Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 163

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1A
Chunk 163
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, as well as higher
state and local excise taxes and the market share of deep discount brands, the tobacco industry has become increasingly price competitive.
As we seek to adapt to the price competitive environment, our competitors that are better capitalized may be able to sustain price discounts
for long periods of time by spreading the loss across their expansive portfolios, with which we are not positioned to compete.

23

“Big tobacco” has also established its
presence in the ENDS market and has begun to make investments in the alternative space. There can be no assurance that our products will
be able to compete successfully against these companies or any of our other competitors, some of which have far greater resources, capital,
experience, market penetration, sales and distribution channels than do we.

Our distribution efforts rely in part on our
ability to leverage relationships with large retailers and national chains. 

Our distribution efforts rely in part on our ability
to leverage relationships with large retailers and national chains to sell and promote our products, which is dependent upon the strength
of the Bidi brand name and, in the future, any brand names that we may own or license, and our salesforce effectiveness. To maintain these
relationships, we must continue to supply products that will bring steady business to these retailers and national chains. We may not
be able to sustain these relationships or establish other relationships with such entities, which could have a material adverse effect
on our ability to execute our branding strategies, our ability to access the end-user markets with our products, or our ability to maintain
our relationships with the manufacturer and sub-distributors of our products. For example, if we are unable to meet benchmarking provisions
in certain of our contracts or if we are unable to maintain and leverage our retail relationships on a scale sufficient to make us an
attractive distributor, it would have a material adverse effect on our ability to act as sole distributor for Bidi, and on our business,
results of operations and financial condition.

In addition, there are factors beyond our control
that may prevent us from leveraging existing relationships, such as industry consolidation. If we are unable to develop and sustain relationships
with large retailers and national chains or are unable to leverage those relationships due to factors such as a decline in the role of
brick-and-mortar retailers in the North American economy, our capacity to maintain and grow brand and product recognition and increase
sales volume will be significantly undermined. In such an event, we may ultimately be forced to pursue and rely on local and more fragmented
sales