What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-01-29 compared with 2025-02-10 · 170 added, 254 removed, 148 unchanged (74% of the section changed)

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Please also see the cautionary language at the beginning of this Report regarding forward-looking statements.

are engaged in the sale, marketing and distribution of electronic nicotine delivery system (“ENDS”) products, also known

as “e-cigarettes”, in a variety of favors.

Until October of 2024, our primary source of revenue has been the Bidi Stick as

we sold our inventory on hand.

However, on June 11, 2024, RAI Strategic Holdings, Inc., R.J.

We are engaged in the sale, marketing

and distribution of electronic nicotine delivery system (“ENDS”) products, also known as “e-cigarettes”, in a

variety of favors.

Until October of 2024, our primary source of revenue has been the Bidi Stick as we sold our inventory on hand.

on June 11, 2024, RAI Strategic Holdings, Inc., R.J.

Reynolds Vapor Company, R.J.

Reynolds Tobacco

Company, and RAI Services Company (collectively, the “RJ Reynolds Entities”) filed a patent infringement complaint with the

International Trade Commission (the “ITC”) against Bidi, us, and forty (40) other respondents (the “ITC Complaint”)

pursuant to Section 337 of the Tariff Act of 1930, as amended.

Specifically, the ITC Complaint alleges that one or more components or

elements of the Bidi Stick infringe U.S.

Reynolds Tobacco Company, and RAI Services Company (collectively,

the “RJ Reynolds Entities”) filed a patent infringement complaint with the International Trade Commission (the “ITC”)

against Bidi, us, and forty (40) other respondents (the “ITC Complaint”) pursuant to Section 337 of the Tariff Act of 1930,

Specifically, the ITC Complaint alleges that one or more components or elements of the Bidi Stick infringe U.S.

11,925,202, which is owned by one of the RJ Reynolds Entities.

The ITC Complaint

requests the ITC grant:

(a) temporary and permanent limited exclusion orders pursuant to Section 337(e) of the Tariff Act of 1930, as

amended, which would prohibit the importation of the Bidi Stick in the United States;

and (b) issue temporary and permanent cease and

desist orders pursuant to 337(f) of the Tariff Act of 1930, as amended, which would prohibit the sale and distribution of the Bidi Stick

The ITC Complaint requests the ITC grant:

(a) temporary and permanent limited

exclusion orders pursuant to Section 337(e) of the Tariff Act of 1930, as amended, which would prohibit the importation of the Bidi Stick

in the United States;

No damages are recoverable in the proceedings before the ITC.

Since the initiation of the ITC Complaint,

we have not imported any Bidi Sticks and currently do not generate any revenue from the sale of Bidi Sticks.

current primary source of revenue is through an international licensing agreement with Philip Morris Products S.A.

a wholly owned affiliate of Philip Morris International Inc.

See “Item 1 Business--Philip Morris Deed of

Licensing Agreement”

have also entered into a Merger and Share Exchange Agreement (the “Merger Agreement”) with Delta Corp Holdings Limited, a

company incorporated in England and Wales (together with its successors and assigns, “Delta”), Delta Corp Holdings Limited,

a Cayman Islands exempted company (“Pubco”), KAVL Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of

Pubco (“Merger Sub”) and Delta Corp Cayman Limited (the “Sellers”).

If the Merger Agreement is consummated, Pubco

will become our parent and all new officers and directors will be appointed by Pubco, except that pursuant to the Merger Agreement we

have the right to appoint one director to the Pubco board of directors and we have agreed to appoint any family member of Ankitaben Patel

(the widow of our former CEO, Nirajkumar Patel) and/or Nirajkumar Patel who is qualified and identified by Bidi for this role prior to

the closing of the Merger Agreement.

While we expect the transactions contemplated by the Merger Agreement to close (the “Closing”)

in March or April of this year, no assurances can be made that such transactions will close by then or ever.

The transactions contemplated

by the Merger Agreement are described in further detail below under “ Item 1 Business--The Merger and Share Exchange Agreement .”

and (b) issue temporary and permanent cease and desist orders pursuant to 337(f) of the Tariff Act of 1930, as amended,

which would prohibit the sale and distribution of the Bidi Stick in the United States.

No damages are recoverable in the proceedings before

Since the initiation of the ITC Complaint, we have not imported any Bidi Sticks and currently do not generate any revenue from

the sale of Bidi Sticks.

Our current primary source of revenue is through an international licensing agreement with Philip Morris Products

(“PMPSA”), a wholly owned affiliate of Philip Morris International Inc.

See “Item 1 Business--Philip

Morris Deed of Licensing Agreement”

We have also entered into

a Merger and Share Exchange Agreement (the “Merger Agreement”) with Delta Corp Holdings Limited, a company incorporated in

England and Wales (together with its successors and assigns, “Delta”), Delta Corp Holdings Limited, a Cayman Islands exempted

company (“Pubco”), KAVL Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Pubco (“Merger Sub”)

and Delta Corp Cayman Limited (the “Sellers”).

On September 11, 2025, Kaival

Brands Innovations Group, Inc., (the “Company”) and Delta Corp Holdings Limited, a company incorporated in England and Wales

(together with its successors and assigns, “Delta”) entered into a Business Combination Termination and Release Agreement

(the “Termination Agreement”) pursuant to Section 10.1(a) of the Merger Agreement (the “Merger Agreement’) among

the Company, Delta, Delta Corp Holdings Limited, a Cayman Islands exempted company, KAVL Merger Sub Inc.

and Delta Corp Cayman Limited.

Pursuant to the Termination

Agreement, the Company and Delta mutually terminated the Merger Agreement and all agreements between the parties that are ancillary thereto

and Delta waived any and all claims against the other party that in any way directly and/or indirectly arise out of, are based upon, or

are in connection with the Merger Agreement and any agreements ancillary thereto.

Material Items, Trends

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from importing the Bidi Stick, then our business, operations, financial results, and reputation would be significantly adversely impacted.

Bidi disputes the patent infringement claims set forth in the ITC Complaint by the RJ Reynolds Entities and plans to vigorously defend

the ITC Investigation.

A Commission determination regarding temporary relief is expected in October or December 2024.

A final Commission

determination on permanent relief is not expected until late 2025 or early 2026.

The asserted patent expires in October 2026 as would

any exclusion order that the ITC enters as a result of the ITC Complaint.

As a result of the ITC Complaint and other factors

we do not expect any significant revenue from the sale of Bidi Sticks in the foreseeable future.

Although Bidi disputes the patent infringement claims set forth in the ITC Complaint by the RJ Reynolds Entities, in December 2024 Bidi

entered into a consent order agreeing to cease all importation and distribution of the Bidi Stick until the RJ Reynolds Entities’

patent expires in October 2026.

In November 2024, the ITC Administrative Law Judge (ALJ) denied temporary relief to the Reynolds Entities

and the case proceeded on the merits.

A trial was held in April 2025.

The initial determination (ID) from the ALJ was issued on August

The ALJ found that violation of §337 based on infringement of U.S.

11,925,202 by the respondents, and that both

the technical and economic prongs of domestic industry were satisfied.

The ID will now be reviewed by the Commission for final approval,

with respondents and complainants expected to file additional briefs.

The Commission target deadline was November 24, 2025,

subject to potential extensions.

The asserted patent expires in October 2026 as would any exclusion order that the ITC enters as a result

of the ITC Complaint, as well as the Bidi consent order

As a result of the ITC Complaint and other

factors, we do not expect any revenue from the sale of Bidi Sticks in the foreseeable future.

Our primary source of revenue is from

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with respect to these assets.

Nature of our Products

and Regulation

Competition in the market for e-cigarettes from illicit

sources may have an adverse effect on our overall sales volume, restricting our ability to increase selling prices and damaging our brand

equity and reputation.

Illicit trade and tobacco trafficking in the form of counterfeit products, smuggled genuine products, and locally

manufactured products on which applicable taxes or regulatory requirements are evaded, represent a significant and growing threat to the

legitimate tobacco industry, including the products we sell.

Although we combat counterfeiting of our Products by engaging in certain

tactics, such as requiring all sales force personnel to randomly collect our Products from retailers in order to be tested by our quality

control team, maintaining a quality control group that is responsible for identifying counterfeit products and surveillance of retailers

we suspect are selling counterfeit Products through our own secret shopper force, no assurance can be given that we will be able to detect

or stop sales of all counterfeit products.

In addition, while we may bring suits against retailers and distributors that sell certain

counterfeit products, no assurance can be given that we will be successful in any such suits or that such suits will be successful in

stopping other retailers or distributors from selling.

Counterfeit Products

Our Products (included in

this context any products that we may develop from the GoFire Purchased Assets) are and will be heavily regulated by the FDA, which has

broad regulatory powers.

The market for ENDS products is subject to a great deal of uncertainty and is still evolving.

ENDS products,

having recently been introduced to market over the past 10 to 15 years, are at a relatively early stage of development, and represent

core components of a market that is evolving rapidly, highly regulated, and characterized by a number of market participants.

in the use of, and interest in, ENDS products is recent, and may not continue on a lasting basis.

With respect to the GoFire Purchase

Assets, the underlying technology touches on hemp/cannabis, nutraceutical and healthcare applications in addition to nicotine, all of

which are heavily regulated by the FDA and other federal and state agencies.

The demand and market acceptance for all of these products

is subject to a high level of uncertainty.

Therefore, we are subject to all the business risks associated with a new enterprise in an

evolving market.

Some of our Product offerings

through Bidi are subject to developing and unpredictable regulation.

Our Products are sold through our distribution network and may be

subject to uncertain and evolving federal, state, and local regulations, including hemp, non-THC cannabidiol (CBD) and other non-tobacco

consumable products.

Enforcement initiatives by those authorities are therefore unpredictable and impossible to anticipate.

We anticipate

that all levels of government, which have not already done so, are likely to seek in some way to regulate these products, but the type,

timing, and impact of such regulations remains uncertain.

With respect to CBD in particular, on January 26, 2023, the FDA announced that

it would not initiate rulemaking to regulate CBD as a dietary food ingredient.

Rather, after careful review, the FDA has concluded that

a new regulatory pathway for CBD is needed and has further indicated that it is prepared to work with Congress to create a new regulatory

pathway for CBD through legislation.

In addition to the de facto

FDA flavor ban that has resulted from the denial of nearly all PMTAs for flavored ENDS, ENDS products that are non-tobacco flavored continue

to face the threat of prohibition at the local level, as many state and local authorities and attorneys general push for bans or request

the FDA to deny PMTAs for flavored ENDS.

In addition, a number of states and localities have banned the sale of non-tobacco flavored tobacco

Recently, for example, California passed Proposition 31, which prohibits the sale of non-tobacco flavored tobacco products,

including e-cigarettes, in retail locations.

Thus, the non-tobacco flavored BIDI® Sticks are not permitted to be sold in California

retail locations.

We anticipate more states and localities will take this approach.

Several other states and localities have banned flavored

ENDS, including Washington, D.C., New York (and New York City), New Jersey, Rhode Island, Illinois (and Chicago), Utah and Massachusetts,

with several more considering similar bans (e.g., Maryland and Connecticut).

to Meet Demand for our Products

We believe that the

matters described under “FDA PMTA Determinations, 11 th Circuit Decision and Impact on Our Business” could have

decreased demand for our Products and would likely have negative opportunities to distribution channels for us through which we could

sell our Products.

However, an unlikely increase in demand for the Products would require us to raise cash and/or obtain financing in

order to purchase Products from Bidi for resale in the marketplace.

As a result, we are faced with the risk that such cash or financing

will not be available in sufficient amounts or on terms acceptable to us (or at all) to meet the market demand for the Products.

inability to fulfill this demand will damage our reputation and could materially impact our ability to increase sales of the Products

which, in turn, would adversely impact our results of operations.

Consumer purchases of tobacco

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when disposable income is lower, and taxes may be higher.

The spread of COVID-19 throughout

the world as well as increasing tensions with China over the past several years has created global economic uncertainty, which may cause

partners, suppliers, and potential customers to closely monitor their costs and reduce activities.

Any of the foregoing could materially

adversely affect the supply chain for Bidi and our Products, and any supply chain distribution for the Products could have a material

adverse effect on our results of operations.

Going Concern

Our financial statements are prepared in accordance

GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal

course of business within one year after the date the consolidated financial statements are issued.

Our accompanying consolidated financial statements

are prepared in accordance with U.S.

GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction

of liabilities in the normal course of business within one year after the date the consolidated financial statements are issued.

In accordance with Financial Accounting Standards

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205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about

our ability to continue as a going concern within one year after the date that the financial statements are issued.

As shown in the accompanying consolidated

financial statements, we have incurred recurring

losses and negative cash flows from operations.

We will need significant additional funds to satisfy our outstanding payables, fund our

working capital, and fully implement our business plan .

our ability to continue as a going concern is adversely affected by the uncertainty surrounding Bidi’s PMTA process with FDA and

outcome of Bidi’s petition with the 11th Circuit Court of Appeals regarding the FDA’s January 2024 MDO relating to Classic

Bidi ® Stick as well as the uncertainty in the Company’s ability to continue to sell the Bidi Stick given the patent

infringements claim filed by RJ Reynolds.

All of these factors raise substantial doubt regarding our ability to continue as a going

Our management plans

to continue developing strategies on similar or expanded operations of our business to help our ability to determine where our business

will be viable going forward.

Until such time, if ever,

we can generate substantial product revenues, management plans to finance our cash needs through public or private equity offerings or

debt financing.

our ability to continue as a going concern within one year after the date that the accompanying financial statements are issued.

shown in the accompanying consolidated financial statements, we have incurred recurring losses and negative cash flows from operations

for the year ended October 31, 2025.

We will need significant additional funds to satisfy our outstanding payables, fund our working

capital, and fully implement our business plan.

In addition, our ability to continue as a going concern is adversely affected by the

FDA’s denial of Bidi’s PMTA process for its non-tobacco flavored Bidi ® Stick as well as our ability to continue

to sell the Bidi Stick given the patent infringements claim filed by RJ Reynolds.

Likewise, in April 2025, the 11th Circuit upheld FDA’s

MDO for the Classic BIDI® Stick.

Finally, on November 4, 2025, FDA issued a MDO for the PMTA for the non-tobacco flavored Bidi Sticks.

All of these factors raise substantial doubt regarding our ability to continue as a going concern.

Our management plans to continue developing strategies

for similar or expanded operations of our business to help our ability to determine where our business will be viable going forward.

such time, if ever, we can generate substantial product revenues, management plans to finance our cash needs through public or private

equity offerings or debt financing.

However, there is no assurance that we will be able

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to support our operations for at least twelve months.

As of October 31, 2024, we had working capital of approximately $3.0 million and

total cash of approximately $3.9 million.

As discussed above, this condition and other factors raise substantial doubt regarding our ability

to continue as a going concern.

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.

are several factors that could result in the need to raise additional funds, including a decline in revenue, a lack of anticipated sales

growth, and increased costs.

Our efforts are directed

toward generating positive cash flow and, ultimately, profitability.

As our efforts during our fiscal 2024 and since have not generated

positive cash flows, we will need to raise additional capital.

Should capital not be available to us at reasonable terms, other actions

will become necessary, including implementing cost control measures and additional efforts to generate sales.

We may also be required to take more strategic actions such as exploring strategic options for the sale of our company, the creation

of joint ventures or strategic alliances under which we will pursue business opportunities, or other alternatives.

We believe we have,

or have access to, the financial resources to weather the impacts of the FDA’s PMTA process and Bidi’s receipt of MDOs from

the FDA in 2021 and 2024, which are subject to additional FDA action and ongoing court proceedings, respectively.

However, we will require

further financing for the next twelve months, given our operating results.

As of October 31, 2025, we had working capital of approximately

$100 thousand and total cash of approximately $0.5 million.

As discussed above, these conditions and other factors raise substantial

doubt regarding our ability to continue as a going concern.

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 several factors that could

result in the need to raise additional funds, including a decline in revenue, a lack of anticipated sales growth, and increased costs.

Our efforts are directed toward generating positive cash flow and, ultimately, profitability.

As our efforts during our fiscal 2025 and

since have not generated positive cash flows, we will need to raise additional capital.

Should capital not be available to us at reasonable

terms, other actions will become necessary, including implementing cost control measures and additional efforts to generate sales.

may also be required to take more strategic actions such as exploring strategic options for the sale of our company, the creation of joint

ventures or strategic alliances under which we will pursue business opportunities, or other alternatives.

We believe we have, or have

access to, the financial resources to weather the impacts of the FDA’s PMTA process and Bidi’s receipt of MDOs from the FDA

in 2021, 2024 and 2025.

Net cash flows used in operations was approximately

$0.7 million for fiscal year ended 2024, compared to cash flow used in operations of approximately $3.0 million for fiscal year ended

The decrease in cash flows used in operations for the fiscal year ended 2024 compared to the fiscal year ended 2023 was primarily

due to changes in Other receivable – related party, Accounts receivable, Income tax receivable, and Accounts

payable – related party (such related party being our affiliate, Bidi, as described further below under Results of Operations).

Net cash flows used in investing activities was zero

for the fiscal year ended 2024, compared to approximately $0.3 million cash flow used in investing activities for the fiscal year ended

The cash used in investing activities for the fiscal year ended 2023 consisted of cash used for the purchase of warehouse equipment

and used for the transaction acquisition costs associated with the purchase of the GoFire, intellectual property.

Net cash flows provided by financing activities was

approximately $4.1 million for the fiscal year ended 2024, compared to approximately $0.1 million provided by financing activities for

the fiscal year ended 2023.

$2.8 million for fiscal year ended 2025, compared to net cash flows used in operations of approximately $0.7 million for fiscal year ended

The increase in cash flows used in operations for the fiscal year ended 2025 compared to the fiscal year ended 2024 was primarily

due to lower revenue.

Net cash flows used in financing activities was approximately

$0.6 million for the fiscal year ended 2025, compared to approximately $4.0 million provided by financing activities for the fiscal year

The cash used in financing activities for the fiscal year 2025 consisted primarily of payments on preferred dividends and

payments on loans payables.

The cash provided by financing activities for the fiscal year ended 2024 consisted primarily from the issuance

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to fiscal year ended October 31, 2024

Revenues for fiscal

year ended 2024 were approximately $6.9 million, compared to approximately $13.1 million in fiscal year ended 2023.

Revenues decreased

in fiscal year ended 2024, primarily due to sales pressure related to the MDO received in January 2024, which resulted in the decrease

in the number of sticks sold to customers.

Cost of Revenue, Net and Gross Profit (Loss):

Revenues for fiscal year ended 2025 were approximately

$0.5 million, compared to approximately $6.9 million in fiscal year ended 2024.

Revenues decreased in fiscal year ended 2025, primarily

due to a decrease in product sales to customers and also due to the decrease in royalty revenue.

Cost of Revenue, Net and Gross Profit:

Gross profit in fiscal year ended 2025 was approximately

$0.5 million, compared to approximately $2.6 million for fiscal year ended 2024.

Total cost of revenue was approximately $4.3 million

for fiscal year ended 2024, compared to approximately $10.5 million for fiscal year ended 2023.

The slight increase in gross profit volume

is primarily driven by the decrease in cost of revenue.

Total cost of revenue, net was zero for the fiscal year

ended 2025, compared to approximately $4.3 million for fiscal year ended 2024.

The decrease in gross profit is due to the reduction of

product sales to customers during the fiscal year ended 2025.

Operating Expenses:

Total operating expenses were approximately $8.3 million

for fiscal year ended 2024, compared to approximately $13.2 million for fiscal year ended 2023.

For the fiscal year ended 2024, operating

expenses consisted primarily of advertising and promotion fees of approximately $0.7 million, stock option compensation expense of approximately

$0.1 million, professional fees of approximately $2.9 million, salaries and wages of $1.8 million, and all other general and administrative

expenses of approximately $2.8 million.

In fiscal year ended 2023, operating expenses consisted primarily of advertising and

promotion fees of approximately $2.5 million, stock option compensation expense of approximately $3.2 million, professional fees of approximately

$2.7 million, salaries and wages of $2.0 million, and all other general and administrative expenses of approximately $2.8 million.

Total operating expenses were approximately $17.1 million for fiscal

year ended 2025, compared to approximately $8.3 million for fiscal year ended 2024.

For the fiscal year ended 2025, operating expenses

consisted primarily of professional fees of approximately $4.6 million, gain on termination of operating lease of $0.06 million , salaries and

wages of $0.6 million, loss on impairment of intangible assets of $9.9 million, and all other general and administrative expenses of approximately

$2.0 million.

For the fiscal year ended 2024, operating expenses consisted primarily of advertising and promotion fees of approximately

$0.7 million, stock option compensation expense of approximately $0.1 million, professional fees of approximately $2.9 million, salaries

and wages of $1.8 million, and all other general and administrative expenses of approximately $2.8 million.

Income Taxes:

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With the changes instituted by

the CARES Act, the Federal NOLs have an indefinite life and will not expire.

Our federal and state tax returns for the 2022 and 2023 tax

years generally remain subject to examination by U.S.

the CAREES Act, the Federal NOLs have an indefinite life and will not expire.

Our federal and state tax returns for the 2023 and 2024

tax years generally remain subject to examination by U.S.

and various state authorities.

A valuation allowance is recorded to reduce the deferred

tax asset if, based on the weight of the evidence, it is more likely than not that some portion or all the deferred tax assets will not

Management determined that a valuation allowance of approximately $8.7 million for the year ended on October 31, 2024, was

necessary to reduce the deferred tax asset to the amount that will more likely than not be realized.

A valuation allowance is recorded to reduce the

deferred tax asset if, based on the weight of the evidence, it is more likely than not that some portion or all the deferred tax assets

will not be realized.

Management determined that a valuation allowance of approximately $10.1 million for the year ended on

October 31, 2025, was necessary to reduce the deferred tax asset to the amount that will more likely than not be realized.

Please refer to Note 9, Income Tax, in the Notes

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Net loss for fiscal year ended 2025 was approximately

$(6.7) million, or $(1.62) basic and diluted net loss per share, compared to a net loss of approximately $(11.1) million, or $(4.13) basic

and diluted net loss per share, for fiscal year 2023.

The decrease in net loss for the fiscal year 2024, as compared to net loss in fiscal

year 2023, is attributable to the revenues and expenses factors noted above.

Weighted-average Common Stock outstanding were 4,313,900

on October 31, 2024, as compared to 2,721,080 on October 31, 2023.

The increase in the weighted-average shares in fiscal year 2024 was

primarily attributable to the issuance of 5,723,916 shares of Common Stock.

$(16.7) million, or $(1.51) basic and diluted net loss per share, compared to a net loss of approximately $(6.7)

million, or $(1.62) basic and diluted net loss per share, for fiscal year 2024.

The increase in net loss for the fiscal year 2025,

as compared to net loss in fiscal year 2024, is attributable to the revenues and expenses factors noted above.

Weighted-average Common

Stock outstanding were 11,032,569 on October 31, 2025, as compared to 4,313,900 on October 31, 2024.

The increase in the weighted-average

shares in fiscal year 2025 was primarily attributable to the issuance of 3,076,100 shares of Common Stock.

Concentrations:

Financial instruments, which potentially subject

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

Financial instruments, which potentially subject us

to concentrations of credit risk, consist primarily of accounts payable, accounts receivable, and revenue.

Concentration of Purchases and Accounts Payable-

Related Party:

the year ended October 31, 2024, 100% of the inventories of products, consisting solely of

the BIDI ® Stick, were purchased from Bidi, a related party, in the amount

of $0.3 million, as compared to $12.8 million for the year ended October 31, 2023.

For the year ended October 31, 2025, the Company had

no inventory on hand.

As of October 31, 2024, 100% of the inventories of products, consisting solely of the BIDI ® Stick,

were purchased from Bidi, a related party, in the amount of $0.3 million.

As of October 31, 2025, we had no related party receivable

As of October 31, 2025, there was $50,000 of related party accounts payable.

On October 31, 2023, a credit of $3.0 million

was applied from the related-party receivable balance to the related party accounts payable balance.

After this was applied, we had no

related party receivable balance as of October 31, 2023.

As of October 31, 2023, the related party accounts payable balance related to

purchases of inventories was $1.5 million.

As of October 31, 2024, there was $131,683 of

related party accounts payable.

Concentration of Revenues and Accounts Receivable:

For the fiscal year 2024, (i) approximately 21% of the revenue from the sale

of Products, solely consisting of the BIDI ® Stick, was generated from QuikTrip Corporation in the amount of approximately

$1.2 million, (ii) approximately 12% from GPM Investments in the amount of $0.7 million, and (iii) approximately 11% from FAVS Business,

LLC in the amount of $0.7 million.

For the fiscal year 2023, (i) approximately 16% of the revenue from the sale of Products, solely consisting

of the BIDI ® Stick, was generated from GPM Investments, LLC in the amount of approximately $2.0 million, (ii) approximately

15% from H.T.

Hackney Co in the amount of $1.8 million, (iii) approximately 15% from FAVS Business, LLC in the amount of $1.8 million,

(iv) approximately 14% from C Store Master in the amount of $1.8 million, and (v) approximately 12% from QuikTrip Corporation in the amount

of $1.5 million.

Corporation with an outstanding balance of approximately $205 accounted for 100% of the

total accounts receivable from customers, as of October 31, 2024.

FAVS Business

LLC with an outstanding balance of approximately $302,000, C Store Master with an outstanding

balance of approximately $301,000, and QuikTrip Corporation with an outstanding balance of

approximately $165,000 accounted for approximately 35%, 35%, and 19% of the total accounts

receivable from customers, respectively, as of October 31, 2023.

No revenue concentration from the sale of Products

existed for the fiscal year ended 2025.

For the fiscal year 2024, (i) approximately 21% of

the revenue from the sale of Products, solely consisting of the BIDI ® Stick, was generated from QuikTrip Corporation in

the amount of approximately $1.2 million, (ii) approximately 12% from GPM Investments in the amount of $0.7 million, and (iii) approximately

11% from FAVS Business, LLC in the amount of $0.7 million.

No accounts receivable concentration from the sale

of Products existed as of October 31, 2025.

QuikTrip Corporation with an outstanding balance of

approximately $205 accounted for 100% of the total accounts receivable from customers, as of October 31, 2024.

Cash and cash equivalents

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

There were no cash equivalents on October 31, 2024, or

October 31, 2023.

Cash as of October 31, 2024, and October 31, 2023, was $3.9 million and $0.5 million, respectively.

There were no cash equivalents as of October 31, 2025,

or October 31, 2024.

Cash as of October 31, 2025, and October 31, 2024, were approximately $0.5 million and $3.9 million, respectively.

Critical Accounting Policies and Estimates

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Products Revenue

We generate product revenue from the sale

of our products to non-retail customers.

We generate product revenue from the sale of our

products to non-retail customers.

We recognize revenue at a point in time based on management’s evaluation of when performance

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In most situations, transfer of control is considered complete when the products have been shipped to the customer.

However, when we enter

a consignment agreement with a new customer, once we ship and deliver the requested amount of the products the customer ordered to it s

distribution center for its retail sales location, we retain ownership of the delivered products until they

are delivered to their retail stores.

When the products are sold in the stores and the funds, as stated in the consignment agreement,

are remitted to us, then we record the revenues in our financial records.

We determined that a customer obtains control of the product

upon shipment when title of such product and risk of loss transfer to the customer.

Our shipping and handling costs are fulfillment costs,

and such amounts are classified as part of cost of sales.

The advance payment is not considered a significant financing component

because the period between when we transfer a promised good to a customer and when the customer pays for that good is short.

credit sales arrangements to non-retail (or wholesale) customers and monitor the collectability of each credit sale routinely .

However, when we

enter a consignment agreement with a new customer, once we ship and deliver the requested amount of the products the customer ordered

to its distribution center for its retail sales location, we retain ownership of the delivered products until they are delivered to their

retail stores.

When the products are sold in the stores and the funds, as stated in the consignment agreement, are remitted to us, then

we record the revenues in our financial records.

We determined that a customer obtains control of the product upon shipment when title

of such product and risk of loss transfer to the customer.

Our shipping and handling costs are fulfillment costs, and such amounts are

classified as part of cost of sales.

The advance payment is not considered a significant financing component because the period

between when we transfer a promised good to a customer and when the customer pays for that good is short.

We offer credit sales arrangements

to non-retail (or wholesale) customers and monitor the collectability of each credit sale routinely.

Quantitative and Qualitative Disclosures

3 unchanged sentences

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 7. Management’s Discussion and Analysis