Commitments and Contingencies |
9 Months Ended | |||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Text Block] |
Note 5. Commitments and Contingencies Operating Leases The Company does not own any real property. The principal executive offices are located at an office complex in New York, New York, which includes approximately twenty thousand square feet of shared office space and services that we are leasing. The lease had an original one-year term that commenced on December 1, 2015, which was renewed until November 30, 2018. The lease allows for the limited use of private offices, conference rooms, mail handling, videoconferencing, and certain other business services. In November 2016, the Company entered a sublease agreement for office and video production space in Cherry Hill, New Jersey. The lease expires on June 30, 2019. With the acquisition of Fight Club OC, the Company assumed a lease for office space in Orange County, California. The lease expires in September 2018. Each of the acquired business operate from home offices or shared office space arrangements. Rent expense was $30,000 and $0 for the three months ended September 30, 2017 and 2016, respectively. Rent expense was $87,000 and $0 for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, the aggregate minimum lease payments for the years ending December 31, 2017, 2018, and 2019 were:
Contingencies Legal Proceedings
In the normal course of business or otherwise, we may become involved in legal proceedings. We will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. In April and May 2017, two purported securities class action complaintsShapiro v. Alliance MMA, Inc., No. 1:17-cv-2583 (D.N.J.), and Shulman v. Alliance MMA, Inc., No. 1:17-cv-3282 (S.D.N.Y.)were filed against the Company and certain of its officers in the United States District Court for the District of New Jersey and the United States District Court for the Southern District of New York, respectively. The complaints allege that the defendants violated certain provisions of the federal securities laws, and purport to seek damages on behalf of a class of shareholders who purchased the Company’s common stock pursuant or traceable to the Company’s initial public offering. In July 2017, the plaintiffs in the New York action voluntarily dismissed their claim. The court has not yet ruled on the motion by the claimants in the New Jersey case to be named lead plaintiffs. We believe that the remaining claim is without merit and intend to defend against it vigorously. Based on the very early stage of the litigation, it is not possible to estimate the amount or range of possible loss that might result from an adverse judgment or a settlement of the case. The Company maintains directors and officers insurance and has notified its insurance carrier of the claims made against it. Earn Out
Management evaluated the financial performance of the Initial Business Units compared to the earn out thresholds as described in the respective Asset Purchase Agreements. Based upon Management’s estimates the Company recognized an earn out liability during the third quarter 2017 of approximately $310,000 related to Shogun’s financial results. This estimated amount is subject to provisions as defined in the related Asset Purchase Agreement. Additionally, the liability will be settled with the issuance of approximately 141,000 shares of Alliance MMA common stock and will be remeasured each reporting period until the shares are issued. |