Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 87

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 8
Chunk 87
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 For purposes of determining aggregate
sales threshold, all sales undertaken since commencement of the PMI Licensing Agreement will be counted.

2. Elimination of Certain Potential
Royalty Adjustments. Certain potential adjustments to the royalties receivable by KBI as provided for in the PMI License Agreement have
been eliminated.

3. Guaranteed Royalty. The guaranteed
royalty payment owed to KBI under the PMI License Agreement has been eliminated. Instead, royalties will be paid on a quarterly basis
going-forward based on actual sales. Any unpaid guaranteed royalty has been cancelled.

4. Insurance Tail Requirements.
KBI’s requirement to keep certain tail insurance after the expiration or termination of the PMI Licensing Agreement was reduced
from 6 years to 2 years.

5. Markets. The identification
of the PMI Markets that PMI may enter has been expanded to cover certain additional territories.

6. Net Reconciliation Payment to
KBI. As a result of the changes to the PMI License Agreement described in paragraphs 1 thought 3 above, the value of such changes was
calculated and reconciled as of the date of commencement of the PMI Licensing Agreement through June 30, 2023. On September 8, 2023, the
Company received the Net Reconciliation Payment from PMPSA of $134,981 pursuant to this provision.

    F-12

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 three months and nine months ended July 31, 2025, the Company paid
license fees of $30,000 and $228,215, respectively, to Bidi. As of July 31, 2025, $60,000 of license fees are owed to Bidi.
During the three months and nine months ended July 31, 2024, the Company paid license fees of $70,000 and $130,000, respectively,
to Bidi. As of October 31, 2024, $131,683 of license fees are owed to Bidi.

As of July 31, 2025, amounts receivable from PMPSA
in connection with the PMI License Agreement totaled $120,000 of which $120,000 and $0 pertain to royalties and reimbursement of certain
non-recurring engineering costs, respectively.