Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 854

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 7A
Chunk 854
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 has determined that a valuation
allowance of $8,703,742 for the year ended on October 31, 2024, it is necessary to reduce the deferred tax asset to the amount that will
more likely than not be realized.

Note 11 – Commitments and Contingencies

The Company follows ASC 450-20, Loss Contingencies, to
report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties
and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably
estimated. There were no commitments or contingencies as of October 31, 2024, and October 31, 2023, other than the below:

QuikfillRx Service Agreement

On March 31, 2020, the Company entered into a service
agreement (the “Service Agreement”) with QuikfillRx LLC, a Florida limited liability company (“QuikfillRx”),
whereby QuikfillRx provides the Company with certain services and support relating to sales management, website development and design,
graphics, content, public communication, social media, management and analytics, and market and other research (collectively, the “Services”). 

Effective as of November 9, 2022, the Company entered
into its latest amendment to the Service Agreement with QuikfillRx (collectively with prior amendments, the “Amended Service Agreement”).
The November 9, 2022 amendment to the Service Agreement was captioned as the “Fourth Amendment” although it was the fifth
amendment to the Service Agreement. Pursuant to the Amended Service Agreement:

(a) the term of the Amended Service Agreement was
extended (unless earlier terminated pursuant to the terms of the Amended Service Agreement) from November 1, 2022 (the “Effective
Date”) until October 31, 2025, following which the term shall automatically renew for successive one (1) year period beginning November
1, 2025;

(b) QuikfillRx agreed to change its “doing business
as” name to “Kaival Marketing Services” within thirty (30) days following the Effective Date;

(c) it was provided that either party may terminate
the Amended Service Agreement without cause upon not less than ninety (90) days prior written notice to the other party;

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(d) QuikfillRx was granted a