Organization and Description of Business	9 Months Ended
Jul. 31, 2022
Accounting Policies [Abstract]
Organization and Description of Business	Note 1 – Organization and Description of Business Kaival Brands Innovations Group, Inc. (the “Company,” the “Registrant,” “we,” “us,” or “our”), formerly known as Quick Start Holdings, Inc., was incorporated on September 4, 2018 in the State of Delaware. Description of Business In March 2020, the Company commenced business operations as a result of becoming the exclusive distributor of certain ENDS and related components (the “Products”) manufactured by Bidi Vapor, LLC (“Bidi”), a related party company that is also owned by Nirajkumar Patel, the Chief Science and Regulatory Officer of the Company. On March 9, 2020, the Company entered into an exclusive distribution agreement (the “Distribution Agreement”) with Bidi, which Distribution Agreement was amended and restated on May 21, 2020 and again on April 20, 2021 (collectively, the “A&R Distribution Agreement”). Pursuant to the A&R Distribution Agreement, Bidi granted the Company an exclusive worldwide right to distribute the Products for sale and resale to both retail level customers and non-retail level customers. Currently, the Products consist primarily of the “BIDI^® Stick.” The Company ceased all retail/direct-to-consumer sales in February 2021. On June 10, 2022, the Company entered into a third amended and restated exclusive distribution agreement (the “Third A&R Distribution Agreement”) which memorializes the Company’s current business relationship with Bidi. On August 31, 2020, the Company formed Kaival Labs, Inc., a Delaware corporation (herein referred to as “Kaival Labs”), as a wholly owned subsidiary of the Company, for the purpose of developing Company-branded and white-label products and services. On March 11, 2022, the Company formed Kaival Brands International, LLC, a Delaware limited liability company (herein referred to as “KBI”), as a wholly owned subsidiary of the Company, for the purpose of entering into an international licensing agreement with Philip Morris Products S.A. (“PMPSA”), a wholly owned affiliate of Philip Morris International Inc. (“PMI”). On July 16, 2021, the Company filed a Certificate of Amendment to the Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect a 1-for-12 reverse stock split (the “Reverse Stock Split”) of the shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The Reverse Stock Split was effective as of 12:01 a.m. Eastern time on July 20, 2021. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares of Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole number. In connection with the Reverse Stock Split, the Board of Directors (the “Board”) approved appropriate and proportional adjustments to all outstanding securities or other rights convertible or exercisable into shares of Common Stock, including, without limitation, all preferred stock, warrants, options, and other equity compensation rights. All historical share and per-share amounts reflected throughout our consolidated financial statements and other financial information in this Quarterly Report have been adjusted to reflect the Reverse Stock Split as if the split occurred as of the earliest period presented. The par value per share of the Common Stock was not affected by the Reverse Stock Split. *Current Product Offerings* Pursuant to the Third A&R Distribution Agreement, the Company sells and resells electronic nicotine delivery systems, which it may refer to herein as “ENDS Products”, or “e-cigarettes”, to non-retail level customers. The sole Product the Company resells is the “BIDI^® Stick,” a disposable, tamper-resistant ENDS product that comes in a variety of flavor options for adult cigarette smokers. The Company does not manufacture any of the Products it resells. The BIDI^® Stick is manufactured by Bidi. Pursuant to the terms of the Third A&R Distribution Agreement, Bidi provides the Company with all branding, logos, and marketing materials to be utilized by the Company in connection with its marketing and promotion of the Products. On July 14, 2021, the Company announced plans to launch its first Kaival-branded product, a Hemp CBD vaping product. In addition to its branded formulation, the Company anticipates that it will also provide white label, wholesale solutions for other product manufacturers through its subsidiary, Kaival Labs. The Company has not yet launched any branded product, nor has it begun to provide white label wholesale solutions for other product manufacturers. COVID-19 Impact In March 2020, the World Health Organization (the “WHO”) announced a global health emergency because of a new strain of coronavirus (“COVID-19”) originating in Wuhan, China and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in global exposure. The Company was indirectly impacted by supply chain issues and regulatory oversight. The Company believes that many retailers and distributers relaxed their compliance standards as an indirect result of COVID-19 for two reasons: (i) government enforcement of regulations was very limited due to imposed social restrictions, resulting in less in-person monitor enforcement by government officials and (ii) retail stores experienced light foot traffic from customers due to COVID-19 restrictions and fears, which resulted in relaxed compliance in an effort to generate additional revenue. Impact of the FDA PMTA Decision and Subsequent Court Actions As of March 2022, the FDA announced that it has taken action on over 99% of applications and issued Marketing Denial Orders (“MDOs”) for more than 1,167,000 non-tobacco flavored ENDS products, while issuing zero marketing authorizations for such products. Bidi, along with nearly every other company in the ENDS industry, received a MDO for its non-tobacco flavored ENDS products. With respect to Bidi, the MDO covered all non-tobacco flavored BIDI® Sticks, including its Arctic (menthol) BIDI® Stick. As a result, beginning in September 2021, Bidi pursued multiple avenues to challenge the MDO. First, on September 21, 2021, separate from the judicial appeal of the MDO in its entirety, Bidi filed a 21 C.F.R. § 10.75 internal FDA review request specifically of the decision to include the Arctic (menthol) BIDI® Stick in the MDO. In May 2022, the FDA issued a determination that it views the Arctic BIDI® Stick as a flavored ENDS product, and not strictly a menthol flavored product. On September 29, 2021, Bidi petitioned the U.S. Court of Appeals for the Eleventh Circuit (the “11th Circuit”) to review the FDA’s denial of the PMTAs for its non-tobacco flavored BIDI® Stick ENDS, arguing that it was arbitrary and capricious under the Administrative Procedure Act (“APA”), as well as ultra vires, for the FDA not to conduct any scientific review of Bidi’s comprehensive applications, as required by the Tobacco Control Act (“TCA”), to determine whether the BIDI® Sticks are “appropriate for the protection of the public health”. Bidi further argued that the FDA violated due process and the APA by failing to provide fair notice of the FDA’s new requirement for ENDS companies to conduct long-term comparative smoking cessation studies for their flavored products, and that FDA should have gone through the notice and comment rulemaking process for this requirement. On October 14, 2021, Bidi requested that the FDA re-review the MDO and reconsider its position that Bidi did not include certain scientific data in its applications sufficient to allow the PMTAs to proceed to scientific review. In light of this request, on October 22, 2021, pursuant to 21 C.F.R. § 10.35(a), the FDA issued an administrative stay of Bidi’s MDO pending its re-review. Subsequently, the FDA decided not to rescind the MDO and lifted its administrative stay on December 17, 2021. Following the lifting of the FDA’s administrative stay, Bidi filed a renewed motion to stay the MDO with the 11th Circuit. On February 1, 2022, the appellate court granted Bidi’s motion to stay (i.e., put on hold) the MDO, pending the litigation on the merits. Oral arguments in the merits-based proceeding were held on May 17, 2022. On August 23, 2022, the U.S. Court of Appeals for the Eleventh Circuit set aside the MDO issued to the non-tobacco flavored BIDI® Sticks and remanded Bidi’s Premarket Tobacco Product Application (“PMTA”) back to FDA for further review. Specifically, the Court held that the MDO was “arbitrary and capricious” in violation of the Administrative Procedure Act (“APA”) because FDA failed to consider the relevant evidence before it, specifically Bidi’s aggressive and comprehensive marketing and sales-access-restrictions plans designed to prevent youth appeal and access. See Bidi Vapor LLC v. U.S. Food & Drug Administration, __ F.4th __, No. 21-13340, 2022 U.S. App. LEXIS 23607 (11th Cir. Aug. 23, 2022). FDA could appeal the 11th Circuit’s decision by seeking a panel rehearing or a rehearing “en banc” (a review by the entire 11th Circuit, not just the panel that issued the decision) within 45 days of the decision (i.e., by October 7, 2022) or, within 90 days of the final judgment being entered, by filing a petition for writ of certiorari seeking review by the U.S. Supreme Court. If FDA files a petition for a panel rehearing or rehearing en banc, then the 11^th Circuit’s mandate (which is when the judgement takes effect) will not issue. In the event of a petition for writ of certiorari to the Supreme Court, the mandate issues unless FDA files a motion to stay the mandate. If a petition for an en banc hearing is granted, the underlying decision and judgment is vacated. Accordingly, if FDA chooses to appeal the 11th Circuit’s decision or seek review from the Supreme Court, the Company anticipates Bidi will be able to continue marketing and selling the non-tobacco flavored BIDI® Sticks, subject to FDA’s enforcement discretion, for at least the duration of such an appeal. Alternatively, FDA could decide not to appeal the 11th Circuit’s decision and move forward with a review of Bidi’s PMTA on remand, as directed by the Court. It is unclear how long this process could take or how FDA might prioritize Bidi’s application. For example, earlier in 2022, in a PMTA MDO challenge in the 9th Circuit, FDA agreed to re-review its basis of the petitioner My Vape Order’s MDO; the parties accordingly requested the court place the MDO appeal in abeyance pending completion of FDA’s re-review. FDA estimated that it would not be able to complete its re-review of those PMTAs until at least January 2024. See My Vape Order, Inc. v. U.S. Food & Drug Administration, No. 21-71302, 9th Cir., 2022 U.S. App. LEXIS 20306. While FDA could narrowly interpret the Court’s ruling as an order to review only Bidi’s marketing and sales-access restrictions plans, the Company believes that the 11th Circuit’s opinion makes clear that all relevant evidence in an application must be considered. A complete scientific review of the PMTA would require FDA to review all of this information before making an “appropriate for the protection of public health” (known as “APPH”) determination; based on FDA’s history, this scientific review process could take 1-2 years to complete, or longer. In the event of a decision adverse to Bidi following a rehearing by the 11th Circuit or from the Supreme Court, or if the FDA otherwise chooses to enforce against Bidi, because its products are not yet authorized, or if the FDA issues another MDO for Bidi’s non-tobacco flavored ENDS after completing its review of the PMTAs on remand, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI® Stick products in the United States, thereby resulting in the Company being unable to distribute such products, leaving only the tobacco-flavored (Classic) BIDI® Sticks for sale in the United States (pending FDA’s review of that PMTA), and the Company’s business and financial condition would be materially adversely affected. The Company cannot provide any assurances as to the timing or outcome of a potential appeal of the 11th Circuit’s decision, or FDA’s review of the PMTAs on remand. Separately, on or about May 13, 2022, FDA placed the tobacco-flavored Classic BIDI® Stick into the final Phase III scientific review.

Organization and Description of Business

9 Months Ended

Jul. 31, 2022

Organization and Description of Business

Note 1 – Organization and Description of Business

Kaival Brands Innovations Group, Inc. (the “Company,” the “Registrant,” “we,” “us,” or “our”), formerly known as Quick Start Holdings, Inc., was incorporated on September 4, 2018 in the State of Delaware.

Description of Business

In March 2020, the Company commenced business operations as a result of becoming the exclusive distributor of certain ENDS and related components (the “Products”) manufactured by Bidi Vapor, LLC (“Bidi”), a related party company that is also owned by Nirajkumar Patel, the Chief Science and Regulatory Officer of the Company.

On March 9, 2020, the Company entered into an exclusive distribution agreement (the “Distribution Agreement”) with Bidi, which Distribution Agreement was amended and restated on May 21, 2020 and again on April 20, 2021 (collectively, the “A&R Distribution Agreement”). Pursuant to the A&R Distribution Agreement, Bidi granted the Company an exclusive worldwide right to distribute the Products for sale and resale to both retail level customers and non-retail level customers. Currently, the Products consist primarily of the “BIDI^® Stick.” The Company ceased all retail/direct-to-consumer sales in February 2021. On June 10, 2022, the Company entered into a third amended and restated exclusive distribution agreement (the “Third A&R Distribution Agreement”) which memorializes the Company’s current business relationship with Bidi.

On August 31, 2020, the Company formed Kaival Labs, Inc., a Delaware corporation (herein referred to as “Kaival Labs”), as a wholly owned subsidiary of the Company, for the purpose of developing Company-branded and white-label products and services. On March 11, 2022, the Company formed Kaival Brands International, LLC, a Delaware limited liability company (herein referred to as “KBI”), as a wholly owned subsidiary of the Company, for the purpose of entering into an international licensing agreement with Philip Morris Products S.A. (“PMPSA”), a wholly owned affiliate of Philip Morris International Inc. (“PMI”).

On July 16, 2021, the Company filed a Certificate of Amendment to the Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect a 1-for-12 reverse stock split (the “Reverse Stock Split”) of the shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The Reverse Stock Split was effective as of 12:01 a.m. Eastern time on July 20, 2021. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares of Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole number. In connection with the Reverse Stock Split, the Board of Directors (the “Board”) approved appropriate and proportional adjustments to all outstanding securities or other rights convertible or exercisable into shares of Common Stock, including, without limitation, all preferred stock, warrants, options, and other equity compensation rights. All historical share and per-share amounts reflected throughout our consolidated financial statements and other financial information in this Quarterly Report have been adjusted to reflect the Reverse Stock Split as if the split occurred as of the earliest period presented. The par value per share of the Common Stock was not affected by the Reverse Stock Split.

Current Product Offerings

Pursuant to the Third A&R Distribution Agreement, the Company sells and resells electronic nicotine delivery systems, which it may refer to herein as “ENDS Products”, or “e-cigarettes”, to non-retail level customers. The sole Product the Company resells is the “BIDI^® Stick,” a disposable, tamper-resistant ENDS product that comes in a variety of flavor options for adult cigarette smokers. The Company does not manufacture any of the Products it resells. The BIDI^® Stick is manufactured by Bidi. Pursuant to the terms of the Third A&R Distribution Agreement, Bidi provides the Company with all branding, logos, and marketing materials to be utilized by the Company in connection with its marketing and promotion of the Products.

On July 14, 2021, the Company announced plans to launch its first Kaival-branded product, a Hemp CBD vaping product. In addition to its branded formulation, the Company anticipates that it will also provide white label, wholesale solutions for other product manufacturers through its subsidiary, Kaival Labs. The Company has not yet launched any branded product, nor has it begun to provide white label wholesale solutions for other product manufacturers.

COVID-19 Impact

In March 2020, the World Health Organization (the “WHO”) announced a global health emergency because of a new strain of coronavirus (“COVID-19”) originating in Wuhan, China and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in global exposure.

The Company was indirectly impacted by supply chain issues and regulatory oversight. The Company believes that many retailers and distributers relaxed their compliance standards as an indirect result of COVID-19 for two reasons: (i) government enforcement of regulations was very limited due to imposed social restrictions, resulting in less in-person monitor enforcement by government officials and (ii) retail stores experienced light foot traffic from customers due to COVID-19 restrictions and fears, which resulted in relaxed compliance in an effort to generate additional revenue.

Impact of the FDA PMTA Decision and Subsequent Court Actions

As of March 2022, the FDA announced that it has taken action on over 99% of applications and issued Marketing Denial Orders (“MDOs”) for more than 1,167,000 non-tobacco flavored ENDS products, while issuing zero marketing authorizations for such products.

Bidi, along with nearly every other company in the ENDS industry, received a MDO for its non-tobacco flavored ENDS products. With respect to Bidi, the MDO covered all non-tobacco flavored BIDI® Sticks, including its Arctic (menthol) BIDI® Stick. As a result, beginning in September 2021, Bidi pursued multiple avenues to challenge the MDO. First, on September 21, 2021, separate from the judicial appeal of the MDO in its entirety, Bidi filed a 21 C.F.R. § 10.75 internal FDA review request specifically of the decision to include the Arctic (menthol) BIDI® Stick in the MDO. In May 2022, the FDA issued a determination that it views the Arctic BIDI® Stick as a flavored ENDS product, and not strictly a menthol flavored product.

On September 29, 2021, Bidi petitioned the U.S. Court of Appeals for the Eleventh Circuit (the “11th Circuit”) to review the FDA’s denial of the PMTAs for its non-tobacco flavored BIDI® Stick ENDS, arguing that it was arbitrary and capricious under the Administrative Procedure Act (“APA”), as well as ultra vires, for the FDA not to conduct any scientific review of Bidi’s comprehensive applications, as required by the Tobacco Control Act (“TCA”), to determine whether the BIDI® Sticks are “appropriate for the protection of the public health”. Bidi further argued that the FDA violated due process and the APA by failing to provide fair notice of the FDA’s new requirement for ENDS companies to conduct long-term comparative smoking cessation studies for their flavored products, and that FDA should have gone through the notice and comment rulemaking process for this requirement.

On October 14, 2021, Bidi requested that the FDA re-review the MDO and reconsider its position that Bidi did not include certain scientific data in its applications sufficient to allow the PMTAs to proceed to scientific review. In light of this request, on October 22, 2021, pursuant to 21 C.F.R. § 10.35(a), the FDA issued an administrative stay of Bidi’s MDO pending its re-review. Subsequently, the FDA decided not to rescind the MDO and lifted its administrative stay on December 17, 2021. Following the lifting of the FDA’s administrative stay, Bidi filed a renewed motion to stay the MDO with the 11th Circuit. On February 1, 2022, the appellate court granted Bidi’s motion to stay (i.e., put on hold) the MDO, pending the litigation on the merits. Oral arguments in the merits-based proceeding were held on May 17, 2022.

On August 23, 2022, the U.S. Court of Appeals for the Eleventh Circuit set aside the MDO issued to the non-tobacco flavored BIDI® Sticks and remanded Bidi’s Premarket Tobacco Product Application (“PMTA”) back to FDA for further review. Specifically, the Court held that the MDO was “arbitrary and capricious” in violation of the Administrative Procedure Act (“APA”) because FDA failed to consider the relevant evidence before it, specifically Bidi’s aggressive and comprehensive marketing and sales-access-restrictions plans designed to prevent youth appeal and access. See Bidi Vapor LLC v. U.S. Food & Drug Administration, __ F.4th __, No. 21-13340, 2022 U.S. App. LEXIS 23607 (11th Cir. Aug. 23, 2022).

FDA could appeal the 11th Circuit’s decision by seeking a panel rehearing or a rehearing “en banc” (a review by the entire 11th Circuit, not just the panel that issued the decision) within 45 days of the decision (i.e., by October 7, 2022) or, within 90 days of the final judgment being entered, by filing a petition for writ of certiorari seeking review by the U.S. Supreme Court. If FDA files a petition for a panel rehearing or rehearing en banc, then the 11^th Circuit’s mandate (which is when the judgement takes effect) will not issue. In the event of a petition for writ of certiorari to the Supreme Court, the mandate issues unless FDA files a motion to stay the mandate. If a petition for an en banc hearing is granted, the underlying decision and judgment is vacated. Accordingly, if FDA chooses to appeal the 11th Circuit’s decision or seek review from the Supreme Court, the Company anticipates Bidi will be able to continue marketing and selling the non-tobacco flavored BIDI® Sticks, subject to FDA’s enforcement discretion, for at least the duration of such an appeal.

Alternatively, FDA could decide not to appeal the 11th Circuit’s decision and move forward with a review of Bidi’s PMTA on remand, as directed by the Court. It is unclear how long this process could take or how FDA might prioritize Bidi’s application. For example, earlier in 2022, in a PMTA MDO challenge in the 9th Circuit, FDA agreed to re-review its basis of the petitioner My Vape Order’s MDO; the parties accordingly requested the court place the MDO appeal in abeyance pending completion of FDA’s re-review. FDA estimated that it would not be able to complete its re-review of those PMTAs until at least January 2024. See My Vape Order, Inc. v. U.S. Food & Drug Administration, No. 21-71302, 9th Cir., 2022 U.S. App. LEXIS 20306.

While FDA could narrowly interpret the Court’s ruling as an order to review only Bidi’s marketing and sales-access restrictions plans, the Company believes that the 11th Circuit’s opinion makes clear that all relevant evidence in an application must be considered. A complete scientific review of the PMTA would require FDA to review all of this information before making an “appropriate for the protection of public health” (known as “APPH”) determination; based on FDA’s history, this scientific review process could take 1-2 years to complete, or longer.

In the event of a decision adverse to Bidi following a rehearing by the 11th Circuit or from the Supreme Court, or if the FDA otherwise chooses to enforce against Bidi, because its products are not yet authorized, or if the FDA issues another MDO for Bidi’s non-tobacco flavored ENDS after completing its review of the PMTAs on remand, Bidi will be forced to cease the continued sale of its non-tobacco flavored BIDI® Stick products in the United States, thereby resulting in the Company being unable to distribute such products, leaving only the tobacco-flavored (Classic) BIDI® Sticks for sale in the United States (pending FDA’s review of that PMTA), and the Company’s business and financial condition would be materially adversely affected. The Company cannot provide any assurances as to the timing or outcome of a potential appeal of the 11th Circuit’s decision, or FDA’s review of the PMTAs on remand.

Separately, on or about May 13, 2022, FDA placed the tobacco-flavored Classic BIDI® Stick into the final Phase III scientific review.