Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 32

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 32
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 completion of the business combination.

In connection with business combination transactions
like the proposed Business Combination, it is not uncommon for lawsuits to be filed against the parties and/or their respective directors
and officers alleging, among other things, that the proxy statement/prospectus provided to shareholders contains false and misleading
statements and/or omits material information concerning the transaction. Although no such lawsuits have yet been filed in connection with
the Business Combination, it is possible that such actions may arise and, if they do arise, to seek, among other things, injunctive relief
and an award of attorneys’ fees and expenses. Defending such lawsuits could require us and Delta to incur significant costs and
draw the attention of our and Delta’s management teams away from the consummation of the Business Combination and the management
of their respective businesses. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the Business
Combination is consummated may adversely affect Pubco’s business, financial condition, results of operations and cash flows. Such
legal proceedings could delay or prevent the Business Combination from being consummated within the expected timeframe.

After the Business
Combination, Pubco may be exposed to unknown or contingent liabilities and may be required to take write-downs or write-offs, restructuring
and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and share
price.

It is possible that the due diligence conducted in
relation to Kaival and Delta and their respective businesses has not identified all material issues or risks associated with Kaival and
Delta or the industries in which they compete.

Furthermore, factors outside of the parties’
control could arise later. As a result of these factors, Pubco may be exposed to liabilities and incur additional costs and expenses and
be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in losses.
Even if the due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner
not consistent with the parties’ preliminary risk analysis. If any of these risks materialize, this could have a material adverse
effect on the Pubco’s financial condition and results of operations and could contribute to negative market perceptions about Pubco’s
securities.

Due to potential fluctuations
in the market value of Pubco Ordinary Shares, Kaival stockholders cannot be sure of the market value of the consideration that they will
receive in the Business Combination.