Company: KAVL
Filing Date: 2025-02-21
Form Type: PRE 14C
Source: 0001731122-25-000278
Chunk: 6

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-21
Form: PRE 14C
Chunk 6
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 and Delta as wholly owned subsidiaries of Pubco, a newly formed holding company, and pursuant to which (a) Pubco
will acquire all of the issued and outstanding capital shares of Delta from the Sellers in exchange for the issue by Pubco of ordinary
shares in the capital of Pubco, such that Delta will become a wholly owned subsidiary of Pubco and the Sellers become shareholders of
Pubco (the “Share Exchange”); and immediately thereafter (b) Merger Sub will merge with and into Kaival, with
Kaival continuing as the surviving entity and wholly owned subsidiary of Pubco (the “Merger”). We refer to the Share
Exchange, the Merger and the other transactions contemplated by the Merger Agreement as the “Business Combination.

The Board of Directors intends
to implement the Reverse Split with the primary intent of increasing the per share price of Common Stock for the following principal reasons:

| ● | to encourage increased investor interest in the Company’s Common Stock and promote greater liquidity for its stockholders through the Merger and resulting combined company’s listing on Nasdaq; |
| ● | to help attract, retain, and motivate employees; and                                                                                                                                             |
| ● | to facilitate the closing of the Merger and Business Combination.                                                                                                                                |

Investor Interest and Liquidity

In addition, in approving the proposed
Reverse Split, the Board of Directors considered that the Reverse Split and the resulting increase in the per share price of Common Stock
could encourage increased investor interest 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