Ex-NFL star Shawne Merriman in midst of legal battle over MMA company

Former NFL star Shawn Merriman founded Lights Out Xtreme Fighting in April 2019 with the hope of building a mixed martial arts brand that would stand out from global companies like UFCBellator and the like.

lights out Great strides in doing so. The company used innovative AI technology to bring more advertising capabilities to its matches and signed a distribution rights agreement with ESPN for broadcast in Latin American countries.

On January 8th everything changed.

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Former NFL and Maryland Terrapins linebacker Shawn Merriman is honored on the field for his Lights On Foundation charity during the second half of the game against the George Washington Colonials at 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 said that Lights Out Sports “has appointed Dr. Zach Ellison as Chairman of the Board, President and CEO, effective immediately” and that Ellison “will begin the next phase of growth, with responsibility for strategy, governance, capital allocation and execution.”

“Assets don’t scale by themselves. Leadership does,” Ellison said in the statement. “There is significant opportunity at Lights Out to grow the platform across live events, live TV and partnerships to create lasting enterprise value.”

Merriman told Fox News Digital that the announcement came as a surprise to him.

“It was a moment. I was literally taken off the board and armed to the teeth,” Merriman said. “As I said, we had every intention of making things right, and that was not 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 to solve it but it is not an option. I understand that, we got some papers signed that might allow them to do some things, but it is not this. It is unfortunate. Every day, I only think about my team, the staff and the fighters.”

Merriman said that the problem between the two companies is due to… Loan from ARI. A lawsuit was filed against ARI Agent, LLC and ARI Senior Secured Growth on January 26.

Lights Out obtained 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 loan was secured by company assets including intellectual property” but ARI did not have “management or ownership rights” in Lights Out, the court filing said.

Shawn Merriman is the founder of Lights Out Xtreme Fighting and Lights Out Sports TV. (Robert Hanashiro, USAT, USA TODAY via Imagen Content Services, LLC)

Merriman’s attorney said in court that the loan agreement preserves Merriman’s “stock ownership and voting rights” and considers the remedies offered by the secured lender. ARI “issued a notice purporting to exercise default remedies under the loan agreement and, at the same time, invoked the agent and power of attorney provisions” on Jan. 2, the filing said.

ARI removed Merriman from the board, changed the company’s incorporation, “appointed” Ellison as a director of the board and “paved the way for equity conversion and dilution,” the filing said.

Representatives for the former NFL star argued that “the agent and power of attorney provisions in the loan agreement are security devices intended to protect the value of the collateral, not to confer management authority or ownership rights” and “do not permit defendants to operate the company, serve as administrators, remove management, or appropriate management absent statutory foreclosure or court oversight.”

Merriman sought a declaration that ARI was not a director of Lights Out and had no good cause to call off the fights or terminate contracts with vendors as well as to seek attorneys’ fees and court costs.

ARI’s attorney filed a motion to remove the case from the District Court of Clark County to the U.S. District Court for the District of Nevada due to the diverse nationalities of the plaintiff and defendant and the controversy at issue exceeding $75,000.

On February 17, Chief U.S. District Judge Andrew P. Gordon, upon Amnesty International’s request to return the case to state court. He said in his decision that ARI must respond to Lights Out’s request to pay attorneys’ fees, which sparked new filings between the two sides on Monday.

In between the decision and the new filings, Lights Out said in a Feb. 20 news release a temporary restraining order (TRO) was filed in federal court.

“I hope to repay the money as we intended to do and go ahead and get started right away,” Merriman told Fox News Digital. “That’s what I hope for. I’m not someone who wants to fight because fighting takes time and money and it also affects a lot of people. I have employees who had opportunities to go other places to get more money and they didn’t do it because they believed in me. They believed in what I was building. And it’s unfortunate that a lot of people are affected by this.”

Shawn Merriman attends Michael Rubin’s Super Bowl Fanatics Party at Marquee Nightclub at The 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 on Wednesday, saying the case does not involve a “wrongful takeover” of a company but instead involves “defaulting borrowers” at Lights Out XF and Lights Out Enterprises. ARI “voluntarily and knowingly executed warrants and orders that gave ARI the rights to manage the company,” the court filing said.

If Merriman defaulted on the loan, ARI said in its court filing that it would allow ARI “to exercise all voting, corporate and other rights” as if it were the absolute owner.

ARI’s lawyers added that the company lawfully exercised control over the company “pursuant to proxies activated by default and subsequently became the majority owner by exercising previously granted security rights.”

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“Ultimately, this case is about whether Merriman, a borrower that admitted default and contractually relinquished control of the company, might use emergency relief to undo the consequences of its own agreements,” the filing said. “Under the settled principles of contract enforcement and equitable relief, he may not. Merriman’s request for a temporary restraining order and his request for a preliminary injunction should be denied.”

The decision could come as early as Friday.

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