Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 764

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 7
Chunk 764
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their relative fair values. The cost of acquisition does not include any contingent consideration related to contingent cash
payments as those obligations are contingent in future amount of royalties and will be recognized when the contingency is resolved,
and the consideration is paid or becomes payable. Goodwill is not recognized in an asset acquisition. The Purchased Assets have been
recorded at a cost of $11,795,975 and are included in Intangible Assets in the consolidated balance sheet.

The consideration paid for the GoFire APA was as follows
(see Note 5):

Schedule of consideration paid

Common Stock
 
$
1,119,800

Series B Preferred Stock

9,047,980

Common Stock Warrants

1,059,523

Transaction Costs

568,672

Total consideration
 
$
11,795,975

    F-17

The fair value of the Common Stock is based on the
publicly traded share price as of the acquisition date and represents a Level 1 measurement.

The fair value of the Series B Preferred Stock and
Common Stock Warrants were determined using the Black-Scholes Option Pricing model. The fair value measurements are based on significant
unobservable inputs, including management estimates and assumptions, and thus represent Level 3 measurements.

Note 5 – Intangible Assets

The Company’s intangible assets include patents
and technology that were acquired pursuant to the GoFire APA. The cost and accumulated amortization of the intangible assets amounted
to $11,795,975 and $1,114,064 as of October 31, 2024, respectively and $11,795,975 and $327,666 as of October 31, 2023, respectively.
Amortizable patents and technology have a useful life of 15.0 years with a weighted average remaining useful life of 13.7 years and 14.6
years as of October 31, 2024 and October 31, 2023, respectively.

The Company recognized an amortization expense of
$786,398 and $327,666 for the years then ended October 31, 2024 and 2023, respectively. Amortization expense is included under general
and administrative expenses in the consolidated statements of operations.

Future amortization expense of intangible assets is as follows:

    Schedule of future amortization expense of intangible assets  

    Year ending October
    31, 2025  
    $786,398 
  
    Year ending October 31