Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 480

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 3
Chunk 480
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, subject to the FDA’s enforcement
discretion, for the duration of the PMTA scientific review.

 Separately, on or about May 13, 2022, the FDA placed
the tobacco-flavored Classic BIDI® Stick into the final Phase III scientific review. In March 2023, FDA issued a deficiency letter
regarding the Classic BIDI® Stick PMTA, to which Bidi submitted in June 2023. Subsequently, on January 22, 2024, FDA issued a MDO
for the Classic BIDI® Stick. On January 26, 2024, Bidi filed a petition for review of the MDO with the 11th Circuit Court
of Appeals, followed by a motion to stay the MDO. Bidi is arguing, among other things, that the MDO was arbitrary and capricious in violation
of the Administrative Procedure Act. On February 2, 2024, Bidi filed a Time Sensitive Motion for a Stay Pending Review, which the court
denied on February 18, 2024. The case is now proceeding on the merits, with Bidi’s opening merits brief filed on April 15, 2024.
FDA filed its response brief on June 7, 2024, and Bidi filed its reply brief on July 29, 2024. The 11th Circuit has indicated
that the oral argument will be held in April 2025. The Company cannot provide any assurance as to the timing or outcome. Unless the MDO
is ultimately remanded by the 11th Circuit, the Classic BIDI® Stick is considered an adulterated tobacco product, the continued
marketing and distribution of which is prohibited.

    F-8

Risks and Uncertainties

The FDA has indicated
that it is prioritizing enforcement of unauthorized ENDS against companies (1) that never submitted PMTAs, (2) whose PMTAs have been
refused acceptance or filing by the FDA, (3) whose PMTAs remain subject to MDOs, and (4) that are continuing to market unauthorized synthetic
nicotine products after the July 13, 2022, cutoff. Subject to FDA’s enforcement discretion, until the scientific review process
is complete on each of Bidi’s PMTA’s, the Company views the risk of FDA enforcement against Bidi as low and is no longer
marketing the Classic BIDI® Stick per the MDO. The Company