UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(Address of principal executive office, including zip code)
Telephone:
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
$0.001 per share |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
| ITEM 5.02. | DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS |
On March 5, 2022, the Compensation Committee (the “Committee”) and the Board of Directors (the “Board”) of Kaival Brands Innovations Group, Inc. (the “Company,” “we,” “us,” or “our”) approved certain changes in the equity compensation for Nirajkumar Patel, our Chief Executive Officer, and Eric Mosser, our Chief Operating Officer. On March 9, 2022, the Committee approved certain changes in the cash compensation for Mr. Patel and Mr. Mosser.
Termination of Restricted Stock Units
Previously, we granted Mr. Patel 250,000 restricted stock units (“RSUs”), which vest over a three-year period (the “Patel Time Vesting RSUs”), and 500,000 RSUs that vest only upon a change of control of us or if we achieve in excess of $1 billion in accumulated total gross revenues (the “Patel Event Vesting RSUs”). On March 5, 2022, we and Mr. Patel agreed to terminate the (i) 120,833 unvested Patel Time Vesting RSUs and (ii) 500,000 unvested Patel Event Vesting RSUs.
Similarly, we previously granted Mr. Mosser 250,000 RSUs, which vest over a three-year period (the “Mosser Time Vesting RSUs”), and 333,334 RSUs that vest only upon a change of control of us or if we achieve in excess of $1 billion in accumulated total gross revenues (the “Mosser Event Vesting RSUs”). On March 5, 2022, we and Mr. Mosser agreed to terminate the (i) 120,833 unvested Mosser Time Vesting RSUs and (ii) 333,334 unvested Mosser Event Vesting RSUs.
Grant of Stock Options
On March 5, 2022, the Committee and the Board approved the grant of a non-qualified stock option exercisable for up to 600,000 shares of our common stock to Mr. Patel. One-half of the shares vested on the grant date and the remaining shares will vest on March 5, 2023. The exercise price is $2.85 per share and the non-qualified stock option has a ten-year term.
On March 5, 2022, the Committee and the Board approved the grant of a non-qualified stock option exercisable for up to 500,000 shares of our common stock to Mr. Mosser. One-half of the shares vested on the grant date and the remaining shares will vest on March 5, 2023. The exercise price is $2.85 per share and the non-qualified stock option has a ten-year term.
The above descriptions of the non-qualified stock options do not purport to be complete and are qualified in their entirety by the full text of the form of non-qualified stock option, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
Base Salary
On March 9, 2022, the Committee approved an annual base salary equal to $300,000 for Mr. Patel and $240,000 for Mr. Mosser. The annual base salaries will be reviewed by the Committee on an annual basis.
Termination of Cash Bonus
The Board previously approved a cash bonus award to (i) Mr. Patel equal to $30,000 for every $25 million in gross revenues generated by us (the “Patel Cash Bonus Award”) and (ii) Mr. Mosser equal to $20,000 for every $25 million in gross revenues generated by us (the “Mosser Cash Bonus Award” and, together with the Patel Cash Bonus Award, the “Cash Bonus Awards”). On March 9, 2022, the Committee terminated the Cash Bonus Awards.
ITEM 9.01 FINANCIAL STATEMENTS
(d) Exhibits
| Exhibit Number | Description of Exhibit | |
| 10.1 | Form of Non-Qualified Stock Option | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Kaival Brands Innovations Group, Inc. | ||
| Dated: March 10, 2022 | By: | /s/ Nirajkumar Patel |
| Nirajkumar Patel | ||
| Chief Executive Officer and a Director | ||
Exhibit 10.1
KAIVAL BRANDS INNOVATIONS GROUP, INC.
2020 STOCK AND INCENTIVE COMPENSATION PLAN
Nonqualified Stock Option
Grant of Option. KAIVAL BRANDS INNOVATIONS GROUP, INC., a Delaware corporation (the “Company”), hereby grants to the Awardee named below a Nonqualified Stock Option for the purchase of up to but not exceeding the number of shares of the Company’s Common Stock, $.001 par value per share (the “Option”), exercisable at the price and upon the terms and conditions set forth below, and subject to any adjustments made pursuant to Section 14 of the Company’s 2020 Stock and Incentive Compensation Plan (“Plan”):
| Awardee: | |||
| Number of Shares: | |||
| Grant Date: | |||
| Exercise Price/Share: | |||
| Expiration Date: |
Approval of Counsel Required for Issuance of Common Stock. No shares of Common Stock shall be issued pursuant to the exercise of the Option unless counsel for the Company shall be satisfied that such issuance will be in compliance with applicable Federal and state securities laws.
Option Subject to Plan. The Option is granted as a Nonqualified Stock Option as defined in Section 2(w) of the Plan that is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code, is issued pursuant to the Plan, and is in all respects subject to the terms, provisions, conditions and restrictions of the Plan. In the event of any conflict between this instrument and the Plan, the Plan shall control.
Defined Terms. Except as otherwise defined herein, capitalized terms used in this instrument shall have the meanings ascribed to such terms in the Plan.
Exercise Price. The Option exercise price set forth above for each related Common Share is not less than the Fair Market Value of each Common Share calculated as of the date of grant in accordance with Section 2(t) of the Plan. The exercise price is subject to adjustment pursuant to Section 14 of the Plan.
Vesting of Option. The Option will become vested and exercisable with respect to the number of shares set forth in the vesting schedule below until the Option is 100% vested, except as otherwise provided in the Plan:
| DATE VESTED AND | NUMBER of SHARES |
| EXERCISABLE | EXERCISABLE |
| [Date] | [number] |
| [Date] | [number] |
| [Date] | [number] |
| [Date] | [number] |
| [Date] | [number] |
| [Date] | [number] |
Option Period. The Option, or any part thereof, may be exercised at any time between the date at which it becomes vested and exercisable and the Expiration Date set forth above, inclusive of such dates, except that in the event of the Awardee’s death, or his or her Disability (as defined under Section 2(p) of the Plan), or if the Awardee’s employment by the Company is terminated for any reason, or if there is a Change of Control of the Company, then the provisions of Sections 12(c) and 14(b) of the Plan, respectively, shall govern the option period. Notwithstanding the foregoing, in no event may the Option vest and be exercised unless and until the Company has an effective Registration Statement on Form S-8 (or such other applicable form) on file with the Securities and Exchange Commission to register the issuance of the shares Common Stock upon the exercise of the Option, unless the Company determines that such grant (i) shall be registered in another manner under the Securities Act of 1933, as amended (the “Securities Act”), or (ii) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable.
Method of Exercise. The Option is exercisable by providing a written notice of exercise in accordance with the procedures adopted by the Committee, but subject to all conditions and restrictions set forth in the Plan, and the Option consideration shall be payable in one of the forms permitted under Section 8(f) of the Plan, as determined by the Committee. The exercise price for the number of shares exercised under the Option shall be payable in full at the time of exercise.
Transferability. The Option is not assignable or transferable except by will or the laws of descent or distribution and is exercisable during the Awardee’s lifetime only by him or her. No assignment or transfer of the Option, or the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except to a designated beneficiary, upon death, by will or the laws of descent or distribution) will vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Option will terminate and become of no further effect.
Tax Withholding on Exercise. Awardee shall satisfy the Company’s withholding obligation of any federal, state, local or foreign taxes of any kind required to be withheld as a result of an exercise of the Option by providing payment of the amount of such withholding: (i) by cash, certified or cashier’s check, money order or personal check; (ii) by delivery of shares of the Company’s common stock already owned by Awardee; (iii) by the Company’s withholding from other compensation payable to Awardee by the Company; or (iv) pursuant to a request by Awardee, by withholding from the shares of common stock to be delivered upon exercise of the Option no more than the maximum number of shares that is necessary to satisfy the statutory withholding obligation.
Page 2 of 3
| KAIVAL BRANDS INNOVATIONS GROUP, INC. | ||||
| By: | Date: | |||
| Title: | ||||
The Awardee acknowledges receipt of a copy of the Plan, represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option evidenced hereby subject to all the terms, provisions, conditions and restrictions of the Plan. The Awardee also understands that this Option is not intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Accordingly, the Awardee understands that he or she will recognize taxable income upon exercise of the Option based on the difference between the Option exercise price and the Fair Market Value of the shares at the time of exercise.
| Signature: | ||
| Printed Name: | ||
| Date: |
Page 3 of 3
Cover |
Mar. 05, 2022 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Mar. 05, 2022 |
| Entity File Number | 000-56016 |
| Entity Registrant Name | Kaival Brands Innovations Group, Inc. |
| Entity Central Index Key | 0001762239 |
| Entity Tax Identification Number | 83-3492907 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | 4460 Old Dixie Highway |
| Entity Address, City or Town | Grant |
| Entity Address, State or Province | FL |
| Entity Address, Postal Zip Code | 32949 |
| City Area Code | (833) |
| Local Phone Number | 452-4825 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, par value |
| Trading Symbol | KAVL |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | true |
| Elected Not To Use the Extended Transition Period | false |
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