Company: KAVL
Filing Date: 2025-09-16
Form Type: 10-Q
Source: 0001731122-25-001266
Chunk: 64

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-09-16
Form: 10-Q
Item: Item 2
Chunk 64
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 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.

On July 25, 2022, we announced the launch of PMPSA’s
custom-branded self-contained e-vapor product, pursuant to the licensing agreement. The product, a self-contained e-vapor device initially
called VEEBA and more recently rebranded as VEEV NOW, has been custom developed and was initially distributed in Canada. VEEV NOW was
then commercially launched by PMPSA in Europe in February 2023, with additional market launches planned this year. On August 12, 2023,
we executed and entered into a Deed 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 seeking to 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