0001731122-21-000407.txt : 20210318 0001731122-21-000407.hdr.sgml : 20210318 20210318093502 ACCESSION NUMBER: 0001731122-21-000407 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20210317 ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20210318 DATE AS OF CHANGE: 20210318 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Kaival Brands Innovations Group, Inc. CENTRAL INDEX KEY: 0001762239 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 833492907 FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-56016 FILM NUMBER: 21753311 BUSINESS ADDRESS: STREET 1: 4460 OLD DIXIE HIGHWAY CITY: GRANT STATE: FL ZIP: 32949 BUSINESS PHONE: (833) 452-4825 MAIL ADDRESS: STREET 1: 4460 OLD DIXIE HIGHWAY CITY: GRANT STATE: FL ZIP: 32949 FORMER COMPANY: FORMER CONFORMED NAME: Quick Start Holdings, Inc. DATE OF NAME CHANGE: 20181218 8-K 1 e2525_8k.htm FORM 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report: March 17, 2021

Kaival Brands Innovations Group, Inc.
(Exact name of registrant as specified in its charter)

Delaware	000-56016	83-3492907
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

4460 Old Dixie Highway
Grant, Florida 32949
(Address of principal executive office, including zip code)

Telephone: (833) 452-4825
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

ITEM 5.02 DEPARTURE OF DIRECTOR OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENT OF CERTAIN OFFICERS

Effective March 17, 2021, the Board of Directors (the “Board”) of Kaival Brands Innovations Group, Inc. (the “Company”) appointed Paul Reuter, Carolyn Hanigan, and Roger Brooks to serve on the Board. Mr. Reuter, Ms. Hanigan, and Mr. Brooks were appointed to fill vacancies created by the Board to expand the size of the Board from two to five directors.

The Board evaluated Mr. Reuter’s, Ms. Hanigan’s, and Mr. Brooks’ independence in accordance with the independence standards for directors set forth in Rule 5602(a)(2) of the Nasdaq Listing Rules, and affirmatively determined that each individual qualifies as an independent director. Effective March 17, 2021, (i) Mr. Reuter was appointed to serve as the Chair of the Board, the Chair of the Governance and Nominating Committee, and a member of the Audit and Finance Committees; (ii) Ms. Hanigan was appointed to serve as the Chair of the Finance Committee and a member of the Audit and Governance and Nominating Committees; and (iii) Mr. Brooks was appointed to serve as the Chair of the Audit Committee and a member of the Governance and Nominating and Finance Committees.

Effective March 17, 2021, we entered into Independent Director Agreements (each, an “Independent Director Agreement” and, collectively, the “Independent Director Agreements”) with each of Mr. Reuter, Ms. Hanigan, and Mr. Brooks, pursuant to which each director will receive cash compensation in the amount of $12,500 per quarter and a non-qualified stock option to purchase up to 300,000 shares of the Company’s common stock. 90,000 shares underlying the stock options will vest on March 17, 2021, 70,000 shares underlying the stock options will vest on March 17, 2022, 70,000 shares underlying the stock options will vest on March 17, 2023, and the remaining 70,000 shares underlying the stock options will vest on March 17, 2024. The exercise price per share was based on the closing bid price of the Company’s common stock on March 17, 2021, or $2.165 per share. The foregoing summary is qualified in its entirety by the full text of the Independent Director Agreements, which are filed herewith as Exhibits 10.1, 10.2, and 10.3 to this Current Report on Form 8-K (this “Report”) and is incorporated by reference herein.

Biographical and other information as to each director is as follows:

Paul Reuter

Mr. Reuter, age 74, has nearly five decades of industry experience in small box retail as a journalist, editorial director, entrepreneur, and speaker. From April 2013 through June 2019, he served as the Chairman and Founding Partner of the Midwest Retail Group LLC, which was the largest 7-Eleven franchise group. Beginning in January 2018, Mr. Reuter founded and serves as a consultant for Kreative Collaborations, LLC, an industry consultancy. Prior to that, Mr. Reuter purchased CSP Information Group Inc. (“CSP Information Group”) in 1991 and served as the Chief Executive Officer until July 2012, at which time CSP Information Group was sold to CSP Business Media, now Winsight LLC, based in Chicago, Illinois. Under his leadership, CSP Information Group became the industry leader in market share and a well-respected industry journalism entity. Mr. Reuter also serves as a director of Abierto Networks LLC (“Abierto Networks”), a digital communications and engagement solutions provider that primarily focuses on the convenience and food service industries. Mr. Reuter graduated from St. John’s University in 1968. Mr. Reuter’s previous experience in the convenience store industry will provide invaluable knowledge to the Board and qualifies him to serve as a director.

There are no family relationships between Mr. Reuter and any of the Company’s directors or executive officers. There is no arrangement or understanding between Mr. Reuter and any other person pursuant to which Mr. Reuter was appointed as one of the Company’s directors and there are no related party transactions involving Mr. Reuter that are reportable under Item 404(a) of Regulation S-K.

Carolyn Hanigan

Ms. Hanigan, age 49, served as the President of Reynolds American Innovation Company, an operating company of Reynolds American, Inc. (“RAI”) from January 2016 until her retirement in June 2018. Ms. Hanigan led the global vapor collaboration with British American Tobacco (“BAT”) up until RAI was acquired by BAT in 2017. Ms. Hanigan was the architect of RAI’s U.S. reduced risk products strategic direction to further the vision of transforming tobacco. Under her leadership, RAI prepared both the U.S. commercial execution and regulatory applications for the Glo tobacco heating products, the Velo nicotine pouches, and the Alto, Ciro, Vibe and Solo nicotine vaporizers. Prior to her time at RAI, between April 2011 and December 2015, she served as the Vice President of Consumer Marketing at Swander Pace Capital, one of the leading consumer products private equity firms. While at Swander Pace Capital, she provided consumer-led insights needed to make investments, accelerate portfolio company growth, and generate superior returns on exit. The portfolio companies she worked with included Merrick Pet Care, Kicking Horse Coffee, Wholesome Pet Care, Oregon Ice Cream, glo Professional, Gilchrist and Soames, and Voortman’s Cookies. From July 2008 until October 2010, she served as the Chief Marketing Officer of The Nutro Company, the operating company of Mars Pet Care, Inc. Ms. Hanigan spent almost a combined 10 years in marketing at Nestle S.A. and sales and marketing at The Clorox Company. She holds a Bachelor’s degree in business from Boston College and a Master of Business Administration degree from St. Mary’s College. Ms. Hanigan’s extensive tobacco industry experience, as well as her consumer sales and marketing experience qualifies her for service on the Board.

There are no family relationships between Ms. Hanigan and any of the Company’s directors or executive officers. There is no arrangement or understanding between Ms. Hanigan and any other person pursuant to which Ms. Hanigan was appointed as one of the Company’s directors and there are no related party transactions involving Ms. Hanigan that are reportable under Item 404(a) of Regulation S-K.

Roger Brooks

Mr. Brooks, age 76, has served as the Chairman, Treasurer, and Co-founder of Abierto Networks, a digital media and engagement technology company focused on the convenience store, retail, and other similar consumer market segments, since 2005. Prior to his roles at Abierto Networks, from 1998 to 2008, Mr. Brooks was the lead independent director and member of the compensation and audit committees for Moldflow Corporation, a Nasdaq-listed software company that was sold to Autodesk, Inc. in 2008. From 2017 to 2019, Mr. Brooks served as an independent director of Lytron, Incorporated, a closely held international industrial solutions company. From 1998 to 2002, Mr. Brooks served as President, Chief Executive Officer, and member of the board for Intelligent Controls, Inc., a publicly traded software and instrumentation company, which was sold to Franklin Electric Co. Inc. Mr. Brooks was President, Chief Executive Officer, and a board member of Dynisco, Inc. from 1987 to 1996 where he grew the company from $10 million of sales to an international company with over $100 million of sales. Mr. Brooks holds a Bachelor of Arts degree from the University of Connecticut and a Master of Business Administration degree from New York University, Stern Graduate Business School. He is also a graduate of the Stanford University Executive Management Program. Mr. Brooks extensive experience gained from his roles as an executive officer and director of numerous public companies, as well as experience in the convenience store, retail, and other consumer markets will be invaluable to the Board and qualifies him for service as a director.

There are no family relationships between Mr. Brooks and any of the Company’s directors or executive officers. There is no arrangement or understanding between Mr. Brooks and any other person pursuant to which Mr. Brooks was appointed as one of the Company’s directors and there are no related party transactions involving Mr. Brooks that are reportable under Item 404(a) of Regulation S-K.

A copy of the Company’s March 18, 2021 press release announcing these appointments is furnished as Exhibit 99.1 to this Report.

ITEM 5.05 AMENDMENTS TO THE REGISTRANT’S CODE OF ETHICS, OR WAIVER OF A PROVISION OF THE CODE OF ETHICS

On March 17, 2021, the Board adopted a Code of Ethics and Business Conduct, that applies to all directors, senior officers, and employees of the Company (the “Code of Ethics”). The Code of Ethics was adopted to enhance and clarify Company personnel’s understanding of the Company’s standards of ethical business practices, promote awareness of ethical issues that may be encountered in carrying out an employee’s or director’s responsibilities, and sets forth how to address ethical issues that may arise. The foregoing summary is qualified in its entirety by the full text of the Code of Ethics, which is attached hereto as Exhibit 14.1 and incorporated herein by reference. The Code of Ethics will be posted on the Company’s website, www.kaivalbrands.com, as soon as possible. The inclusion of the Company’s website address in this Report does not include or incorporate by reference the information on the Company’s website into this Report.

ITEM 8.01 OTHER EVENTS

On March 17, 2021, the Board approved the establishment of three standing committees: the Audit Committee, the Governance and Nominating Committee, and the Finance Committee. On the same date, the Board also approved and adopted the Audit Committee Charter (the “Audit Charter”), the Governance and Nominating Committee Charter (the “Governance Charter”), and the Finance Committee Charter (the “Finance Charter” and, together with the Audit Charter and the Governance Charter, the “Charters”). The Charters will be available on the Company’s website. The Charters are also attached hereto as Exhibits 99.2, 99.3, and 99.4 and are incorporated herein by reference.

Finally, on March 17, 2021, the Board also approved and adopted an Insider Trading Policy, a copy of which is attached hereto as Exhibit 99.5 and is incorporated herein by reference. The Insider Trading Policy will be posted on the Company’s website.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d)

Exhibits

Exhibit Number	Description
10.1	Independent Director Agreement, dated March 17, 2021, by and between the Company and Paul Reuter.
10.2	Independent Director Agreement, dated March 17, 2021, by and between the Company and Carolyn Hanigan.
10.3	Independent Director Agreement, dated March 17, 2021, by and between the Company and Roger Brooks.
14.1	Code of Business Conduct and Ethics.
99.1	Press Release dated March 18, 2021.
99.2	Audit Committee Charter.
99.3	Governance and Nominating Committee Charter.
99.4	Finance Committee Charter.
99.5	Insider Trading Policy.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Kaival Brands Innovations Group, Inc.

Dated: March 18, 2021	By:	/s/ Nirajkumar Patel
		Nirajkumar Patel
		Chief Executive Officer, Chief Financial Officer, and a Director

EX-10.1 2 e2525_10-1.htm EXHIBIT 10.1

Exhibit 10.1

INDEPENDENT DIRECTOR AGREEMENT

THIS INDEPENDENT DIRECTOR AGREEMENT (this “Agreement”) is entered into on March 17, 2021, and effective on March 17, 2021 (the “Effective Date”), by and between Kaival Brands Innovations Group, a Delaware corporation (the “Company”), and Paul Reuter (the “Director”).

WHEREAS, the Company seeks to attract and retain as directors, capable and qualified persons to serve on the Company’s board of directors (the “Board”);

WHEREAS, the Company has requested and received from the Director certain information regarding the Director’s qualifications and fitness to serve on the Board and has considered and relied upon the accuracy of such information in offering the Director the opportunity to serve on the Board;

WHEREAS, the Company believes that the Director possesses the necessary qualifications and abilities to serve as a director of the Company and to perform the functions and meet the Company’s needs related to the Board; and

WHEREAS, the Director is willing to serve on the Board, subject to the terms set forth herein and in accordance with the provisions of this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements and promises contained herein, and other good and valuable consideration, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Director hereby agree as follows:

1. Service to the Board.

(a) Subject to the terms and provisions of this Agreement, the term of service as a director under this Agreement shall begin on the Effective Date and shall continue until the earliest of the following to occur (the “Term”): (i) the third anniversary of the Effective Date; (ii) the death or disability of the Director; (iii) the termination of the Director from membership on the Board by the mutual agreement of the Company and the Director; (iv) the removal of the Director from the Board by the stockholders of the Company in accordance with the Delaware General Corporation Law, the Company’s Restated Certificate of Incorporation, as amended, and the Company’s Bylaws; and (v) the resignation by the Director from the Board. For purposes of this Section, “disability” shall mean the inability of the Director to perform the Services for a period of at least fifteen (15) consecutive days.

(b) During the Term of this Agreement, the Director will serve on the following Board committees (each a “Committee”) and in the capacities stated:

	Member	Chairperson
Audit Committee	ü
Governance and Nominating Committee	ü	ü
Finance Committee	ü

In addition, the Director hereby agrees that he will also serve as the Chairperson of the Board.

2. Services / Duties.

(a) The Director’s duties will include without limitation: (a) making reasonable business efforts to attend all scheduled meetings of the Board as described below; (b) serving on the Committees listed above, and making reasonable business efforts to attend all meetings of each Committee of which the Director is a member; and (c) performing such other customary duties and responsibilities assigned to the Chairman of the Board (collectively, the “Services”). The Director shall perform his Services on behalf of the Company in good faith and in a manner that is in the best interests of the Company.

(b) The Company currently intends to hold during each calendar year: (i) at least four (4) Board meetings to be held likely via conference call or video call; however, occasional in-person Board meetings may be required; and (ii) at least one (1) annual stockholders’ meeting. The Board and its committees will hold additional meetings as may be required by the business and affairs of the Company. In fulfilling his responsibilities as a member of the Board, the Director agrees that he shall act honestly and in good faith with a view to the best interests of the Company and exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances.

(c) The Director will use his best efforts to provide the Services to the Company, to promote the interests of the Company, and to devote the time necessary to faithfully perform his duties and the Services. The Company recognizes that the Director (i) is or may become a full-time executive employee of another entity and that his responsibilities to such entity may have priority and (ii) sits or may sit on the board of directors of other entities, subject to any limitations set forth by the Sarbanes-Oxley Act of 2002 and limitations provided by any exchange or quotation service on which the Company’s common stock is listed or traded. So long as any outside activities do not create a conflict, interfere, or violate the Director’s obligations under this Agreement or the Director’s fiduciary duties to the Company and the stockholders, the Director may be employed by another company, may serve on other boards of directors or advisory boards, and may engage in any other business activity. Notwithstanding the same, the Director will provide the Company with prior written notice of any future commitments to such entities and use reasonable business efforts to coordinate his respective commitments so as to fulfill his obligations to the Company, and in any event, will fulfill his legal obligations as a Director. Other than as set forth above, the Director will not, without the prior notifications to the Board, engage in any other business activity which could create a conflict of interest with the Company, materially interfere with the performance of his duties, services, and responsibilities hereunder or which is in violation of the reasonable policies established from time to time by the Company; provided, that the foregoing shall in no way limit his activities on behalf of (i) any current employer and its affiliates or (ii) the board of directors of any entities on which he currently sits. At such time as the Board receives such notification, the Board may require the resignation of the Director if it determines that such business activity does in fact materially interfere with the performance of the Director’s duties, the Services, and responsibilities hereunder.

3. Compensation and Expenses.

(a) Board Compensation; Committee Compensation. For Services provided to the Company hereunder, the Director will be entitled to receive $12,500 compensation per quarter during the Term of this Agreement.

(b) Stock Compensation. As additional compensation for the Services provided to the Company hereunder, the Director is also entitled to receive from the Company on the Effective Date, a non-qualified stock option (the “Stock Option”) to purchase 300,000 shares of the Company’s common stock, with the exercise price determined by using the closing bid price of the Company’s common stock on the Effective Date. Vesting will be as follows: 90,000 of the shares underlying the Stock Option shall vest on the Effective Date, 70,000 of the shares underlying the Stock Option shall vest on the first anniversary of the Effective Date, 70,000 of the shares underlying the Stock Option shall vest on the second anniversary of the Effective Date, and the remaining 70,000 shares underlying the Stock Option shall vest on the third anniversary of the Effective Date; however, if a change of control event occurs (as defined in the Award Agreement (as defined below)), all unvested shares shall vest immediately. Any and all equity awards shall be granted under and shall be subject to the terms and provisions of the 2020 Stock and Incentive Compensation Plan, as the same may be amended from time to time (the “Incentive Plan”), and shall be granted subject to the execution and delivery of a stock option award agreement, as approved by the Board, in substantially the same form as attached hereto as Exhibit A (the “Award Agreement”). The parties hereby agree that to the extent permitted by the Incentive Plan, the number of shares underlying the Stock Option shall not be adjusted in the event the Company effects one or more reverse stock splits of its common stock.

(c) Other Benefits. The Board (or its designated Committee) may from time to time authorize such other compensation and benefits for the Director, in addition to the compensation set forth above in subsections (a) and (b) of this Section 3.

(d) Expenses. Upon submission of proper receipts, invoices, or vouchers, as may reasonably be required by the Company, the Company shall reimburse the Director for all reasonable out-of-pocket expenses incurred by the Director in connection with the Director’s attendance at any meetings of the Board or of any committee of the Board, provided that the Director complies with the generally applicable policies, practices, and procedures of the Company for submission of expense reports, receipts or similar documentation of such expenses.

(e) Independent Contractor. While serving as a member of the Board, the Director’s status shall be that of an independent contractor and not, for any purpose, that of an employee or agent with authority to bind the Company in any respect. All payments and other consideration made or provided to the Director under this Section 3 shall be made or provided without withholding or deduction of any kind, and the Director shall assume sole responsibility for discharging all tax or other obligations associated therewith.

4. Director’s Representation and Acknowledgment. The Director represents to the Company that his execution and performance of this Agreement shall not be in violation of any agreement or obligation (whether or not written) that he may have with or to any person or entity, including without limitation, any prior or current employer. The Director also agrees to use his best efforts to avoid or minimize any such conflict and agrees not to enter into any agreement or obligation that could create such a conflict, without the approval of the majority of the disinterested members of the Board. If, at any time, the Director is required to make any disclosure or take any action that may conflict with any of the provisions of this Agreement, the Director will promptly notify the Chairman of the Board and President of the Company of such obligation, prior to making such disclosure or taking such action. The Director hereby acknowledges and agrees that this Agreement (and any other agreement or obligation referred to herein) shall be an obligation solely of the Company, and the Director shall have no recourse whatsoever against any stockholder of the Company or any of their respective affiliates with regard to this Agreement.

5. Director Covenants.

(a) Confidentiality. Director shall maintain in confidence and shall not, directly or indirectly, disclose or use, either during or after the Term of this Agreement, any Proprietary Information (as defined below), confidential information, or trade secrets belonging to Company, whether or not it is in written or permanent form, except to the extent necessary to perform the Director’s Services, as required by a lawful government order or subpoena, or as authorized in writing by Company. These nondisclosure obligations also apply to Proprietary Information belonging to customers and suppliers of Company, and other third parties, learned by the Director as a result of performing the Services. “Proprietary Information” means all information pertaining in any manner to the business of Company, unless (i) the information is or becomes publicly known through lawful means; (ii) the information was part of Director’s general knowledge prior to his relationship with Company; or (iii) the information is disclosed to the Director without restriction by a third party who rightfully possesses the information and did not learn of it from Company.

(b) Insider Trading Guidelines. The Director agrees to execute the Company’s Insider Trading Policy in the form attached hereto as Exhibit B. In addition, the Director shall provide the Company on a semi-annual basis a certification of Director’s compliance with such Insider Trading Policy.

(c) Remedies. The Director agrees that any breach of the terms of this Section 5 would result in irreparable injury and damage to the Company for which the Company would have no adequate remedy at law; the Director therefore also agrees that in the event of said breach or any threat of breach, the Company shall be entitled to an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Director and/or any and all entities acting for and/or with the Director, without having to prove damages or paying a bond, in addition to any other remedies to which the Company may be entitled at law or in equity. The terms of this paragraph shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including, but not limited to, the recovery of damages from the Director. The Director acknowledges that the Company would not have entered into this Agreement had the Director not agreed to the provisions of this Section 5.

(d) The provisions of this Section 5 shall survive termination, and the existence of any claim or cause of action by the Director against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements of this Section 5.

6. Directors’ and Officers’ Insurance. The Company agrees that it will obtain directors’ and officers’ insurance benefitting the Board by the earlier of (i) the date the Company’s common stock is approved for listing on the Nasdaq Capital Market or (ii) May 31, 2021, and shall use its best efforts to maintain such insurance during the remainder of the Term of this Agreement. To the extent the Company maintains an insurance policy or policies providing directors’ and officers’ liability insurance, the Director shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company’s directors or officers.

7. Non-Waiver of Rights. The failure to enforce at any time the provisions of this Agreement or to require at any time performance by the other party hereto of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part hereof, or the right of either party hereto to enforce each and every provision in accordance with its terms. No waiver by either party hereto of any breach by the other party hereto of any provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions at that time or at any prior or subsequent time.

8. Notices. Every notice relating to this Agreement shall be in writing and shall be given by personal delivery or by registered or certified mail, postage prepaid, return receipt requested; to:

If to the Company:	Kaival Brands Innovations Group, Inc. 4460 Old Dixie Highway Grant, Florida 32949

If to the Director:	Paul Reuter

9. Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, personal representatives, estates, successors (including, without limitation, by way of merger) and assigns. Notwithstanding the provisions of the immediately preceding sentence, neither the Director nor the Company shall assign all or any portion of this Agreement without the prior written consent of the other party.

10. Entire Agreement. This Agreement (together with the other agreements referred to herein) sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, promises, covenants, arrangements, communications, representations, or warranties, whether oral or written, between them as to such subject matter.

11. Severability. The provisions of this Agreement are severable, and any provision of this Agreement that is held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable in any respect will not affect the validity or enforceability of any other provision of this Agreement.

12. Governing Law. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and the Director hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum; provided, however, that neither party shall commence any such action or proceeding unless prior thereto the parties have in good faith attempted to resolve the claim, dispute or cause of action which is the subject of such action or proceeding through mediation by an independent third party.

13. Legal Fees. The parties hereto agree that the non-prevailing party in any dispute, claim, action or proceeding between the parties hereto arising out of or relating to the terms and conditions of this Agreement or any provision thereof (a “Dispute”), shall reimburse the prevailing party for reasonable attorney’s fees and expenses incurred by the prevailing party in connection with such Dispute; provided, however, that the Director shall only be required to reimburse the Company for its fees and expenses incurred in connection with a Dispute if the Director’s position in such Dispute was found by the court, arbitrator or other person or entity presiding over such Dispute to be frivolous or advanced not in good faith.

14. Modifications. Neither this Agreement nor any provision hereof may be modified, altered, amended, or waived except by an instrument in writing duly signed by the party to be charged.

15. Tense and Headings. Whenever any words used herein are in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. The headings contained herein are solely for the purposes of reference, are not part of this Agreement and shall not in any way affect the meaning or interpretation of this Agreement.

16. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. Facsimile execution and delivery of this Agreement is legal, valid, and binding for all purposes.

IN WITNESS WHEREOF, the parties hereto have caused this Independent Director Agreement to be duly executed and signed as of the day and year first above written.

COMPANY:

KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation

By:	/s/ Eric Mosser
Name:		Eric Mosser
Title:		Chief Operating Officer

DIRECTOR:

/s/ Paul Reuter
Paul Reuter

EXHIBIT A

Form of Stock Option Award Agreement

KAIVAL BRANDS INNOVATIONS GROUP, INC.
2020 STOCK AND INCENTIVE COMPENSATION PLAN

Nonqualified Stock Option

Grant of Option. KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation (the “Company”), hereby grants to the Awardee named below a Nonqualified Stock Option for the purchase of up to but not exceeding the number of shares of the Company’s Common Stock, $.001 par value per share (the “Option”), exercisable at the price and upon the terms and conditions set forth below, and subject to any adjustments made pursuant to Section 14 of the Company’s 2020 Stock and Incentive Compensation Plan (“Plan”):

Awardee: Paul Reuter

Number of Shares: 300,000

Grant Date: March 17, 2021

Exercise Price/Share: $2.165

Expiration Date: March 16, 2031

Approval of Counsel Required for Issuance of Common Stock. No shares of Common Stock shall be issued pursuant to the exercise of the Option unless counsel for the Company shall be satisfied that such issuance will be in compliance with applicable Federal and state securities laws.

Option Subject to Plan. The Option is granted as a Nonqualified Stock Option as defined in Section 2(w) of the Plan that is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code, is issued pursuant to the Plan, and is in all respects subject to the terms, provisions, conditions and restrictions of the Plan. In the event of any conflict between this instrument and the Plan, the Plan shall control.

Defined Terms. Except as otherwise defined herein, capitalized terms used in this instrument shall have the meanings ascribed to such terms in the Plan.

Exercise Price. The Option exercise price set forth above for each related Common Share is not less than the Fair Market Value of each Common Share calculated as of the date of grant in accordance with Section 2(t) of the Plan. The exercise price is subject to adjustment pursuant to Section 14 of the Plan.

Vesting of Option. The Option will become vested and exercisable with respect to the number of shares set forth in the vesting schedule below until the Option is 100% vested, except as otherwise provided in the Plan:

DATE VESTED AND EXERCISABLE	NUMBER OF SHARES EXERCISABLE
March 17, 2021	90,000
March 17, 2022	70,000
March 17, 2023	70,000
March 17, 2024	70,000

All unvested shares underlying the Option shall vest immediately upon a Change of Control (as that term is defined in the Plan).

Option Period. The Option, or any part thereof, may be exercised at any time between the date at which it becomes vested and exercisable and the Expiration Date set forth above, inclusive of such dates, except that in the event of the Awardee’s death, or his or her Disability (as defined under Section 2(p) of the Plan), or if the Awardee’s employment by the Company is terminated for any reason, or if there is a Change of Control of the Company, then the provisions of Sections 12(c) and 14(b) of the Plan, respectively, shall govern the option period.

Method of Exercise. The Option is exercisable by providing a written notice of exercise in accordance with the procedures adopted by the Committee, but subject to all conditions and restrictions set forth in the Plan, and the Option consideration shall be payable in one of the forms permitted under Section 8(f) of the Plan, as determined by the Committee. The exercise price for the number of shares exercised under the Option shall be payable in full at the time of exercise.

Transferability. The Option is not assignable or transferable except by will or the laws of descent or distribution and is exercisable during the Awardee’s lifetime only by him or her. No assignment or transfer of the Option, or the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except to a designated beneficiary, upon death, by will or the laws of descent or distribution) will vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Option will terminate and become of no further effect.

Tax Withholding on Exercise. Awardee shall satisfy the Company’s withholding obligation of any federal, state, local or foreign taxes of any kind required to be withheld as a result of an exercise of the Option by providing payment of the amount of such withholding: (i) by cash, certified or cashier’s check, money order or personal check; (ii) by delivery of shares of the Company’s common stock already owned by Awardee; (iii) by the Company’s withholding from other compensation payable to Awardee by the Company; or (iv) pursuant to a request by Awardee, by withholding from the shares of common stock to be delivered upon exercise of the Option no more than the maximum number of shares that is necessary to satisfy the statutory withholding obligation.

KAIVAL BRANDS INNOVATIONS GROUP, INC.

By:			Date:

Title:

The Awardee acknowledges receipt of a copy of the Plan, represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option evidenced hereby subject to all the terms, provisions, conditions and restrictions of the Plan. The Awardee also understands that this Option is not intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Accordingly, the Awardee understands that he or she will recognize taxable income upon exercise of the Option based on the difference between the Option exercise price and the Fair Market Value of the shares at the time of exercise.

Signature:

Printed Name:

Date:

EXHIBIT B

Insider Trading Policy

See attached.

EX-10.2 3 e2525_10-2.htm EXHIBIT 10.2

Exhibit 10.2

INDEPENDENT DIRECTOR AGREEMENT

WHEREAS, the Company seeks to attract and retain as directors, capable and qualified persons to serve on the Company’s board of directors (the “Board”);

WHEREAS, the Director is willing to serve on the Board, subject to the terms set forth herein and in accordance with the provisions of this Agreement.

1. Service to the Board.

(b) During the Term of this Agreement, the Director will serve on the following Board committees (each a “Committee”) and in the capacities stated:

	Member	Chairperson

Audit Committee	ü

Governance and Nominating Committee	ü

Finance Committee	ü	ü

2. Services / Duties.

(a) The Director’s duties will include without limitation: (a) making reasonable business efforts to attend all scheduled meetings of the Board as described below; (b) serving on the Committees listed above, and making reasonable business efforts to attend all meetings of each Committee of which the Director is a member; and (c) performing such other customary duties and responsibilities assigned to the Director by the Chairman of the Board (collectively, the “Services”). The Director shall perform her Services on behalf of the Company in good faith and in a manner that is in the best interests of the Company.

(b) The Company currently intends to hold during each calendar year: (i) at least four (4) Board meetings to be held likely via conference call or video call; however, occasional in-person Board meetings may be required; and (ii) at least one (1) annual stockholders’ meeting. The Board and its committees will hold additional meetings as may be required by the business and affairs of the Company. In fulfilling her responsibilities as a member of the Board, the Director agrees that she shall act honestly and in good faith with a view to the best interests of the Company and exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances.

(c) The Director will use her best efforts to provide the Services to the Company, to promote the interests of the Company, and to devote the time necessary to faithfully perform her duties and the Services. The Company recognizes that the Director (i) is or may become a full-time executive employee of another entity and that her responsibilities to such entity may have priority and (ii) sits or may sit on the board of directors of other entities, subject to any limitations set forth by the Sarbanes-Oxley Act of 2002 and limitations provided by any exchange or quotation service on which the Company’s common stock is listed or traded. So long as any outside activities do not create a conflict, interfere, or violate the Director’s obligations under this Agreement or the Director’s fiduciary duties to the Company and the stockholders, the Director may be employed by another company, may serve on other boards of directors or advisory boards, and may engage in any other business activity. Notwithstanding the same, the Director will provide the Company with prior written notice of any future commitments to such entities and use reasonable business efforts to coordinate her respective commitments so as to fulfill her obligations to the Company, and in any event, will fulfill her legal obligations as a Director. Other than as set forth above, the Director will not, without the prior notifications to the Board, engage in any other business activity which could create a conflict of interest with the Company, materially interfere with the performance of her duties, services, and responsibilities hereunder or which is in violation of the reasonable policies established from time to time by the Company; provided, that the foregoing shall in no way limit her activities on behalf of (i) any current employer and its affiliates or (ii) the board of directors of any entities on which she currently sits. At such time as the Board receives such notification, the Board may require the resignation of the Director if it determines that such business activity does in fact materially interfere with the performance of the Director’s duties, the Services, and responsibilities hereunder.

3. Compensation and Expenses.

4. Director’s Representation and Acknowledgment. The Director represents to the Company that her execution and performance of this Agreement shall not be in violation of any agreement or obligation (whether or not written) that she may have with or to any person or entity, including without limitation, any prior or current employer. The Director also agrees to use her best efforts to avoid or minimize any such conflict and agrees not to enter into any agreement or obligation that could create such a conflict, without the approval of the majority of the disinterested members of the Board. If, at any time, the Director is required to make any disclosure or take any action that may conflict with any of the provisions of this Agreement, the Director will promptly notify the Chairman of the Board and President of the Company of such obligation, prior to making such disclosure or taking such action. The Director hereby acknowledges and agrees that this Agreement (and any other agreement or obligation referred to herein) shall be an obligation solely of the Company, and the Director shall have no recourse whatsoever against any stockholder of the Company or any of their respective affiliates with regard to this Agreement.

5. Director Covenants.

(a) Confidentiality. Director shall maintain in confidence and shall not, directly or indirectly, disclose or use, either during or after the Term of this Agreement, any Proprietary Information (as defined below), confidential information, or trade secrets belonging to Company, whether or not it is in written or permanent form, except to the extent necessary to perform the Director’s Services, as required by a lawful government order or subpoena, or as authorized in writing by Company. These nondisclosure obligations also apply to Proprietary Information belonging to customers and suppliers of Company, and other third parties, learned by the Director as a result of performing the Services. “Proprietary Information” means all information pertaining in any manner to the business of Company, unless (i) the information is or becomes publicly known through lawful means; (ii) the information was part of Director’s general knowledge prior to her relationship with Company; or (iii) the information is disclosed to the Director without restriction by a third party who rightfully possesses the information and did not learn of it from Company.

(b) Insider Trading Guidelines. The Director agrees to execute the Company’s Insider Trading Policy in the form attached hereto as Exhibit A. In addition, the Director shall provide the Company on a semi-annual basis a certification of Director’s compliance with such Insider Trading Policy

8. Notices. Every notice relating to this Agreement shall be in writing and shall be given by personal delivery or by registered or certified mail, postage prepaid, return receipt requested; to:

If to the Company:	Kaival Brands Innovations Group, Inc. 4460 Old Dixie Highway Grant, Florida 32949

If to the Director:	Carolyn Hanigan

14. Modifications. Neither this Agreement nor any provision hereof may be modified, altered, amended, or waived except by an instrument in writing duly signed by the party to be charged.

IN WITNESS WHEREOF, the parties hereto have caused this Independent Director Agreement to be duly executed and signed as of the day and year first above written.

COMPANY:

KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation

By:	/s/ Eric Mosser
Name:		Eric Mosser
Title:		Chief Operating Officer

DIRECTOR:

/s/ Carolyn Hanigan
Carolyn Hanigan

EXHIBIT A

Form of Stock Option Award Agreement

KAIVAL BRANDS INNOVATIONS GROUP, INC.

2020 STOCK AND INCENTIVE COMPENSATION PLAN

Nonqualified Stock Option

Awardee: Carolyn Hanigan

Number of Shares: 300,000

Grant Date: March 17, 2021

Exercise Price/Share: $2.165

Expiration Date: March 16, 2031

Defined Terms. Except as otherwise defined herein, capitalized terms used in this instrument shall have the meanings ascribed to such terms in the Plan.

DATE VESTED AND EXERCISABLE	NUMBER OF SHARES EXERCISABLE
March 17, 2021	90,000
March 17, 2022	70,000
March 17, 2023	70,000
March 17, 2024	70,000

All unvested shares underlying the Option shall vest immediately upon a Change of Control (as that term is defined in the Plan).

KAIVAL BRANDS INNOVATIONS GROUP, INC.

By:			Date:

Title:

Signature:

Printed Name:

Date:

EXHIBIT B

Insider Trading Policy

See attached.

EX-10.3 4 e2525_10-3.htm EXHIBIT 10.3

Exhibit 10.3

INDEPENDENT DIRECTOR AGREEMENT

WHEREAS, the Company seeks to attract and retain as directors, capable and qualified persons to serve on the Company’s board of directors (the “Board”);

WHEREAS, the Director is willing to serve on the Board, subject to the terms set forth herein and in accordance with the provisions of this Agreement.

1. Service to the Board.

(b) During the Term of this Agreement, the Director will serve on the following Board committees (each a “Committee”) and in the capacities stated:

	Member	Chairperson
Audit Committee	ü	ü
Governance and Nominating Committee	ü
Finance Committee	ü

In connection with serving as the Company’s Audit Committee Chairperson, the Director agrees that he is also serving as the “audit financial expert” for purposes of filings before the Securities and Exchange Commission, OTC Markets Group Inc., and/or Nasdaq Capital Markets, as applicable.

2. Services / Duties.

(a) The Director’s duties will include without limitation: (a) making reasonable business efforts to attend all scheduled meetings of the Board as described below; (b) serving on the Committees listed above, and making reasonable business efforts to attend all meetings of each Committee of which the Director is a member; and (c) performing such other customary duties and responsibilities assigned to the Director by the Chairman of the Board (collectively, the “Services”). The Director shall perform his Services on behalf of the Company in good faith and in a manner that is in the best interests of the Company.

3. Compensation and Expenses.

5. Director Covenants.

8. Notices. Every notice relating to this Agreement shall be in writing and shall be given by personal delivery or by registered or certified mail, postage prepaid, return receipt requested; to:

If to the Company:	Kaival Brands Innovations Group, Inc. 4460 Old Dixie Highway Grant, Florida 32949

If to the Director:	Roger Brooks

14. Modifications. Neither this Agreement nor any provision hereof may be modified, altered, amended, or waived except by an instrument in writing duly signed by the party to be charged.

IN WITNESS WHEREOF, the parties hereto have caused this Independent Director Agreement to be duly executed and signed as of the day and year first above written.

COMPANY:

KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation

By:	/s/ Eric Mosser
Name:		Eric Mosser
Title:		Chief Operating Officer

DIRECTOR:

/s/ Roger Brooks
Roger Brooks

EXHIBIT A

Form Stock Option Award Agreement

KAIVAL BRANDS INNOVATIONS GROUP, INC.
2020 STOCK AND INCENTIVE COMPENSATION PLAN

Nonqualified Stock Option

Awardee: Roger Brooks

Number of Shares: 300,000

Grant Date: March 17, 2021

Exercise Price/Share: $2.165

Expiration Date: March 16, 2031

Defined Terms. Except as otherwise defined herein, capitalized terms used in this instrument shall have the meanings ascribed to such terms in the Plan.

DATE VESTED AND EXERCISABLE	NUMBER OF SHARES EXERCISABLE
March 17, 2021	90,000
March 17, 2022	70,000
March 17, 2023	70,000
March 17, 2024	70,000

All unvested shares underlying the Option shall vest immediately upon a Change of Control (as that term is defined in the Plan).

KAIVAL BRANDS INNOVATIONS GROUP, INC.

By:			Date:

Title:

Signature:

Printed Name:

Date:

EXHIBIT B

Insider Trading Policy

See attached.

EX-14.1 5 e2525_14-1.htm EXHIBIT 14.1

Exhibit 14.1

KAIVAL BRANDS INNOVATIONS GROUP, inc.
(the “Corporation”)

Code of Ethics and Business Conduct
For DIRECTORS, SENIOR OFFICERS AND EMPLOYEES OF THE CORPORATION
(this “Code”)

This Code applies to the Chief Executive Officer, President, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Controller, any Presidents of business units/divisions, any Executive Vice-Presidents, any Vice-Presidents, any Executive Officers, and persons performing similar functions (collectively, the “Senior Officers”) along with all directors, officers, and employees within the Corporation and its subsidiaries (the directors, officers, and employees are hereinafter collectively referred to as the “Directors, Officers, and Employees”). This Code covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all Directors, Officers and Employees of the Corporation. All Directors, Officers, and Employees should conduct themselves accordingly and seek to avoid the appearance of improper behaviour in any way relating to the Corporation.

Any Employee who has any questions about the Code should consult with the Chief Executive Officer, the President, the Corporation’s board of directors (the “Board”) or the Corporation’s audit committee (the “Audit Committee”).

The Corporation has adopted the Code for the purpose of promoting:

●

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;

●

full, fair, accurate, timely and understandable disclosure in all reports and documents that the Corporation files with, or submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by the Corporation;

●

compliance with applicable governmental laws, rules, and regulations;

●

the protection of Corporation assets, including corporate opportunities and confidential information;

●

fair dealing practices;

●

the prompt internal reporting of violations of the Code; and

●

accountability for adherence to the Code.

All Directors, Officers, and Employees are required to be familiar with the Code, comply with its provisions and report any suspected violations as described below.

honest and ethical conduct

The Corporation’s policy is to promote high standards of integrity by conducting its affairs honestly and ethically.

Each Director, Officer, and Employee must act with integrity and observe the highest ethical standards of business conduct in his or her dealings with the Corporation’s customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job.

CONFLICTS OF INTEREST

A conflict of interest occurs when an individual’s private interest (or the interest of a member of his or her family) interferes, or even appears to interfere, with the interests of the Corporation as a whole. A conflict of interest can arise when an Employee (or a member of his or her family) takes actions or has interests that may make it difficult to perform his or her work for the Corporation objectively and effectively. Conflicts of interest also arise when an Employee (or a member of his or her family) receives improper personal benefits as a result of his or her position in the Corporation.

Loans by the Corporation to, or guarantees by the Corporation of obligations of, Directors, Officers, and Employees or their family members are of special concern and could constitute improper personal benefits to the recipients of such loans or guarantees, depending on the facts and circumstances. Loans by the Corporation to, or guarantees by the Corporation of obligations of, any Director, Officer, or his or her family members are expressly prohibited.

Whether or not a conflict of interest exists or will exist can be unclear. Conflicts of interest should be avoided unless specifically authorized and approved in accordance with the terms of this Code.

Persons other than Directors and Officers who have questions about a potential conflict of interest or who become aware of an actual or potential conflict should discuss the matter with, and seek a determination and prior authorization or approval from their immediate supervisor or the Chief Operating Officer. A supervisor may not authorize or approve conflict of interest matters or make determinations as to whether a problematic conflict of interest exists without first providing the Chief Operating Officer with a written description of the activity and seeking the Chief Operating Officer’s written approval. If the supervisor is himself or herself involved in the potential or actual conflict, the matter should instead be discussed directly with the Chief Operating Officer.

Directors and Officers must seek determinations and prior authorizations or approvals of potential conflicts of interest exclusively from the Audit Committee.

Specifically, each Employee must:

●

act with integrity, including being honest and candid while still maintaining the confidentiality of information when required or consistent with the Corporation’s policies;

●

avoid violations of the Code, including actual or apparent conflicts of interest with the Corporation in personal and professional relationships;

●

disclose to the Board or the Audit Committee any material transaction or relationship that could reasonably be expected to give rise to a breach of the Code, including actual or apparent conflicts of interest with the Corporation;

●

obtain approval from the Board or Audit Committee before making any decisions or taking any action that could reasonably be expected to involve a conflict of interest or the appearance of a conflict of interest;

●

observe both the form and spirit of laws and governmental rules and regulations, accounting standards and Corporation policies;

●

maintain a high standard of accuracy and completeness in the Corporation’s financial records;

●

ensure full, fair, timely, accurate, and understandable disclosure in the Corporation’s periodic reports;

●

report any violations of the Code to the Board or Audit Committee;

●

proactively promote ethical behavior among peers in his or her work environment; and

●

maintain the skills appropriate and necessary for the performance of his or her duties.

Disclosure of Corporation information

As a result of the Corporation’s status as a public company, it is required to file periodic and other reports with the SEC. The Corporation takes its public disclosure responsibility seriously to ensure that these reports furnish the marketplace with full, fair, accurate, timely, and understandable disclosure regarding the financial and business condition of the Corporation. All disclosures contained in reports and documents filed with or submitted to the SEC, or other government agencies, on behalf of the Corporation or contained in other public communications made by the Corporation must comply with all applicable securities laws and SEC rules and must be complete and correct in all material respects and understandable to the intended recipient.

Each Director, Officer, and Employee, in relation to his or her area of responsibility, must be committed to providing timely, consistent, and accurate information, in compliance with all legal and regulatory requirements. It is imperative that this disclosure be accomplished consistently during both good times and bad and that all parties in the marketplace have equal or similar access to this information.

All of the Corporation’s books, records, accounts, and financial statements must be maintained in reasonable detail, must appropriately reflect the Corporation’s transactions, and must conform both to applicable legal requirements and to the Corporation’s system of internal controls. Unrecorded or “off the book” funds, assets, or liabilities should not be maintained unless permitted by applicable law or regulation. Senior Officers involved in the preparation of the Corporation’s financial statements must prepare those statements in accordance with generally accepted accounting principles, consistently applied, and any other applicable accounting standards and rules so that the financial statements materially, fairly, and completely reflect the business transactions and financial statements and related condition of the Corporation. Further, it is important that financial statements and related disclosures be free of material errors. All Directors, Officers, and Employees must cooperate fully with the Corporation’s accounting and internal audit personnel as well as the Corporation’s independent public accountants and legal counsel.

Specifically, each Director, Officer, and Employee who is involved in the Corporation’s disclosure process must:

●

be familiar and comply with the disclosure requirements generally applicable to the Corporation and the Corporation’s disclosure controls and procedures and its internal control over financial reporting;

●

take all necessary steps to ensure that all filings with the SEC and all other public communications about the financial and business condition of the Corporation provide full, fair, accurate, timely and understandable disclosure;

●

not knowingly misrepresent, or cause others to misrepresent, facts about the Corporation to others, including the Corporation’s independent auditors, governmental regulators, self-regulating organizations and other governmental officials;

●

to the extent that he or she participates in the creation of the Corporation’s books and records, promote the accuracy, fairness and timeliness of those records; and

●

in relation to his or her area of responsibility, properly review and critically analyze proposed disclosure for accuracy and completeness.

PROTECTION AND PROPER USE OF COMPANY ASSETS

All Directors, Officers, and Employees should protect the Corporation’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Corporation’s profitability and are prohibited.

All Corporation assets should be used only for legitimate business purposes. Any suspected incident of fraud or theft should be reported for investigation immediately. The obligation to protect Corporation assets includes the Corporation’s proprietary information. Proprietary information includes intellectual property, such as trade secrets, patents, trademarks, and copyrights, as well as business and marketing plans, engineering and manufacturing ideas, designs, databases, records, and any non-public financial data or reports. Unauthorized use or distribution of this information is prohibited and could also be illegal and result in civil or criminal penalties.

CORPORATE OPPORTUNITIES

All Directors, Officers, and Employees owe a duty to the Corporation to advance its interests when the opportunity arises. Directors, Officers and Employees are prohibited from taking for themselves personally (or for the benefit of friends or family members) opportunities that are discovered through the use of Corporation assets, property, information, or position. Directors, Officers, and Employees may not use Corporation assets, property, information, or position for personal gain (including gain of friends or family members). In addition, no Director, Officer, or Employee may compete with the Corporation.

CONFIDENTIAL INFORMATION

Directors, Officers, and Employees must maintain the confidentiality of confidential information entrusted to them by the Corporation of its customers, suppliers, joint venture partners, or others with whom the Corporation is considering a business or other transaction except when disclosure is authorized by an executive officer or is required or mandated by laws or regulations. Confidential information includes all non-public information that might be useful or helpful to competitors or harmful to the Corporation or its customers or suppliers, if disclosed. It also includes information that suppliers, customers and other parties have entrusted to the Corporation. The obligation to preserve confidential information continues even after employment ends.

Records containing personal data about employees or private information about customers and their employees are confidential. They are to be carefully safeguarded and kept current, relevant, and accurate. They should be disclosed only to authorized personnel or as required by law.

All inquiries regarding the Corporation from non-employees, such as financial analysts and journalists, should be directed to the Board or the Audit Committee. The Corporation’s policy is to cooperate with every reasonable request of a government investigator for information. At the same time, the Corporation is entitled to all the safeguards provided by law for the benefit of persons under investigation or accused of wrongdoing, including legal representation. If a representative of any government or government agency seeks an interview or requests access to data or documents for the purposes of an investigation, the Employee should refer the representative to the Board or the Audit Committee. Directors, Officers, and Employees also should preserve all materials, including documents and e-mails that might relate to any pending or reasonably possible investigation.

FAIR DEALING

Each Director, Officer, and Employee must deal fairly with the Corporation’s customers, suppliers, partners, service providers, competitors, employees, and anyone else with whom he or she has contact in the course of performing his or her job. No Director, Officer, or Employee may take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of facts, or any other unfair dealing practice.

Compliance with laws

The Directors, Officers, and Employees must respect, obey and comply with all applicable foreign, federal, state, and local laws, rules, and regulations applicable to the business and operations of the Corporation. Although not all Directors, Officers, and Employees are expected to know the details of all applicable laws, rules, and regulations, it is important to know enough to determine when to seek advice from appropriate personnel. Questions about compliance should be addressed to the Chief Operating Officer.

Directors, Officers, and Employees who have access to, or knowledge of, material nonpublic information from or about the Corporation are prohibited from buying, selling, or otherwise trading in the Corporation’s stock or other securities of or in respect of the Corporation. “Material nonpublic” information includes any information, positive or negative, that has not yet been made available or disclosed to the public and that might be of significance to an investor, as part of the total mix of information, in deciding whether to buy or sell stock or other securities.

Directors, Officers, and Employees also are prohibited from giving “tips” on material nonpublic information – that is, directly or indirectly disclosing such information to any other person, including family members, other relatives, and friends, so that they may trade in the Corporation’s stock or other securities of or in respect of the Corporation.

Furthermore, if, during the course of a Director’s, Officer’s, or Employee’s service with the Corporation, he or she acquires material nonpublic information about another company, such as one of the Corporation’s customers or suppliers, or the Director, Officer, or Employee learns that the Corporation is planning a major transaction with another company (such as an acquisition), the Director, Officer, or Employee is restricted from trading in the securities of that other company.

Reporting actual and potential violations of the code and Accountability for compliance with the code

The Corporation, through the Board or the Audit Committee, is responsible for applying this Code to specific situations in which questions may arise and has the authority to interpret this Code in any situation. This Code is not intended to provide a comprehensive guideline for Senior Officers in relation to their business activities with the Corporation. Any Director, Officer, or Employee may seek clarification on the application of this Code from the Board or the Audit Committee.

Each Director, Officer, and Employee must:

●

notify the Corporation of any existing or potential violation of this Code, and failure to do so is itself a breach of the Code; and

●

not retaliate, directly or indirectly, or encourage others to do so, against any Director, Officer, or Employee for reports, made in good faith, of any misconduct or violations of the Code solely because that Director, Officer, or Employee raised a legitimate ethical issue.

The Board or the Audit Committee will take all action it considers appropriate to investigate any breach of the Code reported to it. All Directors, Officers, and Employees are required to cooperate fully with any such investigation and to provide truthful and accurate information. If the Board or the Audit Committee determines that a breach has occurred, it will take or authorize disciplinary or preventative action as it deems appropriate, after consultation with the Corporation’s counsel if warranted, up to and including termination of employment. Where appropriate, the Corporation will not limit itself to disciplinary action but may pursue legal action against the offending Director, Officer, or Employee involved. In some cases, the Corporation may have a legal or ethical obligation to call violations to the attention of appropriate enforcement authorities.

Compliance with the Code may be monitored by audits performed by the Board, Audit Committee, the Corporation’s counsel, and/or by the Corporation’s outside auditors. All Directors, Officers, and Employees are required to cooperate fully with any such audits and to provide truthful and accurate information.

Any waiver of this Code for any Director, Officer, or Employee may be made only by the Board and will be promptly disclosed to the stockholders and others, as required by applicable law. The Corporation must disclose changes to and waivers of the Code in accordance with applicable law.

Acknowledgment of Receipt and Review

To be signed and returned to the Chief Operating Officer.

I, _______________________, acknowledge that I have received and read a copy of the Kaival Brands Innovations Group, Inc. Code of Ethics and Business Conduct. I understand the contents of the Code and I agree to comply with the policies and procedures set out in the Code.

I understand that I should approach the Chief Operating Officer if I have any questions about the Code generally or any questions about reporting a suspected conflict of interest or other violation of the Code.


	[NAME]


	[PRINTED NAME]


	[DATE]

EX-99.1 6 e2525_99-1.htm EXHIBIT 99.1

Exhibit 99.1

Kaival Brands Innovations Group, Inc.

Kaival Brands (OTCQB: KAVL) Announces Appointment of Three
New Directors to the Board Ahead of Planned Nasdaq Uplisting
Paul Reuter, Carolyn Hanigan, and Roger Brooks Join Board

GRANT, FL, March 18, 2021 (PR Newswire) – Kaival Brands Innovations Group, Inc. (OTCQB: KAVL) (“Kaival Brands,” the “Company,” or “we”), the exclusive global distributor of all products manufactured by Bidi Vapor, LLC (“Bidi Vapor”), which are intended exclusively for adults 21 and over, today announced that its Board of Directors (the “Board”) has appointed Paul Reuter, of Kreative Collaborations, LLC and formerly of MidWest Retail Group LLC, Carolyn Hanigan, former President of Reynolds American Innovation Company, and Roger Brooks, Chairman, Treasurer, and Co-founder of Abierto Networks LLC, to its Board. With the addition of Mr. Reuter, Ms. Hanigan, and Mr. Brooks, all of whom will be independent under applicable Nasdaq rules, the Company’s Board will have five directors. As previously announced, the Company has applied for listing on the Nasdaq Capital Market, and in addition to gaining the valuable experience and judgment that the new members will bring to the Board, the appointments of Mr. Reuter, Ms. Hanigan and Mr. Brooks are intended to ensure the Company is in compliance with certain Nasdaq corporate governance rules ahead of its planned Nasdaq uplisting.

“We are very pleased that Paul, Carolyn, and Roger have agreed to join us as new members of the Board,” said Niraj Patel, Chief Executive Officer of Kaival Brands. “Coming off a remarkable year that demonstrated the strength of our team and products, these three individuals are joining the Company at an exciting time. We look forward to benefiting from their diverse backgrounds and respective expertise. Their value will prove indispensable as we work towards our near-term goal of becoming a Nasdaq-listed company.”

About Our Newly Appointed Directors

Mr. Paul Reuter

Mr. Reuter brings nearly five decades of industry experience in small box retail as a journalist, editorial director, entrepreneur, and speaker. He has launched two successful businesses, including MidWest Retail Group LLC, which was the largest U.S. 7-Eleven franchise group, where he served as Chairman and founding partner from April 2013 through June 2019. He is also the founder of Kreative Collaborations, LLC, an industry consultancy. Prior to his current endeavours, Mr. Reuter purchased CSP Information Group Inc. (“CSP Information Group”) in 1991 and served as the Chief Executive Officer until July 2012. In July 2012, CSP Information Group was sold to CSP Business Media, now Winsight LLC based in Chicago, Illinois. Under his leadership, CSP became the industry leader in market share and a well-respected industry journalism entity. Mr. Reuter also serves as a director of Abierto Networks LLC (“Abierto Networks”), a digital media and engagement technology company focused on the convenience store, retail, and other similar consumer market segments.

Ms. Carolyn Hanigan

Prior to her retirement, Ms. Hanigan was the President of Reynolds American Innovation Company, an operating company of Reynolds American, Inc. (“RAI”), between January 2016 and June 2018. Ms. Hanigan led the global vapor collaboration with British American Tobacco (“BAT”) up until RAI was acquired by BAT in 2017. Ms. Hanigan was the architect of RAI’s U.S. reduced risk products strategic direction to further the vision of transforming tobacco. Under her leadership, RAI prepared both the U.S. commercial execution and regulatory applications for the Glo tobacco heating products, the Velo nicotine pouches, and the Alto, Ciro, Vibe and Solo nicotine vaporizers. Prior to her time at Reynolds America, Inc., she was Vice President of Consumer Marketing at Swander Pace Capital, one of the leading consumer products private equity firms. While at Swander Pace Capital, she provided consumer-led insights needed to make investments, accelerate portfolio company growth, and generate superior returns on exit. She worked with the portfolio executive teams at Merrick Pet Care, Kicking Horse Coffee, Wholesome Pet Care, Oregon Ice Cream, glo Professional, Gilchrist and Soames, and Voortman’s Cookies. From July 2008 until October 2010, she served as the Chief Marketing Officer of The Nutro Company, the operating company of Mars Pet Care, Inc. Ms. Hanigan spent almost a combined 10 years in marketing at Nestle S.A. and sales and marketing at The Clorox Company. She holds a Bachelor’s degree in business from Boston College and a Master of Business Administration degree from St Mary’s College.

Mr. Roger Brooks

Mr. Brooks is currently the Chairman, Treasurer, and Co-founder of Abierto Networks, positions he has held since 2005. Prior to his roles at Abierto Networks, from 1998 to 2008, Mr. Brooks was the lead independent director and member of the compensation and audit committees for Moldflow Corporation, a Nasdaq-listed software company that was sold to Autodesk, Inc. in 2008. From 2017 to 2019, Mr. Brooks served as an independent director of Lytron, Incorporated, a closely held international industrial solutions company. From 1998 to 2002, Mr. Brooks served as President, Chief Executive Officer, and member of the board for Intelligent Controls, Inc., a publicly traded software and instrumentation company, which was sold to Franklin Electric Co. Inc. Mr. Brooks was President, Chief Executive Officer, and a board member of Dynisco, Inc. from 1987 to 1996 where he grew the company from $10 million of sales to an international company with over $100 million of sales. Roger holds a Bachelor of Arts degree from the University of Connecticut and a Master of Business Administration degree from New York University, Stern Graduate Business School. He is also a graduate of the Stanford University Executive Management Program.

“These three appointees share our core values: family and integrity. Each person has displayed these core values as good actors throughout their careers within their respective fields, and we look forward to having them join our Board,” adds Eric Mosser, Chief Operating Officer of Kaival Brands.

Mr. Patel, the Company’s President, Chief Executive Officer, and Chief Financial Officer, owns and controls Bidi Vapor. As a result, Bidi Vapor and the Company are considered under common control and Bidi Vapor is considered a related party.

About Bidi Vapor

Based in Melbourne, Florida, Bidi Vapor maintains a commitment to responsible marketing, supporting age-verification standards and sustainability through its Bidi^® Cares recycling program. The company’s premiere device, the Bidi^® Stick, is a premium product made with medical-grade components, a UL-certified battery and technology designed to deliver a consistent vaping experience. Bidi Vapor is also adamant about strict compliance with all federal, state, and local guidelines and regulations. At BIDI^® Vapor, innovation is key to its mission, with the BIDI^® Stick promoting environmental sustainability while providing a unique vaping experience to adult smokers. Contributing to a smoke-free world for future generations is in BIDI^®Vapor’s DNA.

For more information, visit www.bidivapor.com.

- - - - -

About Kaival Brands

Based in Grant, Florida, Kaival Brands is a company focused on growing and incubating innovative and profitable products into mature and dominant brands in their respective markets. Our vision is to develop internally, acquire, own, or exclusively distribute these innovative products and grow each into dominant market-share brands with superior quality and recognizable innovation. Kaival Brands is the exclusive global distributor of all products manufactured by Bidi Vapor.

Learn more about Kaival Brands Innovations Group, Inc., at www.kaivalbrands.com

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Forward-Looking Statements

This press release includes statements that constitute “forward-looking statements” within the meaning of federal securities laws, which are statements other than historical facts that frequently use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “position,” “should,” “strategy,” “target,” “will,” and similar words. All forward-looking statements speak only as of the date of this press release. Although we believe that the plans, intentions, and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions, or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied, or forecasted in such statements. Our business may be influenced by many factors that are difficult to predict, involve uncertainties that may materially affect results, and are often beyond our control. Factors that could cause or contribute to such differences include, but are not limited to, the approval of our application for listing on the Nasdaq Capital Market; the duration and scope of the COVID-19 pandemic and impact on the demand for the products we distribute; the actions governments, businesses, and individuals take in response to the pandemic, including mandatory business closures and restrictions on onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the effects of steps that we could take to reduce operating costs; our inability to generate and sustain profitable sales growth; circumstances or developments that may make us unable to implement or realize anticipated benefits, or that may increase the costs, of our current and planned business initiatives; changes in government regulation or laws that affect our business; and those factors detailed by us in our public filings with the Securities and Exchange Commission. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. Except as required under the federal securities laws and the Securities and Exchange Commission’s rules and regulations, we do not have any intention or obligation to update any forward-looking statements publicly, whether as a result of new information, future events, or otherwise.

Investor & Public Relations:
Inflection Partners, LLC
New York | Philadelphia | New Orleans
www.inflectionpartnersllc.com
Office: (504) 381-4603
stephen@inflectionpartnersllc.com

# # #

EX-99.2 7 e2525_99-2.htm EXHIBIT 99.2

Exhibit 99.2

AUDIT COMMITTEE CHARTER

The Purpose of the Audit Committee

The purpose of the Audit Committee (the “Committee”) of Kaival Brands Innovations Group, Inc. (the “Company”) is to represent and assist the Board of Directors (the “Board”) in its general oversight of the Company’s accounting and financial reporting processes, audits of the financial statements, and internal control and audit functions. Management is responsible for (a) the preparation, presentation, and integrity of the Company’s financial statements; (b) accounting and financial reporting principles; and (c) the Company’s internal controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations. The Company’s independent registered public accounting firm (the “Independent Auditors”) is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards.

The Committee members are not professional accountants or auditors and their functions are not intended to duplicate or to certify the activities of management and the Independent Auditors. Consequently, it is not the duty of the Committee to conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the Independent Auditors. The Committee serves a Board-level oversight role, where it oversees the relationship with the Independent Auditors, as set forth in this Charter, and receives information and provides advice, counsel, and general direction, as it deems appropriate, to management and the Independent Auditors, taking into account the information it receives, discussions with the Independent Auditors, and the experience of the Committee’s members in business, financial, and accounting matters.

Membership and Structure

The Committee shall be comprised of at least three directors, as determined by the Board, that meet the director and Committee member independence requirements and financial literacy requirements of The Nasdaq Stock Market, LLC, the Securities and Exchange Commission, and any other applicable requirements. No Committee member can have participated in the preparation of the financial statements of the Company or any of the Company’s current subsidiaries at any time during the past three years.

Each Committee member must be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, and cash flow statement. At least one member of the Committee must have past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that leads to financial sophistication, as determined by the Board. At least one Committee member must be an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. A person who satisfies this definition of “audit committee financial expert” will also be presumed to have financial sophistication.

Appointment to the Committee, including the designation of the Chair of the Committee and the designation of any Committee members as “audit committee financial experts”, shall be made on an annual basis by the full Board based on recommendations from the Governance and Nominating Committee. The Board may remove any Committee member at any time with or without cause.

Operations

The Committee shall meet at least four times a year, on a quarterly basis, at such times and places as the Committee shall determine. Additional meetings may occur as the Committee or its Chair deems advisable. The Committee shall meet in executive session privately, with the Independent Auditors, without senior management present, not less frequently than quarterly. The Committee shall cause adequate minutes of all its proceedings to be kept, and shall report on its actions and activities at the next Board meeting occurring after a Committee meeting. Committee members shall be furnished with copies of the minutes of each meeting and any action taken by unanimous consent.

The Committee shall be governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. The Committee is authorized to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Company, or (c) the laws of the State of Delaware.

The Chair of the Committee is to be contacted directly by the Independent Auditors (1) to review items of a sensitive nature that can impact the accuracy of financial reporting or (2) to discuss significant issues relative to the overall responsibility of the Board that have been communicated to management but, in their judgment, may warrant follow-up by the Committee.

Authority

The Committee shall have the resources and authority necessary to discharge its duties and responsibilities. The Committee shall have the authority, in its sole discretion, to engage independent legal, accounting, and other advisers, as it determines necessary to carry out its duties. The Committee shall have sole authority to approve related fees and retention terms. The Committee shall receive appropriate funding from the Company, as determined by the Committee in its capacity as a committee of the Board, for the payment of compensation to the Company’s Independent Auditors, any other accounting firm engaged to perform services for the Company, any outside counsel, and any other advisors to the Committee.

Any communications between the Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Committee will take all necessary steps to preserve the privileged nature of those communications.

The Committee may form and delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees or one or more designated members of the Committee, as the Committee deems appropriate in its sole discretion.

Responsibilities

The Committee shall have the following authority and responsibilities:

To select, retain, compensate, oversee, and terminate, if necessary, the Independent Auditors engaged for the purpose of preparing or issuing an audit report or performing other audit, review, or attest services for the Company;

To select, retain, compensate, oversee, and terminate, if necessary, any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review, or attestation services for the Company;

To obtain and review annually a report by the Independent Auditors describing: (a) the firm’s internal quality-control procedures; and (b) any material issues raised by the most recent internal quality-control review or peer review or Public Company Accounting Oversight Board review or inspection of the firm or by any other inquiry or investigation by governmental or professional authorities within the preceding five years regarding one or more independent audits carried out by the firm, and any steps taken to deal with any such issues;

To keep the Company’s Independent Auditors informed of the Committee’s understanding of the Company’s relationships and transactions with related parties that are significant to the Company; and to review and discuss with the Independent Auditors its evaluation of the Company’s identification of, accounting for, and disclosure of its relationships and transactions with related parties, including any significant matters arising from the audit regarding the Company’s relationships and transactions with related parties;

To review and discuss annually with the Independent Auditors the written report from the Independent Auditors concerning any relationship between the Independent Auditors and the Company or any of its subsidiaries or any other relationships that may adversely affect the independence or objectivity of the Independent Auditors, and, based on such review, assesses the independence of the Independent Auditors;

To review and discuss with the Company’s Independent Auditors any other matters required to be discussed by PCAOB Auditing Standards No. 1301, Communications with Audit Committees, including, without limitation, the Independent Auditors’ evaluation of the quality, not just the acceptability, of the Company’s financial reporting, information relating to significant unusual transactions, and the business rationale for such transactions and the Independent Auditors’ evaluation of the Company’s ability to continue as a going concern;

To pre-approve all audit and permitted non-audit and tax services that may be provided by the Company’s Independent Auditors or other registered public accounting firms, and establish policies and procedures for the review and pre-approval by the Committee of all auditing services and permissible non-audit services (including the fees and terms thereof) to be performed by the Independent Auditors or other registered public accounting firms on an on-going basis;

To review and discuss with the Company’s Independent Auditors: (a) all critical accounting principles and practices and financial statement presentation, including any significant changes in the Company’s selection or application of such accounting principles, to be used in the audit; (b) all alternative accounting treatments of financial information within general accepted accounting principles (“GAAP”) that have been discussed with management, including the ramifications of the use of the alternative treatments and the treatment preferred by the Independent Auditors; (c) any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements; and (d) other material written communications between the Independent Auditors and management;

To review and discuss with the Company’s management and the Independent Auditors: (a) earnings press releases, including the financial information and business discussion included therein and its presentation and the use of any pro forma or adjusted non-GAAP information; (b) any financial information and earnings guidance provided to analysts and ratings agencies, including the type of information to be disclosed and type of presentation to be made; (c) the unaudited quarterly or interim financial statements and the disclosure under the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) section to be included in the Company’s Quarterly Report on Form 10-Q before the Form 10-Q is filed; and (d) the year-end audited financial statements, the form of audit opinion to be issued by the Independent Auditors on the financial statements, and the disclosure under the MD&A section to be included in the Company’s Annual Report on Form 10-K before the Form 10-K is filed;

10.

To recommend to the Board that the audited financial statements and the MD&A section be included in the Company’s Annual Report on Form 10-K and produce the Committee report, if and as required by the rules of the Securities and Exchange Commission, to be included in the Company’s proxy statement;

11.

To review and discuss with the Independent Auditors: (a) the auditors’ responsibilities under generally accepted auditing standards and the responsibilities of management in the audit process; (b) the overall audit strategy; (c) its audit plans and procedures, including the general audit approach, scope, staffing, fees, and timing of the annual audit; (d) any significant risks identified during the auditors’ risk assessment procedures; (e) when completed, the results, including significant findings, of the annual audit and accompanying management letters; and (f) the results of the Independent Auditors’ procedures with respect to interim periods;

12.

To review and discuss with management and the Independent Auditors various topics and events that may have significant financial impact on the Company or that are the subject of discussions between management and the Independent Auditors;

13.

To review and discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures;

14.

To review, approve, and oversee any related-party transactions (as defined in Item 404 of Regulation S-K) and any other potential conflict of interest situations on an ongoing basis, and to develop policies and procedures for the Committee’s approval of related-party transactions;

15.

To review and discuss with management and the Independent Auditors: (a) the adequacy and effectiveness of the Company’s internal controls, including any significant deficiencies or material weaknesses in the design or operation of, and any significant changes in, the Company’s internal controls, any special audit steps adopted in light of any material control deficiencies, and any fraud involving management or other employees with a significant role in such internal controls; (b) disclosure relating to the Company’s internal controls, the Independent Auditors’ report, if and as required by the rules of the Securities and Exchange Commission, on the effectiveness of the Company’s internal control over financial reporting, and the required management certifications to be included in or attached as exhibits to the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as applicable; (c) the Company’s internal audit procedures, and (d) the adequacy and effectiveness of the Company’s disclosure controls and procedures, and management reports thereon;

16.

To review annually with the Chief Financial Officer the scope of the internal audit program, and the performance of both the internal audit group and the Independent Auditors in executing their plans and meeting their objectives and to assure the regular rotation of the Independent Auditor’s lead audit partner;

17.

To review the use of auditors other than the Independent Auditors in cases such as management’s request for second opinions;

18.

To review matters related to the corporate compliance activities of the Company;

19.

To establish and oversee procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

20.

To establish policies for the hiring of employees and former employees of the Independent Auditors;

21.

To review periodically with the Company’s in-house and outside legal counsel any legal and regulatory matters, including legal cases against or regulatory investigations of the Company and its subsidiaries, that could have a significant impact on the Company’s financial statements, the Company’s compliance with applicable laws and regulations, and any material reports or inquiries received from regulators or governmental agencies;

22.

To obtain timely reports from management and the Company’s counsel that the Company and its subsidiaries are in conformity with applicable legal requirements and the Company’s Code of Ethics, including disclosures of insider and affiliated party transactions;

23.

To advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Ethics;

24.

To review and approve the Company’s Code of Ethics, as it may be amended and updated from time to time, ensure that management has implemented a compliance program to enforce such Code of Ethics (which shall include reporting of violations of the Code of Ethics to the Committee), monitor compliance with the Code of Ethics, and enforce the provisions of the Code of Ethics;

25.

To review and investigate reported breaches or violations of the Company’s Code of Ethics;

26.

To review and approve: (a) any change or waiver in the Company’s Code of Ethics for principal executives and senior financial officers and (b) any disclosures to be made on the Current Report on Form 8-K regarding such change or waiver;

27.

When appropriate, to designate one or more Committee members to perform certain of its duties on its behalf, subject to such reporting to or ratification by the Committee as the Committee shall direct; and

28.

To review and assess the adequacy of this Charter at least annually and recommend any proposed changes to the full Board for approval.

The Committee shall consult with management but may not delegate these responsibilities, except as specifically provided for above.

Performance Evaluation

The Committee shall conduct an annual evaluation of the performance of its duties under this Charter and shall present the results of the evaluation to the Board. The Committee shall conduct this evaluation in such manner as it deems appropriate.

Adopted by the Board of Directors on March 17, 2021.

EX-99.3 8 e2525_99-3.htm EXHIBIT 99.3

Exhibit 99.3

GOVERNANCE AND NOMINATING COMMITTEE CHARTER

The Purpose of the Governance and Nominating Committee

The purpose of the Governance and Nominating Committee (the “Committee”) of Kaival Brands Innovations Group, Inc. (the “Company”), is to determine the slate of director nominees for election to the Company’s Board of Directors (the “Board”), to identify and recommend candidates to fill vacancies occurring between annual stockholder meetings, to review the Company’s policies and programs that relate to matters of corporate responsibility, including public issues of significance to the Company and its stockholders, and any other related matters required by the federal securities laws.

Membership and Structure

The membership of the Committee shall consist of at least three directors, each of whom shall meet the independence requirements established by the Board and applicable laws, regulations, and listing requirements of The Nasdaq Stock Market, LLC. The Committee members and the Committee’s Chair shall be appointed by the Board. The Board may remove any member from the Committee at any time with or without cause.

Operations

The Committee shall meet at least twice a year. Additional meetings may occur as the Committee or its Chair deems advisable. The Committee shall cause to be kept adequate minutes of all its proceedings, and shall report on its actions and activities at the next meeting of the Board occurring after such Committee meeting. The Committee members shall be furnished with copies of the minutes of each meeting and any action taken by unanimous consent.

The Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. The Committee is authorized and empowered to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Company, or (c) the laws of the State of Delaware.

Authority

The Committee shall have the resources and authority necessary to discharge its duties and responsibilities. The Committee has sole authority to retain and terminate outside counsel, any search firm used to identify director candidates, or other experts or consultants, as it deems appropriate, including sole authority to approve the firms’ fees and other retention terms. Any communications between the Committee and legal counsel in the course of obtaining legal advice shall be considered privileged communications of the Company and the Committee shall take all necessary steps to preserve the privileged nature of those communications.

The Committee may form and delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees or one or more designated Committee members, as the Committee deems appropriate in its sole discretion.

Responsibilities

The principal responsibilities and functions of the Committee are as follows:

To assist the Board in determining the qualifications, qualities, skills, and other expertise required to be a director;

To assist in identifying, interviewing, and recruiting candidates for the Board, consistent with criteria approved by the Board. The Committee shall consider any director candidates recommended by the Company’s stockholders pursuant to the procedures described in the Company’s proxy statement. The Committee shall also consider any nominations of director candidates validly made by stockholders in accordance with applicable laws, rules, and regulations, and the provisions of the Company’s charter documents;

To review an incumbent, replacement, or additional director’s qualifications, including capability, availability to serve, conflicts of interest, and other relevant factors;

To make annual recommendations to the Board regarding the selection and approval of the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders, subject to approval by the Board;

To make annual recommendations to the Board regarding the appointment to the committees of the Board (including this Committee), subject to approval by the Board;

To oversee the Company’s corporate governance practices and procedures, including identifying best practices;

To review and recommend to the Board for approval any changes to the documents, policies, and procedures in the Company’s corporate governance framework, including making recommendations about changes to the charters of other Board committees after consultation with the respective committee chairs;

To develop, subject to approval by the Board, a process for an annual evaluation of the Board and its committees and to oversee the conduct of this annual evaluation in order to facilitate the directors’ fulfillment of their responsibilities in a manner that serves the interests of the Company’s stockholders;

To annually review the Board’s committee structure and composition and to make recommendations to the Board regarding the appointment of directors to serve as members of each committee and each committee’s chair, as needed;

10.

If a vacancy on the Board and/or any Board committee occurs, to identify and make recommendations to the Board regarding the selection and approval of candidates to fill such vacancy either by stockholder election or appointment by the Board;

11.

To review and discuss with management disclosure of the Company’s corporate governance practices, including information regarding the operations of the Committee and other Board committees, director independence, and the director nomination process, and to recommend that this disclosure be, included in the Company’s proxy statement or Annual Report on Form 10-K, as applicable;

12.

To review and assess the adequacy of this Charter at least annually and recommend any proposed changes to the full Board for approval; and

13.

To assist the Chairman of the Board if the Chairman is a non-management director, or otherwise the Chairman of the Committee acting as the Lead Independent Director, in leading the Board’s annual review of the Chief Executive Officer’s performance.

Performance Evaluation

Adopted by the Board of Directors on March 17, 2021.

EX-99.4 9 e2525_99-4.htm EXHIBIT 99.4

Exhibit 99.4

FINANCE COMMITTEE CHARTER

The Purpose of the Finance Committee

The purpose of the Finance Committee (the “Committee”) of the Board of Directors (the “Board”) of Kaival Brands Innovations Group, Inc. (the “Company”), is to carry out the responsibilities delegated by the Board relating to oversight of the Company’s financial management, including oversight of the Company’s strategic and transactional planning and activities, global financing and capital structure objectives and plans, insurance program, tax structure, and investment program and policies.

Membership and Structure

The membership of the Committee shall consist of at least three directors, each of whom shall meet the independence requirements established by the Board, if any, and applicable laws, rules, and regulations of the Securities and Exchange Commission and The Nasdaq Stock Market, LLC. The Committee members and the Committee’s Chair shall be appointed by the Board. The Board may remove any member from the Committee at any time with or without cause.

Operations

Authority

The Committee shall have the authority, in its sole discretion, to select, retain, and obtain the advice of professionals, including outside counsel, other advisors, and director search firms, as the Committee deems necessary to assist with the execution of its duties and responsibilities as set forth in this Charter. The Committee shall set the compensation and oversee the work of such professionals. The Committee shall receive appropriate funding from the Company, as determined by the Committee in its capacity as a committee of the Board, for the payment of compensation to its professionals, outside counsel, and any other advisors.

The Committee may form and delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees or one or more designated Committee members, as the Committee deems appropriate in its sole discretion.

Responsibilities

The Committee shall have the following authority and responsibilities:

To review and approve management’s recommendations to the Board with respect to significant capital expenditures;

To review, approve, and monitor significant mergers, acquisitions, divestitures, joint ventures, minority investments, and other debt and equity investments, including overseeing the due diligence process;

To conduct a review of completed transactions for purposes of assessing the degree of success achieved;

To review and oversee management’s plans and objectives for the capitalization of the Company, including the structure and amount of debt and equity to meet the Company’s financing needs;

To review and approve management’s recommendations to the Board with respect to new offerings of debt and equity securities, stock splits, credit agreements (including material changes thereto), and the Company’s investment policies;

To review and approve management’s recommendations to the Board regarding dividends or stock splits;

To review and approve management’s recommendations to the Board regarding authorizations for repurchases of the Company’s common stock;

To review and approve management’s recommendations for the investment of excess cash, if any;

To review management’s decisions regarding certain financial aspects of the Company’s employee benefit plans;

10.

To review and oversee the Company’s tax strategies;

11.

To review with management the Company’s strategies for management of significant financial risks and contingent liabilities;

12.

To review the annual business plans from the perspective of cash flow, capital spending, and financing requirements;

13.

To review, and recommend to the Board for approval, authorization limits for the Committee and the Chief Executive Officer to approve expenditures; and

14.

To review this Charter on an annual basis and recommend any changes to the Board for approval.

Performance Evaluation

Adopted by the Board of Directors on March 17, 2021.

EX-99.5 10 e2525_99-5.htm EXHIBIT 99.5

Exhibit 99.5

KAIVAL BRANDS INNOVATIONS GROUP, INC.

INSIDER TRADING POLICY

Adopted March 17, 2021

This Insider Trading Policy (this “Policy”) provides guidelines with respect to transactions in the securities of Kaival Brands Innovations Group, Inc. (the “Company”), and the handling of confidential information about the Company and the companies with which the Company does business (“Other Companies”). The Company’s Board of Directors (the “Board”) has adopted this Policy to promote compliance with all federal and state securities laws that prohibit certain persons who are aware of material nonpublic information about the Company or Other Companies from: (i) trading in securities of the Company and any of the Other Companies or (ii) providing material nonpublic information to other persons who may trade on the basis of that information.

Persons Subject to this Policy

This Policy applies to all officers of the Company and its subsidiaries, all members of the Board, and all employees of the Company and its subsidiaries. The Company may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to material nonpublic information of the Company or any Other Company. This Policy also applies to family members, other members of a person’s household, and entities controlled by a person covered by this Policy, as described below.

Transactions Subject to this Policy

This Policy applies to transactions in the Company’s securities (collectively referred to in this Policy as “Company Securities”), including the Company’s common stock and preferred stock, warrants, options, convertible promissory notes, and any other type of derivative security, whether or not issued by the Company.

Individual Responsibility

The Company depends upon the conduct and diligence of its directors, officers, and other employees and consultants and the Company’s affiliates, in both their professional and personal capacities, to ensure full compliance with this Policy. Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the Company and Other Companies (as applicable) and not to engage in transactions in Company Securities or securities of Other Companies while in possession of material nonpublic information about the Company or Other Companies. No one (especially persons subject to this Policy) may engage in illegal trading, and all such persons must avoid the appearance of improper trading. Each individual is responsible for making sure that he or she complies with this Policy, and that any family member, household member, or entity whose transactions are subject to this Policy, as discussed below, also comply with this Policy. In all cases, the responsibility for determining whether an individual is in possession of material nonpublic information rests with that individual. Any action on the part of the Company, the Compliance Officer (as defined below), or any other employee or director pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an individual from any liability under applicable securities laws. You could be subject to severe legal penalties and disciplinary action by the Company for any conduct prohibited by this Policy or by applicable securities laws, as described below in more detail under the heading “Consequences of Violations.”

Administration of the Policy

The Company’s Chief Operating Officer, Eric Mosser, shall serve as the Compliance Officer (the “Compliance Officer”) for the purposes of this Policy, and, in his absence, another officer designated by the Compliance Officer shall be responsible for administration of this Policy. The duties of the Compliance Officer include, but are not limited to, the following:

●

Assisting with the implementation and enforcement of this Policy;

●

Circulating this Policy to all employees and ensuring that this Policy is amended as necessary to remain up to date with insider trading laws;

●

Pre-clearing all trading in securities of the Company in accordance with the procedures set forth in this Policy;

●

Providing approval of any Rule 10b5-1 plans and any prohibited transactions in accordance with the procedures set forth in this Policy; and

●

Providing a reporting system with an effective whistleblower protection mechanism.

All determinations and interpretations by the Compliance Officer shall be final and not subject to further review.

Statement of Policy

It is the policy of the Company that none of its directors, officers, or other employees (or any other person designated by this Policy or by the Compliance Officer as subject to this Policy), who is aware of material nonpublic information relating to the Company, may directly, or indirectly through family members or other persons or entities:

Engage in the purchase or sale or short sale or any other transaction of any Company Securities, except as otherwise specified in this Policy under the headings “Transactions Under Company Plans,” “Transactions Not Involving a Purchase or Sale,” and “Rule 10b5-1 Plans”;

Recommend the purchase or sale or short-sale of any Company Securities;

Disclose material nonpublic information to (“tip”) persons within the Company whose jobs do not require them to have that information, or outside of the Company to other persons, including, but not limited to, family, friends, business associates, investors, and expert consulting firms, unless any such disclosure is made in accordance with the Company’s policies regarding the protection or authorized external disclosure of information regarding the Company; or

Assist anyone engaged in the above activities.

In addition, it is the policy of the Company that none of its directors, officers, or other employees (or any other person designated as subject to this Policy), who, in the course of working for the Company, learns of material nonpublic information about a company with which the Company does business, including a customer or supplier of the Company, may trade in that Other Company’s securities until the information becomes public or is no longer material.

There are no exceptions to this Policy, except as specifically noted herein. Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure or for tax payments), or even small transactions, are not excepted from this Policy. The securities laws do not recognize any mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.

Definition of Material Nonpublic Information

Material Information. Information is considered “material” if a reasonable investor would consider that information important in making a decision to buy, hold, or sell securities. Any information that could be expected to affect a company’s stock price, whether it is positive or negative, should be considered material. There is no bright-line standard for assessing materiality; rather, materiality is based on an assessment of all of the facts and circumstances at the time of the potential securities transaction, and is often evaluated by enforcement authorities with the benefit of hindsight. When in doubt about whether particular nonpublic information is material, you should presume it is material. If you are unsure whether information is material, you should either consult the Compliance Officer before making any decision to disclose such information (other than to persons who need to know it) or to trade in or recommend securities to which that information relates or assume that the information is material. While it is not possible to define all categories of material information, some examples of information that ordinarily would be regarded as material (unless and until disseminated to the public; see, When Information is Considered Public, below) are:

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Projections of future earnings or losses, or other earnings guidance;

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Changes to previously announced earnings guidance (or estimates), or the decision to suspend earnings guidance, or unusual gains or losses in major operations;

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Significant write-downs in assets or increases in reserves;

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A pending or proposed merger, acquisition, divestiture, recapitalization, strategic alliance, licensing arrangement, purchase or sale of substantial assets, joint venture, corporate restructuring or a tender offer;

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A pending or proposed acquisition or disposition of a significant asset;

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Significant related party transactions;

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A change in dividend policy, the declaration of a stock split, or an offering of additional securities;

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Bank borrowings or other financing transactions out of the ordinary course;

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The establishment of a repurchase program for Company Securities;

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A change in the Company’s (or any Other Company’s) pricing or cost structure;

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Major marketing changes;

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A change in the Company’s management or Board;

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A change in auditors or notification that the auditor’s reports may no longer be relied upon;

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A significant change in accounting methods or policies;

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Development of a significant new product, process, or service;

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Pending or threatened significant litigation, the resolution of such litigation or government agency investigations;

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Impending bankruptcy or the existence of severe liquidity problems;

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Extraordinary borrowings;

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The gain or loss of one or more significant customers, suppliers or contracts;

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A significant cybersecurity incident, such as a data breach, or any other significant disruption in the Company’s (or Other Company’s) operations or loss, potential loss, breach, or unauthorized access of its property or assets, whether at its facilities or through its information technology infrastructure; or

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The imposition of an event-specific restriction on trading in Company Securities or the securities of any Other Company or the extension or termination of such restriction.

When Information is Considered Public. Information that has not been disclosed to the public is generally considered to be “nonpublic information.” In order to establish that the information has been disclosed to the public, it may be necessary to demonstrate that the information has been widely disseminated. Information generally would be considered widely disseminated if it has been disclosed through the Dow Jones “broad tape,” newswire services, a broadcast on widely-available radio or television programs, publication in a widely-available newspaper, magazine, or news website, or public disclosure documents filed with the Securities and Exchange Commission (the “SEC”) that are available on the SEC’s website. By contrast, information would likely not be considered widely disseminated if it is available only to the Company’s employees, or if it is only available to a select group of analysts, brokers, and institutional investors. Nonpublic information may also include undisclosed facts that are the subject of rumors, even if the rumors are widely circulated, as well as information that has been entrusted to the Company on a confidential basis until a public announcement of the information has been made and enough time has elapsed for the market to respond to a public announcement of the information as set forth below. As with questions of materiality, if you are not sure whether information is considered public, you should either consult with the Compliance Officer or assume that the information is nonpublic and treat it as confidential.

Once information has been widely disseminated, it is still necessary to provide the investing public with sufficient time to absorb the information. As a general rule, information should not be considered fully absorbed by the marketplace until after the second (2^nd) business day after the day on which the information has been released. If, for example, the Company were to make an announcement on a Monday, you should not trade in Company Securities until Thursday. Depending on the particular circumstances, the Company may determine that a longer or shorter period should apply to the release of specific material nonpublic information.

Transactions by Family Members and Others

This Policy applies to your family members who reside with you (including a spouse, a child, a child away at college, stepchildren, grandchildren, parents, stepparents, grandparents, siblings, and in-laws), anyone else who lives in your household, and any family members who do not live in your household but whose transactions in Company Securities are directed by you or are subject to your influence or control, such as parents or children who consult with you before they trade in Company Securities (collectively referred to as “Family Members”). You are responsible for the transactions of these other persons and, therefore, should make them aware of the need to confer with you before they trade in Company Securities. You should treat all such transactions for the purposes of this Policy and applicable securities laws as if the transactions were for you – for your own account. This Policy does not, however, apply to personal securities transactions of Family Members where the purchase or sale decision is made by a third-party not controlled by, influenced by, or related to you or your Family Members – for example, a professional financial advisor.

Transactions by Entities that You Influence or Control

This Policy applies to any entities that you influence or control, including any corporations, partnerships, or trusts (collectively referred to as “Controlled Entities”). Transactions by these Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if they were for you – for your own account.

Transactions Under Company Plans

This Policy does not apply in the case of the following transactions, except as specifically noted:

Stock Option Exercises. This Policy does not apply to the exercise of an employee stock option acquired pursuant to the Company’s plans, or to the exercise of a tax withholding right, pursuant to which a person has elected to have the Company withhold shares subject to an option to satisfy tax withholding requirements. This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.

Restricted Stock Awards. This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right, pursuant to which you elect to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. This Policy does apply, however, to any market sale of restricted stock.

Other Similar Transactions. Any other purchase of Company Securities from the Company or sales of Company Securities to the Company are not subject to this Policy.

Special and Prohibited Transactions

The Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if the persons subject to this Policy engage in certain types of transactions. It, therefore, is the Company’s policy that any persons covered by this Policy may not engage in any of the following transactions:

Short-Term Trading. Short-term trading of Company Securities may be distracting to the person and may unduly focus the person on the Company’s short-term stock market performance instead of the Company’s long-term business objectives. For these reasons, any director, officer, or other employee of the Company who purchases Company Securities in the open market may not sell any Company Securities of the same class during the six months following the purchase (or vice versa). Under certain circumstances, federal law would require that certain of such persons pay to the Company the profit that is made from those short-term trading activities.

Short Sales. Short sales of Company Securities (i.e., the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value and, therefore, have the potential to signal to the market that the seller lacks confidence in the Company’s prospects. In addition, short sales may reduce a seller’s incentive to seek to improve the Company’s performance. For these reasons, short sales of Company Securities are prohibited. In addition, Section 16(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), prohibits officers and directors from engaging in short sales. (Short sales arising from certain types of hedging transactions are governed by the paragraph below captioned “Hedging Transactions.”)

Publicly-Traded Options. Given the relatively short term of publicly-traded options, transactions in options may create the appearance that a director, officer, or employee is trading based on material nonpublic information and also focus a director’s, officer’s, or other employee’s attention on short-term performance at the expense of the Company’s long-term objectives. Accordingly, transactions in put options, call options, or other derivative securities, on a stock exchange or in any other organized market, are prohibited by this Policy. (Option positions arising from certain types of hedging transactions are governed by the paragraph below captioned “Hedging Transactions.”)

Hedging Transactions. Hedging or monetization transactions can be accomplished through a number of possible mechanisms, including through the use of financial instruments, such as prepaid variable forwards, equity swaps, collars, and exchange funds. Such transactions may permit a director, officer, or employee to continue to own Company Securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the director, officer, or employee may no longer have the same objectives as the Company’s other stockholders. Therefore, you may not enter into hedging or monetization transactions or similar arrangements with respect to Company Securities.

Margin Accounts and Pledged Securities. Securities held in a margin account as collateral for a margin loan may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information, or otherwise is not permitted to trade in Company Securities, directors, officers, and other employees are prohibited from holding Company Securities in a margin account or otherwise pledging Company Securities as collateral for a loan. (Pledges of Company Securities arising from certain types of hedging transactions are governed by the paragraph above captioned “Hedging Transactions.”)

Standing and Limit Orders. Standing and limit orders (except standing and limit orders under approved Rule 10b5-1 Plans, as described below) create heightened risks for insider trading violations similar to the use of margin accounts. There is no control over the timing of purchases or sales that result from standing instructions to a broker. As a result, the broker could (even unknowingly) execute a transaction when a director, officer, or other employee is in possession of material nonpublic information. Therefore, you are discouraged from placing standing or limit orders on Company Securities. If a person subject to this Policy determines that he or she must use a standing order or limit order, the order should be limited to short duration and should otherwise comply with the restrictions and procedures outlined below under the heading “Additional Procedures.”

Additional Procedures

The Company has established additional procedures in order to assist it in the administration of this Policy, to facilitate compliance with laws prohibiting insider trading while in possession of material nonpublic information, and to avoid the appearance of any impropriety. These additional procedures are applicable only to those individuals described below.

Pre-Clearance Procedures. The persons designated by the Compliance Officer as being subject to these procedures, as well as the Family Members and Controlled Entities of such persons, may not engage in any transaction (including any transfers, gifts, pledge or loans) in Company Securities without first obtaining pre-clearance of the transaction from the Compliance Officer. A request for pre-clearance should be submitted to the Compliance Officer at least two (2) business days in advance of the proposed transaction. The Compliance Officer is under no obligation to approve a transaction submitted for pre-clearance and may determine not to permit the transaction. If a person seeks pre-clearance and permission to engage in the transaction is denied, then he or she should refrain from initiating any transaction in Company Securities and should not inform any other person of the restriction. The Compliance Officer shall record the date each request is received, and the date and time each request is approved or disapproved. Unless revoked, a grant of permission will normally remain valid until the close of trading two business days following the day on which it was granted. If the transaction does not occur during the two-day period, pre-clearance of the transaction must be re-requested.

When a request for pre-clearance is made, the requestor should carefully consider whether he or she may be aware of any material nonpublic information about the Company and should describe fully those circumstances to the Compliance Officer. The requestor should also indicate whether he or she has effected any non-exempt “opposite-way” transactions within the past six months, and should be prepared to report the proposed transaction on an appropriate Form 4 or Form 5. The requestor should also be prepared to comply with SEC Rule 144 and file Form 144, if necessary, at the time of any sale.

Quarterly Trading Restrictions. The persons designated by the Compliance Officer as subject to this restriction, as well as their Family Members or Controlled Entities, may not conduct any transactions involving Company Securities (other than as specified by this Policy), during a “Blackout Period,” given that they generally possess (or are presumed to possess) material nonpublic information about the Company’s financial results. For the first, second, and third fiscal quarters, the “Blackout Period” begins five (5) calendar days prior to the end of the respective fiscal quarter and ends on the third (3^rd) business day following the date of the public release of the Company’s financial results for that quarter. In other words, for the first, second, and third fiscal quarters, these persons may only conduct transactions in Company Securities during the “Window Period” beginning on the fourth (4^th) business day following the public release of the Company’s quarterly earnings and ending on the sixth (6^th) calendar day prior to the close of the next fiscal quarter. For the fourth fiscal quarter (which is also the end of the fiscal year), the “Blackout Period” begins fifteen (15) calendar days prior to the end of the fiscal fourth quarter/year end and ends on the third (3^rd) business day following the date of the public release of the Company’s financial results for the year. In other words, for the fourth fiscal quarter/year end, these persons may only conduct transactions in Company Securities during the “Window Period” beginning on the fourth (4^th) business day following the public release of the Company’s annual earnings and ending on the sixteenth (16^th) calendar days prior to the end of the first fiscal quarter of the next fiscal year.

Under certain very limited circumstances, a person subject to this restriction may be permitted to trade during a Blackout Period, but only if the Compliance Officer concludes that the person does not in fact possess material nonpublic information. Persons wishing to trade during a Blackout Period must contact the Compliance Officer for approval at least two (2) business days in advance of any proposed transaction involving Company Securities.

Event-Specific Trading Restriction Periods. From time to time, an event may occur that is material to the Company and is known by only a few directors, officers, and/or employees. So long as the event remains material and nonpublic, the persons designated by the Compliance Officer may not trade Company Securities. In addition, the Company’s financial results may be sufficiently material in a particular fiscal quarter that, in the judgment of the Compliance Officer, designated persons should refrain from trading in Company Securities even sooner than the typical Blackout Period described above. In that situation, the Compliance Officer may notify these persons that they should not trade in Company Securities, without disclosing the reason for the restriction. The existence of an event-specific trading restriction period or extension of a Blackout Period will not be announced to the entire Company and should not be communicated to any other person. Even if the Compliance Officer has not designated you as a person who should not trade due to an event-specific restriction, you should not trade while aware of material nonpublic information. Exceptions will not be granted during an event-specific trading restriction period.

Exceptions. The quarterly trading restrictions and event-specific trading restrictions do not apply to those transactions to which this Policy does not apply, as described above under the headings “Transactions Under Company Plans” and “Transactions Not Involving a Purchase or Sale.” Further, the requirement for pre-clearance, the quarterly trading restrictions, and event-specific trading restrictions do not apply to transactions conducted pursuant to approved Rule 10b5-1 plans, described under the heading “Rule 10b5-1 Plans.”

Rule 10b5-1 Plans

Rule 10b5-1 under the Exchange Act provides a defense from insider trading liability under Rule 10b-5. In order to be eligible to rely on this defense, a person subject to this Policy must enter into a Rule 10b5-1 plan for transactions in Company Securities that meets certain conditions specified in the Rule (a “Rule 10b5-1 Plan”). If the plan meets the requirements of Rule 10b5-1, Company Securities may be purchased or sold without regard to certain insider trading restrictions. To comply with the Policy, a Rule 10b5-1 Plan must be approved by the Compliance Officer and meet the requirements of Rule 10b5-1 and the Company’s “Guidelines for Rule 10b5-1 Plans,” which are attached hereto as Exhibit A. In general, a Rule 10b5-1 Plan must be entered into at a time when the person entering into the plan is not aware of material nonpublic information. Once the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing, and timing of transactions in advance or delegate discretion on these matters to an independent third party. Any Rule 10b5-1 Plan must be submitted for approval ten (10) business days prior to the entry into the Rule 10b5-1 Plan. No further pre-approval of transactions conducted pursuant to the Rule 10b5-1 Plan will be required.

Post-Termination Transactions

This Policy continues to apply to transactions in Company Securities even after termination of service to the Company. If an individual is in possession of material nonpublic information when his or her service terminates, that individual may not trade in Company Securities until that information has become public or is no longer material. The pre-clearance procedures specified under the heading “Additional Procedures,” above, however, will cease to apply to transactions in Company Securities upon the expiration of any Blackout Period or other Company-imposed trading restrictions applicable at the time of the termination of service.

Consequences of Violations

The purchase or sale of securities while aware of material nonpublic information, or the disclosure of material nonpublic information to others who then trade in Company Securities, is prohibited by the federal and state laws. Insider trading violations are pursued vigorously by the SEC, U.S. Attorneys, and state enforcement authorities, as well as the laws of foreign jurisdictions. Punishment for insider trading violations is severe and could include significant fines and imprisonment. Given the severity of the potential penalties, compliance with this Policy is absolutely mandatory.

While the regulatory authorities concentrate their efforts on the individuals who trade, or who tip inside information to others who trade, the federal securities laws also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to prevent insider trading by Company personnel.

In addition, an individual’s failure to comply with this Policy may subject the individual to Company-imposed sanctions, including dismissal for cause, whether or not the employee’s failure to comply results in a violation of law. Needless to say, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish a person’s reputation, and irreparably damage a career.

Company Assistance

Any person who has a question about this Policy or its application to any proposed transaction may obtain additional guidance from the Compliance Officer, Eric Mosser, who can be reached by telephone at 503.567.1167 or by e-mail at eric@kaivalbrands.com.

Certification

All persons subject to this Policy must certify their understanding of, and intent to comply with, this Policy.

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As adopted by the Board of Directors on March 17, 2021.

ACKNOWLEDGMENT AND CERTIFICATION

I certify that:

I have read and understand the Company’s Insider Trading Policy (the “Policy”). I understand that the Compliance Officer is available to answer any questions I have regarding the Policy.

Since date the Policy became effective, or such shorter period of time that I have been an employee of the Company, I have complied with the Policy.

I will continue to comply with the Policy for as long as I am subject to the Policy.

Signature:

Print name:

Date:

EXHIBIT A

GUIDELINES FOR RULE 10B5-1 PLANS

Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), provides an affirmative defense from insider trading liability under Rule 10b-5. In order to be eligible to rely on this defense, a person subject to the Kaival Brands Innovations Group, Inc. Insider Trading Policy (the “Policy”) must enter into a Rule 10b5-1 plan for transactions in Company Securities (as defined in the Policy) that meets certain conditions specified in the Rule (a “Rule 10b5-1 Plan”). If the Rule 10b5-1 Plan meets the requirements of Rule 10b5-1, Company Securities may be purchased or sold without regard to certain insider trading restrictions. In general, a Rule 10b5-1 Plan must be entered into in good faith, at a time when the person entering into that Plan is not aware of any material nonpublic information. Once the Rule 10b5-1 Plan has been adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The Rule 10b5-1 Plan must either specify the amount, pricing, and timing of transactions in advance or delegate discretion on these matters to an independent third party.

As specified in the Policy, a Rule 10b5-1 Plan must be approved by the Compliance Officer and meet the requirements of Rule 10b5-1 and these guidelines. Any Rule 10b5-1 Plan must be submitted for approval ten (10) business days prior to the entry into the Rule 10b5-1 Plan. No further pre-approval of transactions conducted pursuant to the Rule 10b5-1 Plan will be required.

The following guidelines apply to all Rule 10b5-1 Plans:

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You may not enter into, modify, or terminate a trading program during a blackout period or while in possession of material nonpublic information.

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All Rule 10b5-1 Plans must have a duration of at least six (6) months and no more than two (2) years.

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If a Rule 10b5-1 Plan is terminated, you must wait at least thirty (30) calendar days before trading outside of the Rule 10b5-1 Plan.

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If a trading program is terminated, you must wait until the commencement of the next trading window period (as set forth in the Policy) before a new Rule 10b5-1 plan may be adopted.

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You may not commence sales under a trading program until at least thirty (30) calendar days following the date of establishment of a trading program. Any modification of a trading program must not take effect for at least thirty (30) calendar days from the date of modification.

Each director, officer, and other Section 16 insider understands that the approval or adoption of a preplanned selling program in no way reduces or eliminates such person’s obligations under Section 16 of the Exchange Act, including such person’s disclosure and short-swing trading liabilities thereunder. If any questions arise, such person should consult with their own counsel in implementing a Rule 10b5-1 Plan.