Company: KAVL
Filing Date: 2025-06-10
Form Type: 10-Q
Source: 0001731122-25-000842
Chunk: 21

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-06-10
Form: 10-Q
Item: Item 1
Chunk 21
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 share equivalents
from conversion of dilutive stock options and warrants using the treasury method and preferred stock using the if-converted method, except
when antidilutive. In the event of a net loss, the effects of all potentially dilutive shares are excluded from the diluted net loss per
share calculation as their inclusion would be antidilutive.

Concentration of Revenues and Accounts Receivable

No revenue concentration from the sale of Products
existed for the six months ended April 30, 2025.

For the six months ended April 30, 2024, (i) 20% or
$998,905 of the revenue from the sale of Products, solely consisting of the BIDI® Stick, was generated from QuikTrip Corporation,
and (ii) 15% or $763,562 of the revenue from the sale of the Products was generated from GPM Investments, LLC. Subsequent to April 30,
2024, QuickTrip Corporation terminated its consignment arrangement with the Company.

No accounts receivable concentration from the sale
of Products existed as of April 30, 2025.

QuikTrip Corporation, with an
outstanding balance of approximately $205 accounted for 100% of the total accounts receivable from customers, as of October 31, 2024.

Share-Based Compensation

The Company measures the cost of services received
in exchange for an award of equity instruments (share-based payments, referred to herein as “SBP”) based on the grant-date
fair value of the award. That cost is recognized over the period during which a recipient is required to provide service in exchange for
the SBP award—the requisite service period (vesting period). For SBP awards subject to performance conditions, compensation is not
recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated using the
Black-Scholes-Merton option-pricing model.

    F-13

Fair Value of Financial Instruments

The Company’s balance sheet includes certain
financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively
short period of time between the origination of these instruments and their expected realization.

ASC 820, Fair Value Measurements and Disclosures
(“ASC 820”), defines fair value as the exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants