Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 853

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 7A
Chunk 853
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 the income tax effective
rate.

Significant components of the tax expense recognized
in the accompanying statements of operations for the years ended October 31, 2024, and October 31, 2023, are as follows:

Schedule of components of income tax expense

October 31,

2024
 
2023

Current Tax Expense:

Federal
 
$
—

$
—

State

19,658

2,348

Total Current Tax Expense

19,658

2,348

Deferred Tax Expense:

Federal

—

—

State

—

—

Total Deferred Tax Expense

—

—

Tax provision:

Federal

—

—

State

19,658

2,348

Total
 
$
19,658

$
2,348

    F-25

Total net deferred taxes are comprised of the following
on October 31, 2024, and October 31, 2023:

Schedule of deferred tax assets and liabilities

October 31,

2024
 
2023

Deferred Tax Assets:

Stock Compensation Expense – NQSO
 
$
1,871,908

$
2,069,641

Other

837,264

499,203

Net Operating Loss Carryforwards

6,258,699

4,998,800

Total Deferred Tax Asset

8,967,871

7,567,644

Deferred Tax Liabilities:

Prepaid Expenses

(75,319
)

(27,497
)

Right of Use Asset

(188,810
)

(220,859
)

Total Deferred Tax Liabilities

(264,129
)

(248,356
)

Less: Valuation Allowance

(8,703,742
)

(7,319,288
)

Net Deferred Tax Asset
 
$
—

$
—

The Company has Federal NOL carryforwards of
approximately $29.8 million and state NOL carryforwards of approximately $0.4 million. With the changes instituted by the CARES Act,
the Federal NOLs have an indefinite life and will not expire. The Company’s federal and state tax returns for the 2023 and 2022
tax years generally remain subject to examination by U.S. and various state authorities. A valuation allowance is recorded to reduce the
deferred tax asset if, based on the weight of the evidence, it is more likely than not that some portion or all the deferred tax assets
will not be realized. After consideration of all the evidence, both positive and negative, management