Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 462

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 3
Chunk 462
---
 likely have negative opportunities to distribution channels for us through which we could
sell our Products. However, an unlikely increase in demand for the Products would require us to raise cash and/or obtain financing in
order to purchase Products from Bidi for resale in the marketplace. As a result, we are faced with the risk that such cash or financing
will not be available in sufficient amounts or on terms acceptable to us (or at all) to meet the market demand for the Products. Our
inability to fulfill this demand will damage our reputation and could materially impact our ability to increase sales of the Products
which, in turn, would adversely impact our results of operations.

Inflation

Consumer purchases of tobacco
products are historically affected by economic conditions, such as changes in employment, salary and wage levels, the availability of
consumer credit, inflation, interest rates, fuel prices, sales taxes, and the level of consumer confidence in prevailing and future economic
conditions. The U.S. has been experiencing an environment of material inflation in recent quarters, and this condition may impact discretionary
consumer purchases, such as the BIDI® Stick. Demand for our products may also decline during recessionary periods or at other times
when disposable income is lower, and taxes may be higher.

Supply
Chain

The spread of COVID-19 throughout
the world as well as increasing tensions with China over the past several years has created global economic uncertainty, which may cause
partners, suppliers, and potential customers to closely monitor their costs and reduce activities. Any of the foregoing could materially
adversely affect the supply chain for Bidi and our Products, and any supply chain distribution for the Products could have a material
adverse effect on our results of operations.

Going Concern

Our financial statements are prepared in accordance
with U.S. GAAP applicable to a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal
course of business within one year after the date the consolidated financial statements are issued.

In accordance with Financial Accounting Standards
Board (or FASB), Accounting Standards Update (or ASU) No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic
205-40), our management evaluates whether there are conditions or events, considered in aggregate, that raise substantial doubt about
our ability to continue as a going concern within one year after the date that the financial statements are issued.

As shown in the accompanying consolidated
financial statements,   we have incurred recurring
losses and negative cash