Company: KAVL
Filing Date: 2025-06-10
Form Type: 10-Q
Source: 0001731122-25-000842
Chunk: 75

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-06-10
Form: 10-Q
Item: Item 8
Chunk 75
---
 of Amendment No. 1 (the “PMI License Amendment”) with PMPSA, Bidi and KBI. Pursuant to
the PMI License Amendment (which was effective on June 30, 2023), resulting in a Net Reconciliation Payment to KBI and ongoing quarterly
royalty payments.

The ability of PMPSA to generate
sales of its licensed products is important to our results of operations since we derive royalty revenue from PMPSA sales. Should our
relationship with PMPSA deteriorate or terminate, or if PMPSA is unable to generate meaningful sales of its licensed products, our business
and results of operations would be materially harmed.

Ability to Develop
and Monetize the GoFire Intellectual Property

We purchased certain vaporizer
and inhalation-related technology from GoFire in May 2023 with the goal of diversifying our business and lessening our dependence on BIDI
Vapor. We do not expect that the acquired assets will generate immediate revenue for us, and while we believe this to be a transformative
acquisition for us and we are already seeking to develop and monetize the acquired assets, we can give no assurances at this time that
either (i) the patent applications we acquired will eventuate in issued patents or (ii) we will be able to enter into successful monetizing
arrangements with respect to these assets.

Inflation

Consumer purchases of tobacco
products are historically affected by economic conditions, such as changes in employment, salary and wage levels, the availability of
consumer credit, inflation, interest rates, fuel prices, sales taxes, and the level of consumer confidence in prevailing and future economic
conditions. The U.S. has been experiencing an environment of material inflation in recent quarters, and this condition may impact discretionary
consumer purchases, such as the BIDI® Stick. Demand for our Products may also decline during recessionary periods or at other times
when disposable income is lower, and taxes may be higher.

Corporate History

We were incorporated on September 4, 2018, in the
State of Delaware. Effective July 12, 2019, we changed our corporate name from Quick Start Holdings, Inc. to Kaival Brands Innovations
Group, Inc. The name change was effected through a parent/subsidiary short-form merger of Kaival Brands Innovations Group, Inc., our wholly-owned
Delaware subsidiary formed solely for the purpose of the name change, with and into us. We were the surviving entity.

2