Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 99

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 8
Chunk 99
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 100% of
the inventories of Products, consisting solely of the BIDI® Stick, were purchased from Bidi, a related party controlled by Nirajkumar
Patel, the former Chief Executive Officer and Director of the Company, in the amount of $273,060.

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 and nine months ended July 31, 2025,
the Company paid license fees of approximately $30,000 and $228,215, respectively to Bidi.   As of July 31, 2025, the Company
had a payable to Bidi of $60,000 related to the PMI License Agreement.

During the three and nine months ended July 31, 2024,
the Company paid license fees of $70,000 and $130,000, respectively, to Bidi.   As of October 31, 2024, the Company had a payable
to Bidi of $131,683 related to the PMI License Agreement.

Leased Office Space and Storage Space

On June 10, 2022, the Company entered into the 2022
Lease with Just Pick, owned and controlled by Nirajkumar Patel, the former Chief Executive Officer and Director of the Company. The Company
had $19,554 and $140,533 in operating lease expenses for the three and nine months ended July 31, 2025, respectively, and $49,844
and $148,012 for the three and nine months ended July 31, 2024, respectively.

On April 23, 2025, the Company received a letter
of demand from Just Pick, LLC. noting that the Company was in breach of the lease as base rent and operating expenses have not been
paid since January 8, 2025. On April 30, 2025, the Company responded and provided Just Pick, LLC with a termination notice. As of
April 30, 2025, the Company determined that it would no longer be using the leased office space in its business and recorded a loss
on the ROU assets of $707,626, accordingly. In May 2025, the Company paid the total unpaid lease payments through May 2025 amounting