Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 21

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 1
Chunk 21
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 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption
permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. The Company is continuing
to evaluate the impact of adopting this new guidance but does not expect it to have a material impact on the Company’s financial
statements.

Note 3 – Going Concern

The accompanying unaudited interim consolidated financial
statements of the Company are prepared in accordance with U.S. GAAP applicable to a going concern, which contemplates realization of assets
and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements
are issued. In accordance with Financial Accounting Standards Board (or FASB), Accounting Standards Update (or ASU) No. 2014-15, Presentation
of Financial Statements – Going Concern (Subtopic 205-40), the Company’s management evaluates whether there are conditions
or events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within
one year after the date that the financial statements are issued.

 The
Company has incurred recurring losses and negative cash flows from operations for three months ended January 31, 2025. The  
Company will need significant additional funds to satisfy its outstanding payables, fund its working
capital, and fully implement its business plan. In addition, the Company’s ability to continue as a going concern is adversely
affected by the uncertainty surrounding Bidi’s PMTA process with FDA and outcome of Bidi’s petition with the 11th
Circuit Court of Appeals regarding the FDA’s January 2024 MDO relating to Classic Bidi® Stick as well as the uncertainty
in the Company’s ability to continue to sell the Bidi Stick given the patent infringements claim filed by RJ Reynolds.
All of these factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

Management plans to continue developing strategies
for similar or expanded operations for the Company’s business to help the Company’s ability to determine where its business
will be viable going forward. Until such time, if ever, the Company can generate substantial product revenues, management plans to
finance its cash needs through public or private equity offerings or debt financing.

However, there is no assurance that the Company will
be able to raise additional capital, generate revenues or achieve profitability due to the factors listed above as well as the regulation
and public perception of