Company: KAVL
Filing Date: 2025-06-10
Form Type: 10-Q
Source: 0001731122-25-000842
Chunk: 77

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-06-10
Form: 10-Q
Item: Item 8
Chunk 77
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 which contemplates realization of assets
and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated financial statements
are issued.

In accordance with Financial Accounting Standards
Board (“FASB”), Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements –
Going Concern (Subtopic 205-40), the Company’s management evaluates whether there are conditions or events, considered in aggregate,
that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the
accompanying financial statements are issued.

The Company has
incurred recurring losses and negative cash flows from operations for six months ended April 30, 2025. The Company will need
significant additional funds to satisfy its outstanding payables, fund its working capital, and fully implement its business plan.
In addition, the Company’s ability to continue as a going concern is adversely affected by the uncertainty surrounding
Bidi’s PMTA process with the FDA for its non-tobacco flavored Bidi® Stick as well as the uncertainty in the
Company’s ability to continue to sell the Bidi Stick given the patent infringements claim filed by RJ Reynolds. Likewise, in
April 2025 the 11th Circuit upheld FDA’s MDO for the Classic BIDI® Stick. All of these factors raise
substantial doubt regarding the Company’s ability to continue as a going concern.

Management plans to continue developing strategies
for similar or expanded operations for the Company’s business to help the Company’s ability to determine where its business
will be viable going forward. Until such time, if ever, the Company can generate substantial product revenues, management plans to
finance its cash needs through public or private equity offerings or debt financing.

3

However, there is no assurance that the Company will
be able to raise additional capital, generate revenues or achieve profitability due to the factors listed above as well as the regulation
and public perception of ENDS products and the various other risks faced by the Company. The accompanying unaudited interim consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the outcome of these or other risks or uncertainties.

Liquidity and Capital Resources

We believe we will not have sufficient cash on hand
to support our operations for at least twelve months. As of April 30, 2025, we had working capital of