8-K
Kaival Brands Innovations Group, Inc. (KAVL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):March 20, 2023 (March 18, 2023)
Kaival Brands Innovations Group, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 000-56016 | 83-3492907 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission File Number) | (I.R.S. Employer<br><br>Identification No.) |
4460 Old Dixie Highway
Grant-Valkaria, Florida 32949
(Address of principal executive office, including zip code)
Telephone: (833) 452-4825
(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 |
|---|---|---|
| Common Stock, par value $0.001 per share | KAVL | The Nasdaq Stock Market, LLC |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 ofDirectors; Appointment of Principal Officers.
On March 18, 2023, Paul Reuter notified the Board of Directors (the “Board”) of Kaival Brands Innovations Group, Inc. (the “Company”) of his intent to retire and resign from the office of Chairman of the Board and each Board committee on which he serves, effective immediately. Mr. Reuter’s retirement and resignation was not the result of any disagreement with management or the Company on any matter relating to the Company’s operations, policies or practices.
In connection with his retirement from the Board, on March 18, 2023, the Company granted to Mr. Reuter a one-time cash payment of $50,000. In addition, all options to purchase shares of the Company’s common stock that were previously issued to Mr. Reuter and subject to automatic vesting vested in full.
Following Mr. Reuter’s departure from the Board, effective March 19, 2023, the Board adopted, by unanimous consent to action and pursuant to the powers of the Board under the Company’s bylaws and applicable law, to expand and fix the size of the Board from five members to seven members. The Board subsequently appointed Messrs. Barry M. Hopkins, David Worner and Mark Thoenes to the Board to fill the three resulting vacancies. Mr. Hopkins was appointed to the position of Chairman of the Board.
Messrs. Roger Brooks and George Chuang, each current members of the Board, will remain on the Board. Following the changes to the Board, the Board consists of a total of seven members, four of whom (Messrs. Hopkins, Worner, Brooks and Chuang) are “independent” directors within the meaning of listing rules of the NASDAQ Stock Market.
On March 20, 2023, the Company issued a press release regarding the change in the composition of the Board. Such press release is filed as Exhibit 99.1 to this Report.
Biographical Summaries of Messrs. Hopkins, Wornerand Thoenes
Barry M. Hopkins
Barry Hopkins has decades of experience in business development, performance management, and retail, having spent over thirty years with Altria, one of the world’s largest producers and marketers of tobacco, cigarettes and related products. While at Altria, Mr. Hopkins served in various roles, including District Manager, Vice President of Sales, Vice President of Trade Marketing, and Vice President of National accounts. In 2005, Mr. Hopkins founded Ideas in Motion, a consulting company. For seven years while running Ideas in Motion, Mr. Hopkins consulted with Turning Point Brands, a consumer products company that markets and distributes products including alternative smoking accessories and consumables. Mr. Hopkins eventually joined Turning Point Brands in 2012 as a Senior Executive and gradually transitioned to other senior level roles including Senior Vice President of Sales and Marketing, and Senior Vice President of Executive Organizational Development. Mr. Hopkins remained at Turning Point Brands for over eleven years and, while there, garnered recognition for the development and implementation of a systematic connection process that ultimately resulted in eight record setting quarters exceeding all prior sales and profit objectives. The Board believes Mr. Hopkins is qualified to serve on the Board because of his considerable experience in retail and knowledge of the tobacco and cigarette industry.
Mr. Hopkins (a) is not a party to any arrangement or understanding with any other person pursuant to which he was selected as a director of the Company and (b) has not been involved in any transactions with the Company or related persons of the Company that would require disclosure under Item 404(a) of the Regulation S-K.
David Worner
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. The Board believes Mr. Worner is qualified to fulfill a director role with the Company because of the wealth of knowledge he possesses in accounting and finance.
Mr. Worner (a) is not a party to any arrangement or understanding with any other person pursuant to which he was selected as a director of the Company and (b) has not been involved in any transactions with the Company or related persons of the Company that would require disclosure under Item 404(a) of the Regulation S-K.
Mark Thoenes
Mark Thoenes currently serves as Interim Chief Financial Officer of the Company, a position he has held since June 2021. Mr. Thoenes has more than 35 years of diverse financial and operational leadership. He has been a licensed Certified Public Accountant since 1984 and began his career with Ernst & Young Global Limited. Following over a decade of executive experience in finance and operational roles for privately held healthcare companies, from 2000 to 2010, Mr. Thoenes served as the Executive Vice President and Chief Financial Officer of Rentrak Corporation, a publicly traded company listed on Nasdaq. Since his departure from Rentrak, Mr. Thoenes has been the President of MLT Consulting Services, LLC, a full-service business and financial consulting firm where he has provided outsourced financing and operational management services for companies The Board believes Mr. Thoenes is qualified to serve on the Board because of his history with the Company and because of his accounting, financial and operational experience.
Aside from agreements that have previously been disclosed by the Company in its filings with the Securities and Exchange Commission related to his position as Interim Chief Financial Officer of the Company, Mr. Thoenes has not been involved in any transactions with the Company or related persons of the Company that would require disclosure under Item 404(a) of Regulation S-K. There are no arrangements or understandings between him and any other persons pursuant to which he was or is to be selected as a director.
Committee Assignments
On March 19, 2023, the Board approved a reconstitution of the Audit, Compensation and Nominating and Corporate Governance Committees of the Board. As a result, the current members of each Board committee are as follows:
| Committee | Chairman | Committee Members |
|---|---|---|
| Audit Committee | X | Roger Brooks |
| David Worner | ||
| George Chuang | ||
| Compensation Committee | X | David Worner |
| Barry Michael Hopkins | ||
| George Chuang | ||
| Governance and Nominating Committee | X | Barry Michael Hopkins |
| David Worner | ||
| Roger Brooks |
Compensatory Arrangements
In connection with each of his appointments to the Board, the Company has agreed to grant Messrs. Hopkins, Worner, and Thoenes compensation in accordance with the following schedule:
| ANNUAL DIRECTOR COMPENSATION | |||||
|---|---|---|---|---|---|
| BOARD | Cash | Non-Qualified Stock Options | Grant Date | Vest Date | Expiration Date |
| Barry M. Hopkins | $100,000 | 125,000 | 3/19/2023 | 3/19/2024 | 3/19/2033 |
| David Worner | $100,000 | 125,000 | 3/19/2023 | 3/19/2024 | 3/19/2033 |
| Mark Thoenes | $ – | – | N/A | N/A | N/A |
Such equity grants shall be issued under and shall be governed pursuant to the terms of the Company’s Amended and Restated 2020 Stock and Incentive Compensation plan.
Item 9.01. Financial Statementsand Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release of the Company, dated March 20, 2023, announcing changes to the Company’s Board of Directors |
| 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 20, 2023 | By: | /s/ Eric Mosser |
| Eric Mosser | ||
| President and Chief Operating Officer |
Exhibit99.1
Kaival Brands Appoints Three New Membersto its Board of Directors
Former Turning Points Brands and Altria executiveBarry Hopkinsappointed Chairman of the Board
Appointees bring decades of senior leadershipexperience in tobacco,public company finance and accounting and governance to Kaival Brands
GRANT-VALKARIA, Fla., March 20, 2023 /Globenewswire/-- Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) (“Kaival Brands,” the “Company” or “we,” “our” or similar terms), the exclusive distributor of all products manufactured by Bidi Vapor, LLC (“Bidi Vapor”), including the BIDI^®^ Stick electronic nicotine delivery system (ENDS), which are intended for adults 21 and over, announced today the appointment of Barry Hopkins, David Worner and Mark Thoenes to Kaival’s Board of Directors.
The appointments bring senior leadership to Kaival Brands covering key areas of tobacco industry experience, public company financing and accounting and corporate governance.
The new board appointments coincide with the retirement of Paul Reuter as Chairman of Kaival Brand’s Board of Directors. Existing independent directors Roger Brooks and George Chaung will continue to serve on Kaival Brand’s board.
Eric Mosser, Chief Operating Officer, President, and a director of Kaival Brands, commented: “We are excited to welcome new independent directors Barry Hopkins and David Worner to our board. With their combined backgrounds and expertise as established senior executive leaders within the tobacco and public company accounting and finance sectors, we believe they will make an immediate impact on our company as we execute on both current and future growth initiatives. I am also excited to announce that Mark Thoenes, our Interim Chief Financial Officer, has also joined our board. In his current role, Mark has proven invaluable in assisting with key decisions as our company navigated an exceptionally difficult regulatory environment. Finally, on behalf of our board and company, we would like to thank Paul Reuter for his service to our board and shareholders through several milestone moments. We wish him the best in retirement.”
About Barry Hopkins
Barry Hopkins joins Kaival Brands as Chairman of the Board with decades of senior executive experience within the traditional tobacco vape, and CBD spaces. Mr. Hopkins spent most of his decades-long career primarily in senior sales and marketing roles for Turning Point Brands and Altria. Most recently, before retiring, Mr. Hopkins served as Senior Vice President of Executive Organizational Development of Turning Point Brands, where he led that company’s senior management team in building the infrastructure for an enhanced performance management system and development of a new strategic planning process with a focus on mission critical initiatives to achieve a sustainable competitive advantage. These initiatives contributed to eight record-setting quarters in terms of revenue growth.
Mr. Hopkins stated “After spending more than 40 years within the industry, I am excited to join Kaival Brands at such an extraordinary inflection point. Management has done an exceptional job over the past two years navigating not only COVID-19 related hurdles, but an extraordinarily challenging regulatory environment brought on by the FDA’s PMTA process. “I believe my experience at the highest levels of management can significantly contribute to the ongoing efforts by both board and company leadership as Kaival Brands embarks on future growth initiatives, as evidenced by the recently announced national distribution agreements.”
Mr. Hopkins earned an undergraduate degree in Business Administration, Management and Operations from his studies at Staten Island College and Bernard Baruch University. Mr. Hopkins will serve as Chairman of the Board of Directors and as Chairman of the Governance and Nominating Committee of the board.
About David Worner
David Worner brings to the Kaival Brands board a diverse combination of finance, fundraising, mergers and acquisitions, technical accounting and operational experience gained over nearly 20 years. Mr. Worner is currently the Chief Executive Officer & Founder of GrowthPath Partners, a transactional accounting & advisory firm that services companies going through fundraising, mergers and acquisitions and public offering events. Prior to founding GrowthPath, Mr. Worner was a partner at NOW CFO, an outsourced chief financial officer and financial consulting firm.
Mr. Worner earned an undergraduate degree in Accounting from the University New Orleans. Mr. Worner will serve as the Chairman of the Compensation Committee of the board.
About Mark Thoenes
Mark Thoenes, the current Interim Chief Financial Officer of Kaival Brands, has more than 35 years of diverse financial and operational leadership. 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 and 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. For the past eleven years, in addition to his role at the Company, Mr. Thoenes has been the President of MLT Consulting Services, LLC, a full-service business/financial consulting firm.
Mr. Thoenes earned an undergraduate degree in Business Administration, Economics, Finance and Accounting from Portland State University.
ABOUT KAIVAL BRANDS
Based in Grant-Valkaria, Florida, Kaival Brands is a company focused on incubating innovative and profitable products into mature and dominant brands, with a current focus on the distribution of electronic nicotine delivery systems (ENDS) also known as “e-cigarettes”. Our business plan is to seek to diversify into distributing other nicotine and non-nicotine delivery system products (including those related to hemp-derived cannabidiol (known as CBD) products. Kaival Brands and Philip Morris Products S.A. (via sublicense from Kaival Brands) are the exclusive global distributors of all products manufactured by Bidi Vapor.
Learn more about Kaival Brands at https://ir.kaivalbrands.com/overview/default.aspx.
ABOUT BIDI VAPOR
Based in Melbourne, Florida, Bidi Vapor maintains a commitment to responsible, adult-focused marketing, supporting age-verification standards and sustainability through its BIDI^®^ Cares recycling program. Bidi Vapor’s premier device, the BIDI^®^ Stick, is a premium product made with high-quality components, a UL-certified battery and technology designed to deliver a consistent vaping experience for adult smokers 21 and over. Bidi Vapor is also adamant about strict compliance with all federal, state and local guidelines and regulations. At Bidi Vapor, innovation is key to its mission, with the BIDI^®^ Stick promoting environmental sustainability, while providing a unique vaping experience to adult smokers.
Nirajkumar Patel, the Company’s Chief Science and Regulatory Officer and director, owns and controls Bidi Vapor. As a result, Bidi Vapor is considered a related party of the Company.
For more information, visit www.bidivapor.com.
Cautionary Note Regarding Forward-LookingStatements
This press release and the statements of the Company’s management and partners included herein and related to the subject matter herein includes statements that constitute “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended), which are statements other than historical facts. You can identify forward-looking statements by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “position,” “should,” “strategy,” “target,” “will,” and similar words. All forward-looking statements speak only as of the date of this press release. Although we believe that the plans, intentions, and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions, or expectations will be achieved. Therefore, actual outcomes and results (including, without limitation, the impact of the Company’s new directors on the business and results of operations of the Company) could materially and adversely differ from what is expressed, implied, or forecasted in such statements. Our business may be influenced by many factors that are difficult to predict, involve uncertainties that may materially affect results, and are often beyond our control. Factors that could cause or contribute to such differences include, but are not limited to: (i) future actions by the FDA in response to the 11th Circuit Court’s decision that could impact our business and prospects, (ii) the outcome of FDA’s scientific review of Bidi Vapor’s pending PMTAs, (iii) the results of international marketing and sales efforts by Philip Morris International, the Company’s international distribution partner, (iv) how quickly domestic and international markets adopt our products, (v) the scope of future FDA enforcement of regulations in the ENDS industry, (vi) the FDA’s approach to the regulation of synthetic nicotine and its impact on our business, (vii) potential federal and state flavor bans and other restrictions on ENDS products, (viii) the duration and scope of the COVID-19 pandemic and impact on the demand for the products we distribute, (ix) general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth, (x) the effects of steps that we could take to reduce operating costs, (xi) our inability to generate and sustain profitable sales growth, including sales growth in U.S. and international markets, (xii) circumstances or developments that may make us unable to implement or realize anticipated benefits, or that may increase the costs, of our current and planned business initiatives, (xiii) significant changes in our relationships with our distributors or sub-distributors and (xiv) other factors detailed by us in our public filings with the Securities and Exchange Commission, including the disclosures under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2022, filed with the Securities and Exchange Commission on January 27, 2023 and accessible at www.sec.gov. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. Except as required under the federal securities laws and the Securities and Exchange Commission’s rules and regulations, we do not have any intention or obligation to update any forward-looking statements publicly, whether as a result of new information, future events, or otherwise.
InvestorRelations:
Stephen Sheriff, Director of Communications and Administration
Ir.kaivalbrands.com
investors@kaivalbrands.com