Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 1198

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 8
Chunk 1198
---

Our management is responsible for establishing and
maintaining adequate internal control over our financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control
over financial reporting is a process, including policies and procedures, designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted
accounting principles. Our management assessed our internal control over financial reporting using the criteria in Internal Control –
Integrated Framework (2013 Framework), issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Based on our evaluation under the framework in COSO,
our management concluded that our internal control over financial reporting was ineffective, taken as a whole, as of October 31, 2024,
based on such criteria. Material weaknesses existed in the design or operation of certain of our internal controls over financial reporting
that adversely affect our internal controls. A material weakness is a significant deficiency, or combination of deficiencies, in internal
control over financial reporting that results in more than a remote likelihood that a material misstatement of the annual or interim financial
statements may not be prevented or detected. Management determined that there was a lack of resources to provide segregation of duties
consistent with control objectives, the lack of sufficient and consistent real time remote communications, and the lack of a fully developed
formal review process that includes multiple levels of review over financial disclosure and reporting processes. However, management has
been in the process of implementing new controls that should mitigate, if not fully eliminate certain identified risks in our control
over financial reporting.

The weaknesses and the related risks are not uncommon
in a company of our size because of the limitations in the location, size and number of our staff. To address these material weaknesses,
and subject to the receipt of additional financing or cash flows, we have undertaken certain remediation measures to date to address the
material weaknesses described in this Report, including implementing procedures pursuant to which we can ensure proper segregation of
duties and hire additional resources to ensure appropriate review and oversight, as well as more timely formal communications processes,
more diligent review and approval of all disbursements and more timely