Clover Leaf Capital Corp. (NASDAQ:CLOE) announced on Friday an amendment to its merger agreement with Kustom Entertainment, Inc., extending the deadline to finalize their business combination. The new Outside Date is set for August 30, 2024, pushed back from the original date of July 22, 2024. This extension provides additional time for the completion of the merger process, which was originally disclosed on June 1, 2023.
In addition to the merger agreement modification, Clover Leaf and Digital Ally (NASDAQ:DGLY), Inc., the sole stockholder of Kustom Entertainment, amended the terms of their Lock-Up Agreement. The amendment reduces the percentage of Clover Leaf Class A common stock subject to the lock-up from 85% to a range of 70% to 80%. Digital Ally will determine the exact percentage within this range, subject to Clover Leaf's approval, to ensure compliance with closing conditions specified in the merger agreement.
This strategic move comes as part of the ongoing efforts to finalize the business combination between Clover Leaf, a Delaware corporation specializing in miscellaneous amusement and recreation services, and Kustom Entertainment, known for its events, festivals, and ticketing technologies. The merger is anticipated to bring together Clover Leaf's resources and Kustom Entertainment's innovative services to create a formidable entity in the entertainment sector.
In other recent news, Clover Leaf Capital Corp. has secured a conditional extension for its Nasdaq listing. The approval, granted by The Nasdaq Stock Market LLC, hinges on the successful merger of Clover Leaf with Kustom Entertainment, Inc. by August 2024. This development is a response to Clover Leaf's appeal to Nasdaq's Hearings Panel after failing to comply with certain listing requirements.
Previously, Clover Leaf had been found non-compliant with Nasdaq Listing Rule 5550(a)(3), which necessitates a minimum of 300 public holders, and Nasdaq Listing Rule 5620(a), which requires an annual stockholders' meeting within twelve months of the fiscal year-end. The proposed merger with Nevada-based Kustom Entertainment is anticipated to address these issues and ensure compliance with all initial listing criteria.
Detailed information about the business combination is available in a proxy statement and registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission. Investors are encouraged to review these documents for a comprehensive understanding of the merger and related matters. These are the latest developments in Clover Leaf's ongoing efforts to maintain its Nasdaq listing.
InvestingPro Insights
As Clover Leaf Capital Corp. (NASDAQ:CLOE) navigates through its merger process with Kustom Entertainment, Inc., real-time data and analysis from InvestingPro offer valuable insights into the company's financial health. Clover Leaf's market cap currently stands at $64.91M, which provides a sense of the company's size in the marketplace. Despite the challenges ahead, the company's stock has shown resilience with a year-to-date price total return of 16.97%, reflecting investor optimism about the merger's potential benefits.
An InvestingPro Tip highlights that Clover Leaf's stock is in overbought territory according to the RSI, suggesting that traders should be cautious. Additionally, the company is grappling with weak gross profit margins, which could impact its financial performance. It's also worth noting that Clover Leaf has not been profitable over the last twelve months, emphasizing the importance of the upcoming merger in potentially revitalizing the company's financial outlook.
For investors looking for a more in-depth analysis, InvestingPro offers additional tips on Clover Leaf, which can be accessed by visiting InvestingPro's dedicated page for CLOE. Interested readers can also take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With the next earnings date approaching on August 14, 2024, staying informed with InvestingPro could be crucial for investors monitoring Clover Leaf's progress.
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