Kaival Brands Receives Initial Royalty Payment from Philip Morris International Following Increased International Sales

Record International Sales in July 2023

Follows Recently Amended Agreement with Philip Morris International

GRANT-VALKARIA, Fla., Sept. 21, 2023 (GLOBE NEWSWIRE) -- Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) ("Kaival Brands," the "Company," or "we"), the exclusive U.S. distributor of all products manufactured by Bidi Vapor, LLC ("Bidi Vapor"), which are intended for adults 21 and over, today provided an update on sales activity by, and royalty payments received by Kaival Brands from, Philip Morris International, Inc. (PMI), whose affiliate holds the license from Kaival Brands to market Bidi Vapor-based products in multiple international jurisdictions.

Importantly, Kaival Brands announced that PMI achieved a record level of monthly sales in July for of its products (marketed by PMI under the names VEEBA and VEEV NOW).

Eric Mosser, Chief Executive Officer and President of Kaival Brands, stated, "We are extremely pleased to see the positive trajectory of sales and royalties to our company as international consumers realize the difference in quality and the science behind the BIDI Stick and VEEBA/VEEV NOW devices. We are proud to work with Philip Morris and remain steadfast in our commitment to the responsible commercialization of better alternatives to cigarettes for adults who would otherwise continue smoking.”

Amended Agreement with Philip Morris International

On August 17, 2023, the Company, through its wholly owned subsidiary, Kaival Brands International (KBI), entered into an amended license agreement with Philip Morris Products S.A., a wholly owned affiliate of PMI (NYSE: PM), for the development and distribution of electronic nicotine delivery system (“ENDS”) products in multiple international jurisdictions.   Under the terms of the amended agreement, the parties agreed to revise certain terms, which provide for, among other things, a fixed pricing structure with volume-driven increases and a recapture of non-recurring engineering costs by KBI.  

As a result of the amended agreement, Kaival Brands recently received both a net reconciliation payment from PMI of approximately $135,000 and a royalty payment earned from July 1, 2023 through July 31, 2023, in the amount of approximately $121,000, for a total payment of approximately $256,000.

Royalties

Furthermore, the Company projects additional royalties to be earned from PMI through the end of 2023, with an anticipated increasing trajectory of royalty income.