Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 355

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1B
Chunk 355
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 by Kaival Holdings LLC.

(9) Address
is 401 N. Wickham Road, Suite 130 Melbourne, FL 32935

(10) KDMM
Trust I owns all of the equity of Bidi and Ankitaben Patel, as trustee of KDMM Trust I, has voting control over the Kaival shares owned
by Bidi.

57

Item 13. Certain Relationships and Related Party Transactions 

Since the beginning of our fiscal
year, we have entered into or participated in the following transactions with related persons:

Revenue

During the year ended October 31, 2024, the Company recognized revenue of $5,950
from three companies owned by Nirajkumar Patel, former Chief Executive Officer and director of the Company and/or his wife.

Purchases and Accounts Payable

During the
year ended October 31, 2024, 100% of the inventories of products, consisting solely of the BIDI® Stick, were purchased from
Bidi, a related party controlled by Nirajkumar Patel and/or his wife  ,
in the amount of $0.3 million.

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 year ended October 31, 2024, the Company
paid license fees of approximately $220,000 to Bidi. As of October 31, 2024, the Company had accounts payable to Bidi of $131,683 for
license fees.

Leased Office Space and Storage
Space

We capitalize all leased assets
pursuant to ASU 2016-02, Leases (Topic 842) (“Topic 842”), which requires lessees to recognize right-of-use (“ROU”)
assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with terms longer
than 12 months and classified as either financing or operating leases. We exclude short-term leases having initial terms of 12 months
or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term. On
June 10, 2022, we entered into the 2022 Lease with Just Pick for approximately 21,332 rentable square feet combined in our principal
office building and warehouse, together with all