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Former NFL star Shawne Merriman founded Lights Out Xtreme Fighting in April 2019 in hopes of creating a mixed martial arts brand that would differentiate itself from global companies like the UFC, Bellator, etc.
Lights Out has made progress in this area. The company used innovative AI technology to bring more advertising opportunities to its fights and signed a distribution rights deal with ESPN to broadcast in Latin American countries.
On January 8, everything changed.
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Former NFL and Maryland Terrapins linebacker Shawne Merriman is recognized on the field for his charity Lights On Foundation during the second half of the game against the George Washington Colonials at the Xfinity Center on November 11, 2021. (Tommy Gilligan/USA TODAY Sports)
Lights Out Sports announced that Applied Real Intelligence (ARI), described as “a leading alternative investment firm and provider of growth capital to North American innovators,” has acquired a “majority stake in the company.”
A press release at the time stated that Lights Out Sports “appointed Dr. Zack Ellison as Chairman, President and CEO, effective immediately” and that Ellison would “transition to the next phase of growth, with responsibility for strategy, governance, capital allocation and execution.”
“Assets don’t adapt on their own. Leadership does,” Ellison said in the release. “There is a huge opportunity at Lights Out to grow the platform through live events, streaming television and partnerships to create sustainable business value. »
Merriman told PK Press Club Digital that the announcement surprised him.
“It was instantaneous. I was literally taken off the board and just strong-armed,” Merriman said. “Like I said, we had every intention of making things right, it wasn’t even an option. It’s unnecessary and even as I speak to you today, we are looking for a solution and we have the capabilities for a solution but it’s not an option. I understand, we have signed documents that may allow them to do certain things, but not this one. It’s just unfortunate. Every day I just think about my team, my staff and the fighters.”
Merriman said the issue between the two companies stemmed from a loan from ARI. A lawsuit was filed against ARI Agent, LLC and ARI Senior Secured Growth on January 26.
Lights Out entered into an agreement to borrow $2.1 million in May 2024 and missed three interest payments between October and December 2025, totaling about $50,000, according to court documents filed in Nevada. The court filing said “the loan was secured by the company’s assets, including intellectual property,” but that ARI did not have “management or ownership rights” in Lights Out.
Shawne Merriman is the founder of Lights Out Xtreme Fighting and Lights Out Sports TV. (Robert Hanashiro, USAT, USA TODAY via Imagn Content Services, LLC)
Merriman’s attorney said in the court filing that the loan agreement preserved “equity ownership and voting rights” of Lights Out and Merriman and contemplated remedies from the secured lenders. The filing states that ARI “issued a notice purporting to exercise default remedies under the Loan Agreement and, simultaneously, invoked the Powers of Attorney and Agent provisions” on January 2.
The filing says ARI allegedly removed Merriman from the board, amended the company’s constitution, “installed” Ellison as board director and “cleared the way for stock conversion and dilution.”
Representatives for the former NFL star argued that “the power of attorney and attorney provisions of the loan agreement are safeguards intended to protect the value of the collateral, not a grant of managerial authority or ownership rights” and “do not authorize Defendants to operate the Company, act as officers, move management or otherwise provide appropriate governance absent legal foreclosure or court oversight.”
Merriman sought a declaration that ARI was not the manager of Lights Out and had no valid reason to cancel fights or terminate contracts with vendors, and sought attorneys’ fees and court costs.
ARI’s attorney filed a motion to remove the case from the Clark County District Court to the U.S. District Court for the District of Nevada due to the diversity of citizenship of the plaintiff and defendant and that the controversy at issue exceeded a value of $75,000.
On February 17, Chief U.S. District Judge Andrew P. Gordon granted ARI’s motion to remove the case to state court. He said in his ruling that ARI must respond to Lights Out’s request to pay its attorney fees, which triggered new filings between the two sides on Monday.
Between the ruling and the new filings, Lights Out declared in a press release on February 20 a temporary restraining order (TRO) in federal court.
“I hope to pay back the money like we intended to do, move on and get started immediately,” Merriman told PK Press Club Digital. “That’s what I hope for. I’m not one to want to fight because fighting costs time and money and it also affects a lot of people. I have employees who had the opportunity to go elsewhere for more money and they didn’t do it because they believed in me. They believed in what I was building. It’s just a shame that so many people are affected by this.”
Shawne Merriman attends Michael Rubin’s Fanatics Super Bowl Party at Marquee Nightclub at Cosmopolitan of Las Vegas on February 10, 2024 in Las Vegas, Nevada. (Ethan Miller/Getty Images)
ARI’s attorneys filed a response to Merriman’s TRO request on Wednesday, saying the case did not involve a “wrongful takeover” of a company, but rather involved “distressed borrowers” in Lights Out XF and Lights Out Enterprises. The court filing says ARI “voluntarily and knowingly executed warranties and warrants that gave it governance rights over the company.”
If Merriman failed to repay the loan, ARI said in its court filing that it authorized ARI to “exercise all voting, corporate and other rights” as if it were the absolute owner.
ARI’s lawyers added that the company legally exercised control of the company “under default-triggered proxies and subsequently became the majority owner through the exercise of previously granted subscription rights.”
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“Ultimately, this case turns on whether Merriman, a borrower who admitted default and contractually relinquished control of a company, can use emergency relief to undo the consequences of its own agreements,” the filing states. “Under established principles of contract performance and equitable relief, he cannot do so. Merriman’s request for a temporary restraining order and motion for a preliminary injunction should be denied.”
A decision could come as early as Friday.
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