Company: KAVL
Filing Date: 2025-06-10
Form Type: 10-Q
Source: 0001731122-25-000842
Chunk: 50

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-06-10
Form: 10-Q
Item: Item 8
Chunk 50
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 is arguing, among other things, that the MDO was arbitrary and capricious in violation of the Administrative Procedure Act.
On February 2, 2024, Bidi filed a Time Sensitive Motion for a Stay Pending Review, which the court denied on February 18, 2024. Briefing
on the merits proceeded, with Bidi filing the opening merits brief on April 15, 2024. FDA filed its response brief on June 7, 2024, and
Bidi filed its reply brief on July 29, 2024. Oral arguments were held before a three-judge panel on the 11th Circuit on April
2, 2025. The Court issued a decision on April 24, 2025 upholding FDA’s denial order. Accordingly, at this time, the Classic
BIDI® Stick is considered an adulterated tobacco product, the continued marketing and distribution of which is prohibited.

    F-7

Risks and Uncertainties

The FDA has indicated that it is prioritizing enforcement of unauthorized ENDS
against companies (1) that never submitted PMTAs, (2) whose PMTAs have been refused acceptance or filing by the FDA, (3) whose PMTAs remain
subject to MDOs, and (4) that are continuing to market unauthorized synthetic nicotine products after the July 13, 2022, cutoff. Subject
to FDA’s enforcement discretion, until the scientific review process is complete on Bidi’s PMTA the Company
views the risk of FDA enforcement against Bidi as low and is no longer marketing the Classic BIDI® Stick per the MDO. The Company
anticipates FDA will move forward with a review of Bidi’s PMTA for the non-tobacco flavored BIDI® Sticks on remand, as directed
by the Court; however, the Company cannot provide any assurances as to the timing or outcome.

Merger and Share Exchange Agreement

On September 23, 2024, we agreed with Delta Corp Holdings
Limited, a company incorporated in England and Wales (“Delta”) to effect a business combination between us and Delta by entering
into a Merger and Share Exchange Agreement (the “Merger Agreement”) among us, Delta, Delta Corp Holdings Limited, a Cayman
Islands exempted company (“Pubco”), KAVL Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Pubco (“Merger
Sub”), and the shareholders of