Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 779

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 7
Chunk 779
---
 F-25

Total net deferred taxes are comprised of the following
on October 31, 2024, and October 31, 2023:

Schedule of deferred tax assets and liabilities

October 31,

2024
 
2023

Deferred Tax Assets:

Stock Compensation Expense – NQSO
 
$
1,871,908

$
2,069,641

Other

837,264

499,203

Net Operating Loss Carryforwards

6,258,699

4,998,800

Total Deferred Tax Asset

8,967,871

7,567,644

Deferred Tax Liabilities:

Prepaid Expenses

(75,319
)

(27,497
)

Right of Use Asset

(188,810
)

(220,859
)

Total Deferred Tax Liabilities

(264,129
)

(248,356
)

Less: Valuation Allowance

(8,703,742
)

(7,319,288
)

Net Deferred Tax Asset
 
$
—

$
—

The Company has Federal NOL carryforwards of
approximately $29.8 million and state NOL carryforwards of approximately $0.4 million. With the changes instituted by the CARES Act,
the Federal NOLs have an indefinite life and will not expire. The Company’s federal and state tax returns for the 2023 and 2022
tax years generally remain subject to examination by U.S. and various state authorities. A valuation allowance is recorded to reduce the
deferred tax asset if, based on the weight of the evidence, it is more likely than not that some portion or all the deferred tax assets
will not be realized. After consideration of all the evidence, both positive and negative, management 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