Overview

We are engaged in the sale, marketing and distribution of electronic nicotine delivery system (“ENDS”) products, also known as “e-cigarettes”, in a variety of flavors. Until October of 2024, our primary source of revenue has been the Bidi Stick. However, on June 11, 2024, RAI Strategic Holdings, Inc., R.J. Reynolds Vapor Company, R.J. Reynolds Tobacco Company, and RAI Services Company (collectively, the “RJ Reynolds Entities”) filed a patent infringement complaint with the International Trade Commission (the “ITC”) against Bidi, us, and forty (40) other respondents (the “ITC Complaint”). Since the initiation of the ITC Complaint, we have not imported any Bidi Sticks and currently do not generate any revenue from the sale of Bidi Sticks. Our current primary source of revenue is through an international licensing agreement with Philip Morris Products S.A. (“PMPSA”), a wholly owned affiliate of Philip Morris International Inc. (“PMI”).

We have also entered into a Merger and Share Exchange Agreement (the “Merger Agreement”) with Delta Corp Holdings Limited, a company incorporated in England and Wales. While we expect the transactions contemplated by the Merger Agreement to close in March or April of this year, no assurances can be made that such transactions will close by then or ever.

Material Items, Trends and Risks Impacting Our Business

1. The ITC Complaint filed by the RJ Reynolds Entities alleges that one or more components or elements of the Bidi Stick infringe U.S. Patent No. 11,925,202, which is owned by one of the RJ Reynolds Entities. If the Company or Bidi is prohibited from importing the Bidi Stick, then our business, operations, financial results, and reputation would be significantly adversely impacted.

PMI Licensing Agreement and International Distribution

On June 13, 2022, we, through our wholly owned subsidiary, KBI, entered into the PMI License Agreement with PMPSA, a wholly owned affiliate of PMI, for the development and distribution of ENDS products in certain markets outside of the United States. The ability of PMPSA to generate sales of its licensed products is important to our results of operations since we derive royalty revenue from PMPSA sales.

Ability to Develop and Monetize the GoFire Intellectual Property

In May 2023, we acquired 19 existing and 47 pending patents with novel technologies related to vaporization and inhalation technologies from GoFire. We expect to continue seeking third-party licensing opportunities in the cannabis, hemp/CBD, nicotine, nutraceutical and pharmaceutical markets, as a means of monetizing our patents.

Inflation

Consumer purchases of tobacco products are historically affected by economic conditions, such as changes in employment, salary and wage levels, the availability of consumer credit, inflation, interest rates, fuel prices, sales taxes, and the level of consumer confidence in prevailing and future economic conditions. The U.S. has been experiencing an environment of material inflation in recent quarters, and this condition may impact discretionary consumer purchases, such as the BIDI® Stick.

Going Concern

The Company has incurred recurring losses and negative cash flows from operations for three months ended January 31, 2025. The Company will need significant additional funds to satisfy its outstanding payables, fund its working capital, and fully implement its business plan. In addition, the Company’s ability to continue as a going concern is adversely affected by the uncertainty surrounding Bidi’s PMTA process with FDA and outcome of Bidi’s petition with the 11th Circuit Court of Appeals regarding the FDA’s January 2024 MDO relating to Classic Bidi® Stick as well as the uncertainty in the Company’s ability to continue to sell the Bidi Stick given the patent infringements claim filed by RJ Reynolds.

Liquidity and Capital Resources

As of January 31, 2025, the Company had working capital of $1,998,945 and total cash of $2,427,612. The Company believes it will not have sufficient cash on hand to support its operations for at least twelve months. The Company intends to generally rely on cash from operations and equity and debt offerings to the extent necessary and available, to satisfy its liquidity needs.

Results of Operations

The following table summarizes the Company’s results of operations for the three months ended January 31, 2025 and 2024:

Revenues decreased in the first quarter of 2025 primarily due to a decrease in product sales to customers. The increase in net loss for the first quarter of 2025 compared to the first quarter of 2024 is primarily attributable to the decrease in revenues and increase in operating expenses, particularly stock compensation expense.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities. There have been no material changes to the Company’s critical accounting policies and estimates during the three months ended January 31, 2025 from those disclosed in its 2024 Annual Report.

Emerging Growth Company

The Company is an “emerging growth company” that is exempt from certain financial disclosure and governance requirements for up to five years as defined in the Jumpstart Our Business Startups Act of 2012.