Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 67

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 2
Chunk 67
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udited 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 July 31, 2025, we had working capital of $546,419 and total cash of $1,268,926.
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.

Cash Flows:

Net cash flows used
in operations was approximately $2.0 million for the first nine months of fiscal year 2025, compared to $0.12 million cash flows provided
by operations for the first nine months of fiscal year 2024. The decrease in cash flows provided by operations for the first nine months
of fiscal year 2025 compared to the first nine months of fiscal year 2024 was primarily due to the lower sales revenue.

Net cash flows used in financing activities was approximately
$0.6 million for the first nine months of fiscal year 2025, compared to cash flows provided by financing activities of approximately $3.9
million for the first nine months of fiscal year 2024. The cash used in financing activities for the first nine months of fiscal year
2025 consisted primarily of payments on preferred dividends and payments on loans payables.

Results of Operations

Three months