Company: KAVL
Filing Date: 2025-06-10
Form Type: 10-Q
Source: 0001731122-25-000842
Chunk: 40

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-06-10
Form: 10-Q
Item: Item 1
Chunk 40
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 fiscal year
2025 was approximately $47 thousand, or approximately 100.0% of revenues, net, compared to approximately $0.5 million gross profit
or approximately 22.4%, of revenues, net, for the second quarter of fiscal year 2024. Total cost of revenue, net was zero for the second
quarter of fiscal year 2025, compared to approximately $1.7 million, or approximately 77.6% of revenue, net for the second quarter of
fiscal year 2024. The decrease is due to the reduction of product sales to customers during the three months ended April 30, 2025.

4

Operating Expenses:

Total
                                            operating expenses were approximately $2.0 million for the second quarter of fiscal
                                            year 2025, compared to approximately $1.8 million for the second quarter of fiscal year 2024. The
                                            increase is primarily from the loss on the ROU asset of $0.7 million offset by reduced advertising
                                            and promotions expenses, as well as a decrease in stock compensation expense for share-based
                                            awards to management and members of the board of directors. For the second quarter of
                                            fiscal year 2025, operating expenses consisted primarily of a loss on ROU asset of $0.7 million, professional
                                            fees of approximately $0.7 million, and all other general and administrative expenses of
                                            approximately $0.6 million. General and administrative expenses in the second quarter of
                                            fiscal year 2025 consisted primarily of salaries and wages, insurance, lease expense, project
                                            expenses, banking fees, business fees and state and franchise taxes.

For the second quarter of fiscal year 2024, operating
expenses consisted primarily of advertising and promotion fees of approximately $0.3 million, stock option expense of approximately ($0.3)
million, professional fees of approximately $0.5 million, and all other general and administrative expenses of approximately $1.3 million.
General and administrative expenses in the first quarter of fiscal year 2024 consisted primarily of salaries and wages, insurance, lease
expense, project expenses, banking fees, business fees and state and franchise taxes.

Income Taxes:

During the second quarter of fiscal year 2025, we did not accrue a provision for
income taxes, due to the pre-tax loss of approximately $2.0 million. Similarly, we did not accrue a provision for income taxes, due to
the