Kaival Brands Reports Fiscal 2021 Year End Results Corporate Updates & Milestones During and Subsequent to the Fiscal Fourth Quarter:
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Financial Results: Revenues for fiscal year 2021, which ended on October 31, 2021, were approximately $58.8 million, compared to $64.3 in the prior fiscal year. Revenues decreased in fiscal year 2021, primarily in the last two fiscal quarters, primarily due to FDA's issuance of Bidi Vapor's MDO, which prevented us from marketing the non-tobacco flavored BIDI® Sticks in the United States towards the end of fiscal year 2021. In addition, we faced increased competition, which we believe was the result of the lack of enforcement by federal and state authorities against sub-par and low-priced vaping products that continued to enter the market illegally without U.S. Food and Drug Administration ("FDA") authorization. Much of this competition was from bad-actors in the industry who continue to introduce unauthorized ENDS, including disposables, using synthetic nicotine in order to avoid FDA's Premarket Tobacco Product Application ("PMTA") scientific review process. Net loss for fiscal year 2021 was approximately ($9.0) million compared to net income of approximately $3.8 million for fiscal year 2020. The decrease in net income year-over-year was largely due to the decrease in revenues and the increase in operating expenses.
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Nasdaq Uplisting & Public Offering: On July 29, 2021, the Company commenced trading on The Nasdaq Capital Market. This decision represented a very important strategic milestone. Subsequently, we closed a successful underwritten public offering of approximately $8.3 million in September 2021.
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Impact of FDA PMTA Decision: During fiscal 2021, we were significantly impacted by the FDA's PMTA process. First, we believe that many retailers and distributors were reluctant to take on new inventory leading up to September 9, 2021, which marked the end of the court-ordered continued compliance policy for ENDS subject to timely submitted PMTAs. This negative impact to our third quarter of fiscal 2021 was compounded in the fourth quarter of fiscal 2021 by Bidi Vapor's receipt of a MDO relating to its flavored BIDI® Sticks in September 2021. In connection with the PMTA process, the FDA effectively "banned" flavored ENDS by denying nearly all then-pending PMTAs for such products. Bidi Vapor, along with nearly every other company in the ENDS industry, received a MDO for its non-tobacco flavored ENDS products.
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Judicial Stay of MDO: A recent court ruling, which was issued on February 1, 2022, stays the MDO issued to Bidi Vapor pending the litigation on the merits.
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ENDS Market Dominance, Number One Disposable ENDS Product for 2021: Based on the Goldman Sachs' Equity Research Report through January 29, 2022 on the Nielsen data for total nicotine volumes (the "Goldman Report"), the BIDI® Stick was the largest disposable ENDS Product based on retail sales for the 52-week period ending on January 29, 2022. The BIDI® Stick has increased its absolute-dollar market share of the disposable ENDS market share from 24.2% during the 52-week period ending on January 28, 2021 to 42.4% of retail sales during the 52-week period ending on January 29, 2022. According to the Goldman Report, total dollar sales growth has surged to 2,879% to lead the category for the 12-week period ended January 29, 2022. We believe our growth underscores the unique customer experience the BIDI® Stick provides.
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Global Opportunities: In addition to the continued domestic opportunity, we believe that international markets provide an exciting growth opportunity for us. The estimated total addressable global market for ENDS products is approximately $36.7 billion. Bidi Vapor has received approval to market and distribute products within 11 international markets, including the United Kingdom, France, Russia, and the Czech Republic. The Company is also actively exploring potential partnerships with international distribution companies in order to possibly expand Product distribution more rapidly in these international markets.
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Domestic Growth Opportunities: Based upon information released by the FDA, we believe that only 7% of the domestic players in this industry remain. Prior to these recent PMTA denials, we captured an approximately 37% market share within the ENDS market. That market share was captured from a market containing hundreds of other brands. We believe this provides an exciting growth opportunity for the brand.
"The judicial stay of Bidi Vapor's MDO was based, in part, on the likelihood of the merits case succeeding and we very much look forward to the day when Bidi Vapor's PMTAs for its flavored ENDS are back into scientific review by the FDA. In the meantime, we are actively exploring and negotiating potential international distribution opportunities for the BIDI® Stick and look forward to aggressively expanding into international markets in 2022," Mr. Patel said
Mr. Patel, the Company's President, Chief Executive Officer, owns and controls Bidi Vapor. As a result, Bidi Vapor and the Company are considered under common control and Bidi Vapor is considered a related party.
https://finance.yahoo.com/news/kaival-brands-reports-fiscal-2021-130500976.html