Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 501

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 3
Chunk 501
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half of the Commitment Fee Shares if the Note is 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 $98,432 as loss on extinguishment of debt for the year then ended October
31, 2024. As of October 31, 2024 and October 31, 2023 the carrying value of the loan and unamortized debt discount and issuance costs
were 0zero and zero and $513,295 and 136,705, respectively.

Note 7 – Leases 

The Company capitalizes all leased assets pursuant
to ASU 2016-02, Leases (Topic 842) (“Topic 842”), which requires lessees to recognize right-of-use (“ROU”) assets
and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with terms longer than
12 months and classified as either financing or operating leases. The Company excludes short-term leases having initial terms of 12 months
or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.

The Company does not have financing leases and only
one operating lease for office space and inventory storage space with Just Pick, LLC (“Just Pick”), a related party that was
owned and controlled by Nirajkumar Patel, the former Chief Executive Officer and Director of the Company (see Note 9). Certain of the
Company’s leases, have and may in the future, include renewal options, which have been and might be in the future, included in the
calculation of the lease liabilities and right of use assets when the Company is reasonably certain to exercise the option.

    F-19

Cash flow information related to leases was as follows:

Schedule of cash flow information related to leases

October 31, 2024
 
October 31, 2023

Other Lease Information

Cash paid for amounts included in the measurement of lease liabilities:

 Operating cash flows from operating leases
 
$
(198,392
)
 
$
(190,541
)

The following table provides the maturities of lease liabilities as of
October 31, 2024:

Schedule of maturities of lease liabilities

Operating

Le