What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-02-16 compared with 2021-02-12 · 40 added, 267 removed, 4 unchanged (99% of the section changed)

Market for Registrant’s Common

Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Registrant’s

Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

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 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

July 31, 2020

April 30, 2020

January 31, 2020

October 31, 2019

July 31, 2019

April 30, 2019

January 31, 2019

Though February 11, 2021.

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

On July 20, 2021, our Common Stock began

trading on the Nasdaq Capital Market under the trading symbol “KAVL.”

As of February 11, 2022, we had 30,233,319

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

As of October

As of February

11, 2022, we had approximately 4,800 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

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

We have not paid any dividends to our

stockholders 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;

Uses of Proceeds from

Registered Securities

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

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.

As a “smaller reporting company”,

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 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 audited Financial Statements and notes thereto for the year ended October 31, 2020 included under Item 8 –

Statements and Supplementary Data in this 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 Report

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

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

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 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

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

We do not have any off-balance sheet arrangements

that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,

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

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.

Uses of Proceeds

from Registered Securities

Common Stock Issued

During the fiscal year ended October 31, 2021, 53,785 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.

We issued the shares in

reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act (in that the issuance of shares

of our Common Stock did not involve any public offering).

During the fiscal year ended October

31, 2021, 12,500 shares of our Common Stock were issued to Uptick Capital Partners as compensation for consulting services rendered

We issued the shares in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act (in

that the issuance of shares of our Common Stock did not involve any public offering).

During the fiscal year ended October

31, 2021, 308,333 shares of our Common Stock were issued to Inflection Partners, LLC as compensation for consulting and investor

relations services rendered to us.

We issued the shares in reliance on the exemption from registration pursuant to Section 4(a)(2)

of the Securities Act (in that the issuance of shares of our Common Stock did not involve any public offering).

During the fiscal year ended October

31, 2021, 30,000 shares of our Common Stock were issued to Advisory Group Equity Services, LTD as compensation for consulting services

rendered to us.

We issued the shares in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities

Act (in that the issuance of shares of our Common Stock did not involve any public offering).

During the fiscal year ended October

31, 2021, 221,666 shares of our Common Stock were issued to employees and one former employee as employee bonus compensation.

We withheld 92,871 shares to satisfy tax obligations due upon such issuances.

We issued the shares in reliance on the exemption

from registration pursuant to Section 4(a)(2) of the Securities Act (in that the issuance of shares of our Common Stock did not

involve any public offering).

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