Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 897

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 8
Chunk 897
---
 ordinary shares in the capital of Pubco (the “Share Exchange”); and 
  
    (b)
    immediately
    following to the completion of the Share Exchange, Merger Sub shall merge with and into us (the “Merger”), with us continuing
    as the surviving entity in the Merger.;

Upon consummation of the transactions contemplated by the
Merger Agreement, including the Share Exchange and the Merger, each of us and Delta will become wholly owned subsidiaries of Pubco. 

Note 2 – Basis of Presentation and Significant
Accounting Policies

Principles of Consolidation

The consolidated financial statements include the
financial statements of the Company’s wholly-owned subsidiaries, Kaival Labs and KBI. Intercompany transactions are eliminated.

Basis of Presentation

This summary of significant accounting policies is
presented to assist in understanding the Company’s consolidated financial statements. These accounting policies conform to accounting
principles, generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation
of the consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading
have been included. Actual results could differ from those estimates.

Cash

The Company considers all highly liquid investments
with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of October
31, 2024, and October 31, 2023.

The Federal Deposit Insurance Corporation (“FDIC”)
insures deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit
insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. The Company had uninsured cash of $3,652,300
and $252,586 as of October 31, 2024, and October 31, 2023, respectively.

Advertising and Promotion

All advertising, promotion and marketing expenses,
including commissions, are expensed when incurred.

Accounts Receivable and Reserve for Credit Losses

Accounts receivable pertain to contracts with customers
who are granted credit by the Company in the ordinary course of business and are