Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 552

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 4
Chunk 552
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 credit, inflation, interest rates, fuel prices, sales taxes, and the level of consumer confidence in prevailing and future economic
conditions. The U.S. has been experiencing an environment of material inflation in recent quarters, and this condition may impact discretionary
consumer purchases, such as the BIDI® Stick. Demand for our products may also decline during recessionary periods or at other times
when disposable income is lower, and taxes may be higher.

Supply
Chain

The spread of COVID-19 throughout
the world as well as increasing tensions with China over the past several years has created global economic uncertainty, which may cause
partners, suppliers, and potential customers to closely monitor their costs and reduce activities. Any of the foregoing could materially
adversely affect the supply chain for Bidi and our Products, and any supply chain distribution for the Products could have a material
adverse effect on our results of operations.

Going Concern

Our financial statements 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), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about
our ability to continue as a going concern within one year after the date that the financial statements are issued.

As shown in the accompanying consolidated
financial statements,   we have incurred recurring
losses and negative cash flows from operations. We will need significant additional funds to satisfy our outstanding payables, fund our
working capital, and fully implement our business plan. In addition,
our 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 our ability to continue as a going 
concern.

Our management plans
to continue developing strategies on similar or expanded operations of our business to help our ability to determine where our