Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 165

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1A
Chunk 165
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 all the business risks associated with a new enterprise in an evolving market.

24

For example, ENDS products that are non-tobacco flavored
continue to face the threat of prohibition at the local level, as many state and local authorities and attorneys general push for bans
or request the FDA to deny a PMTA for flavored ENDS. To date, at least nine states, including the District of Columbia, have banned the
sale of flavored ENDS (e.g., California, Massachusetts, Illinois, New Jersey, New York, Rhode Island, and Utah), with several more considering
similar bans (e.g., Maryland and Connecticut). As the September 9, 2021, PMTA review deadline has now passed, the FDA has implemented
a de facto ban of non-tobacco flavored ENDS by denying over 99% of pending applications, while issuing marketing authorizations for only
two non-tobacco flavored (menthol) ENDS.

If flavors are ultimately prohibited to be sold by
Bidi in the United States, the use of ENDS products may decline significantly, which may materially and adversely affect our business,
financial condition, and results of operations. Continued evolution, uncertainty, and the resulting increased risk of failure of our new
and existing product offerings in this market could have a material adverse effect on our ability to build and maintain market share and
on our business, results of operations and financial condition.

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. These regulations include or could include restrictions including
prohibitions on certain form factors, such as smokable hemp products, or age restrictions. 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 pathway for CBD is needed that balances individuals’ desire for access to CBD products with the regulatory oversight
needed to manage risks. The FDA further