Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 42

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 1
Chunk 42
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 exploring strategic options for the sale
                                            of our company, the creation of joint ventures or strategic alliances under which we will
                                            pursue business opportunities, or other alternatives.

Cash Flows:

Net cash flows used
in operations was approximately $2.0 million for the first nine months of fiscal year 2025, compared to $0.12 million cash flows provided
by operations for the first nine months of fiscal year 2024. The decrease in cash flows provided by operations for the first nine months
of fiscal year 2025 compared to the first nine months of fiscal year 2024 was primarily due to the lower sales revenue.

Net cash flows used in financing activities was approximately
$0.6 million for the first nine months of fiscal year 2025, compared to cash flows provided by financing activities of approximately $3.9
million for the first nine months of fiscal year 2024. The cash used in financing activities for the first nine months of fiscal year
2025 consisted primarily of payments on preferred dividends and payments on loans payables.

Results of Operations

Three months ended July 31, 2025, compared to three
months ended July 31, 2024

Revenues:

Revenues for the third quarter of fiscal year 2025
were approximately $142 thousand, compared to approximately $714 thousand in the same period of the prior fiscal year. Revenues decreased
in the third quarter of 2025, primarily due to a decrease in product sales to customers and also due to the decrease in royalty revenue.

Cost of Revenue, Net and Gross Profit:

Gross profit in the third quarter of fiscal year 2025
was approximately $142 thousand, or approximately 100.0% of revenues, net, compared to approximately $369 thousand gross profit or
approximately 51.7%, of revenues, net, for the third quarter of fiscal year 2024. Total cost of revenue, net was zero for the third quarter
of fiscal year 2025, compared to approximately $345 thousand, or approximately 48.3% of revenue, net for the third quarter of fiscal year
2024. The decrease is due to the reduction of product sales to customers during the three months ended July 31, 2025.

4

Operating Expenses:

Total operating expenses were approximately $701 thousand for
the third quarter of fiscal year 2025, compared to approximately $1.8 million for the third quarter of fiscal year 2024.