Kaival Brands(KAVL) - 2021 Q2 - Quarterly Report

Financial Performance - Revenues for Q2 FY2021 were approximately $18.1 million, a decrease from $22.5 million in Q2 FY2020[98] - Net loss for Q2 FY2021 was approximately $4.3 million, or $(0.02) per share, compared to a net income of approximately $2.8 million in Q2 FY2020[102] - Revenues for the second quarter of fiscal year 2021 were approximately $18.1 million, a decrease of 19.56% compared to $22.5 million in the same period of the prior fiscal year[104] - Net loss for the first six months of fiscal year 2021 was approximately $3.9 million, compared to a net income of approximately $2.8 million for the same period in fiscal year 2020, reflecting a significant decline in financial performance[108] Profitability - Gross profit for Q2 FY2021 was approximately $6.3 million, compared to $4.2 million in Q2 FY2020, driven by a decrease in the cost of products sold[99] - Gross profit for the first six months of fiscal year 2021 was approximately $11.1 million, significantly up from approximately $4.2 million for the same period in fiscal year 2020, indicating a strong improvement in profitability[105] Operating Expenses - Total operating expenses for Q2 FY2021 were approximately $10.4 million, significantly higher than $458,000 in Q2 FY2020, primarily due to increased general and administrative expenses[100] - Total operating expenses for the first six months of fiscal year 2021 were approximately $14.7 million, a substantial increase from approximately $471,000 in the same period of fiscal year 2020[106] - General and administrative expenses for the first six months of fiscal year 2021 were approximately $13.0 million, primarily consisting of legal fees, salaries, and other professional fees[106] Cash Flow and Working Capital - Cash flow used in operations was approximately $5.2 million for the first six months of FY2021, compared to $1.9 million provided by operations in the same period of FY2020[97] - As of April 30, 2021, the company had working capital of approximately $9.2 million and total cash of approximately $2.1 million[95] - The company anticipates improvement in cash flows based on minimum purchase obligations in A&R Sub-Distribution Agreements, despite potential increases in costs[97] Distribution Agreements - The company has entered into multiple A&R Sub-Distribution Agreements to enhance product distribution, which is expected to increase revenues in the current fiscal year[98] - The company has continued to enter into additional A&R Sub-Distribution Agreements, which is expected to increase revenue in the remainder of the current fiscal year[104] Stock Information - Weighted-average common stock shares outstanding were 282,143,504 in Q2 FY2021, down from 572,364,574 in Q2 FY2020[103] - Weighted-average common stock shares outstanding decreased to 280,242,288 in the first six months of fiscal year 2021 from 572,364,574 in the same period of fiscal year 2020[109] Cost of Revenue - The total cost of revenue for the first six months of fiscal year 2021 was approximately $44.4 million, compared to $18.3 million for the same period in fiscal year 2020, indicating increased costs associated with revenue generation[105] Tax Expenses - The company expensed approximately $293,100 for prior year income taxes during the first six months of fiscal year 2021, a decrease from approximately $950,400 in the same period of fiscal year 2020[107] COVID-19 Impact - The company is actively monitoring the impact of COVID-19 on its operations and financial condition, although it has not seen significant negative effects to date[78] Off-Balance Sheet Arrangements - The company does not have any off-balance sheet arrangements that could materially affect its financial condition or results of operations[110]