Alliance MMA, Inc. (NASDAQ: AMMA) - RedChip.com · • AMMA is a stepping stone for the next generation of fighters and champions ... a first mover advantage, ... AMMA’s business

June 8, 2017 Current Price: $1.15 Target Price: $3.70

Alliance MMA, Inc. (NASDAQ: AMMA)

Market Data

Fiscal Year December

Industry Mixed Martial Arts

Market Cap $10.81M

Insider Ownership 6.8%

Shares Outstanding 9.4M

Equity Float 8.1M

Avg. Volume (3 mo.) 1.4M As of June 9, 2017

Income Statement Snapshot

TTM

Revenue $0.76M

Net Loss ($2. 3M)

Balance Sheet Snapshot MRQ

Cash $2.8M

Debt $0.0M

Company Overview

Alliance MMA (NASDAQ: AMMA) is a professional mixed martial arts (MMA)

company that brings together the best regional productions. It was incorporated in

2015 for acquiring businesses that engage in the promotion of MMA events, known

as promotions. Alliance MMA is the only publicly-traded MMA promotions

company.

Valuation

We are valuing AMMA using a 4.0 P/S multiple applied to our FY19 sales estimate

of $16.8 million. This gives us a near-term target price of $ 3.70 per share.

Investment Highlights

• Alliance MMA is the first publicly-traded Mixed Martial Arts (MMA)

company

o First of its kind to bring together the top regional MMA promotions in the US

• Mixed Martial Arts is a multi-billion-dollar industry

o UFC is valued at $4.5 billion and generated about $600 million in revenue in

FY15

• AMMA generated $755,000 in revenue in 1Q17; Gross profit margin was

38%

o The Company grew revenue 28% QoQ and produced a total of 13regional

MMA promotions across the country

• AMMA’s acquisitions are high profile MMA brands that have a solid fan

base and great management

• AMMA is on road to generate record revenue in FY17

o The Company has completed 12 events year-to-date and has at least 45

additional events scheduled for the remainder of FY17

• AMMA is a stepping stone for the next generation of fighters and champions

for the UFC and other premier MMA promotions

• Company’s management team has extensive industry experience with

major MMA brands

Alliance MMA is the first publicly-traded Mixed Martial Arts (MMA) company. AMMA has

a first mover advantage, bringing together top local and regional MMA promotions (events) in the

US.

The Company completed its NASDAQ IPO in October 2016 and raised approximately $10 million

from the IPO, selling a total of 2.2 million shares, and forming the largest group of regional MMA

promotions in the US.

Since its inception, the Company has acquired nine MMA organizations and added existing MMA

business support units, such as SuckerPunch, Alliance Sports Media, and CageTix. Operating as a

centralized management organization, AMMA applies industry best practices to maximize

profitability. Headquartered in New York, AMMA currently operates promotions in ten of the top

20 major media markets cities and plans to expand into 20 cities nationally by the end of 2017. The

expanding national footprint will allow the company to increase its viewership, number of events,

customer base, number of contracted fighters, and sponsorship deals; thus, increasing the overall

revenue run rate.

Figure 1: AMMA’s MMA Event

The Company’s core mission is to identify and cultivate the next generation of fighters and

champions for the Ultimate Fighting Championship (UFC) and other MMA promotions. It provides

a platform to fighters between the ages of 18-34 as the go to brand for those seeking the “College

Hoops” of MMA and ultimately providing them a platform to reach their true potential and advance

to the sport’s highest level of professional MMA competition.

Mixed Martial Arts is a multi-billion-dollar industry. Ultimate Fighting Championship

(UFC) was an MMA fight club purchased by casino moguls Frank and Lorenzo Fertitta. Over a

period of 15 years, the Fertitta brothers grew the club into a $4.2 billion sports empire. The closest

competitor to UFC, World Wrestling Entertainment (WWE), is valued at $1.5 billion. UFC

generated about $600 million in revenue in FY15 and signed a $700 million, seven-year

broadcasting deal signed with FOX.

MMA events bring celebrities, high rollers, and rabid fans into an arena much like a gladiator event.

Typical UFC events have a seating capacity of between 15,000-20,000. UFC draws its revenue

from various sources including ticketing, TV advertisements, sponsorships, and other celebrity

deals.

Figure 2: UFC Fighters in Action

In mid-2016, the Fertitta brothers sold UFC for a staggering $4.2 billion, cashing out for a

significant ROI (they bought the club out of bankruptcy for $2 million in 2001). UFC has

viewership in more than 150 countries around the globe, reaching 1.1 billion households. UFC

stages an average of 40 events each year across the US, with approximately 550 fighters

participating.

AMMA’s business model is similar to UFC’s model. Long-term, AMMA has the potential to

generate rapid revenue growth with its events operating in regional markets across the United

States, in addition to the international expansion. The Company’s near-term strategy is to acquire

or create regional MMA promotions in top 20 media markets across the U.S. It will target high-

revenue opportunities with proven marketing and audience reach. As the Company expands its

national footprint it will seek to secure high-value sponsorship agreements with prominent

consumer brands.

AMMA’s management acts as an umbrella over its regional events which are managed locally.

Also, by targeting young aspiring MMA fighters in regional markets who strive to make it to the

UFC and other top-tier MMA promotions, AMMA has a significant opportunity to showcase future

fighters to fighter management firms and managers; thus, providing a source for in-house talent

development that will reap ongoing benefits.

AMMA generated $755,000 in revenue in 1Q17; Gross profit margin was 38%. AMMA grew

revenue 28% QoQ in 1Q17 and produced a total of 13 regional MMA promotions. The Company

has demonstrated the ability to produce high gross margins (38% in 1Q17) and we believe margins

will continue to improve going forward, driven primarily by lower relative costs as they achieve

business efficiencies with further benefit from the addition of new events and increased ticket sales.

During the first quarter, the Company continued to incur expenses related to building out the

necessary infrastructure to support future growth, including recruiting key executives and support

personnel staff.

The Company has multiple potential sources of revenue:

1. Regional MMA Events

2. Media Distribution

3. National Sponsorships

4. Fighter Management

Regional MMA events generate revenue via ticket sales, venue fees from casinos and local and

regional sponsorship agreements. This also may include revenue from food, beverage, merchandise

sales and ticket services such as CageTix.

CageTix is an electronic ticking platform that focuses specifically on Mixed Martial Arts. This

service allows consumers to target a specific athlete in an MMA promotion and award that athlete

with a percentage of the ticket sale; consumers can put money directly into the pocket of the fighter.

Since its inception, CageTix has been used in 1,200 MMA events and currently services 64 MMA

promotions, operating in 106 cities. In 2014, CageTix sold over 15,883 tickets to 6,291 customers.

The acquisition of CageTix will further accelerate revenue growth for AMMA.

Media Distribution revenue is generated from monetization of events through broadcast

television advertising, internet streaming pay-per-view fees, distribution and licensing of content.

AMMA’s MMA Promotions Operating States

Cage Fury Fighting Championship Pennsylvania/ New Jersey

Shogun Fights Maryland

Hosier Fight Club Illinois/Indiana

V3 Fights Tennessee/ Mississippi

Combat Games Washington

Iron Tiger Fight Series Ohio

Fight Time Promotions Florida

National Fighting Championship Georgia

“TBD” (Eric Del Fierro*) California

“TBD” (John Prisco*) Florida

Table 1: Current Alliance MMA Promotions

*Eric Del Fierro, founder of Total Combat which produced 35 MMA promotions in Southern California

and Mexico, joined the Company as its General Manager in the San Diego, California market

*John Prisca, founder of Extreme Fighting Championships (XFC), has joined the Company to spearhead its

promotional debut in the Tampa, Florida market

Fighter Management revenue is earned from fighter purse commissions at the completion of

events. This also includes third-party pay-per-view sales, personal brand sponsorships, and other

ancillary activities. Also, the acquisition of SuckerPunch provides the company with significant

fighter management revenue. SuckerPunch has 100+ fighters under contract, and approximately

dozen of its fighters have are fighting at the UFC level.

The Company emphasizes the importance of General Managers (GMs) for each of promotions.

GMs are responsible for business development, matchmaking fighters, regulatory compliance with

local and state commissioners, venue selection, fighter relations, and regional sponsorship deals.

Figure 3: AMMA Fighters in Action

AMMA plans to pursue opportunities in Asia, Europe, Middle East, Africa, Central and South

America. Scott Sheeley, the former owner of Iron Tiger Fight Series, will lead the expansion into

new international markets.

AMMA’s near-term goal is to secure 20 regional MMA promotion markets by the end of FY17.

Long-term the company aims to host more than 125 events per year, with more than 1,000

contracted fighters. We believe that the company will have made substantial progress into

international markets, securing major brand sponsorship revenue for live MMA events, digital

media and Alliance MMA fighters by the end of FY18.

AMMA’s acquisitions are high profile MMA brands that have a solid fan base and great

management. Each of the Company’s acquisitions are high profile MMA brands that have a solid

fan base and great management. This provides the Company with necessary cash flows to continue

its business expansion. Some highlights on its acquisitions:

Cage Fury Fighting Championship (CFFC) operates in Pennsylvania and New Jersey. It is

ranked in the top 10 of all regional MMA brands and has promoted over 60 professional MMA

events. It currently airs on CBS Sport Network & PPV and has sent more than 25 fighters to the

UFC, including Aljamain Sterling, Jimmie Rivera, Lyman Good, and Paul Felder.

Figure 4: Cage Fury Fighting Championship(CFFC) 65, May 20, 2017

Combat Games (COGA) operates in Washington and is the MMA leader in the Pacific Northwest.

It has promoted over 50 events in the last seven years and played host to stars such as Demetrius

Johnson, their first bantamweight amateur champion who turned pro, becoming the UFC

Champion with the longest running title-defense streak ever.

Fight Time Promotions has been Florida’s best MMA brand for seven years. They’ve produced

over 35 events and have been telecasted on CBS Sports Network, Comcast Sports Net and HBO

Plus. They currently have over 80 fighters under contract.

Hosier Fight Club (HFC) is the first sanctioned MMA event in the state of Indiana, just outside

of Chicago. With over 25 events under its belt, HFC is considered by many in the Midwest to be

the established leader of the local MMA scene. In addition, HFC attracts high profile UFC veterans

such as Neil Magny, Felice Herrig and many more to its MMA events.

AMMA’s other brands also have incredible fan following and history. Together, these ten high-

performing MMA brands provide AMMA with a solid base of predictable revenue with events

scheduled year-round.

AMMA is on road to generate record revenue in FY17. The Company completed 13 events

during 1Q2017, and has at least 50 additional events scheduled for the remainder of FY17. AMMA

has recently announced the planned acquisition through Letter of Intent to acquire an additional

promotion in Los Angeles. With addition of this promotions, the number of events will increase

and we anticipate strong revenue growth in FY17 with further acceleration in FY18.

Table 2: Potential AMMA Events

# Events City Date

1 Iron Tiger Fight Series 73 Columbus, Ohio 6/17/2017

2 V3 Fights 60 Memphis, Tennessee 6/17/2017

3 National Fighting Championship 96 Atlanta, Georgia 6/30/2017

4 Combat Games 56 Seattle, Washington 7/15/2017



7 Alliance San Diego (Brand TBD) 2 San Diego, California 7/29/2017

8 Iron Tiger Fight Series 74 Akron, Ohio 7/29/2017

9 Fight Time 37 Ft Lauderdale, Florida 8/4/2017


11 CFFC 66 Atlantic City, New Jersey 8/5/2017


13 Alliance Tampa (Brand TBD) 1 Tampa, Florida 8/19/2017


15 Iron Tiger Fight Series 75 Bellefontaine, Ohio 8/26/2017

16 Hoosier Fight Club 34 Hammond, Indiana 9/9/2017


18 CFFC 67 Philadelphia, Pennsylvania 9/16/2017


20 Iron Tiger Fight Series 76 Columbus, Ohio 9/30/2017



23 Hoosier Fight Club 35 South Bend, Indiana 10/7/2017

24 Shogun XVII Baltimore, Maryland 10/7/2017

25 V3 Fights 62 Tunica, Mississippi 10/14/2017





30 CFFC 69 Philadelphia, Pennsylvania 11/11/2017



33 Hoosier Fight Club 36 Michican City, Indiana 11/24/2017

34 Iron Tiger Fight Series 77 Akron, Ohio 11/25/2017





39 Shogun XVIII Washington DC 12/9/2017



* All event locations and dates are subject to change

AMMA is a stepping stone for the next generation of fighters and champions for the UFC

and other premier MMA promotions. The Company provides a platform for fighters to showcase

their skills in the hopes of becoming the next generation of fighters in UFC and other premier

MMA promotions. Most recently, AMM fighters, Brian Kelleher and Jared Gordon joined the

ranks of the UFC, and after Max “Blessed” Holloway’s triumph at UFC 212 in Rio De Janeiro, he

is now the Ultimate Fighting Championship’s (UFC) undisputed World Featherweight Champion.

With his victory Saturday night, Holloway joins Germaine de Randamie, current UFC female

World Featherweight Champion, as SuckerPunch Entertainment’s second reigning UFC

Champion. AMMA’s whole-owned subsidiary SuckerPunch has a history of sending fighters to

UFC events. More and more fighters see AMMA as the best way to reach their ultimate

destination: the UFC.

Company’s management team has extensive industry experience with major MMA brands.

AMMA’s president, Robert Haydak, successfully led top ranked regional MMA promotion, Cage

Fighting Championships. Prior experience as a founder/CEO of two highly successful ventures and

28 years of experience in the industry, Haydak provides AMMA with a formidable foundation in

all aspects of business operations.

The Company’s chief marketing officer, James Byrne, is a veteran of arena sports marketing,

creating media opportunities, joint ventures and marketing partnerships. Byrne was a senior

marketing executive for Ultimate Fighting Championship, World Wrestling Entertainment and

Glory Kickboxing, and brings 38 years of industry experience.

Recently, AMMA promoted Burt Watson to Executive Vice president of Operations. Burt brings

his well-seasoned MMA promotional experience and extraordinary leadership skills to the

Company. Mr. Watson began his career in boxing more than 30 years ago coordinating events that

involved boxing stars Mike Tyson, Oscar De La Hoya, Roy Jones etc. Prior to joining Alliance

MMA, Mr. Watson was the Ultimate Fighting Championship (UFC) Event Coordinator for 14

years. Throughout his illustrious career, Mr. Watson was responsible for coordinating televised

sporting events featured on numerous networks including ABC, CBS, NBC, ESPN, HBO,

Showtime, USA, BET and Telemundo.

Major MMA brand experience provides the Company with valuable expertise to drive the

Company’s growth in a large market opportunity.

Valuation

We are valuing AMMA using a 4.0x P/S multiple applied to our 2019 sales estimate of $16.0

million, generating a target price of $3.70. A 4.0x P/S multiple values AMMA at a steep discount

to UFC, which was valued at 6.7x sales at the time of its acquisition in 2015. We believe a discount

is appropriate given that AMMA is at the earlier stage in the MMA space than UFC, the dominant

brand globally.

Some notes on our model:

• We are projecting AMMA to generate revenue of $4.1 million in FY17, $8.8 million in

FY18, and $16.7 million in FY19. We have projected AMMA to have a QoQ growth

between 22%-30%

• We believe that the company’s organic marketing reach and sponsorship deals will

significantly increase revenue growth in FY18 and FY19 and AMMA’s market

penetration rate will begin to increase significantly between 2H18-1H19.

• We assume that the company will raise equity in FY17, FY18 and FY19 to finance

operations and acquisitions. We believe that management may turn to alternative

financing for additional capital to finance acquisitions.

• Our projections are based on optimistic assumptions that the company will expand to 20

regional MMA promotions by the end of FY17, significant progress into international

expansion by the end of FY18 and continued expansion globally in FY19.

RISKS

AMMA’s business represents a new business model in the MMA industry. The Company has

limited operating history and the company’s business strategy may not successfully address risks

and uncertainties that the business might face and could adversely affect the overall success and/or

delay profitability.

There are substantial doubts about AMMA’s ability to continue to run its business

operations. Due to the Company’s business expansion and usage of capital, the Company lacks

sufficient cash flows to finance operations and acquisitions. The Company may not be able to

continue its business operations without raising capital. Failure to complete a capital raise would

likely slow the Company’s expected growth.

AMMA’s business expansion could be affected by other successful MMA promotions. The

Company is not a direct competitor to successful MMA promotions like UFC that operate in the

industry. However, these successful MMA promotions could adversely impact AMMA’s business

strategy and expansion with significant usage of their greater resources.

Company may not be able to attract promotional and advertising sponsorships. AMMA’s

business strategy includes developing national sponsorship agreements with regional and national

consumer brands to increase its audience and overall profitability. If the Company is unable to

attract promotional and advertising sponsorships, AMMA’s operating results will be adversely

affected.

Potential class action lawsuit. A class action lawsuit against the company seeks damages on

behalf of shareholders who participated in the Company’s initial public offering (IPO) on October

6, 2016. The lead plaintiff motion deadline is on June 16, 2017.

Management

Paul Danner, Chairman & Chief Executive Officer

Mr. Danner, 59, is our Chairman of the Board and Chief Executive Officer. Prior to joining the

Company in 2016, Mr. Danner served as the Managing Director of Destiny Partners Worldwide, a

global organizational management and business operations consultancy, from 2006 to 2016. From

2008 to 2010, Mr. Danner was also the Chief Executive Officer of China Crescent Enterprises, a

publicly traded information technologies company headquartered in Shanghai, China. Previously,

he served as Chairman and Chief Executive Officer of Paragon Financial Corporation, a publicly

traded financial services firm listed on NASDAQ, from 2002 to 2006. From January 1998 to 2001,

Mr. Danner was employed in various roles at MyTurn.com, Inc., a NASDAQ listed company,

including as Chief Executive Officer. From 1996 to 1997, Mr. Danner was the Managing Partner

of Technology Ventures, a consulting firm. From 1985 to 1996 he held executive-level and sales

& marketing positions with a number of technology companies including NEC Technologies and

Control Data Corporation. Mr. Danner served as a Naval Aviator flying the F-14 Tomcat, and

subsequently as an Aerospace Engineering Duty Officer supporting the Naval Air Systems

Command, for eight years on active duty plus 22 years with the reserve component of the United

States Navy. Mr. Danner retired from the Navy in 2009 with the rank of Captain. Mr. Danner holds

a BS in Business Finance from Colorado State University and an MBA from Old Dominion

University and has completed curricula at the Naval War College, Defense Acquisition University

and the National Defense University. The Board of Directors believes that Mr. Danner is qualified

to serve as a director because of his management and leadership experience, particularly in growth

stage and roll-up companies, the perspective he brings as our Chief Executive Officer, and his

experience as an officer and director of several private and public companies.

Robert Haydock, President

Mr. Haydak, 46, is our President. Prior to joining us in 2016, Mr. Haydak was the Chief Executive

Officer of Cage Fury Fighting championships, a leading MMA promotion serving the Atlantic

City, New Jersey and Pennsylvania markets from 2011. Prior to CFFC, Mr. Haydak served as Chief

Executive Officer of Global Distribution Group, Inc., a privately held logistics and consulting firm

serving domestic retailers seeking sales and distribution assistance in overseas markets which he

co-founded in 2007. From 1997 through 2006 served as founder and President of RJH Express,

Inc., a privately held residential home delivery company serving major retailers in the Northeast.

A former NCAA Division 1 wrestler, Mr. Haydak holds a BS in Business Administration from

Flagler College.

John Price, Chief Financial Officer

Prior to joining AMMA in 2016, Mr. Price was Chief Financial Officer of MusclePharm

Corporation, a publicly-traded nutritional supplement company. Prior to joining MusclePharm in

2013, Mr. Price served as vice president of finance—North America at Opera Software, a

Norwegian public company focused on digital advertising. From 2011 to 2013, he served as vice

president of finance and corporate controller GCT Semiconductor. From 2004 to 2011, Mr. Price

served in various roles at Tessera Technologies including VP of Finance & Corporate Controller.

Prior to Tessera Technologies, Mr. Price served various roles at Ernst &Young LLP. Mr. Price

served nearly three years in the San Jose, California office and nearly five years in the Pittsburgh,

Pennsylvania office. Mr. Price has been a certified public accountant (currently inactive) since

2000 and attended Pennsylvania State University, where he earned a Bachelor’s of Science

Degree in Accounting.

James Byrne, Chief Marketing Officer

Mr. Byrne is a veteran of arena sports marketing. Immediately prior to joining the Company in

2017, he operated a boutique marketing consultancy in Manhattan with clients Saatchi & Saatchi,

Penn State University and SONY Pictures Classics. Previously he served as CMO of Glory

Sports International Pte Ltd. d/b/a Glory Kickboxing, headquartered in Singapore from 2012 to

2014. From 2002 to 2014, Byrne served as Executive Consultant to Zuffa, LLC d/b/a Ultimate

Fighting Championship advising ownership of media opportunities, joint ventures and marketing

partnerships. Byrne also oversaw the "Attitude Era" at World Wrestling Entertainment (WWE -

an NYSE listed company) from 1999-2001, and guided the company through a highly-visible

public offering. Byrne's career prior includes a concentration in televised offerings at Carsey-

Werner (Roseanne, Cosby, That 70s Show), The Walt Disney Company and Interpublic Group

(IPG - an NYSE listed company). He holds a BA from Georgetown University.

Jason Robinett, Chief Technology Officer

Prior to joining the Company in 2016, Mr. Robinett served in a variety of leadership positions

within the technology industry in addition to his role as VP of Operations for Combat Games

MMA promotion. From 2008 to 2015, Mr. Robinett served as Chief Information Security Officer

and later as Director of Technology Services for Watermark Estate Management Services, a

private entity which oversees many of Bill Gates' personal and family matters where he was

responsible for the establishment of a variety of security controls and technologies used to ensure

highly available services on a global scale. From 2000 to 2008, Mr. Robinett held a variety of

positions including Director of Information Security/Chief Information Security Officer for

Expedia, Inc, (EXPE – a Nasdaq listed company) where he created the company’s global

information security organization. From 1997 to 2000, Mr. Robinett was a founding member of

4sure.com, an online computer hardware retailer which was acquired by Office Depot in late

2000 to provide their ecommerce platform. He holds a BS in Information Technology with a

focus on Information Security from Washington Governors University.

Burt A. Watson, Executive Vice President, Operations

Mr. Watson began his decades long career in boxing and MMA as business manager to the

legendary “Smokin” Joe Frazier where he handled all aspects of administrative support from

contract negotiations and personal appearances to television interviews and public relations. As

one of the industry’s most sought after event coordinators, Mr. Watson has worked with boxing

greats Muhammad Ali, Larry Holmes, George Foreman, Ken Norton, Mike Tyson and Oscar De

La Hoya. As an independent site coordinator Mr. Watson has assisted some of boxing’s most

notable promoters, including Don King, Lou Duva, Frank Warren Sports of London, and

Univision. In 2001, Mr. Watson began his career in MMA when UFC President Dana White

recruited Mr. Watson to the UFC. During his tenure at the UFC from 2001 until 2015, Mr.

Watson served as event and athlete relations coordinator. With extensive television relations, Mr.

Watson has organized championship fights and boxing events on such networks as ESPN,

Showtime, HBO, CBS and ABC.

Joseph Gamberale

Mr. Gamberale, 51, has served a director since our formation in February 2015. Mr. Gamberale

serves as the chairman of our compensation committee and a member of our audit and nominating

committees. Prior to founding Alliance, Mr. Gamberale was the founder and managing member of

Ivy Equity Investors, LLC, a New York-based private investment firm launched in 2014. From

2011 to 2014, Mr. Gamberale was a private investor. In 2001, Mr. Gamberale co-founded Centurion

Capital Hedge Fund, a multi-strategy investment firm which he actively managed until his

retirement in 2011. From 1996 through 2001, Mr. Gamberale oversaw the Athletes and Entertainers

Private Client Group at Merrill Lynch where he advised clients on a wide spectrum of securities

and industries, particularly involving roll-up transactions in fragmented businesses. From 1991 to

1996, Mr. Gamberale was a financial advisor at Solomon Smith Barney. Mr. Gamberale is a

member of the Central Park Conservatory, Columbus Citizens Foundation, and Grand Havana

Room and politically active in supporting numerous charitable organizations. Mr. Gamberale is a

graduate of Rutgers University. The Board believes that Mr. Gamberale is qualified to serve as a

director because of his extensive experience as an executive in the financial services industry,

particularly as such experience relates to roll-up transactions.

Renzo Gracie

Mr. Gracie, 48, serves as a director. One of the true martial arts legends, Renzo Gracie is a Jiu-

Jitsu black belt from the famous Gracie family. Born in Rio de Janeiro, Brazil, Mr. Gracie is the

grandson of Gracie Jiu Jitsu founder Carlos Gracie and son of 9th Dan BJJ black belt Robson

Gracie, brother to Ralph and Ryan Gracie. Like most men in the Gracie family, Renzo started

training Jiu Jitsu as an infant. He had formal instruction from many of the Gracie patriarchs, but

two of his biggest influences were the legendary Rolls Gracie and Carlos Gracie Jr. (the man who

later awarded him his black belt). Mr. Gracie has won numerous competitions, the most

prestigious being the Abu Dhabi Combat Club (ADCC), in which he is a two-time champion. Mr.

Gracie’s name is also synonymous with Vale-Tudo, the famous “no holds barred” style of

fighting in Brazil that is credited with originating modern MMA. Mr. Gracie has fought all over

the world for organizations such as Pride FC and the UFC. Mr. Gracie pioneered Brazilian Jiu-

Jitsu in America in the 1990’s when he founded Renzo Gracie Academy in New York City, one

of the cornerstones of Brazilian Jiu-Jitsu in America. Mr. Gracie is recognized as one of the

sports best teachers and mentors. With his signature combination of charisma and intelligence,

Mr. Gracie has guided students such as Matt Serra a former UFC Champion, Roger Gracie a ten-

times Jiu Jitsu world champion, John Danaher the Jiu-Jitsu Coach to UFC Champions Georges

St-Pierre and Chris Weidman, Shawn Williams, and Ricardo Almeida to black belt. The Board

believes that Mr. Gracie is qualified to serve as a director because of his substantial experience in

the MMA industry.

Mark Shefts

Mr. Shefts, 58, serves as a director and chairman of our audit committee and a member of our

compensation committee. Since 2004, Mr. Shefts has served as the Chief Executive Officer of

The Rushcap Group, Inc., a privately held investment and consulting firm. Since 2005, Mr. Shefts

has served as a Trustee of The Onyx & Breezy Foundation, a non-profit organization. Previously,

Mr. Shefts was the Director, President and co-owner of All-Tech Investment Group Inc., from

1987 to 2001, and Domestic Securities, Inc., from 1993 to 2011, each an SEC-registered broker

dealer. Mr. Shefts has previously owned seats on both the New York Stock Exchange and the

Chicago Stock Exchange. Mr. Shefts has been an arbitrator for the American Arbitration

Association and FINRA Dispute Resolution, Inc. with an area of specialization in the field of

financial services. Mr. Shefts holds FINRA Series 7, 24 and 63 licenses and a Series 27

qualification as a Financial and Operations Principal. Mr. Shefts is also certified as Financial

Services Auditor and a Certified Fraud Examiner. Mr. Shefts has been a Director, EVP & Chief

Financial officer of Arbor Entech Corp. and Solar Products Sun-Tank, Inc., each a publicly traded

company. Mr. Shefts holds a BS in accounting from Brooklyn College of The City University of

New York. The Board believes that Mr. Shefts is qualified to serve as a director because of his

substantial experience as an executive in the financial services industry and his experience as an

officer and director of several private and public companies.

Joel D. Tracy

Mr. Tracy, 55, serves as a director and a member of our audit and nominating committees. Mr.

Tracy has been self-employed as a Certified Public Accountant since 1989, specializing in tax

and estate planning for high net worth individuals. From 2004 to 2016, Mr. Tracy was the

managing member of ABT Realty, LLC, a privately held real estate company. From 2008 to

2016, Mr. Tracy was the managing member of Vista Bridge Associates, LLC, a privately held

company lending money for personal injury settlements. Previously, from 1980 to 2000, Mr.

Tracy was the President of Auto-Rite Supply Company, Inc., a family owned auto parts store

chain. He has been involved in various local and community organizations including the

American Institute of Certified Public Accountants and Optimists International, a not-for-profit

organization for children. Mr. Tracy holds a Bachelor of Science in Commerce from Rider

College, Lawrenceville, New Jersey. The Board of Directors believe that Mr. Tracy is qualified to

serve as a director because of his substantial experience as an accountant and financial services

professional and his experience as an officer and director of several private and public companies.

Table 3: Income Statement

Revenue FY15 1Q17 2Q17E 3Q17E 4Q17E FY17E 1Q18E 2Q18E 3Q18E 4Q18 FY18 FY19E

UFC Revenue 600,000,000 198375000 198375000 198375000 198375000 793,500,000 228131250 228131250 228131250 228131250 912,525,000 1,049,403,750

AMMA's market penetration wrt. UFC revenue 0.38% 0.45% 0.55% 0.70% 0.52% 0.75% 0.95% 0.98% 1.20% 0.97% 1.60%

Total Revenue AMMA 754,830 892,688 1,091,063 1,388,625 4,127,205 1,710,984 2,167,247 2,235,686 2,737,575 8,851,493 16,790,460

Cost of revenue 470,572 535,613 632,816 805,403 2,444,403 769,943 975,261 894,275 958,151 3,597,630 6,716,184

Gross profit 284,258 357,075 458,246 583,223 1,682,802 941,041 1,191,986 1,341,412 1,779,424 5,253,863 10,074,276

Operating expenses:

Professional and consulting fees 428,288 89,269 109,106 138,863 765,526 171,098 216,725 223,569 273,758 885,149 1,679,046

General and administrative 1,323,000 1,294,397 1,363,828 1,388,625 5,369,850 1,454,337 1,733,798 1,900,333 2,190,060 7,278,528 11,753,322

EBITDA (1,467,030) (1,026,591) (1,014,688) (944,265) (4,452,574) (684,394) (758,536) (782,490) (684,394) (2,909,814) (3,358,092)

Non-cash charges 860,025 925,808 968,079 1,015,617 3,769,529 1,046,293 1,078,492 1,112,301 1,147,835 4,384,922 5,042,660

Total operating expenses 2,611,313 2,309,474 2,441,014 2,543,104 9,904,905 2,671,728 3,029,014 3,236,203 3,611,653 12,548,598 13,437,890

Loss from operations (2,327,055) (1,952,399) (1,982,767) (1,959,882) (8,222,103) (1,730,687) (1,837,028) (1,894,792) (1,832,229) (7,294,736) (3,363,614)

Other expense 399 0 0 0 0 0 0 0 0 0

Loss before provision for income taxes (2,326,656) (1,952,399) (1,982,767) (1,959,882) (8,222,103) (1,730,687) (1,837,028) (1,894,792) (1,832,229) (7,294,736) (3,363,614)

Provision for income taxes 0 0 0 0 0 0 0 0 0 0

Net loss (2,326,656) (1,952,399) (1,982,767) (1,959,882) (8,222,103) (1,730,687) (1,837,028) (1,894,792) (1,832,229) (7,294,736) (3,363,614)

Net loss per share, basic and diluted (0.25) (0.19) (0.17) (0.15) (0.74) (0.13) (0.13) (0.13) (0.12) (0.50) (0.19)

Weighted average shares used to compute net loss

per share, basic and diluted 9,344,226 10,278,649 11,820,446 13,002,490 11,111,453 13,652,615 14,335,246 15,052,008 15,804,608 14,711,119 18,175,300

18.91% 32.40%

YoY Revenue Growth

QoQ Revenue Growth 18.26% 22.22% 27.27% 23.21% 26.67% 30.67% 26.32%

Gross Margin 37.66% 40.00% 42.00% 42.00% 40.77% 55.00% 55.00% 60.00% 65.00% 59.36% 60.00%

Operating Margin 345.95% 258.71% 223.73% 183.14% 239.99% 156.15% 139.76% 144.75% 131.93% 141.77% 80.03%

G&A % of Rev 175.27% 145.00% 125.00% 100.00% 130.11% 85.00% 80.00% 85.00% 80.00% 82.23% 70.00%

P&C % of Rev 56.74% 10.00% 10.00% 10.00% 18.55% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Table 4: Balance Sheet

4Q16 4Q17E 4Q18E 4Q19E

ASSETS

Current assets:

Cash 4,678,473 3,051,103 3,158,347 3,437,016

Accounts receivable 8,450 412,721 708,119 1,007,428

Prepaid expenses 134,852 214,738 285,729 402,971

Total current assets 4,821,775 3,678,562 4,152,195 4,847,415

Property and equipment, net 122,312 207,609 351,081 403,744

Intangible assets, net 5,780,213 7,147,914 7,497,239 8621825

Goodwill 3,271,815 4,600,256 4,979,465 5,477,411

TOTAL ASSETS 13,996,115 15,634,340 16,979,980 19,350,395

1,638,225

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities 284,361 2,144,945 3,528,392 6,044,566

Short-term notes payable 530,051 4,784,178 2,500,000

Total current liabilities 284,361 2,674,996 8,312,570 8,544,566

TOTAL LIABILITIES 284,361 2,674,996 8,312,570 8,544,566

Stockholders' Equity:

Common stock 9,022 13,002 15,805 18,175

Additional paid-in capital 18,248,582 25,714,295 28,714,295 34,213,956

Accumulated deficit (4,545,850) (12,767,953) (20,062,689) (23,426,302)

TOTAL STOCKHOLDERS’ EQUITY 13,711,754 12,959,344 8,667,411 10,805,829

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 13,996,115 15,634,340 16,979,980 19,350,395

Table 5: Cash Flow Statement

1Q17 FY17E FY18E FY19

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss (2,369,833) (8,222,103) (7,294,736) (3,363,614)

Adjustments to reconcile net loss to net cash

used in operating activities:

Stock-based compensation 319,729 1,483,862 1,925,924 2,214,813

Amortization of acquired intangibles 517,376 2,212,614 2,356,781 2,710,298

Depreciation of fixed assets 22,920 73,053 102,216 117,549

Changes in operating assets and liabilities:

Accounts receivable (190,123) (404,271) (295,399) (299,308)

Prepaid expenses 18,386 (79,886) (70,991) (117,242)

Accounts payable and accrued liabilities 424,922 1,860,584 1,383,447 2,516,174

Net cash used in operating activities (1,256,623) (3,076,147) (1,892,756) 3,778,669

CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of SuckerPunch (357,500)

Net cash used in investing activities (524,651) (2,300,000) (4,000,000) (6,000,000)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Equity Financing 5,000,000 3,000,000 2,000,000

Proceeds from note payable – related party — 530,051 3,000,000 500,000

Proceeds from issuance of common stock to

founders —

Net cash provided by financing activities 0 5,530,051 6,000,000 2,500,000

Net Increase in CASH (1,781,274) 153,904 107,244 278,669

Cash and cash equivalents, beginning of year 4,678,473 2,897,199 3,051,103 3,158,347

Cash and cash equivalents, end of year 2,897,199 3,051,103 3,158,347 3,437,016

Additional Information

Auditor: Friedman, LLP

Company Website

About RedChip

RedChip Companies, an Inc. 5000 company, is an international small-cap research, investor relations, and media company

headquartered in Orlando, Florida; with affiliate offices in New York, Pittsburgh, and Seoul. RedChip delivers concrete, measurable

results for its clients through its extensive global network of small-cap institutional and retail investors. RedChip has developed the

most comprehensive platform of products and services for small-cap companies, including: RedChip Research(TM), Traditional

Investor Relations, Digital Investor Relations, Institutional and Retail Conferences, "The RedChip Money Report"(TM) television

show, Shareholder Intelligence, Social Media and Blogging Services, and Webcasts. RedChip is not a FINRA member or registered

broker/dealer.

RedChip Companies, Inc. research reports, company profiles and other investor relations materials, publications or presentations,

including web content, are based on data obtained from sources we believe to be reliable but are not guaranteed as to accuracy

and are not purported to be complete. As such, the information should not be construed as advice designed to meet the investment

needs of any investor. Any opinions expressed in RedChip reports, company profiles, or other investor relations materials and

presentations are subject to change. RedChip Companies and its affiliates may buy and sell shares of securities or options of the

issuers mentioned on this website at any time.

The information contained herein is not intended to be used as the basis for investment decisions and should not be construed as

advice intended to meet the investment needs of any investor. The information contained herein is not a representation or warranty

and is not an offer or solicitation of an offer to buy or sell any security. To the fullest extent of the law, RedChip Companies, Inc.,

our specialists, advisors, and partners will not be liable to any person or entity for the quality, accuracy, completeness, reliability or

timeliness of the information provided, or for any direct, indirect, consequential, incidental, special or punitive damages that may

arise out of the use of information provided to any person or entity (including but not limited to lost profits, loss of opportunities,

trading losses and damages that may result from any inaccuracy or incompleteness of this information).

Stock market investing is inherently risky. RedChip Companies is not responsible for any gains or losses that result from the opinions

expressed on this website, in its research reports, company profiles or in other investor relations materials or presentations that it

publishes electronically or in print.

We strongly encourage all investors to conduct their own research before making any investment decision. For more information on

stock market investing, visit the Securities and Exchange Commission ("SEC") at www.sec.gov.

Alliance MMA (NASDAQ: AMMA) agreed to pay RedChip Companies, Inc. a one-time cash fee for this research report.

Investor awareness services and programs are designed to help small-cap companies communicate their investment

characteristics. RedChip investor awareness services include the preparation of a research profile(s), multimedia marketing, and

other awareness services.

Company Contact Info:

Jim Platek

Director, Investor Relations

Alliance MMA, Inc.

590 Madison Avenue, 21st Floor

New York, NY 10022

mailto:[email protected]

https://www.alliancemma.com/

mailto:[email protected]

Documents

Alliance MMA, Inc. (NASDAQ: AMMA) - RedChip.com · • AMMA is a stepping stone for the next generation of fighters and champions ... a first mover advantage, ... AMMA’s business