Alliance MMA settles in principle with plaintiffs in securities lawsuit

March 10, 2018

The parties in the Alliance MMA lawsuit have filed a Notice of Settlement filed in the class action lawsuit filed in federal court in New Jersey.

The lawsuit was premised upon an accounting irregularity in Alliance MMA’s 10-Q filings in 2016 could no longer be relied upon.  As a result, two lawsuits were filed against the company with one being dismissed in order for the other to be the lead case in the litigation.

Alliance MMA became the first publicly traded MMA organization on the NASDAQ.  Since it began trading publicly, the company’s stock has been down since.  As of Friday, March 9th the stock closed in trading at just $0.52.

Alliance MMA denied any financial impact as a result of the error and brought a motion to dismiss in the lawsuit.  The parties determined to settle the case prior to plaintiffs filing an opposition.

The notice allows for a stay on a deadlines in the case while the parties finalize a settlement.  A settlement and dismissal of the case must occur by April 9th according to the below filing.

Notice of Settlement by JASONCRUZ206 on Scribd

Payout Perspective:

The settlement is probably the best for both parties as the plaintiffs likely received compensation while Alliance MMA cut off the legal fee spigot.  We shall see what impact, if any, it has on the operations of Alliance MMA.  The company made changes in its C-suite and named a new president this past February.

Alliance MMA cleans house of C-Suite officers according to SEC filing

February 14, 2018

Alliance MMA announced that its Chief Executive Officer, Paul K. Danner III, resigned as an officer of the Company effectively immediately according to a February 7, 2018 SEC Filing.  In addition, it terminated the employment of the Company’s President, Robert Haydak, and its Chief Marketing Officer James Byrne.

Danner will stay on with Alliance MMA as Chairman of the Company’s Board of Directors through May 1, 2018.

Alliance MMA announced that Robert L. Mazzeo will serve as the Company’s acting CEO.  Mazzeo had been acting as the company’s corporate counsel and is a partner at Mazzeo Song, P.C.

Alliance MMA is a publicly traded company on the NASDAQ.  The stock is currently trading under $0.75 per share.  The company’s 52 week high is $3.38 as of the time of this writing.  It is down 77.46%  over the course of the past 52 weeks.  When it opened on the NASDAQ in November 2016 it started at $4.00 per share.

The company positioned itself as a “feeder” league for bigger promotions like the UFC.  It had acquired several regional promotions

MMA Payout previously interviewed Haydak and Burt Watson about their work with Alliance MMA.

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.

Alliance MMA posts positive 2nd Quarter financial results

August 15, 2017

Alliance MMA reported its second quarter revenue and things about to be looking up.  The publicly traded company reported 48% growth in revenue on Monday.

According to a company release announcing its results it posted a 48% increase in revenue over the previous quarter, “based in part on the increment contribution of our most recent acquisitions,” per Paul Danner, Alliance MMA’s CEO.  Danner noted that the revenue showed positive momentum toward achieving “a cash-flow positive position in the not too distant future.”

Alliance MMA has 11 regional promotions in its stable and is building toward a goal of having regional promotions in the top 20 domestic media markets.  It also aims to have at least 125 professional MMA events per year.

According to CFO John Price, the collective contribution of its infrastructure of its electronic ticket platform, fighter management firm SuckerPunch Entertainment and regional MMA events resulted in a 43% operating margin and a 14% increase over the first quarter of the year.  Price also noted that it had a “capital raise of approximately $1,500,000” to support its ongoing acquisition program.

Payout Perspective:

The results are good news for a company that has experienced a dip in its stock and securities lawsuits due to an alleged misrepresentation in reporting.  Notably, one of those lawsuits was voluntarily dismissed according to its 10-Q and the company states that the other lacks merit.  However, it appears that the plaintiffs in these lawsuits are determining who would become the lead plaintiff in a possible class action.  Despite glowing results, the stock on the NASDAQ is up slightly as of this writing Tuesday morning at $1.40.  It has a market cap of slightly over 10 million.

Payout Exclusive: Interview with Roy Englebrecht and Alliance MMA’s Robert Haydak

June 28, 2017

Alliance MMA continues its expansion of regional promotions.  This month, it announced the acquisition of Roy Englebrecht’s Southern California fight promotion.  MMA Payout had the opportunity to speak with Alliance MMA’s President Robert Haydak and Roy Englebrecht.

The acquisition is the largest promotion the publicly traded company has made thus far.  The New York Business Journal reported that the transaction was for the acquisition of the assets of Roy Englebrecht Promotions in a cash and stock deal.  It is the 11th promotion it has acquired in its bid for strategic expansion.  One of the company’s overall goals is to become a feeder league for bigger promotions such as the UFC and Bellator.  It has acquired other ancillary companies such as fighter management company Suckerpunch and ticket company Cage Tix.  Alliance MMA provides infrastructure support to the regional companies while allowing the existing promoters to continue to run the promotion.

“31 years as an independent promoter is enough,” stated Englebrecht of the change.  He will stay on serving in the same capacity for the promotion.  To date, it has 18 fight dates set for this year including boxing/MMA hybrid shows at Fight Club OC at the Hangar in Orange County, California.  He also has two new events, “Rumble on the Water,” at the Queen Mary in Long Beach, California and Gladiator MMA which will be held in the LA Coliseum.

Englebrecht will continue to serve as the promotion’s GM and his staff will remain.  This is similar to other acquisitions made by Alliance MMA where they allow the staff to remain in place for a certain amount of time and will make a future decision on the company staffing.

He noted that he is willing to ween off of the MMA/boxing hybrid shows which have been very popular but that decision will be based on Alliance MMA.  Haydak stated that it was his first experience with a hybrid show and was impressed with the event Roy had created.  A decision has yet been made on the fate of Fight Club OC at The Hangar.

Englebrecht was impressed with the professional nature of Alliance MMA which was one of the reasons he decided to sell his promotion.  Alliance MMA first approached Englebrecht at one of his events in December 2016 and then met CEO Paul Danner at another one of his events in 2017.  The two sides exchanged information and after review of documents by the necessary people a deal was made.  The fact that Alliance MMA included Haydak, a former promoter, it made Englebrecht more at ease since they spoke the same language.

“Certainly, their due diligence which made me very comfortable,” said Englebrecht.  Haydak emphasized that Alliance MMA is being meticulous about its mergers and acquisitions.  “Its a very tedious and long process,” explained Haydak of what the company does in looking into acquiring a promotion.  “There is back and forth regarding financial and operations review.”  Out of 60 companies it has reviewed, Englebrecht’s promotion was just the 11th promotion Alliance MMA has purchased.  “It’s just not just jumping on any opportunity,” said Haydak.

The acquisition according to Haydak was based on Roy’s reputation as a promoter and Alliance MMA’s desire to make inroads into Southern California.  “We identified California as a market to get into.”  Alliance MMA also is working with longtime Alliance MMA Gym’s Eric del Fierro to promote fights in the region as well.  However, Alliance MMA does not see any conflict with the two regional promotions in the Southland.  “We’re not concerned about that all.  We’re working on the same purpose,” explained Haydak.

Englebrecht enjoyed his time as an independent promoter but voiced the challenges of being out in the “wilderness.”  “I’m a fan of regional promotions.  In saying that, you still have to do a whole lot.  It’s not like you’re a Golden Boy, UFC or Bellator.”

Second securities lawsuit filed against Alliance MMA

May 9, 2017

A second securities lawsuit has been filed against Alliance MMA for claims that it misled investors.  The new lawsuit filed May 3rd is in the United States District Court for the Southern District of New York and seeks class action status.

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.”

The Complaint filed by plaintiff David Shulman states that Alliance MMA completed its IPO that consisted public sale of 2,222,308 shares of the Company’s common stock at $4.50 per share.  According to a Declaration from the Plaintiff filed with the Complaint, he purchased 100 shares of Alliance MMA on October 16, 2016 for $3.99 per share.

As of this writing on Tuesday, May 9, 2017, the stock is trading around $1.53 per share.

A Second Alliance MMA Lawsuit by JASONCRUZ206 on Scribd

Certification of Plaintiff in Second Alliance MMA Lawsuit by JASONCRUZ206 on Scribd

Payout Perspective:

The lawsuit is similar to the one filed in New Jersey last month.  One might expect a similar response from Alliance MMA in that it has retained a law firm to defend itself against these allegations.  With an issue like this, it is expected that Plaintiff attorneys smell blood in the water and search for investors that may have been harmed from the misstatements made by the Company.  MMA Payout will continue to follow the situation.