Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 27

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 27
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 that each share of the Series
A Preferred Stock was convertible into approximately 0.3968 shares of Common Stock. On June 24, 2022, all 3,000,000 shares of Series A
Preferred Stock were converted into shares of Common Stock by Kaival Holdings, our majority stockholder. The conversion of 3,000,000 shares
of Series A Preferred Stock, at a conversion rate of 0.3968, equaled 1,190,477 shares of Common Stock. As a result, the authorized, preferred
stock of the Company consists of 5,000,000 shares with a par value of $0.001 per share, with 0 shares of preferred stock issued or outstanding
as of October 31, 2022. 

May 2023 GoFire Asset Purchase Agreement

On May 30, 2023, we and Kaival Labs entered into an Asset Purchase Agreement
(the “GoFire APA”) with GoFire. Pursuant to the terms of the GoFire APA, we, through Kaival Labs, purchased certain intellectual
property assets of GoFire consisting of various patents, patent applications and trademarks in exchange for equity securities of our company
and certain contingent cash consideration. The purchased assets consist of 19 existing patents and 47 pending patents with novel technologies
related to vaporization and inhalation technologies. The patents and patent applications cover the U.S. and several international territories.
The purchased assets also include four registered and two pending trademarks. We have determined that the acquisition of the purchased
assets does not constitute the acquisition of a “business” (as defined in Rule 11-01(d) of Regulation S-X).

15

Pursuant to the terms of the GoFire APA, we paid to
GoFire, in addition to certain contingent cash consideration described below, consideration in the form of equity securities of our company
consisting of (i) an aggregate of 95,239 shares of Common Stock (the “2023 APA Shares”); (ii) 900,000 shares of newly-designated
Series B Convertible Preferred Stock, par value $0.001 per share, (the “Series B Preferred Stock” and the shares of Common
Stock underlying the Series B Preferred, the “Series B Conversion Shares”), the rights, preferences and terms of which are
set forth in a Certificate of Designation of Rights and Preferences of the Series B Preferred Stock, and (iii) a Common Stock purchase
warrant to purchase