Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 756

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 7
Chunk 756
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 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 through 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-13

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 and 2023, $131,683
and zero,
respectively, of license fees are owed to Bidi.

As of October 31, 2024, amounts receivable from PMPSA
in connection with the PMI license agreement pertaining to royalties totaled $263,367. As of October 31, 2023, amounts receivable from
PMPSA in connection with the PMI License Agreement totaled $1,002,196 of which $289,672 and $712,524 pertain to royalties
and reimbursement of certain non-recurring engineering costs, respectively.

Net Loss Per Share

Basic net loss per share
is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the
period, without consideration of potential common stock equivalents.

Diluted net loss per share
is calculated by dividing net loss available to common stockholders by the weighted average number of common stock outstanding plus common
share equivalents from conversion of dilutive stock options and warrants using the treasury method and preferred stock using the if-converted
method, except when antidilutive. In the event of a net loss, the effects