Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Apr. 30, 2020 | May 27, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | Kaival Brands Innovations Group, Inc. | |
Entity Central Index Key | 0001762239 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Shell Company? | false | |
Is Entity Emerging Growth Company? | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 572,364,574 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Interactive Data Current | Yes | |
Incorporation State | DE | |
File Number | 000-56016 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Apr. 30, 2020 | Oct. 31, 2019 |
CURRENT ASSETS: | ||
Cash in bank | $ 1,970,682 | $ 0 |
Accounts receivable | 3,213,920 | 0 |
Accounts receivable - related parties | 5,070 | 0 |
Inventories | 16,419 | 0 |
Total Current Assets | 5,206,091 | 0 |
TOTAL ASSETS | 5,206,091 | 0 |
CURRENT LIABILITIES: | ||
Accrued expenses | 1,162,282 | 44,886 |
Accounts payable | 19,493 | 0 |
Accounts payable - related party | 1,259,145 | 0 |
Total Current Liabilities | 2,440,920 | 44,886 |
TOTAL LIABILITIES | 2,440,920 | 44,886 |
STOCKHOLDERS' EQUITY(DEFICIT): | ||
Preferred stock ($.001 par value, 5,000,000 shares authorized, none issued and outstanding as of April 30, 2020 and October 31, 2019) | 0 | 0 |
Common stock ($.001 par value, 1,000,000,000 shares authorized, 572,364,574 issued and outstanding as of April 30, 2020 and October 31, 2019) | 572,365 | 572,365 |
Additional paid in capital | (516,869) | (544,026) |
Retained earnings (accumulated deficit) | 2,709,675 | (73,225) |
Total Stockholders' Equity (Deficit) | 2,765,171 | (44,886) |
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) | $ 5,206,091 | $ 0 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Apr. 30, 2020 | Oct. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outsanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 572,364,574 | 572,364,574 |
Common stock, shares outstanding | 572,364,574 | 572,364,574 |
Statement of Operations (Unaudi
Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | |
Revenues | ||||
Revenues | $ 22,473,674 | $ 0 | $ 22,473,674 | $ 0 |
Revenues - related parties | 32,480 | 0 | 32,480 | 0 |
Total revenues | 22,506,154 | 0 | 22,506,154 | 0 |
Cost of revenue | ||||
Cost of revenue - related party | 18,301,800 | 0 | 18,301,800 | 0 |
Total cost of revenue | 18,301,800 | 0 | 18,301,800 | 0 |
Gross profit | 4,204,354 | 0 | 4,204,354 | 0 |
Operating expenses | ||||
Selling expenses | 259,998 | 0 | 259,998 | 0 |
General & Administrative expenses | 198,092 | 4,225 | 211,025 | 18,185 |
Total operating expenses | 458,090 | 4,225 | 471,023 | 18,185 |
Income (loss) before income taxes provision | 3,746,264 | (4,225) | 3,733,331 | (18,185) |
Provision for income taxes | (950,431) | 0 | (950,431) | 0 |
Net income (loss) | $ 2,795,833 | $ (4,225) | $ 2,782,900 | $ (18,185) |
Net income (loss) per common share - basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average number of common shares outstanding - basic and diluted | 572,364,574 | 572,364,574 | 572,364,574 | 572,364,574 |
Statement of Cash Flows (Unaudi
Statement of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ 2,782,900 | $ (18,185) |
Adjustment to reconcile net income (loss) to net cash provided by operating activities: | ||
Expenses contributed to capital | 27,157 | 12,160 |
Changes in current assets and liabilities: | ||
Accounts receivable | (3,213,920) | 0 |
Accounts receivable - related parties | (5,070) | 0 |
Inventories | (16,419) | 0 |
Accounts payable | 19,493 | 0 |
Accounts payable - related party | 1,259,145 | 0 |
Accrued expenses | 1,117,396 | 6,025 |
Net cash provided by operating activities | 1,970,682 | 0 |
Net change in cash | 1,970,682 | 0 |
Beginning cash balance | 0 | 0 |
Ending cash balance | 1,970,682 | 0 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest paid | 0 | 0 |
Income taxes paid | $ 0 | $ 0 |
Statement of Changes in Stockho
Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Preferred Shares (Series A) | Preferred Shares (Series B) | Common Shares | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Total |
Balance at beginning at Oct. 31, 2018 | $ 572,365 | $ (570,989) | $ (4,376) | $ (3,000) | ||
Balance at beginning (in shares) at Oct. 31, 2018 | 572,364,574 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Expenses paid on behalf of the Company and contributed to capital | 7,210 | 7,210 | ||||
Net Income (loss) | (13,960) | (13,960) | ||||
Balance at end at Jan. 31, 2019 | $ 572,365 | (563,779) | (18,336) | (9,750) | ||
Balance at end (in shares) at Jan. 31, 2019 | 572,364,574 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Expenses paid on behalf of the Company and contributed to capital | 4,950 | 4,950 | ||||
Net Income (loss) | (4,225) | (4,225) | ||||
Balance at end at Apr. 30, 2019 | $ 572,365 | (558,829) | (22,561) | (9,025) | ||
Balance at end (in shares) at Apr. 30, 2019 | 572,364,574 | |||||
Balance at beginning at Oct. 31, 2019 | $ 572,365 | (544,026) | (73,225) | (44,886) | ||
Balance at beginning (in shares) at Oct. 31, 2019 | 572,364,574 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Expenses paid on behalf of the Company and contributed to capital | 26,457 | 26,457 | ||||
Net Income (loss) | (12,933) | (12,933) | ||||
Balance at end at Jan. 31, 2020 | $ 572,365 | (517,569) | (86,158) | (31,362) | ||
Balance at end (in shares) at Jan. 31, 2020 | 572,364,574 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Expenses paid on behalf of the Company and contributed to capital | 700 | 700 | ||||
Net Income (loss) | 2,795,833 | 2,795,833 | ||||
Balance at end at Apr. 30, 2020 | $ 572,365 | $ (516,869) | $ 2,709,675 | $ 2,765,171 | ||
Balance at end (in shares) at Apr. 30, 2020 | 572,364,574 |
Note 1 - Organization and Descr
Note 1 - Organization and Description of Business | 6 Months Ended |
Apr. 30, 2020 | |
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. USSE Corp. and USSE Delaware Merger USSE Corp., a Nevada Corporation (“USSE Nevada”), formerly known as Quick Start Holdings, Inc., was incorporated with the Nevada Secretary of State on July 8, 1998 under the original name C&A Restaurants, Inc. (“C&A Restaurants”). On June 15, 2009, C&A Restaurants changed its name to USSE Corp. Effective September 19, 2018, USSE Nevada re-domiciled from Nevada to Delaware pursuant to a merger of USSE Nevada with and into USSE Delaware, Inc., a Delaware corporation (“USSE Delaware”), with USSE Delaware as the surviving entity (the “Re-domestication Merger”). Each share of USSE Nevada’s common stock issued and outstanding immediately prior to the effective date of the Re-domestication Merger was automatically converted into one fully paid and nonassessable share of USSE Delaware. Immediately following the Re-domestication Merger, USSE Delaware was authorized to issue up to 1,005,000,000 shares, which consisted of: (i) 1,000,000,000 shares of common stock, par value $0.001 per share, of which 66,397,574 shares were issued and outstanding at such date; (ii) 5,000,000 shares of preferred stock, par value $0.001 per share, of which (a) 1,000,000 shares were designated as Convertible Series A, all of which were issued and outstanding at that date; and (b) 500,000 shares were designated as Convertible Series B, of which 71,700 Convertible Series B preferred shares were issued and outstanding at that date. Holding Company Reorganization On September 4, 2018, USSE Delaware acquired 1,000 shares of common stock of the Company, which represented 100% of the Company’s then-outstanding shares of common stock, for no consideration, resulting in the Company becoming a wholly-owned subsidiary of USSE Delaware. Also, immediately prior to the Holding Company Reorganization (as defined below), USSE Merger Sub, Inc., a Delaware corporation (“USSE Merger Sub”), was the Company’s wholly-owned subsidiary. On September 19, 2018 (the “Effective Time”), and in accordance with the provisions set forth in Section 251(g) of the Delaware General Corporation Law (“DGCL”), USSE Merger Sub, an indirect wholly-owned subsidiary of USSE Delaware and the Company’s direct wholly-owned subsidiary merged with and into USSE Delaware, the Company’s then parent (the “Holding Company Reorganization”). USSE Delaware was the surviving corporation and the Company’s wholly-owned subsidiary. USSE Delaware also changed its name to USSE Corp. following the Holding Company Reorganization. Upon completion of the Holding Company Reorganization, by virtue of the merger, and without any action on the part of the holder thereof, each share of USSE Delaware’s common stock issued and outstanding immediately prior to the Effective Time of the Holding Company Reorganization was automatically converted into one validly issued, fully paid, and non-assessable share of the Company’s common stock. Additionally, each share of USSE Delaware’s preferred stock issued and outstanding immediately prior to the Effective Time was converted into one validly issued, fully paid, and non-assessable share of the Company’s preferred stock, having the same designations, rights, powers, and preferences, and the qualifications, limitations, and restrictions thereof, as the corresponding share of USSE Delaware’s preferred stock. Each share of the Company’s common stock issued and outstanding and held by USSE Delaware immediately prior to the Effective Time was cancelled. This resulted in the Company being authorized to issue up to 1,005,000,000 shares, which consisted of: (i) 1,000,000,000 shares of common stock, par value $0.001 per share, of which 66,397,574 shares were issued and outstanding; (ii) 5,000,000 shares of preferred stock, par value $0.001 per share, of which (a) 1,000,000 shares were designated as Convertible Series A, all of which were issued and outstanding; and (b) 500,000 shares were designated as Convertible Series B, of which 71,700 shares of Convertible Series B preferred stock were issued and outstanding. Post-Holding Company Reorganization On October 19, 2018, the Company issued 500,000,000 shares of restricted common stock and 400,000 shares of Convertible Series B Preferred Stock to GMRZ Holdings LLC, a Nevada limited liability company (“GRMZ”), for services rendered to the Company. Commensurate with the filing of the Company’s Amended and Restated Certificate of Incorporation with the Delaware Secretary of State on October 22, 2018, every issued and outstanding share of Convertible Series A preferred stock was converted into 1.25 shares of common stock with shareholders’ economic rights preserved. Additionally, at the same time, every share of Convertible Series B preferred stock, issued and outstanding was converted into ten shares of common stock with stockholders’ economic rights adversely affected in the conversion. Immediately following the conversion of the aforementioned shares, and upon filing of the Amended and Restated Certificate of Incorporation, the authorized and unissued shares of Convertible Series A and Convertible Series B preferred stock were cancelled. As of October 22, 2018, Convertible Series A and Series B preferred stock were removed from the status of authorized but unissued preferred stock. On February 6, 2019, the Company entered into a non-binding Share Purchase Agreement (the “Agreement”), by and among the Company, GMRZ, and Kaival Holdings, LLC (formerly known as Kaival Brands Innovations Group, LLC), a Delaware limited liability company (formerly known as Kaival Brands Innovations Group, LLC) (“KH”), pursuant to which, on February 20, 2019, GMRZ sold 504,000,000 shares of the Company’s restricted common stock, representing approximately 88.06 percent of the Company’s issued and outstanding shares of common stock, to KH, and KH paid GMRZ consideration in the amount set forth in the Agreement (the “Purchase Price”). The consummation of the transactions contemplated by the Agreement resulted in a change in control of the Company, with KH becoming the Company’s largest controlling stockholder. The sole members of KH are Nirajkumar Patel and Eric Mosser. The Purchase Price was paid with personal funds of the members of KH. Effective July 12, 2019, we changed our corporate name from Quick Start Holdings, Inc. to Kaival Brands Innovations Group, Inc. The name change was effected through a parent/subsidiary short-form merger of Kaival Brands Innovations Group, Inc., our wholly-owned Delaware subsidiary formed solely for the purpose of the name change, with and into us. We were the surviving entity. On the effective date of the merger, our name was changed to “Kaival Brands Innovations Group, Inc.” and our Amended and Restated Certificate of Incorporation, as amended (the “Charter”), was further amended to reflect our new legal name. There were no other changes to our Charter. Currently, we have 572,364,574 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. KH, which is owned and controlled by Nirajkumar Patel and Eric Mosser, is our controlling stockholder, owning 504,000,000 shares of our restricted common stock. During the quarter ended April 30, 2020, the Company commenced business operations. Description of Business The Company is focused on growing and incubating innovative and profitable products into mature, dominant brands. During the quarter ended April 30, 2020, the Company commenced business operations as a result of becoming an exclusive distributor of certain electronic nicotine delivery systems and related components (the “Products”) manufactured by Bidi Vapor, LLC (“Bidi”), a Florida limited liability company, a related party company that is also owned by Nirajkumar Patel, the Chief Executive Officer and Chief Financial Officer of the Company. On March 9, 2020, the Company entered into an exclusive distribution agreement (the “Distribution Agreement”) with Bidi, a related party company, which Distribution Agreement was amended and restated on May 21, 2020 (the “A&R Distribution Agreement”) in order to clarify some of the provisions. 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. In connection with the A&R Distribution Agreement, the Company entered into non-exclusive sub-distribution agreements, which were subsequently amended and restated by the parties in order to clarify certain provisions (all such agreements, as amended and restated, are collectively referred to as the “A&R Sub-Distribution Agreements”), whereby the Company appointed the counterparties as non-exclusive sub-distributors. Pursuant to the A&R 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 continental United States (the “Territory”). On March 31, 2020, the Company entered into a service agreement (the “Service Agreement”) with QuikfillRx LLC, a Florida limited liability company (“QuikfillRx”), whereby QuikfillRx has agreed to provide the Company with certain services and support relating to sales management, website development and design, graphics, content, public communication, social media, management and analytics, and market and other research (collectively, the “Services”). The Services will be provided by QuikfillRx as requested from time to time by the Company. Recent Developments In January 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. As of the date of issuance of these unaudited financial statements, our operations have not been significantly impacted. No impairments were recorded as of April 30, 2020 and no triggering events or changes in circumstances had occurred. However, the full impact of the COVID-19 pandemic continues to evolve subsequent to the three and six months ended April 30, 2020 and as of the date these unaudited financial statements are issued. As such, the full magnitude of the COVID-19 pandemic, and the resulting impact, if any, on our financial condition, liquidity, and future results of operations is uncertain. Management is actively monitoring the global situation on our financial condition, liquidity, operations, suppliers, industry, and customers. Reduced demand for products or impaired ability to meet customer demand (including as a result of disruptions at our suppliers) could have a material adverse effect on our business operations and financial performance. 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 results of operations, financial condition, or liquidity for the remainder of fiscal year 2020 and beyond. As of the date of this filing, our recently commenced business operations have not been impacted. |
Note 2 - Basis of Presentation
Note 2 - Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 2 – Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the audited financial statements and notes thereto for the year ended October 31, 2019 on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements, which would substantially duplicate the disclosures contained in the audited financial statements for the year ended October 31, 2019, as reported in the Annual Report on Form 10-K filed with the SEC on January 27, 2020, have been omitted. Significant Accounting Policies Accounts Receivable and Allowance for Doubtful Accounts Receivables are stated at cost, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of accounts receivables. A considerable amount of judgment is required in assessing the amount of the allowance and the Company considers the historical level of credit losses and collection history and applies percentages to aged receivable categories. The Company makes judgments about the creditworthiness of debtors based on ongoing credit evaluations, and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the debtors were to deteriorate, resulting in their inability to make payments, a larger allowance may be required. As of April 30, 2020, the Company did not have any allowance for doubtful accounts based on management’s assessment. Inventories Inventories are stated at the lower of cost and net realizable value. Cost includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. As of April 30, 2020, the inventories only consisted of finished goods. Revenue Recognition The Company adopted ASC 606, Revenue from Contracts with Customers Products Revenue The Company generates products revenue from the sale of the Products (as defined above) to retail and non-retail customers. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and control of the Products has been transferred to the customer. In most situations, transfer of control is considered complete when the products have been shipped to the customer. The Company’s sales arrangements for retail sales usually require full prepayment before delivery of the Products. The advance payment is not considered a significant financing component because the period between the Company transfers a promised good to a customer and when the customer pays for that good is short. The Company offers credit sales arrangements to non-retail (or wholesale) customers and monitors the collectability of each credit sales periodically. Income Tax Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, “ Revenue from Contracts with Customers |
Note 3 - Going Concern
Note 3 - Going Concern | 6 Months Ended |
Apr. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 3 – Going Concern The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. Prior to March 2020, the Company demonstrated adverse conditions that raised substantial doubt about the Company’s 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. Also, the Company had not established any source of revenue to cover its operating costs. The Company’s management funded operating expenses with related party contributions to capital. However, on March 9, 2020, the Company commenced business operations upon entering into the A&R Distribution Agreement with Bidi, a related party company, whereby 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. In April, in connection with the A&R Distribution Agreement, the Company entered into the A&R Sub-Distribution Agreements with certain third-party counterparties, whereby we appointed such counterparties as non-exclusive sub-distributors. Pursuant to the A&R 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 Territory. With these agreements in effect, the Company has established sources of revenue to cover its operating costs and achieved net income of $2,782,900 during the six months ended April 30, 2020. As of April 30, 2020, the Company has a positive working capital of $2,765,171. Management plans to continue similar operations with increased marketing, which the Company believes will result in increased revenue and net income. However, 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 Quarterly Report, the previously reported going concern has been alleviated based on the reasons above, and management does not have substantial doubt of the Company’s ability to continue as a going concern. These 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 the Company cannot continue as a going concern. |
Note 4 - Stockholder Equity
Note 4 - Stockholder Equity | 6 Months Ended |
Apr. 30, 2020 | |
Equity [Abstract] | |
Stockholder Equity | Note 4 – Stockholder Equity Additional Paid-In Capital The Company’s Chief Executive Officer and Chief Financial Officer, Mr. Nirajkumar Patel, paid expenses on behalf of the Company totaling $16,257 during the six months ended April 30, 2020, which is considered a contribution to the Company with no expectation of repayment and is recorded as additional paid-in capital. The Company’s Chief Operating Officer, Mr. Eric Mosser, paid expenses on behalf of the Company totaling $10,900 during the six months ended April 30, 2020, which is considered a contribution to the Company with no expectation of repayment and is recorded as additional paid-in capital. |
Note 5 - Related-Party Transact
Note 5 - Related-Party Transactions | 6 Months Ended |
Apr. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Note 5 – Related-Party Transactions Revenue and Accounts Receivable During the six months ended April 30, 2020, the Company generated $22,460, $9,030, $880, and $110 of revenue from Cloud Nine 2012, Inc., JC Products of USA, LLC, Shree Maharaj, Inc., and Bhawani Krupa, Inc., respectively. All of these companies are owned by Nirajkumar Patel, the Chief Executive Officer and Chief Financial Officer of the Company, and/or his wife. As of April 30, 2020, the Company has accounts receivable from Cloud Nine 2012, Inc., Shree Maharaj, Inc., and Bhawani Krupa, Inc. in the amount of $4,080, $880, and $110, respectively. Purchases and Accounts Payable During the six months ended April 30, 2020, the Company purchased $18,318,219 of products from Bidi and sold $18,301,800 of goods to retail and non-retail customers. As of April 30, 2020, the Company had accounts payable to Bidi of $1,278,638. Contributed Capital During the six months ended April 30, 2020, the Company’s Chief Executive Officer / Chief Financial Officer and Chief Operating Officer provided contributed capital of $16,257 and $10,900, respectively, to the Company. For additional information, see Note 4, Additional Paid-in Capital Office Space We utilize the home office space and warehouse of our management at no cost. |
Note 6 - Concentration
Note 6 - Concentration | 6 Months Ended |
Apr. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration | Note 6 - Concentration Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of purchases of inventories, accounts payable, accounts receivable, and revenue. Concentration of Purchases and Accounts Payable For the six months ended April 30, 2020, 100% of the inventories of products , primarily consisting of the “Bidi Stick,” were purchased from Bidi, a related party, in the amount of $18,318,219. It also accounted for 100% of the total accounts payable as of April 30, 2020. Concentration of Revenues and Accounts Receivable For the six months ended April 30, 2020, approximately 36% of the revenue from the sale of products, primarily consisting of the “Bidi Stick,” was generated from Favs Business, LLC in the amount of $8,003,396. Favs Business, LLC, Midwest Distribution, and GW Trading Inc. accounted for approximately 32%, 13%, and 11%, respectively, of the total accounts receivable as of April 30, 2020. |
Note 7 - Income Tax
Note 7 - Income Tax | 6 Months Ended |
Apr. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Note 7 – Income Tax The Company is subject to federal income taxes and state income tax in the U.S. Significant judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017, and reduced the U.S. federal corporate tax rate from 35% to 21%, eliminated corporate Alternative Minimum Tax, modified rules for expensing capital investment, and limited the deduction of interest expense for certain companies. The Company fulfilled and shipped all of the Products from Florida and, thus, it is subject to the state corporate income tax of Florida with a tax rate of 4.458%. During the six months ended April 30, 2020, the Company generated taxable income of $2,782,900 and, thus, accrued $784,000 of federal income tax and $166,432 of state income tax. Significant components of the Company’s deferred tax assets and liabilities as of April 30, 2020 and October 31, 2019 after applying enacted corporate income tax rate, is net operating loss carryforward of $0 and $15,377, and a valuation allowance of $0 and $15,377, respectively, which is a total deferred tax asset of $0. The Company’s tax returns for 2018 and 2019 remain open to examination. |
Note 2 - Basis of Presentatio_2
Note 2 - Basis of Presentation and Significant Accounting Policies (Policies) | 6 Months Ended |
Apr. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the audited financial statements and notes thereto for the year ended October 31, 2019 on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements, which would substantially duplicate the disclosures contained in the audited financial statements for the year ended October 31, 2019, as reported in the Annual Report on Form 10-K filed with the SEC on January 27, 2020, have been omitted. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Receivables are stated at cost, net of an allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of accounts receivables. A considerable amount of judgment is required in assessing the amount of the allowance and the Company considers the historical level of credit losses and collection history and applies percentages to aged receivable categories. The Company makes judgments about the creditworthiness of debtors based on ongoing credit evaluations, and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the debtors were to deteriorate, resulting in their inability to make payments, a larger allowance may be required. As of April 30, 2020, the Company did not have any allowance for doubtful accounts based on management’s assessment. |
Inventories | Inventories Inventories are stated at the lower of cost and net realizable value. Cost includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. As of April 30, 2020, the inventories only consisted of finished goods. |
Revenue Recognition | Revenue Recognition The Company adopted ASC 606, Revenue from Contracts with Customers |
Products Revenue | Products Revenue The Company generates products revenue from the sale of the Products (as defined above) to retail and non-retail customers. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and control of the Products has been transferred to the customer. In most situations, transfer of control is considered complete when the products have been shipped to the customer. The Company’s sales arrangements for retail sales usually require full prepayment before delivery of the Products. The advance payment is not considered a significant financing component because the period between the Company transfers a promised good to a customer and when the customer pays for that good is short. The Company offers credit sales arrangements to non-retail (or wholesale) customers and monitors the collectability of each credit sales periodically. |
Income Tax | Income Tax Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the recorded book basis and the tax basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income and tax credits that are available to offset future federal income taxes. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, “ Revenue from Contracts with Customers |
Note 1 - Organization and Des_2
Note 1 - Organization and Description of Business (Details) - $ / shares | Feb. 06, 2019 | Sep. 04, 2018 | Oct. 19, 2018 | Oct. 31, 2019 | Apr. 30, 2020 | Sep. 19, 2018 |
Common stock, par value | $ 0.001 | $ 0.001 | ||||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 | ||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||
Preferred stock, shares issued | 0 | 0 | ||||
Preferred stock, shares outstanding | 0 | 0 | ||||
Common stock acquisition | 1,000 | |||||
Percentage of acquisition | 100.00% | |||||
Common stock, shares issued | 572,364,574 | 572,364,574 | ||||
Common stock, shares outstanding | 572,364,574 | 572,364,574 | ||||
Share Purchase Agreement [Member] | ||||||
Number of restricted common stock sold | 504,000,000 | |||||
Percentage of purchase | 88.06% | |||||
Predecessor [Member] | ||||||
Authorized capital | 1,005,000,000 | |||||
Common stock, par value | $ 0.001 | |||||
Common stock, shares authorized | 1,000,000,000 | |||||
Preferred stock, par value | $ 0.001 | |||||
Preferred stock, shares authorized | 5,000,000 | |||||
Common stock, shares issued | 66,397,574 | |||||
Common stock, shares outstanding | 66,397,574 | |||||
Predecessor [Member] | Preferred Stock Series A | ||||||
Preferred stock, shares authorized | 1,000,000 | |||||
Preferred stock, shares issued | 1,000,000 | |||||
Preferred stock, shares outstanding | 1,000,000 | |||||
Predecessor [Member] | Preferred Shares (Series B) | ||||||
Preferred stock, shares authorized | 500,000 | |||||
Preferred stock, shares issued | 71,700 | |||||
Preferred stock, shares outstanding | 71,700 | |||||
GRMZ [Member] | ||||||
Preferred stock, shares issued | 400,000 | |||||
Number of restricted common stock sold | 500,000,000 | |||||
KBIG [Member] | ||||||
Number of restricted common stock owned | 504,000,000 |
Note 3 - Going Concern (Details
Note 3 - Going Concern (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net income (loss) | $ 2,795,833 | $ (4,225) | $ 2,782,900 | $ (18,185) |
Working capital | $ 2,765,171 | $ 2,765,171 |
Note 4 - Stockholder Equity (De
Note 4 - Stockholder Equity (Details Narrative) - USD ($) | 6 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Proceeds from Contributions from Affiliates | $ 27,157 | $ 12,160 |
Chief Financial Officer [Member] | ||
Proceeds from Contributions from Affiliates | 16,257 | |
Chief Operating Officer [Member] | ||
Proceeds from Contributions from Affiliates | $ 10,900 |
Note 5 - Related-Party Transa_2
Note 5 - Related-Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | Oct. 31, 2019 | |
Revenue from related parties | $ 32,480 | $ 0 | $ 32,480 | $ 0 | |
Accounts receivable from related parties | 5,070 | 5,070 | $ 0 | ||
Cost of revenue - related party | 18,301,800 | $ 0 | 18,301,800 | 0 | |
Accounts payable to related paties | 1,259,145 | 1,259,145 | $ 0 | ||
Proceeds from Contributions from Affiliates | 27,157 | $ 12,160 | |||
Chief Financial Officer [Member] | |||||
Proceeds from Contributions from Affiliates | 16,257 | ||||
Chief Operating Officer [Member] | |||||
Proceeds from Contributions from Affiliates | 10,900 | ||||
Cloud Nine 2012 [Member] | |||||
Revenue from related parties | 22,460 | ||||
Accounts receivable from related parties | 4,080 | 4,080 | |||
JC Products of USA [Member] | |||||
Revenue from related parties | 9,030 | ||||
Shree Maharaj [Member] | |||||
Revenue from related parties | 880 | ||||
Accounts receivable from related parties | 880 | 880 | |||
Bhawani Krupa [Member] | |||||
Revenue from related parties | 110 | ||||
Accounts receivable from related parties | 110 | 110 | |||
Bidi [Member] | |||||
Purchases of products | 18,318,219 | ||||
Accounts payable to related paties | $ 1,278,638 | $ 1,278,638 |
Note 6 - Concentration (Details
Note 6 - Concentration (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | |
Revenue from related parties | $ 32,480 | $ 0 | $ 32,480 | $ 0 |
Accounts Payable [Member] | ||||
Concentration percentage | 100.00% | |||
Bidi [Member] | ||||
Purchases of products | $ 18,318,219 | |||
Favs Business [Member] | ||||
Revenue from related parties | $ 8,003,396 | |||
Favs Business [Member] | Revenues [Member] | ||||
Concentration percentage | 36.00% | |||
Favs Business [Member] | Accounts Receivable [Member] | ||||
Concentration percentage | 32.00% | |||
Midwest Distribution [Member] | Accounts Receivable [Member] | ||||
Concentration percentage | 13.00% | |||
GW Trading [Member] | Accounts Receivable [Member] | ||||
Concentration percentage | 11.00% |
Note 7 - Income Tax (Details Na
Note 7 - Income Tax (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2020 | Apr. 30, 2019 | Apr. 30, 2020 | Apr. 30, 2019 | Oct. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||
U.S. federal and state income tax rate | 21.00% | 35.00% | |||
Statutory corporate income tax rate | 4.458% | ||||
Net income (loss) | $ 2,795,833 | $ (4,225) | $ 2,782,900 | $ (18,185) | |
Accrued of federal income tax | 784,000 | ||||
Accrued of state income tax | 166,432 | ||||
Net operating loss carryforward | 0 | 0 | $ 15,377 | ||
Valuation allowance | 0 | 0 | 15,377 | ||
Deferred tax asset | $ 0 | $ 0 | $ 0 |