Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 67

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 8
Chunk 67
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 Corp Cayman Limited (the “Sellers”). If the Merger Agreement is consummated, Pubco will become our parent and all
new officers and directors will be appointed by Pubco, except that pursuant to the Merger Agreement we have the right to appoint one
director to the Pubco board of directors and we have agreed to appoint any family member of Ankitaben Patel (the widow of our former
CEO, Nirajkumar Patel) and/or Nirajkumar Patel who is qualified and identified by Bidi for this role prior to the closing of the Merger
Agreement. While we expect the transactions contemplated by the Merger Agreement to close (the “Closing”) in March or April
of this year, no assurances can be made that such transactions will close by then or ever.

Material Items, Trends
and Risks Impacting Our Business

We believe that the following items and trends may
be useful in better understanding our results of operations.

1

On June 11, 2024, the RJ Reynolds Entities filed the
ITC Complaint. The ITC Complaint requests the ITC grant: (a) temporary and permanent limited exclusion orders pursuant to Section 337(e)
of the Tariff Act of 1930, as amended, which would prohibit the importation of the Bidi Stick in the United States; and (b) issue temporary
and permanent cease and desist orders pursuant to 337(f) of the Tariff Act of 1930, as amended, which would prohibit the sale and distribution
of the Bidi Stick in the United States. No damages are recoverable in the proceedings before the ITC. If the Company or Bidi is prohibited
from importing the Bidi Stick, then our business, operations, financial results, and reputation would be significantly adversely impacted.
Bidi disputes the patent infringement claims set forth in the ITC Complaint by the RJ Reynolds Entities and plans to vigorously defend
the ITC Investigation. A Commission determination regarding temporary relief is expected in October or December 2024. A final Commission
determination on permanent relief is not expected until late 2025 or early 2026. The asserted patent expires in October 2026 as would
any exclusion order that the ITC enters as a result of the ITC Complaint.

As a result of the ITC Complaint and other factors
we do not expect any significant revenue from the sale of Bidi Sticks in the foreseeable future. Our primary source of revenue is from
KBI