MPO Year in Review – Alliance MMA sued by investors

December 24, 2017

Alliance MMA, the publicly traded MMA organization that launched in late 2016, was sued by shareholders citing violations of securities law for alleged misrepresentation of information.

A class action suit is sought and there were efforts by multiple companies to seek out aggrieved shareholders.  Two lawsuits were filed in New York although one was later dismissed under the belief that the lawsuit originally filed would serve as the lawsuit that potential plaintiffs could join as part of a class action.

The lawsuit arises out of an amendment made by the company which trades on the NASDAQ.  In an 8-K filing made by the company last month, it stated that financial statements previously made for the nine months ended September 30, 2016 included in the Company’s Form 10-Q, three months ending June 30, 2016 and six months ending June 30, 2016 could no longer be relied upon because of an error in recognizing as compensation transfers of common stock by an affiliate of the Company to “individuals who were at the time of transfer, or subsequently became, officers, directors or consultants of the Company.”

Alliance MMA CEO, Paul Danner addressed the lawsuit. It has retained a law firm that will likely bring a motion to dismiss the lawsuit.

Alliance MMA lawsuit by JASONCRUZ206 on Scribd

The basic issue was an apparent error with the transfer of stock and the need to indicate the issue.  This sparked the lawsuit.

Regardless of the lawsuit, a concern for shareholders is that the stock price has tumbled since its initial launch.  The 52-week high as of this writing is $3.99 with its low at $0.85.  At closing on Friday, December 22nd, it traded at $1.20 per share.  The stock price is down approximately 65% from its IPO price.

There is also the issue raised as to whether Alliance MMA overstated its operating margin.  Alliance MMA denies it did but there is some speculation.

The company continued growth this year acquiring several regional promotions for its stable.  We shall see what 2018 brings for the company.

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