Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 54

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 8
Chunk 54
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alty Adjustments. Certain potential adjustments to the royalties receivable by KBI as provided for in the PMI License Agreement have
been eliminated.

3. Guaranteed Royalty. The guaranteed
royalty payment owed to KBI under the PMI License Agreement has been eliminated. Instead, royalties will be paid on a quarterly basis
going-forward based on actual sales. Any unpaid guaranteed royalty has been cancelled.

    F-12 

 4. Insurance Tail Requirements.
KBI’s requirement to keep certain tail insurance after the expiration or termination of the PMI Licensing Agreement was reduced
from 6 years to 2 years.

5. Markets. The identification
of the PMI Markets that PMI may enter has been expanded to cover certain additional territories.

6. Net Reconciliation Payment to
KBI. As a result of the changes to the PMI License Agreement described in paragraphs 1 thought 3 above, the value of such changes was
calculated and reconciled as of the date of commencement of the PMI Licensing Agreement through June 30, 2023. On September 8, 2023, the
Company received the Net Reconciliation Payment from PMPSA of $134,981 pursuant to this provision.

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  $108,215 to Bidi. As of January 31, 2025 and October 31,
2024, $81,429 and 131,683, respectively, of license fees are owed to Bidi.

As of January 31, 2025, amounts receivable from
PMPSA in connection with the PMI License Agreement totaled $206,857 of which $206,857 and $0 pertain
to royalties and reimbursement of certain non-recurring engineering costs, respectively. As of October 31, 2024, amounts receivable
from PMPSA in connection with the PMI License Agreement totaled $263,367 of which $263,367 and $0 pertain to royalties and reimbursement of certain
non-recurring engineering costs, respectively.

Net Loss Per Share

Basic net loss per share is computed by dividing net
loss available to common stockholders by the weighted average number of common shares outstanding during