Company: KAVL
Filing Date: 2025-03-17
Form Type: 10-Q
Source: 0001731122-25-000399
Chunk: 9

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-17
Form: 10-Q
Item: Item 1
Chunk 9
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 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 anticipates FDA will move forward with a review of Bidi’s PMTA on remand, as directed by the Court; however,
the Company cannot provide any assurances as to the timing or outcome.

    F-7 

Merger and Share Exchange Agreement

On September 23, 2024, we agreed with Delta Corp Holdings Limited, a company incorporated in England and Wales (“Delta”) to effect a business combination between us and
Delta by entering into a Merger and Share Exchange Agreement (the “Merger Agreement”) among us, Delta, Delta Corp Holdings
Limited, a Cayman Islands exempted company (“Pubco”), KAVL Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary
of Pubco (“Merger Sub”), and the shareholders of Delta. Pursuant to the Merger Agreement, we will effect a merger and share
exchange involving the following transactions:

    (a)
    Pubco shall acquire all
    of the issued and outstanding shares of Delta from each holder of Delta shares in exchange for the issuance by Pubco of ordinary
    shares in the capital of Pubco (the “Share Exchange”); and 
  
    (b)
    immediately following to
    the completion of the Share Exchange, Merger Sub shall merge with and into us (the “Merger”), with us continuing as the
    surviving entity in the Merger.;

    Upon consummation of the transactions contemplated by the Merger Agreement, including the Share Exchange and the Merger, each of us and Delta will become wholly owned subsidiaries of Pubco. 

Note 2 – Basis of Presentation and Significant
Accounting Policies

Principles of Consolidation

The consolidated financial statements include the
financial statements of the Company’s wholly-owned subsidiaries, Kaival Labs and Kaival Brands International. Intercompany transactions
are eliminated.

Basis of Presentation

The accompanying unaudited interim consolidated financial
statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America
(“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with