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Acquisitions | 9 Months Ended
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Sep. 30, 2016
Business Combination Disclosure [Text Block] | Note 5. Acquisitions Target Companies and Target Assets The Company completed the first tranche of its IPO on September 30, 2016, and closed the acquisitions of the businesses of the Target Companies and the Target Assets by making cash payments totaling $1,391,736, Net, and issuing 1,377,531 shares of common stock. In October 2016, the Company issued the final payment of $129,500 to Louis Neglia. The acquisition of the Target Companies has been accounted for as a business acquisition, under the acquisition method of accounting. The Target Companies are as follows: CFFC Promotions, LLC Based in Atlantic City, New Jersey, CFFC was founded in 2011 and has promoted over 58 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. CFFC’s Robert Haydak and Mike Constantino serve as the Company’s President and Director of Business Development, respectively, Devon Mathiesen will serve as General Manager of CFFC. Hoosier Fight Club Promotions, LLC Based in the Chicago metropolitan area, HFC was founded in 2009 and has promoted over 26 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 Regional Vice President 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 over 46 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 Regional Vice President 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 14 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 our Regional Vice President for the mid-Atlantic region. V3, LLC Based in Memphis, Tennessee, V3 Fights was founded in 2009 and has promoted 45 events primarily at event centers in Memphis, Tennessee and elsewhere in Tennessee, Mississippi and Alabama. V3Fights 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. V3Fights founder Nick Harmeier serves as Regional Vice President 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. With a media library containing 11,000 titles comprising approximately 10,000 hours of unique video content, and the addition of approximately 1,200 hours of new original content annually, GFL maintains the largest continuously growing database of MMA events, fighters, and fight videos in the world. The GFL fighter database contains information on over 25,000 professional and amateur combat sports fighters and over 18,000 fights. GFL combines proprietary technology with content production and acquisition to deliver diverse and compelling content to a global audience. GFL’s content is distributed globally in all broadcast media through its proprietary distribution platform via cable/satellite, Internet, IPTV and mobile protocols. The GFL platform utilizes GFL’s proprietary scalable online master control technology that enables viewers using a broad range of devices and formats to obtain large amounts of video and other content. GFL broadcasts an average of 450 live events annually (having broadcast 2,500 events since inception) to viewers in over 175 countries. GFL has produced 150 episodes of the GoFightLiveTM “real fights” series airing weekly on Comcast Sports Net, SNY and other networks globally. 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 international mixed martial arts events including Legacy, RFA, Bellator MMA, King of the Cage, and Glory. Since its inception, CageTix has sold tickets for over 1200 MMA events and currently services 64 MMA promotions operating in 106 cities. In 2014, CageTix sold 15,883 tickets to 6,391 customers. Formerly the founder of Victory Fighting Championships, Jay Schneider is a member of the Nebraska Athletic Commission and was a senior columnist for Ultimate MMA magazine under the pen name ‘Victory Jay’ for over a decade. Jay Schneider serves as Vice President. Acquisition of the Target Assets In addition to the acquisition of the businesses of the Target Companies, the Company also acquired the MMA video libraries of two prominent regional promotions. The fight libraries consist of the following: Hoss Promotions, LLC (“Hoss”) An affiliate of CFFC, Hoss owns 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 (“Ring of Combat”) 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. On September 30, 2016, 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 has also secured the media rights to all future Ring of Combat promotions. Preliminary Purchase Allocation As consideration for the acquisitions of the businesses of the Target Companies and the Target Assets, the Company delivered the following amounts of cash and shares of common stock, and recorded a contingent liability related to the specified earn outs.
|  |  |  |  |  | Consideration |  | Contingent |  | Total |  | Total |
Target Company |  | Cash |  | Shares |  | Paid |  | Consideration |  | Shares |  | Consideration |
Shogun |  | $ | 250,000 |  |  | 111,111 |  | $ | 750,000 |  | $ | 174,219 |  |  | 149,826 |  | $ | 924,219 |
CageTix |  |  | 150,000 |  |  | 38,889 |  |  | 325,000 |  |  | 75,621 |  |  | 55,694 |  |  | 400,621 |
CFFC Promotions |  |  | 235,000 |  |  | 470,000 |  |  | 2,350,000 |  |  | 184,632 |  |  | 511,029 |  |  | 2,534,632 |
GFL |  |  | 450,000 |  |  | 419,753 |  |  | 2,338,889 |  |  | — |  |  | 419,753 |  |  | 2,338,889 |
HFC |  |  | 120,000 |  |  | 106,667 |  |  | 600,000 |  |  | 60,170 |  |  | 120,038 |  |  | 660,170 |
COGA |  |  | 80,000 |  |  | 75,556 |  |  | 420,000 |  |  | 182,890 |  |  | 116,198 |  |  | 602,890 |
V3 Fights |  |  | 100,000 |  |  | 111,111 |  |  | 600,000 |  |  | 38,862 |  |  | 119,747 |  |  | 638,862 |
Total Target Companies |  | $ | 1,385,000 |  |  | 1,333,087 |  | $ | 7,383,889 |  | $ | 716,394 |  |  | 1,492,285 |  | $ | 8,100,283 |
Hoss |  | $ | 100,000 |  |  | 44,444 |  | $ | 300,000 |  | $ | — |  |  | 44,444 |  | $ | 300,000 |
Louis Neglia |  |  | 155,000 |  |  | — |  |  | 155,000 |  |  | — |  |  | — |  |  | 155,000 |
Total Target Assets |  | $ | 255,000 |  |  | 44,444 |  | $ | 455,000 |  | $ | - |  |  | 44,444 |  | $ | 455,000 |
Total |  | $ | 1,640,000 |  |  | 1,377,531 |  | $ | 7,838,889 |  | $ | 716,394 |  |  | 1,536,729 |  | $ | 8,555,283 |
The number of shares of common stock paid as consideration was calculated based on the IPO public offering price of $4.50 per share. The following table reflects the preliminary allocation of the purchase price for the Target Assets and the businesses of the Target Companies to identifiable assets, liabilities assumed and pro forma intangible assets and goodwill:
|  | Target Companies |  | Target Assets |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Louis |
|  | Total |  | Shogun |  | CageTix |  | CFFC |  | GFL |  | HFC |  | COGA |  | V3 Fights |  | Hoss |  | Neglia |
Cash and equivalents |  | $ | 118,764 |  | $ | 13,131 |  | $ | 48,969 |  | $ | 551 |  | $ | 42,081 |  | $ | 11,194 |  | $ | 2,838 |  | $ | — |  | $ | — |  | $ | — |
Accounts receivable and other current assets, net |  |  | 30,599 |  |  | 20,603 |  |  | — |  |  | 3,000 |  |  | 900 |  |  | 1,096 |  |  | 5,000 |  |  | — |  |  | — |  |  | — |
Property and equipment, net |  |  | 23,661 |  |  | — |  |  | — |  |  | 4,448 |  |  | 13,174 |  |  | — |  |  | 6,039 |  |  | — |  |  | — |  |  | — |
Intangible assets |  |  | 5,963,436 |  |  | 52,500 |  |  | 360,559 |  |  | 1,437,000 |  |  | 2,041,677 |  |  | 653,775 |  |  | 519,300 |  |  | 443,625 |  |  | 300,000 |  |  | 155,000 |
Goodwill |  |  | 2,706,374 |  |  | 867,170 |  |  | 82,161 |  |  | 1,113,733 |  |  | 279,264 |  |  | 19,567 |  |  | 99,049 |  |  | 245,430 |  |  | — |  |  | — |
Total identifiable assets |  | $ | 8,842,834 |  | $ | 953,404 |  | $ | 491,689 |  | $ | 2,558,732 |  | $ | 2,377,096 |  | $ | 685,632 |  | $ | 632,226 |  | $ | 689,055 |  | $ | 300,000 |  | $ | 155,000 |
Accounts payable and accrued expenses |  |  | 287,551 |  |  | 29,185 |  |  | 91,068 |  |  | 24,100 |  |  | 38,207 |  |  | 25,462 |  |  | 29,336 |  |  | 50,193 |  |  | — |  |  | — |
Total identifiable liabilities |  | $ | 287,551 |  | $ | 29,185 |  | $ | 91,068 |  | $ | 24,100 |  | $ | 38,207 |  | $ | 25,462 |  | $ | 29,336 |  | $ | 50,193 |  | $ | — |  | $ | — |
Total purchase price |  | $ | 8,555,283 |  | $ | 924,219 |  | $ | 400,621 |  | $ | 2,534,632 |  | $ | 2,338,889 |  | $ | 660,170 |  | $ | 602,890 |  | $ | 638,862 |  | $ | 300,000 |  | $ | 155,000 |
Under acquisition accounting, assets and liabilities acquired are recorded at their fair value on the acquisition date, with any excess in purchase price over these values being allocated to identifiable intangible assets and goodwill at September 30, 2016. The respective asset purchase agreements for the Target Companies other than GFL, and the agreement and plan of merger for GFL, contemplate the acquisition of certain assets and assume certain liabilities. Due to the short-term nature of many of the assets acquired, their carrying values, as shown in the historical financial statements of the companies, approximate their respective fair values. In addition, value has been assigned to those intangible assets related to intellectual property rights to video libraries, ticketing software and customer and venue relationships of each Target Company. The goodwill recognized for these acquisitions is related primarily to synergies with the combined businesses and assembled workforce. Goodwill and Identifiable Intangible Assets Goodwill The change in the carrying amount of goodwill for the nine months ended September 30, 2016 is as follows:
Balance as of December 31, 2015 |  | $ | - |
Goodwill acquired |  |  | 2,706,374 |
Balance as of September 30, 2016 |  | $ | 2,706,374 |
Intangible Assets Management’s preliminary estimates of each intangible asset type/category is based upon the nature of the businesses and the contracts entered into with each of the Target Companies and intellectual property rights of video libraries of the Target Assets. The acquisitions bring value to the business platform through their reputations as premier MMA promotional companies and their extensive video libraries, ticketing platforms, and customer and venue relationships. As such, the intellectual property rights of video libraries, ticketing software, and customer and venue relationships comprise the significant majority of management’s estimate of intangible assets. The preliminary estimated useful lives of intangible assets are based upon each asset’s contribution to the business platform and growth strategy. All estimates are preliminary.
|  | Useful |  |  |  | Sho |  |  |  |  |  |  |  |  |  |  |  | V3 |  |  |  | Louis |
Intangible assets |  | Life |  | Total |  | Gun |  | CageTix |  | CFFC |  | GFL |  | HFC |  | COGA |  | Fights |  | Hoss |  | Neglia |
Video library, intellectual property |  | 5 years |  | $ | 3,636,477 |  | $ | 52,500 |  | $ | — |  | $ | 397,000 |  | $ | 2,041,677 |  | $ | 197,000 |  | $ | 352,300 |  | $ | 141,000 |  | $ | 300,000 |  | $ | 155,000 |
Venue contracts |  | 3 years |  |  | 1,966,400 |  |  | — |  |  | — |  |  | 1,040,000 |  |  | — |  |  | 456,775 |  |  | 167,000 |  |  | 302,625 |  |  | — |  |  | — |
Ticketing software |  | 3 Years |  |  | 360,559 |  |  | — |  |  | 360,559 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total intangible assets |  |  |  | $ | 5,963,436 |  | $ | 52,500 |  | $ | 360,559 |  | $ | 1,437,000 |  | $ | 2,041,677 |  | $ | 653,775 |  | $ | 519,300 |  |  | 443,625 |  | $ | 300,000 |  | $ | 155,000 |
Since the intangible assets were acquired on September 30, 2016, there is no amortization expense for the three or nine months ended September 30, 2016. As of September 30, 2016, estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows:
The remainder of 2016 |  | $ | 375,737 |
2017 |  |  | 1,502,948 |
2018 |  |  | 1,502,948 |
2019 |  |  | 1,309,035 |
2020 |  |  | 727,295 |
Thereafter |  |  | 545,473 |
|  | $ | 5,963,436 |
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS For the nine months ended September 30, 2016 (In thousands, except share information)
|  | Target Companies - Actual Results |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Pro |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Target |  |  |  |  |  | Forma |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | V3 |  | Companies |  | Alliance |  | Total |  | Adjusting |  | Pro |
|  | Shogun |  | CageTix |  | CFFC |  | GFL |  | HFC |  | COGA |  | Fights |  | Subtotal |  | MMA |  | Results |  | Entries |  | Forma Results |
Revenue |  | $ | 302 |  | $ | 106 |  | $ | 432 |  | $ | 340 |  | $ | 193 |  | $ | 90 |  | $ | 97 |  | $ | 1,559 |  | $ | — |  | $ | 1,559 |  | $ | — |  | $ | 1,559 |
Cost of revenues |  |  | 204 |  |  | — |  |  | 337 |  |  | 231 |  |  | 133 |  |  | 50 |  |  | 62 |  |  | 1,016 |  |  | — |  |  | 1,016 |  |  | — |  |  | 1,016 |
Gross profit |  |  | 98 |  |  | 106 |  |  | 95 |  |  | 109 |  |  | 60 |  |  | 40 |  |  | 35 |  |  | 543 |  |  | — |  |  | 543 |  |  |  |  |  | 543 |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General and administrative expenses |  |  | 16 |  |  | 22 |  |  | 65 |  |  | 125 |  |  | 13 |  |  | 27 |  |  | 18 |  |  | 285 |  |  | 399 |  |  | 684 |  |  | — |  |  | 684 |
Professional and consulting fees |  |  | 8 |  |  | — |  |  | 8 |  |  | 10 |  |  | 8 |  |  | 9 |  |  | 10 |  |  | 52 |  |  | 420 |  |  | 472 |  |  | (311) | (i) |  | 161 |
Depreciation |  |  | — |  |  | — |  |  | 1 |  |  | 21 |  |  | — |  |  | 6 |  |  | — |  |  | 28 |  |  | — |  |  | 28 |  |  | - |  |  | 28 |
Amortization |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | - |  |  | 1,127 | (ii) |  | 1,127 |
Total operating expenses |  |  | 24 |  |  | 22 |  |  | 74 |  |  | 156 |  |  | 21 |  |  | 42 |  |  | 28 |  |  | 365 |  |  | 819 |  |  | 1,184 |  |  | 975 |  |  | 2,000 |
Net income (loss) |  |  | 74 |  |  | 84 |  |  | 21 |  |  | (47) |  |  | 39 |  |  | (2) |  |  | 7 |  |  | 178 |  |  | (819) |  |  | (641) |  |  | (975) |  | $ | (1,457) |
Weighted average common shares outstanding |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 8,888,978 |
Net loss per common share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 0.18 |
(i) Professional fees. The Target Companies incurred approximately $311,000 of professional fees directly related to the acquisition of prospective targets. These costs will be non-recurring and have been adjusted from the pro forma results. (ii) Amortization of intangible assets. Intangible assets are amortized over their estimated useful lives. The estimated useful lives of acquired intangible assets are based upon the economic benefit expected to be received and the period during which we expect to receive that benefit. A useful life of five years has been assigned to the intellectual property rights of acquired video libraries and three years to the acquired ticketing software and customer and venue relationships based on a number of factors, including contractual agreements, estimated production hours available on video libraries and economic factors pertaining to the combined companies. The unaudited pro forma financial information includes various assumptions, including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed of Target Companies based on management’s best estimates of fair value. The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities. Accordingly, the pro forma adjustments are preliminary and have been made solely for illustrative purposes. The unaudited pro forma statement of operations for the nine months ended September 30, 2016 are based on the historical financial statements of Alliance MMA, Inc. after giving effect to the acquisition of the Target Assets and the businesses of the Target Companies and the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma financial information. The unaudited pro forma financial information is not intended to represent or be indicative of the results of operations or financial position that would have been reported had the acquisitions been completed as of the date presented, and should not be taken as a representation of potential future results of operations or financial position. For purposes of these unaudited pro forma statements of operations, the acquisitions of the Target Assets and the businesses of the Target Companies are assumed to have occurred on January 1, 2016, and aggregate the results of Alliance and the Target Companies for the nine months ended September 30, 2016.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1392-128463 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1524-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4922-128472 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4934-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4926-128472 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1383-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 + Details
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