Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 23

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 1
Chunk 23
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 subject to an effective interest rate of 11.15%.
As of January 31, 2025 and October 31, 2024, the outstanding balance of the Insurance loans amounted to $43,667 and $207,616, respectively.

Loan Agreements

On November 29, 2023, the Company entered into two
loan agreements which are collateralized by all assets of the Company until the loans are repaid in full. Under the terms of these agreements,
the Company received the disclosed Purchase Price and agreed to repay the disclosed Purchase Amount, which is collected by the lenders
at the disclosed weekly payment rate. The Company’s former Chief Executive Officer, Eric Mosser personally guarantees the performance
of these loans. These loans were fully paid on June 13, 2024, upon their maturity.

On August 9, 2023, the Company entered into a Securities
Purchase Agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”), pursuant to which the Company sold a
Promissory Note in the principal amount of $650,000 (the “Note”) to AJB in a private transaction for a purchase price of $585,000
(giving effect to original issue discount of $65,000). The Note matured on February 8, 2024 (the “Maturity Date”) and had
interest at the rate of 10% per annum. Interest was payable on a monthly basis beginning on the date one month following the date of issuance
of the Note. Pursuant to the terms of the SPA, the Company paid a commitment fee to AJB in the form of 19,048 shares of Common Stock (the
“Commitment Fee Shares”) with a relative fair value of $130,478 which was recognized as discount to the note. The debt discount
and issuance costs were amortized over the term of the note. Amortization expense amounted to zero and $38,273 for the three months ended
January 31, 2025, and 2024, respectively.

Under the SPA, the Company had the right to repurchase
half of the Commitment Fee Shares if the Note was repaid in full prior to maturity. On December 1, 2023, the Company fully paid the loan
balance in advance of the maturity date. In connection with the repayment of the Note, the Company agreed that AJB would be permitted
to retain all of the Commitment Fee Shares. The Company recognized $98