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Former NFL star Shawne Merriman founded Lights Out Xtreme Fighting in April 2019 in hopes of building a mixed martial arts brand that would differentiate itself from global companies like the UFC, Bellator and the like.
Lights Out moved forward in that direction. The company used innovative artificial intelligence technology to bring more advertising possibilities to its fights and signed a distribution rights agreement 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 by his Lights On Foundation charity 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), which describes itself 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 said Lights Out Sports “named Dr. Zack Ellison as chairman, president and CEO, effective immediately” and that Ellison would be “the next phase of growth, with responsibility for strategy, governance, capital allocation and execution.”
“Assets don’t scale on their own. Leadership does,” Ellison said in the statement. “There is a huge opportunity at Lights Out to grow the platform through live events, streaming TV and partnerships to create lasting business value.”
Merriman told Pak Gazette Digital that the announcement came as a surprise to him.
“It was instantaneous. They literally took me off the board and just put me together hard,” Merriman said. “As I said, we had every intention of doing things right, but that wasn’t even an option. This is 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 is not an option. I understand, we have some signed documents that may allow them to do some things, but not this. It’s just unfortunate. Every day, I just think about my team, my staff and the fighters.”
Merriman said the problem between the two companies stemmed from an ARI loan. On January 26, a lawsuit was filed against ARI Agent, LLC and ARI Senior Secured Growth.
Lights Out secured a deal 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 that “the loan was secured by the company’s assets, including intellectual property,” but ARI had no “management or ownership rights” over 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 a court filing that the loan agreement preserved the stock ownership and voting rights of Lights Out and Merriman and provided for secured lender solutions. The filing says ARI “issued a notice purporting to exercise default remedies under the Loan Agreement and simultaneously invoked power of attorney provisions” on Jan. 2.
The filing said ARI allegedly removed Merriman from the board, changed the company’s constitution, “installed” Ellison as a board director and “paved the way for equity conversion and dilution.”
Representatives for the former NFL star argued that the “proxy and proxy provisions in the Loan Agreement are security devices intended to protect collateral value, not grants of administrative authority or property rights” and “do not authorize Defendants to operate the Company, act as officers, displace management or proper governance without legal foreclosure or judicial oversight.”
Merriman sought a declaration that ARI was not the director of Lights Out and had no valid reason to cancel fights or terminate contracts with suppliers, as well as seeking attorney fees and court costs.
ARI’s attorney filed a motion to remove the case from 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 the dispute at issue exceeded a value of $75,000.
On February 17, U.S. District Judge Andrew P. Gordon granted ARI its motion to have the case transferred to state court. He said in his decision that ARI must respond to Lights Out’s request to pay its attorneys’ fees, prompting new filings between the two sides on Monday.
Between the decision and the new filings, Lights Out said in a Feb. 20 press release a Temporary Restraining Order (TRO) in federal court.
“I hope to return the money as we intended and move forward and get started right away,” Merriman told Pak Gazette Digital. “That’s what I hope. I’m not a person who wants to fight because fighting takes time and money and it also affects a lot of people. I have staff that have had opportunities to go other places for more money and they didn’t do it because they believed in me. They believed in what I was building. It’s just unfortunate that so many people are affected by this.”
Shawne Merriman attends Michael Rubin’s Fanatics Super Bowl Party at Marquee Nightclub at the Cosmopolitan of Las Vegas on February 10, 2024 in Las Vegas, Nevada. (Ethan Miller/Getty Images)
ARI attorneys filed a response to Merriman’s TRO request on Wednesday, saying the case did not involve an “unfair acquisition” of a company but involved “distressed borrowers” in Lights Out XF and Lights Out Enterprises. The court filing said ARI “knowingly and voluntarily executed warranties and guarantees that granted ARI governance rights over the Company.”
If Merriman defaulted on the loan, ARI said in its court filing that it allowed him to “exercise all voting, corporate and other rights” as if he were the absolute owner.
ARI’s attorneys added that the company legally exercised control of the company “pursuant to powers triggered by default and subsequently became the majority owner through the exercise of previously granted security rights.”
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“Ultimately, this case concerns whether Merriman, a borrower who admitted default and contractually relinquished control of a company, can use emergency relief to undo the consequences of his own agreements,” the filing reads. “Under established principles of contract enforcement and equitable relief, he cannot do so. Merriman’s request for a temporary restraining order and motion for preliminary injunctive relief must be denied.”
The decision could come as early as Friday.
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