Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 44

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 44
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, 2021, PMTA review deadline has now passed, the FDA has implemented
a de facto ban of non-tobacco flavored ENDS by denying over 99% of pending applications, while issuing marketing authorizations for only
two non-tobacco flavored (menthol) ENDS.

If flavors are ultimately prohibited to be sold by
Bidi in the United States, the use of ENDS products may decline significantly, which may materially and adversely affect our business,
financial condition, and results of operations. Continued evolution, uncertainty, and the resulting increased risk of failure of our new
and existing product offerings in this market could have a material adverse effect on our ability to build and maintain market share and
on our business, results of operations and financial condition.

Some of our product offerings through Bidi are
subject to developing and unpredictable regulation. 

Our products are sold through our distribution network
and may be subject to uncertain and evolving federal, state, and local regulations, including hemp, non-THC cannabidiol (CBD) and other
non-tobacco consumable products. Enforcement initiatives by those authorities are therefore unpredictable and impossible to anticipate.
We anticipate that all levels of government, which have not already done so, are likely to seek in some way to regulate these products,
but the type, timing, and impact of such regulations remains uncertain. These regulations include or could include restrictions including
prohibitions on certain form factors, such as smokable hemp products, or age restrictions. On January 26, 2023, The FDA announced that
it would not initiate rulemaking to regulate CBD as a dietary food ingredient. Rather, after careful review, the FDA has concluded that
a new regulatory pathway for CBD is needed that balances individuals’ desire for access to CBD products with the regulatory oversight
needed to manage risks. The FDA further indicated that it is prepared to work with Congress on this matter. Accordingly, we cannot give
any assurance that such actions would not have a material adverse effect on this emerging business.

Significant increases in state and local regulation
of our products have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions. The Prevent
All Cigarette Trafficking (or PACT) Act, which went into effect in June 2010, amended the Jenkins Act and initially only applied to the
sales of cigarettes, roll-your-own tobacco, and smokeless tobacco. Specifically, the PACT Act regulates the sale, transfer, or shipment