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): August 1, 2024
DIGITAL
ALLY, INC.
(Exact
Name of Registrant as Specified in Charter)
| Nevada |
|
001-33899 |
|
20-0064269 |
| (State
or other Jurisdiction |
|
(Commission |
|
(IRS
Employer |
| of
Incorporation) |
|
File
Number) |
|
Identification
No.) |
14001
Marshall Drive, Lenexa, KS 66215
(Address
of Principal Executive Offices) (Zip Code)
(913)
814-7774
(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 exchange on which registered |
| Common
stock, $0.001 par value |
|
DGLY |
|
The
Nasdaq Capital 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
8.01 Regulation FD Disclosure.
On
June 1, 2023, Digital Ally, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with Clover Leaf Capital Corp., a Delaware corporation (together with its successors, “Clover Leaf”), CL Merger Sub, Inc.,
a Nevada corporation and a wholly-owned subsidiary of Clover Leaf (“Merger Sub”), Yntegra Capital Investments LLC, a Delaware
limited liability company, in the capacity as the representative from and after the effective time for the stockholders of Clover Leaf
in accordance with the terms and conditions of the Merger Agreement, and Kustom Entertainment, Inc., a Nevada corporation, and a wholly
own subsidiary of the Company (“Kustom”). Pursuant to the Merger Agreement, subject to the terms and conditions set forth
therein upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge
with and into Kustom (the “Merger”), with Kustom continuing as the surviving corporation in the Merger and a wholly-owned
subsidiary of Clover Leaf. In the Merger, all of the issued and outstanding capital stock of Kustom immediately prior to the effective
time shall no longer be outstanding and shall automatically be cancelled and shall cease to exist in exchange for the right for the Company
to receive the Merger Consideration (as defined herein).
The
aggregate merger consideration to be paid pursuant to the Merger Agreement to the Company as of immediately prior to the effective time
will be an amount equal to (the “Merger Consideration”) (i) $125 million, minus (ii) the estimated consolidated indebtedness
of Kustom as of the Closing (“Closing Indebtedness”). The Merger Consideration to be paid to the Company will be paid solely
by the delivery of new shares of Clover Leaf Class A common stock, each valued at $11.14 per share. The Closing Indebtedness (and the
resulting Merger Consideration) is based solely on estimates determined shortly prior to the Closing and is not subject to any post-Closing
true-up or adjustment.
On
August 1, the board of directors of the Company (the “Board”) set the record date for the dividend distribution to August
12, 2024 for determining stockholders entitled to receive the dividend distribution (the “Record Date”).
On
August 5, 2024, the Company issued a press release announcing that the Company and the Board has set the Record Date for the dividend distribution on the common stock. As mentioned above, the Record
Date for the holders of the common stock to participate in the dividend is August 12, 2024.
The
press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein. The information contained in the press release
is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in such filing.
Item
9.01 Financial Statements and Exhibits.
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 hereunto duly authorized.
Date:
August 5, 2024
| |
Digital
Ally, Inc. |
| |
|
|
| |
By: |
/s/
Stanton E. Ross |
| |
Name: |
Stanton
E. Ross |
| |
Title: |
Chairman
and Chief Executive Officer |
Exhibit
99.1
Kustom
Entertainment, Inc. and Clover Leaf Capital Corp. Announce Effectiveness of Registration Statement as Digital Ally Announces Record Date
for Distribution
KANSAS
CITY, August 5, 2024 (GLOBE NEWSWIRE) – Digital Ally, Inc. (Nasdaq: DGLY) – Kustom Entertainment, Inc. (“Kustom Entertainment”),
a premier live event marketing and concert production company and current subsidiary of Digital Ally Inc. (“Digital Ally”),
today announced that Clover Leaf Capital Corp.’s (“Clover Leaf”) registration
statement on Form S-4 has been declared effective by the U.S. Securities and Exchange Commission (the “SEC”) as of Tuesday,
July 30, 2024, relating to the previously announced proposed business combination by and among Clover Leaf, Kustom Entertainment, Inc.
and CL Merger Sub, Inc.
Clover
Leaf has mailed the definitive proxy statement/prospectus (the “Proxy Statement”) to stockholders of record as of the close
of business on July 24, 2024. The Proxy Statement contains information and a proxy card relating to the special meeting of Clover
Leaf’s stockholders (the “Special Meeting”).
The
Special Meeting to approve the proposed business combination is scheduled on August 20, 2024 at 10:00 a.m. Eastern Time
via a virtual meeting format at www.cstproxy.com/cloverlcc/bc2024.
The
combined company will be known as Kustom Entertainment and will operate under the same management team, led by Stanton E. Ross, the current
CEO. 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. Additionally, Digital Ally will distribute to its shareholders
30% of the shares obtained in Kustom Entertainment immediately following the closing of the merger and intends to distribute the balance
of such shares following a six-month lock-up period. The initial distribution will be made to all stockholders of record of Digital Ally
as of the close of business on August 12, 2024.
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 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. 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 because they contain important
information about CLOE, Kustom Entertainment and the transaction. Investors and security holders may obtain free copies of the proxy
statement/prospectus 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, 2023 filed with
the SEC on March 22, 2024. Additional information regarding the participants in the proxy solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, are included in the proxy statement/ prospectus and other relevant materials
to be filed with the SEC regarding the transaction. Stockholders, potential investors and other interested persons should read the proxy
statement/prospectus carefully before making any voting or investment decisions. 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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