Company: KAVL
Filing Date: 2025-03-03
Form Type: DEF 14C
Source: 0001731122-25-000319
Chunk: 7

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-03-03
Form: DEF 14C
Chunk 7
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 in Common Stock, and the shares of Pubco (“Pubco Ordinary Shares”) exchanged
for Common Stock as a result of the Merger, and thereby promote greater liquidity for its stockholders.

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In the event that the Merger was
consummated and Kaival’s Common Stock did not have a minimum price sufficient to list Pubco Ordinary Shares on Nasdaq, the combined
company’s ordinary shares would likely trade in the over-the-counter market. If Pubco Ordinary Shares were to trade on the over-the-counter
market, selling Pubco Ordinary Shares could be more difficult because smaller quantities of shares would likely be bought and sold, and
transactions could be delayed. In addition, many brokerage houses and institutional investors have internal policies and practices that
prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their
customers, further limiting the liquidity of Kaival Common Stock or Pubco Ordinary Shares. These factors could result in lower prices
and larger spreads in the bid and ask prices for such stock. Additionally, investors may be dissuaded from purchasing lower priced stocks
because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts
at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks. A greater price per
share of Kaival Common Stock, and thereby Pubco Ordinary Shares resulting from the Merger, could allow a broader range of institutions
to invest in the combined company’s ordinary shares. For all of these reasons, Kaival believes the Reverse Split could potentially
increase marketability, trading volume, and liquidity of the combined company’s ordinary shares.

Employee Retention

The Kaival board of directors believe
that Kaival’s employees and directors who are compensated in the form of Kaival’s equity-based securities (or Pubco’s
ordinary shares as a result of the Merger) may be less incentivized and invested in the combined company’s ordinary shares if Pubco
is no longer listed on Nasdaq. Accordingly, the Kaival board of directors believes that obtaining Nasdaq listing qualifications for Pubco
Ordinary Shares, can help attract, retain, and motivate employees and members of the Pubco board of directors.

Merger Agreement Provisions

The Merger Agreement provides that
it is a mutual closing condition (in other words that the obligations of each of Kaival and Delta to consummate the Business Combination’s
Transactions