Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 13

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 1
Chunk 13
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lease components as a single lease
component. The Company also elected the short-term lease recognition exemption for all leases that qualify, such that leases with a term
of 12 months or less are not recognized on the balance sheet.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, which includes
definite-lived intangibles, long-lived fixed assets and lease right-of-use assets, for impairment whenever events or changes in circumstances
indicate the carrying amount of an asset may not be recoverable. Factors that could trigger an impairment review include significant under-performance
relative to expected historical or projected future operating results, significant changes in the manner of the Company’s use of
the acquired assets or the strategy for the Company’s overall business or significant negative industry or economic trends. If this
evaluation indicates that the value of the long-lived asset may be impaired, the Company makes an assessment of the recoverability of
the net carrying value of the asset over its remaining useful life. If this assessment indicates that the long-lived asset is not recoverable,
based on the estimated undiscounted future cash flows of the technology over the remaining useful life, the Company reduces the net carrying
value of the related asset to fair value and may adjust the remaining useful life. An impairment analysis is subjective and assumptions
regarding future growth rates and operating expense levels can have a significant impact on the expected future cash flows and impairment
analysis.

No impairment was identified for the three months ended January 31, 2025
and 2024, respectively.

Revenue Recognition

The Company recognizes revenue in accordance with
ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company recognizes revenue when a customer
obtains control of promised goods, in an amount that reflects the consideration that the Company expects to receive in exchange for the
goods. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (1)
identify the contracts with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price;
(4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as the entity satisfies
a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the
consideration it is entitled to in exchange for the goods it transfers to the customer. Under ASC 606, disaggregated revenue from contracts
with