Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 388

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 2
Chunk 388
---
 in certain markets outside of the United States, subject to market (or regulatory) assessment. The PMI License Agreement
grants to PMPSA a license of certain intellectual property rights relating to Bidi’s ENDS device, known as the BIDI® Stick in
the United States, as well as potentially newly developed devices, to permit PMPSA to manufacture, promote, sell, and distribute such
ENDS device and newly developed devices, in international markets, outside of the United States.

Product Offerings

 Pursuant to the A&R Distribution Agreement, the
Company sells and resells electronic nicotine delivery systems, which it may refer to herein as “ENDS Products”, or “e-cigarettes”,
to non-retail level customers. The sole Product the Company resells is the “BIDI® Stick,” a disposable,
tamper-resistant ENDS product that comes in a variety of flavor options for adult cigarette smokers. The Company does not manufacture
any of the Products it resells. The BIDI® Stick is manufactured by Bidi, who uses a contract manufacturer in China. Pursuant
to the terms of the A&R Distribution Agreement, Bidi provides the Company with all branding, logos, and marketing materials to be
utilized by the Company in connection with its marketing and promotion of the Products.

Impact of the FDA PMTA Decision and Subsequent
Court Actions

In September 2021, in connection with the Bidi’s
Premarket Tobacco Product Application (“PMTA”) process, the U.S. Food and Drug Administration’s (“FDA”)
effectively “banned” flavored ENDS by denying nearly all then-pending PMTAs for such products. Following the issuance of Marketing
Denial Orders (“MDO”), manufacturers are required to stop selling non-tobacco flavored ENDS products.

Bidi, along with nearly every other company in the
ENDS industry, received a MDO for its non-tobacco flavored ENDS products. With respect to Bidi, the MDO covered all non-tobacco flavored
BIDI® Sticks, including its Arctic (menthol) BIDI® Stick. As a result, beginning in September 2021, Bidi pursued multiple avenues
to challenge the MDO. First, on September 21, 2021, separate from the judicial appeal of the MDO in its entirety, Bidi filed a 21 C.F.R.
§ 10.75 internal FDA supervisory review request specifically of the