 shares to

satisfy tax obligations due upon such issuances.

Purchases of Equity Securities by the Issuer

and Affiliated Purchasers

We did not, nor did any affiliated purchaser,

make any repurchases of our equity securities during the fourth quarter of fiscal year 2019.

the year ended October 31, 2020, we repurchased 226,000 shares of our common stock, which were immediately cancelled upon repurchasing.

Our Chief Executive Officer and Chief Financial

Officer, Nirajkumar Patel, and our Chief Operating Officer, Eric Mosser did not purchase shares in the open market during our fiscal

year ended October 31, 2020.

Selected Financial Data.

1 unchanged sentence

we are not required to provide the information required by this Item.

Management’s

Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and

Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis

10 unchanged sentences

regarding forward-looking statements.

Potential Impact of COVID-19

In March 2020, the World Health Organization

(the “WHO”) declared the outbreak of COVID-19 as a pandemic based on the rapid increase in global exposure.

continues to spread throughout the world, including the United States.

Our business operations, which commenced during this pandemic,

continue to be operational and, to date, we have not seen any significant direct negative impact of COVID-19 to our newly commenced

However, the COVID-19 pandemic continues to impact economic conditions, which could impact the short-term and long-term

demand from our customers and, therefore, has the potential to negatively impact our results of operations, cash flows, and financial

position in the future.

Management is actively monitoring this situation and any impact on our financial condition, liquidity,

and results of operations.

However, given the daily evolution of the COVID-19 pandemic and the global responses to curb its spread,

we are not presently able to estimate the effects of the COVID-19 pandemic on our future results of operations, financial condition,

or liquidity for the remainder of fiscal year 2021 and, possibly, beyond.

Business Overview

Since inception, we have been engaged in limited

organizational efforts.

We are currently exploring and evaluating business opportunities, which may include entering into distribution

or other contractual arrangements or acquiring the assets of an existing company.

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.

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.

Management envisions that such business opportunities would result in us commencing business

operations without having to otherwise consummate a business combination.

We have not entered into any definitive agreements with

however, we have engaged in discussions with various parties regarding potential business opportunities.

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, 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 its 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.

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

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.

However, there is no guarantee that such additional funds will be made available to us or on terms that are favorable to us.

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.

Obviously, if Mr.

Mosser, or other investors do not loan to or invest sufficient funds in us, then

we will not be able to meet our SEC 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.

Currently, we market and place the

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

Distribution Agreement entered into with Bidi, a related party, in March 2020 (and subsequently amended and restated in May

Pursuant to the A&R Distribution Agreement, we sell and resell the Products to both retail level customers and

non-retail level customers.

Bidi’s primary product is the “Bidi Stick.”

Bidi is considered a related party

to us because our Chief Executive Officer, Chief Financial Officer, and director, Mr.

Nirajkumar Patel, owns and controls

Patel is also a beneficial owner of KH, the entity that is our largest controlling stockholder.

Thus, Bidi and we

are under common control.

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 engaged QuikfillRx in March 2020 and, pursuant to the Amended Service Agreement, QuikfillRx agreed

to provide us with the Services, as we may request from time to time.

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.

connection with the A&R Distribution Agreement, we entered into the Sub-Distribution Agreements with certain counterparties,

pursuant to which we appointed such counterparties as non-exclusive sub-distributors of the Products to non-retail customers within

the Territory.

Each of the Sub-Distribution Agreements set forth certain minimum purchase obligations.

Going Concern

We have negative working capital, a stockholder

deficit, and have no source of revenues.

These conditions raise substantial doubt about our ability to continue as a going concern.

For the foreseeable future, we will be devoting our efforts to exploring and evaluating business opportunities, which may include

merger or acquisition candidates.

Our ability to continue as a going concern is dependent upon our ability to develop additional

sources of capital, locate and complete a merger with another company or otherwise commence business operations, and ultimately,

achieve profitable operations.

Prior to March 2020, we demonstrated adverse

conditions that raised substantial doubt about our ability to continue as a going concern.

These adverse conditions were negative

financial trends, specifically operating loss, working capital deficiency, and other adverse key financial ratios.

had not established any source of revenue to cover our operating costs.

Our management funded operating expenses with related party

contributions to capital.

However, on March 9, 2020, we commenced business

operations upon entering into the A&R Distribution Agreement with Bidi, a related party company, whereby 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.

In April, in connection with the A&R Distribution

Agreement, we began to enter into the Sub-Distribution Agreements with certain third-party counterparties, whereby we appointed

such 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

With these agreements in effect, we have established

sources of revenue to cover our operating costs and achieved net income of $3,845,822 during the year ended October 31, 2020.

of October 31, 2020, we had a positive working capital of $4,406,679.

Management plans

to continue similar operations with increased marketing, which we believe will result in increased revenue and net income.

there is no assurance that management’s plan will be successful due to the current economic climate in the United States

and globally.

At the time of filing this Report, the previously reported going concern has been alleviated based on the reasons

above, and management does not have substantial doubt our ability to continue as a going concern.

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.

The audited consolidated financial statements

filed as part of this 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 had no known demands or commitments and

are not aware of any events or uncertainties as of October 31, 2019 or October 31, 2018 that will result in or

that are reasonably likely to materially increase or decrease our current liquidity.

As of October 31, 2019 and October 31, 2018,

the Company had no assets.

The Company’s current liabilities as of October 31, 2019 and October 31, 2018

totaled $44,886 and $3,000, respectively, which consisted of accrued expenses.

The Company had no cash flows from operating

activities for the year ended October 31, 2019 and for the period from September 4, 2018 (inception) through October 31, 2018.

The Company has generated no revenues since inception.

The Company is dependent upon the receipt of capital investment or other

financing to fund its ongoing operations and to execute its business plan.

In addition, the Company is dependent upon certain related

parties to provide continued funding and capital resources.

If continued funding and capital resources are unavailable at reasonable

terms, the Company may not be able to implement its plan of operations.

The Company can provide no assurance that it can continue

to satisfy its cash requirements for at least the next twelve months.

We have no known demands or commitments and

are not aware of any events or uncertainties as of October 31, 2020 that will result in or that are reasonably likely to materially

increase or decrease our current liquidity.

October 31, 2020, we had working capital of approximately $4.4 million and total cash of approximately $7.4 million.

Now that we have commenced business operations,

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

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 COVID-19;

however, we are unable to presently estimate any potential future impacts from COVID-19

and an extended impact could have a material and adverse effect on our sales, earnings, and liquidity.

Cash flow provided by operations was approximately

$7.6 million for the fiscal year 2020, compared to $0 for the fiscal year 2019.

The increase in cash flow from operations for the

fiscal year 2020 was mainly due to the increase in net income.

We anticipate continued improvement in our cash flows provided by

operations in future years based on the minimum purchase obligations set forth in the Sub-Distribution Agreements, partially offset

by increases in costs as we ramp up our sales and marketing efforts.

Results of Operations

The Company has not conducted any active operations

since inception, except for its efforts to identify suitable business opportunities.

The Company has not generated any revenue

from September 4, 2018 (inception), through October 31, 2019.

It is unlikely that the Company will have any revenues unless it

is able to identify suitable business opportunities and commence operations, of which there can be no assurance.

Management believes

that these circumstances may hinder the Company’s ability to continue as a going concern.

The Company’s plan of operation

for the next twelve months is to continue its efforts to locate suitable business opportunities.

For the year ended October 31, 2019, the Company

had a net loss of $68,849.

For the period from September 4, 2018 (inception) through October 31, 2018, the Company had a net loss

In both cases, the net loss consisted of general and administrative expenses.

Year ended October 31, 2020, compared to

year ended October 31, 2019

Revenues for the fiscal year 2020 were approximately

$64.3 million, compared to $0 in the prior fiscal year.

During the second quarter of fiscal year 2020, we entered into the A&R

Distribution Agreement, pursuant to which we were granted the exclusive, worldwide right to distribute the Products.

In connection

therewith, we entered into the Sub-Distribution Agreements and other agreements with counterparties and granted such sub-distributors

the right to distribute the Products to non-retail customers within the Territory.

Cost of Revenue and Gross Profit:

Gross profit in the fiscal year 2020 was approximately

$10.0 million, compared to $0 for the fiscal year 2019.

Total cost of revenue was approximately $54.3 million for the fiscal year

2020, compared to $0 for the fiscal year 2019.

The increase in gross profit is entirely driven by the sales of the Products beginning

in the second quarter of fiscal year 2020.

Operating Expenses:

Total operating

expenses were approximately $4.7 million

for the fiscal year 2020, compared to approximately $69,000 for the fiscal year 2019.

For the fiscal year 2020, operating expenses

consisted of commissions paid to QuikfillRx pursuant to the Amended Service Agreement of approximately $2.3 million and general

and administrative expenses of approximately $2.4 million.

General and administrative expenses in the fiscal year 2020 consisted

primarily of legal fees, salaries, professional fees, merchant fees, and other service fees.

Total operating expenses for the fiscal

year 2019 consisted solely of general and administrative expenses, which were primarily from professional fees incurred.

future operating expenses to continue to increase while we generate increased sales growth.

Income Taxes:

During the fiscal year 2020, we accrued approximately

$1.3 million for income taxes, compared to $0 for the fiscal year 2019.

Please refer to Note 7, Income Tax, in the Notes to the

Consolidated Financial Statements in this Report for additional information related to our income taxes.

Net Income (Loss):

Net income for the fiscal year 2020 was approximately

$3.8 million, or $0.01 basic and diluted net income per share, compared to net loss of approximately $68,849, or $0.00 basic and

diluted net loss per share, for the fiscal year 2019.

The increase in net income for the fiscal year 2020, as compared to fiscal

year 2019, is attributable to the commencement of sales of the Products.

Weighted-average common stock shares outstanding

were 516,212,943 at October 31, 2020 as compared to 572,364,574 at October 31, 2019.

Accrued Expenses:

We accrued approximately $80,000 for a quarterly

bonus and $132,000 for a quarterly commission payable to QuikfillRx, based our applicable gross quarterly sales for the three months

ended October 31, 2020.

We accrued approximately $165,000 for bonuses

payable to our executive officers based on the revenues benchmark achieved during the three months ended July 31, 2020.

Excise taxes totaling approximately $502,000

were accrued based on taxable sales during the fourth quarter of fiscal 2020.

Concentrations:

Financial instruments, which potentially subject

us to concentrations of credit risk, consist primarily of purchases of inventories, accounts payable, accounts receivable, and

Concentration of Purchases and Accounts

Payable- Related Party:

For the year ended October 31, 2020, 100% of

the inventories of Products, primarily consisting of the “Bidi Stick,”

were purchased from Bidi, a related party company

that is owned by Nirajkumar Patel, our Chief Executive Officer and Chief Financial Officer, in the amount of approximately $54.0

It also accounted for 100% of the total accounts payable as of October 31, 2020.

Concentration of Revenues and Accounts Receivable:

ended October 31, 2020, approximately 41% of

the revenue from the sale of products, primarily consisting of the “Bidi Stick,”

was generated from Favs Business,

LLC in the amount of approximately $26.4 million and approximately 6% of the revenue from the sale of products was generated from

MMS Distro, Inc., in the amount of approximately $3.9 million.

Go Brands, Inc., with an outstanding balance

of approximately $319,000 and GPM Investment, LLC, with an outstanding balance of approximately $551,200, accounted for approximately

33% and 56% of the total accounts receivable from customers, respectively, as of October 31, 2020.

Contractual Obligations

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.

Off Balance Sheet Arrangements

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revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Contractual Obligations

Cash and Cash Equivalents

We consider all highly liquid investments

with an original maturity of three months or less when purchased to be cash equivalents.

Cash and cash equivalents at October 31,

2020 and October 31, 2019 were $7,421,701 and $0, respectively.

Critical Accounting Policies and

Please see Note 2, Basis of Presentation

and Significant Accounting Policies , to the Consolidated Financial Statements for a description of critical accounting policies

and estimates.

Recently Adopted Accounting Pronouncements

See Note 2, Basis of Presentation and

Significant Accounting Policies, to the Consolidated Financial Statements for a description of recent accounting pronouncements

and accounting changes.

Quantitative and Qualitative Disclosures

about Market Risk.

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.

and Qualitative Disclosures about Market Risk.

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.

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 5. Market for Registrant’s Common Equity