Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 71

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 8
Chunk 71
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 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 the Company’s ability to continue as a going concern.

Management plans to continue developing strategies
for similar or expanded operations for the Company’s business to help the Company’s ability to determine where its business
will be viable going forward. Until such time, if ever, the Company can generate substantial product revenues, management plans to
finance its cash needs through public or private equity offerings or debt financing.

However, there is no assurance that the Company will
be able to raise additional capital, generate revenues or achieve profitability due to the factors listed above as well as the regulation
and public perception of ENDS products and the various other risks faced by the Company. The accompanying unaudited interim consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the outcome of these or other risks or uncertainties.

Liquidity and Capital Resources

We believe we will not have sufficient cash on hand
to support our operations for at least twelve months. As of January 31, 2025, we had working capital of $1,998,945 and total cash of $2,427,612.
As discussed above, this condition and other factors raise substantial doubt regarding our ability to continue as a going concern.

We intend to generally
rely on cash from operations and equity and debt offerings to the extent necessary and available, to satisfy our liquidity needs. There
are several factors that could result in the need to raise additional funds, including a decline in revenue, a lack of anticipated sales
growth, and increased costs. Our efforts are directed toward generating positive cash flow and, ultimately, profitability. As our efforts
during our fiscal 2024 and since have not generated positive cash flows, we will need to raise additional capital. Should capital not
be available to us at reasonable terms, other actions will become necessary, including implementing cost control measures and additional
efforts to generate sales. We may also be required to take more strategic actions such as 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.
We believe we have,