Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 102

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 8
Chunk 102
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, Delta, Delta Corp Holdings
Limited, a Cayman Islands exempted company, KAVL Merger Sub Inc. and Delta Corp Cayman Limited. 

Pursuant to the Termination
Agreement, the Company and Delta mutually terminated the Merger Agreement and all agreements between the parties that are ancillary thereto
and Delta waived any and all claims against the other party that in any way directly and/or indirectly arise out of, are based upon, or
are in connection with the Merger Agreement any agreements ancillary thereto.

Material Items, Trends
and Risks Impacting Our Business

We believe that the following items and trends may
be useful in better understanding our results of operations.

On June 11, 2024, the RJ Reynolds Entities filed the ITC Complaint. The ITC
Complaint requests the ITC grant: (a) temporary and permanent limited exclusion orders pursuant to Section 337(e) of the Tariff Act of
1930, as amended, which would prohibit the importation of the Bidi Stick in the United States; and (b) issue temporary and permanent cease
and desist orders pursuant to 337(f) of the Tariff Act of 1930, as amended, which would prohibit the sale and distribution of the Bidi
Stick in the United States. No damages are recoverable in the proceedings before the ITC. If the Company or Bidi is prohibited from importing
the Bidi Stick, then our business, operations, financial results, and reputation would be significantly adversely impacted. Although Bidi
disputes the patent infringement claims set forth in the ITC Complaint by the RJ Reynolds Entities, in December 2024 Bidi entered into
a consent order agreeing to cease all importation and distribution of the Bidi Stick until the RJ Reynolds Entities’ patent expires
in October 2026. In November 2024, the ITC Administrative Law Judge (ALJ) denied temporary relief to the Reynolds Entities and the case
proceeded on the merits. A trial was held in April 2025.The initial determination (ID) from the ALJ was issued on August 29, 2025. The
ALJ found that violation of §337 based on infringement of U.S. Patent No. 11,925,202 by the respondents, and that both the technical
and economic prongs of domestic industry were satisfied. The ID will now be reviewed by the Commission for final approval, with respondents
and complainants expected