OTC: KAVL

Merger and Share Exchange Agreement

On September 23, 2024, we agreed
with Delta Corp Holdings Limited, a company incorporated in England and Wales (“Delta”) to effect a business combination between
us and Delta by entering into a Merger and Share Exchange Agreement (the “Merger Agreement”) among us, Delta, Delta Corp Holdings
Limited, a Cayman Islands exempted company (“Pubco”), KAVL Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary
of Pubco (“Merger Sub”), and the shareholders of Delta.

On September 11, 2025, the Company and Delta entered
into a Business Combination Termination and Release Agreement (the “Termination Agreement”) pursuant to Section 10.1(a) of
the Merger Agreement (the “Merger Agreement’) among the Company, Delta, Delta Corp Holdings Limited, a Cayman Islands exempted
company, KAVL Merger Sub Inc. and Delta Corp Cayman Limited.

Pursuant to the Termination Agreement, the Company
and Delta mutually terminated the Merger Agreement and all agreements between the parties that are ancillary thereto and Delta waived
any and all claims against the other party that in any way directly and/or indirectly arise out of, are based upon, or are in connection
with the Merger Agreement and any agreements ancillary thereto.

Description of Business Segments & Key Agreements

Kaival Labs, Inc. & Kaival Brands International,
LLC.

On August 31, 2020, we formed Kaival Labs, Inc., a
Delaware corporation (herein referred to as “Kaival Labs”), as a wholly owned subsidiary for the purpose of developing our
own branded and white-label products and services, of which none has commenced as of the date of this Report. We have not launched any
Kaival-branded products, nor have we begun to provide white label wholesale solutions for other product manufacturers.

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On May 30, 2023, through Kaival Labs, we acquired
certain vaporization and inhalation-related intellectual property from GoFire, Inc. (“GoFire”) in exchange for equity securities
for our company and contingent cash consideration. The goal of this acquisition is to diversify our product offerings and create near
and longer-term revenue opportunities in the form of potential licenses for the acquired technology and our development of new products
based on the purchased assets. In the near term, we expect to seek third-party licensing opportunities in the cannabis, hemp/CBD, nicotine
and nutraceutical markets. Longer term, we believe we can utilize the purchased assets to create innovative and market-disruptive products,
including patent protected vaporizer devices and related hardware and software applications. No assurance can be given, however, that
the GoFire assets will generate revenue for us in the future or otherwise create the value for our company that we anticipate.

On March 11, 2022, we formed Kaival Brands International,
LLC, a Delaware limited liability company (herein referred to as “KBI”), as a wholly owned subsidiary for the purpose of entering
into an international licensing agreement with Philip Morris Products S.A. (“PMPSA”), a wholly owned affiliate of Philip Morris
International Inc. (“PMI”), as described further below.

Philip Morris Deed of Licensing Agreement

On June 13, 2022, KBI entered into the PMI License
Agreement with PMPSA, effective as of May 13, 2022 (the “PMI Commencement Date”). Pursuant to the PMI License Agreement, KBI
granted PMPSA an exclusive irrevocable license to use its technology, documentation, and intellectual property to make, distribute, and
sell disposable nicotine e-cigarette products based on the intellectual property in certain international markets set forth in the PMI
License Agreement (or the PMI Markets). We have the exclusive international distribution rights to products and, in order to allow KBI
to fulfill its obligations set forth in the PMI License Agreement, has contributed the international distribution rights for the PMI Markets
to KBI as set forth in a Capital Contribution Agreement, dated June 10, 2022. The sublicense granted to PMPSA is exclusive in the PMI
Markets and neither KBI nor any of its affiliates can sell, promote, use, or distribute any competing products in the PMI Markets for
the duration of the term of the PMI License Agreement and any Sell-Out Period (as defined in the PMI License Agreement). PMSPA will be
responsible for any regulatory filings necessary to sell products in the PMI Markets. Both KBI and PMPSA agree to work together in the
registration and maintenance of the Intellectual Property, but KBI will bear all costs and expenses to implement the registration strategy.
Finally, PMPSA has agreed to potential future development services with KBI in the PMI Markets and has been granted certain rights with
respect to potential future products.

The initial term of the PMI License Agreement is five
(5) years and automatically renews for an additional five-year period unless PMPSA has failed to meet the agreed upon minimum key performance
indicators set forth in the PMI License Agreement, in which case the PMI License Agreement will automatically terminate at the end of
the initial license term.

In consideration for the grant of the licensed rights,
PMPSA agreed to pay to KBI a royalty payment for the sale of each unit of product manufactured and sold. In addition, before the launch
of the first product in a market and each anniversary of such launch, PMPSA agrees to pre-pay to KBI a guaranteed minimum royalty, equal
to a percentage of the estimated royalties payable by PMPSA to KBI in relation to all markets in the twelve (12)-month period following
the first launch or each successive anniversary of the first launch, subject to an aggregate maximum guaranteed royalty payment for all
markets for each applicable twelve (12)-month period. PMPSA may require modification of certain products to be sold under the PMI Licensing
Agreement to be modified for a PMI Market. Pursuant to the PMI Licensing Agreement, PMPSA has absolute discretion over sales, marketing,
product branding and packaging pertaining to sales in the PMI Markets, as well as the right to select the specific PMI Markets in which
to launch commercialization and determine what product types are to be promoted in each market, subject to sales and marketing plans and
annual business plans set by PMPSA and certain expansion criteria agreed between PMPSA and KBI.

The PMI License Agreement contains customary representations,
warranties, covenants, and indemnification provisions; however, KBI’s liability under the PMI License Agreement is capped at the
greater of: (i) Ten Million Dollars ($10,000,000); or (ii) an amount equal to the total of the royalties due to KBI (but not yet paid)
plus the royalties (including the guaranteed royalty payment) paid to KBI pursuant to the PMI License Agreement during the immediately
preceding twelve (12) consecutive months, provided that such amount shall not exceed Thirty Million Dollars ($30,000,000). These royalties
may be initially offset on a limited basis by jointly agreed upon costs such as development costs incurred for entry to specific international
markets.

2

On August 12, 2023, we executed and entered into a
Deed of Amendment No. 1 (the “PMI License Amendment”) with PMPSA, Bidi and KBI. Pursuant to the PMI License Amendment (which
has an effective date of June 30, 2023), the following material changes have been made to the PMI License Agreement:

(i) Royalty Rate. The royalty
paid by PMPSA to KBI will no longer be based on sales price of the product being sold, but rather on the volume of liquid contained within
product being sold. The royalty will be on a sliding scale of between $0.08 to $0.16 per sale based on the volume of liquid contained
in the product, increasing to between $0.10 to $0.20 per sale upon meeting certain sales milestones. For purposes of determining aggregate
sales threshold, all sales undertaken since commencement of the PMI Licensing Agreement will be counted.

(ii) 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.

(iii) 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.

(iv) 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.

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

(vi) Net Reconciliation
Payment to KBI. As a result of the changes to the PMI License Agreement described in paragraphs (i) thought (iii) 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. 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.
In March 2023, PMPSA announced the launch of a product (now called VEEV NOW) under the PMI License Agreement.

In connection with the PMI License Agreement, we,
Bidi, and PMPSA also entered into a deed of letter to require specific performance of the duties and obligations set forth in the PMI
License Agreement if KBI is unable or fails to sublicense the intellectual property to PMPSA pursuant to the PMI License Agreement and/or
is unable or fails to perform certain of its obligations or grant the rights pursuant to the PMI License Agreement. In addition, we, Bidi,
and PMPSA entered into a guarantee, whereby we and Bidi guarantee to PMPSA up to 50% of all of KBI’s monetary obligations set forth
in the PMI License Agreement if KBI fails to perform or discharge certain of its obligations in the PMI License Agreement.

In November 2023, KBI, Bidi and PMPSA agreed to initiate a pilot project,
pursuant to which PMPSA would manufacture up to an agreed upon number of Bidi Sticks with PMI’s own e-liquid for commercialization
in Canada. Based on the results of the pilot, we and PMPSA may consider appropriate changes or amendments to the PMI License Agreement
to accommodate the manufacturing and sales of Bidi Sticks containing PMI e-liquids in Canada. As of the date of this Report, this pilot
program has not yet started.

On December 16, 2024, KBI and Bidi received a letter
from PMPSA that notified us of their intention to discontinue the licensing agreement of their 2ml products due to the lack of profitability
and the analysis that it would likely not turn profitable. They confirmed that this decision would not affect the commercialization activities
under the licensing agreement of the 5ml and 18ml vaping products.

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KBI License Agreements

On June 10, 2022, Bidi entered into a License Agreement
(the “License Agreement:) with KBI, pursuant to which KBI has the exclusive irrevocable license to use Bidi’s licensed intellectual
property to the extent necessary for KBI to fulfill its obligations set forth in the PMI License Agreement. Such irrevocable license includes:
(i) the right of KBI to grant sub-licenses to PMPSA under the PMI License Agreement for the express purposes set forth in the PMI License
Agreement, but for no other purpose; (ii) the right of KBI to grant to PMPSA the right to grant sub-sub-licenses in the manner set forth
in the PMI License Agreement, but for no other purpose; and (iii) certain branding rights to the extent (but only to the extent) necessary
to permit KBI to perform its obligations to PMPSA as set forth in the PMI License Agreement.

Pursuant to the License Agreement, if at any time,
KBI receives any license of PMPSA intellectual property from PMPSA or any of its affiliates in the manner contemplated by the PMI License
Agreement, KBI will grant Bidi an irrevocable sub-license of all right, title, and interest of KBI in and to that PMPSA intellectual property.
In addition, Bidi and KBI agree that any amount payable and all net royalties payable to KBI under the PMI License Agreement will be apportioned
equally between Bidi and KBI in a manner such that each will ultimately receive fifty percent (50%) thereof.

The License Agreement contains customary representations,
warranties, covenants, and indemnification provisions.

Bidi Vapor, LLC Distribution Agreement

On March 9, 2020, we entered into an exclusive distribution
agreement (the “Distribution Agreement”) with our affiliate Bidi, which Distribution Agreement was amended and restated on
May 21, 2020, April 20, 2021, on June 10, 2022, and on November 17, 2022 (collectively, the “A&R Distribution Agreement”).
Pursuant to the A&R Distribution Agreement, Bidi granted us an exclusive worldwide right to distribute Bidi’s ENDS (as more
particularly set forth in the A&R Distribution Agreement) for sale and resale to both retail level customers and non-retail level
customers. Currently, the products consist solely of the “BIDI® Stick,” Bidi’s disposable, tamper resistant
ENDS product made with medical-grade components, a UL-certified battery and technology designed to deliver a consistent vaping experience
for adult smokers 21 and over. We had distributed products to wholesalers and retailers of ENDS products, having ceased all direct-to-consumer
sales in February 2021.

BIDI® Stick comes in a variety of flavor options
for adult cigarette smokers. We do not manufacture any of the products we resell. The BIDI® Stick is manufactured by Bidi through
its contract manufacturer in China. Pursuant to the terms of the A&R Distribution Agreement, Bidi provides us with all branding, logos,
and marketing materials to use with our commercial partners in connection with our marketing and promotion of Bidi products.

The A&R Distribution Agreement extends the previous
one-year, annual renewable term to an initial term of ten years, which automatically renews for another ten-year term if we satisfy certain
minimum purchase thresholds. The A&R Distribution Agreement also provides us with a right of first refusal in the event Bidi receives
an offer that would constitute a “change of control transaction,” as well as a right of first refusal to act as the exclusive
distributor of any and all future products of Bidi that arise out of or related to ENDS and components related to ENDS, or arise out of
or related to the tobacco-derived nicotine industry.

In connection with the A&R Distribution Agreement,
we entered into non-exclusive sub-distribution agreements, some of which were subsequently amended and restated by the parties in order
to clarify certain provisions (all such sub-distribution agreements, as amended and restated, are collectively referred to as the “Sub-Distribution
Agreements”), whereby we appointed the counterparties as non-exclusive sub-distributors. Pursuant to the Sub-Distribution Agreements,
the sub-distributors agreed to purchase for resale products in such quantities as they should need to properly service non-retail customers
within the continental United States (the “Territory”). These agreements were terminated in the current year.

On October 25, 2024, we entered into a letter agreement
with Bidi, pursuant to which we (i) agreed with Bidi that “Products” as defined in the A&R Distribution Agreement means
and includes (and has always meant and included) only the following items, to the exclusion of all other items and products (including,
without limitation, the Excluded Products): (a) the “Bidi Stick”, which is an electronic nicotine delivery system, or “e-cigarette”,
at 6% nicotine (including all available flavors) in the versions previously sold by Manufacturer to Distributor; and (b) acrylic displays
preloaded with one hundred (100) such “Bidi Sticks;” (ii) waived and fully relinquished: (a) our Right of First Offer,

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Right
of First Refusal, and all other rights (if any) with respect to all Future Products (whether previously introduced, or introduced hereafter,
by Manufacturer) pursuant to the Distribution Agreement; and (b) all of its rights with respect to a Bona Fide Offer pursuant to Section
4.F of the A&R Distribution Agreement; (iii) released Bidi from all claims arising out of events that occurred prior to the Effective
Date of the A&R Distribution Agreement and (iv) acknowledged the existence of that certain matter styled In the Matter of Certain
Disposable Vaporizer Devices and Components Thereof, Inv. No. 337-TA-1410 before the United States International Trade Commission, and
agreed that neither said matter not any outcome thereof or resolution resulting therefrom that affects Bidi shall constitute a breach
or other default by Bidi under the A&R Distribution Agreement

A key third party collaborator of ours was QuikfillRx,
a Florida limited liability company which did business as “Kaival Marketing Services” to reflect its contributions to our
company. QuikfillRx provided us with certain services and support relating to sales management, website development and design, graphics,
content, social media, management and analytics, and market and other research. QuikfillRx provided these services to us pursuant to a
Services Agreement, most recently amended on November 9, 2022, which had a term ending on October 31, 2025 (subject to potential one-year
extensions) and pursuant to which QuikfillRx received monthly cash compensation and was granted certain equity compensation in the form
of options. This Agreement was terminated in February 2024.

Other Potential Product Offerings & Opportunities

In May 2023 we acquired 19 existing and 47 pending
patents with novel technologies related to vaporization and inhalation technologies from GoFire. The GoFire patent portfolio includes
novel technologies across extrusion dose control, product preservation, tracking and tracing usage, multiple modalities (i.e., different
methods of vaporizing) and child safety. The patents and patent applications cover territories including the United States, Australia,
Canada, China, the EPO (European Patent Organization), Israel, Japan, Mexico, New Zealand and South Korea. The portfolio also includes
a proprietary mobile device software application that is used in conjunction with certain patents in the portfolio.

We expect to continue seeking third-party licensing
opportunities in the cannabis, hemp/CBD, nicotine, nutraceutical and pharmaceutical markets, as a means of monetizing our patents. Longer
term, we believe we can utilize the acquired patents to create innovative and market-disruptive products for its growing base of adult
consumers, including patent protected vaporizer devices and related hardware and software applications.

As described above, we hope to generate revenue from
this acquired intellectual property via licensing and product development activities. However, there can be no assurance that we will
be able to implement this strategy.

Concentrations

Concentration of Purchases and Other Receivable -
Related Party:

There were no purchases of inventory from Bidi for
the year ended October 31, 2025 and no amounts owed to Bidi for inventory purchases as of October 31, 2025.

For the year ended October 31, 2024, 100% of the inventories
of Products, consisting solely of the BIDI® Stick, were purchased from Bidi, a related party company that is owned by KMDD Trust,
in the amount of approximately $0.3 million.

As of October 31, 2025, we had a related party receivable
balance of zero. As of October 31, 2025, the related party accounts payable balance was $50,000.

As of October 31, 2024, we had a related party receivable
balance of zero. As of October 31, 2024, the related party accounts payable balance was $131,683.

Concentration of Revenues and Accounts Receivable:

No revenue concentration from the sale of Products
existed for the year ended October 31, 2025.

5

For the year ended October 31, 2024, a substantial
portion of our revenues from the sale of Products, solely consisting of the BIDI® Stick, were derived from the following customers:
(i) QuikTrip Corporation generated approximately 21%, (ii) GPM Investments generated approximately 12%, and (iii) FAVS Business, LLC generated
approximately 11%.

No accounts receivable concentration from the sale
of Products existed as of October 31, 2025.

QuikTrip Corporation, with an outstanding balance
of approximately $205 accounted for 100% of the total accounts receivable from customers, as of October 31, 2024.

Environment and Government Regulation Related
to our Operations

Because we are only a wholesale distributor of products,
namely the BIDI® Stick, we are only subject to Federal, state, and international laws pertaining to a distributor, not a manufacturer,
of ENDS products.

Our business is dependent entirely on the resale of
products provided by Bidi; thus, there is a significant risk that our business could be materially adversely affected if Bidi, as the
manufacturer, does not properly abide by any Federal, state, or international laws that regulate ENDS products. Any lapse in production
or availability of products from Bidi would hamper our ability to operate as we would be limited in our ability to supply our customers
if our inventory ran low or ceased to exist entirely.

As a manufacturer of ENDS products, Bidi is responsible
for abiding by and following various rules and regulations pertaining to the manufacturing of the ENDS products we sell and any lapse
in abiding by any pertinent rules and regulations may negatively impact our ability to operate. As a distributor, we are also subject
to various rules and regulations. Some of the below may not directly apply to us at this time due to the nature of our present operations.
These rules and regulations include, but are not limited to, the following:

Environmental Laws

We may be subject to federal, state, and local environmental
laws and regulations. Compliance with these provisions has not had, nor do we expect such compliance will have any, material adverse effect
upon our capital expenditures, financial condition, or competitive position. We believe that we are not subject to any material costs
for compliance with any environmental laws.

Intellectual Property

As of the date of this Report, we own the trademarks
KAIVAL BRANDS and KAIVAL LABS. In addition, we purchased certain intellectual property assets of GoFire consisting of various patents,
patent applications and trademarks in exchange for equity securities of our company and certain contingent cash consideration. The purchased
assets consist of 19 existing patents and 47 pending patents with novel technologies related to vaporization and inhalation technologies.
The patents and patent applications cover the U.S. and several international territories. The purchased assets also include four registered
and two pending trademarks.

We rely on certain intellectual property rights, including
logos, trademarks, and trade names, of Bidi that were granted to us pursuant to the A&R Distribution Agreement to be used in connection
with the marketing, advertisement, and sale of products. We also indirectly rely on Bidi’s intellectual property rights related
to products, such as patents. If a third-party challenged Bidi’s patents, or infringed upon such rights, our business would be materially
adversely affected.

Employees

As of the date of this Report we have four employees,
all of whom are full-time, including our officers. In addition to our two officers, we have two employees who fulfill roles
in business development, information technology, and financial accounting and reporting management. All our employees are eligible to
enroll, or have already enrolled, in our medical plan.

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Emerging Growth Company

We are an emerging growth company (“EGC”),
that is exempt from certain financial disclosure and governance requirements for up to five years as defined in the Jumpstart Our Business
Startups Act of 2012 (the “JOBS Act”). The JOBS Act eases restrictions on the sale of securities and increases the number
of stockholders a company must have before becoming subject to the reporting and disclosure rules of the Securities and Exchange Commission
(the “SEC”). We have not elected to use the extended transition period for complying with new or revised accounting standards
under Section 102(b)(2) of the JOBS Act, which allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies.

Corporate History

We were incorporated on September 4, 2018, in the
State of Delaware. Effective July 12, 2019, we changed our corporate name from Quick Start Holdings, Inc. to Kaival Brands Innovations
Group, Inc. The name change was affected through a parent-subsidiary short-form merger of Kaival Brands Innovations Group, Inc., our wholly-owned
Delaware subsidiary formed solely for the purpose of the name change, with and into us. We were the surviving entity.

2018 Holding Company Reorganization

On September 4, 2018, USSE Delaware, Inc., a Delaware
corporation (“USSE Delaware”) acquired all of our then-outstanding shares of common stock, resulting in us becoming its wholly
owned subsidiary. On September 19, 2018, our wholly owned subsidiary, USSE Merger Sub, Inc., a Delaware corporation (“USSE Merger
Sub”), merged with and into USSE Delaware, our then parent, effected a reorganization (the “Holding Company Reorganization”)
in accordance with the provisions set forth in Section 251(g) of the Delaware General Corporation Law (“DGCL”). USSE Delaware
was the surviving corporation and our wholly owned subsidiary. USSE Delaware also changed its name to USSE Corp. following the Holding
Company Reorganization.

Upon completion of the Holding Company Reorganization,
by virtue of the merger, and without any action on the part of the holder thereof, each share of USSE Delaware’s common stock issued
and outstanding immediately prior to the effective time of the Holding Company Reorganization was automatically converted into one validly
issued, fully paid, and non-assessable share of our Common Stock. Additionally, each share of USSE Delaware’s preferred stock
issued and outstanding immediately prior to the effective time was converted into one validly issued, fully paid, and non-assessable share
of our preferred stock, having the same designations, rights, powers, and preferences, and the qualifications, limitations, and restrictions
thereof, as the corresponding share of USSE Delaware’s preferred stock. Each share of our Common Stock issued and outstanding
and held by USSE Delaware immediately prior to the effective time was canceled.

2018 Change of Control

On October 19, 2018, we issued 500,000,000 shares
of restricted Common Stock and 400,000 shares of Convertible Series B preferred stock to GMRZ Holdings LLC, a Nevada limited liability
company (“GMRZ”), for services rendered to us. GMRZ became our controlling stockholder as a result of such issuances.
On February 6, 2019, we entered into a non-binding Share Purchase Agreement (the “Agreement”) by and among GMRZ, Kaival Holdings,
LLC (formerly known as Kaival Brands Innovations Group, LLC), a Delaware limited liability company (“Kaival Holdings”), and
us, pursuant to which, on February 20, 2019, GMRZ sold 504,000,000 shares of our restricted Common Stock, representing approximately 88.06
percent of our then-issued and outstanding shares of Common Stock, to Kaival Holdings, and Kaival Holdings paid GMRZ consideration in
the amount set forth in the Agreement (the “Purchase Price”). The consummation of the transactions contemplated by the Agreement
resulted in a change in control of us, with Kaival Holdings becoming our largest controlling stockholder. The sole voting members of Kaival
Holdings were Nirajkumar Patel and Eric Mosser (former executives and directors of our company), with Mr. Patel holding voting control.
The Purchase Price was paid with personal funds of the members of Kaival Holdings.

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2020 Share Cancellation and Exchange Agreement

On August 19, 2020, we entered into a Share Cancellation
and Exchange Agreement (the “Share Cancellation and Exchange Agreement”) with our controlling stockholder, Kaival Holdings.

Pursuant to the Share Cancellation and Exchange Agreement,
Kaival Holdings returned to us 300,000,000 shares of our Common Stock (the “Cancellation Shares”), which Cancellation Shares
were canceled and retired by us. Following such cancellation, Kaival Holdings owns 204,000,000 shares of our Common Stock.

On August 19, 2020, we filed a Certificate of Designation
of Preferences, Rights, and Limitations of the Series A Preferred Stock (the “Series A Certificate of Designation”) with the
Secretary of State of the State of Delaware, which authorized a total of 3,000,000 shares, par value $0.01 per share, of Series A Preferred
Stock (the “Series A Preferred Stock”).

In exchange for the Cancellation Shares, we issued
3,000,000 shares (the “Preferred Shares”) of our newly designated Series A Preferred Stock to Kaival Holdings. The exchange
of the Cancellation Shares and the issuance of the Preferred Shares was intended to comply with Section 3(a)(9) of the Securities Act,
in that the issuance was exempt from the registration requirements of the Act because the exchange of the Cancellation Shares for the
Preferred Shares was an exchange between us, as issuer, with an existing stockholder, and no commission or other remuneration was paid
or given directly for the exchange.

2021 Reverse Stock Split

On July 16, 2021, we filed a Certificate of Amendment
to the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to affect a 1-for-12 reverse
stock split (the “Reverse Stock Split”) of the shares of our Common Stock. The Reverse Stock Split was effective as of 12:01
a.m. Eastern Time on July 20, 2021. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares
of our Common Stock that would have otherwise resulted from the Reverse Stock Split were rounded up to the nearest whole number. In connection
with the Reverse Stock Split, our Board approved appropriate and proportional adjustments to all outstanding securities or other rights
convertible or exercisable into shares of our Common Stock, including, without limitation, all preferred stock, warrants, options, and
other equity compensation rights. All historical share and per-share amounts reflected throughout our consolidated financial statements
and other financial information in this Report have been adjusted to reflect the Reverse Stock Split as if the split occurred as of the
earliest period presented. The par value per share of our Common Stock was not affected by the Reverse Stock Split.

2022 Series A Preferred Shares Converted

The authorized preferred stock of the Company consists
of 5,000,000 shares with a par value of $ 0.001 per share, of which 3,000,000 shares were designated as Series A Convertible Preferred
Stock (the “Series A Preferred Stock”). Each share of the Series A Preferred Stock was initially convertible into 100 shares
of Common Stock; however, as a result of the Reverse Stock Split, the conversion rate was adjusted such that each share of the Series
A Preferred Stock was convertible into approximately 0.3968 shares of Common Stock. On June 24, 2022, all 3,000,000 shares of Series A
Preferred Stock were converted into shares of Common Stock by Kaival Holdings, our majority stockholder. The conversion of 3,000,000 shares
of Series A Preferred Stock, at a conversion rate of 0.3968, equaled 1,190,477 shares of Common Stock. As a result, the authorized, preferred
stock of the Company consists of 5,000,000 shares with a par value of $0.001 per share, with 0 shares of preferred stock issued or outstanding
as of October 31, 2025.

May 2023 GoFire Asset Purchase Agreement

On May 30, 2023, we and Kaival Labs entered into an
Asset Purchase Agreement (the “GoFire APA”) with GoFire. Pursuant to the terms of the GoFire APA, we, through Kaival Labs,
purchased certain intellectual property assets of GoFire consisting of various patents, patent applications and trademarks in exchange
for equity securities of our company and certain contingent cash consideration. The purchased assets consist of 19 existing patents and
47 pending patents with novel technologies related to vaporization and inhalation technologies. The patents and patent applications cover
the U.S. and several international territories. The purchased assets also include four registered and two pending trademarks. We have
determined that the acquisition of the purchased assets does not constitute the acquisition of a “business” (as defined in
Rule 11-01(d) of Regulation S-X).

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Pursuant to the terms of the GoFire APA, we paid to
GoFire, in addition to certain contingent cash consideration described below, consideration in the form of equity securities of our company
consisting of (i) an aggregate of 95,239 shares of Common Stock (the “2023 APA Shares”); (ii) 900,000 shares of newly-designated
Series B Convertible Preferred Stock, par value $0.001 per share, (the “Series B Preferred Stock” and the shares of Common
Stock underlying the Series B Preferred, the “Series B Conversion Shares”), the rights, preferences and terms of which are
set forth in a Certificate of Designation of Rights and Preferences of the Series B Preferred Stock, and (iii) a Common Stock purchase
warrant to purchase 95,239 shares of Common Stock (the “Warrant” and the shares of Common Stock underlying the Warrant, the
“Warrant Shares”). As additional consideration for the purchased assets, any cannabis-specific (meaning cannabis, hemp or
cannabinoid) royalties that are generated by Kaival Labs from or due to the purchased assets, from May 30, 2023, until January 1, 2027,
will be subject to a contingent cash payment as described in the GoFire APA and subject to the terms of the GoFire APA. 9,524 2023 APA
Shares and a Warrant for 9,524 Warrant Shares were issued to an advisor to GoFire at the closing of the GoFire APA.

Pursuant to the GoFire APA, we are required to use
commercially reasonable efforts to register the 85,715 2023 APA Shares and 85,715 Warrants and Warrant Shares with the SEC for distribution
to GoFire’s stockholders and/or public resale by such stockholders within 180 days of May 30, 2023. Such registration was declared
effective by the SEC on January 12, 2024. To our knowledge, portions of the 85,715 2023 APA Shares and 85,715 Warrants have been distributed
to the GoFire stockholders pursuant to such registration statement.

In addition, if any Series B Preferred Stock remains
outstanding nineteen (19) months after May 30, 2023, we shall use commercially reasonable efforts to file with the SEC subsequent registration
statement registering the distribution to GoFire’s stockholders and/or public resale Series B Conversion Shares by such stockholders.
If such subsequent registration statement is required, we will use our commercially reasonable efforts to obtain effectiveness of such
subsequent registration statement within nineteen (19) months of May 30, 2023, and if we do not so register the Series B Conversion Shares
within nineteen (19) months of May 30, 2023, we will issue to GoFire or its designee an additional ten percent (10%) of all of the Series
B Conversion Shares underlying the then-outstanding shares of Series B Preferred Stock. To satisfy this obligation we will provide
GoFire with an additional 10% of our shares of common stock issued to them upon the conversion of the Series B Preferred Stock at the
closing of the Business Combination.

All of the securities issued as consideration for
the GoFire purchased assets were subject to a lock-up agreement that terminated on November 26, 2023.

2024 Reverse Stock Split

On January 22, 2024, the Company filed a Certificate
of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware
to affect a 1-for-21 reverse stock split (the “2024 Reverse Stock Split”) of the shares of the Common Stock. The 2024 Reverse
Stock Split was effective on January 25, 2024, on the Nasdaq Stock Market. No fractional shares were issued in connection with the 2024
Reverse Stock Split. Any fractional shares of the Company’s Common Stock that would have otherwise resulted from the 2024 Reverse
Stock Split were rounded up to the nearest whole number. In connection with the 2024 Reverse Stock Split, the Board approved appropriate
and proportional adjustments to all outstanding securities or other rights convertible or exercisable into shares of the Common Stock,
including, without limitation, all preferred stock, warrants, options, and other equity compensation rights. All historical share and
per-share amounts reflected throughout the accompanying consolidated financial statements in this Report have been retroactively adjusted
to reflect the 2024 Reverse Stock Split as if the split occurred as of the earliest period presented. The par value per share of the Common
Stock was not affected by the 2024 Reverse Stock Split.

Bidi Debt Exchange Agreement

On October 25, 2024 we entered the Debt Exchange Agreement
with Bidi pursuant to which we satisfied an outstanding debt of $1,275,000 we owed to Bidi under the A&R Distribution Agreement by
the issuance of 1,400,144 shares of our common stock to Bidi.

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