Weather 
NEWYou can now listen to Fox News articles!
Former NFL star Shawne Merriman founded Lights Out Xtreme Fighting in April 2019 with hopes of building a mixed martial arts brand that differentiates from global companies like UFC, Bellator and the like.
Lights Out made strides in doing just that. The company used innovative AI technology to bring more advertising possibilities to their bouts and signed a distribution rights deal with ESPN to broadcast in Latin American countries.
On Jan. 8, everything changed.
Lights Out Sports announced that Applied Real Intelligence (ARI), which is described as a “leading alternative investment firm and provider of growth capital to North American innovators,” acquired a “majority interest in the company.”
A press release at the time said Lights Out Sports “appointed Dr. Zack Ellison as Chairman of the Board, President, and Chief Executive Officer, effective immediately” and that Ellison would “next phase of growth, with responsibility for strategy, governance, capital allocation, and execution.”
“Assets don’t scale themselves. Leadership does,” Ellison said in the release. “There’s a huge opportunity at Lights Out to grow the platform across live events, streaming TV, and partnerships to create durable enterprise value.”
Merriman told Fox News Digital the announcement came as a surprise to him.
“It was instant. I was literally being removed from the board and just got strong armed,” Merriman said. “Like I said, we had every intention of making things right, that just wasn’t even an option. This is unnecessary and even as I’m speaking to you today, we’re looking for a solution and we got the capabilities for a solution but it’s not an option. I get it, we got some signed paperwork that may allow them to do some things, but not this. It’s just unfortunate. Every day, I’m just thinking about my team and staff and the fighters.”
Merriman said the issue between the two companies stemmed over a loan from ARI. A lawsuit was filed against ARI Agent, LLC and ARI Senior Secured Growth on Jan. 26.
Lights Out secured an agreement to borrow $2.1 million in May 2024 and missed three interest payments between October and December 2025, totaling approximately $50,000, according to court documents filed in Nevada. The court filing said “the loan was secured by company’s assets including intellectual property” but ARI didn’t have “management or ownership rights” in Lights Out.
Merriman’s attorney said in a court filing the loan agreement preserved Lights Out and Merriman’s “equity ownership and voting rights and contemplates secured-lender remedies.” The filing said ARI “issued a notice purporting to exercise default remedies under the Loan Agreement and, simultaneously, invoked proxy and attorney-in-fact provisions” on Jan. 2.
The filing said that ARI allegedly removed Merriman from the board, changed the company’s incorporation, “installed” Ellison as the director of the board and “paved the path for equity conversion and dilution.”
The former NFL star’s representatives argued that the “proxy and attorney-in-fact provisions in the Loan Agreement are security devices intended to protect collateral value, not grants of managerial authority or ownership rights” and “does not authorize Defendants to operate the Company, act as officers, displace management, or appropriate governance absent lawful foreclosure or court supervision.”
Merriman sought to have it declared that ARI was not the director of Lights Out and it had no valid reason to cancel fights or end contracts with vendors as well as sought attorney fees and court costs.
ARI’s attorney filed a motion to remove the case from the District Court of Clark County to U.S. District Court for the District of Nevada due to the diversity in citizenship of the plaintiff and defendant and the controversy at hand exceeded a value of $75,000.
On Feb. 17, Chief U.S. District Judge Andrew P. Gordon granted ARI its motion for the case to be remanded to state court. He said in his decision that ARI must respond to Lights Out’s request to pay their attorney fees, which sparked new filings between the two sides on Monday.
In between the decision and the new filings, Lights Out said in a news release on Feb. 20 a Temporary Restraining Order (TRO) in federal court.
“I’m hoping to pay the money back like we intended to do and move on and get started immediately,” Merriman told Fox News Digital. “That’s what I’m hoping for. I’m not a person that wants to fight because fighting is time and money and it also affects a lot of people. I’ve got staff that have had opportunities to go other places for more money and they didn’t because they believed in me. They believed in what I was building. It’s just unfortunate that so many people are affected by this.”
ARI’s attorneys filed a response to Merriman’s TRO request on Wednesday, saying that the case didn’t involve a “wrongful takeover” of a company but instead involved “distressed borrowers” in Lights Out XF and Lights Out Enterprises. The court filing said ARI “voluntarily and knowingly executed guaranties and warrants that gave A.R.I. governance rights over the Company.”
If Merriman defaulted on the loan, ARI said in its court filing that it allowed ARI to “exercise all voting, corporate, and other rights’ as if it were the absolute owner.”
ARI’s attorneys added that the company lawfully exercised control of the company “pursuant to default-triggered proxies and thereafter became the majority owner through the exercise of the previously granted warrant rights.”
CLICK HERE TO DOWNLOAD THE FOX NEWS APP
“Ultimately, this case is about whether Merriman, a borrower who admitted default and contractually surrendered control of a company, may use emergency relief to undo the consequences of his own agreements,” the filing read. “Under settled principals of contract enforcement and equitable relief, he may not. Merriman’s Application for Temporary Restraining Order and Motion for Preliminary Injunction should be denied.”
A decision could come as early as Friday.
Related Article
