Executive Summary

Revenues were approximately $3.0M, flat year over year (vs. ~$3.1M), while gross margin turned negative to -4.2% due to ~$1.4M in customer credits/discounts/rebates; net loss narrowed YoY to ~$4.0M with -$0.07 EPS from -$0.16 EPS YoY .
Distribution expansion progressed: initial activation in over 1,000 Circle K locations with ramp to 5,000 planned in South Atlantic and Midwest regions; management expects this sales activity to repeat into 2H FY23 and beyond .
Strategic developments included launch of PMI’s VEEBA product in the U.K. (royalties expected) and acquisition of GoFire IP portfolio (12 patents, 46 applications) to broaden vaporization/inhalation technology footprint .
Estimates context: S&P Global Wall Street consensus data were unavailable to retrieve for Q2 2023 in this session; therefore estimates comparisons are not included (S&P Global consensus unavailable).

What Went Well and What Went Wrong

Circle K rollout: “We have activated over 1,000 new Circle K locations, with the goal of ramping up to 5,000 this year,” highlighting regulatory-compliant positioning and expected revenue benefits .
International licensing momentum: Philip Morris Products S.A. launched VEEBA in the U.K., with Kaival expecting future royalties under the license agreement .
Strategic IP and governance: Acquisition of GoFire IP (12 patents/46 applications) and appointment of independent director James P. Cassidy to help capitalize on assets; new board members bring tobacco, finance, and governance experience .

Margin compression: Gross margin fell to -4.2% (gross loss of ~$0.1M), driven by ~$1.4M in credits/discounts/rebates in the quarter; cost of revenue rose to ~104.2% of net revenue .
Cash and working capital decline: Cash fell to ~$1.1M and working capital to ~$3.7M as of April 30, 2023, down from ~$3.8M cash and ~$6.6M working capital as of January 31, 2023 .
Opex outlook: Management expects operating expenses to increase as the company expands footprint to support growth initiatives, sustaining near-term loss profile .

Metric	Q4 2022	Q1 2023	Q2 2023
Revenue ($USD Millions)	$3.0	$2.5	$3.0
EPS ($USD)	N/A	-$0.05	-$0.07
Gross Profit ($USD Millions)	$1.1	$0.5	-$0.1
Gross Margin (%)	N/A	21.4%	-4.2%
Operating Expenses ($USD Millions)	N/A	$3.5	$3.8
Net Loss ($USD Millions)	-$2.7	-$3.0	-$4.0
Cost of Revenue (% of Revenue)	N/A	78.6%	104.2%
Cash ($USD Millions)	$3.7 (as of Oct 31, 2022)	$3.8 (as of Jan 31, 2023)	$1.1 (as of Apr 30, 2023)
Working Capital ($USD Millions)	N/A	$6.6	$3.7

KPIs and Operational Indicators:

KPI	Q4 2022	Q1 2023	Q2 2023
Customer credits/discounts/rebates ($USD Millions)	N/A	~$0.7	~$1.4
Circle K activated stores	N/A	N/A	>1,000 activated; ramp to 5,000 planned
International product launch (PMI VEEBA)	Announced prior year; ongoing royalties framework	N/A	U.K. launch noted; royalties expected

Segment breakdown: Not applicable; company reports as a distribution business without segment reporting in its 8-K press materials .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2023 (2H emphasis)	Not provided	Qualitative: expects increased orders and sales driven by Circle K rollout and broader distribution; positioning as compliant alternative amid FDA enforcement	N/A
Operating Expenses	FY 2023	Not provided	Expect opex to increase to support footprint expansion and growth	N/A
Royalties (PMI VEEBA)	FY 2023+	Not provided	Expect to generate royalties in future periods under license agreement	N/A
Cash Position	FY 2023	Not provided	Plans to augment cash through increased sales and potential debt/equity financings	N/A

No explicit numerical guidance ranges (revenue, margins, tax rate, etc.) were provided in the Q2 2023 press materials .

Note: No Q2 2023 earnings call transcript was available in our filings corpus; themes summarized from press releases/8-Ks .

Topic	Previous Mentions (Q4 2022 & Q1 2023)	Current Period (Q2 2023)	Trend
FDA enforcement & regulatory landscape	MDO vacated; expectation FDA pulls bad actors; positioning for renewed growth	Emphasizes increased FDA enforcement creating opportunities; BIDI® Stick positioned as compliant alternative	Strengthening regulatory tailwind
Distribution expansion	Agreements with national broker; +53,500 doors potential; 13,500 locations new agreements	Circle K rollout: >1,000 activations, ramp to 5,000 stores underway	Execution progressing
International licensing (PMI VEEBA)	PMI licensing (Canada launch in 2022); royalties framework	U.K. launch; expects future royalties	Expanding geography; monetization ahead
Margin dynamics	Q1 2023 gross margin 21.4%; credits/discounts ~$0.7M	Gross margin -4.2% due to ~$1.4M credits/discounts/rebates; cost of revenue 104.2% of revenue	Short-term pressure from promotions/credits
Governance & leadership	KMS hire (former Swisher VP) to support resurgence	New independent directors; James P. Cassidy joins Board	Building experience base
Technology/IP strategy	N/A	Acquisition of GoFire IP portfolio (12 patents/46 applications) to diversify into vaporization/inhalation tech	Strategic optionality expanding

“We remain excited and confident in the future of Kaival Brands… we believe we have positioned ourselves for increased sales in the second half of the year… increased enforcement by the FDA against bad actors… as evidenced by our Circle K relaunch… we recently acquired an intellectual property portfolio from GoFire and are currently focused on seeking third-party licensing opportunities” — Eric Mosser, President & COO .
“Following the recent, commendable increased enforcement by the FDA… we are excited to announce the renewed rollout of the BIDI® Stick in Circle K… we have activated over 1,000 new Circle K locations, with the goal of ramping up to 5,000 this year” — Eric Mosser, President & COO .
“Fiscal 2022 was an exceptionally challenging year… prohibited from selling flavored BIDI Sticks… The good news is that this impediment is behind us… we expect and hope that the FDA will continue to pull bad actors from the marketplace” — Eric Mosser, President & COO .

No earnings call transcript was available in our document corpus for Q2 2023; management commentary and clarifications are drawn from the 8-K press releases .

S&P Global Wall Street consensus estimates for Q2 2023 (EPS and revenue) were unavailable to retrieve in this session; as a result, comparisons to consensus are not included (S&P Global consensus unavailable).

Near-term top-line catalysts: Circle K rollout (>1,000 activations with ramp to 5,000) and broader broker/distributor agreements should support sales growth into 2H FY23 .
Margin recovery is key: Q2 gross margin turned negative (-4.2%) on ~$1.4M credits/discounts; watch normalization of promotional activity and mix shifts to improve margins .
Liquidity: Cash declined to ~$1.1M and working capital to ~$3.7M; management may seek debt/equity financing alongside sales growth to augment liquidity .
Regulatory tailwind: Increased FDA enforcement against non-compliant ENDS may favor compliant offerings like BIDI® Stick, aiding customer wins and shelf space .
Optionality from IP/licensing: GoFire IP adds tech assets for new markets; PMI’s VEEBA launch in U.K. signals potential royalty streams over time .
Opex discipline vs. expansion: Operating expenses are expected to increase as footprint grows; monitor sales leverage to drive operating efficiency .
Execution focus: The narrative hinges on converting regulatory/commercial momentum into sustainable revenue and margin expansion; track sell-through at Circle K and incremental large-account wins .