Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 70

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 2
Chunk 70
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 2024. For the nine
months ended July 31, 2025, operating expenses consisted primarily of stock option expense of $36 thousand, professional fees totaling
approximately $4.3 million, loss on ROU asset of $0.7 million, and all other general and administrative expenses of approximately $2.0
million. General and administrative expenses during the nine months ended July 31, 2025, consisted primarily of salaries and wages, insurance,
lease expense, project expenses, banking fees, business fees and state and franchise taxes.

5

For the nine months ended July 31, 2024, operating
expenses were approximately $6.5 million, consisting primarily of advertising and promotion fees of approximately $0.7 million, stock
option expense of $77 thousand, professional fees totaling approximately $1.9 million, and all other general and administrative expenses
of approximately $3.8 million. General and administrative expenses during the nine months ended July 31, 2024, consisted primarily of
salaries and wages, insurance, banking fees, business fees, and other service fees.

Income Taxes:

During the nine months ended July 31, 2025, we did
not accrue a tax provision for income taxes, due to the pre-tax loss of approximately $6.6 million for the nine months ended July
31, 2025. Similarly, we did not accrue a tax provision for income taxes during the nine months ended July 31, 2024, due to the pre-tax
loss of approximately $5.2 million for the nine months ended July 31, 2024.

Net Loss:

The net loss for the first nine months ended July
31, 2025, was approximately $6.6 million, or $0.61 basic and diluted net loss per share, compared to net loss for the nine months ended
July 31, 2024, which was approximately $5.2 million, or $1.62 basic and diluted net loss per share. The increase in the net loss for the
nine months ended July 31, 2025, as compared to the nine months ended July 31, 2024, is primarily attributable to the increase of stock
based compensation, loss on ROU asset and lower sales revenue.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity
with GAAP requires management to make certain estimates and assumptions that affect reported amounts of assets and liabilities and disclosure
of