Company: KAVL
Filing Date: 2025-02-21
Form Type: PRE 14C
Source: 0001731122-25-000278
Chunk: 7

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-21
Form: PRE 14C
Chunk 7
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 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 shall be subject to the satisfaction or written waiver (where permissible) by Delta and Kaival of the condition) that the
Pubco Ordinary Shares to be issued in connection with those Transactions shall have been approved for listing on the Nasdaq, subject to
official notice of issuance. The Merger Agreement also requires each of Kaival and Delta to use specified efforts to consummate the Business
Combination.

By potentially increasing Kaival’s
stock price, the Reverse Split would reduce the risk that Kaival Common Stock would be below the threshold required pursuant to Nasdaq
Marketplace Rules, in order to list the Pubco Ordinary Shares for the combined company, which requirements may include a minimum price
of $4.00 per share (or $3.00 per share under specified circumstances).

The Kaival board of directors has
considered the potential harm to Kaival and its stockholders should Nasdaq fail to list the Pubco Ordinary Shares on The Nasdaq Capital
Market, including that the Merger was not consummated or that if