Company: KAVL
Filing Date: 2025-06-10
Form Type: 10-Q
Source: 0001731122-25-000842
Chunk: 78

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-06-10
Form: 10-Q
Item: Item 8
Chunk 78
---
 $906,727   and total cash
of $1,805,702. 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, or have access to, the financial resources
to weather the impacts of the FDA’s PMTA process and Bidi’s receipt of MDOs from the FDA in 2021 and 2024, which are subject
to additional FDA action. However, we will require further financing for the next twelve months, given our operating results and our inability
to sell Bidi sticks as a result of the ITC complaint filed by RJ Reynolds.

Cash Flows:

Net cash flows
used in operations was approximately $1.5 million for the first six months of fiscal year 2025, compared to $0.7 million cash flows
provided by operations for the first six months of fiscal year 2024. The decrease in cash flows provided by operations for the first
six months of fiscal year 2025 compared to the first six months of fiscal year 2024 was primarily due to the increase of stock-based
compensation, loss on ROU asset and lower sales revenue.  

Net cash flows used in financing activities was approximately
$0.6 million   for the first six months of fiscal year 2025, compared to cash flows used in financing activities of approximately
$0.8 for the first six months of fiscal year 2024. The cash used in financing activities for the first six months of fiscal year 2025
consisted primarily of payments on preferred dividends and payments on