Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 509

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 3
Chunk 509
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 December 15, 2023.

Pre-Funded Warrants

The Company issued a pre-funded warrant to purchase
an aggregate of 2,175,000 shares of Common Stock in connection with the June 2024 Public Offering. The Pre-funded Warrants were sold to
Purchasers whose purchase of Common Units in the June 2024 Public Offering would have otherwise resulted in such Purchaser beneficially
owning more than 4.99% (or, at the election of the purchaser, 9.99%) of the Company’s outstanding Common Stock. The exercise price
of each Pre-funded Warrant is $0.001 per share. The Pre-funded Warrants are exercisable immediately and may be exercised at any time until
all of the Pre-funded Warrants are exercised in full.

Immediately after the Closing Date, the Purchasers
of the Pre-funded Units exercised all of the 2,175,000 Pre-funded Warrants and purchased shares of common stock. The Company issued 2,174,456
shares of common stock from exercises of pre-funded warrants, consisting of 1,450,000 Pre-funded Warrants through cash exercise and 725,000
Pre-funded Warrants through cashless exercise. The Company received proceeds amounting to $1,450 from the cash exercise of the Pre-funded
Warrants. As of October 31, 2024, there were no Pre-Funded Warrants outstanding.

Note 9 – Related-Party Transactions  

 In March 2020, the Company commenced business
operations as a result of becoming the exclusive distributor of certain ENDS and related components (the “Products”) manufactured
by Bidi, a related party company that is also owned by Nirajkumar Patel, the former Chief Executive Officer and Director of the Company.

On June 24, 2024, the Company obtained a short-term
loan from Bidi, a related party company to finance the state and franchise tax fees. The principal amount was $218,787 and was not subject
to interest. The entire principal balance of this loan shall be due and payable in full immediately upon receipt of funds by the Company
pursuant to the June 2024 Public Offering noted above. This loan was fully paid on June 25, 2024, and as of October 31, 2024, had
an outstanding balance of zero.

Revenue and Accounts Receivable

During the fiscal year ended October 31, 2024, the
Company