Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 28

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 1
Chunk 28
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 stock warrants was $1,511,006.

Note 8 – Related-Party Transactions

In March 2020, the Company commenced business operations
as a result of becoming the exclusive distributor of certain ENDS and related components (the “Products”) manufactured by
Bidi, a related party company that was also owned by Nirajkumar Patel, the former Chief Executive Officer and Director of the Company.

    F-19 

Revenue and Accounts Receivable

During the three months ended January 31, 2024,
the Company recognized revenue of $1,900 from one
company owned by Nirajkumar Patel, the former Chief Executive Officer and Director of the Company, and/or his wife. There was   no
accounts receivable balance for these transactions as of October 31, 2024.

Purchases and Accounts Payable

During the three months ended January 31, 2024, 100%
of the inventories of Products, consisting solely of the BIDI® Stick, were purchased from Bidi, a related party controlled by Nirajkumar
Patel, the former Chief Executive Officer and Director of the Company, in the amount of $273,060. This amount reflects the deposit paid
for inventory on order.

There were no purchases of inventory from Bidi for the three months ended
January 31, 2025 and no amounts owed to Bidi for inventory purchases as of January 31, 2025.

The KBI License agreement provides that KBI shall
pay Bidi license fees equivalent to 50% of the adjusted earned royalty payments, after any offsets due to jointly agreed costs such development
costs incurred for entry to specific international markets.

During the three months
ended January 31, 2025, the Company paid license fees of approximately $108,215 to Bidi. As of January 31, 2025, the Company
had   a payable to Bidi of $81,429 related
to the PMI License Agreement.

During the three months ended January 31, 2024,
the Company paid license fees of approximately $0 to Bidi.  As of October 31, 2024, the Company had a payable to Bidi of
$131,683 related
to the PMI License Agreement.  

Leased Office Space and Storage Space

On June 10, 2022, the Company entered into the 2022
Lease with Just Pick, owned and controlled by