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Kaival Brands Innovations Group Inc. (NASDAQ: KAVL)

Kaival Brands Innovations Group Inc. (NASDAQ: KAVL) is a company focused on growing and incubating innovative and profitable products into mature and dominant brands in their respective markets. Its vision is to develop internally, acquire, own or exclusively distribute these innovative products and grow each into dominant market-share brands with superior quality and recognizable innovation. In line with this vision, Kaival Brands is the exclusive global distributor of all products manufactured by Bidi Vapor LLC, which are intended exclusively for adults 21 and over.

Kaival Brands is on a mission to set the highest standard and elevate the adult consumer experience for vaping. The company is headquartered in Grant, Florida.

Bidi® Stick

Bidi® Stick, Bidi Vapor LLC’s primary offering, is the fastest-growing closed system disposable electronic nicotine delivery system (ENDS) in the U.S.

Intended exclusively for adults 21 and over, the one-time use device is designed with premium features, including a high-quality battery, satisfying Class A nicotine offering consistently smooth throat hits and an aluminum body. Bidi Stick is ready to use straight from the package, providing a consistent and precise amount of nicotine with every draw.

Bidi Stick and all Bidi Vapor products are sold primarily through national convenience stores, as well as online exclusively through authorized direct retailers and GoPuff, the digital convenience store.

Bidi® Cares Initiative

The tamper-resistant Bidi Stick is the only ENDS on the market with an ecologically friendly, mass-recycling program. The Bidi® Cares initiative focuses on promoting sustainable practices to save the environment, one step at a time, through proper disposal of vapor products.

Through Bidi Cares, Kaival Brands and Bidi Vapor aim to promote and educate consumers on the dangers of improper waste disposal.

Recent Corporate Developments

  • December 6, 2021: Kaival Brands announced a partnership with Koupon to create an electronic engagement program involving Koupon’s digital promotion platform. The partnership will offer customers who purchase the BIDI Stick digital opportunities based on their purchases.
  • December 14, 2021: The company reported that 80% of adult participants in a recent survey of e-cigarette users and cigarette smokers in the United Kingdom preferred the BIDI Stick over their current options, according to data from Voccii LLC. Per the news release, this conclusion cut across device type, as the BIDI Stick was compared against open-systems, cartridges/pods and other disposable e-cigarettes.
  • February 16, 2022: Kaival Brands reported its financial results for the fiscal year ended October 31, 2021. The company recorded total revenues of approximately $58.8 million for the 12-month period despite the FDA’s issuance of Bidi Vapor’s marketing denial order (MDO), which prevented Kaival Brands from marketing the non-tobacco flavored BIDI Sticks in the United States toward the end of the fiscal year. A court ruling on February 1, 2022, put a stay on the MDO pending litigation on its merits, meaning that the MDO is not currently legally in force.

Market Outlook

The U.S. e-cigarette and vape market was valued at $6.09 billion in 2020, according to data from Grand View Research. The firm expects the industry to expand at a compound annual growth rate of 27.3% from 2021 to 2028, with growth factors including rising awareness of tobacco alternatives.

Management Team

Nirajkumar Patel is the CEO, President, Treasurer and Director of Kaival Brands and owner of Bidi Vapor LLC. In 2004, Mr. Patel received a Bachelor of Science in pharmaceutical sciences from AISSMS College of Pharmacy in Pune, India. He moved to the United States in 2005, and he continued his education at the Florida Institute of Technology, where he graduated in 2009 with a master’s degree in medicinal and pharmaceutical chemistry. He currently holds a Six Sigma Black Belt Certification.

Eric Mosser is the COO, Secretary and Director of Kaival Brands. Mr. Mosser attended Arizona State University, where he studied business management. In 2004, he graduated from Rio Salado College with an associate degree in applied science in computer technology.

Mark Thoenes is the Interim CFO of Kaival Brands. A senior/c-suite level executive with more than 35 years of diverse financial and operational leadership, he has been a licensed CPA since 1984. Mr. Thoenes began his career with Ernst & Young Global Ltd. From 2000 to 2010, he served as the EVP/CFO of Rentrak Corporation. For the past 11 years, Mr. Thoenes has been the President of MLT Consulting Services LLC, a full-service business/financial consulting firm.

Paul Reuter is a Director of Kaival Brands. He brings to the company nearly five decades of industry experience in small box retail as a journalist, editorial director, entrepreneur and speaker. Mr. Reuter has launched two successful businesses, including MidWest Retail Group LLC, which was the largest U.S. 7-Eleven franchise group, where he served as Chairman and founding partner from April 2013 through June 2019. He is also the founder of Kreative Collaborations LLC, an industry consultancy.

Roger Brooks is a Director of Kaival Brands. Since 2005, he has served as the Chairman, Treasurer and Co-Founder of Abierto Networks. Prior to his roles with Abierto, Mr. Brooks was the lead independent director and a member of the compensation and audit committees for Moldflow Corporation, a Nasdaq-listed software firm that was sold to Autodesk Inc. in 2008. He holds a Bachelor of Arts degree from the University of Connecticut and a Master of Business Administration degree from New York University, Stern Graduate Business School. He is also a graduate of the Stanford University Executive Management Program.

George Chuang is a Director of Kaival Brands. After graduating from the University of Chicago, he spent time at Manhattan Bank as an Assistant Treasurer for its Credit Risk Department. After earning his MBA from Yale University, he worked as a management consultant at Pricewaterhouse Management Consulting, followed by a stint as the Chief Administrative Officer for several equity product sales groups at Lehman Brothers. Four years ago, Mr. Chuang founded and is currently the CEO of Lucy Labs Inc., an asset management firm focused on cryptocurrency algorithmic trading.

Investment Considerations
  • Kaival Brands is the exclusive global distributor for Bidi Vapor LLC, including the Bidi® Stick.
  • Bidi Stick is the fastest-growing closed system disposable electronic nicotine delivery system in the U.S.
  • Kaival Brands commenced trading on The Nasdaq Capital Market on July 29, 2021, subsequently closing a successful underwritten public offering of approximately $8.3 million in September 2021.
  • The U.S. e-cigarette and vape market is forecast to achieve a 27.3% CAGR from 2021 to 2028, reaching a valuation of $40.25 billion, according to Grand View Research.
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