ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Third Amended and Restated Distribution Agreement

On June 10, 2022, Kaival Brands Innovations Group, Inc., a Delaware corporation (the "Company"), entered into a Third Amended and Restated Exclusive Distribution Agreement (the "Third A&R Distribution Agreement") with Bidi Vapor, LLC, a Florida limited liability company ("Bidi"), which amended and restated the Second Amended and Restated Exclusive Distribution Agreement, dated April 20, 2021 (the "Second A&R Distribution Agreement"), which amended and restated the Amended and Restated Exclusive Distribution Agreement, dated May 21, 2020 (the "First A&R Distribution Agreement"), which amended and restated the Exclusive Distribution Agreement, dated March 9, 2020 (the "Original Distribution Agreement" and, together with the Third A&R Distribution Agreement, the Second A&R Distribution Agreement, and the First A&R Distribution Agreement, the "Distribution Agreement").

The purpose of the Third A&R Distribution Agreement is to modify various terms and provisions to reflect the terms of the PMI Licensing Agreement (as defined below) and also modify the terms between the Company and Bidi. Pursuant to the Third A&R Distribution Agreement, Bidi granted the Company, and its designees, an exclusive right to distribute electronic and non-electronic nicotine delivery systems and related components (other than certain excluded products, the "Products") for sale and resale to both retail level customers and non-retail level customers worldwide, subject to a carve-out for, and exclusion, of the PMI Markets (as defined below). The Company will pay Bidi $2.90 for each Bidi Stick purchased for the remainder of 2022. Beginning in 2023 and each year thereafter, the Company and Bidi will negotiate a price per unit in good faith. If they cannot agree on a price, then the parties will utilize a third-party consultant to determine a price per unit.

In addition, the Company has the exclusive right of first refusal of any and all future Bidi products that: (a) arise out of or relate to electronic nicotine delivery systems and related components to electronic nicotine delivery systems (including any variations thereto (e.g., pods)); or (b) arise out of or relate to the nicotine industry, but will exclude oral-based nicotine pouches, e-cigarettes that produce a non-nicotine containing aerosol, and nicotine e-cigarettes authorized for as medicinal or pharmaceutical products that do not have the look and feel of the Bidi Stick. For the avoidance of doubt, future products include all flavors and variants of a product, but only such products as are, or are to be, distributed for commercial sale. Bidi and the Company agree to engage in good faith negotiations regarding the terms and conditions of future products to be sold, including but not limited to pricing and minimum purchase thresholds, pursuant to which the Company will have the exclusive right to distribute the future products. The minimum purchase thresholds will not apply to any Product until Bidi receives a Marketing Grant Order from the Food and Drug Administration for a specific Product or type of flavored nicotine Product. If the minimum purchase threshold requirement is not met by less than fifty percent (50%) for a calendar year, then the Distribution Agreement's exclusivity provisions will remain in effect and the Company will have a twelve (12) month cure period. If the minimum purchase thresholds requirement is not cured within the twelve (12) month cure period, or, if the minimum purchase threshold requirement is not met by more than fifty percent (50%) for a calendar year, then the Company will lose its exclusive distribution rights. The Company's obligation to meet a minimum purchase threshold will be reduced for shipping delays, force majeure, enforcement actions, product defects, or Bidi's inability to fulfill purchase orders.

Pursuant to the Distribution Agreement, the Company will promote, market, sell, and distribute the Products. Bidi will provide the Company with all branding, logos, and marketing materials to be used in connection with the promotion and marketing of the Products. The Company will perform the marketing and promotion of the Products at its own expense and will be responsible for all expenses incurred by it in connection with its obligations under the Distribution Agreement, including the salaries or other compensation for its personnel, costs and expenses associated with establishing and maintaining its sales organization and offices, and marketing, advertising, and promotion expenses. The Company is also responsible for the warehousing and storage of the Products, and, contemporaneous with the execution of the Distribution Agreement entered into the Lease (as defined below) to fulfill this obligation.

Further, the Distribution Agreement outlines the terms and conditions for submitting purchase orders for Bidi products. Product prices and minimum order requirements are set during the fourth quarter of the subsequent year by an agreement between Bidi and the Company. The Company is responsible to pay all shipping carrier invoices and assumes title and risk of loss upon the delivery of the products at their destination. However, Bidi may refuse, cancel, or delay any shipment of the products when the Company is delinquent in any payment for more than thirty (30) calendar days, or when the Company is in material breach of its obligations.

Pursuant to the Distribution Agreement, Bidi granted to the Company a revocable, sublicensable, non-transferable, non-exclusive, limited license to use Bidi's logos, trademarks, and trade names, together with all branding and marketing materials created by or on behalf of Bidi in connection with the Products, and the domain www.bidivapor.com (the "Intellectual Property"), solely in connection with the marketing, advertisement, and sale of the Products. The Intellectual Property will remain the sole and exclusive property of Bidi, as applicable, and the license will immediately terminate upon the expiration or termination of the Distribution Agreement. Bidi also granted the Company a non-exclusive, royalty-free license to use Bidi's logos, trademarks, and trade names ("Bidi's Marks") on the Company's web sites and marketing materials. Bidi's Marks will remain the sole and exclusive property of Bidi and Bidi's license will immediately terminate upon the expiration or termination of the Distribution Agreement.

The Distribution Agreement has a term of ten years and automatically renews for a successive ten-year term, unless earlier terminated pursuant to the Distribution Agreement. Either party is entitled to terminate the Distribution Agreement at any time in the event of material breach by the other party that remains uncured after thirty (30) calendar days following written notice thereof. In such event, termination is effective immediately and automatically upon the expiration of the applicable notice period, without further notice or action by either party. Either party may terminate the Distribution Agreement and any outstanding purchase orders immediately, at its option, upon written notice if the other party (i) becomes or is declared insolvent or bankrupt, (ii) is the subject of a voluntary or involuntary bankruptcy or other proceeding related to its liquidation or solvency, which proceeding is not dismissed within sixty (60) calendar days after its filing, (iii) ceases to do business in the normal course, or (iv) makes an assignment for the benefit of creditors.

Bidi is considered a related party to the Company because the Company's Chief Executive Officer and director, Mr. Nirajkumar Patel, owns and controls Bidi. Mr. Patel is also a beneficial owner of the entity that is the Company's largest controlling stockholder. Thus, the Company and Bidi are under common control. The Company's Audit Committee of the board of directors reviewed the terms of the Third A&R Distribution Agreement and approved the Company entering into the agreement.

The above description of the Third A&R Distribution Agreement does not purport to be complete and is qualified in its entirety by the full text of such Agreement, which the Company intends to file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended April 30, 2022. The delay will provide the parties time to redact certain information set forth in the Third A&R Distribution Agreement, which the parties were unable to do given the close proximity of the execution date of the Third A&R Distribution Agreement and the filing of this Current Report on Form 8-K (this "Current Report").





Lease Agreement

On June 10, 2022, the Company entered into a Lease Agreement (the "Lease") with Just Pick, LLC (the "Landlord") for approximately 21,332 rentable square feet combined in the office building and warehouse located at 4460 Old Dixie Highway, Grant Valkaria, Florida 32949 (the "Premises"), together with all improvements thereon. The Landlord is considered a related party to the Company because the Company's Chief Executive Officer and director, Mr. Nirajkumar Patel, owns and controls the Landlord. Mr. Patel is also a beneficial owner of the entity that is the Company's largest controlling stockholder. Thus, the Company and the Landlord are under common control. The Company's Audit Committee of the board of directors reviewed the terms of the Lease and approved the Company entering into the agreement.

The anticipated commencement date of the Lease is June 10, 2022 (the "Commencement Date"). The term of the Lease is one (1) year (the "Lease Term"), with one automatic renewal period for a five-year term. The Company, in its sole . . .

ITEM 7.01 REGULATION FD DISCLOSURE

On June 13, 2022, the Company issued a press release announcing its entry into the agreements as described above under Item 1.01. A copy of the press release is attached as Exhibit 99.1 to this Current Report.

The information in Exhibit 99.1 shall not be deemed as "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of such Section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.





                           FORWARD LOOKING STATEMENTS

This Current Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks, uncertainties, and assumptions that are difficult to predict. All statements other than statements of historical fact contained in this Current Report, including statements regarding future events, our future financial performance, business strategy, and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," or "should," or the negative of these terms or other comparable terminology. The forward-looking statements made herein are based on the Company's current expectations. Actual results could differ materially from those described or implied by such forward-looking statements as a result of various important factors, including, without limitation, its limited operating history, competitive factors in the Company's industry and market, and other general economic conditions. The forward-looking statements made herein are based on the Company's current expectations, assumptions, and projections, which could provide to be incorrect. The forward-looking statements made herein speak only as of the date of this Current Report and the Company undertakes no obligation to update publicly such forward-looking statements to reflect subsequent events or circumstances, except as otherwise required by law.

ITEM 9.01 FINANCIAL STATEMENTS





(d) Exhibits



Exhibit Number Description of Exhibit
99.1             Press Release dated June 13, 2022.
104            Cover Page Interactive Data File (embedded within the Inline XBRL
               document).

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