Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 371

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 2
Chunk 371
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 team, maintaining a quality control group that is responsible for identifying counterfeit products and surveillance of retailers
we suspect are selling counterfeit Products through our own secret shopper force, no assurance can be given that we will be able to detect
or stop sales of all counterfeit products. In addition, while we may bring suits against retailers and distributors that sell certain
counterfeit products, no assurance can be given that we will be successful in any such suits or that such suits will be successful in
stopping other retailers or distributors from selling.

Counterfeit Products

Our Products (included in
this context any products that we may develop from the GoFire Purchased Assets) are and will be heavily regulated by the FDA, which has
broad regulatory powers. The market for ENDS products is subject to a great deal of uncertainty and is still evolving. ENDS products,
having recently been introduced to market over the past 10 to 15 years, are at a relatively early stage of development, and represent
core components of a market that is evolving rapidly, highly regulated, and characterized by a number of market participants. Rapid growth
in the use of, and interest in, ENDS products is recent, and may not continue on a lasting basis. With respect to the GoFire Purchase
Assets, the underlying technology touches on hemp/cannabis, nutraceutical and healthcare applications in addition to nicotine, all of
which are heavily regulated by the FDA and other federal and state agencies. The demand and market acceptance for all of these products
is subject to a high level of uncertainty. Therefore, we are subject to all the business risks associated with a new enterprise in an
evolving market.

Some of our Product offerings
through Bidi are subject to developing and unpredictable regulation. Our Products are sold through our distribution network and may be
subject to uncertain and evolving federal, state, and local regulations, including hemp, non-THC cannabidiol (CBD) and other non-tobacco
consumable products. Enforcement initiatives by those authorities are therefore unpredictable and impossible to anticipate. We anticipate
that all levels of government, which have not already done so, are likely to seek in some way to regulate these products, but the type,
timing, and impact of such regulations remains uncertain. With respect to CBD in particular, on January 26, 2023, the FDA announced that
it would not initiate rulemaking to regulate CBD as a dietary food ingredient. Rather, after careful review, the FDA has concluded that
a new regulatory