Company: KAVL
Filing Date: 2025-06-16
Form Type: S-3
Source: 0001731122-25-000885
Chunk: 20

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-06-16
Form: S-3
Chunk 20
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 ability to market and sell our electronic and vaporizer products. At present, we are unable to predict whether the Tobacco
Control Act will impact our products to a greater degree than competitors in the industry, thus affecting our competitive position.

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As part of the “Consolidated Appropriations
Act, 2021,” signed into law on December 27, 2020, Congress amended the PACT Act to apply to ENDS, which includes the BIDI® Stick.
The PACT Act regulates the sale, transfer, or shipment of cigarettes, roll-your-own tobacco, smokeless tobacco, and now ENDS, for both
business-to-business transactions as well as online sales. The PACT Act imposes substantial restrictions on sellers and shippers of ENDS
products, including, but not limited to registration with the Bureau of Alcohol, Tobacco, Firearms and Explosives (or ATF), registration
with state Tobacco Tax Administrators, and monthly reporting requirements to state and local Tobacco Tax Administrators. Delivery sellers
are subject to substantial additional restrictions, including, but not limited to, compliance with state excise tax collection requirements,
licensing requirements, shipping, and packaging requirements. Companies were required to comply with PACT Act requirements beginning on
or about March 28, 2021.

We have adopted the following compliance measures:

| ● | We have retained a team of legal, tax and accounting experts to advise on state and local tax, licensing, and regulatory matters associated with the distribution of the BIDI® Stick; |

| ● | We are appropriately licensed or registered in every state which requires it; |

| ● | We calculate and remit excise taxes where required; |

| ● | We have made a substantial investment in excise tax reporting and compliance software to ensure that all applicable taxes are properly calculated and remitted to the appropriate taxing authorities. The software is now completely integrated with our systems; |

| ● | We have registered with the ATF and the states into which we ship the products; |

| ● | We have implemented processes to ensure timely filing of all required reporting; and |

| ● | In February 2021, we ceased all direct-to-consumer sales. |

Federal Trade Commission

The Federal Trade Commission (FTC) routinely requests
various industry sectors to provide information on marketing and advertising practices, and typically summarizes the aggregate information
provided by all respondents in a public report. The FTC issued what is known as an “Order to File Special Report” to