The Company and Basis of Presentation |
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| Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
Note 1. The Company and Basis of Presentation
Nature of Business
Alliance MMA, Inc. (“Alliance” or the “Company”) was formed in Delaware on February 12, 2015 to acquire companies in the mixed martial arts (“MMA”) industry. On September 30, 2016, Alliance completed the first tranche of its initial public offering and acquired the assets and assumed certain liabilities of six companies, consisting of five MMA promoters and a ticketing platform focused on MMA events. In October 2016, GFL Acquisition, Co., Inc., a wholly-owned subsidiary of Alliance, merged with a seventh company, Go Fight Net, Inc., which produces and distributes MMA video entertainment. GFL was subsequently rebranded as Alliance Sports Media. The respective acquired businesses of the seven companies are referred to in these Notes as the “Initial Business Units”. At the completion of the offering in October, the Company acquired certain MMA and kickboxing video libraries (the “Initial Acquired Assets”). Subsequent to the acquisition of the Initial Business Units and the Initial Acquired Assets, the Company acquired the assets of four additional promotion companies, Iron Tiger Fight Series, Fight Time, National Fighting Championships and Fight Club OC, and a fighter management and marketing company, SuckerPunch, along with the intellectual property rights to the Sheffield video fight library of Shogun Fights (the “Subsequent Acquisitions”). Initial Business Units
Promotions
Ticketing Platform
Video Production and Distribution
Initial Acquired Assets Following the completion of its initial public offering, Alliance also acquired the following assets: Louis Neglia’s Ring of Combat All rights in the existing MMA and kickboxing video libraries of Louis Neglia’s Martial Arts Karate, Inc. related to the Louis Neglia’s Ring of Combat and Louis Neglia’s Kickboxing events and shows, a right of first refusal to acquire the rights to all future Louis Neglia MMA and kickboxing events. Hoss Promotions, LLC The MMA and video library of Hoss Promotions, LLC related to certain CFFC events. Subsequent Acquisitions
Following the acquisition of the Initial Business Units and Initial Acquired Assets, the Company acquired:
Iron Tiger Fight Series
The Ohio-based MMA promotion business of Ohio Fitness and Martial Arts, LLC doing business as Iron Tiger Fight Series (“ITFS”) on December 9, 2016. In June 2017, ITFS hired the former owner of Explosive Fight Promotions, an Ohio based MMA promotion business, as General Manager, along with certain staff members.
Sucker Punch
Roundtable Creative Inc., a Virginia corporation d/b/a SuckerPunch Entertainment (“SuckerPunch”), a leading fighter management and marketing company on January 4, 2017. Fight Time The MMA Promotion business of Ft. Lauderdale, Florida based Fight Time Promotions, LLC (“Fight Time”) on January 18, 2017. National Fighting Championships
The Atlanta, Georgia based mixed martial arts promotion business of Undisputed Productions, LLC, doing business as National Fighting Championships or NFC (“NFC”) on May 12, 2017.
Fight Club OC
The Orange County, California based mixed martial arts business of The Englebrecht Company, Inc., doing business as Roy Englebrecht Promotions or Fight Club OC (“Fight Club OC”) on June 14, 2017.
Sheffield The intellectual property rights to the Sheffield video fight library of the Shogun promotions. The following is a description of each of the Initial Business Units, the Initial Acquired Assets and the Subsequent Acquisitions: Initial Business Units CFFC Promotions, LLC Based in Atlantic City, New Jersey, CFFC was founded in 2011 and has promoted 65 professional MMA events, primarily in New Jersey and Pennsylvania. Ranked in the top 10 of all regional MMA promotions, CFFC currently airs on the CBS Sports Network as well as www.gfl.tv and has sent 23 fighters to the UFC. Devon Mathiesen serves as General Manager of CFFC. Hoosier Fight Club Promotions, LLC Based in the Chicago metropolitan area, HFC was founded in 2009 and has promoted 33 events, including the first sanctioned event in Indiana in January, 2010. HFC has sent or promoted eight fighters to the UFC and several to Invicta Fighting Championships. HFC’s Danielle Vale serves as General Manager in the Chicago area market. Punch Drunk, Inc. d/b/a COmbat GAmes MMA Based in Kirkland, Washington, COGA was founded in 2009 and has promoted 55 shows primarily in Washington State. COGA frequently airs on ROOT Sports Pacific Northwest regional network as well as www.gfl.tv. COGA’s founder Joe DeRobbio serves as General Manager for the Pacific Northwest region. Bang Time Entertainment LLC d/b/a Shogun Fights Based in Baltimore, Maryland, Shogun was founded in 2008 and has promoted 16 fights at the Royal Farms Arena in Baltimore, the same venue that hosted UFC 174 in April of 2014. A premier mid-Atlantic regional MMA promotion, Shogun Fights currently airs on Comcast Sportsnet as well as www.gfl.tv. Shogun’s founder John Rallo serves as General Manager our for the mid-Atlantic region. V3, LLC Based in Memphis, Tennessee, V3 Fights was founded in 2009 and has promoted 60 events primarily at event centers in Memphis, Tennessee and elsewhere in Tennessee, Mississippi and Alabama. V3 Fights is the mid-South’s premier MMA promotion and has been broadcast live on Comcast Sports South as well as www.ustream.com, www.YouTube.com. V3 Fights founder Nick Harmeier serves as General Manager for the mid-South region. Go Fight Net, Inc. Founded in 2010, Go Fight Net operates “GoFightLive” or “GFL” a sports media and technology platform focusing exclusively on the combat sports marketplace. CageTix LLC Founded in 2009 by Jay Schneider, a seasoned MMA event promoter, CageTix is the first group sales service to focus specifically on the MMA industry. CageTix is intended to be complementary to any existing ticket service such as Ticketmaster or box office sales used by a promotion. CageTix presently services the industry’s top mixed martial arts events. Subsequent Acquisitions Iron Tiger Fight Series Based in Bellfountain, Ohio, IT was founded in 1995 and has promoted 69 professional and amateur MMA events in various locations throughout Ohio. IT has sent or promoted 10 fighters to the UFC and several to Bellator. IT’s Scott Sheeley serves as General Manager of IT. SuckerPunch Based in Northern Virginia, SuckerPunch manages professional MMA fighters, including current UFC feather weight champion Max Holloway. Fight Time Productions Based in Ft. Lauderdale, Florida, Fight Time has promoted 36 professional MMA events in Miami, Florida. Fight Time is South Florida’s premier MMA promotion and was founded by the late Howard Davis and Karla Guadamuz who serves as General Manager. National Fighting Championships Based in Atlanta, Georgia, NFC was founded in 2002 and has promoted 96 professional and amateur MMA events throughout Atlanta, Georgia, South Carolina and North Carolina. NFC’s David Oblas serves as General Manager of NFC. Fight Club OC Based in Orange County, California, Fight Club OC was founded in 1982 and has promoted more than 260 professional and amateur MMA events throughout Southern California. Fight Club OC’s Roy Englebrecht serves as General Manager of Fight Club OC. Sheffield Recordings Limited, Inc. A service provider of Shogun, Sheffield owned the intellectual property rights of events promoted by Shogun. The Company has acquired the exclusive rights to the Sheffield video fight library for a contractual price of $50,000, of which $25,000 was paid in cash during the first quarter of 2017 and $8,500 was paid with the issuance of 5,556 shares of Alliance common stock during the second quarter of 2017. The agreement for the video fight library calls for $25,000 of Alliance MMA Stock to be issued based upon the IPO price of $4.50 per share. The Company has valued the stock portion of the acquisition based upon the date the 5,556 shares were issued, May 12, 2017. Initial Acquired Assets Hoss Promotions, LLC An affiliate of CFFC, Hoss owned the intellectual property rights to approximately 30 MMA events promoted by CFFC. The Company has acquired the exclusive rights to the Hoss fighter library, which covers approximately 100 hours of video content. Ring of Combat, LLC Based in Brooklyn, New York, and founded by MMA icon and three-time World Kickboxing Champion Louis Neglia (34-2), Ring of Combat is currently ranked as the No. 4 regional promotion in the world by Sherdog.com, a website devoted to the sport of mixed martial arts that is owned indirectly by Evolve Media, LLC. The Company acquired the exclusive rights to the Ring of Combat fighter library, which includes professional MMA, amateur, and kickboxing events and covers approximately 200 hours of video content. Ring of Combat has sent approximately 90 fighters to the UFC. The Company additionally secured the media rights to all future Ring of Combat promotions. Basis of Presentation and Principles of Consolidation
The accompanying interim unaudited condensed consolidated financial statements as of June 30, 2017 and December 31, 2016, and for the three and six months ended June 30, 2017 and 2016, have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) for interim financial information. The amounts as of December 31, 2016 have been derived from the Company’s annual audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary (consisting of normal recurring adjustments) to state fairly the financial position of the Company and its results of operations, changes in stockholders’ equity and cash flows as of and for the periods presented. These financial statements should be read in conjunction with the annual audited financial statements and notes thereto as of and for the year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on April 17, 2017 (the “Form 10-K”). The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2017 or any future period and the Company makes no representations related thereto. Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Such estimates include, but are not limited to, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, the assessment of the recoverability of goodwill, likelihood and range of possible losses on contingencies, valuation and recognition of stock-based compensation expense, recognition and measurement of current and deferred income tax assets and liabilities, assessment of unrecognized tax benefits, among others. Actual results could differ from those estimates. Liquidity and Going Concern Our primary need for liquidity is to fund the working capital needs of our business, our planned capital expenditures, the continued acquisition of regional promotions and related companies, and general corporate purposes. We have incurred losses and experienced negative operating cash flows since the inception of our operations in October 2016. We believe, however, that the successful implementation of our business plan, along with other actions we have taken and will continue to take, will improve our operating margins and address corporate overhead expenditures. Since completing our IPO in October 2016, we have focused primarily on building out a domestic MMA platform, which is expected eventually to include a presence in the top 20 media markets. To date, we have created a persistent brand presence in eleven markets through the acquisition of nine promotional businesses along with the promotion of regional Alliance MMA events in two additional markets. We have also continued to develop our existing media library of live MMA events, and have built a professional corporate infrastructure that will support our long-term goals. These activities and investments in our business directly support our stated goal of promoting at least 125 regional MMA events annually. To ensure that our capital needs are met over the next twelve months, in August 2017, we completed a capital raise of $1.5 million through the placement of 1.5 million units which consist of one common share and warrant. We expect to raise additional capital in the amount of $1.0 million during 2017. Management is in final negotiations with multiple national sponsors and, on the basis of those negotiations, expects to receive at least $500,000 in national sponsorship revenue during the next twelve months. Additionally, we are in final discussions with national casinos to promote our MMA events at venues that would produce better margins through entertainment fees paid to the Company and, in certain cases, a reduction in event overhead through complimentary food and lodging for fighters and staff. While many challenges associated with successfully executing our aggressive expansion plan exist, and while our historical operating results raise doubts with respect to our ability to continue as a going concern, we expect that our recent and anticipated financings, the continued implementation of our business plan and the expected increase in sponsorship revenue will provide sufficient liquidity and financial flexibility over the next twelve months. We cannot, however, predict with certainty the outcome of our actions to generate liquidity, including our success in raising additional capital or the anticipated results of our operations.
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