Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 78

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 8
Chunk 78
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idi is arguing, among other things, that the MDO was arbitrary and capricious in violation
of the Administrative Procedure Act. On February 2, 2024, Bidi filed a Time Sensitive Motion for a Stay Pending Review, which the court
denied on February 18, 2024. Briefing on the merits proceeded, with Bidi filing the opening merits brief on April 15, 2024. FDA filed
its response brief on June 7, 2024, and Bidi filed its reply brief on July 29, 2024. Oral arguments were held before a three-judge panel
on the 11th Circuit on April 2, 2025. The Court issued a decision on April 24, 2025 upholding FDA’s denial order.
Accordingly, at this time, the Classic BIDI® Stick is considered an adulterated tobacco product, the continued marketing and distribution
of which is prohibited.

    F-7

Risks and Uncertainties

The FDA has indicated that it is prioritizing enforcement
of unauthorized ENDS against companies (1) that never submitted PMTAs, (2) whose PMTAs have been refused acceptance or filing by the FDA,
(3) whose PMTAs remain subject to MDOs, and (4) that are continuing to market unauthorized synthetic nicotine products after the July
13, 2022, cutoff. Subject to FDA’s enforcement discretion, until the scientific review process is complete on Bidi’s PMTA
the Company views the risk of FDA enforcement against Bidi as low and is no longer marketing the Classic BIDI® Stick per the MDO.
The Company anticipates FDA will move forward with a review of Bidi’s PMTA for the non-tobacco flavored BIDI® Sticks on remand,
as directed by the Court; however, the Company cannot provide any assurances as to the timing or outcome.

Merger and Share Exchange Agreement

On September 23, 2024, we agreed with Delta Corp
Holdings Limited, a company incorporated in England and Wales (“Delta”) to effect a business combination between us and Delta
by entering into a Merger and Share Exchange Agreement (the “Merger Agreement”) among us, Delta, Delta Corp Holdings Limited,
a Cayman Islands exempted company (“Pubco”), KAVL Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of
Pubco (“Merger Sub”), and the shareholders of Delta