Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 40

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 40
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 strongly linked to and indicated to be the primary cause of the severe respiratory illnesses, and (ii) THC-containing ENDS
products from informal sources were linked to most cases of severe respiratory illnesses. Furthermore, there have been recent claims that
users of ENDS products may suffer a greater risk of more serious COVID-19 complications. However, it remains unclear whether the exposure
to toxic chemicals through ENDS product usage will increase the risk of COVID-19.

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Research regarding the actual causes of these illnesses
is still ongoing. If ENDS product usage is determined or perceived to pose long-term health risks or to be linked to illnesses, the usage
of ENDS products may significantly decline, which would have a material adverse effect on our business, financial condition, and results
of operations. Although we currently do not offer products containing THC, any perceived correlation between THC and Vitamin E acetate
may adversely affect the public’s perception of ENDS products in general, regardless of whether such products contain THC and/or
Vitamin E.

We do not expect the assets acquired from GoFire
will generate immediate revenue for us, and we may never be able to develop these assets into revenue generating products. 

We purchased a certain vaporizer and inhalation-related
patent portfolio from GoFire in May 2023 with the goal of diversifying our business and lessening our dependence on Bidi. We do not expect
that the acquired assets will generate immediate revenue for us. While we will seek to monetize the acquired intellectual property, including
through third-party licensing opportunities, we can give no assurances at this time that either (i) the patent applications we acquired
will result in issued patents or (ii) we will be able to successfully monetize these assets. Our failure to capitalize on our GoFire assets
would materially impair our strategy of diversifying our product offerings, leaving us even more reliant on the products we distribute
for Bidi.

We may not be successful in maintaining the
consumer brand recognition and loyalty of our products and face intense competition and may fail to compete effectively. 

We compete in a market that relies on innovation and
the ability to react to evolving consumer preferences and, thus, are subject to significant competition in the ENDS market, and larger
tobacco industry and compete against companies in such market and industry that have access to significant resources in terms of technology,
relationships with suppliers and distributors and access to cash flow and financial markets.

Consumer perceptions of the overall safety of tobacco,
nicotine, cannabis,