Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 19

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 19
---
 all remaining tobacco products, including: (i) certain
“new generation” products (such as electronic cigarettes, vaporizers, and e-liquids) and their components or parts (such as
tanks, coils, and batteries); (ii) cigars and their components or parts (such as cigar tobacco); (iii) pipe tobacco; (iv) hookah products;
or (v) any other tobacco product “newly deemed” by the FDA (the “Deeming Rule”). The Deeming Rule applies to all
products made or derived from tobacco intended for human consumption but excluding accessories of tobacco products (such as lighters).
Furthermore, starting in April 2022, FDA was also granted authority to regulate products containing synthetic (non-tobacco) nicotine as
tobacco products. Specifically, the Consolidated Appropriations Act of 2022 amended the definition of a “tobacco product”
in the Food, Drug and Cosmetic Act and gave the FDA authority to regulate products containing nicotine from any source, including synthetic
nicotine.

The Deeming Rule requires (i) United States manufactured
products be registered with the FDA and that products include ingredient listings; (ii) newly deemed products be marketed only after FDA
review and authorization, subject to FDA’s compliance enforcement policy; (iii) products only make direct and implied claims of
reduced risk if the FDA authorizes after finding that scientific evidence supports the claim and that marketing the product will benefit
public health as a whole; (iv) sellers of such products refrain from distributing free samples; (v) sellers of such products implement
minimum age and identification restrictions to prevent sales to individuals under age 18 (later extended to 21); (vi) packaging of and
advertisements for products include prescribed health warnings; and (vii) sellers refrain from selling Bidi products in vending machines,
unless the machine is located in a facility that never admits youth. We, along with Bidi, must comply with these regulations. Any lapse
in compliance by us, or Bidi, could hamper our ability to operate, which would adversely affect the results of operations.

Newly deemed tobacco products are also subject to
the other requirements of the Tobacco Control Act, such as Bidi products cannot be adulterated or misbranded. The FDA could in the future
promulgate good manufacturing practice regulations for these and our other products, which could have a material adverse impact on Bidi’s
ability to, and the cost to, manufacture