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

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 1
Chunk 10
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 BIDI® Stick in
the United States, as well as potentially newly developed devices, to permit PMPSA to manufacture, promote, sell, and distribute such
ENDS device and newly developed devices, in international markets, outside of the United States.

International Trade Commission (ITC) claims against
the Company

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 the Company’s business, operations, financial results, and reputation would be significantly
adversely impacted.

As a result of the ITC Complaint and other factors,
the Company does not expect any significant revenue from the sale of Bidi Sticks in the foreseeable future. The Company’s primary
source of revenue is from KBI from royalties from PMI under the PMI License Agreement.

Impact of the FDA PMTA Decision and Subsequent
Court Actions

In September 2021, in connection with the Bidi’s
Premarket Tobacco Product Application (“PMTA”) process, the U.S. Food and Drug Administration’s (“FDA”)
effectively “banned” flavored ENDS by denying nearly all then-pending PMTAs for such products. Following the issuance of Marketing
Denial Orders (“MDO”), manufacturers are required to stop selling non-tobacco flavored ENDS products.

    F-6

Bidi, along with nearly every other company in the
ENDS industry, received a MDO for its non-tobacco flavored ENDS products. With respect to Bidi, the MDO covered all non-tobacco flavored
BIDI® Sticks, including its Arctic (menthol) BIDI® Stick. As a result, beginning in September 2021, Bidi pursued multiple avenues
to challenge the MDO. First, on September 21, 2021, separate from the