Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 185

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1A
Chunk 185
---
% of the Liquidation Preference,
accruing from May 30, 2023 and payable on the eighteen-month anniversary of May 30, 2023. No preemptive rights are granted to the
holders of Series B Preferred Stock. The Majority Holders have the ability to cause a voluntary conversion of the Series B Preferred
Stock into Common Stock at a conversion rate of 0.3968 shares of Common Stock per share of Series B Preferred Stock which may only
occur on or after the following dates 18 month, 24 month, 36, month, 48 month, and 60 month anniversary of the original issuance
date; and only up to 180,000 number of shares of Series B Preferred Stock on each of the these dates. All shares of Series B
Preferred Stock will automatically convert to Common Stock upon the occurrence of a Change of Control (as defined in the GoFire
APA). On December 3, 2024, the Company paid Accrued dividends of $405,000 to Series B convertible preferred shareholders.

Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations.

This management’s Discussion and Analysis
of Financial Condition and Results of Operations is designed to provide a reader of the financial statements with a narrative report on
our financial condition, results of operations, and liquidity. This discussion and analysis should be read in conjunction with the audited
Financial Statements and notes thereto for the year ended October 31, 2024, included under Item 8 – Financial Statements and Supplementary
Data in this Report. The following discussion contains forward-looking statements that involve risks and uncertainties, such as statements
of our plans, objectives, expectations, and intentions. Our actual results could differ materially from those discussed in the forward-looking
statements. Please also see the cautionary language at the beginning of this Report regarding forward-looking statements.

Overview

We
are engaged in the sale, marketing and distribution of electronic nicotine delivery system (“ENDS”) products, also known
as “e-cigarettes”, in a variety of favors. Until October of 2024, our primary source of revenue has been the Bidi Stick as
we sold our inventory on hand. However, on June 11, 2024, RAI Strategic Holdings, Inc., R.J. Reynolds Vapor Company, R.J. Reynolds Tobacco
Company, and RAI Services Company (collectively, the “RJ Reynolds Entities”) filed a patent infringement complaint with the
International Trade Commission (