Digital Ally Subsidiary Enters Amendment to Increase Distribution to Shareholders

Posted December 15, 2023

Lenexa-based Digital Ally, Inc. announced its subsidiary Kustom Entertainment entered into an amendment with Clover Leaf Capital Corp. to form a business combination valued at $222 million.

A business combination for Kustom Entertainment and Miami-based Clover Leaf Capital, a special purpose acquisition company, was originally proposed in June. The original Lock-Up Agreement would see Digital Ally distribute 15 percent of all securities received as merger consideration in the merger at the closing.

Under the new agreement, Digital Ally will now immediately distribute 20 percent of all securities, with 80 percent subject to the 6-month lock-up period, according to a release.

“Executing the Amended Lock-Up Agreement increases the immediate distribution to shareholders from 15% to 20% of all securities received as merger consideration at closing, which provides a greater immediate value for our shareholders,” Digital Ally CEO Stan Ross said. “We continue to be excited about the completion of this transaction and moved one step closer with the filing of our S-4/A last week with the SEC. We will continue to keep our shareholders informed throughout this process, and continue to strive towards maximizing their shareholder value.”

The combined company will operate under the name Kustom Entertainment and will operate under the current Kustom Entertainment management, with Digital Ally CEO Stan Ross transitioning to CEO of the newly combined company.

The combined company is expected to have an implied initial pro forma equity value of approximately $222.2 million and is expected to provide approximately $14 million in gross proceeds from the cash held in trust by Clover Leaf Capital.