Company: KAVL
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001731122-25-000185
Chunk: 31

Company: Kaival Brands Innovations Group, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 1
Chunk 31
---
.

The exercise of Kaival’s boards
of directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result
in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are
appropriate and in Kaival’s shareholders’ best interests.

In the period leading up to
the closing of the Business Combination, events may occur that, pursuant to the Merger Agreement, would require Kaival and/or Delta to
agree to amend the Merger Agreement, to consent to certain actions taken by Delta or Kaival, as applicable, or to waive rights that Kaival
or Delta is entitled to under the Merger Agreement. Such events could arise because of changes in the course of Kaival’s or Delta’s
business, a request by Kaival or Delta to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or
the occurrence of other events that would have a material adverse effect on Kaival’s or Delta’s business. In any of such circumstances,
it would be at Kaival’s or Delta’s discretion, acting through their respective board of directors, to grant consent or waive
those rights. The existence of the financial and personal interests of the directors of Kaival described in the preceding risk factors
may result in a conflict of interest on the part of one or more of the directors between what they may believe is best for Kaival and
its stockholders and what he or they may believe is best for themselves in determining whether or not to take the requested action.

17

The Company will incur
significant transaction and transition costs in connection with the Business Combination.

The Company has incurred and expect to incur significant,
non-recurring costs in connection with consummating the Business Combination, including legal, accounting, consulting, investment banking
and other fees, expenses and costs. In addition, PubCo will incur significant costs operating as a public company following the consummation
of the Business Combination and may also incur additional costs to retain key employees. Generally, transaction expenses incurred in connection
with the Business Combination will be paid by the party incurring those expenses, and many of those expenses might not be paid until after
the Closing. Accordingly, these expenses could result in Holdings having less money following the Closing to spend on other aspects of
its business, particularly if the actual expenses turn out to be higher than anticipated.

Legal proceedings in
connection with the Business Combination, the outcomes of which are uncertain, could delay or prevent the