Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 72

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 8
Chunk 72
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 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 and ongoing court proceedings, respectively.
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
$0.9 million for the first three months of fiscal year 2025, compared to $0.2 million cash flows provided by operations for the first
three months of fiscal year 2024. The decrease in cash flows provided by operations for the first three months of fiscal year 2025 compared
to the first three months of fiscal year 2024 was primarily due to changes in accounts receivable and inventory.

Net cash flows used
in financing activities was approximately $0.6 million for the first three months of fiscal year 2025, compared to cash flows used in
financing activities of approximately $0.2 for the first three months of fiscal year 2024. The cash used in financing activities for the
first three months of fiscal year 2025 consisted primarily of payments on loans payables and preferred dividends.  

5

Results of Operations

Three months ended January 31, 2025, compared to
three months ended January 31, 2024

Revenues:

Revenues for the first quarter of fiscal year 2025
were approximately $0.2 million, compared to approximately $3.2 million in the same period of the prior fiscal year. Revenues decreased
in the first quarter of 2025, primarily due to a decrease in product sales to customers.

Cost of Revenue, Net and Gross Profit:

Gross profit in the first quarter of fiscal year 2025
was approximately $0.2 million, or approximately 100.0% of revenues, net, compared to approximately $1.2 million gross profit or
approximately 37.3%, of revenues, net, for the first quarter of fiscal year 2024. Total cost of revenue, net was zero for the first quarter
of fiscal year 2025, compared to approximately $2.0 million, or approximately 62.7% of revenue, net for the first quarter of fiscal year
2024. The decrease