Overview

Clover Acquisition Corp. is a blank check company incorporated in the Cayman Islands on September 27, 2023. The company was formed for the purpose of effecting a business combination with one or more businesses or entities. Clover Acquisition Corp. intends to use cash derived from the proceeds of its initial public offering (IPO) and private placement, as well as debt or a combination of cash, shares, and debt to complete the business combination.

Results of Operations

Clover Acquisition Corp. has not engaged in any operations or generated any revenues to date. The company’s activities have been limited to organizational activities, preparing for and completing the IPO, and identifying a target company for a business combination. The company generates non-operating income in the form of interest earned on marketable securities held in the trust account.

For the three months ended June 30, 2024, the company had a net income of $1,653,670, which consisted of $2,240,420 in interest earned on marketable securities held in the trust account, offset by $586,750 in operating expenses.

For the six months ended June 30, 2024, the company had a net income of $3,313,749, which consisted of $4,469,118 in interest earned on marketable securities held in the trust account, offset by $1,155,369 in operating expenses.

Factors That May Adversely Affect Results of Operations

Clover Acquisition Corp.’s results of operations and ability to complete a business combination may be adversely affected by various factors, including:

• Downturns in the financial markets or economic conditions
• Increases in oil prices, inflation, or interest rates
• Supply chain disruptions
• Declines in consumer confidence and spending
• Public health considerations
• Geopolitical instability, such as the military conflicts in Ukraine and the Middle East

The company cannot predict the likelihood, duration, or magnitude of these events and their potential negative impact on its business and ability to complete a business combination.

Liquidity and Capital Resources

On November 24, 2023, Clover Acquisition Corp. consummated its IPO of 17,000,000 units at $10.00 per unit, generating gross proceeds of $170,000,000. Simultaneously, the company sold 5,000,000 private placement warrants to the sponsor at $1.00 per warrant, generating $5,000,000 in proceeds.

As of June 30, 2024, the company had cash and marketable securities held in the trust account of approximately $174,325,575 (including $4,469,118 of interest income). The company intends to use substantially all of the funds held in the trust account to complete its business combination.

The company had cash of $1,192,421 held outside of the trust account as of June 30, 2024, which it uses to identify and evaluate target businesses, perform due diligence, and finance transaction costs related to the initial business combination.

The company does not believe it will need to raise additional funds to meet the expenditures required for operating its business. However, it may need to obtain additional financing to complete the business combination or if it becomes obligated to redeem a significant number of its public shares upon consummation of the business combination.

Contractual Obligations

Clover Acquisition Corp. has the following contractual obligations:

• Administrative Services Agreement: $10,000 per month for office space and administrative support
• Services and Indemnification Agreement: $60,000 per month for the services of its executive team
• Underwriting fees: $2,550,000 cash underwriting fee and $5,950,000 deferred underwriting fee
• Financial Advisory Services Agreement: $510,000 fee upon IPO closing and up to $1,190,000 deferred fee upon business combination closing

The company will cease the monthly fees under the Administrative Services Agreement and Services and Indemnification Agreement upon the earlier of the completion of its initial business combination or liquidation.

Critical Accounting Estimates and Policies

The company’s critical accounting policies include:

• Ordinary Shares Subject to Possible Redemption: Ordinary shares subject to possible redemption are classified as temporary equity.
• Warrant Instruments: The company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms and applicable authoritative guidance.
• Net Income per Ordinary Share: The company computes net income per ordinary share by dividing net income by the weighted average number of ordinary shares outstanding for the period.

The company has not identified any critical accounting estimates. It has adopted recent accounting pronouncements, including ASU 2016-13 on credit losses and ASU 2020-06 on debt and derivatives, with no material effect on its financial statements.