Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 758

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 7
Chunk 758
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 of equity instruments (share-based payments, referred to herein as “SBP”) based on the grant-date
fair value of the award. That cost is recognized over the period during which a recipient is required to provide service in exchange for
the SBP award—the requisite service period (vesting period). For SBP awards subject to performance conditions, compensation is not
recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated using the
Black-Scholes-Merton option-pricing model.

The fair value of each option granted during the years
then ended October 31, 2024, and October 31, 2023, was estimated on the date of grant using the Black-Scholes-Merton option-pricing model
with the weighted average assumptions in the following table:

Schedule of weighted average assumptions 

As of October
 
As of October

31, 2024
 
31, 2023

Expected dividend yield

0
%

0
%

Expected option term (years)

5.5 – 7

6.25 – 10

Expected volatility

214.72 - 225.52
%

270.98 – 286.91
%

Risk-free interest rate

3.78 - 4.63
%

3.47 - 4.34
%

    F-14

The expected term of options granted represents the
period of time that options granted are expected to be outstanding. The expected volatility was based on the volatility in the trading
of the Company’s common stock. The risk-free interest rate used is based on the published U.S. Department of Treasury interest rates
in effect at the time of stock option grant for zero coupon U.S. Treasury notes with maturities approximating each grant’s expected
term. Forfeitures and cancellations are recorded as they occur.

Income Tax

Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the
recorded book basis and the tax basis of assets and liabilities for financial and income tax reporting. Deferred tax assets and liabilities
represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities
are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income and
tax credits that are available to offset future federal income taxes. The Company believes that its income tax filing positions and deductions