Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 68

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 2
Chunk 68
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 ended July 31, 2025, compared to three
months ended July 31, 2024

Revenues:

Revenues for the third quarter of fiscal year 2025
were approximately $142 thousand, compared to approximately $714 thousand in the same period of the prior fiscal year. Revenues decreased
in the third quarter of 2025, primarily due to a decrease in product sales to customers and also due to the decrease in royalty revenue.

Cost of Revenue, Net and Gross Profit:

Gross profit in the third quarter of fiscal year 2025
was approximately $142 thousand, or approximately 100.0% of revenues, net, compared to approximately $369 thousand gross profit or
approximately 51.7%, of revenues, net, for the third quarter of fiscal year 2024. Total cost of revenue, net was zero for the third quarter
of fiscal year 2025, compared to approximately $345 thousand, or approximately 48.3% of revenue, net for the third quarter of fiscal year
2024. The decrease is due to the reduction of product sales to customers during the three months ended July 31, 2025.

4

Operating Expenses:

Total operating expenses were approximately $701 thousand for
the third quarter of fiscal year 2025, compared to approximately $1.8 million for the third quarter of fiscal year 2024. The decrease
is primarily a decrease in professional fees, payroll and general and administrative expenses.   For the third quarter
of fiscal year 2025, operating expenses consisted primarily of professional fees of approximately $0.2 million, and all other general
and administrative expenses of approximately $0.4 million. General and administrative expenses in the third 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 third quarter of fiscal year 2024, operating expenses consisted primarily
of advertising and promotion fees of approximately $0.03 million, stock option expense of approximately $56 thousand, professional fees
of approximately $0.6 million, and all other general and administrative expenses of approximately $1.1 million. General and administrative
expenses in the third 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 third quarter of fiscal year