Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 44

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 1
Chunk 44
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, 2025, compared to the nine months ended July 31, 2024, primarily due to a decrease in product sales to customers.

Cost of Revenue and Gross Profit:

Gross profit for the
nine months ended July 31, 2025, was approximately $0.4 million, compared to gross profit of approximately $2.1 million for the nine
months ended July 31, 2024. Total cost of revenue was zero for the nine months ended July 31, 2025, compared to $4.1 million for the
nine months ended July 31, 2024. The decrease in gross profit for the nine months ended July 31, 2025 compared to the nine months ended
July 31, 2024 is due to the reduction of product sales to customers during the nine months July 31, 2025.

Operating Expenses:

Total operating expenses were approximately $7.0 million
for the nine months ended July 31, 2025, compared to approximately $6.5 million for the nine months ended July 31, 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