Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 73

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 8
Chunk 73
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 is due to the reduction of product sales to customers during the three months January 31 ,2025.

Operating Expenses:

Total operating expenses
were approximately $4.3 million for the first quarter
of fiscal year 2025, compared to approximately $2.9 million for the first quarter of fiscal year 2024. The increase is primarily   from stock compensation
expense of $2.9 million for share-based awards to management and members of the board of directors. For the first quarter of fiscal year
2025, operating expenses consisted primarily of professional fees of approximately $3.4 million, and all other general and administrative
expenses of approximately $0.9 million. General and administrative expenses in the first quarter of fiscal year 2025 consisted primarily
of salaries and wages, insurance, lease expense, project expenses, banking fees, business fees and state and franchise taxes. For the
first quarter of fiscal year 2024, operating expenses consisted primarily of advertising and promotion fees of approximately $0.4 million,
stock option expense of approximately $0.3 million, professional fees of approximately $0.8 million, and all other general and administrative
expenses of approximately $1.4 million. General and administrative expenses in the first quarter of fiscal year 2024 consisted primarily
of salaries and wages, insurance, lease expense, project expenses, banking fees, business fees and state and franchise taxes.

Income Taxes:

During the first quarter of fiscal year 2025, we did
not accrue a provision for income taxes, due to the pre-tax loss of approximately ($4.0) million. Similarly, we did not accrue a provision
for income taxes, due to the pre-tax loss of approximately ($2.1) million for the first quarter of fiscal year 2024.

Net Loss:

As a result of the items noted above, the net loss
for the first quarter of fiscal year 2025 was approximately $4.0 million, or $0.43 basic and diluted net loss per share, compared to a
net loss of approximately $2.2 million, or $0.76 basic and diluted net loss per share, for the first quarter of fiscal year 2024.
The increase in the net loss for the first quarter of fiscal year 2025, as compared to the first quarter of fiscal year 2024, is
primarily attributable to the decrease in revenues and increase in operating expenses as noted above.

Critical Accounting Policies and Estimates

The preparation