$KAVL Kaival Brands Acquires Extensive Vaporizer and Inhalation Patent Portfolio to Diversify Product Offerings and Create New Revenue Opportunities
https://www.globenewswire.com/news-release/20...ities.html
GRANT-VALKARIA, Fla., May 31, 2023 (GLOBE NEWSWIRE) -- Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) ("Kaival Brands," the "Company" or "we,” “our” or similar terms), the exclusive distributor of all products manufactured by Bidi Vapor, LLC (“Bidi Vapor”), including the BIDI® Stick electronic nicotine delivery system (ENDS), which are intended for adults 21 and over, today announced it has acquired an extensive patent portfolio from GoFire, Inc. with the goal of diversifying its product offerings and creating near and longer term revenue opportunities.
The acquired assets will be housed in Kaival Labs, Inc., a wholly owned subsidiary of Kaival Brands which develops new branded and white-label products and services in the vaporizer and inhalation technology sectors.
In the near term, Kaival Brands expects to seek third-party licensing opportunities in the cannabis, hemp/CBD, nicotine and nutraceutical markets, as a means of monetizing its new patents. Longer term, the Company believes it can utilize the acquired patents to create innovative and market-disruptive products, including patent protected vaporizer devices and related hardware and software applications.
The GoFire patent portfolio includes 12 existing and 46 pending with novel technologies across extrusion dose control, product preservation, tracking and tracing usage, multiple modalities (i.e., different methods of vaporizing) and child safety. The patents and patent applications cover territories including the United States, Australia, Canada, China, the European Patent Organisation, Israel, Japan, Mexico, New Zealand and South Korea. The portfolio also includes a proprietary mobile device software application that is used in conjunction with certain patents in the portfolio.
“This is a transformative asset acquisition for Kaival Brands,” stated Eric Mosser, President and Chief Operating Officer of Kaival Brands. “As we look to the future of our company beyond our core BIDI® Stick distribution business, the purchase of this extensive patent portfolio marks the first step in diversifying our product offerings for adult consumers and potential revenue streams. We are already exploring near-term, revenue generating opportunities through royalty-based licensing agreements with third party partners in the cannabis, hemp/CBD, nicotine and nutraceutical spaces. Our longer-term plan is to incorporate this intellectual property into new, adult-focused products and expand into new segments such as cannabis/hemp, nutraceutical, and pharmaceutical markets that we can sell ourselves through existing and potential new distribution partners, once all necessary regulatory clearances have been obtained. Additionally, we believe that the portfolio provides us with certain strategic advantages due to the limited number of patents in the vaporizer space. In short, we believe this forward-looking acquisition, with the acquisition consideration structured in key respects at premiums to the current market value of our common stock, broadens and strengthens our company and our prospects considerably as we seek to drive value for our stockholders.”
Nirajkumar Patel, Chief Science and Regulatory Officer of Kaival Brands and owner of Bidi Vapor, stated, “We believe these patents and patent applications represent a valuable opportunity to increase our product portfolio and diversify revenue streams. From a science perspective, these patents are innovative with novel applications, and we look forward to developing these patents into commercial or pharmaceutical products for adult consumers. From a regulatory point of view, there are only so many patents in the vaporizer space, and we believe that acquiring an extensive portfolio such as this is a wise strategic purchase for the long-term success of Kaival Brands.”
Peter Calfee, Chief Executive Officer of GoFire, Inc., stated, “We are excited to place these valuable assets into Kaival’s hands. After working hard to create this intellectual property with a goal of providing safer and healthier products to the marketplace, we engaged in a comprehensive assessment of how best to further its development into actual products and services with consumer reach. At the end of that process, we chose to invest our patent portfolio in Kaival in exchange for Kaival equity as the right fit for our technology. We have confidence in Kaival’s management team and board of directors as Kaival seeks to further develop and ultimately monetize this technology for the benefit of all Kaival stockholders, including GoFire’s stockholders. We look forward to realizing the potential market strength of this patent portfolio with Kaival.”
Transaction Overview
The consideration for the purchased patents consists primarily of Kaival Brands equity securities. In certain key aspects, the equity consideration was structured in a forward-looking manner with valuations or exercise prices struck at premiums to the current market price of Kaival Brands’ common stock.
Specifically, the equity consideration consists of: (i) 2,000,000 shares of Kaival Brands common stock; (ii) 900,000 shares of newly designated, non-voting Series B Preferred Stock valued at $15 per share and (iii) warrants to purchase 2,000,000 shares of common stock with exercise prices ranging from $3.00 to $6.00 per share for each of four 500,000 share tranches. The Company could receive up $9,000,000 in cash proceeds if such warrants are exercised in the future for cash.
The Series B Preferred shares are redeemable at $15 per share or at lower prices depending on the market value of the Company’s common stock at the time of redemption. Each preferred share is convertible into 8.3333 shares of Company common stock, or 7,500,000 common shares in total. Each preferred share has a $15 face value which, on an as converted basis, equates to a value of $1.80 for each of the 8.3333 shares of common stock receivable upon conversion, representing a premium to the market price of the Kaival’s common stock as of the closing date. However, the preferred shares may be only converted into common stock beginning 18 months following the closing and then only on a limited basis over the next 5 years, if the Company has not redeemed the preferred shares prior to conversion. The holders of the Series B preferred shares are also entitled to nominate one individual to serve on board of directors of Kaival Brands, with the initial board member being James P. Cassidy, a GoFire board advisor with significant investment, management and tobacco industry experience.
The share consideration is subject to a six-month lockup agreement. GoFire or its designees have been granted certain registration rights with respect to the common stock issued as part of or underlying the equity consideration.
In another forward-looking consideration structure, GoFire is also entitled to potential contingent cash consideration based on a percentage of license revenue received by Kaival Brands over the next four years from cannabis-related applications of the acquired patents.
Trust Capital Markets, a division of AGES Financial Services Ltd, acted as advisor to Kaival Brands and Winchester Capital Partners LLC acted as advisor to GoFire. Ellenoff Grossman & Schole LLP acted as legal counsel to Kaival Brands and the Gunster law firm acted as legal counsel to GoFire.
Additional details regarding this transaction will be provided in a Current Report on Form 8-K to be filed by the Company with the U.S. Securities and Exchange Commission.
https://www.globenewswire.com/news-release/20...ities.html
GRANT-VALKARIA, Fla., May 31, 2023 (GLOBE NEWSWIRE) -- Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) ("Kaival Brands," the "Company" or "we,” “our” or similar terms), the exclusive distributor of all products manufactured by Bidi Vapor, LLC (“Bidi Vapor”), including the BIDI® Stick electronic nicotine delivery system (ENDS), which are intended for adults 21 and over, today announced it has acquired an extensive patent portfolio from GoFire, Inc. with the goal of diversifying its product offerings and creating near and longer term revenue opportunities.
The acquired assets will be housed in Kaival Labs, Inc., a wholly owned subsidiary of Kaival Brands which develops new branded and white-label products and services in the vaporizer and inhalation technology sectors.
In the near term, Kaival Brands expects to seek third-party licensing opportunities in the cannabis, hemp/CBD, nicotine and nutraceutical markets, as a means of monetizing its new patents. Longer term, the Company believes it can utilize the acquired patents to create innovative and market-disruptive products, including patent protected vaporizer devices and related hardware and software applications.
The GoFire patent portfolio includes 12 existing and 46 pending with novel technologies across extrusion dose control, product preservation, tracking and tracing usage, multiple modalities (i.e., different methods of vaporizing) and child safety. The patents and patent applications cover territories including the United States, Australia, Canada, China, the European Patent Organisation, Israel, Japan, Mexico, New Zealand and South Korea. The portfolio also includes a proprietary mobile device software application that is used in conjunction with certain patents in the portfolio.
“This is a transformative asset acquisition for Kaival Brands,” stated Eric Mosser, President and Chief Operating Officer of Kaival Brands. “As we look to the future of our company beyond our core BIDI® Stick distribution business, the purchase of this extensive patent portfolio marks the first step in diversifying our product offerings for adult consumers and potential revenue streams. We are already exploring near-term, revenue generating opportunities through royalty-based licensing agreements with third party partners in the cannabis, hemp/CBD, nicotine and nutraceutical spaces. Our longer-term plan is to incorporate this intellectual property into new, adult-focused products and expand into new segments such as cannabis/hemp, nutraceutical, and pharmaceutical markets that we can sell ourselves through existing and potential new distribution partners, once all necessary regulatory clearances have been obtained. Additionally, we believe that the portfolio provides us with certain strategic advantages due to the limited number of patents in the vaporizer space. In short, we believe this forward-looking acquisition, with the acquisition consideration structured in key respects at premiums to the current market value of our common stock, broadens and strengthens our company and our prospects considerably as we seek to drive value for our stockholders.”
Nirajkumar Patel, Chief Science and Regulatory Officer of Kaival Brands and owner of Bidi Vapor, stated, “We believe these patents and patent applications represent a valuable opportunity to increase our product portfolio and diversify revenue streams. From a science perspective, these patents are innovative with novel applications, and we look forward to developing these patents into commercial or pharmaceutical products for adult consumers. From a regulatory point of view, there are only so many patents in the vaporizer space, and we believe that acquiring an extensive portfolio such as this is a wise strategic purchase for the long-term success of Kaival Brands.”
Peter Calfee, Chief Executive Officer of GoFire, Inc., stated, “We are excited to place these valuable assets into Kaival’s hands. After working hard to create this intellectual property with a goal of providing safer and healthier products to the marketplace, we engaged in a comprehensive assessment of how best to further its development into actual products and services with consumer reach. At the end of that process, we chose to invest our patent portfolio in Kaival in exchange for Kaival equity as the right fit for our technology. We have confidence in Kaival’s management team and board of directors as Kaival seeks to further develop and ultimately monetize this technology for the benefit of all Kaival stockholders, including GoFire’s stockholders. We look forward to realizing the potential market strength of this patent portfolio with Kaival.”
Transaction Overview
The consideration for the purchased patents consists primarily of Kaival Brands equity securities. In certain key aspects, the equity consideration was structured in a forward-looking manner with valuations or exercise prices struck at premiums to the current market price of Kaival Brands’ common stock.
Specifically, the equity consideration consists of: (i) 2,000,000 shares of Kaival Brands common stock; (ii) 900,000 shares of newly designated, non-voting Series B Preferred Stock valued at $15 per share and (iii) warrants to purchase 2,000,000 shares of common stock with exercise prices ranging from $3.00 to $6.00 per share for each of four 500,000 share tranches. The Company could receive up $9,000,000 in cash proceeds if such warrants are exercised in the future for cash.
The Series B Preferred shares are redeemable at $15 per share or at lower prices depending on the market value of the Company’s common stock at the time of redemption. Each preferred share is convertible into 8.3333 shares of Company common stock, or 7,500,000 common shares in total. Each preferred share has a $15 face value which, on an as converted basis, equates to a value of $1.80 for each of the 8.3333 shares of common stock receivable upon conversion, representing a premium to the market price of the Kaival’s common stock as of the closing date. However, the preferred shares may be only converted into common stock beginning 18 months following the closing and then only on a limited basis over the next 5 years, if the Company has not redeemed the preferred shares prior to conversion. The holders of the Series B preferred shares are also entitled to nominate one individual to serve on board of directors of Kaival Brands, with the initial board member being James P. Cassidy, a GoFire board advisor with significant investment, management and tobacco industry experience.
The share consideration is subject to a six-month lockup agreement. GoFire or its designees have been granted certain registration rights with respect to the common stock issued as part of or underlying the equity consideration.
In another forward-looking consideration structure, GoFire is also entitled to potential contingent cash consideration based on a percentage of license revenue received by Kaival Brands over the next four years from cannabis-related applications of the acquired patents.
Trust Capital Markets, a division of AGES Financial Services Ltd, acted as advisor to Kaival Brands and Winchester Capital Partners LLC acted as advisor to GoFire. Ellenoff Grossman & Schole LLP acted as legal counsel to Kaival Brands and the Gunster law firm acted as legal counsel to GoFire.
Additional details regarding this transaction will be provided in a Current Report on Form 8-K to be filed by the Company with the U.S. Securities and Exchange Commission.
