As filed with the Securities and Exchange Commission
on May 29, 2024
Registration No. 333-279045
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No.3
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KAIVAL BRANDS INNOVATIONS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware |
5960 |
83-3492907 |
(State or other jurisdiction of |
(Primary Standard Industrial |
(I.R.S. Employer |
incorporation or organization) |
Classification Code Number) |
Identification Number) |
|
4460 Old Dixie Highway |
|
|
Grant-Valkaria, Florida 32949 |
|
|
(833) 452-4825 |
|
|
(Address, including zip code, and telephone number, |
|
|
including area code, of registrant’s principal executive offices) |
|
Nirajkumar Patel
Chief Executive Officer
Kaival Brands Innovations Group, Inc
4460 Old Dixie Highway
Grant-Valkaria, Florida 32949
(833) 452-4825
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies
to: |
Ross David
Carmel, Esq |
Mitchell
S. Nussbaum, Esq. |
Jeffrey Wofford, Esq |
Angela M. Dowd, Esq. |
Sichenzia Ross Ference
Carmel LLP |
Loeb & Loeb LLP |
1185
Avenue of the Americas, 31st Floor |
345
Park Avenue |
New
York, NY 10036 |
New
York, NY 10154 |
Tel: (212) 930-9700 |
Tel: (212)407-4000 |
Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities
being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933,
check the following box. ☒
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
|
|
Emerging growth company |
☒ |
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 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
The information in this prospectus
is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION, DATED |
MAY 29, 2024 |
Up to 3,012,048 Units consisting of
Up to 3,012,048 Shares of Common Stock and
Up to 4,518,072 Common Warrants to purchase
Up to 4,518,072 Shares of Common Stock
Up to 3,012,048 Pre-Funded Units consisting
of
Up to 3,012,048 Pre-Funded Warrants to purchase
Up to 3,012,048 Shares of Common Stock and
Up to 4,518,072 Common Warrants to purchase
Up to 4,518,072 Shares of Common Stock
Up to 3,012,048 Shares of Common Stock Underlying
the Pre-Funded Warrants
Up to 4,518,072 Shares of Common Stock Underlying
the Common Warrants
We
are offering on a best efforts basis up to 3,012,048 units, each unit consisting of one share of common stock and one and one-half common
warrants to purchase one and one-half shares of common stock, at an assumed offering price of $1.66 per unit, which is equal to the closing
price of our common stock on the Nasdaq Stock Market LLC on May 28, 2024 for gross proceeds of up to $5,000,000. The common warrants
included in the units will have an initial exercise price of $[*] per share (equal to 100% of the public offering price of each unit
sold in this offering), will be exercisable immediately and will expire five years from the date of issuance. For the common warrants,
if, on the date that is 30 calendar days immediately following the initial issuance date (the “Reset Date”), the Reset Price,
as defined below, is less than the exercise price at such time, the exercise price of the warrants shall be decreased to the Reset Price.
“Reset Price” means 100% of the arithmetic average of the daily VWAPs during the five trading days immediately preceding
the Reset Date, provided, that in no event shall the Reset Price be less than 20% of the most recent closing price at the time of execution
of the securities purchase agreement (subject to adjustment for reverse and forward stock splits, recapitalizations and similar transactions
following the date of the securities purchase agreement).
We are also offering the
shares of our common stock that are issuable from time to time upon the exercise of the common warrants included in the units.
We are also offering to certain
purchasers whose purchase of units in this offering would otherwise result in the purchaser, together with its affiliates and certain
related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately
following the consummation of this offering, the opportunity to purchase, if any such purchaser so chooses, pre-funded units, each pre-funded
unit consisting of one pre-funded warrant to purchase one share of common stock and the same common warrant described above with each
share of common stock, in lieu of units that would otherwise result in such purchaser’s beneficial ownership exceeding 4.99% (or,
at the election of the purchaser, 9.99%) of our outstanding common stock. The purchase price of each pre-funded unit will be equal to
the price per unit being sold to the public in this offering, minus $0.001, and the exercise price of each pre-funded warrant included
in the pre-funded units will be $0.001 per share. The pre-funded warrants will be exercisable immediately and may be exercised at any
time until all of the pre-funded warrants are exercised in full. For each pre-funded unit we sell, the number of units (and shares of
common stock) we are offering will be decreased on a one-for-one basis. This offering also relates to the shares of common stock issuable
upon the exercise of the pre-funded warrants and the common warrants included in the pre-funded units.
The units and pre-funded units
have no stand-alone rights and will not be certificated or issued as stand-alone securities. The shares of common stock or pre-funded
warrants and the common warrants comprising the units or the pre-funded units, as the case may be, are immediately separable and will
be issued separately in this offering. We are also registering the shares of common stock issuable from time to time upon exercise of
the common warrants and pre-funded warrants included in the units and pre-funded units offered hereby.
Our common stock is listed
on the Nasdaq Stock Market, LLC under the symbol “KAVL.” On May 28, 2024, the closing price of our common stock on the Nasdaq
Stock Market, LLC was $1.66 per share. We do not intend to apply for a listing of the units, the pre-funded units, the pre-funded warrants,
or the common warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the
liquidity of the pre-funded warrants and the common warrants will be limited.
The units and pre-funded units
will be offered at a fixed price and are expected to be issued in a single closing. There is no minimum number of securities or minimum
aggregate amount of proceeds for this offering to close. However, notwithstanding the foregoing, the shares of our common stock underlying
the pre-funded warrants and the common warrants will be offered on a continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended. We expect this offering to be completed not later than two business days following the commencement of sales in this
offering (after the effective date of the registration statement of which this prospectus forms a part) and we will deliver all securities
to be issued in connection with this offering delivery versus payment or receipt versus payment, as the case may be, upon receipt of investor
funds received by us. Accordingly, neither we nor the placement agent have made any arrangements to place investor funds in an escrow
account or trust account since the placement agent will not receive investor funds in connection with the sale of the securities offered
hereunder.
We have engaged Maxim Group LLC
(the “placement agent” or “Maxim”), to act as our exclusive placement agent in connection with this offering.
The placement agent has agreed to use its reasonable best efforts to solicit offers to purchase the securities offered by this prospectus.
The placement agent is not purchasing or selling any of the securities we are offering and the placement agent is not required to arrange
the purchase or sale of any specific number or dollar amount of securities. Because there is no minimum offering amount required as a
condition to closing in this offering, the actual offering amount, placement agent’s fee and proceeds to us, if any, are not presently
determinable and may be substantially less than the total maximum offering amounts described throughout this prospectus. We have agreed
to pay the placement agent, the placement agent fees set forth in the table below and to provide certain other compensation to the Placement
Agent. See “Plan of Distribution” for more information regarding these arrangements.
Investing in our securities
involves a high degree of risk. You should review carefully the risks and uncertainties described herein under the heading “Risk
Factors” beginning on page 10 of this prospectus and under similar heading in other documents that are incorporated by reference
into this prospectus.
We are an “emerging
growth company” as defined under the federal securities laws and as such, may elect to comply with reduced public company reporting
requirements. Please read “Prospectus Summary - Implications of Our Being an Emerging Growth Company” beginning on page 6
of this prospectus for more information.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
|
|
Per
Unit(1) |
|
Total |
Public
offering price |
|
$ |
|
|
|
$ |
|
|
Placement
agent fees(2) |
|
$ |
|
|
|
$ |
|
|
Proceeds
to us (before expenses) |
|
$ |
|
|
|
$ |
|
|
| (1) | Assumes that all units consist of one share of common stock and
one and one half common warrant. |
| (2) | We have agreed to pay the placement agent a cash fee equal to 7.0% of the aggregate gross proceeds raised
in this offering, and to reimburse the placement agent for certain of its offering-related expenses. See “Plan of Distribution”
for a description of the compensation to be received by the placement agent. |
We expect to deliver the securities offered hereby on or about
[*], 2024.
Sole Placement Agent
MAXIM GROUP LLC
The date of this
prospectus is ,2024.
TABLE
OF CONTENTS
ABOUT THIS PROSPECTUS
We incorporate by reference important
information into this prospectus. You may obtain the information incorporated by reference without charge by following the instructions
under “Where You Can Find More Information.” You should carefully read this prospectus as well as additional information
described under “Incorporation of Certain Information by Reference,” before deciding to invest in our securities.
We have not, and the placement
agent has not, authorized anyone to provide any information or to make any representations other than those contained in this prospectus
or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and
can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell
only the securities offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained
in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery or
any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date. To
the extent there is a conflict between the information contained in this prospectus, on the one hand, and the information contained in
any document filed with the Securities and Exchange Commission before the date of this prospectus and incorporated by reference herein,
on the other hand, you should rely on the information in this prospectus. If any statement in a document incorporated by reference is
inconsistent with a statement in another document incorporated by reference having a later date, the statement in the document having
the later date modifies or supersedes the earlier statement.
The information in this prospectus
is accurate only as of the date on the front cover of this prospectus and the information in any free writing prospectus that we may provide
you in connection with this offering is accurate only as of the date of that free writing prospectus. Our business, financial condition,
results of operations and prospects may have changed since those dates. No person is authorized in connection with this prospectus to
give any information or to make any representations about us, the securities offered hereby or any matter discussed in this prospectus,
other than the information and representations contained in this prospectus. If any other information or representation is given or made,
such information or representation may not be relied upon as having been authorized by us.
For investors outside the United
States: We have not taken any action that would permit this offering or possession or distribution of this prospectus in any jurisdiction
where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession
of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities covered hereby
and the distribution of this prospectus outside the United States.
Unless otherwise indicated, information
contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market
position, market opportunity and market share, is based on information from our own management estimates and research, as well as from
industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from
publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe
to be reasonable. Our management estimates have not been verified by any independent source, and we have not independently verified any
third-party information. In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject
to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and
other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special Note Regarding
Forward-Looking Statements.”
Pursuant to Item 10(f) of Regulation
S-K promulgated under the Securities Act of 1933, as amended, as indicated herein, we have elected to comply with the scaled disclosure
requirements applicable to “smaller reporting companies,” including providing two years of audited financial statements.
We further note that the representations,
warranties and covenants made by us in any agreement that is filed as an exhibit to the registration statement of which this prospectus
is a part were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk
among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations,
warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should
not be relied on as accurately representing the current state of our affairs.
We own or have rights to trademarks
or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In
addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect the content of our products.
This prospectus may also contain trademarks, service marks and trade names of other companies, which are the property of their respective
owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended
to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, some of the copyrights,
trade names and trademarks referred to in this prospectus are listed without their ©, ® and ™ symbols, but we will assert,
to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other trademarks are the property
of their respective owners.
SUMMARY
This summary highlights information
contained in other parts of this prospectus or incorporated by reference into this prospectus from our filings with the Securities and
Exchange Commission, or SEC. Because it is only a summary, it does not contain all of the information that you should consider before
purchasing our securities in this offering and it is qualified in its entirety by, and should be read in conjunction with, the more detailed
information appearing elsewhere or incorporated by reference into this prospectus. You should read the entire prospectus, the registration
statement of which this prospectus is a part, and the information incorporated by reference herein in their entirety, including the “Risk
Factors” and our financial statements and the related notes incorporated by reference into this prospectus, before purchasing
our securities in this offering. Unless the context requires otherwise, references in this prospectus to the terms “we,” “us,”
“our,” the “Company,” and “Kaival” refer to Kaival Brands Innovations Group, Inc., a Delaware corporation,
unless otherwise indicated. The term “Common Stock” means our common stock, par value $0.001 per share.
Unless the context specifically requires otherwise, all historical share and per-share
amounts reflected in our consolidated financial statements and other financial information incorporated by reference in this Prospectus
are presented to reflect a 1-for-21 reverse stock split of our Common Stock which became effective for legal and accounting purposes on
January 22, 2024 as if such split occurred as of the earliest period presented.
Overview
We are engaged in the sale, marketing and distribution of electronic nicotine
delivery system (“ENDS”) products, also known as “e-cigarettes”, in a variety of flavors. Our primary product
is the Bidi® Stick as well as other products manufactured by our affiliate Bidi Vapor LLC (“Bidi”). We hold
the exclusive worldwide right to market and distribute the Bidi® Stick and certain other products manufactured by Bidi.
Our current revenue generating activities are focused on driving sales growth of the BIDI® Stick, primarily through wholesale
and traditional retail channels, including convenience stores. Along with our affiliate Bidi, which bears the bulk of the responsibility
for U.S. Food and Drug Administration (“FDA”) and other regulatory matters relating to its products, we are committed to steadfast
compliance with established FDA requirements regarding the use of our products.
At the same time, as the FDA regulatory
landscape and Premarket Tobacco Product Application (“PMTA”)-related enforcement continues to evolve, we have faced challenges
and industry-wide headwinds, which we are continuing to navigate by pursuing new revenue opportunities by diversifying our platform through
the distribution, development, and subsequent scaling of other nicotine and non-nicotine products. An important goal for our company is
to leverage our existing presence with our sales channels to establish an efficient platform from
which to create shareholder value by developing and growing current and potentially new business lines, revenues and, ultimately, positive
cash flows and profitability.
Business Strategy
In addition
to our focus on driving revenue through distribution of the BIDI® Stick, we intend to build our revenue by executing key internal
strategic initiatives. Accomplishing these financial goals will depend on a number of factors including our ability to execute these strategies.
Representative key initiatives include:
|
● |
Maximizing the core business: |
|
● |
Continuing the growth and management of strategic alliances with market leaders within dense, established e-cigarette markets; |
|
● |
Development of internal national account sales team to drive new revenue opportunities and manage key strategic third-party vendor and broker alliances to maximize targeted market penetration; |
|
● |
Search for high-caliber, experienced talent that create impact and add value to our organization quickly; |
|
● |
Effective financial management and capital planning: |
|
● |
Establishing an efficient, scalable organizational infrastructure to support our expected growth and diversification; |
|
● |
Improving overall business processes to deliver greater value to our customers; |
|
● |
Data-driven product innovation and strategic expansion: |
|
● |
Investing in our core organizational capabilities to provide diversified, revenue generative opportunities both through our existing distribution network and beyond; |
|
● |
Further development of internal data processes to drive growth and diversification efforts; |
|
● |
Pursuing third-party licensing opportunities through our vaporization and inhalation-related intellectual property portfolio which we acquired from GoFire Inc. in May 2023; |
|
● |
During 2024 and beyond, we plan on exploring strategic acquisition and collaboration arrangements that generate revenue, positive cash flows and profitable operations in order to expand the scale of our company by capitalizing on our traditional retail outlet and other distribution relationships. |
We will continue to align ourselves
with progressive, proven, performance-based partners, which may include the development and expansion of key financial services relationships
as we seek to diversify through data-driven decisions.
Description of Business Segments & Key Agreements
Bidi Vapor, LLC Distribution Agreement
On March 9, 2020, we entered into
an exclusive distribution agreement (the “Distribution Agreement”) with our affiliate Bidi, which Distribution Agreement was
amended and restated on May 21, 2020, April 20, 2021, on June 10, 2022, and on November 17, 2022 (collectively, the “A&R Distribution
Agreement”). Pursuant to the A&R Distribution Agreement, Bidi granted us an exclusive worldwide right to distribute Bidi’s
ENDS (as more particularly set forth in the A&R Distribution Agreement) for sale and resale to both retail level customers and non-retail
level customers. Currently, the products consist solely of the “BIDI® Stick,” Bidi’s disposable, tamper resistant
ENDS product made with medical-grade components, a UL-certified battery and technology designed to deliver a consistent vaping experience
for adult smokers 21 and over. We presently distribute products to wholesalers and retailers of ENDS products, having ceased all direct-to-consumer
sales in February 2021. Nirajkumar Patel, our Chief Executive Officer and director and an indirect controlling shareholder of our company,
owns Bidi.
BIDI® Stick comes in a variety
of flavor options for adult cigarette smokers. We do not manufacture any of the products we resell. The BIDI® Stick is manufactured
by Bidi. Pursuant to the terms of the A&R Distribution Agreement, Bidi provides us with all branding, logos, and marketing materials
to use with our commercial partners in connection with our marketing and promotion of Bidi products.
The A&R Distribution Agreement
extends the previous one-year, annual renewable term to an initial term of ten years, which automatically renews for another ten-year
term if we satisfy certain minimum purchase thresholds. The A&R Distribution Agreement also provides us with a right of first refusal
in the event Bidi receives an offer that would constitute a “change of control transaction,” as well as a right of first refusal
to act as the exclusive distributor of any and all future products of Bidi that arise out of or related to ENDS and components related
to ENDS, or arise out of or related to the tobacco-derived nicotine industry.
In connection with the A&R
Distribution Agreement, we entered into non-exclusive sub-distribution agreements, some of which were subsequently amended and restated
by the parties in order to clarify certain provisions (all such sub-distribution agreements, as amended and restated, are collectively
referred to as the “Sub-Distribution Agreements”), whereby we appointed the counterparties as non-exclusive sub-distributors.
Pursuant to the Sub-Distribution Agreements, the sub-distributors agreed to purchase for resale products in such quantities as they should
need to properly service non-retail customers within the continental United States (the “Territory”).
We process all sales made to non-retail
customers, with all sales to non-retail customers made through Bidi’s age-restricted website, www.wholesale.bidivapor.com. We ceased
all direct-to-consumer sales in February 2021 in order to better ensure youth access prevention and to comply with the Prevent All Cigarette
Trafficking Act (known as the PACT Act). We provide all customer service and support at our own expense. We set the minimum prices for
all sales made by us. We maintain adequate inventory levels of products in order to meet the demands of our non-retail customers and deliver
products sold to these customers.
A key third party collaborator of ours was
QuikfillRx, LLC, (“QuikfillRx”)
a Florida limited liability company. QuikfillRx provided us with certain services and support relating to sales management, website development
and design, graphics, content, public communication, social media, management and analytics, and market and other research. QuikfillRx
provided these services to us pursuant to a Services Agreement, pursuant to which QuikfillRx received monthly cash compensation and was
granted certain equity compensation in the form of options. This Agreement was terminated in February 2024.
Kaival Labs, Inc. & Kaival Brands International,
LLC.
On August 31, 2020, we formed Kaival Labs, Inc., a Delaware corporation (herein
referred to as “Kaival Labs”), as a wholly owned subsidiary for the purpose of developing our own branded and white-label
products and services, of which none has commenced as of the date of this prospectus. We have not yet launched any Kaival-branded products,
nor has it begun to provide white label wholesale solutions for other product manufacturers.
We have, and may continue to, utilize
Kaival Labs to acquire or license complimentary businesses or assets. On May 30, 2023, through Kaival Labs, we acquired certain vaporization
and inhalation-related intellectual property from GoFire, Inc. (“GoFire”) in exchange for equity securities for our company
and contingent cash consideration. The goal of this acquisition is to diversify our product offerings and create near and longer-term
revenue opportunities in the form of potential licenses for the acquired technology and our development of new products based on the purchased
assets. In the near term, we expect to seek third-party licensing opportunities in the cannabis, hemp/CBD, nicotine and nutraceutical
markets. Longer term, we believe we can utilize the purchased assets to create innovative and market-disruptive products, including patent
protected vaporizer devices and related hardware and software applications. No assurances can be given, however, that the GoFire assets
will generate revenue for us in the future or otherwise create the value for our company that we anticipate.
On March 11, 2022, we formed Kaival
Brands International, LLC, a Delaware limited liability company (herein referred to as “KBI”), as a wholly owned subsidiary
for the purpose of entering into an international licensing agreement with Philip Morris Products S.A. (“PMPSA”), a wholly
owned affiliate of Philip Morris International Inc. (“PMI”), as described further below.
FDA PMTA and MDO Determinations, Related Court
Actions and the Impact on Our Business
Non-Tobacco Flavored BIDI®
Sticks
In September 2021, in connection
with the Bidi’s Premarket Tobacco Product Application (“PMTA”) process for BIDI® Stick, the U.S.
Food and Drug Administration (“FDA”) effectively “banned” non-tobacco flavored ENDS by denying nearly all then-pending
PMTAs for such products (including Bidi’s). Following the issuance by the FDA of a related Marketing Denial Order (“MDO”)
regarding these ENDS products, manufacturers were required to stop selling non-tobacco flavored ENDS products. Bidi, along with nearly
every other company in the ENDS industry, received a MDO for its non-tobacco flavored ENDS products. With respect to Bidi, the MDO covered
all non-tobacco flavored BIDI® Sticks, including its Arctic (menthol) BIDI® Stick. As a result, beginning in September 2021, Bidi
pursued multiple avenues to challenge the MDO. First, on September 21, 2021, separate from the judicial appeal of the MDO in its entirety,
Bidi filed a 21 C.F.R. §10.75 internal FDA supervisory review request specifically of the decision to include the Arctic (menthol)
BIDI® Stick in the MDO. In May 2022, the FDA issued a determination that it views the Arctic BIDI® Stick as a non-tobacco flavored
ENDS product, and not strictly a menthol flavored product.
On September
29, 2021, Bidi petitioned the U.S. Court of Appeals for the Eleventh Circuit (or the 11th Circuit) to review the FDA’s
denial of the PMTAs for its non-tobacco flavored BIDI® Stick ENDS (including the Arctic BIDI® Stick), arguing that it was arbitrary
and capricious under the Administrative Procedure Act (or the APA), as well as ultra vires, for the FDA not to conduct any scientific
review of Bidi’s comprehensive applications, as required by the Tobacco Control Act (or the TCA), to determine whether the BIDI®
Sticks are “appropriate for the protection of the public health”. Bidi further argued that the FDA violated due process and
the APA by failing to provide fair notice of the FDA’s new requirement for ENDS companies to conduct long-term comparative smoking
cessation studies for their non-tobacco flavored products compared to tobacco-flavored ENDS products, and that the FDA should have gone
through the notice and comment rulemaking process for this requirement.
On August
23, 2022, the 11th Circuit set aside (i.e., vacated) the MDO issued to the non-tobacco flavored BIDI® Sticks and remanded
Bidi’s PMTA back to the FDA for further review. Specifically, the 11th Circuit held that the MDO was “arbitrary
and capricious” in violation of the APA because the FDA failed to consider the relevant evidence before it, specifically Bidi’s
aggressive and comprehensive marketing and sales-access-restrictions plans designed to prevent youth appeal and access.
The 11th Circuit’s
opinion further indicated that the FDA did not properly review the data and evidence that it has long made clear are critical to the
“appropriate for the protection of the public health” standard for PMTAs set forth in the Tobacco Control Act including,
in Bidi’s case, “product information, scientific safety testing, literature reviews, consumer insight surveys, and details
about our company’s youth access prevention measures, distribution channels, and adult-focused marketing practices,” which
“target only existing adult vapor product users, including current adult smokers,” as well as our retailer monitoring program
and state-of-the-art anti-counterfeit authentication system. Because a MDO must be based on a consideration of the relevant factors,
such as the marketing and sales-access-restrictions plans, the denial order was deemed arbitrary and capricious, and vacated by the FDA.
The FDA
did not appeal to the 11th Circuit’s decision. The FDA had until October 7, 2022 (45 days from the August 23, 2022 decision) to
either request a panel rehearing or a rehearing “en banc” (a review by the entire 11th Circuit, not just the 3-judge
panel that issued the decision), and until November 21, 2022 (90 days after the decision) to seek review of the decision by the U.S. Supreme
Court. No request for a rehearing was filed, and no petition for a writ of certiorari was made to the Supreme Court.
As a result
of the 11th Circuit’s order on the flavored Bidi stick applications, Bidi has been able to continue marketing and selling the non-tobacco
flavored BIDI® Sticks, subject to FDA’s enforcement discretion, during the continued PMTA scientific review. Although the flavored
Bidi sticks are still considered unlawful products under the terms of the Tobacco Control Act, the FDA has indicated that it is prioritizing
enforcement of unauthorized ENDS against companies (1) that never submitted PMTAs, (2) whose PMTAs have been refused acceptance or filing
by the FDA, (3) whose PMTAs remain subject to MDOs, or (4) that are continuing to market unauthorized synthetic nicotine products after
the July 13, 2022 cutoff. As none of these scenarios apply to Bidi, we believe the current risk of FDA enforcement is low. However, there
is a risk that Bidi’s PMTA for non-tobacco flavored BIDI® Sticks will be denied, which would have a significant adverse effect
on our business and could lead to our bankruptcy or the failure of our business entirely.
Since the PMTA was remanded, Bidi
has continued to update its application with the results of new studies, including a nationwide population prevalence study on the BIDI®
Stick that is currently undergoing peer review for publication.
Classic BIDI® Stick
Separately, on or about May 13,
2022, the FDA placed the tobacco-flavored Classic BIDI® Stick into the final Phase III scientific review, and in September 2022 completed
a remote regulatory assessment of Bidi and its contract manufacturer in China, SMISS Technology Co. LTD, in relation to the pending PMTA
for the Classic BIDI® Stick.
On March 20, 2023 Bidi received
its anticipated deficiency letter for the Classic BIDI® Stick PMTA, outlining FDA’s remaining scientific questions. On June
18, 2023, Bidi, provided a timely, comprehensive response to the FDA’s deficiency letter.
On January 22, 2024, FDA issued an MDO for the Classic BIDI® Stick even
though 23 other competing tobacco flavored ENDS products have received FDA marketing authorization. The FDA’s stated bases for the
MDO included testing and data deficiencies specific to the Classic BIDI® Stick PMTA. While this development precludes us from marketing
the Classic BIDI® Stick, which could have a material adverse effect on our company, the FDA’s decision does not involve the
ten PMTAs for Bidi Vapor’s non-tobacco flavored devices described above which are still under the FDA’s scientific review.
Those ten products remain available for sale, subject to FDA’s enforcement discretion.
In response to the Classic BIDI®
Stick MDO, on January 26, 2024, Bidi filed a petition requesting that the 11th Circuit review the MDO, which Bidi believes was, among
other things, arbitrary and capricious, in violation of the Administrative Procedure Act. Bidi also sought a stay of the MDO pending the
outcome of the litigation, but the court denied the stay motion which means that the tobacco flavored Bidi stick product cannot currently
be sold. The briefing schedule for Bidi’s petition calls for all substantive briefs of Bidi and the government to be filed on or
about June 2024. There is no schedule for any potential oral argument before the court, nor is there any deadline by which the court must
rule on the petition. The January 2024 MDO regarding Classic BIDI® Stick and the denial of Bidi’s motion for a stay have
had an immediate and ongoing adverse impact on our business, and the outcome of Bidi’s 11th Circuit petition is uncertain and
will likely take many months or longer to resolve. Our continuing inability to sell Classic BIDI® Stick could continue to cause material
impediments to our ability to operate our business and cause a material adverse effect on our results of operations. No assurances can
be given on the timing or ultimate outcome of this litigation, and so long as the case remains undecided, we are unable to sell the Classic
BIDI® Stick product.
Moreover, FDA’s review of Bidi’s PMTA for its non-tobacco-flavored ENDS
products could be completed before the 11th Circuit rules on Bidi’s petition for review of the MDO for the Classic BIDI® Stick
There is a risk that FDA could issue an MDO to that PMTA based on similar reasons used by FDA to deny the Classic BIDI® Stick PMTA,
in addition to reasons cited by FDA in every other MDO denying other non-tobacco-flavored PMTAs submitted by other applicants. If that
were to occur and if Bidi is again unsuccessful in obtaining a judicial stay of the FDA’s MDO, we would have no products available
to sell, which would likely prevent us from continuing to operate our business.
Bidi’s non-tobacco flavored
ENDS products generate the overwhelming majority of our sales revenues. The PMTA for those products has already been denied once by FDA,
and is only being re-reviewed due to the order of the 11th Circuit. The FDA considers all flavored ENDS products to be illegal unless
subject to a granted PMTA (of which there are none).
Additionally, in March 2023 the
FDA, pursuant to the Family Smoking Prevention and Tobacco Control Act (“FSPTCA”), proposed new requirements for tobacco product
manufacturers regarding the manufacture, design, packing and storage of tobacco products. The proposed rule establishes a framework of
manufacturing practices including:
|
● | establishing tobacco product design and development controls; |
|
| |
|
● | ensuring that finished and bulk tobacco products are manufactured according to established
specifications; |
|
| |
|
● | minimizing the manufacture and distribution of tobacco products that don’t meet specifications; |
|
| |
|
● | requiring manufacturers to take appropriate measures to prevent contamination of tobacco
products; |
|
| |
|
● | requiring investigation and identification of products that don’t meet specifications
to institute appropriate corrective actions, such as a recall; and |
|
| |
|
● | establishing the ability to trace all components or parts, ingredients, additives and
materials, as well as each batch of finished or bulk tobacco product, to aid in investigations of those that don’t meet specifications. |
FDA states in the proposed rule
that “These requirements also would help minimize or prevent the manufacture and distribution of nonconforming electronic nicotine
delivery systems (ENDS) e-liquids that contain nicotine concentration levels that vary from the labeled amount and vary from one ENDS
product to another within the same brand…..this potential variability in nicotine concentration, in which an e-liquid product contains
significantly higher levels of nicotine than what is stated on the label, could be misleading to consumers concerned about nicotine delivery
levels, potentially intensifying or prolonging their addiction and potentially exposing users to increased toxins. Tobacco products may
introduce preventable harms not normally associated with use of tobacco products due to inadequate design or manufacturing controls; for
example, defective solder joints from an ENDS cartomizer (atomizer plus replaceable fluid-filled cartridge) may cause respiratory distress
due to metallic particles in the aerosol. This proposed regulation would help to assure that the public health is protected from these,
and other, types of hazards.”
These rules if implemented could
have an adverse effect on our business by increasing costs of manufacturing our ENDS products to ensure compliance.
Other Potential Product Offerings & Opportunities
In May 2023 we acquired 19 existing
and 47 pending patents with novel technologies related to vaporization and inhalation technologies from GoFire. The GoFire patent portfolio
includes novel technologies across extrusion dose control, product preservation, tracking and tracing usage, multiple modalities (i.e.,
different methods of vaporizing) and child safety. The patents and patent applications cover territories including the United States,
Australia, Canada, China, the EPO (European Patent Organization), Israel, Japan, Mexico, New Zealand and South Korea. The portfolio also
includes a proprietary mobile device software application that is used in conjunction with certain patents in the portfolio.
In the near term, we expect to
seek third-party licensing opportunities in the cannabis, hemp/CBD, nicotine, nutraceutical and pharmaceutical markets, as a means of
monetizing our patents. Longer term, we believe we can utilize the acquired patents to create innovative and market-disruptive products
for its growing base of adult consumers, including patent protected vaporizer devices and related hardware and software applications.
As described above, we hope to
generate revenue from this acquired intellectual property via licensing and product development activities. However, there can be no assurance
that we will be able to implement this strategy.
Recent Developments
Nasdaq Delisting Notice
On April
30, 2024, we received a notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”)
notifying us that the date of April 29, 2024, provided by Nasdaq for the Company to hold an annual meeting to regain compliance with
Nasdaq Listing Rule 5620(a) lapsed without the Company holding its annual meeting. The Notice further stated unless the Company requests
an appeal of the above determination by May 7, 2024, Nasdaq has determined that the Company’s securities will be scheduled for
delisting from The Nasdaq Stock Market. On May 3, 2024, we requested an appeal hearing before Nasdaq’s Hearings Panel. Such request
was granted, and an appeal hearing was scheduled for June 13, 2024. Additionally, we scheduled our annual meeting to be held on June
25, 2024 and filed a preliminary proxy statement on Schedule 14A on May 3, 2024 with respect to such annual meeting.
Reverse Stock Split
On January 22, 2024, the
Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary
of State of the State of Delaware to affect a 1-for-21 reverse stock split (the “2024 Reverse Stock Split”) of
the shares of the Common Stock. The 2024 Reverse Stock Split was effective on January 25, 2024, on the Nasdaq Stock Market. No
fractional shares were issued in connection with the 2024 Reverse Stock Split. Any fractional shares of our Common Stock that would
have otherwise resulted from the 2024 Reverse Stock Split were rounded up to the nearest whole number. In connection with the 2024
Reverse Stock Split, the Board approved appropriate and proportional adjustments to all outstanding securities or other rights
convertible or exercisable into shares of the Common Stock, including, without limitation, all preferred stock, warrants, options,
and other equity compensation rights. All historical share and per-share amounts reflected throughout this prospectus, including the
consolidated financial statements and other financial information that are incorporated by reference in this prospectus have been
retroactively adjusted to reflect the 2024 Reverse Stock Split as if the split occurred as of the earliest period presented. The par
value per share of the Common Stock was not affected by the 2024 Reverse Stock Split.
During the three months ended January
31, 2024, the Company issued 52,949 shares of common stock for rounding of shares related to the Reverse Split.
Issuance of Shares
During the three months ended January
31, 2024, the Company issued 16,667 shares of common stock to a FINRA member broker-dealer in connection with the termination
of its relationship with such broker dealer. The fair value was $62,000 based on the closing price of the common stock on the
termination date and recorded as stock-based compensation. Such FINRA member is not participating in this public offering.
Implications of Our Being
an “Emerging Growth Company”
We qualify as an “emerging growth company” as defined in the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”). An “emerging growth company” may take advantage
of reduced reporting requirements that are otherwise applicable to larger public companies. In particular, as an emerging growth company,
we:
|
● |
may
present only two years of audited financial statements and only two years of related Management’s Discussion and
Analysis of Financial Condition and Results of Operations, or “MD&A; |
|
|
|
|
● |
are
not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing
how those elements fit with our principles and objectives, which is commonly referred to as “compensation discussion and analysis;” |
|
|
|
|
● |
are not required to obtain an attestation
and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the
Sarbanes-Oxley Act of 2002; |
|
|
|
|
● |
are not required to obtain a non-binding
advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,”
“say-on frequency” and “say-on-golden-parachute” votes); |
|
|
|
|
● |
are exempt from certain executive compensation
disclosure provisions requiring a pay-for-performance graph and chief executive officer pay ratio disclosure; |
|
|
|
|
● |
are eligible to claim longer phase-in
periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act; and |
|
|
|
|
● |
will not be required to conduct an
evaluation of our internal control over financial reporting. |
THE OFFERING
Units
offered by us: |
|
Up
to 3,012,048 units, each unit consisting of one share of common stock and
one and one-half common warrants to purchase one and one-half shares of common stock |
|
|
|
Assumed
Public offering price: |
|
$1.66
per unit and $ 1.659 per pre-funded unit. |
|
|
|
Pre-funded
Units offered by us |
|
We
are also offering to certain purchasers whose purchase of units in this
offering would otherwise result in the purchaser, together with its affiliates, beneficially owning more than 4.99% (or, at the election
of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of this offering, the opportunity to purchase,
if such purchasers so choose, pre-funded units, consisting of one pre-funded warrant to purchase one share of common stock and one and
one-half common warrants to purchase one and one-half shares of common stock. The purchase price of each pre-funded unit will equal the
price per unit being sold to the public in this offering, minus $0.001, and the exercise price of each pre- funded warrant will be $0.001
per share of common stock. For each pre-funded unit we sell, the number of units we are offering will be decreased on a one-for-one basis.
This offering also relates to the shares of common stock issuable upon the exercise of any pre- funded warrants or common warrants comprising
the pre-funded unit sold in this offering. |
|
|
|
Description of Common
Warrants: |
|
Each common warrant
will have an initial exercise price of $[*] per share (equal to 100% of the public offering price of each unit sold in this
offering), will be immediately exercisable, and will expire on the five (5) year anniversary of the original issuance date. The
initial exercise price shall be reset immediately following the thirtieth (30th) calendar day following the closing date of the
public offering (the “Reset Date”) to a price equal to the arithmetic average of the daily VWAPs of the common stock on
Nasdaq during the five trading days immediately preceding the Reset Date (the “Reset Price”); provided, however, that in
no event shall the Reset Price be less than 20% of the most recent closing price of our common stock on Nasdaq at the time of
execution of the securities purchase agreement by the purchasers; provided further that the Rest Price cannot be lower than the
initial exercise price. This prospectus also relates to the offering of the shares of common stock issuable upon exercise of the
common warrants. |
|
|
|
Best Efforts Offering |
|
We have agreed to offer
and sell the securities offered hereby directly to the purchasers. We have retained Maxim Group LLC to act as our exclusive placement
agent to use its reasonable best efforts to solicit offers to purchase the securities offered by this prospectus. The placement agent
is not required to buy or sell any specific number of the securities offered hereby. See “Plan of Distribution” beginning
on page 27 of this prospectus. |
|
|
|
Common stock outstanding
prior to this Offering: |
|
2,863,002 shares
of common stock |
|
|
|
Common stock to be outstanding
immediately after this Offering: (1) |
|
5,875,050 shares
(assuming the sale of the maximum number of units covered by this prospectus, no sale of pre-funded units, and no exercise of the
common warrants issued in this offering) |
|
|
|
Use of Proceeds: |
|
Assuming
the maximum number of units are sold in this offering at an assumed public offering price of $1.66 per unit, which represents
the closing price of our common stock on the Nasdaq Stock Market LLC on May 28, 2024, and assuming no issuance of pre-funded warrants
in connection with this offering, we estimate that the net proceeds from our sale of units in this offering will be approximately
$4,290,000, after deducting the placement agent fees and estimated offering expenses payable by us. However, this is a best effort
offering with no minimum number of securities or amount of proceeds as a condition to closing, and we may not sell all or any
of these securities offered pursuant to this prospectus; as a result, we may receive significantly less in net proceeds.
We
intend to use the net proceeds of this offering for continuing operating expenses and working capital. See “Use of Proceeds.” |
Risk Factors: |
|
Investing in our securities involves a high degree of risk. See “Risk Factors” starting on page 10 of this prospectus for a discussion of factors you should carefully consider before investing in our securities. |
|
|
|
Lock-up: |
|
We, all of our directors and officers, and the holders of 10% or more of our outstanding shares of common stock(and all holders of securities exercisable for or convertible into shares of common stock), have agreed, subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any of our common stock or other securities convertible into or exercisable or exchangeable for our common stock for a period of ninety (90) after this offering is completed without the prior written consent of the placement agent. See “Plan of Distribution” for more information. |
|
|
|
Trading Symbol/Nasdaq Listing Application: |
|
Our common stock is listed on the Nasdaq Stock Market, LLC under the ticker symbol “KAVL”. There is no established trading market for the common warrants or the pre-funded warrants and we do not expect a trading market to develop. We do not intend to list the common warrants or the prefunded warrants on any securities exchange or other trading market. Without a trading market, the liquidity of the common warrants and the pre-funded warrants will be extremely limited. |
|
|
|
Transfer Agent; Warrant Agent |
|
The transfer agent for our common stock is vStock LLC. The warrant agent for the common warrants and the pre-funded warrants will be vStock LLC. |
|
(1) |
The
number of shares of common stock to be outstanding immediately after this offering is based on 2,863,002
shares of common stock outstanding as of May 29, 2024 and excludes:
(1)
357,120 shares of our common stock issuable upon conversion of 900,000 outstanding shares of Series B Preferred Stock;
(2) 267,821 shares of our common stock issuable upon exercise of stock options outstanding, at a weighted average exercise
price of $37.74 per share
(3)
205,636 shares of our common stock issuable upon the exercise of warrants outstanding, at a weighted average exercise price of $65.19
per share.
(4)
99,732,179 shares of our common stock reserved for future issuance under our Amended and Restated 2020 Stock and Incentive Compensation
Plan |
Unless otherwise indicated, this prospectus assumes no issuance of pre-funded
warrants in connection with this offering and no exercise of the common warrants offered hereby.
RISK FACTORS
Investing in our securities
involves a high degree of risk. Before deciding to invest in our securities, you should consider carefully the risks and uncertainties
described below and under Item 1A.”Risk Factors” in our Annual Report on Form 10-K, filed with the Securities
and Exchange Commission, or SEC, on February 14, 2024, which are each incorporated by reference in this prospectus, together with all
of the other information contained in this prospectus and documents incorporated by reference herein, and in any free writing prospectus
that we have authorized for use in connection with this offering. If any of the matters discussed in the following risk factors were to
occur, our business, financial condition, results of operations, cash flows or prospects could be materially adversely affected, the market
price of our common stock could decline and you could lose all or part of your investment in our securities. Additional risks and uncertainties
not presently known or which we consider immaterial as of the date hereof may also have an adverse effect on our business.
RISKS RELATED TO OUR BUSINESS
Our Business Is Particularly
At Risk Given The FDA’s Strict Regulatory And Enforcement Posture Toward ENDS Products Generally, And Adverse Regulatory And Court
Decisions Against Bidi ENDS Products In Particular.
The ENDS
industry is relatively new and is rapidly evolving, and the FDA has been aggressive in its oversight of the ENDS industry. Changes in
existing laws, regulations and policies and the issuance of new laws, regulations, policies, as well as the FDA’s actions on ENDS-related
PMTAs (including Bidi’s) and any other entry barriers in relation to the ENDS industry may materially and adversely affect our ability
to conduct business and our results of operations.
In particular,
FDA has only authorized the sale of approximately 23 tobacco-flavored ENDS products, and has denied marketing authorizations for every
non-tobacco-flavored ENDS product application it has acted upon. The FDA’s stated criteria for authorizing a non-tobacco-flavored
ENDS product is that the applicant must demonstrate that the specific non-tobacco flavor “provide[s] an added benefit for adults
who smoke cigarettes—in terms of complete switching or significant smoking reduction—relative to that of tobacco-flavored
products that is sufficient to outweigh the known risks to youth.” However, some applicants whose non-tobacco flavored applications
were denied by FDA have obtained judicial orders remanding the applications to FDA for further review.
Bidi, as well as other companies in the ENDS industry,
has taken aggressive actions in response to adverse FDA decisions involving its products and its PMTAs for those products. These efforts
by Bidi and others have resulted in some favorable preliminary court decisions, but also many significant unfavorable court decisions.
Even if Bidi is able to continue its legal efforts to support its products and applications, the courts, including the Supreme Court,
may ultimately issue rulings that could cause Bidi, and us, to go out of business.
RISKS RELATED TO THIS OFFERING
This is a reasonable best
efforts offering, with no minimum amount of securities required to be sold, and we may sell fewer than all of the securities offered hereby.
The placement agent has agreed
to use its best efforts to solicit offers to purchase the units and pre-funded units in this offering. The placement agent has no obligation
to buy any of the securities from us or to arrange for the purchase or sale of any specific number or dollar amount of the securities.
There is no required minimum number of securities that must be sold as a condition to completion of this offering. As there is no minimum
offering amount required as a condition to the closing of this offering, the actual offering amount, placement agent fees and proceeds
to us are not presently determinable and may be substantially less than the maximum amounts set forth above. We may sell fewer than all
of the securities offered hereby, which may significantly reduce the amount of proceeds received by us, and investors in this offering
will not receive a refund in the event that we do not sell all of the units or pre-funded units offered in this offering. The success
of this offering will impact our ability to use the proceeds to execute our business plans. We may have insufficient capital to implement
our business plans and satisfy current obligations, potentially resulting in greater operating losses or dilution unless we are able to
raise the required capital from alternative sources. There is no assurance that alternative capital, if needed, would be available on
terms acceptable to us, or at all.
You will experience
immediate dilution in the net tangible book value per share of the common stock you purchase, and may experience additional dilution in
the future.
Because the effective price
per share of common stock included in the units or issuable upon exercise of the warrants or pre-funded warrants being offered may be
higher than the net tangible book value per share of our common stock, you may experience dilution to the extent of the difference between
the effective offering price per share of common stock you pay in this offering and the net tangible book value per share of our common
stock immediately after this offering. Assuming the sale of 3,012,048 units at a public offering price of $ 1.66 per unit and our net
tangible book value as of January 31, 2024, and assuming no sale of any pre-funded units in this offering, no exercise of any of the
common warrants being offered in this offering, and after deducting the placement agent fees and estimated offering expenses payable
by us, you will incur immediate dilution in as adjusted net tangible book value of approximately $0.85 per share. As a result of the
dilution to investors purchasing securities in this offering, investors may receive less than the purchase price paid in this offering,
if anything, in the event of the liquidation of our company. See the section entitled “Dilution” below for a more
detailed discussion of the dilution you will incur if you participate in this offering.
We have broad discretion in the use of the net proceeds
we receive from this offering and may not use them effectively.
Our management will have broad
discretion in the application of the net proceeds we receive in this offering, including for any of the purposes described in the section
entitled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess whether
our management is using the net proceeds appropriately. Because of the number and variability of factors that will determine our use of
our net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. The failure by our management
to apply these funds effectively could result in financial losses that could have a material adverse effect on our business and cause
the price of our common stock to decline. Pending their use, we may invest our net proceeds from this offering in short-term, investment-grade,
interest-bearing securities. These investments may not yield a favorable return to our stockholders.
An active trading market for our shares may not be sustained.
Although our shares are listed
on the Nasdaq Stock Market, LLC, the market for our shares has demonstrated varying levels of trading activity. The current level of trading
may not be sustained in the future. The lack of an active market for our shares may impair investors’ ability to sell their shares
at the time they wish to sell them or at a price that they consider reasonable, may reduce the fair market value of their shares and may
impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire additional
intellectual property assets by using our shares as consideration.
This offering may cause the trading price of our common
stock to decrease.
The number of shares of common
stock underlying the securities we propose to issue and ultimately will issue if this offering is completed, may result in an immediate
decrease in the market price of our common stock. This decrease may continue after the completion of this offering. We cannot predict
the effect, if any, that the availability of shares for future sale represented by the pre-funded warrants or common warrants issued in
connection with the offering will have on the market price of our common stock from time to time.
Future sales of substantial amounts of our common stock
could adversely affect the market price of our common stock.
We may choose to raise additional
capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating
plans. If additional capital is raised through the sale of equity or convertible debt securities, or perceptions that those sales could
occur, the issuance of these securities could result in further dilution to investors purchasing our common stock in this offering or
result in downward pressure on the price of our common stock, and our ability to raise capital in the future.
We have previously received
a notice from Nasdaq that we were not in compliance with the Nasdaq continued listing requirements. If we are unable to regain compliance
with Nasdaq’s listing requirements, our common stock could be delisted, which could affect our common stock’s market price
and liquidity and reduce our ability to raise capital.
Our
common stock is listed for trading on Nasdaq. In order to maintain the listing of our common
stock on Nasdaq, we must satisfy Nasdaq’s continued listing requirements. On April
30, 2024, we received a notice (the “Notice”) from the Listing Qualifications
Department of The Nasdaq Stock Market notifying us that the date of April 29, 2024, provided
by Nasdaq for the Company to hold an annual meeting to regain compliance with Nasdaq Listing
Rule 5620(a) lapsed without the Company holding its annual meeting. The Notice further stated
unless the Company requests an appeal of the above determination by May 7, 2024, Nasdaq has
determined that the Company’s securities will be scheduled for delisting from The Nasdaq
Stock Market. On May 3, 2024, we requested an appeal hearing before Nasdaq’s Hearings
Panel. Such request was granted, and an appeal hearing was scheduled for June 13, 2024. Additionally,
we scheduled our annual meeting to be held on June 25, 2024, and filed a definitive proxy
statement on Schedule 14A on May 14, 2024 with respect to such annual meeting.
We cannot assure you that we
will be able to regain compliance with Nasdaq listing standards. Our failure to continue to meet these requirements would result in our
common stock being delisted from Nasdaq. We and holders of our securities could be materially adversely impacted if our common stock is
delisted from Nasdaq. In particular:
|
● |
we may be unable to raise equity capital on acceptable terms or at all; |
|
● |
we may lose the confidence of our customers, which would jeopardize our ability to continue our business as currently conducted; |
|
● |
the price of our common stock will likely decrease as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws; |
|
● |
holders may be unable to sell or purchase our securities when they wish to do so; |
|
● |
we may become subject to stockholder litigation; |
|
● |
we may lose the interest of institutional investors in our common stock; |
|
● |
we may lose media and analyst coverage; |
|
● |
our common stock could be considered a “penny stock,” which would likely limit the level of trading activity in the secondary market for our common stock; and |
|
● |
we would likely lose any active trading market for our common stock, as it may only be traded on one of the over-the-counter markets, if at all. |
We may not receive any additional funds upon the exercise
of the common warrants.
Each common warrant has an
initial exercise price of $[*] per share (equal to 100% of the public offering price of each unit sold in this offering), subject to
adjustment as described herein , and may also be exercised in certain circumstances by way of a cashless exercise, meaning that the holder
may not pay a cash purchase price upon exercise, but instead would receive upon such exercise the net number of shares of our common
stock determined according to the formula set forth in the warrant. Accordingly, we may not receive any additional funds, or any significant
additional funds, upon the exercise of the warrants.
There is no public market for the common warrants or pre-funded
warrants being offered by us in this offering.
There is no established public
trading market for the common warrants or the pre-funded warrants, and we do not expect a market to develop. In addition, we do not intend
to apply to list the common warrants or the pre-funded warrants on any national securities exchange or other nationally recognized trading
system. Without an active market, the liquidity of the common warrants and the pre-funded warrants will be limited.
The common warrants included in the units and in the pre-funded
units are speculative in nature.
The common warrants represent
the right to acquire shares of common stock at a fixed price. Specifically, commencing on the date of issuance, holders of the common
warrants may acquire the shares of common stock issuable upon exercise of such warrants at an initial exercise price of $[*] per share
of common stock (equal to 100% of the public offering price of each unit sold in this offering), subject to adjustment as described herein.
Moreover, following this offering, the market value of the common warrants is uncertain and there can be no assurance that the market
value of the common warrants will equal or exceed the public offering price. There can be no assurance that the market price of the shares
of common stock will ever equal or exceed the exercise price of the common warrants, and consequently, whether it will ever be profitable
for holders of common warrants to exercise the common warrants.
Except as otherwise set
forth in the common warrants and pre-funded warrants, holders of the common warrants and the pre-funded warrants offered hereby will have
no rights as stockholders with respect to the shares of common stock underlying the common warrants and the pre-funded warrants until
such holders exercise their common warrants and pre-funded warrants and acquire our common stock.
Except as otherwise set forth
in the common warrants and pre-funded warrants, until holders of the common warrants and the pre-funded warrants acquire shares of our
common stock upon exercise thereof, such holders of the common warrants and the pre-funded warrants will have no rights with respect to
the shares of our common stock underlying such warrants, such as voting rights. Upon exercise of the common warrants or the pre-funded
warrants, as the case may be, the holder will be entitled to exercise the rights of a common stockholder only as to matters for which
the record date occurs after the exercise date.
Purchasers who purchase
our securities in this offering pursuant to a securities purchase agreement may have rights not available to purchasers that purchase
without the benefit of a securities purchase agreement.
In addition to rights and remedies
available to all purchasers in this offering under federal securities and state law, the purchasers that enter into a securities purchase
agreement will also be able to bring claims for breach of contract against us. The ability to pursue a claim for breach of contract provides
those investors with the means to enforce the covenants uniquely available to them under the securities purchase agreement including timely
delivery of shares and indemnification for breach of contract.
Since we do not expect
to pay any cash dividends for the foreseeable future, investors may be forced to sell their stock in order to obtain a return on their
investment.
We do not anticipate declaring
or paying in the foreseeable future any cash dividends on our capital stock. Instead, we plan to retain any earnings to finance our operations
and growth plans discussed elsewhere or incorporated by reference in this prospectus. Accordingly, investors must rely on sales of their
common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result,
investors seeking cash dividends should not purchase our common stock.
The trading price of our
common stock has been and is likely to continue to be highly volatile and could be subject to wide fluctuations in response to various
factors, some of which are beyond our control.
Our share price is highly
volatile. During the period from June 1, 2023, to May 10, 2024 the closing price of our common stock (on a post-reverse split basis)
ranged from a high of $19.11 per share (as adjusted for the reverse split) to a low of $1.33 per share (as adjusted for the reverse split).
The stock market in general has experienced extreme volatility that has often been unrelated to the operating performance of particular
companies. As a result of this volatility, you may not be able to sell your common stock at or above the public offering price and you
may lose some or all of your investment.
Our Series B Preferred
Stock ranks senior to our common stock.
Our Series B Preferred Stock
ranks, with respect to dividend rights, rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of our company, and redemption rights, senior to our common stock and each other class or series of securities
now existing or hereafter authorized classified or reclassified, the terms of which do not expressly provide that such class or series
ranks on a parity basis with or senior to the Series B Preferred Stock as to dividend rights, rights on the distribution of assets on
any voluntary or involuntary liquidation, dissolution or winding up of the affairs of our company, and redemption rights.
For so long as any shares
of Series B Preferred Stock remain outstanding, the majority holders of the Series B Preferred Stock are entitled to designate one individual
to be nominated to serve as a director on our board of directors.
For so long as any shares of Series B Preferred Stock remain outstanding, the
majority holders of the Series B Preferred Stock (or the Majority Holders) will be entitled to designate one (1) individual to be nominated
to serve as a director (who we refer to as the Series B Preferred Director) on our board of directors (or the Board). At each annual meeting
of the stockholders of our company, or at any special meeting called for the purpose of electing directors, the Board shall nominate such
designee for election. Unless the Board shall have received from the Majority Holders a written designation by March 1 of each calendar
year of an individual other than the then-sitting Series B Preferred Director, the Board shall nominate the then-sitting Series B Preferred
Director for re-election to the Board. The Series B Preferred Director is subject to any board of directors-related provisions that may
be contained in our Certificate of Incorporation or Bylaws. The Majority Holders, voting as a single class at a meeting called for such
purpose (or by written consent signed by the Majority Holders in lieu of such a meeting), have the sole right to remove the Series B Preferred
Director from the Board. Any vacancy created by the removal, resignation or death of a Series B Preferred Director may solely be filled
by the Majority Holders, voting as a single class, at a meeting called for such purpose (or by written consent signed by the Majority
Holders in lieu of such a meeting). The Series B Preferred Director shall be entitled to receive similar compensation, benefits, reimbursement
(including of reasonable travel expenses), indemnification and insurance coverage for his or her service as a director of our company
as the other non-employee directors of on the Board. The initial Series B Preferred Director is Mr. James P. Cassidy. As of the date of
this prospectus, the seat on our Board designated for the Series B Preferred Director is vacant due to Mr. Cassidy’s resignation
from the Board on January 25, 2024. As a result of their Board appointment right, the Majority Holders could have a disproportionate impact
on our governance and operations, which could have an adverse effect on our company.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements other than statements of historical
facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives
of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “should,”
“estimate,” “will,” “may,” “future,” “plan,” “intend” and “expect”
and similar expressions generally identify forward-looking statements. These statements are not guarantees of future performance or events
and are subject to risks and uncertainties that may cause actual results to differ materially from those included within or implied by
such forward-looking statements. These factors are not intended to represent a complete list of the general or specific factors that may
affect us. It should be recognized that other factors, including general economic factors and business strategies, may be significant,
presently or in the future. Forward-looking statements are not statements of historical facts, but rather reflect our current expectations
concerning future events and results, including, without limitation, statements related to:
|
● |
our substantial reliance on, and efforts to diversify our business from, the business of our affiliate Bidi Vapor, LLC (“Bidi”); |
|
|
|
|
● |
our ability to raise required funding in the form of debt or equity both in the near and longer term; |
|
|
|
|
● |
our ability to obtain from, and pay for, Bidi products we distribute; |
|
|
|
|
● |
our ability to integrate and ultimately enter into licenses for or create products relating to the intellectual property assets we acquired from GoFire, Inc. on May 30, 2023; |
|
|
|
|
● |
the impact of the August 2022 11th Circuit Court of Appeals decision overturning the U.S. Food and Drug Administration’s (“FDA”) previous denial of Bidi’s Premarket Tobacco Product Application (“PMTA”) for its non-tobacco flavored BIDI® Stick electronic nicotine delivery system (“ENDS”), which we are permitted to distribute in the U.S. subject to FDA enforcement and maintenance of all state licenses and permits, and the outcome of the FDA’s pending review of such PMTA, the denial of which could have a substantial adverse impact on our company; |
|
|
|
|
● |
the impact of the FDA’s marketing denial order (“MDO”) in January 2024 regarding the Classic BIDIR Stick tobacco-flavored ENDS product, which has the potential to have a substantial adverse impact on our company; |
|
|
|
|
● |
the outcome of Bidi Vapor’s petition with the 11th Circuit Court of Appeals regarding the January 2024 MDO related to Classic BIDI® Stick; |
|
|
|
|
● |
our relationship with, and the results of marketing and sales activity by, Phillip Morris International, to whom we have licensed international rights to distribute Bidi products and from who we are entitled to receive royalty payments; |
|
|
|
|
● |
the influence on our company of Kaival Holdings, LLC, our majority shareholder which is controlled by Nirajkumar Patel, our Chief Executive Officer and a director of our company, and the potential for conflicts of interests between Kaival Holdings and our company and our minority stockholders; |
|
|
|
|
● |
our relationships with, and reliance on, third party distributors and brokers to arrange for sales of our products; |
|
|
|
|
● |
the market perception of Bidi products we distribute and related impacts on our reputation; |
|
|
|
|
● |
the impact of black-market goods on our business; |
|
|
|
|
● |
the demand for Bidi products we distribute; |
|
|
|
|
● |
anticipated product performance, and our market and industry expectations; |
|
● |
our ability or plans to diversify our product offerings; |
|
|
|
|
● |
the impact of government regulation, laws or consumer preferences generally, or changes thereto, that could affect our business; and |
|
|
|
|
● |
circumstances or developments that may make us unable to implement or realize the anticipated benefits, or that may increase the costs of, our current and planned business initiatives, including matters over which we have little or no control such as COVID-19. |
You should carefully read this
prospectus and the documents we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus
is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify
all of the forward-looking statements in this prospectus by these cautionary statements.
Except as required by law, we
assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially
from those anticipated in any forward-looking statements, whether as a result of new information, future events or otherwise.
This prospectus also refers to
estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our
industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates.
In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate
are necessarily subject to a high degree of uncertainty and risk.
USE OF
PROCEEDS
We
estimate that the net proceeds from this offering will be approximately $4,290,000 (assuming
the sale of all units offered hereby at the assumed public offering price of $1.66 per unit,
which represents the closing sale price of our common stock on the Nasdaq Stock Market, LLC
on May 28,2024, and assuming no issuance of pre-funded warrants), after deducting placement
agent fees and estimated offering expenses payable by us, and assuming no sale of any pre-funded
units offered hereunder. However, because this is a best efforts offering with no minimum
number of securities or amount of proceeds as a condition to closing, the actual offering
amount, placement agent fees and net proceeds to us are not presently determinable and may
be substantially less than the maximum amounts set forth on the cover page of this prospectus,
and we may not sell all or any of the securities we are offering. As a result, we may receive
significantly less in net proceeds. Based on the assumed offering price set forth above,
we estimate that our net proceeds from the sale of 75% or 50% of the units offered in this
offering would be approximately $3,127,500 and $1,965,000, respectively, after deducting
placement agent fees and estimated offering expenses payable by us.
We currently intend to use the
net proceeds of this offering for general corporate and working capital purposes and to fund ongoing operations and expansion of our business.
We cannot currently allocate specific percentages of the net proceeds to us from this offering that we may use for these purposes and
our management will have broad discretion in the allocation of such net proceeds.
DILUTION
If you purchase securities
in this offering, your ownership interest will be diluted immediately to the extent of the difference between the assumed public offering
price per unit and as adjusted, net tangible book value per share of common stock immediately after this offering. Tangible assets equal
our total assets less goodwill and intangible assets. As of January 31, 2024, our historical net tangible book value was $476,073 or
$0.17 per share of common stock. Historical net tangible book value per share represents the amount of our total tangible assets less
total liabilities, divided by the number of shares of our common stock outstanding as of January 31, 2024.
After giving effect to the
sale by us in this offering of 3,012,048 units at an assumed public offering price of $1.66 per unit (the closing sale price of our common
stock on the Nasdaq Stock Market, LLC on May 28, 2024), assuming no sale of any pre-funded units in this offering and no exercise of
any of the common warrants being offered in this offering and deducting the placement agent fees and estimated offering expenses payable
by us, our as adjusted net tangible book value as of January 31, 2024, would have been $4,766,073, or $0.81 per share of common stock.
This amount represents an immediate increase in net tangible book value of $0.64 per share to our existing shareholders and an immediate
dilution of $0.85 per share to purchasers of our securities in this offering. We determine dilution per share to investors participating
in this offering by subtracting the as adjusted net tangible book value per share after this offering from the offering price per share
paid by investors participating in this offering.
The following table illustrates this per share dilution:
The
following table illustrates this per share dilution: |
|
|
|
|
|
Assumed
public offering price per unit |
|
$ |
1.66 |
|
Historical
net tangible book value per share at January 31, 2024 |
|
$ |
0.17 |
|
Increase
in as adjusted net tangible book value per share attributable to this offering |
|
$ |
0.64 |
|
As
adjusted net tangible book value per share after giving effect to this offering |
|
$ |
0.81 |
|
Dilution
per share to investors purchasing securities in this offering |
|
$ |
0.85 |
|
If
we only sell 75% or 50% of the maximum offering amount, our as adjusted
net tangible book value after this offering would be $3,603,573, or $2,441,073, respectively, and the dilution per share to investors
purchasing securities in this offering would be $0.96 or $1.10, respectively, assuming no pre-funded warrants are issued and no warrants
are exercised, and after deducting placement agent fees and estimated offering expenses payable by us.
The information discussed above
is illustrative only and will adjust based on the actual public offering price, the actual number of units that we offer in this offering,
and other terms of this offering determined at the time of pricing. The foregoing discussion and table assumes no sale of pre-funded units,
which if sold, would reduce the number of units that we are offering on a one-for-one basis. In addition, we may choose to raise additional
capital due to market conditions or strategic considerations. To the extent that additional capital is raised through the sale of equity
or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
|
The
number of shares of common stock to be outstanding immediately after this offering is based on 2,863,002
shares of common stock outstanding as of May 29, 2024 and excludes:
(1) 357,120
shares of our common stock issuable upon conversion of 900,000 outstanding shares of Series B Preferred Stock;
(2) 267,821
shares of our common stock issuable upon exercise of stock options outstanding, at a weighted average exercise price
of $37.74 per share
(3) 205,636
shares of our common stock issuable upon the exercise of warrants outstanding, at a weighted average exercise price of $65.19 per
share.
(4) 99,732,179
shares of our common stock reserved for future issuance under our Amended and Restated 2020 Stock and Incentive Compensation Plan. |
CAPITALIZATION
The following table summarizes our unaudited capitalization as
of January 31, 2024. Such information is set forth on the following basis:
|
● |
on
an as adjusted basis, giving effect to the sale of the 3,012,048 units (assuming
no sale of pre-funded units) in this offering at the assumed public offering price of $1.66
per unit, which represents the closing sale price of our common stock on the Nasdaq Stock
Market, LLC on May 28, 2024, and an aggregate offering amount of $5,000,000, and assuming
no issuance of pre-funded units, after deducting placement agent’s fees and estimated
offering expenses, and excluding the proceeds, if any, from the subsequent exercise of the
common warrants issued pursuant to this offering; |
You
should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of
Operation,” as well as our financial statements and related notes and the other financial information, incorporated by reference
into this prospectus from our SEC filings, including our most recent Annual Report on Form 10-K, our Quarterly Report on Form 10-Q, and
our Current Reports on Form 8-K. The information presented in the capitalization table below is unaudited.
| |
As of January 31, 2024 |
| |
(Unaudited) |
| |
Actual | |
As
adjusted(1) |
Cash | |
$ | 591,293 | | |
$ | 4,881,293 | |
| |
| | | |
| | |
Total debt | |
| 821,889 | | |
| 821,889 | |
Stockholders’ equity: | |
| | | |
| | |
Common stock, $0.001 par value, 1,000,000,000 shares
authorized, 2,863,002 issued and outstanding, and 5,875,050 issued and outstanding, as adjusted | |
| 2,863 | | |
| 5,875 | |
Additional paid in capital | |
| 44,621,654 | | |
| 48,908,642 | |
Accumulated deficit | |
| (32,877,634 | ) | |
| (32,877,634 | ) |
Total stockholders’ equity | |
| 11,747,783 | | |
| 16,036,883 | |
Total capitalization | |
$ | 12,569,672 | | |
$ | 16,858,772 | |
|
(1) |
A
decrease in the number of units offered by us to 2,259,036 units (resulting in net proceeds
of approximately $3,127,500) would decrease cash, decrease stockholders’ equity, and
decrease total capitalization on an as adjusted basis by approximately $1,162,500 from the
amounts presented in the table above, assuming the assumed offering price of $1.66 per unit
remains the same, and after deducting placement agent’s fees and estimated offering
expenses payable by us. The Company has not completed its review of the accounting treatment
and fair value of the common warrants and pre-funded warrants offered hereby. The table above
assumes the common warrants and pre-funded warrants are accounted for within equity. If the
Company determines the warrants are to be accounted for as liabilities, the fair value of
the warrants will be recognized as a liability and subsequently recorded at fair value each
reporting period with the change in fair value recognized within income. |
The as adjusted information
discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering
determined at pricing.
|
The
number of shares of common stock to be outstanding immediately after this offering is based on 2,863,002
shares of common stock outstanding as of May 29, 2024 and excludes:
(1) 357,120
shares of our common stock issuable upon conversion of 900,000 outstanding shares of Series B Preferred Stock;
(2) 267,821
shares of our common stock issuable upon exercise of stock options outstanding, at a weighted average exercise price
of $37.74 per share
(3) 205,636
shares of our common stock issuable upon the exercise of warrants outstanding, at a weighted average exercise price of $65.19 per
share.
(4) 99,732,179
shares of our common stock reserved for future issuance under our Amended and Restated 2020 Stock and Incentive Compensation Plan. |
MANAGEMENT
The
following table sets forth, as of the date of this prospectus, the names and ages of the current Board of Directors of the Company, our
executive officers and the principal offices and positions held by each person.
Name |
|
Age |
|
Position(s) |
|
Dates
in Position or Office |
|
|
|
|
|
|
|
Nirajkumar
Patel(1) |
|
|
40 |
|
|
Chief Executive Officer
and Director |
|
March 7, 2024–
Current |
|
|
|
|
|
|
|
|
|
David
Worner (2) |
|
|
45 |
|
|
Director |
|
March 19, 2023– Current |
|
|
|
|
|
|
|
|
|
Mark
Thoenes (3) |
|
|
70 |
|
|
Director |
|
August 1, 2023 – Current |
|
|
|
|
|
|
|
|
|
Ashesh
Modi(4) |
|
|
45 |
|
|
Director |
|
April 23,
2024-Current |
|
|
|
|
|
|
|
|
|
Ketankumar
Patel(5) |
|
|
39 |
|
|
Director |
|
April 23,
2024-Current |
|
|
|
|
|
|
|
|
|
Eric
Morris |
|
|
48 |
|
|
Interim Chief Financial Officer |
|
March 7, 2024– Current |
(1) |
Mr. Patel served as our Chief Executive Officer and Chief Financial Officer from February 20, 2019, until June 24, 2022. |
(2) |
Mr. Worner serves as chair of the Audit Committee and a member of the Compensation Committee and Governance and Nominating Committee. |
(3) |
Mr. Thoenes was appointed to the Board effective August 1, 2023. From June 30, 2021 until August 1, 2023, he served as our Interim Chief Financial Officer. |
(4) |
Mr. Modi serves as chair of the Governance and Nominating Committee and a member of the Audit Committee and the Compensation Committee. |
(5) |
Mr. Patel serves as chair of the Compensation Committee and member of the Audit Committee and Governance and Nomination Committee. |
Nirajkumar
Patel, Chief Executive Officer and Director. Nirajkumar Patel attended AISSMS College of Pharmacy in Pune, India and received a Bachelor
of Science Degree in Pharmacy in 2004. After moving to the United States in 2005, Mr. Patel became a United States citizen in 2008 and
obtained a master’s degree in chemistry from the Florida Institute of Technology in 2009. Mr. Patel is a prominent local businessman
in Brevard County, Florida. In 2017 and 2018, Mr. Patel served as Vice President for the Board of the Indian Association of the Space
Coast, located in Brevard County, Florida. Mr. Patel founded, and has served as a Board member of, the Florida Independent Liquor Stores
Owners Association since 2017. In 2013, Mr. Patel launched Just Chill Products LLC, a highly successful developer/manufacturer of high-end
CBD products and has served as its Chief Executive Officer and Chief Science Officer since 2017. In 2017, Mr. Patel created Relax Lab
Inc., a producer/manufacturer of a CBD relaxation beverage, and currently serves as its Chief Executive Officer and Chief Science Officer.
In 2017, Mr. Patel also created RLX Lab LLC, a producer/manufacturer of a non-CBD relaxation beverage, and currently serves as its Chief
Executive Officer and Chief Science Officer. In 2017, Mr. Patel also founded KC Innovations Lab Inc., a CBD white-label manufacturing
service and developer/producer of best-selling white-label CBD products including cosmetics, edibles, beverages, topicals, and vape oils,
and currently serves as its Chief Executive Officer and Chief Science Officer. Additional companies that are owned by Nirajkumar Patel,
the Chief Science & Regulatory Officer and director of our company, and/or his wife include Beach Food Store created in 2004, Diya
Food Store created in 2010, Cloud Nine 2012 created in 2012, JC Products of USA, LLC created in 2013 and Just Pick, LLC. We believe that
Mr. Patel is qualified to serve on our Board because of his prior and current management experience, as well as his business experience
within our business industry.
David Worner, Director. Mr.
David Worner began his career in public accounting and is currently the Chief Executive Officer of GrowthPath Partners, a transactional
accounting and advisory firm which he founded in July 2021. From August 2012 to June 2021, Mr. Worner served as a partner at NOW CFO,
a national finance and accounting consulting firm. Prior to his time at NOW CFO, Mr. Worner worked as a Controller at Covario, an independent
provider of search marketing agency services, from August 2010 until August 2012. Prior to his time at Covario, from September 2006 to
August 2012, he worked as an Accounting Manager for Securities and Exchange Commission Reporting and SOX Management for NTN Buzztime,
a company that produces interactive entertainment across different platforms. Mr. Worner received a bachelor’s degree in accounting
from the University of New Orleans in 2005. We believe Mr. Worner is qualified to serve on our Board because of his expertise in finance,
organizational development and business operations.
Mark Thoenes, Director.
Mr. Mark Thoenes, has more than 35 years of diverse financial and operational leadership to our company. From June 30, 2021 to August
1, 2023, he served as our Interim Chief Financial Officer on a consulting basis. He has been a licensed Certified Public Accountant since
1984 and began his career with Ernst & Young Global Limited. From 2000 to 2010, Mr. Thoenes served as the Executive Vice President/Chief
Financial Officer of Rentrak Corporation (“Rentrak”), a publicly traded company listed on Nasdaq and headquartered in Portland,
Oregon. Founded in 1977, Rentrak went public in 1986, and remained a public company until it was acquired by comScore, Inc. in 2016, after
Mr. Thoenes left Rentrak. For the past eleven years, Mr. Thoenes has been the President of MLT Consulting Services, LLC, a full-service
business/financial consulting firm. We believe Mr. Thoenes is qualified to serve on our Board because of his experience in finance, business
operations, financial and corporate exercise serve as his main contribution to the company’s operation. He is qualified as a director
of our Company given his extensive experience in public companies and finance.
Ashesh Modi, Director:
Since 2017, Mr. Modi, has been a pharmacist at Publix. Since 2016, Mr. Modi has also held a realtor license and has managed multi-million
dollar deals, earning accolades such as being named a top 1% Realtor by Lokation Real Estate in 2022. He also served as President
of the Indian Association of the Space Coast in Florida in 2017 -2018. After earning a Bachelor of Pharmacy degree from A R College of
Pharmacy at Sardar Patel University in India, he came to USA in 2002 where he attended Master's in Public Health from the University of
Oklahoma. We believe that Mr. Modi is qualified to serve on our board of directors due to his background in our industry.
Ketankumar Patel, Director:
In 2017, Mr. Patel founded liquor franchise company called In and Out Liquors. Through that business, he developed a thorough understanding
of how to manage and sell high-value, age-restricted products. Mr. Patel is a graduate of APC College of Pharmacy, Chikhali, Maharastra,
India. After obtaining his degree in 2005, Mr. Patel moved to the United States in 2006. We believe that Mr. Patel is qualified to serve
on our board of directors due to his background in our industry and the business of age-restricted products.
Eric
Morris. Interim Chief Financial Officer: Mr. Morris has served as our Interim Chief Financial Officer since March 2024. Prior to
this position he was our Controller from April 2023 to March 2024. He has been a licensed Certified Public Accountant since 2006. From
Sept 2017 to April 2023, he worked as a fractional accounting consultant at a privately held company with a diverse group of clients.
Prior to his time as a consultant, from December 2010 to August 2017, he was the Controller at a privately held Parking Meter Company.
Mr. Morris received a bachelor’s degree in accounting from Linfield University in 2000. We believe that Mr. Morris is qualified
to serve as our Interim Chief Financial Officer because of his prior and current management experience, as well as his business experience
within our business industry.
Director Independence
Under
Nasdaq standards, a director is not “independent” unless the Board affirmatively determines that he or she does not have a
direct or indirect material relationship with us or any of our subsidiaries. In addition, the director must meet the bright-line tests
for independence set forth by the Nasdaq rules. Our Board has undertaken a review of its composition, the composition of its committees
and the independence of our directors and considered whether any director has a material relationship with us that could compromise his
ability to exercise independent judgment in carrying out his responsibilities. Based on these standards, the Board has determined that
Messrs. Worner, Modi, and Ketankumar Patel are “independent” directors within the meaning of listing rules of the Nasdaq
Stock Market.
All
the members of the Audit, Compensation and Governance and Nominating Committees are independent. In making determinations regarding director
independence, our Board considered the relationships that each non-employee director has with us and all other facts and circumstances
our Board deemed relevant in determining their independence, including the director’s beneficial ownership of our Common Stock and
the relationships of our non-employee directors with certain of our significant stockholders.
DESCRIPTION OF OFFERED SECURITIES
We are offering shares of our
common stock, pre-funded warrants to purchase shares of our common stock, and common warrants to purchase shares of our common stock.
The following summary descriptions of our common stock, pre-funded warrants and common warrants are based on the provisions of our certificate
of incorporation and bylaws, which are incorporated by reference into the registration statement which includes this prospectus, and the
applicable provisions of the Delaware General Corporation Law. This information may not be complete in all respects and is qualified in
its entirety by reference to the provisions of our certificate of incorporation, bylaws and the Delaware General Corporation Law. For
information on how to obtain copies of our certificate of incorporation and bylaws, see the information below under the heading “Where
You Can Find Additional Information.”
The shares of common stock, pre-funded
warrants, and common warrants that we are offering are immediately separable and will be issued separately.
Common Stock
We
currently have authority to issue up to 1,000,000,000 shares of common stock, $0.001 par
value per share. As of May 29, 2024, we had 2,863,002, shares of common stock outstanding.
From time to time we may amend our certificate of incorporation to increase the number of
authorized shares of common stock. Any such amendment would require the approval of the holders
of a majority of the voting power of the shares entitled to vote thereon.
Holders of our common stock are
entitled to one vote for each share held of record on all matters submitted to a vote of stockholders, including the election of directors,
and are entitled to receive dividends when and as declared by our Board out of funds legally available therefore for distribution to stockholders
and to share ratably in the assets legally available for distribution to stockholders in the event of the liquidation or dissolution,
whether voluntary or involuntary, of our company. We have not paid any dividends and do not anticipate paying any dividends on our common
stock in the foreseeable future. It is our present policy to retain earnings, if any, for use in the development of our business. Our
common stockholders do not have cumulative voting rights in the election of directors and have no preemptive, subscription, or conversion
rights. Our common stock is subject to redemption by us.
Common Warrants
The following summary of certain
terms and provisions of the common warrants included in the units and pre-funded units that are being offered hereby is not complete and
is subject to, and qualified in its entirety by, the provisions of the common warrant, the form of which will be filed as an exhibit to
the registration statement of which this prospectus forms a part. Prospective investors should carefully review the terms and provisions
of the form of common warrant for a complete description of the terms and conditions of the common warrants.
Duration, Exercise Price and Form
Each
common warrant included in the units and pre-funded units will have an initial exercise price
equal to $[●] per share (equal to 100% of the public offering price per unit).
The common warrants will be immediately exercisable and may be exercised until the five-year
anniversary of the original issuance date. The exercise price and number of shares of common
stock issuable upon exercise are subject to appropriate adjustment in the event of stock
dividends, stock splits, reorganizations or similar events affecting our common stock and
the exercise price. The initial exercise price shall be reset immediately following the thirtieth
(30th) calendar day following the closing date of the public offering (the “Reset Date”)
to a price equal to the arithmetic average of the VWAPs of the common stock on Nasdaq during the five trading
days immediately preceding the Reset Date (the “Reset Price”); provided, however,
that in no event shall the Reset Price be less than 20% of the most recent closing price
of our common stock on Nasdaq at the time of execution of the securities purchase agreement
by the purchasers; provided further that the Rest Price cannot be lower than the initial
exercise price. The common warrants will be issued separately from the common stock or the
pre-funded warrants, as the case may be, and may be transferred separately immediately thereafter.
The common warrants will be issued in electronic form.
Exercisability
The common warrants will be exercisable,
at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full
for the number of shares of our common stock purchased upon such exercise. A holder (together with its affiliates) may not exercise any
portion of such holder’s warrants to the extent that the holder would own more than 4.99% of the outstanding common stock (or at
the election of a holder prior to the date of issuance, 9.99%) immediately after exercise, except that upon at least 61 days’ prior
notice from the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s
warrants up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such
percentage ownership is determined in accordance with the terms of the common warrants. If, at the time of exercise there is no effective
registration statement registering, or the prospectus contained therein is not available for the issuance of, the shares of common stock
underlying the warrants, then the warrants may also be exercised, in whole or in part, at such time by means of a cashless exercise, in
which case the holder would receive upon such exercise the net number of shares of common stock determined according to the formula set
forth in the warrant.
Fundamental Transactions
In the event of a fundamental
transaction, as described in the common warrants and generally including any reorganization, recapitalization or reclassification of our
common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation or merger
with or into another person, the acquisition of more than 50% of our outstanding common stock, or any person or group becoming the beneficial
owner of 50% of the voting power represented by our outstanding common stock, the holders of the common warrants will be entitled to receive
upon exercise of the common warrants the kind and amount of securities, cash or other property that the holders would have received had
they exercised the common warrants immediately prior to such fundamental transaction, and the successor entity will succeed to, and be
substituted for us, and may exercise every right and power that we may exercise and will assume all of our obligations under the common
warrants with the same effect as if such successor entity had been named in the common warrant itself. If holders of our common stock
are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given
the same choice as to the consideration it receives upon any exercise of the common warrant following such fundamental transaction.
Warrant Agent; Global Certificate
The common warrants will be issued
in registered form under a warrant agency agreement between our transfer agent or other warrant agent and us. The common warrants will
initially be represented only by one or more global warrants deposited with the warrant agent, as custodian on behalf of The Depository
Trust Company, or DTC, and registered in the name of Cede & Co, a nominee of DTC, or as otherwise directed by DTC.
Transferability
Subject to applicable laws, a
common warrant may be transferred at the option of the holder upon surrender of the common warrant to us together with the appropriate
instruments of transfer.
Fractional Shares
No fractional shares of common
stock will be issued upon the exercise of the common warrants. Rather, the number of shares of common stock to be issued will be rounded
down to the nearest whole number.
Trading Market
There is no established trading
market for the common warrants, and we do not expect a market to develop. We do not intend to apply for a listing of the common warrants
on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the common
warrants will be limited. The common stock issuable upon exercise of the common warrants is currently listed on Nasdaq.
Rights as a Stockholder
Except as otherwise provided
in the common warrants or by virtue of the holders’ ownership of shares of common stock, the holders of the common warrants do not
have the rights or privileges of holders of our shares of common stock, including any voting rights, until such common warrant holders
exercise their common warrants.
Governing Law
The common warrants are governed by New York law.
Pre-Funded Warrants
The following summary of certain
terms and provisions of the pre-funded warrants that are being offered hereby is not complete and is subject to, and qualified in its
entirety by, the provisions of the pre-funded warrant, the form of which is filed as an exhibit to the registration statement of which
this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of pre-funded warrant
for a complete description of the terms and conditions of the pre-funded warrants.
Duration, Exercise Price and Form
Each pre-funded unit will be
sold in this offering at a purchase price equal to $[*] (equal to the purchase price per unit, minus $0.001). Each pre-funded
warrant included in the pre-funded units offered hereby will have an initial exercise price per share equal to $0.001. The pre-funded
warrants will be immediately exercisable and will not expire prior to exercise. The exercise price and number of shares of common stock
issuable upon exercise are subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar
events affecting our common stock. The pre-funded warrants will be issued in electronic form.
Exercisability
The pre-funded warrants will
be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and, at any time
a registration statement registering the issuance of the shares of common stock underlying the pre-funded warrants under the Securities
Act of 1933, as amended (the “Securities Act”), is effective and available for the issuance of such shares, or an exemption
from registration under the Securities Act is available for the issuance of such shares, by payment in full in immediately available funds
for the number of shares of common stock purchased upon such exercise. A holder (together with its affiliates) may not exercise any portion
of the pre-funded warrant to the extent that the holder would own more than 4.99% (or, at the election of the holder, 9.99%) of the outstanding
common stock immediately after exercise, except that upon notice from the holder to us, the holder may increase or decrease the beneficial
ownership limitation in the holder’s pre-funded warrants up to 9.99% of the number of shares of our common stock outstanding immediately
after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrants
provided that any increase in the beneficial ownership limitation shall not be effective until 61 days following notice to us. If, at
the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for
the issuance of, the shares of common stock underlying the pre-funded warrants, then the pre-funded warrants may also be exercised, in
whole or in part, at such time by means of a cashless exercise, in which case the holder would receive upon such exercise the net number
of shares of common stock determined according to the formula set forth in the pre-funded warrant.
Warrant Agent; Global Certificate
The pre-funded warrants will
be issued in registered form under a warrant agency agreement between our transfer agent or other warrant agent and us. The pre-funded
warrants will initially be represented only by one or more global warrants deposited with the warrant agent, as custodian on behalf of
The Depository Trust Company, or DTC, and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.
Transferability
Subject to applicable laws, a
pre-funded warrant may be transferred at the option of the holder upon surrender of the pre-funded warrant to us together with the appropriate
instruments of transfer.
Fractional Shares
No fractional shares
of common stock will be issued upon the exercise of the pre-funded warrants. Rather, the number of shares of common stock to be issued
will be rounded up to the nearest whole number.
Trading Market
There is no established public
trading market for the pre-funded warrants, and we do not expect a market to develop. In addition, we do not intend to apply to list the
pre-funded warrants on any national securities exchange or other nationally recognized trading system. Without an active trading market,
the liquidity of the pre-funded warrants will be limited.
Right as a Stockholder
Except as otherwise provided
in the pre-funded warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the pre-funded
warrants do not have the rights or privileges of holders of our common stock with respect to the shares of common stock underlying the
pre-funded warrants, including any voting rights, until they exercise their pre-funded warrants. The pre-funded warrants will provide
that holders have the right to participate in distributions or dividends paid on our common stock.
Fundamental Transaction
In the event of a fundamental
transaction, as described in the pre-funded warrants and generally including any reorganization, recapitalization or reclassification
of our common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation
or merger with or into another person, the acquisition of more than 50% of our outstanding common stock, or any person or group becoming
the beneficial owner of 50% of the voting power represented by our outstanding common stock, the holders of the pre-funded warrants will
be entitled to receive upon exercise of the pre-funded warrants the kind and amount of securities, cash or other property that the holders
would have received had they exercised the pre-funded warrants immediately prior to such fundamental transaction, and the successor entity
will succeed to, and be substituted for us, and may exercise every right and power that we may exercise and will assume all of our obligations
under the pre-funded warrants with the same effect as if such successor entity had been named in the pre-funded warrant itself. If holders
of our common stock are given a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder
shall be given the same choice as to the consideration it receives upon any exercise of the pre-funded warrant following such fundamental
transaction.
Amendment and Waiver
The pre-funded warrants may be
modified or amended or the provisions thereof waived with the written consent of our company and the respective holder.
Governing Law
The pre-funded warrants are governed by New York law.
Transfer Agent; Warrant Agent
The transfer agent and registrar for our common stock is vStock
LLC. The warrant agent for the common warrants and the pre-funded warrants will be vStock Transfer, LLC.
Certain Effects of Delaware Law and Certificate of Incorporation and
Bylaw Provisions
Certain provisions in our Certificate of Incorporation and Bylaws, as well
as certain provisions of the DGCL, may be deemed to have an anti-takeover effect and may delay, deter, or prevent a tender offer or takeover
attempt that a stockholder might consider to be in its best interests, including attempts that might result in a premium being paid over
the market price of the shares held by stockholders. These provisions contained in our Certificate of Incorporation and Bylaws include
the items described below.
|
● |
Special Meetings of Stockholders. Our Bylaws provide that special meetings of our stockholders may be called only by a majority of our Board, the President, Chief Executive Officer, or the Secretary. |
|
|
|
|
● |
No Cumulative Voting. Our Certificate of Incorporation does not include a provision for cumulative voting for directors. Under cumulative voting, a minority stockholder holding a sufficient percentage of a class of shares could be able to ensure the election of one or more directors. |
|
|
|
|
● |
Undesignated Preferred Stock. Because our Board has the power to establish the preferences and rights of the shares of any additional series of Preferred Stock, it may afford holders of any Preferred Stock preferences, powers, and rights, including voting and dividend rights, senior to the rights of holders of our common stock, which could adversely affect the holders of common stock and could discourage a takeover of us even if a change of control of our company would be beneficial to the interests of our stockholders. |
|
|
|
|
● |
Our Officers Beneficially Own a Majority of Our Capital Stock. Our executive officers and sole directors beneficially own more than a majority of our common stock and own all of the issued and outstanding shares of Series A Preferred Stock. Accordingly, they are able to control all matters related to our company. |
These and other provisions contained in our Certificate of Incorporation
and Bylaws are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to
encourage persons seeking to acquire control of us to first negotiate with our Board. However, these provisions could delay or discourage
transactions involving an actual or potential change in control of us, including transactions in which stockholders might otherwise receive
a premium for their shares over then current prices. Such provisions could also limit the ability of stockholders to remove current management
or approve transactions that stockholders may deem to be in their best interests.
In addition, we are subject to the provisions of Section 203 of the DGCL.
Section 203 of the DGCL prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested
stockholder” for a period of three years after the person became an interested stockholder, unless:
|
● |
The board of directors of the corporation approved the business combination or other transaction in which the person became an interested stockholder prior to the date of the business combination or other transaction; |
|
|
|
|
● |
Upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding, shares owned by persons who are directors and also officers of the corporation and shares issued under which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
|
|
|
|
● |
on or subsequent to the date the person became an interested stockholder, the board of directors of the corporation approved the business combination and the stockholders of the corporation authorized the business combination at an annual or special meeting of stockholders by the affirmative vote of at least 66-2/3% of the outstanding voting stock of the corporation that is not owned by the interested stockholder. |
A “business combination” includes mergers, asset sales, and
other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested
stockholder” is a person who, together with affiliates and associates, owns, or within the prior three years did own, 15% or more
of a corporation’s voting stock.
Section 203 of the DGCL could depress our stock price and delay, discourage,
or prohibit transactions not approved in advance by our Board, such as takeover attempts that might otherwise involve the payment to our
stockholders of a premium over the market price of our common stock.
PLAN OF DISTRIBUTION
We are offering on a best
efforts basis up to 3,012,048 units or pre-funded units, based on an assumed public offering price of $1.66 per unit or $1.659 per pre-funded
unit., which represents the closing price of our common stock on the Nasdaq Stock Market, LLC on May 28, 2024, for gross proceeds of
up to approximately $5,000,000 before deduction of placement agent fees and offering expenses. There is no minimum amount of proceeds
that is a condition to closing of this offering. The actual amount of gross proceeds, if any, in this offering could vary substantially
from the gross proceeds from the sale of the maximum amount of securities being offered in this prospectus.
Pursuant to a placement agency
agreement, dated as of [*], 2024, we have engaged Maxim Group LLC to act as our exclusive placement agent to solicit offers to purchase
the securities offered by this prospectus. The placement agent is not purchasing or selling any securities, nor is it required to arrange
for the purchase and sale of any specific number or dollar amount of securities, other than to use its “best efforts” to arrange
for the sale of the securities by us. Therefore, we may not sell the entire amount of securities being offered. Investors purchasing securities
offered hereby will have the option to execute a securities purchase agreement with us. In addition to the rights and remedies available
to all investors in this offering under federal and state securities laws, the investors which enter into a securities purchase agreement
will also be able to bring claims of breach of contract against us. Investors who do not enter into a securities purchase agreement shall
rely solely on this prospectus in connection with the purchase of our securities in this offering. The placement agent may engage one
or more subagents or selected dealers in connection with this offering.
The placement agency agreement
provides that the placement agent’s obligations are subject to conditions contained in the placement agency agreement.
The units will be offered at
a fixed price and are expected to be issued in a single closing. There is no minimum number of units to be sold or minimum aggregate offering
proceeds for this offering to close.
We will deliver the securities
being issued to the investors upon receipt of investor funds for the purchase of the securities offered pursuant to this prospectus. We
expect to deliver the securities being offered pursuant to this prospectus on or about [*], 2024.
Placement Agent Fees, Commissions and Expenses
Upon the closing of this offering,
we will pay the placement agent a cash transaction fee equal to 7% of the aggregate gross cash proceeds to us from the sale of the securities
in the offering. In addition, we will reimburse the placement agent for certain of its out-of-pocket expenses incurred in connection with
this offering, including the placement agent’s legal fees, and actual travel and reasonable out-of-pocket expenses, in an amount
not to exceed $100,000. If this offering is not completed, we have agreed to reimburse the placement agent for its actual expenses in
an amount not to exceed 25,000. We have paid an advance in the amount of $25,000 to the placement agent, which will be applied against
the placement agent’s accountable out-of-pocket expenses and will be reimbursed to us to the extent not incurred.
The following table shows the
public offering price, placement agent fees and proceeds, before expenses, to us, assuming the sale of all units in this offering and
no sale of any pre-funded units in this offering.
|
|
Per
Unit(1) |
|
Total |
Public
offering price |
|
$ |
|
|
|
$ |
|
|
Placement
agent fees(2) |
|
$ |
|
|
|
$ |
|
|
Proceeds
to us (before expenses) |
|
$ |
|
|
|
$ |
|
|
We estimate that the total
expenses of the offering, including registration and filing fees, printing fees and legal and accounting expenses, but excluding the
placement agent fees, will be approximately $360,000, all of which are payable by us. This figure includes, among other things, the placement
agent’s expenses (including the legal fees, costs and expenses for the placement agent’s legal counsel) that we have agreed
to reimburse.
Lock-Up Agreements
We,
each of our officers and directors and all holders of securities exercisable
for or convertible into in excess of ten percent (10%) of the outstanding shares of common stock shall enter into customary “lock-up”
agreements in favor of the placement agent pursuant to which such persons and entities shall agree, for a period of ninety (90) days after
the closing of this offering, that they shall neither offer, issue, sell, contract to sell, encumber, grant any option for the sale of
or otherwise dispose of any of our securities without the placement agent’s prior written consent, including the issuance of shares
of Common Stock upon the exercise of currently outstanding options.
The placement agent may in its
sole discretion and at any time without notice release some or all of the shares subject to lock-up agreements prior to the expiration
of the lock-up period. When determining whether or not to release shares from the lock-up agreements, the placement agent will consider,
among other factors, the security holder’s reasons for requesting the release, the number of shares for which the release is being
requested and market conditions at the time.
In addition, we have also
agreed with the placement agent that until the three-month anniversary of the closing date of this offering, we will not affect or enter
into an agreement to effect a “Variable Rate Transaction” as defined in the placement agency agreement to be entered into
with each purchaser.
Right of First Refusal
Upon the closing of the offering
or Financing (as defined below), we have agreed to grant the placement agent a right of first refusal for a period of eighteen (18) months
from such closing, to act as sole managing underwriter and sole book runner, sole placement agent, or sole sales agent, for any and all
future public or private equity, equity-linked or debt (excluding commercial bank debt) offerings for which we retain the service of an
underwriter, agent, advisor, finder or other person or entity in connection with such offering during such eighteen (18) month period
of the Company (and any successor thereto). We shall not offer to retain any entity or person in connection with any such offering on
terms more favorable than terms on which it offers to retain the placement agent. Such offer shall be made in writing in order to be effective.
The placement agent shall notify us within ten (10) business days of its receipt of the written offer contemplated above as to whether
it agrees to accept such retention. “Financing” shall mean, where an underwriter, placement agent and/or finder is utilized
in transactions involving third parties who may be interested in providing financing to the Company including equity, equity-linked, convertible
and/or debt securities.
Indemnification
We have agreed to indemnify the
placement agent against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the placement
agent may be required to make for these liabilities.
Regulation M
The placement agent may be deemed
to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any profit realized
on the resale of the securities sold by it while acting as principal might be deemed to be underwriting discounts or commissions under
the Securities Act. As an underwriter, the placement agent would be required to comply with the requirements of the Securities Act and
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, without limitation, Rule 10b-5 and Regulation
M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of our securities by the placement agent
acting as principal. Under these rules and regulations, the placement agent (i) may not engage in any stabilization activity in connection
with our securities and (ii) may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our
securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.
Determination of Offering Price and Warrant Exercise Price
The actual offering price of
the units and pre-funded units we are offering, and the exercise price of the common warrants included in the units and pre-funded units
that we are offering, were negotiated between us, the placement agent and the investors in the offering based on the trading of our shares
of common stock prior to the offering, among other things. Other factors considered in determining the public offering price of the securities
we are offering, as well as the exercise price of the common warrants that we are offering, include our history and prospects, the stage
of development of our business, our business plans for the future and the extent to which they have been implemented, an assessment of
our management, the general conditions of the securities markets at the time of the offering and such other factors as were deemed relevant.
Electronic Distribution
A prospectus in electronic format
may be made available on a website maintained by the placement agent or an affiliate. Other than this prospectus, the information on the
placement agent’s website and any information contained in any other website maintained by the placement agent is not part of this
prospectus or the registration statement of which this prospectus form a part, has not been approved and/or endorsed by us or the placement
agent, and should not be relied upon by investors. In connection with the offering, the placement agent or selected dealers may distribute
prospectuses electronically. No forms of electronic prospectus other than prospectuses that are printable as Adobe® PDF will be used
in connection with this offering.
Other than the prospectus in
electronic format, the information on the placement agent’s website and any information contained in any other website maintained
by the placement agent is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been
approved and/or endorsed by us or the placement agent in its capacity as placement agent and should not be relied upon by investors.
Other Relationships
The placement agent and certain
of its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial
and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage
activities. The placement agent and certain of its affiliates have, from time to time, performed, and may in the future perform, various
commercial and investment banking and financial advisory services for us and our affiliates, for which they received or will receive customary
fees and expenses. However, except as disclosed in this prospectus, we have no present arrangements with the placement agent for any further
services.
In the ordinary course of their
various business activities, the placement agent and certain of its affiliates may make or hold a broad array of investments and actively
trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account
and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments issued
by us and our affiliates. If the placement agent or its affiliates have a lending relationship with us, they routinely hedge their credit
exposure to us consistent with their customary risk management policies. The placement agent and its affiliates may hedge such exposure
by entering into transactions that consist of either the purchase of credit default swaps or the creation of short positions in our securities
or the securities of our affiliates, including potentially the securities offered hereby. Any such short positions could adversely affect
future trading prices of the securities offered hereby. The placement agent and certain of its affiliates may also communicate independent
investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities
or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and
instruments.
Listing
Our common stock is traded on Nasdaq under the symbol “KAVL”.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is vStock
Transfer, LLC.
Selling Restrictions
Other than in the United States,
no action has been taken by us or the placement agent that would permit a public offering of the securities offered by this prospectus
in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly
or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such
securities be distributed or published, in any jurisdiction, except under circumstances that will result in compliance with the applicable
rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about
and to observe any restrictions relating to this offering and the distribution of this prospectus. This prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer
or a solicitation is unlawful.
Australia. No placement
document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments
Commission (ASIC), in relation to the offering.
This prospectus does not constitute
a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the Corporations Act) and does
not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the
Corporations Act.
Any offer in Australia of the
securities may only be made to persons (the Exempt Investors) who are “sophisticated investors” (within the meaning of section
708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act)
or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the securities
without disclosure to investors under Chapter 6D of the Corporations Act.
The securities applied for by
Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the
offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant
to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies
with Chapter 6D of the Corporations Act. Any person acquiring securities must observe such Australian on-sale restrictions.
This prospectus contains general
information only and does not take account of the investment objectives, financial situation or particular needs of any particular person.
It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to
consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek
expert advice on those matters.
Brazil. The offer
of securities described in this prospectus will not be carried out by means that would constitute a public offering in Brazil under Law
No. 6,385, of December 7, 1976, as amended, under the CVM Rule (Instrução) No. 400, of December 29, 2003. The offer and
sale of the securities have not been and will not be registered with the Comissão de Valores Móbilearios in Brazil. The
securities have not been offered or sold, and will not be offered or sold in Brazil, except in circumstances that do not constitute a
public offering or distribution under Brazilian laws and regulations.
Canada. The securities
may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined
in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients,
as defined in National Instrument 31 103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of
the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable
securities laws.
Securities legislation in certain
provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement (including
any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser
within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer
to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights
or consult with a legal advisor.
Pursuant to section 3A.3 of National
Instrument 33 105 Underwriting Conflicts (NI 33 105), the placement agent is not required to comply with the disclosure requirements of
NI 33-105 regarding conflicts of interest in connection with this offering.
Cayman Islands. No invitation, whether directly
or indirectly, may be made to the public in the Cayman Islands to subscribe for our securities.
European Economic Area.
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant
Member State”) an offer to the public of any securities may not be made in that Relevant Member State, except that an offer to the
public in that Relevant Member State of any securities may be made at any time under the following exemptions under the Prospectus Directive,
if they have been implemented in that Relevant Member State:
| ● | to any legal entity which is a qualified investor as defined in the Prospectus Directive; |
| ● | to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010
PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted
under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or |
| ● | in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such
offer of securities shall result in a requirement for the publication by us or any placement agent of a prospectus pursuant to Article
3 of the Prospectus Directive. |
For the purposes of this provision,
the expression an “offer to the public” in relation to any securities in any Relevant Member State means the communication
in any form and by any means of sufficient information on the terms of the offer and any securities to be offered so as to enable an investor
to decide to purchase any securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive
in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including
the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure
in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
Hong Kong. The
contents of this prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation
to the offer. If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
Please note that (i) our shares may not be offered or sold in Hong Kong, by means of this prospectus or any document other than to “professional
investors” within the meaning of Part I of Schedule 1 of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) (SFO)
and any rules made thereunder, or in other circumstances which do not result in the document being a “prospectus” within the
meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong) (CO) or which do not constitute an offer or invitation to the public for
the purpose of the CO or the SFO, and (ii) no advertisement, invitation or document relating to our shares may be issued or may be in
the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere) which is directed at, or the contents
of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong
Kong) other than with respect to the shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional
investors” within the meaning of the SFO and any rules made thereunder.
Israel. This document
does not constitute a prospectus under the Israeli Securities Law, 5728-1968, or the Securities Law, and has not been filed with or approved
by the Israel Securities Authority. In the State of Israel, this document is being distributed only to, and is directed only at, and any
offer of the shares is directed only at, investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting
primarily of joint investment in trust funds, provident funds, insurance companies, banks, portfolio managers, investment advisors, members
of the Tel Aviv Stock Exchange, underwriters, venture capital funds, entities with equity in excess of NIS 50 million and “qualified
individuals”, each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors
(in each case purchasing for their own account or, where permitted under the Addendum, for the accounts of their clients who are investors
listed in the Addendum). Qualified investors will be required to submit written confirmation that they fall within the scope of the Addendum,
are aware of the meaning of same and agree to it.
The People’s
Republic of China. This prospectus may not be circulated or distributed in the PRC and the shares may not be offered or sold,
and will not offer or sell to any person for re-offering or resale directly or indirectly to any resident of the PRC except pursuant to
applicable laws, rules and regulations of the PRC. For the purpose of this paragraph only, the PRC does not include Taiwan and the special
administrative regions of Hong Kong and Macau.
Switzerland. The
securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (the SIX) or on any other stock
exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for
issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses
under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland.
Neither this document nor any other offering or marketing material relating to the securities or the offering may be publicly distributed
or otherwise made publicly available in Switzerland.
Neither this document nor any
other offering or marketing material relating to the offering, or the securities have been or will be filed with or approved by any Swiss
regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the
Swiss Financial Market Supervisory Authority FINMA, and the offer of securities has not been and will not be authorized under the Swiss
Federal Act on Collective Investment Schemes (CISA). Accordingly, no public distribution, offering or advertising, as defined in CISA,
its implementing ordinances and notices, and no distribution to any non-qualified investor, as defined in CISA, its implementing ordinances
and notices, shall be undertaken in or from Switzerland, and the investor protection afforded to acquirers of interests in collective
investment schemes under CISA does not extend to acquirers of securities.
Taiwan. The securities
have not been and will not be registered with the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and
regulations and may not be sold, issued or offered within Taiwan through a public offering or in circumstances which constitutes an offer
within the meaning of the Securities and Exchange Act of Taiwan that requires a registration or approval of the Financial Supervisory
Commission of Taiwan. No person or entity in Taiwan has been authorized to offer, sell, give advice regarding or otherwise intermediate
the offering and sale of the securities in Taiwan.
United Kingdom.
This prospectus has only been communicated or caused to have been communicated and will only be communicated or caused to be communicated
as an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets
Act of 2000, or the FSMA) as received in connection with the issue or sale of our common stock in circumstances in which Section 21(1)
of the FSMA does not apply to us. All applicable provisions of the FSMA will be complied with in respect to anything done in relation
to our common stock in, from or otherwise involving the United Kingdom.
LEGAL MATTERS
The validity of the securities
offered hereby will be passed upon for us by Sichenzia Ross Ference Carmel LLP, New York, New York. Loeb & Loeb LLP, New York, NY,
is acting as counsel to the placement agent.
EXPERTS
Our consolidated balance sheets as of October 31, 2023 and 2022 and the related
consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended, incorporated by
reference into this prospectus, have been audited by MaloneBailey, LLP, our independent registered public accounting firm, with respect
thereto, and has been so included in reliance upon the report (which report includes an explanatory paragraph relating to going concern)
of such firm given on their authority as experts in accounting and auditing
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and
special reports, proxy statements and other documents with the SEC. You may read and copy any document we file at the SEC’s public
reference room at 100 F Street, N.E., Washington, D.C. 20549. You should call 1-800-SEC-0330 for more information on the public reference
room. The SEC maintains an Internet website at www.sec.gov that contains reports, proxy and information statements, and other information
regarding issuers of securities, like us, that file electronically with the SEC. Our SEC filings are available to you on the SEC’s
Internet website. We also maintain a website at https://kaivalbrands.com, which provides additional information about the Company.
The contents of our website or any other website, however, are not a part of this prospectus and is not incorporated by reference into
this prospectus. Our website address is included as an inactive textual reference only.
This prospectus is part of a
registration statement on Form S-1 that we filed with the SEC to register the securities to be offered hereby. This prospectus does not
contain all of the information included in the registration statement, including certain exhibits and schedules. You may obtain the registration
statement and exhibits to the registration statement from the SEC at the address listed above or from the SEC’s website listed above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We are incorporating by reference
certain documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents.
The information in the documents incorporated by reference is considered to be part of this prospectus. We incorporate by reference the
documents listed below and any future filings we may make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this prospectus and before the termination of the offering. Additionally, all filings filed by the registrant pursuant to
the Exchange Act after the date of the initial registration statement and prior to effectiveness of the registration statement shall be
deemed to be incorporated by reference into this prospectus.
| ● | Annual Report on Form 10-K for the fiscal year ended October 31, 2023. |
| ● | Quarterly Report on Form 10-Q for the fiscal quarters ended January 31, 2024. |
|
● |
Current Reports on Form 8-K filed with the SEC on May 3, 2024, April 25, 2024, March 14, 2024, March 13, 2024, February 26, 2024, February 8, 2024, January 26, 2024, January 22, 2024, December 28, 2023, December 5, 2023 and, November 13, 2023. |
|
|
|
|
● |
Schedule 14A with the SEC on May 14, 2024. |
In no event, however, will any
of the information that we “furnish” to the SEC in any current report on Form 8-K or any other report or filing be incorporated
by reference into, or otherwise included in, this prospectus.
Information contained in this
prospectus supplements, modifies or supersedes, as applicable, the information contained in earlier-dated documents incorporated by reference.
Information contained in later-dated documents incorporated by reference supplements, modifies or supersedes, as applicable, the information
contained in this prospectus or in earlier-dated documents incorporated by reference.
We will provide to each person,
including any beneficial owner, to whom a prospectus has been delivered, free of charge, upon oral or written request, copies of any documents
that we have incorporated by reference into this prospectus. You may request, orally or in writing, a copy of these documents, and any
exhibits incorporated by reference in these documents, which will be provided to you at no cost, by contacting:
KAIVAL BRANDS INNOVATIONS GROUP, INC
4460 Old Dixie Highway
Grant-Valkaria, Florida 32949
Attention: Interim Chief Financial Officer, Eric Morris
Telephone: (833) 452-4825
The SEC maintains an
Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC and state the address of that site (www.sec.gov) and these reports, proxy and information statements are also available
through our website at https://ir.kaivalbrands.com/overview/default.aspx
You should rely only on the information
contained in this prospectus, including information incorporated by reference as described above, or any prospectus supplement that we
have specifically referred you to. We have not authorized anyone else to provide you with different information. You should not assume
that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those
documents or that any document incorporated by reference is accurate as of any date other than its filing date. You should not consider
this prospectus to be an offer or solicitation relating to the securities in any jurisdiction in which such an offer or solicitation relating
to the securities is not authorized. Furthermore, you should not consider this prospectus to be an offer or solicitation relating to the
securities if the person making the offer or solicitation is not qualified to do so, or if it is unlawful for you to receive such an offer
or solicitation.
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities
Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is therefore unenforceable.
Up to 3,012,048 Units consisting of
Up to 3,012,048 Shares of Common Stock and
Up to 4,518,072 Common Warrants to purchase
Up to 4,518,072 Shares of Common Stock
Up to 3,012,048 Pre-Funded Units consisting
of
Up to 3,012,048 Pre-Funded Warrants to purchase
Up to 3,012,048 Shares of Common Stock and
Up to 4,518,072 Common Warrants to purchase
Up to 4,518,072 Shares of Common Stock
Up to 3,012,048 Shares of Common Stock Underlying
the Pre-Funded Warrants
Up to 4,518,072 Shares of Common Stock Underlying
the Common Warrants
PROSPECTUS
[•], 2024
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 13. | Other Expenses of Issuance and Distribution. |
The estimated expenses payable by us in connection with the issuance
and distribution of the securities being registered are as follows:
SEC Registration Fee | |
$ | 1,476 | |
FINRA Filing Fee | |
$ | 2,000 | |
Legal Fees and Expenses* | |
$ | 150,000 | |
Accounting Fees and Expenses* | |
$ | 70,000 | |
Miscellaneous Fees and Expenses* | |
$ | 11,524 | |
Total | |
$ | 235,000 | |
* Estimated solely for the purposes of this Item. Actual expenses may vary.
| Item 14. | Indemnification of Directors and Officers. |
Section 145 of the Delaware General
Corporation Law (“DGCL”) authorizes a corporation to indemnify its directors and officers against liabilities arising out
of actions, suits and proceedings to which they are made or threatened to be made a party by reason of the fact of their prior or current
service to the corporation as a director or officer, in accordance with the provisions of Section 145, which are sufficiently broad to
permit indemnification under certain circumstances for liabilities arising under the Securities Act of 1933, as amended (the “Securities
Act”). The indemnity may cover expenses (including attorneys’ fees) judgments, fines and amounts paid in settlement actually
and reasonably incurred by the director or officer in connection with any such action, suit or proceeding. Section 145 permits corporations
to pay expenses (including attorneys’ fees) incurred by directors and officers in advance of the final disposition of such action,
suit or proceeding. In addition, Section 145 provides that a corporation has the power to purchase and maintain insurance on behalf of
its directors and officers against any liability asserted against them and incurred by them in their capacity as a director or officer,
or arising out of their status as such, whether or not the corporation would have the power to indemnify the director or officer against
such liability under Section 145.
Our certificate of incorporation,
as amended (the “Certificate of Incorporation”), provides that, unless otherwise required under applicable law, (a) a director
shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, and (b) we shall
indemnify any director or officer made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact of such person’s current or prior service as a director or officer of the Company any predecessor of the Company,
or any other enterprise per the Company’s or any predecessor to the Company’s request.
Our bylaws provide that (a) we
shall indemnify and hold harmless our directors and officers to the maximum extent and in the manner permitted by the DGCL against expenses
(including attorneys’ fees) reasonably incurred in connection with any proceeding, whether civil, criminal, administrative or investigative,
arising by reason of the fact that such person is or was an agent of the corporation, (b) we shall advance expenses incurred by any director
or officer prior to the final disposition of any proceeding to which the director or officer was or is or is threatened to be made a party
promptly following a request therefore, subject to certain limited requirements, and (c) the rights conferred in our Bylaws are not exclusive.
We have also obtained insurance
policies covering our directors and officers with respect to certain liabilities, including liabilities arising under the Securities Act.
The foregoing represents a summary
of the general effect of the DGCL, our Certificate of Incorporation, and any other contracts or arrangements of the Company relating to
indemnification, and is qualified in its entirety by reference to, the terms and provisions of the DGCL, our Certificate of Incorporation,
and such other contracts or arrangements relating to indemnification.
| Item 15. | Recent Sales of Unregistered Securities. |
The following sets forth information
regarding all unregistered securities sold by us in transactions that were exempt from the requirements of the Securities Act in the last
three years. Except where noted, all of the securities discussed in this Item 15 were all issued in reliance on the exemption under Section
4(a)(2) of the Securities Act without engaging in any advertising or general solicitation of any kind, and unless otherwise indicated,
without payment of placement agent fees or commissions.
Common Stock
Our authorized Common Stock consists
of 1,000,000,000 shares with a par value of $0.001 per share. There were 2,793,386 shares of Common Stock issued and outstanding as of
October 31, 2023 as compared to 2,674,718 shares of the Common Stock issued and outstanding as of October 31, 2022.
During the three months ended
January 31, 2024, the Company issued 16,667 shares of common stock to a FINRA member broker-dealer in connection with the termination
of its relationship with such broker dealer. The fair value was $62,000 based on the closing price of the common stock on the
termination date and recorded as stock-based compensation. Such FINRA member is not participating in this public offering.
During the year ended October
31, 2023, we issued 95,239 shares of Common Stock as consideration for the acquisition of intellectual property assets from GoFire. We
also issued 4,381 shares of Common Stock as compensation for advisory services rendered in connection with the GoFire APA.
During the year ended October
31, 2023, we issued 19,048 shares of Common Stock as part of a loan transaction with AJB Investments entered into on August 9, 2023. Such
loan has been repaid in full as of the date of this prospectus.
During the fiscal year ended
October 31, 2022, third parties exercised warrants to purchase 40,744 shares of our Common Stock for net proceeds of $1,625,650.
During the fiscal year ended
October 31, 2022, we issued 5,870 shares of Common Stock with the fair value of $172,379 to employees for services RSUs that were settled
with common shares. Of the shares issued to employees, 2,130 shares were withheld by us to satisfy tax withholding obligations equal to
$59,862.
During the fiscal year ended
October 31, 2022, 618 shares of our Common Stock were issued to an individual as compensation for consulting services rendered to us.
We issued the shares in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act (in that the issuance
of shares of our Common Stock did not involve any public offering).
During the fiscal year ended
October 31, 2022, 731 shares of our Common Stock were issued to QuikfillRx, LLC as compensation for marketing and promotion services rendered
to us. We issued the shares in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act (in that
the issuance of shares of our Common Stock did not involve any public offering).
During the fiscal year ended
October 31, 2022, 539 shares of our Common Stock were issued to an individual as compensation for professional legal services rendered
to us. We issued the shares in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act (in that
the issuance of shares of our Common Stock did not involve any public offering).
During the fiscal year ended,
October 31, 2022, all 3,000,000 shares of Series A Preferred Stock were converted into shares of Common Stock by Kaival Holdings, our
majority stockholder. The conversion of 3,000,000 shares of Series A Preferred Stock, at a conversion rate of 0.3968, equaled 1,190,477
shares of Common Stock. As a result, the authorized, preferred stock of the Company consists of 5,000,000 shares with a par value of $0.001
per share, with 0 shares of preferred stock issued or outstanding as of October 31, 2022.
Series B Convertible Preferred
Stock
We issued 900,000 shares of the Series B Preferred Stock as consideration
for the acquisition of intellectual property assets from GoFire in May 2023. The Series B Preferred Stock carries no voting rights except:
(i) with respect to the ability of the holders of a majority of the then outstanding Series B Preferred Stock (the “Majority Holders”),
to nominate a director to our board of directors, and (ii) that the vote of the Majority Holders is necessary for effecting any amendment
to the Company’s Certificate of Incorporation or Certificate of Designation that affects the Series B Preferred Stock. The Series
B Preferred Stock is redeemable at our option at a redemption price of $15 per share, subject to potential downward adjustments based
on the trading price of the Common Stock. Subject to additional limitations in the GoFire APA, the Series B Preferred Stock holds seniority
over the Common Stock and each other class of series of securities now existing or hereafter authorized with respect to dividend rights,
the distribution of assets upon liquidation, and dissolution and redemption rights. Upon a liquidation and winding up of our company,
the holders of Series B Preferred Stock are entitled to a liquidation preference of $15 per share (the “Liquidation Preference”),
though the redemption may be adjusted downward based on the trading price of the Common Stock at the time of liquidation. The holders
of Series B Preferred Stock are entitled to receive a dividend equal to 2% of the Liquidation Preference, accruing from May 30, 2023 and
payable on the eighteen-month anniversary of May 30, 2023. Dividends compound on each six month anniversary of the original issuance date.
No preemptive rights are granted to the holders of Series B Preferred Stock. The Majority Holders have the ability to cause a voluntary
conversion of the Series B Preferred Stock into Common Stock at a conversion rate of 0.3968 shares of Common Stock per share of Series
B Preferred Stock which may only occur on or after the following dates 18 month, 24 month, 36, month, 48 month, and 60 month anniversary
of the original issuance date; and only up to 180,000 number of shares of Series B Preferred Stock on each of the these dates. All shares
of Series B Preferred Stock will automatically convert to Common Stock upon the occurrence of a Change of Control (as defined in the GoFire APA).
| Item 16. | Exhibits and Financial Statement Schedules. |
Exhibit No. |
Exhibit |
1.1* |
Form of Placement Agency Agreement |
3.1 |
Restated Certificate of Incorporation, which was filed as Exhibit 3.1 to our Registration Statement on Form 10-12G filed with the Securities and Exchange Commission on March 25, 2019, and is incorporated herein by reference thereto. |
3.2 |
Bylaws, which were filed as Exhibit 3.2 to our Registration Statement on Form 10-12G filed with the Securities and Exchange Commission on February 19, 2019, and are incorporated herein by reference thereto. |
3.3 |
Certificate of Ownership and Merger, as filed with the Secretary of State of the State of Delaware on June 20, 2019, which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 15, 2019, and is incorporated herein by reference thereto. |
3.4 |
Certificate of Correction, as filed with the Secretary of State of the State of Delaware on July 15, 2019, which was filed as Exhibit 3.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 15, 2019, and is incorporated herein by reference thereto. |
3.5 |
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Kaival Brands Innovations Group, Inc., effective July 20, 2021, which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 20, 2021, and is incorporated herein by reference thereto. |
3.6 |
Certificate of Designation of Preferences, Rights and Limitations of the Series B Convertible Preferred Stock, dated May 30, 2023, which was filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 14, 2023, and is incorporated herein by reference thereto. |
3.7 |
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Kaival Brands Innovations Group, Inc., effective January 22, 2024, which was filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2024, and is incorporated herein by reference thereto. |
4.1 |
Form of senior indenture, filed as Exhibit 4.4 to our Registration Statement on Form S-3 filed with the Securities and Exchange Commission on July 30, 2021, and is incorporated herein by reference thereto. |
4.2 |
Form of Warrant, filed as Exhibit 4.1 to our Current Report on Form 8-K filed with Securities and Exchange Commission on October 4, 2021, and is incorporated herein by reference thereto. |
4.3 |
Warrant Agency Agreement, dated as of September 29, 2021, by and between Kaival Brands Innovations Group, Inc. and VStock Transfer, LLC, as warrant agent, filed as Exhibit 4.2 to our Current Report on Form 8-K filed with Securities and Exchange Commission on October 4, 2021, and is incorporated herein by reference thereto. |
4.4 |
Common Stock Purchase Warrant issued to GoFire, Inc on May 30, 2023, which was filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 14, 2023, and is incorporated herein by reference thereto. |
4.5* |
Form of Common Warrant |
4.6** |
Form of Pre-Funded Warrant |
5.1* |
Opinion of Sichenzia Ross Ference Carmel LLP |
10.1 |
Service Agreement by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, dated March 31, 2020, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2020, and is incorporated herein by reference thereto. |
10.2 |
First Amendment to Service Agreement by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, dated June 2, 2020, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 3, 2020, and is incorporated herein by reference thereto. |
10.3 |
Non-Exclusive Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Favs Business, LLC, dated April 3, 2020, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 6, 2020, and is incorporated herein by reference thereto. (1) |
10.4 |
Non-Exclusive Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Colonial Wholesale Distributing Inc., dated April 11, 2020, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 13, 2020, and is incorporated herein by reference thereto. (1) |
10.5 |
Amended and Restated Non-Exclusive Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Favs Business, LLC, dated May 21, 2020, which was filed as Exhibit 10.6 to our Form 10-Q filed with the Securities and Exchange Commission on May 27, 2020, and is incorporated herein by reference thereto. (1) |
10.6 |
Amended and Restated Non-Exclusive Sub-Distribution Agreement by and between Kaival Brands Innovations Group, Inc. and Colonial Wholesale Distributing Inc., dated May 25, 2020, which was filed as Exhibit 10.7 to our Form 10-Q filed with the Securities and Exchange Commission on May 27, 2020, and is incorporated herein by reference thereto. (1) |
10.7 |
Share Cancellation and Exchange Agreement, by and between the Company and Kaival Holdings, LLC, dated August 19, 2020, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2020, and is incorporated herein by reference thereto. |
10.8 |
Amended and Restated 2020 Stock and Incentive Compensation Plan, which was filed as an annex to our Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on May 4, 2022 and is incorporated herein by reference thereto. |
10.9 |
Form of Restricted Stock Unit Agreement by and between Kaival Brands Innovations Group, Inc. and Nirajkumar Patel, which was filed as Exhibit 10.3 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 3, 2020, and is incorporated herein by reference thereto. |
10.10 |
Form of Restricted Stock Unit Agreement by and between Kaival Brands Innovations Group, Inc. and Eric Mosser, which was filed as Exhibit 10.4 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 3, 2020, and is incorporated herein by reference thereto. |
10.11 |
Form of Restricted Stock Unit Agreement by and between Kaival Brands Innovations Group, Inc. and Nirajkumar Patel, which was filed as Exhibit 10.5 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 3, 2020 and is incorporated herein by reference thereto. |
10.12 |
Form of Restricted Stock Unit Agreement by and between Kaival Brands Innovations Group, Inc. and Eric Mosser, which was filed as Exhibit 10.6 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 3, 2020 and is incorporated herein by reference thereto. |
10.13 |
Lease Agreement by and between Kaival Brands Innovations Group, Inc., and Just Pick, LLC, dated July 15, 2020, which was filed as Exhibit 10.14 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on September 14, 2020, and is incorporated herein by reference thereto. |
10.14 |
Consulting Agreement, by and between Kaival Brands Innovations Group, Inc. and Russell Quick, dated March 16, 2021, which was filed as Exhibit 10.18 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 21, 2021, and is incorporated herein by reference thereto. |
10.15 |
Second Amendment to Service Agreement, by and between Kaival Brands Innovations Group, Inc. and QuikfillRx LLC, effective as of March 16, 2021, which was filed as Exhibit 10.19 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 21, 2021 and is incorporated herein by reference thereto. |
10.16 |
Independent Director Agreement, dated June 30, 2021, by and between the Company and George Chuang, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 1, 2021, and is incorporated herein by reference thereto. |
10.17 |
Consulting Agreement, dated June 14, 2021, by and between the Company and Mark Thoenes, which was filed as Exhibit 10.2 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 1, 2021, and is incorporated herein by reference thereto. |
10.18 |
Lease Agreement by and between the Company and Just Pick, LLC, dated June 10, 2022, which was filed as Exhibit 10.24 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 21, 2022, and is incorporated herein by reference thereto. |
10.19 |
Deed of Licensing Agreement by and between Kaival Brands International, LLC and Philip Morris Products S.A., dated as of June 13, 2022, which was filed as Exhibit 10.26 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 21, 2022, and is incorporated herein by reference thereto. (1) + |
10.20 |
Fourth Amendment to Service Agreement, dated November 9, 2022 between the Company and QuikfillRx, which was filed as Exhibit 10.1 to our Current Report on Form 8-K filed with Securities and Exchange Commission on November 15, 2022, and is incorporated herein by reference thereto. + |
10.21 |
Nonqualified Stock Option Grant Agreement, dated November 9, 2022, between the Company and QuikfillRx, which was filed as Exhibit 10.2 to our Current Report on Form 8-K filed with Securities and Exchange Commission on November 15, 2022, and is incorporated herein by reference thereto. |
10.22 |
Nonqualified Stock Option Grant Agreement, dated November 9, 2022, between the Company and QuikfillRx, which was filed as Exhibit 10.3 to our Current Report on Form 8-K filed with Securities and Exchange Commission on November 15, 2022, and is incorporated herein by reference thereto. |
10.23 |
Asset Purchase Agreement by and among Kaival Brands Innovations Group, Inc., Kaival Labs, Inc., and GoFire, Inc., dated May 30, 2023, which was filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 14, 2023, and is incorporated herein by reference thereto. |
10.24 |
Deed of Amendment to Deed of License Agreement, executed and entered into by the Company on August 12, 2023, by and among Philip Morris Products S.A., Kaival Brands International, LLC, Bidi Vapor, LLC and the Company. which was filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on September 19, 2023, and is incorporated herein by reference thereto.+ |
10.25 |
Board of Directors Agreement by and between the Company and David Worner, dated February 24, 2024 which was filed as Exhibit 10.1 to our Current Report on form 8-K filed with the Securities and Exchange Commission on April 25, 2024, and is incorporated herein by reference thereto. |
10.26 |
Board of Directors Agreement by and between the Company and Mark Thoenes, dated February 24, 2024 which was filed as Exhibit 10.2 to our Current Report on form 8-K filed with the Securities and Exchange Commission on April 25, 2024, and is incorporated herein by reference thereto. |
10.27 |
Board of Directors Agreement by and between the Company and Ashesh Modi, dated February 24, 2024 which was filed as Exhibit 10.3 to our Current Report on form 8-K filed with the Securities and Exchange Commission on April 25, 2024, and is incorporated herein by reference thereto. |
10.28 |
Board of Directors Agreement by and between the Company and Ketankumar Patel, dated February 24, 2024 which was filed as Exhibit 10.4 to our Current Report on form 8-K filed with the Securities and Exchange Commission on April 25, 2024, and is incorporated herein by reference thereto |
10.29* |
Form of Securities Purchase Agreement |
10.30* |
Form of Warrant Agency Agreement |
19.1 |
Amended and Restated Insider Trading Policy which was filed as Exhibit 19.1 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2024, and is incorporated herein by reference thereto. |
21.1 |
List of Subsidiaries which was filed as Exhibit 21.1 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 13, 2024, and is incorporated herein by reference thereto. |
23.1* |
Consent of Independent Registered Public Accounting Firm |
23.2* |
Consent of Sichenzia Ross Ference Carmel LLP (included as part of Exhibit 5.1) |
24.1** |
Power of Attorney (included on the signature page to this Registration Statement) |
107* |
Filing Fee Table |
* Filed herewith.
** Previously filed
(1) Schedules and Exhibits
omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to
the Securities and Exchange Commission upon request; provided, however, that the Company may request confidential treatment pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any Schedule or Exhibit so furnished.
The undersigned registrant hereby undertakes:
(1) To file, during any
period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Filing Fee Tables”
or “Calculation of Registration Fee” table, as applicable, in the effective registration statement;
(iii) To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that
paragraphs (i), (ii) and (iii) do not apply if the information required to be included in a post-effective amendment by those paragraphs
is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove
from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(4) That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is
part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(5) That,
for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) the
portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv) any other
communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(6) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(7) (A)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time
it was declared effective.
(B) For
the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements
of the Securities Act 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
KAIVAL BRANDS INNOVATIONS GROUP, INC. |
|
|
|
|
By: |
/s/ Nirajkumar Patel |
|
|
Nirajkumar Patel |
|
|
Chief Executive |
|
|
Officer (principal executive officer) |
|
|
|
|
By: |
/s/ Eric Morris |
|
|
Eric Morris |
|
|
Interim Chief Financial Officer (principal financial and accounting officer) |
Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates
indicated.
Signature |
|
Title |
|
Date |
|
/s/
Nirajkumar Patel |
|
Chief |
|
|
|
|
Executive Officer and Director |
|
May 29, 2024 |
|
Nirajkumar Patel |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
|
|
/s/
Eric Morris |
|
Interim Chief Financial Officer |
|
May 29, 2024 |
|
Eric Morris |
|
(Principal Financial Officer
and Principal |
|
|
|
|
|
Accounting Officer) |
|
|
|
|
|
|
|
|
|
/s/
David Worner |
|
Director |
|
May 29, 2024 |
|
David Worner |
|
|
|
|
|
|
|
|
|
|
|
/s/
Mark Thoenes |
|
Director |
|
May 29, 2024 |
|
Mark Thoenes |
|
|
|
|
|
|
|
|
|
|
|
/s/
Ashesh Modi |
|
Director |
|
May
29, 2024 |
|
Ashesh Modi |
|
|
|
|
|
|
|
|
|
|
|
/s/
Ketankumar Patel |
|
|
|
|
|
Ketankumar Patel |
|
Director |
|
May 29, 2024 |
|
45
EXHIBIT 1.1
[_______], 2024
Kaival Brands Innovations Group, Inc.
4460 Old Dixie Highway
Grant-Valkaria, Florida 32949
Attention: Mr. Nirajkumar Patel, Executive Officer
& Director
Dear Mr. Patel:
This letter (the “Agreement”)
constitutes the agreement between Maxim Group LLC (“Maxim”) (the “Placement Agent”) and Kaival
Brands Innovations Group, Inc., a Delaware corporation (the “Company”), pursuant to which the Placement Agent shall
serve as the exclusive placement agent for the Company, on a “best efforts” basis, in connection with the proposed placement
(the “Placement”) of common stock (the “Shares”) of the Company, par value $0.001 per share (“Common
Stock”), pre-funded warrants (the “Pre-Funded Warrants”), and warrants to purchase shares of Common Stock
(“Purchase Warrants” and together with the Pre-Funded Warrants, the “Warrants” and together with
the Shares and the shares of Common Stock underlying the Warrants (the “Warrant Shares”), the “Securities”).
The terms of the Placement and the Securities shall be mutually agreed upon by the Company and the purchasers (each, a “Purchaser”
and collectively, the “Purchasers”) and nothing herein constitutes that the Placement Agent would have the power
or authority to bind the Company or any Purchaser or an obligation for the Company to issue any Securities or complete the Placement.
This Agreement and the documents executed and delivered by the Company and the Purchasers in connection with the Placement, including
but not limited to the Purchase Agreement (as defined below), shall be collectively referred to herein as the “Transaction Documents.”
The date of the closing of the Placement shall be referred to herein as the “Closing Date.” The Company expressly
acknowledges and agrees that the Placement Agent’s obligations hereunder are on a reasonable best efforts basis only and that the
execution of this Agreement does not constitute a commitment by the Placement Agent to purchase the Securities and does not ensure the
successful placement of the Securities or any portion thereof or the success of the Placement Agent with respect to securing any other
financing on behalf of the Company. Following the prior written consent of the Company, the Placement Agent may retain other brokers or
dealers to act as sub-agents or selected-dealers on its behalf in connection with the Placement. The sale of the Securities to any Purchaser
will be evidenced by a securities purchase agreement (the “Purchase Agreement”) between the Company and such Purchaser
in a form mutually agreed upon by the Company and the Placement Agent. Capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement. Prior to the signing of any Purchase Agreement, executive officers of the Company
will be available upon reasonable notice and during normal business hours to answer inquiries from prospective Purchasers.
SECTION
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY; COVENANTS OF THE COMPANY.
A. Representations
of the Company. Each of the representations and warranties and covenants made by the Company to the Purchasers in the Purchase Agreement
in connection with the Placement is hereby incorporated herein by reference into this Agreement (as though fully restated herein) and
is, as of the date of this Agreement and as of the Closing Date, hereby made to, and in favor of, the Placement Agent. In addition to
the foregoing, the Company represents and warrants that:
1. The
Company has filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement on Form S-1
(File No. 333-279045) under the Securities Act, which was declared effective on May [___], 2024 (the “Registration Statement”)
for the registration of the Shares, the Warrants and the Warrant Shares under the Securities Act. Following the determination of pricing
among the Company and the prospective Investors introduced to the Company by Placement Agent, the Company will file with the Commission
pursuant to Rules 430A and 424(b) under the Securities Act, and the rules and regulations (the “Rules and Regulations”)
of the Commission promulgated thereunder, a final prospectus relating to the placement of the Shares, the Warrants and the Warrant Shares,
and the plan of distribution thereof and will advise the Placement Agent of all further information (financial and other) with respect
to the Company required to be set forth therein. Such prospectus in the form in which it appears in the Registration Statement at the
time of effectiveness, is hereinafter called the “Preliminary Prospectus” and the final prospectus, in the form in
which it will be filed with the Commission pursuant to Rules 430A and/or 424(b) (including the Preliminary Prospectus as it may be amended
or supplemented) is hereinafter called the “Final Prospectus.” The Registration Statement at the time it originally
became effective is hereinafter called the “Original Registration Statement.” Any reference in this Agreement to the
Registration Statement, the Original Registration Statement, the Preliminary Prospectus or the Final Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein (the “Incorporated Documents”), if any, which were or
are filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), at any given time, as the case
may be; and any reference in this Agreement to the terms “amend,” “amendment” or “supplement” with
respect to the Registration Statement, the Original Registration Statement, the Preliminary Prospectus or the Final Prospectus shall be
deemed to refer to and include the filing of any document under the Exchange Act after the date of this Agreement, or the date of the
Preliminary Prospectus or the Final Prospectus, as the case may be, deemed to be incorporated therein by reference. All references in
this Agreement to financial statements and schedules and other information which is “contained,” “included,” “described,”
“referenced,” “set forth” or “stated” in the Registration Statement, the Preliminary Prospectus or
the Final Prospectus (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules
and other information which is or is deemed to be incorporated by reference in the Registration Statement, the Preliminary Prospectus
or the Final Prospectus, as the case may be. As used in this paragraph and elsewhere in this Agreement, “Time of Sale Disclosure
Package” means the Preliminary Prospectus, the Transaction Documents, the final terms of the Placement provided to the Investors
in writing, and any issuer free writing prospectus as defined in Rule 433 of the Securities Act (each, an “Issuer Free Writing
Prospectus”), if any, that the parties hereto shall hereafter expressly agree in writing to treat as part of the Time of Sale
Disclosure Package. The term “any Prospectus” shall mean, as the context requires, the Preliminary Prospectus, the
Final Prospectus and any supplement to either thereof. The Company has not received any notice that the Commission has issued or intends
to issue a stop order suspending the effectiveness of the Registration Statement or the use of the Preliminary Prospectus or the Final
Prospectus or intends to commence a proceeding for any such purpose.
2. The
Registration Statement (and any further documents to be filed with the Commission) contains all exhibits and schedules as required by
the Securities Act. Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied
in all material respects with the Securities Act and the Exchange Act and the applicable Rules and Regulations and did not and, as amended
or supplemented, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading. The Registration Statement, the Time of Sale Disclosure
Package and the Final Prospectus, each as of its respective date, comply in all material respects with the Securities Act and the Exchange
Act and the applicable Rules and Regulations. Each of the Registration Statement, the Time of Sale Disclosure Package and the Final Prospectus,
as amended or supplemented, did not and will not contain as of the date thereof any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The Incorporated Documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange
Act and the applicable Rules and Regulations, and none of such documents, when they were filed with the Commission, contained any untrue
statement of a material fact or omitted to state a material fact necessary to make the statements therein (with respect to Incorporated
Documents incorporated by reference in the Registration Statement or the Final Prospectus ), in the light of the circumstances under which
they were made not misleading; and any further documents so filed and incorporated by reference in the Registration Statement, the Time
of Sale Disclosure Package or the Final Prospectus , when such documents are filed with the Commission, will conform in all material respects
to the requirements of the Exchange Act and the applicable Rules and Regulations, as applicable, and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading. No post effective amendment to the Registration Statement reflecting any facts or events arising
after the date thereof which represent, individually or in the aggregate, a fundamental change in the information set forth therein is
required to be filed with the Commission. There are no documents required to be filed with the Commission in connection with the transaction
contemplated hereby that (x) have not been filed as required pursuant to the Securities Act or (y) will not be filed within the requisite
time period. There are no contracts or other documents required to be described in the Registration Statement, the Time of Sale Disclosure
Package or the Final Prospectus , or to be filed as exhibits or schedules to the Registration Statement, which (x) have not been described
or filed as required or (y) will not be filed within the requisite time period.
3. The
Company is eligible to use Free Writing Prospectuses in connection with the Placement pursuant to Rules 164 and 433 under the Securities
Act. Any Free Writing Prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will
be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the
Commission thereunder. Each Free Writing Prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under
the Securities Act or that was prepared by or behalf of or used by the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. The Company will not, without
the prior consent of the Placement Agent, prepare, use or refer to, any Free Writing Prospectus.
4. To
the knowledge of the Company, There are no affiliations with any FINRA member firm among the Company’s officers, directors or, to
the knowledge of the Company, any ten percent (10.0%) or greater stockholder of the Company, except as set forth in the Registration Statement,
the Time of Sale Disclosure Package and the Final Prospectus.
B. Covenants
of the Company. The Company has delivered or made available, or will as promptly as practicable deliver or make available, to the
Placement Agent complete conformed copies of the Registration Statement and of each consent and certificate of experts, as applicable,
filed as a part thereof, and conformed copies of the Registration Statement (without exhibits), the Time of Sale Disclosure Package and
the Final Prospectus , as amended or supplemented, in such quantities and at such places as the Placement Agent reasonably requests. Neither
the Company nor any of its directors and officers has distributed and none of them will distribute, prior to the Closing Date, any offering
material in connection with the offering and sale of the Securities pursuant to the Placement other than the Registration Statement, the
Time of Sale Disclosure Package, the Final Prospectus, copies of the documents incorporated by reference therein and any other materials
permitted by the Securities Act.
SECTION
2. REPRESENTATIONS OF THE PLACEMENT AGENT. The Placement Agent represents and warrants that it (i) is a member in
good standing of FINRA, (ii) is registered as a broker/dealer under the Exchange Act, (iii) is licensed as a broker/dealer under the
laws of the States applicable to the offers and sales of the Shares by the Placement Agent, (iv) is and will be a corporate entity validly
existing under the laws of its place of incorporation, and (v) has full power and authority to enter into and perform its obligations
under this Agreement. The Placement Agent will immediately notify the Company in writing of any change in its status as such. The Placement
Agent covenants that it will use its reasonable best efforts to conduct the Placement hereunder in compliance with the provisions of
this Agreement and the requirements of applicable law.
SECTION
3. COMPENSATION. In consideration of the services to be provided for hereunder, the Company shall pay to the Placement
Agent or its designees their pro rata portion (based on the Securities placed) of the following compensation with respect to the Securities
which they are placing:
A. A
cash fee (the “Cash Fee”) equal to an aggregate of seven percent (7%) of the aggregate gross proceeds raised in the
Placement.
B. Subject
to compliance with FINRA Rule 5110(g)(5), the Company also agrees to reimburse the Placement Agent for all travel and other out-of-pocket
expenses, including the reasonable fees, costs and disbursements of its legal counsel, in an amount not to exceed an aggregate of $100,000.
The Company will reimburse Placement Agent directly out of the Closing of the Placement. In the event this Agreement shall terminate prior
to the consummation of the Placement, the Placement Agent shall be entitled to reimbursement for actual expenses upon providing reasonable
documentation relating to the incurrence of such expenses; provided, however, such expenses shall not exceed $25,000.
C. The
Placement Agent reserves the right to reduce any item of its compensation or adjust the terms thereof as specified herein in the event
that a determination shall be made by FINRA to the effect that the Placement Agent’s aggregate compensation is in excess of FINRA
Rules or that the terms thereof require adjustment.
SECTION
4. INDEMNIFICATION. The Company agrees to the indemnification and other agreements set forth
in the Indemnification Provisions (the “Indemnification”) attached hereto as Addendum A, the provisions of
which are incorporated herein by reference and shall survive the termination or expiration of this Agreement.
SECTION 5 ENGAGEMENT
TERM. The Placement Agent’s engagement hereunder shall be until the earlier of (i) the final closing date of the Placement
and (ii) February 5, 2025 (such date, the “Termination Date” and the period of time during which this Agreement remains
in effect is referred to herein as the “Term”). Upon Closing of the Placement or if the Term ends prior to closing
a Placement, then if within twelve (12) months following such time, the Company completes any financing of equity, equity-linked convertible
or debt or other capital raising activity with, or receives any proceeds from, any of the investors contacted or introduced by the Placement
Agent during the Term, then the Company will pay the Placement Agent upon the closing of such financing or receipt of such proceeds the
compensation set forth in Section 3 herein. Notwithstanding anything to the contrary contained herein, the provisions concerning the
Company’s obligation to pay any fees actually earned pursuant to Section 3 hereof and the provisions concerning confidentiality,
indemnification and contribution contained herein and the Company’s obligations contained in the Indemnification Provisions will
survive any expiration or termination of this Agreement. If this Agreement is terminated prior to the completion of the Placement, all
fees due to the Placement Agent shall be paid by the Company to the Placement Agent on or before the Termination Date (in the event such
fees are earned or owed as of the Termination Date). The Placement Agent agrees not to use any confidential information concerning the
Company provided to the Placement Agent by the Company for any purposes other than those contemplated under this Agreement.
SECTION 6 PLACEMENT
AGENT INFORMATION. The Company agrees that any information or advice rendered by the Placement Agent in connection with this engagement
is for the confidential use of the Company only in their evaluation of the Placement and, except as otherwise required by law, the Company
will not disclose or otherwise refer to the advice or information in any manner without the Placement Agent’s prior written consent.
SECTION 7 NO
FIDUCIARY RELATIONSHIP. This Agreement does not create, and shall not be construed as creating rights enforceable by any person or
entity not a party hereto, except those entitled hereto by virtue of the Indemnification Provisions hereof. The Company acknowledges
and agrees that the Placement Agent is not and shall not be construed as a fiduciary of the Company and shall have no duties or liabilities
to the equity holders or the creditors of the Company or any other person by virtue of this Agreement or the retention of the Placement
Agent hereunder, all of which are hereby expressly waived.
SECTION 8 CLOSING.
The obligations of the Placement Agent, and the closing of the sale of the Securities hereunder are subject to the accuracy, when made
and on the Closing Date, of the representations and warranties on the part of the Company contained herein and in the Purchase Agreement,
to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the
Company of their obligations hereunder, and to each of the following additional terms and conditions, except as otherwise disclosed to
and acknowledged and waived by the Placement Agent by the Company:
A. No
stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the Commission, and any request for additional information on the part of the Commission (to be included
in the Registration Statement, the Time of Sale Disclosure Package, the Final Prospectus or otherwise) shall have been complied with to
the reasonable satisfaction of the Placement Agent. Any filings required to be made by the Company in connection with the Placement shall
have been timely filed with the Commission.
B. The
Placement Agent shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Registration Statement,
the Time of Sale Disclosure Package, the Final Prospectus or any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of counsel for the Placement Agent, is material or omits to state any fact which, in the opinion of such counsel,
is material and is required to be stated therein or is necessary to make the statements therein not misleading.
C. All
corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each of this Agreement,
the Securities, the Registration Statement, the Time of Sale Disclosure Package and the Final Prospectus and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the
Placement Agent, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to
enable them to pass upon such matters.
D. The
Placement Agent shall have received from outside counsels to the Company, including intellectual property and regulatory counsels to the
Company, such counsels’ written opinions, addressed to the Placement Agent and the Purchasers and dated as of the Closing Date,
in form and substance reasonably satisfactory to the Placement Agent.
E. On
the date of this Agreement and on the Closing Date, the Placement Agent shall have received a “comfort” letter from MaloneBailey
LLP as of each such date, addressed to the Placement Agent and in form and substance satisfactory in all respects to the Placement Agent
and Placement Agent’s counsel.
F. On
the Closing Date, Placement Agent shall have received a certificate of the chief executive officer of the Company, dated, as applicable,
as of the date of such Closing, to the effect that, as of the date of this Agreement and as of the applicable date, the representations
and warranties of the Company contained herein and in the Purchase Agreement were and are accurate in all material respects, except for
such changes as are contemplated by this Agreement and except as to representations and warranties that were expressly limited to a state
of facts existing at a time prior to the applicable Closing Date, and that, as of the applicable date, the obligations to be performed
by the Company hereunder on or prior thereto have been fully performed in all material respects.
G. On
the Closing Date, Placement Agent shall have received signed Lock-Up Agreements, addressed to the Purchasers by each of the Company’s
directors, officers and holders of 10% or more of the Company’s outstanding Common Stock (and all holders of securities exercisable
for or convertible into shares of Common Stock), as of the date of this Agreement.
H. On
the Closing Date, Placement Agent shall have received a certificate of the Secretary of the Company, dated, as applicable, as of the date
of such Closing, certifying to the organizational documents, good standing in the state of incorporation of the Company and board resolutions
relating to the Placement of the Securities from the Company.
I. The
Company (i) shall not have sustained since the date of the latest audited financial statements included or incorporated by reference in
the Registration Statement, the Time of Sale Disclosure Package and the Final Prospectus , any loss or interference with its business
from fire, explosion, flood, terrorist act or other calamity, whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree, otherwise than as set forth in or contemplated by the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus , and (ii) since such date there shall not have been any change in the capital stock or long-term
debt of the Company or any change, or any development involving a prospective change, in or affecting the business, general affairs, management,
financial position, stockholders’ equity, results of operations or prospects of the Company, otherwise than as set forth in or contemplated
by the Registration Statement, the Time of Sale Disclosure Package and the Final Prospectus , the effect of which, in any such case described
in clause (i) or (ii), is, in the judgment of the Placement Agent, so material and adverse as to make it impracticable or inadvisable
to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated by the Registration Statement, the
Time of Sale Disclosure Package and the Final Prospectus .
J. The
Common Stock is registered under the Exchange Act and, as of the Closing Date, the Shares and the Warrant Shares shall be listed for trading
on the Trading Market or other applicable U.S. national exchange and reasonable evidence of such action, if available, shall have been
provided to the Placement Agent upon its request. The Company shall have taken no action designed to, or likely to have the effect of
terminating the registration of the Common Stock under the Exchange Act or delisting or suspending from trading the Common Stock from
the Trading Market or other applicable U.S. national exchange, nor has the Company received any information suggesting that the Commission
or the Trading Market or other U.S. applicable national exchange is contemplating terminating such registration or listing.
K. No
action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance or sale of the Securities or materially and adversely affect
or potentially and adversely affect the business or operations of the Company; and no injunction, restraining order or order of any other
nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance
or sale of the Securities or materially and adversely affect or potentially and adversely affect the business or operations of the Company.
L. The
Company shall have prepared and filed with the Commission a Current Report on Form 8-K with respect to the Placement, including as an
exhibit thereto this Agreement.
M. The
Company shall have entered into a Purchase Agreement with each of the Purchasers and such agreements shall be in full force and effect
and shall contain representations, warranties and covenants of the Company as agreed between the Company and the Purchasers.
N. FINRA
shall have raised no objection to the fairness and reasonableness of the terms and arrangements of this Agreement. In addition, the Company
shall, if requested by the Placement Agent, make or authorize Placement Agent’s counsel to make on the Company’s behalf, any
filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110 with respect to the Placement and pay all filing fees
required in connection therewith.
O. Prior
to the Closing Date, the Company shall have furnished to the Placement Agent such further information, certificates and documents as the
Placement Agent may reasonably request.
If any of the conditions specified
in this Section 8 shall not have been fulfilled when and as required by this Agreement, or if any of the certificates, opinions, written
statements or letters furnished to the Placement Agent or to Placement Agent’s counsel pursuant to this Section 8 shall not be reasonably
satisfactory in form and substance to the Placement Agent and to Placement Agent’s counsel, all obligations of the Placement Agent
hereunder may be cancelled by the Placement Agent at, or at any time prior to, the consummation of the Closing. Notice of such cancellation
shall be given to the Company in writing or orally. Any such oral notice shall be confirmed promptly thereafter in writing.
SECTION 9 RIGHT
OF FIRST REFUSAL. Upon the Closing of a Placement or Financing (as defined below), for a period of eighteen (18) months from such
closing, the Company grants Maxim a right of first refusal to act as sole managing underwriter and sole book runner, sole placement agent,
or sole sales agent, for any and all future public or private equity, equity-linked or debt (excluding commercial bank debt) offerings
for which the Company retains the service of an underwriter, agent, advisor, finder or other person or entity in connection with such
offering during such eighteen (18) month period of the Company (and any successor thereto). The Company shall not offer to retain any
entity or person in connection with any such offering on terms more favorable than terms on which it offers to retain Maxim. Such offer
shall be made in writing in order to be effective. Maxim shall notify the Company within ten (10) business days of its receipt of the
written offer contemplated above as to whether it agrees to accept such retention. If Maxim should decline such retention, the Company
shall have no further obligations to Maxim with respect to the offering for which it has offered to retain Maxim, except as otherwise
provided for herein. “Financing” shall mean, where an underwriter, placement agent and/or finder is utilized in transactions
involving third parties who may be interested in providing financing to the Company including equity, equity-linked, convertible and/or
debt securities.
SECTION 10 SUBSEQUENT
EQUITY SALES
(a) From the date hereof
until ninety (90) days after the Closing Date, the Company shall not (i) issue, enter into any agreement to issue or announce the issuance
or proposed issuance of any shares of Common Stock or Common Stock Equivalents or (ii) file any registration statement or any amendment
or supplement thereto, other than the Prospectus.
(b) From the date hereof
until three months after the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any
issuance by the Company of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities
that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A)
at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations
for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise
or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common
Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit, whereby
the Company may issue securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the
Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.
(c) Notwithstanding the
foregoing, this Section 10 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt
Issuance.
SECTION 11 GOVERNING
LAW. This Agreement will be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements
made and to be performed entirely in such State. This Agreement may not be assigned by either party without the prior written consent
of the other party. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors
and permitted assigns. Any right to trial by jury with respect to any dispute arising under this Agreement or any transaction or conduct
in connection herewith is waived. Any dispute arising under this Agreement may be brought into the courts of the State of New York or
into the Federal Court located in New York, New York and, by execution and delivery of this Agreement, the Company hereby accepts for
itself and in respect of its property, generally and unconditionally, the jurisdiction of aforesaid courts. Each party hereto hereby
irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by delivering
a copy thereof via overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If either party shall commence
an action or proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
SECTION 12
ENTIRE AGREEMENT/MISC. This Agreement (including the attached Indemnification Provisions) embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and understandings, relating to the subject matter hereof. If any provision
of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in any
other respect or any other provision of this Agreement, which will remain in full force and effect. This Agreement may not be amended
or otherwise modified or waived except by an instrument in writing signed by both Placement Agent and the Company. The representations,
warranties, agreements and covenants contained herein shall survive the closing of the Placement and delivery of the Securities. This
Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or a .pdf format
file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or .pdf signature page were an original thereof.
SECTION 13 CONFIDENTIALITY.
The Placement Agent (i) will keep the Confidential Information (as such term is defined below) confidential and will not (except as required
by applicable law or stock exchange requirement, regulation or legal process (“Legal Requirement”)), without the Company’s
prior written consent, disclose to any person any Confidential Information, and (ii) will not use any Confidential Information other
than in connection with the Placement. The Placement Agent further agrees to disclose the Confidential Information only to its Representatives
(as such term is defined below) who need to know the Confidential Information for the purpose of the Placement, and who are informed
by the Placement Agent of the confidential nature of the Confidential Information. The term “Confidential Information”
shall mean, all confidential, proprietary and non-public information (whether written, oral or electronic communications) furnished by
the Company to a Placement Agent or its Representatives in connection with the Placement Agent’s evaluation of the Placement. The
term “Confidential Information” will not, however, include information which (i) is or becomes publicly available
other than as a result of a disclosure by a Placement Agent or its Representatives in violation of this Agreement, (ii) is or becomes
available to a Placement Agent or any of its Representatives on a non-confidential basis from a third-party, (iii) is known to a Placement
Agent or any of its Representatives prior to disclosure by the Company or any of its Representatives, or (iv) is or has been independently
developed by a Placement Agent and/or the Representatives without use of any Confidential Information furnished to it by the Company.
The term “Representatives” shall mean the Placement Agent’s directors, board committees, officers, employees, financial
advisors, attorneys and accountants. This provision shall be in full force until the earlier of (a) the date that the Confidential Information
ceases to be confidential and (b) two years from the date hereof. Notwithstanding any of the foregoing, in the event that the Placement
Agent or any of its Representatives are required by Legal Requirement to disclose any of the Confidential Information, the Placement
Agent and its Representatives will furnish only that portion of the Confidential Information which the Placement Agent or its Representative,
as applicable, is required to disclose by Legal Requirement as advised by counsel, and will use reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the Confidential Information so disclosed.
SECTION 14 NOTICES.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is sent to the email
address specified on the signature pages attached hereto prior to 6:30 p.m. (New York City time) on a business day, (b) the next business
day after the date of transmission, if such notice or communication is sent to the email address on the signature pages attached hereto
on a day that is not a business day or later than 6:30 p.m. (New York City time) on any business day, (c) the third business day following
the date of mailing, if sent by U.S. internationally recognized air courier service, or (d) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages hereto.
SECTION 15 PRESS
ANNOUNCEMENTS. The Company agrees that the Placement Agent shall, from and after any Closing, have the right to reference the Placement
and the Placement Agent’s role in connection therewith in the Placement Agent’s marketing materials and on its website and
to place advertisements in financial and other newspapers and journals, in each case at its own expense.
[The remainder of this page has been intentionally
left blank.]
Please confirm that the foregoing
correctly sets forth our agreement by signing and returning to Maxim the enclosed copy of this Agreement.
|
Very truly yours, |
|
|
|
MAXIM GROUP LLC |
|
|
|
By: |
|
|
Name: |
Larry Glassberg |
|
Title: |
Co-Head of Investment Banking |
|
Address for notice: |
|
300 Park Avenue, 16th Floor |
|
New York, NY 10022 |
|
Attention: James Siegel, General Counsel |
|
Email: jsiegel@maximgrp.com |
Accepted and Agreed to as of the date first written
above:
KAIVAL BRANDS INNOVATIONS GROUP, |
Address for Notice: |
INC. |
Kaival Brands Innovations Group, Inc. |
|
4460 Old Dixie Highway |
By: |
|
Grant-Valkaria, Florida |
|
Name: Nirajkumar Patel |
Attention: [____________ |
] |
|
Title: Chief Executive Officer |
E-Mail: [______________ |
] |
With a copy to (which shall not constitute notice):
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st Floor
New York, NY 10036
Telephone: (833) 452-4825
Attention:Jeffrey Wofford, Esq.
E-mail: jwofford@srfc.law
[Signature Page to Placement Agency Agreement
Between
Kaival Brands Innovations Group, Inc. and Maxim Group LLC]
ADDENDUM A
INDEMNIFICATION PROVISIONS
Capitalized terms used in this
Addendum shall have the meanings ascribed to such terms in the Agreement to which this Addendum is attached.
In addition to and without limiting
any other right or remedy available to the Placement Agent and the Indemnified Parties (as hereinafter defined), the Company agrees to
indemnify and hold harmless Placement Agent and each of the other Indemnified Parties from and against any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements, and any and all actions, suits, proceedings
and investigations in respect thereof and any and all legal and other costs, expenses and disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise (including, without limitation, the costs, expenses and disbursements, as and when incurred,
of investigating, preparing, pursing or defending any such action, suit, proceeding or investigation (whether or not in connection with
litigation in which any Indemnified Party is a party)) (collectively, “Losses”), directly or indirectly, caused by,
relating to, based upon, arising out of, or in connection with, Placement Agent’s acting for the Company, including, without limitation,
any act or omission by Placement Agent in connection with its acceptance of or the performance or non-performance of its obligations under
the Agreement between the Company and Placement Agent to which these indemnification provisions are attached and form a part, any breach
by the Company of any representation, warranty, covenant or agreement contained in the Agreement (or in any instrument, document or agreement
relating thereto), or the enforcement by Placement Agent of its rights under the Agreement or these indemnification provisions, except
to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction (not subject to further appeal)
to have resulted primarily and directly from the gross negligence or willful misconduct of the Indemnified Party seeking indemnification
hereunder.
The Company also agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection
with the engagement of Placement Agent by the Company or for any other reason, except to the extent that any such liability is found in
a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from such
Indemnified Party’s gross negligence or willful misconduct.
These Indemnification Provisions
shall extend to the following persons (collectively, the “Indemnified Parties”): Placement Agent, its present and former
affiliated entities, managers, members, officers, employees, legal counsel, agents and controlling persons (within the meaning of the
federal securities laws), and the officers, directors, partners, shareholders, members, managers, employees, legal counsel, agents and
controlling persons of any of them. These indemnification provisions shall be in addition to any liability, which the Company may otherwise
have to any Indemnified Party.
If any action, suit, proceeding
or investigation is commenced, as to which an Indemnified Party proposes to demand indemnification, it shall notify the Company with reasonable
promptness; provided, however, that any failure by an Indemnified Party to notify the Company shall not relieve the Company from its obligations
hereunder except to the extent that such failure or delay causes actual material harm to the Company, or materially prejudices its ability
to defend such action, suit, proceeding or investigation on behalf of such Indemnified Party. In case any such action is brought against
any Indemnified Party and such Indemnified Party notifies the Company of the commencement thereof, the Company may elect to assume the
defense thereof, with counsel reasonably satisfactory to such Indemnified Party, and an Indemnified Party may employ counsel to participate
in the defense of any such action provided, that the employment of such counsel shall be at the Indemnified Party’s own expense,
unless (i) the employment of such counsel has been authorized in writing by the Company, (ii) the Indemnified Party has reasonably concluded
(based upon advice of counsel to the Indemnified Party) that there are legal defenses available to the Indemnification Party that are
not available to the Company, or that there exists a conflict or potential conflict of interest (based upon advice of counsel to the Indemnified
Party) between the Indemnified Party and the Company that makes it impossible or inadvisable for counsel to the Company to conduct the
defense of both parties (in which case the Company will not have the right to direct the defense of such action on behalf of the Indemnified
Party), or (iii) the Company has not in fact employed counsel reasonably satisfactory to the Indemnified Party to assume the defense of
such action within a reasonable time after receiving notice of the action, suit or proceeding, in each of which cases the reasonable fees,
disbursements and other charges of such counsel will be at the expense of the Company; provided, further, that in no event shall the Company
be required to pay fees and expenses for more than one firm of attorneys (and local counsel) representing Indemnified Parties. Any such
counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated
by the Company.
The Company shall be liable for
any settlement of any claim against any Indemnified Party made with the Company’s written consent. The Company shall not, without
the prior written consent of Placement Agent, settle or compromise any claim, or permit a default or consent to the entry of any judgment
in respect thereof, unless such settlement, compromise or consent (i) includes, as an unconditional term thereof, the giving by the claimant
to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim, and (ii) does not contain any
factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character, professionalism,
expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.
In order to provide for just and
equitable contribution, if a claim for indemnification pursuant to these indemnification provisions is made but it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case,
even though the express provisions hereof provide for indemnification in such case, then the Company shall contribute to the Losses to
which any Indemnified Party may be subject (i) in accordance with the relative benefits received by the Company and its shareholders,
subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand, and (ii) if (and only if) the allocation provided
in clause (i) of this sentence is not permitted by applicable law, in such proportion as to reflect not only the relative benefits, but
also the relative fault of the Company, on the one hand, and the Indemnified Party, on the other hand, in connection with the statements,
acts or omissions which resulted in such Losses as well as any relevant equitable considerations. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not also found liable for fraudulent misrepresentation. The
relative benefits received (or anticipated to be received) by the Company and its shareholders, subsidiaries and affiliates shall be deemed
to be equal to the aggregate consideration payable or receivable by such parties in connection with the transaction or transactions to
which the Agreement relates relative to the amount of fees actually received by Placement Agent in connection with such transaction or
transactions. Notwithstanding the foregoing, in no event shall the amount contributed by all Indemnified Parties exceed the amount of
fees previously received by Placement Agent pursuant to the Agreement.
Neither termination nor completion
of the Agreement shall affect these Indemnification Provisions which shall remain operative and in full force and effect. The Indemnification
Provisions shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Indemnified Parties
and their respective successors, assigns, heirs and personal representatives.
[The remainder of this page has been intentionally
left blank.]
|
Very truly yours, |
|
|
|
MAXIM GROUP LLC |
|
|
|
By: |
|
|
|
Name: Clifford
A. Teller |
|
|
Title: Co-President |
|
Address for notice: |
|
300 Park Avenue, 16th Floor |
|
New York, NY 10022 |
|
Attention: James Siegel, General Counsel |
|
Email: jsiegel@maximgrp.com |
KAIVAL
BRANDS INNOVATIONS GROUP, |
|
Address for Notice: |
INC. |
|
Kaival Brands Innovations Group, Inc. |
|
|
|
By: |
|
|
4460 Old Dixie Highway |
|
Name: Nirajkumar Patel |
|
Grant-Valkaria, Florida |
|
Title: Chief Executive Officer |
|
Attention: [____________ E-Mail: [______________] |
With a copy to (which shall not constitute notice):
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st Floor
New York, NY 10036
Telephone: (833) 452-4825
Attention: Jeffrey Wofford, Esq.
E-mail: jwofford@srfc.law
[Signature Page to Indemnification Provisions
Pursuant to Placement Agency Agreement]
between Kaival Brands Innovations Group, Inc. and Maxim Group LLC]
12
EXHIBIT 4.5
COMMON STOCK PURCHASE WARRANT
KAIVAL BRANDS INNOVATIONS GROUP, INC.
Warrant Shares: [______] Issue Date: May __, 2024
THIS COMMON STOCK PURCHASE WARRANT
(the “Warrant”) certifies that, for value received, ___________________ or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after
the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on May __, 2029 (the
“Termination Date”) but not thereafter, to subscribe for and purchase from KAIVAL BRANDS INNOVATIONS GROUP, Inc., a
Delaware corporation (the “Company”), up to ____________ shares of Common Stock. (as subject to adjustment hereunder,
the “Warrant Shares”) The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b). The Warrant shall initially be issued and maintained in the form of a security held in book entry form
at the Depository Trust Company or its nominee (“DTC”) shall initially be the sole registered holder of this Warrant,
subject to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agency Agreement,
in which case this sentence shall not apply.
Section
1. Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that
certain Securities Purchase Agreement (the “Purchase Agreement”), dated May __, 2024, among the Company and
the purchasers signatory thereto.
Section
2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on
or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted
by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto as Exhibit A (the “Notice of Exercise”).
Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the
shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice
of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise
be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to
the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in
which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which
the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in the purchase of a portion of
the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise
within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and
agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
Notwithstanding the foregoing
in this Section 2(a), a holder whose interest in this Warrant is a beneficial interest in certificate(s) representing this Warrant held
in book-entry form through DTC (or another established clearing corporation performing similar functions), shall effect exercises made
pursuant to this Section 2(a) by delivering to DTC (or such other clearing corporation, as applicable) the appropriate instruction form
for exercise, complying with the procedures to effect exercise that are required by DTC (or such other clearing corporation, as applicable),
subject to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agency Agreement,
in which case this sentence shall not apply
b) Exercise
Price. The exercise price per share of Common Stock under this Warrant shall be $____, subject to adjustment hereunder (the “Exercise
Price”). “). The Exercise Price shall be reset immediately following the thirtieth (30th) calendar day following the Initial
Exercise Date (the “Reset Date”) to a price that is equal to 100% of the arithmetic average of the daily VWAPs (as defined
below) of the Common Stock on the Trading Market during the five Trading Days immediately preceding the Reset Date (the “Reset Price”);
provided, however, that in no event shall the Reset Price be less than 20% of the most recent closing price of the Common Stock on the
Trading Market at the time of execution of the Purchase Agreement (subject to adjustment for reverse and forward stock splits, recapitalizations
and similar transactions following the date of the Purchase Agreement); and provided, further that, notwithstanding the foregoing, in
the event that the Exercise Price on the Reset Date is less than the Reset Price, there shall be no reset of the Exercise Price on the
Reset Date pursuant to this Section 2(b).
c) Cashless
Exercise. If at the time of exercise hereof, there is no effective registration statement registering, or no current prospectus available
for, the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means
of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
| (A) = | as
applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable
Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant
to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered
pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading
hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal
securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP
on the Trading Day immediately preceding the date of the applicable Notice of Exercise or
(z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg
L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise
if such Notice of Exercise is executed during “regular trading hours” on a Trading
Day and is delivered within two (2) hours thereafter (including until two (2) hours after
the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a)
hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of
such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and
delivered pursuant to Section 2(a) hereof after the close of “regular trading hours”
on such Trading Day; |
| (B) = | the
Exercise Price of this Warrant, as adjusted hereunder; and |
| (X) = | the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance
with the terms = of this Warrant if such exercise were by means of a cash exercise rather
than a cashless exercise. |
If Warrant Shares are issued in
such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant
Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may
be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).
“Bid Price”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed
or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)
in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses
of which shall be paid by the Company.
“VWAP” means,
for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the Purchasers of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
d) Mechanics
of Exercise.
i. Delivery
of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with DTC through its Deposit
or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there
is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder
or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144 (assuming
cashless exercise of the Warrants), and otherwise by physical delivery of a certificate, registered in the Company’s share register
in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise
to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the
delivery to the Company of the Notice of Exercise provided that, payment of the aggregate Exercise Price (other than in the instance of
a cashless exercise) is received by the Company one (1) Trading Day prior to such second Trading Day after the delivery of the Notice
of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days
comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise , provided that, payment of the
aggregate Exercise Price (other than in the instance of a cashless exercise) is received by the Company prior to 2pm ET on the Trading
Day after the delivery of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the
Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with
respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of
the aggregate Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days
and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company
fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such
exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to
$20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share
Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent
that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard
Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary
Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and
upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date (other than as a result of failure of the Holder to
timely deliver the aggregate Exercise Price, unless the Warrant is validly exercised by means of cashless exercise), and if after such
date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount,
if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation
was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares
for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of this Warrant to purchase shares of Common Stock with an aggregate exercise price giving rise to such purchase obligation of
$10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round up to the next whole share.
vi. Charges.
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant
Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent
fees required for same-day processing of any Notice of Exercise and all fees to the DTC (or another established clearing corporation performing
similar functions) required for same-day electronic delivery of the Warrant Shares. For the avoidance of doubt, nothing in this Section
2(d)(vi) shall require the Company to deliver the Warrant Shares on a date earlier than the Warrant Share Delivery Date.
vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise
as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting
as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject
to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d)
of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable
shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the
number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company
or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the
Company shall within one Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such
number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or,
upon election by the Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company,
may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any
increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to
the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section
3. Certain Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of
Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.
b) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells
any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any
class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the
Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation,
then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the
Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (except to the extent an adjustment was already made pursuant
to Section 3(a))) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the
Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is
taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to
be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder’s
right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock
as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To
the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion of the Distribution
shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
d) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions provided, however that the sale by the Company of any Subsidiary, other than a Material Subsidiary,
does not constitute a Fundamental Transaction, Material Subsidiary” shall mean any subsidiary of the Company that is material
to the business and operations of the Company as described in the SEC Reports (iii) any, direct or indirect, purchase offer, tender offer
or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding
Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one
or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v)
the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another
Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or
more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in
Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).
For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash
or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the
event of a Fundamental Transaction that results in the common equity of the Company or the Successor Entity (as applicable) that is issuable
to the Holder upon the exercise of this Warrant not being publicly traded on a national securities exchange in the United States,
the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with,
or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable
Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value
(as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction;
provided, however, that, if the Fundamental Transaction is not within the Company’s control, including not approved
by the Company’s Board of Directors, the Holder shall only be entitled to receive from the Company or any Successor Entity the same
type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that
is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration
be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from
among alternative forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders
of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock
will be deemed to have received common stock of the Successor Entity (which Entity may be the Company following such Fundamental Transaction)
in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal
to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date,
(B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated
Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price
per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction
and (ii) the highest VWAP during the period beginning on the Trading Day immediately preceding the public announcement of the applicable
contemplated Fundamental Transaction (or the consummation of the applicable Fundamental Transaction, if earlier) and ending on the Trading
Day of the Holder’s request pursuant to this Section 3(e) and (D) a remaining option time equal to the time between the date of
the public announcement of the applicable contemplated Fundamental Transaction and the Termination Date and (E) a zero cost of borrow.
The payment of the Black Scholes Value will be made by wire transfer of immediately available funds (or such other consideration) within
the later of (i) five Business Days of the Holder’s election and (ii) the date of consummation of the Fundamental Transaction. The
Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in
accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the
Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder,
deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock
pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions
of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
e) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f) Notice
to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall instruct
the Warrant Agent to promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting
adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment. The Warrant Agent
shall have no duty, responsibility or obligation to determine the correctness of any provisions contained in such notice, including but
not limited to any provisions relating either to the kind or amount of securities or other property receivable upon exercise of warrants
or with respect to the method employed and provided therein for any adjustments, and shall be entitled to rely conclusively for all purposes
upon the provisions contained in any such agreement.
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Common Stock (excluding, however, any forward or reverse stock split), any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its
last email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date
as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided
that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate
action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material,
non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission
pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the
date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section
4. Transfer of Warrant.
a) Transferability.
, This Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office
of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days
of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned
in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. If this Warrant is not held in global form through DTC, this Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer
which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall
be dated the original issue date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c) Warrant
Register. The Warrant Agent (or if this Warrant is not held in global form through DTC, the Company) shall register this Warrant,
upon records to be maintained by the Warrant Agent (or if this Warrant is not held in global form through DTC, the Company) for that purpose
(the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company and the Warrant Agent
may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary. .
d) No
Rights as Stockholder Until Exercise: No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly
set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant
to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be
required to net cash settle an exercise of this Warrant.
d) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
e) Saturdays.
Sundays. Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business
Day.
f) Authorized
Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the
necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
Except and to the extent
as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its articles of
incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company
will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain
all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable
the Company to perform its obligations under this Warrant.
Before taking any action
which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
g) Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
h) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not
utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
i) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this
Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results
in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder
in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
j) Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in
accordance with the notice provisions of the Purchase Agreement.
k) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the
Company.
l) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
m) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable
by the Holder or holder of Warrant Shares.
n) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
o) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
p) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
q) Warrant
Agency Agreement. If this Warrant is held in global form through DTC (or any successor depositary), this Warrant is issued subject
to the Warrant Agency Agreement. To the extent any provision of this Warrant conflicts with the express provisions of the Warrant Agency
Agreement, the provisions of this Warrant shall govern and be controlling.
********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company has caused this Warrant
to be executed by its officer thereunto duly authorized as of the date first above indicated.
|
KAIVAL BRANDS INNOVATIONS GROUP, |
|
INC. |
|
|
|
By: |
|
|
|
Name: Nirajkumar Patel |
|
|
Title: Chief Executive Officer |
EXHIBIT A
NOTICE OF EXERCISE
TO: KAIVAL BRANDS INNOVATIONS GROUP, INC.
(1) The
undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[ ] in lawful money of the United States;
or
[ ] if permitted the cancellation of such
number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect
to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following DWAC Account Number:
[SIGNATURE OF HOLDER]
Name of Investing |
|
Entity: |
|
Signature of Authorized Signatory of Investing Entity: |
|
Name of Authorized Signatory: |
|
Title of Authorized Signatory: |
|
Date: |
|
EXHIBIT B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form
and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
| | |
| Address: |
(Please Print) |
| | |
| Phone Number: | |
| | |
| Email Address: | |
|
Dated:_________________________________________ |
|
|
|
|
|
Holder’s Signature:_______________________________ |
|
|
|
|
|
Holder’s Address:________________________________ |
|
EXHIBIT 5.1
May 29, 2024
KAIVAL BRANDS INNOVATIONS GROUP, INC.
4460 Old Dixie Highway
Grant-Valkaria, Florida 32949
Ladies and Gentlemen:
We have acted as counsel for Kaival Brands Innovations Group, Inc, a Delaware
corporation (the “Company”), in connection with the preparation and filing of a Registration Statement on Form S-1 (the “Registration
Statement”), including a related prospectus filed with the Registration Statement (the “Prospectus”), with the Securities
and Exchange Commission (the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”),
covering the offer and sale of up to $5,000,000 of units, each unit consisting of one share (each a “Share”) of common stock
of the Company, par value $0.001 per share (“Common Stock”) and one and one-half common stock purchase warrant (“Purchase
Warrant”) to purchase one and one-half shares of Common Stock or up to $5,000,000 of pre-funded units, each pre-funded unit consisting
of one pre-funded warrant to purchase one share of common stock(a “Pre-Funded Warrant” and together with the Purchase Warrants,
the “Warrants”)) and one Purchase Warrant to purchase one and one-half shares of Common Stock This opinion is being rendered
in connection with the filing of the Registration Statement with the Commission.
In connection with this opinion, we have examined
originals or copies (certified or otherwise identified to our satisfaction) of (i) the Company’s Articles of Incorporation, as currently
in effect, (ii) the Company’s Bylaws as currently in effect, (iii) the Registration Statement and related Prospectus and (vi) such
corporate records, agreements, documents and other instruments, and such certificates or comparable documents of public officials or of
officers and representatives of the Company, as we have deemed relevant and necessary as a basis for the opinion hereinafter set forth.
In such examination, we have assumed the genuineness
of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified, conformed or photostatic copies, and the authenticity of the originals
of such latter documents. As to certain questions of fact material to this opinion, we have relied upon certificates or comparable documents
of officers and representatives of the Company and have not sought to independently verify such facts.
Based on the foregoing, and in reliance thereon, and
subject to the qualifications, limitations, exceptions and assumptions set forth herein, we are of the opinion that, (i) the Shares and
the Warrants have been duly authorized and when issued as described in the Registration Statement will be duly and validly issued, fully
paid and non-assessable and (ii) the shares of Common Stock issuable upon the exercise of the Warrants have been duly authorized and,
upon the exercise of the Warrants in accordance with the terms thereof, such shares will be duly and validly issued, fully paid and non-assessable
shares of common stock of the Company.
We express no opinion herein as to the laws of any
state or jurisdiction other than Delaware General Corporation Law (including the statutory provisions and all applicable judicial decisions
interpreting those laws) and the federal laws of the United States of America.
This opinion speaks only as of the date hereof and
we assume no obligation to update or supplement this opinion if any applicable laws change after the date of this opinion or if we
become aware after the date of this opinion of any facts, whether existing before or arising after the date hereof, that might change
the opinions expressed above.
This opinion is furnished in connection with the filing
of the Registration Statement and may not be relied upon for any other purpose without our prior written consent in each instance.
We assume no obligation to update or supplement any
of our opinions to reflect any changes of law or fact that may occur. We hereby consent to the filing of this letter as an exhibit to
the Registration Statement and to the reference to our firm under the caption “Legal Matters” in the Prospectus which is a
part of the Registration Statement. In giving such consents, we do not thereby admit that we are in the category of persons whose consent
is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Sichenzia Ross Ference Carmel LLP
Sichenzia Ross Ference Carmel LLP
EXHIBIT 10.29
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement
(this “Agreement”) is dated as of May [___], 2024, between Kaival Brands Innovations Group, Inc., a Delaware
corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively the “Purchasers”).
WHEREAS, subject to the terms and
conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended
(the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION
of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and each Purchaser agree as follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings
set forth in this Section 1.1:
“Acquiring Person”
shall have the meaning ascribed to such term in Section 4.5.
“Action” shall
have the meaning ascribed to such term in Section 3.1 (j).
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person as such terms are used in and construed under Rule 405 under the Securities Act.
“Agent’s Counsel”
means Loeb & Loeb LLP, with offices located at 345 Park Avenue, New York, New York 10154.
“Board of Directors”
means the board of directors of the Company.
“Business Day”
means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by
law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by
law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other
similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long
as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York are generally open
for use by customers on such day.
“Closing” means
the closing of the purchase and sale of the Securities pursuant to Section 2.1.
“Closing Date”
means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and
all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations
to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the second (2nd) Trading
Day following the date hereof.
“Commission”
means the United States Securities and Exchange Commission.
“Common Stock”
means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter
be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Company or any of its Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into
or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company Counsel”
means Sichenzia Ross Ference Carmel LLP, with offices located at 1185 Avenue of the Americas, 31st Floor, New York, NY 10036.
“Disclosure Schedules”
means the Disclosure Schedules of the Company delivered concurrently herewith.
“Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(s).
“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exempt Issuance”
means the issuance of (a) shares of Common Stock, restricted stock, restricted stock units or options to employees, officers, consultants,
other service providers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority
of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established
for such purpose, for services rendered to the Company, (b) the Shares, the Warrants, the Pre-Funded Warrants, the Warrant Shares, and
the Pre-Funded Warrant Shares, (c) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable
for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have
not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange
price or conversion price of such securities (other than in connection with automatic price resets, stock splits, adjustments or combinations
as set forth in such securities) or to extend the term of such securities and (d) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors of the Company (including those that may result in a change of control
of the Company) , provided that, unless otherwise approved by the Placement Agent, such securities are issued as “restricted securities”
(as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection
therewith during the prohibition period in Section 10(a) of the Placement Agency Agreement, and provided that any such issuance
shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or
an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing in securities.
“FCPA” means
the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP” shall
have the meaning ascribed to such term in Section 3.1(h).
“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).
“Intellectual Property
Rights” shall have the meaning ascribed to such term in Section 3.1(p).
“Liens” means
a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Lock-Up Agreements”
means the written agreement, in the form of Exhibit B attached hereto, addressed to the Placement Agent by each of the Company’s
directors, officers and holders of 10% or more of the Company’s outstanding shares of Common Stock (and all holders of securities
exercisable for or convertible into shares of Common Stock).
“Material Adverse Effect”
shall have the meaning assigned to such term in Section 3.1(b).
“Material Permits”
shall have the meaning ascribed to such term in Section 3.1(n).
“Per Share Purchase Price”
equals $[_________], subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement, provided that the purchase price per Pre-Funded Warrant
shall be the Per Share Purchase Price minus $0.001.
“Person” means
an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Placement Agent”
means Maxim Group LLC.
“Placement Agency
Agreement” means the Placement Agency Agreement by and between the Company and the Placement Agent dated the date hereof.
“Pre-Funded Warrants”
means, collectively, the Pre-Funded Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section
2.2(a) hereof, which Pre-Funded Warrants shall be issued pursuant to the Registration Statement, exercisable immediately and shall expire
when exercised in full, the form of Exhibit __ attached hereto.
“Pre-Funded Warrant Shares”
means the shares of Common Stock issuable upon exercise of the Pre-Funded Warrants.
“Preliminary Prospectus”
means any preliminary prospectus included in the Registration Statement, as originally filed or as part of any amendment thereto, or filed
with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the Securities Act.
“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
“Product” has
the meaning ascribed to that term in Section 3.1(ii).
“Prospectus”
means the final pricing prospectus filed for the Registration Statement complying with Rule 424(b) of the Securities Act
“Purchaser Party”
shall have the meaning ascribed to such term in Section 4.8.
“Registration Statement”
means the effective Registration Statement on Form S-1, as amended (File No. 333-279045) which registers the sale of the Shares, the Warrants,
the Pre-Funded Warrants, the Warrant Shares and the Pre-Funded Warrant Shares to the Purchasers.
“Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).
“Rule 144” means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Rule 424” means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means the Shares, the Warrants, the Pre-Funded Warrants, the Warrant Shares and the Pre-Funded Warrant Shares.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shares” means
the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.
“Short Sales”
means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include
locating and/or borrowing shares of Common Stock).
“Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Shares, Pre-Funded Warrants, and Warrants purchased hereunder as specified
below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in
United States dollars and in immediately available funds.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading Day”
means a day on which the principal Trading Market is open for trading.
“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the
NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, and the New York Stock Exchange (or
any successors to any of the foregoing).
“Transaction Documents”
means this Agreement, the Pre-Funded Warrants, the Warrants the Warrant Agency Agreement and the Placement Agency Agreement, all exhibits
and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer Agent”
means vStock Transfer, LLC., the current transfer agent of the Company with a mailing address of 18 Lafayette Pl.., Woodmere, NY 11598,
and any successor transfer agent of the Company.
“Variable Rate Transaction”
shall have the meaning ascribed to such term in Section 4.12(b).
“VWAP” means,
for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.
“Warrant Agency Agreement”
means the Warrant Agency Agreement dated as of the Closing Date between the Company and the Warrant Agent.
“Warrant Agent” means
vStock Transfer, LLC., the current transfer agent of the Company with a mailing address of 18 Lafayette Pl., Woodmere, NY 11598, and any
successor warrant agent of the Company.
“Warrants” means,
collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof,
which Warrants shall be immediately exercisable following the Closing Date and have a term of exercise equal to five years (5) years,
in the form of Exhibit A attached hereto.
“Warrant Shares”
means the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE
II.
PURCHASE AND SALE
2.1 Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery
of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase,
up to an aggregate of $[___________] of Shares and Warrants; provided, however, that, to the extent a Purchaser determines, in
its sole discretion, that such Purchaser (together with such Purchaser’s Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation, or as such Purchaser may otherwise choose, in lieu of purchasing Shares such Purchaser may elect to purchase Pre-Funded
Warrants in lieu of Shares in such manner to result in the same aggregate purchase price being paid by such Purchaser to the Company.
The “Beneficial Ownership Limitation” shall be 4.99% (or, at the election of the Purchaser at the Closing, 9.99%) of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of the Securities on the Closing Date. Each
Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser shall be made available for
“Delivery Versus Payment” settlement with the Company or its designee. The Company shall deliver to each Purchaser its respective
Shares (or Pre-Funded Warrants) and Warrants as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver
the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections
2.2 and 2.3, the Closing shall occur at the offices of Agent’s Counsel or such other location as the parties shall mutually agree.
Unless otherwise directed by the Placement Agent, settlement of the Shares shall occur via “Delivery Versus Payment” (“DVP”)
(i.e., on the Closing Date, the Company shall issue the Shares registered in the Purchasers’ names and addresses and released by
the Transfer Agent directly to the accounts) at the Placement Agent identified by each Purchaser; upon receipt of such Shares, the Placement
Agent shall promptly electronically deliver such Shares to the applicable Purchaser, and payment therefor shall be made by the Placement
Agent (or its clearing firm) by wire transfer to the Company. Notwithstanding anything to the contrary herein and a Purchaser’s
Subscription Amount set forth on the signature pages attached hereto, the number of Shares purchased by a Purchaser (and its Affiliates)
hereunder shall not, when aggregated with all other shares of Common Stock owned by such Purchaser (and its Affiliates) at such time,
result in such Purchaser beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act) in excess of 9.9% of
the then issued and outstanding Common Stock outstanding at the Closing (the “Beneficial Ownership Maximum”), and such
Purchaser’s Subscription Amount, to the extent it would otherwise exceed the Beneficial Ownership Maximum immediately prior to the
Closing, shall be conditioned upon the issuance of Shares at the Closing to the other Purchasers signatory hereto to the extent necessary
to reduce such Purchaser’s beneficial ownership of Common Stock below the Beneficial Ownership Maximum, after taking such Purchaser’s
Subscription Amount. To the extent that a Purchaser’s beneficial ownership of the Shares would otherwise be deemed to exceed the
Beneficial Ownership Maximum, such Purchaser’s Subscription Amount shall automatically be reduced as necessary in order to comply
with this paragraph. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise (as defined in the Pre-Funded Warrants)
delivered on or prior to 4:00 p.m. (New York City time) on the Trading Day prior to the Closing Date, which may be delivered at any time
after the time of execution of this Agreement, the Company agrees to deliver the applicable Pre-Funded Warrant Shares subject to such
notice(s) by 4:00 p.m. (New York City time) on the Closing Date and the Closing Date shall be the Warrant Share Delivery Date (as defined
in the Pre-Funded Warrants) for purposes hereunder.
2.2 Deliveries.
(a) On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser and the Placement Agent the following:
(i) this
Agreement duly executed by the Company;
(ii) a
legal opinion of Company Counsel (including, without limitation, a negative assurance letter), (ii) a legal opinion of _________. on intellectual
property matters, and (iii) a legal opinion of ______________on regulatory matters, each in a form satisfactory to the Placement Agent
and each Purchaser;
(iii)
cold comfort letters from MaloneBailey LLP addressed to the Purchasers and the Placement Agent in form and substance reasonably satisfactory
in all material respects to the Placement Agent (on the date of this Agreement and on the Closing Date);
(iv) duly
executed Lock-Up Agreements.
(v)
duly executed Warrant Agency Agreement.
(vi) subject
to the last sentence of Section 2.1, a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver
on an expedited basis via The Depository Trust Company Deposit or Withdrawal at Custodian system (“DWAC”) Shares equal
to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser;
(vii) a
Warrant in the form of Exhibit A attached hereto registered in the name of such Purchaser to purchase up to a number of shares
of Common Stock equal to 100% of such Purchaser’s Shares, with an initial exercise price equal to $[___], subject to adjustment
therein;
(viii) for
each Purchaser of Pre-Funded Warrants pursuant to Section 2.1, a Pre-Funded Warrant registered in the name of such Purchaser to purchase
up to a number of shares of Common Stock equal to the portion of such Purchaser’s Subscription Amount applicable to the Pre-Funded
Warrant divided by the Per Share Purchase Price minus $0.001, with an exercise price equal to $0.001, subject to adjustment therein; and
(ix) the
Prospectus (which may be delivered in accordance with Rule 172 under the Securities Act).
(b) On
or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:
(i) this
Agreement duly executed by such Purchaser; and
(ii) such
Purchaser’s Subscription Amount, which shall be made available for “Delivery Versus Payment” settlement with the Company
or its designee.
2.3 Closing
Conditions.
(a) The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect,
in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific
date therein in which case they shall be accurate in all material respects (or, to the extent representations or warranties are qualified
by materiality or Material Adverse Effect, in all respects) as of such date);
(ii) all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed
in all material respects; and
(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The
respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:
(i) the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect,
in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of
a specific date therein in which case they shall be accurate in all material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all respects) as of such date);
(ii) all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed
in all material respects;
(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the date hereof;
(v) each
of the Lock-Up Agreements shall remain in full force and effect; and
(vi) from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall
not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities
nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude
in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser,
makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE
III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company. Except as set forth in the SEC Reports (as defined below) to the extent it is specifically referenced
in this section, and the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation
or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company
hereby makes the following representations and warranties to each Purchaser:
(a) Subsidiaries.
All of the Subsidiaries of the Company and their respective jurisdictions of incorporation or organization are set forth on Schedule
3.1(a). Except as set forth on Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock or other equity
interests of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe
for or purchase securities.
(b) Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to
own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any of its Subsidiaries
is in violation nor default of any of the provisions of its articles of incorporation, certificate of incorporation, bylaws or other organizational
or charter documents. The Company and each of its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of its business or property it owns makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result
in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect
on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and its Subsidiaries, or
(iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under
any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c) Authorization:
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other
than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or
upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(d) No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it
is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do
not and will not (i) conflict with or violate any provision of the articles of incorporation, certificate of incorporation or bylaws or
other organizational documents of the Company or any of its Subsidiaries, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties
or assets of the Company or any of its Subsidiaries or give to others any rights of termination, amendment, anti-dilution or similar adjustments,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any of its Subsidiaries is a party
or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Company or any of its Subsidiaries is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or any of its Subsidiaries is bound or affected; except in the case of
clause (ii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection
with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant
to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus and (iii) application(s) to each applicable Trading
Market for the listing of the Shares, Pre-Funded Warrant Shares and Warrant Shares for trading thereon in the time and manner required
thereby.(collectively, the “Required Approvals”).
(f) Issuance
of the Securities: Registration. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.
The Warrant Shares and the Pre-Funded Warrant Shares, when issued in accordance with the terms of the Warrants and the Pre-Funded Warrants,
will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from
its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement, the Warrants and the
Pre-Funded Warrants. The Company has prepared and filed the Registration Statement in conformity with the requirements of the Securities
Act, which became effective on May__, 2024 (the “Effective Date”), including the Preliminary Prospectus, the Prospectus,
and such amendments and supplements thereto as may have been required to the date of this Agreement. The Registration Statement is effective
under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge
of the Company, are threatened by the Commission. The Company shall file the Prospectus with the Commission pursuant to Rule 424(b). At
the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date,
the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities
Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto at the
time the Prospectus or any such amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all
material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) Capitalization.
The capitalization of the Company as of the date hereof is as set forth on Schedule 3.1(g). which Schedule 3.1(g) shall
also include the number of shares of Common Stock owned beneficially, and of record, by Subsidiaries and Affiliates of the Company as
of the date hereof. Except as set forth on Schedule 3.1(g) or in the SEC Reports (as defined below). the Company has not issued
any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of
the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule
3.1(g) and as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock or Common Stock
Equivalents. Except as set forth on Schedule 3.1(g). the issuance and sale of the Securities will not obligate the Company or any
of its Subsidiaries to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities.
Except as set forth on Schedule 3.1(g) or the SEC Reports, there are no outstanding securities or instruments of the Company that
contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries. The Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. All of the outstanding
shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others
is required for the issuance and sale of the Securities. Except as set forth on Schedule 3.1(g). there are no stockholders agreements,
voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s stockholders. On January 22, 2024 the Company effected a 1-for-21
reverse split of its authorized and issued shares of Common Stock .
(h) SEC
Reports: Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be
filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by reference therein, together with the Registration Statement, the
Preliminary Prospectus and the Prospectus , being collectively referred to herein as the “SEC Reports”) on a timely
basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at
the time of filing. No other financial statements or supporting schedules or exhibits are required by Regulation S-X to be described or
included in the Registration Statement or the Prospectus. The pro forma and pro forma as adjusted financial information included in the
Registration Statement and the Prospectus have been properly compiled and prepared in accordance with the applicable requirements of the
Securities Act and the Exchange Act and present fairly the information shown therein, and the assumptions used in the preparation thereof
are reasonable, and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein.
Except as included therein, no historical or pro forma financial statements are required to be included in the Registration Statement
or the Prospectus under the Securities Act and the Exchange Act. .Such financial statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. All disclosures contained in the Registration
Statement or the Prospectus, or incorporated or deemed incorporated by reference therein, regarding “non-GAAP financial measures”
(as such term is defined by the rules and regulations of the Commission), if any, comply with Regulation G of the Exchange Act and Item
10 of Regulation S-K of the Securities Act, to the extent applicable. To the extent required by the Securities Act, each of the Registration
Statement and the Prospectus discloses all material off-balance sheet transactions, arrangements, obligations (including contingent obligations),
and other relationships of the Company with unconsolidated entities or other persons that may have a material current or future effect
on the Company’s financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital
resources, or significant components of revenues or expenses. Except as disclosed in the Registration Statement and the Prospectus, or
as disclosed in the SEC Report, since the date of the latest audited financial statements (i) neither the Company nor any of its direct
and indirect Subsidiaries, including each entity disclosed or described in the Registration Statement and the Prospectus as being a subsidiary
of the Company, has incurred any material liabilities or obligations, direct or contingent that are material to the Company, or entered
into any transactions that are material to the Company, other than in the ordinary course of business, (ii) except for dividends on the
presently outstanding shares of the Company’s preferred stock, the Company has not declared or paid any dividends or made any distribution
of any kind with respect to its capital stock, (iii) there has not been any change in the capital stock of the Company or any of its Subsidiaries,
or, other than in the course of business or any grants under any stock compensation plan, and (iv) there has not been any material adverse
change in the Company’s long-term or short-term debt.
(i) Material
Changes: Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within
the SEC Reports, except as set forth on Schedule 3.1(i) or in the SEC Reports, (i) there has been no event, occurrence or development,
that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company, any has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential
treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i),
no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist
with respect to the Company, its Subsidiaries or any of their respective business, prospects, properties, operations, assets or financial
condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.
(j) Litigation.
Except as set forth on Schedule 3.1(j) or in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any of its Subsidiaries or
any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) (collectively, an “Action”). Except as set forth on Schedule 3.1(j), no Action
set forth on Schedule 3.1(j) (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company, nor any of its Subsidiaries nor any of their respective directors or officers, is or has been the
subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary
duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.
(k) Labor
Relations. No labor dispute exists or, to the knowledge of the Company is imminent with respect to any of the employees of the Company
or any of its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect. None of the employees of the Company
or any of its Subsidiaries is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary,
and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company believes that relationships
with its employees and the employees of its Subsidiaries are good. To the knowledge of the Company, no executive officer of the Company
or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries
to any liability with respect to any of the foregoing matters. The Company and each of its Subsidiaries is in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment
and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(l) Compliance.
Except as set forth on Schedule 3.1(1), neither the Company nor any of its Subsidiaries: (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company
or such Subsidiary under), nor has the Company or any of its Subsidiaries received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which
it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment,
decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each
case as could not have or reasonably be expected to result in a Material Adverse Effect.
(m) Environmental
Laws. The Company and each of its Subsidiaries (i) is in compliance with all federal, state, local and foreign laws relating to pollution
or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface strata),
including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as
all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”): (ii) has received
all permits licenses or other approvals required of it under applicable Environmental Laws to conduct its business; and (iii) is in compliance
with all terms and conditions of any such permit, license or approval where in each clause (i), (ii) and (iii), the failure to so comply
could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) Regulatory
Permits. Except as set forth on Schedule 3.1(n), the Company and each of its Subsidiaries possesses all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign regulatory authorities, including, without limitation, those administered
by the U.S. Food and Drug Administration (“FDA”) of the U.S. Department of Health and Human Services, or by any foreign,
federal, state or local governmental or regulatory authority performing functions similar to those performed by the FDA necessary to conduct
its business as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result
in a Material Adverse Effect (“Material Permits”), and neither the Company nor any of its Subsidiaries has received
any notice of proceedings relating to the revocation or modification of any Material Permit.
(o) Title
to Assets. The Company and each of its Subsidiaries, has good and marketable title in fee simple to all real property owned by it
and good and marketable title in all personal property owned by it that is material to the business of the Company and such Subsidiary,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the Company or such Subsidiary and (ii) Liens for the payment
of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company or any of its Subsidiaries
is held by it under valid, subsisting and enforceable leases with which the Company or such Subsidiary is in compliance.
(p) Intellectual
Property. The Company and each of its Subsidiaries has, or has rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar
rights necessary or required for use in connection with its business as described in the SEC Reports and which the failure to so have
could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any
of its Subsidiaries has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated
or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement except
where such expiration, termination or abandonment would not reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries has received, since the date of the latest audited financial statements included within the SEC Reports, a
written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of
any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company and each of its Subsidiaries has taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(q) Insurance.
The Company and each of its Subsidiaries is insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the business in which the Company or such Subsidiary is engaged, including, but not limited
to, directors and officers insurance coverage of $3,000,000. The Company has no reason to believe that it or any of its Subsidiaries will
not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in cost.
(r) Transactions
With Affiliates and Employees. Except as set forth on Schedule 3.1(r) or the SEC Reports, none of the officers or directors
of the Company or any of its Subsidiaries, and, to the knowledge of the Company, none of the employees of the Company or any of its Subsidiaries,
is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of
$120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company or any of its Subsidiaries and (iii) other employee benefits, including stock option agreements under any stock option
plan of the Company.
(s) Sarbanes-Oxley;
Internal Accounting Controls. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002
that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that
are effective as of the date hereof and as of the Closing Date. Except as set forth on Schedule 3.1(s), the Company maintains a
system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Except as set forth on Schedule 3.1(s), the Company
has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company, and designed
such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of
the Company as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since
the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting
of the Company.
(t) Certain
Fees. Other than the compensation payable to the Placement Agent pursuant to the terms of the Placement Agency Agreement and as set
forth in the Registration Statement and the Prospectus relating to the placement of the Securities, no brokerage or finder’s fees
or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(u) Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be
or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company
shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended.
(v) Registration
Rights. Except as set forth on Schedule 3.1(v), no Person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company or any of its Subsidiaries.
(w) Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company
has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.
Except as set forth on Schedule 3.1(w) or the SEC Reports, the Company has not in the 12 months preceding the date hereof received
notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. Except as set forth on Schedule 3.1(w) or the SEC Reports,
the Company has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and
maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another
established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established
clearing corporation) in connection with such electronic transfer.
(x) Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s articles of incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations
or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of
the Securities and the Purchasers’ ownership of the Securities.
(y) Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information
that it believes constitutes or might constitute material, nonpublic information which is not otherwise disclosed in the Registration
Statement and the Prospectus. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and
correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were made, not misleading. The press releases disseminated
by the Company during the 12 months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes
or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth
in Section 3.2 hereof.
(z) No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither
the Company, nor any of its Subsidiaries to Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of
the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(aa) Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount
that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as
now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the
business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current
cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into
account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts
are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date. Schedule 3.1(aa) sets forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company and its Subsidiaries or for which the Company or any of its Subsidiaries has commitments. For the purposes
of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases
required to be capitalized in accordance with GAAP. Neither the Company nor any of its Subsidiaries is in default with respect to any
Indebtedness.
(bb) Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all
foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports
and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods
subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.
(cc) Foreign
Corrupt Practices. Neither the Company nor any of its Subsidiaries, nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company or any of its Subsidiaries has (i) directly or indirectly, used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign
or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii)
failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the
Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of FCPA.
(dd) Accountants.
The Company’s independent registered public accounting firm is MaloneBailey LLP. To the knowledge and belief of the Company, such
accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect
to the financial statements to be included in the Company’s Annual Report for the fiscal year ended October 31, 2024.
(ee) Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or
any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby
is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s
decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions
contemplated hereby by the Company and its representatives.
(ff) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities
of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified
term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales
or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative”
transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party
in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage
in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the
periods that the value of the Warrant Shares or Pre-Funded Warrant Shares deliverable with respect to Securities are being determined,
and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at
and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities
do not constitute a breach of any of the Transaction Documents.
(gg) Regulation
M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities,
or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company,
other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s Placement Agent in connection with the placement
of the Securities.
(hh) [Reserved]
(ii) FDA.
As to each product subject to the jurisdiction of the FDA under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations
thereunder (“FDCA”) that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or
any of its Subsidiaries (each such product, a “Product”), such Product is being manufactured, packaged, labeled, tested,
distributed, sold and/or marketed by the Company or such Subsidiary in compliance with all applicable requirements under FDCA and similar
laws, rules and regulations relating to registration, investigational use, premarket clearance, licensure, or application approval, good
manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas, labeling, advertising, record keeping
and filing of reports, except where the failure to be in compliance would not have a Material Adverse Effect. Except as set forth on Schedule
3.1(ii), there is no pending, completed or, to the Company’s knowledge, threatened, action (including any lawsuit, arbitration,
or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries
or Affiliates, and none of the Company or any of its Subsidiaries or Affiliates has received any notice, warning letter or other communication
from the FDA or any other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the
uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Product,
(ii) withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or
sales promotional materials relating to, any Product, (iii) enters or proposes to enter into a consent decree of permanent injunction
with the Company or any of its Subsidiaries, or (iv) otherwise alleges any violation of any laws, rules or regulations by the Company
or any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect. The properties,
business and operations of the Company and each of its Subsidiaries have been and are being conducted in all material respects in accordance
with all applicable laws, rules and regulations of the FDA. Except as set forth on Schedule 3.1(ii), neither the Company nor any
of its Subsidiaries or Affiliates has been informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United
States of any product proposed to be developed, produced or marketed by the Company or its Subsidiaries nor has the FDA expressed any
concern as to approving or clearing for marketing any product being developed or marketed or proposed to be developed or marketed by the
Company or any of its Subsidiaries.
(jj) Cybersecurity.
(i)(x) Except as set forth on Schedule 3.1(jj). there has been no security breach or other compromise of or relating to any of
the Company’s or any Subsidiary’s information technology and computer systems, networks, hardware, software, data (including
the data of its respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment
or technology (collectively, “IT Systems and Data”) and (y) the Company and the Subsidiaries have not been notified
of, and has no knowledge of any event or condition that would reasonably be expected to result in, any security breach or other compromise
to its IT Systems and Data; (ii) the Company and the Subsidiaries are presently in compliance with all applicable laws or statutes and
all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and
contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data
from unauthorized use, access, misappropriation or modification, except as would not, individually or in the aggregate, have a Material
Adverse Effect; (iii) the Company and the Subsidiaries have implemented and maintained commercially reasonable safeguards to maintain
and protect its material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and
Data; and (iv) the Company and the Subsidiaries have implemented backup and disaster recovery technology consistent with industry standards
and practices.
(kk) Stock
Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with
the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common
Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s
stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice
to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public
announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(ll) Office
of Foreign Assets Control. Neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any of its Subsidiaries is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(mm) U.S.
Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is or has ever been a U.S. real property
holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify
upon Purchaser’s request.
(nn) Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent
(5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or
Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve.
(oo) Money
Laundering. The operations of the Company and each of its Subsidiaries is and has been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering
Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving
the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(pp) Lock-Up
Agreements. Each of the Company’s directors, officers and holders of 10% or more of the Company’s outstanding shares of
Common Stock as of the date of this Agreement has signed a Lock-Up Agreement.
(qq) FINRA
Affiliation. To the knowledge of the Company, no officer, director or any beneficial owner of 10% or more of the Company’s Common
Stock or Common Stock Equivalents has any direct or indirect affiliation or association with any member of the Financial Industry Regulatory
Authority (“FINRA”) (as determined in accordance with the rules and regulations of FINRA) that is participating in
this offering. Except for securities purchased on the open market, no Company Affiliate is an owner of stock or other securities of any
member of FINRA. No Company Affiliate has made a subordinated loan to any member of FINRA. No proceeds from the sale of the Securities
(excluding compensation as disclosed in the Prospectus to the Placement Agent) will be paid to any FINRA member, any persons associated
with a FINRA member or an affiliate of a FINRA member. Except as disclosed in the Registration Statement and Prospectus, no person to
whom securities of the Company have been privately issued within the 180-day period prior to the initial filing date of the Registration
Statement is a FINRA member, is a person associated with a FINRA member or is an affiliate of a FINRA member. No FINRA member participating
in this offering has a conflict of interest with the Company. For this purpose, a “conflict of interest” exists when a FINRA
member, the parent or affiliate of a FINRA member or any person associated with a FINRA member in the aggregate beneficially own 5% or
more of the Company’s outstanding subordinated debt or common equity, or 5% or more of the Company’s preferred equity. “FINRA
member participating in the offering” includes any associated person of a FINRA member that is participating in the offering, any
member of such associated person’s immediate family and any affiliate of a FINRA member that is participating in the offering. “Any
person associated with a FINRA member” means (1) a natural person who is registered or has applied for registration under the rules
of FINRA and (2) a sole proprietor, partner, officer, director, or branch manager of a FINRA member, or other natural person occupying
a similar status or performing similar functions, or a natural person engaged in the investment banking or securities business who is
directly or indirectly controlling or controlled by a FINRA member. When used in this Section 3.1(ss) the term “affiliate of a FINRA
member” or “affiliated with a FINRA member” means an entity that controls, is controlled by or is under common control
with a FINRA member. The Company will advise the Placement Agent and Agent’s Counsel if it learns that any officer, director or
owner of 10% or more of the Company’s outstanding Common Stock or Common Stock Equivalents is or becomes an affiliate or associated
person of a FINRA member firm.
(rr)
Officers’ Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to the Purchasers
shall be deemed a representation and warranty by the Company to the Purchasers as to the matters covered thereby.
3.2 Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate
as of such date):
(a) Organization:
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company
or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents to which such Purchaser
is a party and performance by such Purchaser of the transactions contemplated by such Transaction Documents have been duly authorized
by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
(b) Understandings
or Arrangements. Such Purchaser is acquiring such Securities as principal for his, her or its own account and not with a view to or
for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities
law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities
law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of
such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting
such Purchaser’s right to sell such Securities pursuant to a registration statement or otherwise in compliance with applicable federal
and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, either: (i) an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities Act.
(d) Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such investment.
(e) Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits
and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities
and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results
of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity
to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary
to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that neither the Placement
Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect to the Securities
nor is such information or advice necessary or desired. Such Purchaser further acknowledges and agrees that neither the Placement Agent
nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities and that the Placement Agent
and any Affiliate may have acquired non-public information with respect to the Company which such Purchaser agrees need not be provided
to it. In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has
acted as a financial advisor or fiduciary to such Purchaser.
(f) Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has
any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or
sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser was first
contacted by the Company or any other Person representing the Company regarding the transactions contemplated hereunder and ending immediately
prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge
of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation
set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision
to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s
representatives, including, without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates,
such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a
representation or warranty, or preclude any actions, with respect to locating or borrowing shares in order to effect Short Sales or similar
transactions in the future.
(g) General Solicitation. Such Purchaser is not purchasing
the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at any seminar or, to the knowledge of such Purchaser, any
other general solicitation or general advertisement.
(h) Information Regarding Purchaser. The Purchaser
has provided the Company with true, complete, and correct information regarding all applicable items set forth on the Purchaser’s
signature page to this Agreement.
The Company acknowledges and agrees that the representations
contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations
and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other
document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated
hereby.
ARTICLE
IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 No
Legends
(a) The
Shares, the Pre-Funded Warrants, the Warrants, the Pre-Funded Warrant Shares and the Warrant Shares shall be issued free of legends.
4.2 Furnishing
of Information.
(a) Until
the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to timely file
(or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange
Act.
4.3 Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of
any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval
is obtained before the closing of such subsequent transaction.
4.4 Securities
Laws Disclosure: Publicity. The Company shall (a) by 8:00 a.m. (New York City time) on May [___], 2024, issue a press release disclosing
the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents
as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release,
the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of
the Purchasers by the Company or any of its officers, directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that
any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company or any of its officers,
directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall
terminate. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser,
with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure
is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement
or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name
of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (a) as required by federal securities law in connection with the filing of final Transaction Documents with the Commission
and (b) to the extent such disclosure is required by law or Trading Market or FINRA regulations, in which case the Company shall provide
the Purchasers with prior notice of such disclosure permitted under this clause (b).
4.5 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser
is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchasers.
4.6 Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting on its
behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably believes constitutes,
material non-public information, unless prior thereto such Purchaser shall have consented to the receipt of such information and agreed
with the Company to keep such information confidential. The Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company. To the extent that the Company delivers any material, non-public
information to a Purchaser without such Purchaser’s consent, the Company hereby covenants and agrees that such Purchaser shall not
have any duty of confidentiality to the Company or any of its officers, directors, agents, employees, Subsidiaries or Affiliates, or a
duty to the Company or any of its officers, directors, agents, employees, Subsidiaries or Affiliates not to trade on the basis of, such
material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that any notice provided
pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Company understands and confirms that
each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.7 Use
of Proceeds. Except as set forth on Schedule 4.7 attached hereto, the Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s
debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption
of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC
regulations.
4.8 Indemnification
of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners
or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court
costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement
or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is solely based upon a material breach of such Purchaser Party’s representations,
warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such
stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which
is finally judicially determined to constitute fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly
notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ one separate counsel in any such action and participate
in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent
that (x) the employment thereof has been specifically authorized by the Company in writing, (y) the Company has failed after a reasonable
period of time to assume such defense and to employ counsel or (z) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to
any Purchaser Party under this Agreement (1) for any settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (2) to the extent, but only to the extent that a loss, claim, damage
or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements
made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.8
shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received
or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser
Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.9 Reservation
of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares
pursuant to this Agreement, Pre-Funded Warrant Shares pursuant to any exercise of the Pre-Funded Warrants and the Warrant Shares pursuant
to any exercise of the Warrants.
4.10 Listing
of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on the Trading
Market on which it is currently listed, and prior to the Closing, the Company shall have applied to list or quote all of the Shares, Pre-Funded
Warrant Shares and Warrant Shares on such Trading Market and concurrently with the Closing, the Company shall have secured the listing
of all of the Shares, Pre-Funded Warrant Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares, Pre-Funded
Warrant Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Shares, Pre-Funded Warrant Shares
and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action
reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with
the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The Company agrees to maintain
the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation,
including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation
in connection with such electronic transfer.
4.11 [Reserved].
4.12 Subsequent
Equity Sales.
(a) Reserved.
(b) From
the date hereof until three months after the Closing Date, the Company shall be prohibited from effecting or entering into an agreement
to effect any issuance by the Company of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving Variable
Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt
or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of
Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities,
or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not
limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser shall be entitled
to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect
damages.
(c) Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an
Exempt Issuance.
4.13 Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right
granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers
as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition
or voting of Securities or otherwise.
4.14 Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor
any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales
of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that
the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section
4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated
by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser
will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules.
Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges
and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions
in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant
to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions
in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser
shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company after the issuance of the
initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have
no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets,
the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement.
4.15 Exercise
Procedures. The form of Notice of Exercise included in the Warrants and Pre-Funded Warrants set forth the totality of the procedures
required of the Purchasers in order to exercise the Warrants and Pre-Funded Warrants. No additional legal opinion, other information or
instructions shall be required of the Purchasers to exercise their Warrants or Pre-Funded Warrants. Without limiting the preceding sentences,
no ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise form be required in order to exercise the Warrants or Pre-Funded Warrants. The Company shall honor exercises of
the Warrants and Pre-Funded Warrants and shall deliver Warrant Shares and Pre-Funded Warrant Shares in accordance with the terms, conditions
and time periods set forth in the Transaction Documents.
4.16 [Reserved].
4.17 [Reserved].
4.18 Capital
Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split or
reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in interest of the Shares,
other than a stock split that is required, in the good faith judgment of the Board of Directors, to maintain the listing of the Common
Stock on the current Trading Market.
4.19 Lock-Up.
The Company shall not amend, modify, waive or terminate any provision of any of the Lock-Up Agreements except to extend the term of the
lock-up period and shall enforce the provisions of each Lock-Up Agreement in accordance with its terms. If any officer or director that
is a party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its best efforts to seek
specific performance of the terms of such Lock-Up Agreement.
ARTICLE
V.
MISCELLANEOUS
5.1 Termination.
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever
on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated
on or before the fifth (5th) Trading Day following the date hereof; provided, however, that no
such termination will affect the right of any party to sue for any breach by any other party (or parties).
5.2 Fees
and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without
limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered
by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.
5.3 Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, the Registration Statement and the
Prospectus, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
5.4 Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the time of transmission, if such notice or communication is delivered via facsimile
at the facsimile number or email attachment at the email address as set forth on the signature pages attached hereto at or prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number or email attachment at the email address as set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd)
Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the
signature pages attached hereto. To the extent that any notice provided pursuant to any Transaction Document constitutes, or contains,
material, non-public information regarding the Company, the Company shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K.
5.5 Amendments:
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in
the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares based on the initial
Subscription Amounts hereunder (or, prior to the Closing, the Company and each Purchaser) or, in the case of a waiver, by the party against
whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and
adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers)
shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed
to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser
relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected
Purchaser. Any amendment effected in accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and
the Company.
5.6 Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any
of the provisions hereof.
5.7 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and then- successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other
than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by
the provisions of the Transaction Documents that apply to the “Purchasers.”
5.8 Third-Party
Beneficiaries. The Placement Agent shall be the third party beneficiary of the representations and warranties of the Company in Section
3.1, the representations and warranties of the Purchasers in Section 3.2 and the covenants in Sections 4.9 and 4.10. This Agreement is
intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8, this Section 5.8 and/or the Placement
Agency Agreement.
5.9 Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts
sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Action or Proceeding, any claim that it is not personally subject to the jurisdiction of any such
court, that such Action or Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action
or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section
4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action or Proceeding.
5.10 Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.
5.11 Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that
the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery
of a “.pdf” format data file or by electronic signature (including Docusign), such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile
or “.pdf’ signature page were an original thereof.
5.12 Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights; provided, however, that in the case of a rescission of an exercise of a Warrant or
Pre-Funded Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded exercise
notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration
of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant or Pre-Funded Warrant (including, issuance
of a replacement warrant certificate evidencing such restored right).
5.14 Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of
and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15 Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby
agree to waive and not to assert in any Action for specific performance of any such obligation the defense that a remedy at law would
be adequate.
5.16 Payment
Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required
to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
5.17 Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance
of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently
protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction
Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose.
Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For
reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through
Agent’s Counsel. Agent’s Counsel does not represent any of the Purchasers and only represents the Placement Agent. The Company
has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because
it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in
this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the Purchasers.
5.18 Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents
is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been
paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due
and payable shall have been canceled.
5.19 Saturdays.
Sundays. Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.20 Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to
share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
5.21 Sales
During Pre-Settlement Period. Notwithstanding anything herein to the contrary, if at any time on or after the time of execution of
this Agreement by the Company and an applicable Purchaser, through, and including the time immediately prior to the Closing (the “Pre-Settlement
Period”), such Purchaser sells to any Person all, or any portion, of any shares of Common Stock to be issued hereunder to such
Purchaser at the Closing (collectively, the “Pre-Settlement Shares”), such Purchaser shall, automatically hereunder
(without any additional required actions by such Purchaser or the Company), be deemed to be unconditionally bound to purchase, and the
Company shall be deemed unconditionally bound to sell, such Pre-Settlement Shares to such Purchaser at the Closing; provided, that the
Company shall not be required to deliver any Pre-Settlement Shares to such Purchaser prior to the Company’s receipt of the purchase
price of such Pre-Settlement Shares hereunder; and provided further that the Company hereby acknowledges and agrees that the forgoing
shall not constitute a representation or covenant by such Purchaser as to whether or not during the Pre-Settlement Period such Purchaser
shall sell any shares of Common Stock to any Person and that any such decision to sell any shares of Common Stock by such Purchaser shall
solely be made at the time such Purchaser elects to effect any such sale, if any.
5.22 WAIVER
OF JURY TRIAL. IN ANY ACTION. SUIT. OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY. THE PARTIES EACH KNOWINGLY
AND INTENTIONALLY. TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW. HEREBY ABSOLUTELY. UNCONDITIONALLY. IRREVOCABLY AND EXPRESSLY WAIVES
FOREVER TRIAL BY JURY.
(Signature Pages Follow)
IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first
indicated above.
KAIVAL
BRANDS INNOVATIONS GROUP, |
Address for Notice: |
INC. |
Kaival Brands Innovations Group, Inc. |
|
|
By: |
|
4460 Old Dixie Highway |
|
Name: Nirajkumar Patel |
Grant-Valkaria, Florida |
|
Title: Chief Executive Officer |
Attention: [____________ E-Mail: [______________] |
With a copy to (which shall not constitute notice):
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st Floor
New York, NY 10036
Telephone: (833) 452-4825
Attention: Jeffrey Wofford, Esq.
E-mail: jwofford@srfc.law
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
[PURCHASER SIGNATURE PAGES TO KAIVAL BRANDS INNOVATIONS
GROUP, INC. SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned
have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated
above.
Name
of Purchaser: |
|
|
Signature
of Authorized Signatory of Purchaser: |
|
|
Name
of Authorized Signatory: |
|
|
Title
of Authorized Signatory: |
|
|
Email
Address of Authorized |
Signatory:
_______________________________________________________________________________________ |
|
Facsimile
Number of Authorized Signatory: |
|
Address for Notice to Purchaser:
Address for Delivery of Warrants and Pre-Funded Warrants to Purchaser (if
not same as address for notice):
DWAC for Shares:
Subscription Amount: $________________________________
Shares:_________________________________
Pre-Funded Warrant Shares:____________________________
Warrant Shares:_______________________________
EIN Number:________________________________
☐
Notwithstanding anything contained in this Agreement to the contrary, by checking this box (i) the obligations of the above-signed to
purchase the securities set forth in this Agreement to be purchased from the Company by the above-signed, and the obligations of the Company
to sell such securities to the above-signed, shall be unconditional and all conditions to Closing shall be disregarded, (ii) the Closing
shall occur on the [second (2nd)] [third (3rd)]Trading Day following the date of this Agreement and (iii) any condition to
Closing contemplated by this Agreement (but prior to being disregarded by clause (i) above) that required delivery by the Company or the
above-signed of any agreement, instrument, certificate or the like or purchase price (as applicable) shall no longer be a condition and
shall instead be an unconditional obligation of the Company or the above-signed (as applicable) to deliver such agreement, instrument,
certificate or the like or purchase price (as applicable) to such other party on the Closing Date.
[SIGNATURE PAGES CONTINUE]
30
EXHIBIT 10.30
WARRANT AGENCY AGREEMENT
WARRANT AGENCY AGREEMENT (this
“Warrant Agreement”) dated as of May __, 2024 (the “Issuance Date”) between Kaival Brands Innovations
Group, Inc., a company incorporated under the laws of the State of Delaware (the “Company”), and vStock Transfer LLC.
(the “Warrant Agent”).
WHEREAS, pursuant to the
terms of that certain Securities Purchase Agreement (the “Purchase Agreement”), dated May __, 2024, by and among the
Company and investors parties thereto, the Company is engaged in a public offering (the “Offering”) of (i) up to _____________
shares of common stock, par value $0.001 per share (the “Common Stock”), of the Company, (ii) up to _____________ common
stock purchase warrants, each exercisable for one share of Common Stock at an initial exercise price of $_____ per share (the “Common
Warrants”); and (iii) up to ____________ pre-funded warrants, each exercisable for one share of Common Stock at an exercise
price of $0.001 per share (the “Pre-Funded Warrants” and, collectively with the Common Warrants, the “Warrants”)).
WHEREAS, the Company has
filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement on Form S-1 (File
No. 333-279045) (as the same may be amended from time to time, the “Registration Statement”), for the registration
under the Securities Act of 1933, as amended (the “Securities Act”), of the shares of Common Stock, the Pre-Funded
Warrants, the Warrants, the shares of Common Stock issuable upon the exercise of the Common Warrants (the “Common Warrant Shares”)
and the shares of Common Stock issuable upon the exercise of the Pre-Funded Warrants (the “Pre-Funded Warrant Shares”
and collectively with the Common Warrant Shares, the “Warrant Shares”), and such Registration Statement was declared
effective on May __, 2024;
WHEREAS, the Company desires
the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in accordance with the terms set forth
in this Warrant Agreement in connection with the issuance, registration, transfer, exchange and exercise of the Warrants
WHEREAS, the Company desires
to provide for the provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation
of rights, and immunities of the Company, the Warrant Agent and the holders of the Warrants; and
WHEREAS, all acts and things
have been done and performed which are necessary to make the Warrants the valid, binding and legal obligations of the Company, and to
authorize the execution and delivery of this Warrant Agreement.
NOW, THEREFORE, in consideration
of the mutual agreements herein contained, the parties hereto agree as follows:
1. Appointment
of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company with respect to the Warrants, and
the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the express terms and conditions set
forth in this Warrant Agreement (and no implied terms or conditions).
2. Warrants.
The Common Warrants and the Pre-Funded Warrants shall be registered securities and shall initially be evidenced, respectively, by global
certificates in the forms of Exhibit A (the “Common Warrant Global Certificate”) and Exhibit B (the
“Pre-Funded Warrant Global Certificate” and collectively with the Common Warrant Global Certificate, the “Global
Certificates”) ) attached to this Warrant Agreement, each of which shall be deposited on behalf of the Company with a custodian
for The Depository Trust Company (“DTC”) and registered in the name of Cede & Co., a nominee of DTC. If DTC
subsequently ceases to make its book-entry settlement system available for the Warrants, the Company shall instruct the Warrant Agent
regarding making other arrangements for book-entry settlement. In the event that the Warrants are not eligible for, or it is no longer
necessary to have the Warrants available in, book-entry form, the Company shall instruct the Warrant Agent to provide written instructions
to DTC to deliver to the Warrant Agent for cancellation the Global Certificates, and the Company shall instruct the Warrant Agent to deliver
to DTC separate certificates evidencing each of the Warrants (“Definitive Certificates” and, together with the Global
Certificates, “Warrant Certificates”) registered as requested through the DTC system. The Definitive Certificates,
together with the forms of election to purchase Common Stock (the “Notice of Exercise”) and the form of assignment
to be printed on the reverse thereof, shall be substantially in the forms of Exhibit C (as it related to the Common Warrants)
or Exhibit D(as it relates to the Pre-Funded Warrants) attached hereto.
2.1 Issuance
and Registration of Warrants.
2.1.1 Warrant
Register. The Warrant Agent shall maintain books (“Warrant Register”) for the registration of original issuance
and the registration of transfer of each of the Warrants.
2.1.2 Issuance
of Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue the Global Certificates and deliver the Warrants
in the DTC book-entry settlement system in accordance with written instructions delivered to the Warrant Agent by the Company. Ownership
of security entitlements in the Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained
(i) by DTC and (ii) by institutions that have accounts with DTC (each, a “Participant”). A Holder has the
right to elect at any time or from time to time a Warrant Exchange (as defined below) pursuant to a Warrant Certificate Request Notice
(as defined below). Upon written notice by a Holder to the Warrant Agent and the Company for the exchange of some or all of such Holder’s
Warrants held in book entry form for a Definitive Certificate evidencing the same number of Warrants, which request shall be in the form
attached hereto as Annex A (as it relates to the Common Warrants) or Annex B (as it relates to the Pre-Funded Warrants) (such
notice, the “Warrant Certificate Request Notice” and the date of delivery of such Warrant Certificate Request Notice
by the Holder, the “Warrant Certificate Request Notice Date” and the actual surrender upon delivery by the Holder of
a number of Warrants in the DTC book-entry settlement system for the same number of Warrants evidenced by a Definitive Certificate, a
“Warrant Exchange”), the Warrant Agent shall promptly effect the Warrant Exchange and shall promptly issue and deliver
to the Holder a Definitive Certificate for such number of Warrants in the name set forth in the Warrant Certificate Request Notice. Such
Definitive Certificate shall be dated the original issue date of the Warrants and shall be manually executed by an authorized signatory
of the Company and shall be in the form attached hereto as Exhibit C (as it relates to the Common Warrants) or Exhibit D
(as it relates to the Pre-Funded Warrants). In connection with a Warrant Exchange, the Company agrees to deliver, or to direct the
Warrant Agent to deliver, the Definitive Certificate to the Holder within two (2) Trading Days of the Warrant Certificate Request
Notice pursuant to the delivery instructions in the Warrant Certificate Request Notice (“Warrant Certificate Delivery Date”).
If the Company fails for any reason to deliver or cause the delivery to the Holder the Definitive Certificate subject to the Warrant Certificate
Request Notice by the Warrant Certificate Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Warrant Shares evidenced by such Definitive Certificate (based on the VWAP (as defined in the Warrant) of
the Common Stock on the Warrant Certificate Request Notice Date), $10 per Trading Day (increasing to $20 per Trading Day on the fifth
Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Certificate Delivery Date until such Definitive
Certificate is delivered or, prior to delivery of such Warrant Certificate, the Holder rescinds such Warrant Exchange. Notwithstanding
the forgoing, the Warrant Agent shall not, in any event, be subject to, or responsible for, liquidated damages or any “buy-in”
penalties contemplated in connection with the Warrants. The Company covenants and agrees that, upon the date of delivery of the Warrant
Certificate Request Notice, the Holder shall be deemed to be the holder of the Definitive Certificate and, notwithstanding anything to
the contrary set forth herein, the Definitive Certificate shall be deemed for all purposes to contain all of the terms and conditions
of the Warrants evidenced by such Definitive Certificate and the terms of this Warrant Agreement. In the event a beneficial owner requests
a Warrant Exchange, upon issuance of the paper Definitive Certificate, the Warrant Agent shall continue to act as warrant agent and the
terms of the paper Definitive Certificate so issued shall exclusively govern in respect thereof.
2.1.3 Beneficial
Owner; Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent shall deem
and treat the person in whose name that Warrant shall be registered on the Warrant Register (the “Holder”) as the absolute
owner of such Warrant for purposes of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant
Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished
by DTC governing the exercise of the rights of a holder of a beneficial interest in any Warrant. The rights of beneficial owners in a
Warrant evidenced by the applicable Global Certificate shall be exercised by the Holder or a Participant through the DTC system, except
to the extent set forth herein or in such Global Certificate.
2.1.4 Execution.
The Warrant Certificates shall be executed on behalf of the Company by any authorized officer of the Company (an “Authorized
Officer”), which need not be the same authorized signatory for all of the Warrant Certificates, either manually or by facsimile
signature. The Warrant Certificates shall be countersigned by an authorized signatory of the Warrant Agent, which need not be the same
signatory for all of the Warrant Certificates, and no Warrant Certificate shall be valid for any purpose unless so countersigned. In case
any Authorized Officer of the Company that signed any of the Warrant Certificates ceases to be an Authorized Officer of the Company before
countersignature by the Warrant Agent and issuance and delivery by the Company, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as though the person who signed such Warrant Certificates had
not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Warrant Certificate, shall be an Authorized Officer of the Company authorized to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement any such person was not such an Authorized Officer.
2.1.5 Registration
of Transfer. Subject to the provisions of the Warrants, at any time at or prior to the Termination Date (as defined below), a transfer
of any Warrants may be registered and any Warrant Certificate or Warrant Certificates may be split up, combined or exchanged for another
Warrant Certificate or Warrant Certificates evidencing the same number of Warrants as the Warrant Certificate or Warrant Certificates
surrendered. Any Holder desiring to register the transfer of Warrants or to split up, combine or exchange any Warrant Certificate shall
make such request in writing delivered to the Warrant Agent, and shall surrender to the Warrant Agent the Warrant Certificate or Warrant
Certificates evidencing the Warrants the transfer of which is to be registered or that is or are to be split up, combined or exchanged
and, in the case of registration of transfer, shall provide a signature guarantee. Thereupon, the Warrant Agent shall countersign and
deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested. The Company
and the Warrant Agent may require payment, by the Holder requesting a registration of transfer of Warrants or a split-up, combination
or exchange of a Warrant Certificate (but, for purposes of clarity, not upon the exercise of the Warrants and issuance of Warrant Shares
to the Holder), of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with such registration of
transfer, split-up, combination or exchange, together with reimbursement to the Company and the Warrant Agent of all reasonable expenses
incidental thereto.
2.1.6 Loss,
Theft and Mutilation of Warrant Certificates. Upon receipt by the Company and the Warrant Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Warrant Certificate, and, in case of loss, theft or destruction, of indemnity
or security in customary form and amount, and reimbursement to the Company and the Warrant Agent of all reasonable expenses incidental
thereto, and upon surrender to the Warrant Agent and cancellation of the Warrant Certificate if mutilated, the Warrant Agent shall, on
behalf of the Company, countersign and deliver a new Warrant Certificate of like tenor to the Holder in lieu of the Warrant Certificate
so lost, stolen, destroyed or mutilated. The Warrant Agent may charge the Holder an administrative fee for processing the replacement
of lost Warrant Certificates, which shall be charged only once in instances where a single surety bond obtained covers multiple certificates.
The Warrant Agent may receive compensation from the surety companies or surety agents for administrative services provided to them.
2.1.7 Proxies.
The Holder of a Warrant may grant proxies or otherwise authorize any person, including the Participants and beneficial holders that may
own interests through the Participants, to take any action that a Holder is entitled to take under this Warrant Agreement or the Warrants; provided, however,
that at all times that Warrants are evidenced by a Global Certificate, exercise of those Warrants shall be effected on their behalf by
Participants through DTC in accordance the procedures administered by DTC.
3. Terms
and Exercise of Warrants.
3.1 Exercise
Price. Each Warrant shall entitle the Holder, subject to the provisions of the applicable Warrant Certificate and of this Warrant
Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the exercise price provided in the applicable
Warrant Certificate, subject, in the case of the Common Warrants, to reset as set forth in Section 2(b) of the applicable Common Warrant
Certificate and subject to the subsequent adjustments provided by Section 3 of the Warrant Certificates. The term “Exercise
Price” as used in this Warrant Agreement refers to the price per share at which shares of Common Stock may be purchased at the
time a Warrant is exercised as provided in the applicable Warrant Certificate.
3.2 Duration
of Warrants. The Warrants may be exercised only during the period (“Exercise Period”) commencing on the Initial
Exercise Date as defined in the applicable Warrant Certificate and ending on the Termination Date. For purposes of this Warrant Agreement,
the “Termination Date” shall have the meaning set forth in the applicable Warrant Certificate. Each Warrant not exercised
on or before the applicable Termination Date (if any) shall become void, and all rights thereunder and all rights in respect thereof under
this Warrant Agreement shall cease at the close of business on the applicable Termination Date.
3.3 Exercise
of Warrants.
3.3.1 Exercise
and Payment. (a) Subject to the provisions of this Warrant Agreement, a Holder (or a Participant or a designee of a Participant
acting on behalf of a Holder) may exercise Warrants by delivering to the Warrant Agent, a duly executed facsimile copy or PDF copy submitted
by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed to the Warrant Certificate. In the case of the Holder of
a Global Certificate, the Holder shall deliver the executed Notice of Exercise and payment of the Exercise Price pursuant to Section 2(a) and
Section 2(b) of the Warrant Certificates (other than in the case of a Cashless Exercise). Notwithstanding any other provision
in this Warrant Agreement, a holder whose interest in a Warrant is a beneficial interest in a Global Certificate held in book-entry form
through the DTC (or another established clearing corporation performing similar functions), shall effect exercises by delivering to the
DTC (or such other clearing corporation, as applicable) the appropriate instruction form for exercise, complying with the procedures to
effect exercise that are required by the DTC (or such other clearing corporation, as applicable). The Company hereby acknowledges and
agrees that, with respect to a Holder whose interest in a Global Warrant is a beneficial interest in a Global Warrant held in book-entry
form through the Depositary (or another established clearing corporation performing similar functions), upon delivery of irrevocable instructions
to such Holder’s Participant to exercise such Warrants, that solely for purposes of Regulation SHO that such Holder shall be deemed
to have exercised such Warrants. The Company acknowledges that the bank accounts maintained by the Warrant Agent in connection with the
services provided under this Warrant Agreement will be in its name and that the Warrant Agent may receive investment earnings in connection
with the investment at Warrant Agent risk and for its benefit of funds held in those accounts from time to time. Neither the Company nor
the Holders will receive interest on any deposits or Exercise Price. The “Exercise Date” will be the date on which
the materials in the foregoing sentence are received by the Warrant Agent (if by 5:00 P.M., New York City time), or the following Trading
Day (if after 5:00 P.M., New York City time), regardless of any earlier date written on the materials. If the materials discussed in this
Section 3.3.1 are received or deemed to be received after the Termination Date, the exercise thereof will be null and void and any
funds delivered to the Company will be returned to the Holder or Participant, as the case may be, as soon as practicable. In no event
will interest accrue on any funds deposited with the Company in respect of an exercise or attempted exercise of the Warrants. (b) The
Common Warrants shall cease to be exercisable and shall terminate and become void as set forth in the applicable Warrant Certificate.
3.3.2 Issuance
of Warrant Shares.
(a) The
Warrant Agent shall, on the Trading Day following the date of exercise of any Warrant, advise the Company and the transfer agent and registrar
for the Company’s Common Stock (the “Transfer Agent”), in respect of (i) the number of Warrant Shares indicated
on the Notice of Exercise as issuable upon such exercise with respect to such exercised Warrants, (ii) the instructions of the Holder
or Participant, as the case may be, provided to the Warrant Agent with respect to the delivery of the Warrant Shares and the number of
Warrants that remain outstanding after such exercise and (iii) such other information as the Company or the Transfer Agent shall
reasonably request.
(b) Upon
the Warrant Agent’s receipt, at or prior to the Close of Business on the Termination Date set forth in a Warrant Certificate, of
the executed Notice of Exercise, accompanied by payment of the Exercise Price pursuant to Section 2(b) of the Warrant Certificate
(other than in the case of a Cashless Exercise), the Warrant Agent shall cause the Warrant Shares underlying such Warrant to be delivered
to or upon the order of the Holder of such Warrant, registered in such name or names as may be designated by such Holder, no later than
the Warrant Share Delivery Date. If the Company is then a participant in the DWAC system and either (A) there is an effective registration
statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) the Warrant is being
exercised via Cashless Exercise then the certificates for Warrant Shares shall be transmitted by the Warrant Agent to the Holder.
3.3.3 Valid
Issuance. All Warrant Shares issued by the Company upon the proper exercise of a Warrant in conformity with this Warrant Agreement
shall be validly issued, fully paid and non-assessable.
3.3.4 No
Fractional Shares or Scrip. No fractional Warrant Shares or scrip representing fractional shares shall be issued upon the exercise
of the Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
3.3.5 Charges,
Taxes, and Expenses. Issuance of Warrant Shares shall be made without charge to a Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant
Shares shall be issued in the name of a Holder or in such name or names as may be directed by a Holder; provided, however, that in the
event that Warrant Shares are to be issued in a name other than the name of a Holder, the Warrant, when surrendered for exercise, shall
be accompanied by the Assignment Form attached to the Warrant duly executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent
fees required for same-day processing of any Notice of Exercise and all fees to DTC (or another established clearing corporation performing
similar functions) required for same-day electronic delivery of the Warrant Shares.
3.3.6 Date
of Issuance. The Company will treat an exercising Holder as a beneficial owner of the Warrant Shares as of the date of exercise of
any Warrant, except that, if such date of exercise is a date when the stock transfer books of the Company are closed, such person shall
be deemed to have become the holder of such shares at the open of business on the next succeeding date on which the stock transfer books
are open.
3.3.7 Cashless
Exercise Under Certain Circumstances. The Company shall provide to the Warrant Agent and each Holder prompt written notice of any
time that there is no effective registration statement covering the Warrants and the Warrant Shares thereunder.
Upon receipt of a Notice of Exercise
for a cashless exercise, the Warrant Agent will promptly deliver a copy of the Notice of Exercise to the Company to confirm the number
of Warrant Shares issuable in connection with the cashless exercise. The Company shall promptly calculate and transmit to the Warrant
Agent in a written notice, and the Warrant Agent shall have no duty, responsibility or obligation under this section to calculate, the
number of Warrant Shares issuable in connection with any cashless exercise. The Warrant Agent shall be entitled to rely conclusively on
any such written notice provided by the Company, and the Warrant Agent shall not be liable for any action taken, suffered or omitted to
be taken by it in accordance with such written instructions or pursuant to this Warrant Agreement.
3.3.8 Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares issuable
in connection with any exercise, the Company shall promptly deliver to the Holder the number of Warrant Shares that are not disputed.
3.3.9 Beneficial
Ownership Limitation. A Holder shall not have the right to exercise any Warrants to the extent that after giving effect to the issuance
of Warrant Shares after exercise as set forth on the applicable Notice of Exercise, such Holder or a person holding through such Holder,
and any other persons acting as a group together with that Holder or person or any of that Holder’s or person’s Affiliates),
would beneficially own in excess of the Beneficial Ownership Limitation (as that term is defined in the Warrant) pursuant to Section 2(e) of
the Warrant Certificates.
4. Adjustments.
The Exercise Price, the number of shares covered by each Warrant and the number of Warrants outstanding are subject to adjustment from
time to time as provided in Section 3 of the applicable Warrant Certificate. All Warrants originally issued by the Company subsequent
to any adjustment made to the Exercise Price pursuant to the Warrant shall evidence the right to purchase, at the adjusted Exercise Price,
the number of shares of Common Stock purchasable from time to time hereunder upon exercise of the Warrants, all subject to further adjustment
as provided herein. Whenever the Exercise Price or the number of shares of Common Stock issuable upon the exercise of each Warrant is
adjusted as provided in this Section 4, the Company shall (a) promptly prepare a certificate setting forth the Exercise Price
of each Warrant as so adjusted, and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Warrant
Agent and with the Transfer Agent a copy of such certificate and (c) instruct the Warrant Agent to send a brief summary thereof to
each Holder of a Warrant.
5. Restrictive
Legends; Fractional Warrants. In the event that a Warrant Certificate surrendered for transfer bears a restrictive legend, the Warrant
Agent shall not register that transfer until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer
may be made and indicating whether the Warrants must also bear a restrictive legend upon that transfer. The Company shall not issue fractions
of Warrants or distribute a Global Certificate or Warrant Certificates that evidence fractional Warrants. Whenever any fractional Warrant
would otherwise be required to be issued or distributed, the actual issuance or distribution shall reflect a rounding of such fraction
either up or down to the nearest whole Warrant. The Warrant Agent shall not be required to effect any registration of transfer or exchange
which will result in the transfer of or delivery of a Warrant Certificate for a fraction of a Warrant. The Company shall not issue fractions
of shares of Common Stock upon exercise of Warrants or distribute stock certificates that evidence fractional shares of Common Stock.
Whenever any fraction of a share of Common Stock would otherwise be required to be issued or distributed, the actual issuance or distribution
in respect thereof shall be made in accordance with Section 2(d)(v) of the applicable Warrant Certificates.
6. Other
Provisions Relating to Rights of Holders of Warrants.
6.1 No
Rights as Shareholder. Except as otherwise specifically provided herein and in accordance with Section 5(a) of the Warrant
Certificates, a Holder, solely in its capacity as a holder of Warrants, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant Agreement be construed to confer
upon a Holder, solely in its capacity as the registered holder of Warrants, any of the rights of a shareholder of the Company or any right
to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of share capital,
consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights or rights to participate
in new issues of shares, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive
upon the due exercise of Warrants.
6.2 Reservation
of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common
Stock pursuant to Section 5(d) of the Warrant Certificates.
7. Concerning
the Warrant Agent and Other Matters.
7.1 Any
instructions given to the Warrant Agent orally, as permitted by any provision of this Warrant Agreement, shall be confirmed in writing
by the Company as soon as practicable. The Warrant Agent shall not be liable or responsible and shall be fully authorized and protected
for acting, or failing to act, in accordance with any oral instructions which do not conform with the written confirmation received in
accordance with this Section 7.1.
7.2 (a)
Whether or not any Warrants are exercised, for the Warrant Agent’s services as agent for the Company hereunder, the Company shall
pay to the Warrant Agent such fees as may be separately agreed between the Company and Warrant Agent and the Warrant Agent’s out
of pocket expenses in connection with this Warrant Agreement, including, without limitation, the reasonable fees and expenses of the Warrant
Agent’s counsel. While the Warrant Agent endeavors to maintain out-of-pocket charges (both internal and external) at competitive
rates, these charges may not reflect actual out-of-pocket costs, and may include handling charges to cover internal processing and use
of the Warrant Agent’s billing systems. (b) All amounts owed by the Company to the Warrant Agent under this Warrant Agreement
are due within 30 days of the invoice date. Delinquent payments are subject to a late payment charge of one and one-half percent (1.5%)
per month commencing 45 days from the invoice date. The Company agrees to reimburse the Warrant Agent for any reasonable attorney’s
fees and any other costs associated with collecting delinquent payments. (c) No provision of this Warrant Agreement shall require
Warrant Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under
this Warrant Agreement or in the exercise of its rights.
7.3 As
agent for the Company hereunder the Warrant Agent: (a) shall have no duties or obligations other than those specifically set forth
herein or as may subsequently be agreed to in writing by the Warrant Agent and the Company; (b) shall be regarded as making no representations
and having no responsibilities as to the validity, sufficiency, value, or genuineness of the Warrants or any Warrant Shares; (c) shall
not be obligated to take any legal action hereunder; if, however, the Warrant Agent determines to take any legal action hereunder, and
where the taking of such action might, in its judgment, subject or expose it to any expense or liability it shall not be required to act
unless it has been furnished with an indemnity reasonably satisfactory to it; (d) may rely on and shall be fully authorized and protected
in acting or failing to act upon any certificate, instrument, opinion, notice, letter, telegram, telex, facsimile transmission or other
document or security delivered to the Warrant Agent and believed by it to be genuine and to have been signed by the proper party or parties;
(e) shall not be liable or responsible for any recital or statement contained in the Registration Statement or any other documents
relating thereto; (f) shall not be liable or responsible for any failure on the part of the Company to comply with any of its covenants
and obligations relating to the Warrants, including without limitation obligations under applicable securities laws; (g) may rely
on and shall be fully authorized and protected in acting or failing to act upon the written, telephonic or oral instructions with respect
to any matter relating to its duties as Warrant Agent covered by this Warrant Agreement (or supplementing or qualifying any such actions)
of officers of the Company, and is hereby authorized and directed to accept instructions with respect to the performance of its duties
hereunder from the Company or counsel to the Company, and may apply to the Company, for advice or instructions in connection with the
Warrant Agent’s duties hereunder, and the Warrant Agent shall not be liable for any delay in acting while waiting for those instructions;
any applications by the Warrant Agent for written instructions from the Company may, at the option of the Agent, set forth in writing
any action proposed to be taken or omitted by the Warrant Agent under this Warrant Agreement and the date on or after which such action
shall be taken or such omission shall be effective; the Warrant Agent shall not be liable for any action taken by, or omission of, the
Warrant Agent in accordance with a proposal included in such application on or after the date specified in such application (which date
shall not be less than five (5) Business Days after the date such application is sent to the Company, unless the Company shall have
consented in writing to any earlier date) unless prior to taking any such action, the Warrant Agent shall have received written instructions
in response to such application specifying the action to be taken or omitted; (h) may consult with counsel satisfactory to the Warrant
Agent, including its in-house counsel, and the advice of such counsel shall be full and complete authorization and protection in respect
of any action taken, suffered, or omitted by it hereunder in good faith and in accordance with the advice of such counsel; (i) may
perform any of its duties hereunder either directly or by or through nominees, correspondents, designees, or subagents, and it shall not
be liable or responsible for any misconduct or negligence on the part of any nominee, correspondent, designee, or subagent appointed with
reasonable care by it in connection with this Warrant Agreement; (j) is not authorized, and shall have no obligation, to pay any
brokers, dealers, or soliciting fees to any person; and (k) shall not be required hereunder to comply with the laws or regulations
of any country other than the United States of America or any political subdivision thereof.
7.4 (a)
In the absence of gross negligence or willful or illegal misconduct on its part, the Warrant Agent shall not be liable for any action
taken, suffered, or omitted by it or for any error of judgment made by it in the performance of its duties under this Warrant Agreement.
Anything in this Warrant Agreement to the contrary notwithstanding, in no event shall Warrant Agent be liable for special, indirect, incidental,
consequential or punitive losses or damages of any kind whatsoever (including but not limited to lost profits), even if the Warrant Agent
has been advised of the possibility of such losses or damages and regardless of the form of action. Any liability of the Warrant Agent
will be limited in the aggregate to the amount of fees paid by the Company hereunder. The Warrant Agent shall not be liable for any failures,
delays or losses, arising directly or indirectly out of conditions beyond its reasonable control including, but not limited to, acts of
government, exchange or market ruling, suspension of trading, work stoppages or labor disputes, fires, civil disobedience, riots,
rebellions, storms, electrical or mechanical failure, computer hardware or software failure, communications facilities failures including
telephone failure, war, terrorism, insurrection, earthquakes, floods, acts of God or similar occurrences. (b) In the event any question
or dispute arises with respect to the proper interpretation of the Warrants or the Warrant Agent’s duties under this Warrant Agreement
or the rights of the Company or of any Holder, the Warrant Agent shall not be required to act and shall not be held liable or responsible
for its refusal to act until the question or dispute has been judicially settled (and, if appropriate, it may file a suit in interpleader
or for a declaratory judgment for such purpose) by final judgment rendered by a court of competent jurisdiction, binding on all persons
interested in the matter which is no longer subject to review or appeal, or settled by a written document in form and substance satisfactory
to Warrant Agent and executed by the Company and each such Holder. In addition, the Warrant Agent may require for such purpose, but shall
not be obligated to require, the execution of such written settlement by all the Holders and all other persons that may have an interest
in the settlement.
7.5 The
Company covenants to indemnify the Warrant Agent and hold it harmless from and against any loss, liability, claim or expense (“Loss”)
arising out of or in connection with the Warrant Agent’s duties under this Warrant Agreement, including the costs and expenses of
defending itself against any Loss, unless such Loss shall have been determined by a court of competent jurisdiction to be a result of
the Warrant Agent’s gross negligence or willful misconduct.
7.6 Unless
terminated earlier by the parties hereto, this Warrant Agreement shall terminate 90 days after the earlier of the Termination Date and
the date on which no Warrants remain outstanding (the “Termination Date”). On the Business Day following the Termination
Date, the Warrant Agent shall deliver to the Company any entitlements, if any, held by the Warrant Agent under this Warrant Agreement.
The Warrant Agent’s right to be reimbursed for fees, charges and out-of-pocket expenses as provided in this Section 7 shall
survive the termination of this Warrant Agreement.
7.7 If
any provision of this Warrant Agreement shall be held illegal, invalid, or unenforceable by any court, this Warrant Agreement shall be
construed and enforced as if such provision had not been contained herein and shall be deemed an agreement among the parties to it to
the full extent permitted by applicable law.
7.8 The
Company represents and warrants that: (a) it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation;
(b) the offer and sale of the Warrants and the execution, delivery and performance of all transactions contemplated thereby (including
this Warrant Agreement) have been duly authorized by all necessary corporate action and will not result in a breach of or constitute a
default under the certificate of incorporation, bylaws or any similar document of the Company or any indenture, agreement or instrument
to which it is a party or is bound; (c) this Warrant Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid, binding and enforceable obligation of the Company; (d) the Warrants will comply in all material respects with all
applicable requirements of law; and (e) to the best of its knowledge, there is no litigation pending or threatened as of the date
hereof in connection with the offering of the Warrants.
7.9 In
the event of inconsistency between this Warrant Agreement and the descriptions in the Registration Statement, as they may from time to
time be amended, the terms of this Warrant Agreement shall control. In the event of inconsistency between this Warrant Agreement and terms
set forth in a Warrant Certificate, the terms of the Warrant Certificate shall control.
7.10 Set
forth in Exhibit E hereto is a list of the names and specimen signatures of the persons authorized to act for the Company under
this Warrant Agreement (the “Authorized Representatives”). The Company shall, from time to time, certify to the Warrant
Agent the names and signatures of any other persons authorized to act for the Company under this Warrant Agreement.
7.11 Except
as expressly set forth elsewhere in this Warrant Agreement, all notices, instructions and communications under this Warrant Agreement
shall be in writing, shall be effective upon receipt and shall be addressed, if to the Company, to its address set forth beneath its signature
to this Warrant Agreement, or, if to the Warrant Agent, to vStock, LLC, 18 Lafayette Pl.., Woodmere, NY 11598, or to such other address
of which a party hereto has notified the other party.
7.12 (a)
This Warrant Agreement shall be governed by and construed in accordance with the laws of the State of New York. All actions and proceedings
relating to or arising from, directly or indirectly, this Warrant Agreement may be litigated in courts located within the Borough of Manhattan
in the City and State of New York. The Company hereby submits to the personal jurisdiction of such courts and consents that any service
of process may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified
for notices hereunder. EACH OF THE PARTIES HERETO HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS WARRANT AGREEMENT. (b) This Warrant Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the parties hereto. This Warrant Agreement may not be assigned, or otherwise transferred, in whole or in part, by either
party without the prior written consent of the other party, which the other party will not unreasonably withhold, condition or delay;
except that (i) consent is not required for an assignment or delegation of duties by the Warrant Agent to any affiliate of Warrant
Agent and (ii) any reorganization, merger, consolidation, sale of assets or other form of business combination by the Warrant Agent
or the Company shall not be deemed to constitute an assignment of this Warrant Agreement. (c) No provision of this Warrant Agreement
may be amended, modified or waived, except in a written document signed by both parties. The Company and the Warrant Agent may amend or
supplement this Warrant Agreement without the consent of any Holder for the purpose of curing any ambiguity, or curing, correcting or
supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions
arising under this Warrant Agreement as the parties may deem necessary or desirable; provided, that no such amendment or supplement
shall adversely affect the interest of the Holders. All other amendments and supplements shall require the vote or written consent of
Holders of at least 50.1% of the then outstanding Warrants, provided that adjustments may be made to the Warrant terms and rights in accordance
with Section 4 without the consent of the Holders.
7.13 Payment
of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant
Agent in respect of the issuance or delivery of Warrant Shares upon the exercise of Warrants, but the Company may, pursuant to the terms
of the Warrant, require the Holders to pay any transfer taxes in respect of the Warrants or such shares. The Warrant Agent may refrain
from registering any transfer of Warrants or any delivery of any Warrant Shares unless or until the persons requesting the registration
or issuance shall have paid to the Warrant Agent for the account of the Company the amount of such tax or charge, if any, or shall have
established to the reasonable satisfaction of the Company and the Warrant Agent that such tax or charge, if any, has been paid.
7.14 Resignation
of Warrant Agent.
7.14.1 Appointment
of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving thirty (30) days’ notice in writing to the Company and the Holders
of the Warrants, or such shorter period of time agreed to by the Company. The Company may terminate the services of the Warrant Agent,
or any successor Warrant Agent, after giving thirty (30) days’ notice in writing to the Warrant Agent or successor Warrant Agent
and the Holders of the Warrants, or such shorter period of time as agreed. If the office of the Warrant Agent becomes vacant by resignation,
termination or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant
Agent. If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation
or incapacity by the Warrant Agent, then the Warrant Agent or any Holder may apply to any court of competent jurisdiction for the appointment
of a successor Warrant Agent at the Company’s cost. Pending appointment of a successor to such Warrant Agent, either by the Company
or by such a court, the duties of the Warrant Agent shall be carried out by the Company. Any successor Warrant Agent (but not including
the initial Warrant Agent), whether appointed by the Company or by such court, shall be a person organized and existing under the laws
of any state of the United States of America, in good standing, and authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with
all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally
named as Warrant Agent hereunder, without any further act or deed, and except for executing and delivering documents as provided in the
sentence that follows, the predecessor Warrant Agent shall have no further duties, obligations, responsibilities or liabilities hereunder,
but shall be entitled to all rights that survive the termination of this Warrant Agreement and the resignation or removal of the Warrant
Agent, including but not limited to its right to indemnity hereunder. If for any reason it becomes necessary or appropriate or at the
request of the Company, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring
to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of
any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully
and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and
obligations.
7.14.2 Notice
of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the Transfer Agent not later than the effective date of any such appointment.
7.14.3 Merger
or Consolidation of Warrant Agent. Any person into which the Warrant Agent may be merged or converted or with which it may be consolidated
or any person resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party or any person succeeding
to the shareowner services business of the Warrant Agent or any successor Warrant Agent shall be the successor Warrant Agent under this
Warrant Agreement, without any further act or deed. For purposes of this Warrant Agreement, “person” shall mean any individual,
firm, corporation, partnership, limited liability company, joint venture, association, trust or other entity, and shall include any successor
(by merger or otherwise) thereof or thereto.
8. Miscellaneous
Provisions.
8.1 Persons
Having Rights under this Warrant Agreement. Nothing in this Warrant Agreement expressed and nothing that may be implied from any of
the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties
hereto and the Holders any right, remedy, or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation,
promise, or agreement hereof.
8.2 Examination
of the Warrant Agreement. A copy of this Warrant Agreement shall be available at all reasonable times at the office of the Warrant
Agent designated for such purpose for inspection by any Holder. Prior to such inspection, the Warrant Agent may require any such holder
to provide reasonable evidence of its interest in the Warrants.
8.3 Counterparts.
This Warrant Agreement may be executed in any number of original, facsimile or electronic counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
8.4 Effect
of Headings. The Section headings herein are for convenience only and are not part of this Warrant Agreement and shall not affect
the interpretation thereof.
9. Certain
Definitions. As used herein, the following terms shall have the following meanings:
(a) “Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
(b) “Standard
Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary
Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
(c) “Trading
Day” means any day on which the Common Stock is traded on the Trading Market.
(d) “Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock
Exchange (or any successors to any of the foregoing).
(e) “Warrant
Share Delivery Date” means the date that is the earliest of: (i) two (2) Trading Days after the delivery to the Company
of the Notice of Exercise, provided that payment of the aggregate Exercise Price (other than in the instance of a cashless exercise) is
received by the Company one (1) Trading Day prior to such second Trading Day after the delivery of the Notice of Exercise, (ii) one
(1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising
the Standard Settlement Period after the delivery to the Company of the Notice of Exercise, provided that payment of the aggregate Exercise
Price (other than in the instance of a cashless exercise) is received by the Company prior to 2pm ET on the Trading Day after the delivery
of the Notice of Exercise.
[Signature Page to Follow]
IN WITNESS WHEREOF, this Warrant
Agency Agreement has been duly executed by the parties hereto as of the day and year first above written.
|
KAIVAL BRANDS INNOVATIONS |
|
GROUP, INC. |
|
|
|
By: |
|
|
Name: |
Nirajkumar Patel |
|
Title: |
Chief Executive Officer |
|
VSTOCK, LLC |
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
ANNEX A
WARRANT CERTIFICATE REQUEST NOTICE
To: vStock, LLC, as Warrant Agent for Kaival Brands
Innovations Group, Inc. (the “Company”)
The undersigned Holder of Common Stock Purchase Warrants
(“Warrants”) in the form of Global Certificates issued by the Company hereby elects to receive a Definitive Certificate evidencing
the Warrants held by the Holder as specified below:
| 1. | Name of Holder of Warrants in form of Global Certificates: |
______________________________________________________________
| 2. | Name of Holder in Definitive Certificate (if different from name of Holder of Warrants in form of Global Certificates): |
_______________________________
| 3. | Number of Warrants in name of Holder in form of Global Certificates: _________________ |
| 4. | Number of Warrants for which Definitive Certificate shall be issued: ___________________ |
| 5. | Number of Warrants in name of Holder in form of Global Certificates after issuance of Definitive Certificate,
if any: ___________ |
| 6. | Definitive Certificate shall be delivered to the following address: |
__________________________________
__________________________________
__________________________________
__________________________________
The undersigned hereby acknowledges and agrees that,
in connection with this Warrant Exchange and the issuance of the Definitive Certificate, the Holder is deemed to have surrendered the
number of Warrants in form of Global Certificates in the name of the Holder equal to the number of Warrants evidenced by the Definitive
Certificate.
[SIGNATURE OF HOLDER]
ANNEX B
WARRANT CERTIFICATE REQUEST NOTICE
To: vStock Transfer, LLC, as Warrant Agent for Kaival
Brands Innovations Group, Inc. (the “Company”)
The undersigned Holder of Pre-Funded Warrants (“Warrants”)
in the form of Global Certificates issued by the Company hereby elects to receive a Definitive Certificate evidencing the Warrants held
by the Holder as specified below:
| 1. | Name of Holder of Warrants in form of Global Certificates: |
______________________________________________________________
| 2. | Name of Holder in Definitive Certificate (if different from name of Holder of Warrants in form of Global Certificates): |
_______________________________
| 3. | Number of Warrants in name of Holder in form of Global Certificates: _________________ |
| 4. | Number of Warrants for which Definitive Certificate shall be issued: ___________________ |
| 5. | Number of Warrants in name of Holder in form of Global Certificates after issuance of Definitive Certificate,
if any: ___________ |
| 6. | Definitive Certificate shall be delivered to the following address: |
__________________________________
__________________________________
__________________________________
__________________________________
The undersigned hereby acknowledges and agrees that,
in connection with this Warrant Exchange and the issuance of the Definitive Certificate, the Holder is deemed to have surrendered the
number of Warrants in form of Global Certificates in the name of the Holder equal to the number of Warrants evidenced by the Definitive
Certificate.
[SIGNATURE OF HOLDER]
Name of Investing Entity: |
|
|
|
|
|
Signature of Authorized Signatory of Investing Entity: |
|
|
|
|
|
Name of Authorized Signatory: |
|
|
|
|
|
Title of Authorized Signatory: |
|
|
|
|
|
Date: ___________________________________________ |
|
EXHIBIT A
[FORM OF GLOBAL WARRANT CERTIFICATE OF COMMON
WARRANT]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
Certificate No.: 1 |
CUSIP No.: |
|
|
Number of Warrants: [ ] |
Issue Date: [ ] |
(ATTACHED)
EXHIBIT B
[FORM OF GLOBAL WARRANT CERTIFICATE OF PRE-FUNDED
WARRANT]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
Certificate No.: 1 |
CUSIP No.: |
|
|
Number of Pre-Funded Warrants: [ ] |
Issue Date: [ ] |
(ATTACHED)
EXHIBIT C
FORM OF COMMON WARRANT
(ATTACHED)
EXHIBIT D
FORM OF PRE-FUNDED WARRANT
(ATTACHED)
EXHIBIT E