Your kid’s H4 application is based on the primary H1B holder’s I797 and will have no impact.
If your H4 application is adjudicated after your H1B is approved (which is more likely to happen due to long processing time for H4 EOS/COS/EAD), USCIS will most probably deny your H4 extension as you will no more be in H4 status on basis of which you applied for the extension.
There is also a chance that USCIS may send you RFE instead of denial at the time of adjudicating your H4 EOS application to prove your H4 status. It is up to you to respond to the RFE with letter explaining that you changed your status to H1B or simply ignore to respond and in either case USCIS will deny your H4.
H-4 extension was filed with principal H-4(i-539) and Kids as co-applicant (i-539A) . Once the status changes into H-1B,
Should I need to withdraw my h4 application?
And automaticlly kids application got withdrawn because filed as a co-applicant?