Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 516

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 3
Chunk 516
---
 or interim financial
statements may not be prevented or detected. Management determined that there was a lack of resources to provide segregation of duties
consistent with control objectives, the lack of sufficient and consistent real time remote communications, and the lack of a fully developed
formal review process that includes multiple levels of review over financial disclosure and reporting processes. However, management has
been in the process of implementing new controls that should mitigate, if not fully eliminate certain identified risks in our control
over financial reporting.

The weaknesses and the related risks are not uncommon
in a company of our size because of the limitations in the location, size and number of our staff. To address these material weaknesses,
and subject to the receipt of additional financing or cash flows, we have undertaken certain remediation measures to date to address the
material weaknesses described in this Report, including implementing procedures pursuant to which we can ensure proper segregation of
duties and hire additional resources to ensure appropriate review and oversight, as well as more timely formal communications processes,
more diligent review and approval of all disbursements and more timely review of all banking transactions sales orders and inventory management.

45

A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met under all potential conditions,
regardless of how remote, and may not prevent or detect all errors and all fraud. Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a
simple error or mistake. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles.

Auditor’s Report on Internal Control Over
Financial Reporting

This Report does not include an attestation report
of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was
not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide
only management’s report in this Report.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control
over financial reporting (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Exchange Act