Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 59

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 59
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 reports we file or submit under the Exchange Act is accumulated
and communicated to management, recorded, processed, summarized, and reported within the time periods specified in the rules and forms
of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of October 31, 2024,
our Interim Chief Executive Officer and our Interim Chief Financial Officer concluded that the disclosure controls and procedures were
not effective as of such date due to material weaknesses in internal controls identified above. 

33

These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls.
Accordingly, because of the inherent limitations in our internal controls system, misstatements, or insufficient disclosures due to error
or fraud may occur and not be detected.

We have incurred, and will continue to incur,
increased costs as a result of operating as a public company, and our management has been required, and will continue to be required,
to devote substantial time to new compliance initiatives. 

As a public company, we have incurred and are continuing
to incur significant legal, accounting, and other expenses and these expenses may increase even more after we are no longer an “emerging
growth company” and “smaller reporting company.” We are subject to the reporting requirements of the Exchange Act and
the rules adopted, and to be adopted, by the SEC. Our management and other personnel devote a substantial amount of time to these compliance
initiatives.

Moreover, these rules and regulations have substantially
increased our legal and financial compliance costs and made some activities more time-consuming and costly. The increased costs can result
in our reporting a net loss. These rules and regulations may make it more difficult and more expensive for us to maintain sufficient directors’
and officers’ liability insurance coverage. We cannot predict or estimate the amount or timing of additional costs we may continue
to incur to respond to these requirements. The ongoing impact of these requirements could also make it more difficult for us to attract
and retain qualified people to serve on our Board, our Board committees, or as executive officers.

Item 1B. Unresolved Staff Comments.

None.

ITEM