Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 62

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 8
Chunk 62
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 respect
of the Series B Dividend shall begin to accrue on a daily basis, be cumulative from and including the Original Issue Date, whether or
not the Corporation has funds legally available for such dividends or such dividends are declared, shall compound on each six month anniversary
of the Original Issue Date and shall be payable in arrears on the 18-month anniversary of the Original Issue Date. No preemptive rights
are granted to the holders of Series B Preferred Stock. The Majority Holders have the ability to cause a voluntary conversion of the Series
B Preferred Stock into Common Stock at a conversion rate of 0.3968 shares of Common Stock per share of Series B Preferred Stock which
may only occur on or after the following dates 18-month, 24 month, 36 month, 48 month, and 60 month anniversary of the original issuance
date; and only up to 180,000 shares of Series B Preferred Stock on each of these dates. All shares of Series B Preferred Stock will automatically
convert to Common Stock upon the occurrence of a Change of Control (as defined in the GoFire APA). On December 3, 2024, the Company paid
accrued dividends of $405,000 to Series B shareholders. As of January 31, 2025, the Company had zero accrued dividend payable to Series
B shareholders and   no further dividends will be accrued or paid.  

    F-17 

Pursuant to the GoFire APA, the Company
is required to use commercially reasonable efforts to register the APA Shares and Warrant Shares with the SEC for distribution to GoFire’s
stockholders and/or public resale by such stockholders within 180 days of the Closing Date. In addition, if any Series B Preferred Stock
remains outstanding nineteen (19) months after the Closing Date, the Company shall use commercially reasonable efforts to file with the
SEC a subsequent registration statement registering the distribution to GoFire’s stockholders and/or public resale Series B Conversion
Shares by such stockholders. If such subsequent registration statement is required, the Company will use its commercially reasonable efforts
to obtain effectiveness of such subsequent registration statement within nineteen (19) months of the Closing Date, and if the Company
does not so register the Series B Conversion Shares within nineteen (19) months of the Closing Date, the Company will issue to GoFire
or its designee an additional ten percent (10%) of all of the Series B Conversion Shares underlying the then outstanding shares of Series