Digital Ally, Inc. (Nasdaq: DGLY) (“Digital Ally”) and Clover
Leaf Capital Corp. (Nasdaq: CLOE) (“CLOE”), a publicly traded
special purpose acquisition company, today announced the filing of
a registration statement by CLOE on Form S-4 (the “Registration
Statement”) with the U.S. Securities and Exchange Commission
(“SEC”), which contains a preliminary proxy statement and
prospectus in connection with the proposed business combination
(the “Business Combination”), announced June 2, 2023, with Kustom
Entertainment, Inc. (“Kustom Entertainment”), a wholly-owned
subsidiary of Digital Ally.
While the Registration Statement has not yet
become effective, and the information contained therein is subject
to change, it provides important information about the combined
company’s proposed business and listing of securities, Kustom
Entertainment’s business, as well as the proposed Business
Combination, and the proposals to be considered by CLOE’s
shareholders.
Following the closing of the business
combination, CLOE will change its name to Kustom Entertainment and
will operate under the same management team as Kustom
Entertainment, Inc., which is currently led by Stanton E. Ross, the
current CEO of Digital Ally. The transaction contemplates an equity
value of $125 million for Kustom Entertainment, Inc. The combined
company is expected to have an implied initial pro forma equity
value of approximately $222.2 million, with the proposed business
combination expected to provide approximately $18.1 million in
gross proceeds from the cash held in trust by CLOE (assuming no
redemptions). Additionally, Digital Ally will distribute to its
shareholders 15% of its shares in the combined company immediately
following closing and intends to distribute the balance of such
shares following a six-month lock-up period.
Maxim Group LLC served as exclusive financial
and capital markets advisor to Kustom Entertainment in connection
with the business combination. Sullivan & Worcester LLP is
serving as legal counsel to Kustom Entertainment and Ellenoff
Grossman & Schole LLP is serving as legal counsel to CLOE.
About Kustom Entertainment, Inc.
Kustom Entertainment, Inc., a recently formed
wholly-owned subsidiary of Digital Ally, will provide oversight to
currently wholly-owned subsidiaries TicketSmarter, Kustom 440, and
BirdVu Jets.
TicketSmarter offers tickets to more than
125,000 live events ranging from concerts to sports and theatre
shows. TicketSmarter is the official ticket resale partner of over
35 collegiate conferences, over 300 universities, and hundreds of
events and venues nationally. TicketSmarter is a primary and
secondary ticketing solution for events and high-profile venues
across North America. For more information on TicketSmarter,
visit www.Ticketsmarter.com.
Established in late 2022, Kustom 440 is an
entertainment division of Kustom Entertainment, Inc., whose mission
it is to attract, manage and promote concerts, sports and private
events. Kustom 440 is unique in that it brings a primary and
secondary ticketing platform, in addition to its well-established
relationships with artists, venues, and municipalities. For more
information on Kustom 440, visit www.Kustom440.com.
Kustom Entertainment operates through its
wholly-owned subsidiaries TicketSmarter, Inc. (“TicketSmarter”),
Kustom 440, Inc. (“Kustom 440”), and BirdVu Jets, Inc. (“BirdVu
Jets”). Following the closing of the Business Combination,
TicketSmarter, Kustom 440, and BirdVu Jets will combine their
management teams and focus on concerts, entertainment and garnering
additional ticketing partnerships, as well as using existing
sponsorships and sports property partnerships to develop
alternative entertainment options for consumers.
About Clover Leaf Capital Corp.
Clover Leaf Capital Corp. is a newly
organized blank check company formed for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more
businesses.
For more information, contact:
Stanton E. Ross, CEO
Info@kustoment.com
Info@cloverlcc.com
Forward-Looking Statements
This press release contains certain
forward-looking statements within the meaning of the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1955.
These forward-looking statements include, without limitation,
CLOE’s and Kustom Entertainment’s expectations with respect to the
proposed business combination between CLOE and Kustom
Entertainment, including statements regarding the benefits of the
transaction, the anticipated timing of the transaction, the implied
valuation of Kustom Entertainment, the products offered by Kustom
Entertainment and the markets in which it operates, and Kustom
Entertainment’s projected future results. Words such as “believe,”
“project,” “expect,” “anticipate,” “estimate,” “intend,”
“strategy,” “future,” “opportunity,” “plan,” “may,” “should,”
“will,” “would,” “will be,” “will continue,” “will likely result,”
and similar expressions are intended to identify such
forward-looking statements. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to significant risks and uncertainties that
could cause the actual results to differ materially from the
expected results. Most of these factors are outside CLOE’s and
Kustom Entertainment’s control and are difficult to predict.
Factors that may cause actual future events to differ materially
from the expected results, include, but are not limited to: (i) the
risk that the transaction may not be completed in a timely manner
or at all, which may adversely affect the price of CLOE’s
securities, (ii) the risk that the transaction may not be completed
by CLOE’s business combination deadline, even if extended by its
stockholders, (iii) and the potential failure to obtain an
extension of the business combination deadline if sought by Clover
Leaf; (iv) the failure to satisfy the conditions to the
consummation of the transaction, including the adoption of the
agreement and plan of merger (“Merger Agreement”) by the
stockholders of CLOE, (v) the occurrence of any event, change or
other circumstance that could give rise to the termination of the
Merger Agreement, (vi) the failure to obtain any applicable
regulatory approvals required to consummate the business
combination; (vii) the receipt of an unsolicited offer from another
party for an alternative transaction that could interfere with the
business combination, (viii) the effect of the announcement or
pendency of the transaction on Kustom Entertainment’s business
relationships, performance, and business generally, (ix) the
inability to recognize the anticipated benefits of the business
combination, which may be affected by, among other things,
competition and the ability of the post-combination company to grow
and manage growth profitability and retain its key employees, (x)
costs related to the business combination, (xi) the outcome of any
legal proceedings that may be instituted against Kustom
Entertainment or CLOE following the announcement of the proposed
business combination, (xii) the ability to maintain the listing of
CLOE’s securities on the Nasdaq prior to the business combination,
(xiii) the ability to implement business plans, forecasts, and
other expectations after the completion of the proposed business
combination, and identify and realize additional opportunities,
(xiv) the risk of downturns and the possibility of rapid change in
the highly competitive industry in which Kustom Entertainment
operates, (xv) the risk that demand for Kustom Entertainment’s
services may be decreased due to a decrease in the number of
large-scale sporting events, concerts and theater shows, (xvi) the
risk that any adverse changes in Kustom Entertainment’s
relationships with buyer, sellers and distribution partners may
adversely affect the business, financial condition and results of
operations, (xvii) the risk that Changes in Internet search engine
algorithms and dynamics, or search engine disintermediation, or
changes in marketplace rules could have a negative impact on
traffic for Kustom Entertainment’s sites and ultimately, its
business and results of operations; (xviii) the risk that any
decrease in the willingness of artists, teams and promoters to
continue to support the secondary ticket market may result in
decreased demand for Kustom Entertainment’s services; (xix) the
risk that Kustom Entertainment is not able to maintain and enhance
its brand and reputation in its marketplace, adversely affecting
Kustom Entertainment’s business, financial condition and results of
operations, (xx) the risk of the occurrence of extraordinary
events, such as terrorist attacks, disease epidemics or pandemics,
severe weather events and natural disasters, (xxi) the risk that
because Kustom Entertainment’s operations are seasonal and its
results of operations vary from quarter to quarter and year over
year, its financial performance in certain financial quarters or
years may not be indicative of, or comparable to, Kustom
Entertainment’s financial performance in subsequent financial
quarters or years; (xxii) the risk that periods of rapid growth and
expansion could place a significant strain on Kustom
Entertainment’s resources, including its employee base, which could
negatively impact Kustom Entertainment’s operating results; (xxiii)
the risk that Kustom Entertainment may never achieve or sustain
profitability; (xxiv) the risk that Kustom Entertainment may need
to raise additional capital to execute its business plan, which
many not be available on acceptable terms or at all; (xxv) the risk
that third-parties suppliers and manufacturers are not able to
fully and timely meet their obligations, (xxvi) the risk that
Kustom Entertainment is unable to secure or protect its
intellectual property, (xxvii) the risk that the post-combination
company’s securities will not be approved for listing on Nasdaq or
if approved, maintain the listing and (xxviii) other risks and
uncertainties indicated from time to time in the proxy statement
and/or prospectus relating to the business combination, including
those under the “Risk Factors” section therein and in CLOE’s other
filings with the SEC. The foregoing list of factors is not
exhaustive. Forward-looking statements speak only as of the date
they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and Kustom Entertainment and CLOE
assume no obligation and do not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise.
Important Information and Where to Find
It
In connection with the transaction, CLOE has
filed the Registration Statement with the SEC, which includes a
preliminary proxy statement to be distributed to holders of CLOE’s
common stock in connection with CLOE’s solicitation of proxies for
the vote by CLOE’s stockholders with respect to the transaction and
other matters as described in the Registration Statement, as well
as a prospectus relating to the offer of the securities to be
issued to Kustom Entertainment’s stockholder in connection with the
transaction. After the Registration Statement has been approved by
the SEC, CLOE will mail a definitive proxy statement, when
available, to its stockholders. Before making any voting or
investment decision, investors and security holders and other
interested parties are urged to read the Registration Statement,
any amendments thereto and any other documents filed with the SEC
carefully and in their entirety when they become available because
they will contain important information about CLOE, Kustom
Entertainment and the transaction. Investors and security
holders may obtain free copies of the preliminary proxy
statement/prospectus and definitive proxy statement/prospectus
(when available) and other documents filed with the SEC by CLOE
through the website maintained by the SEC at http://www.sec.gov, or
by directing a request to: 1450 Brickell Avenue, Suite 2520, Miami,
FL 33131.
Participants in Solicitation
CLOE and Kustom Entertainment and their
respective directors and certain of their respective executive
officers and other members of management and employees may be
considered participants in the solicitation of proxies with respect
to the transaction. Information about the directors and executive
officers of CLOE is set forth in its Annual Report on Form 10-K for
the fiscal year ended December 31, 2022 filed with the SEC on April
14, 2023. Additional information regarding the participants in the
proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be included in
the proxy statement and/or prospectus and other relevant materials
to be filed with the SEC regarding the transaction when they become
available. Stockholders, potential investors and other interested
persons should read the proxy statement and/or prospectus carefully
when it becomes available before making any voting or investment
decisions. When available, these documents can be obtained free of
charge from the sources indicated above.
No Offer or Solicitation
This press release shall not constitute a
solicitation of a proxy, consent or authorization with respect to
any securities or in respect of the proposed business combination.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
U.S. Securities Act of 1933, as amended, or an exemption
therefrom.
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