Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 15

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 1
Chunk 15
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 results could differ from those estimates.

    F-8

Cash

The Company considers all highly liquid investments
with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of July 31,
2025, and October 31, 2024.

The Federal Deposit Insurance Corporation (“FDIC”)
insures deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit
insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. The Company had uninsured cash of $1,018,926
and $3,652,300 as of July 31, 2025, and October 31, 2024, respectively.

Advertising and Promotion

All advertising, promotion and marketing expenses, including commissions,
are expensed when incurred.

Accounts Receivable and Reserve for Credit Loss

Accounts receivable pertain to contracts with customers
who are granted credit by the Company in the ordinary course of business and are recorded at the invoiced amount. Accounts receivable
does not bear interest. Accounts receivable presented on the consolidated balance sheet are adjusted for any write-offs and net of allowance
for credit losses. The Company’s reserve for credit losses is developed by using relevant available information including historical
collection and loss experience, current economic conditions, prevailing economic conditions, supportable forecasted economic conditions
and evaluations of customer balances. Once a receivable is deemed uncollectible after collection efforts have been exhausted, it is written
off against the reserve for credit losses. The Company closely monitors the credit quality of its customers and does not generally require
collateral or other security on receivables. The reserve for credit losses is measured on a collective basis when similar risk characteristics
exist.

Based upon management’s assessment of the accounts
receivable aging and the customers’ payment history, the Company has determined that no reserve for credit losses is required as
of July 31, 2025 and October 31, 2024.

On January 22, 2024, the FDA issued an MDO on Bidi
Vapor’s “Classic” BIDI ® Stick PMTA, which was subsequently upheld by the 11th Circuit Court of
Appeals. The Company evaluated the impact of this MDO to the financial statements and recorded an estimated accrual for potential customer
returns of the “Classic” products of zero and $46,775 as of July