Replies to post #14258 on Kaival Brands Innovations Group Inc (KAVL)

[daiello]

While COD payment is the gold standard, when dealing with major chains, KAVL offers payment terms, with most extending out to 120-days. Thus, in these types of orders, Kaival Brands fulfills and ships the entire product order upfront to the distributor and then receives payment for products upon sale by the wholesale or distributor payable monthly. Thus, with the payment cycle lasting up to 120-days, payment in full can take time. Still, that doesn’t mean the money isn’t coming. What it does do, however, is sometimes skew the quarterly results to make it appear as though the company might be underperforming on guidance.

For instance, its recent combined orders for $41.6 million were shipped with 120-day terms in April of this year. However, despite these orders being placed in the second quarter of fiscal 2021, GAAP accounting rules require that revenue recognition only be posted once the product sells or payment is received, since there can be no assurance sales happen. Thus, while KAVL expects to receive the entire invoice amount, it can be slow to accrue for reporting purposes—however, it’s still a receivable that merits investor attention. And the excellent news is that while KAVL awaits its cash, it can benefit from similar terms that allow them to leverage terms and expand its market reach as well. That’s already happening.

[RandyKCMO]

This is a great article. Thanks for sharing!!

I think KAVL should be trading at multiples of its current share price... based on the actual and projected revenue before us.

RK