SANTA MONICA, Calif., Oct. 9, 2006 (PRIMEZONE) -- Pro Elite, Inc. (Pink Sheets:PELE) announced today the acquisition of Real Sport, Inc. through an exchange of stock (reverse merger) with the shareholders of Real Sport, Inc. Concurrently with the closing of the reverse merger, Pro Elite, Inc. (the "Company") raised $10 million in gross proceeds from institutional investors in a private placement of units. Each unit consisted of 1,500 shares of common stock and one three-year warrant to purchase 500 shares of common stock with an exercise price of $.004 per share. The purchase price of a unit was $3.00. Hunter World Markets, Inc. of Beverly Hills, Calif., acted as the Company's sole placement agent. After giving effect to the private placement and the Reverse Merger, the investors in the private placement received approximately 27% of the outstanding stock of Pro Elite, Inc., and the shareholders of Real Sport, Inc. received approximately 66% of the outstanding stock (prior to any shares of common stock issuable upon exercise of outstanding warrants and options).
Real Sport, Inc. ("RSI") is the holding company for two newly formed subsidiaries which will act as the Company's operating entities: I-Fight, Inc. and MMA Live Inc. The operating subsidiaries will (a) organize and promote mixed martial arts matches, (b) organize and operate a mixed martial arts league, and (c) create an Internet community of martial arts.
Prior to the reverse merger, Pro Elite, Inc. was an inactive company. The restructured Company's business plan is to capitalize on the popularity and growth of Mixed Martial Arts ("MMA") while taking advantage of the Internet social networking phenomenon that has seen tremendous growth over the last several years. The MMA industry is fragmented at the upper echelon level with minimal organized activity for the large numbers of MMA participants at the grassroots level. The Company plans on reaching MMA participants through the efficient networking available over the Internet while developing an outlet for both fans and fighters. The Company plans to utilize the production and promotion of live events to help develop brand awareness for the rest of the Company's operations. The Company will produce and promote first class events featuring the top fighters in MMA while creating a Mixed Martial Arts grassroots Internet community.
Industry
MMA is currently one of the fastest growing spectator sports in the country. MMA events are consistently selling out 12,800 seat venues. The reality show "Ultimate Fighter" airing on SpikeTV has consistently delivered high ratings. "Ultimate Fighter" was ranked number one in its timeslot for men, ages 18-34, out-delivering all other programming on broadcast, cable, or pay cable. MMA fighters and events are some of the most popular topics keyed in to the major search engines and recently was more searched on Yahoo.com than the hit TV show "American Idol." Currently, the sport is licensed in 20 states and four provinces in Canada and a number of other states are attempting to license the sport. MMA is also extremely popular internationally with a number of its stars from, among other countries, Brazil and Japan. MMA matches have taken place in many foreign countries. Management believes that MMA is still a sport in its infancy with significant room to grow.
The potential customer base for Mixed Martial Arts is approximately the 4 million people participating in some form of martial arts. There are approximately 25,000 martial arts gyms in the United States.
Social networking sites, including myspace.com, friendster.com, and facebook.com, have had explosive growth the last few years. myspace.com signed up 75 million registered users in the last 2 years and was recently sold to News Corp for $580 million.
The Opportunity
The Company expects to exploit the growing interest in MMA by creating and combining a world class fight event company with a social internet networking community centered around a grassroots league of MMA participants (I Fight, Inc.).
We plan on creating a new mixed martial arts league and Internet community. This league and Internet community will enable every fighter an opportunity to compete. The league matches will be broadcast on the Internet and higher-level fights could have television/pay-per-view distribution. We plan to build a fan base beginning at the local level with local stars while these fighters gradually work their way up to regional and national competitions. We also plan on building an extensive library of content relating to MMA which may attract additional fans to the website and may generate future revenues.
Company
We will combine an online networking site centered around MMA coupled with an X-prize foundation style tournament and fight league where competitors will be eligible to compete against each other for a significant yearly prize.
Currently, there is a lack of community and awareness for most of the MMA fighters except for the superstars at the top of the sport. We plan to work at the grassroots level with the various dojos across the country to sign up and recruit fighters. Each member of I Fight.com, our Internet site, will be able to create their own custom webpage similar to the various social networking sites, like myspace.com, friendster.com and facebook.com. Each fighter will be able to invite fans to see the content of their customizable site. The fighters will also be incentivized to build out their fan base. In essence, we will help each individual fighter develop his/her own brand awareness and in turn create a community of fighters and fans across the country.
We will also form a new league centered around a national tournament commencing at the local level with regional fights that will enable all fighters, regardless of size and weight, an opportunity to compete on a larger scale. These fights will be broadcast over the Internet to increase demand and interest in local and regional fighters. The tournaments will then culminate at the national level with significant prize money. This league will also be designed to serve as a farm system for future major league fighters, providing all fighters with a chance for significant prize money and the opportunity for national exposure.
LifeLogger.com
RSI has entered into a letter of intent to acquire the intellectual property assets of LifeLogger.com relating to its social networking business. LifeLogger.com is an advanced social networking, online depository, and personalized content tool that is expected to be the beginning backbone of the I-Fight.com community. LifeLogger.com is a currently up and running Internet site, recently rated by Business Week as one of the top 10 blogging sites on the Internet. Its current functionality includes, user generated customized sites, storage of Audio, Video, and Messages, customer sign-up and tracking, Blogging, Web-links, and social networking. LifeLogger is currently in discussion to provide the technology to others as a private label running under the third parties brands. The technology development team for LifeLogger.com is based in Malaysia.
Competition
The MMA market is fragmented. The Ultimate Fighting Championship currently holds the first mover advantage and is the preeminent entity in the sport. The UFC began operations when the "No-Holds-Barred Fight League" was purchased by the Fertitta Brothers (Stations Casinos) in 2001. The first event sold less than 5000 tickets and took in just over $217,000 at the gate. A recent July 8th, 2006, event sold 12,400 tickets and took in over $3 million at the gate. The Ultimate Fighting Championship's pay-per-view numbers also continue to rise exemplifying its and the sports increased popularity. UFC is now consistently doing PPV business on a similar level as big-time boxing. UFC has exceeded World Wrestling Entertainment in domestic orders. The Randy Couture-Chuck Liddell show in February of 2006, which originally projected at 350,000 PPV buys, is now estimated to top 400,000 buys. The most recent UFC "60" event is projected to be in the range of 615,000 to 625,000 pay-per-view buys and the gross PPV revenue will be approximately $25 million. Additionally, there are a number of other players in the market that have been successful to some degree including Pride, WFA, and MMA League.
Even with the increase in PPV buys, the Company believes that a certain level of apathy has materialized in the UFC's product: the endless series of rematches, the trumpeting of mid-card talent, and the refusal to regard any talent outside the promotion as valuable. Thus, we believe there is demand for an innovative and appealing alternative to the UFC.
Revenue Model
The Company will have two revenue models. One part of the Company will encompass the producing, marketing, and distributing of live MMA events. The Company will also create a professional fight league to cross-promote its other interests. The live event part of the Company will be run by Gary Shaw. The Company will derive revenues from a variety of sources including live gate, pay per view, licensing, Internet downloads, television, marketing, sponsorships, advertising, merchandise and concessions. The Company expects to receive a significant amount of its revenues from the live events the first two years, while building up the revenue streams from the Internet side.
The I-Fight Internet model encompasses an online social networking site with user-generated content combined with a grassroots fight league and national tournament. The revenue model from the Internet side will come from monthly fighter and fan subscriptions, advertising, sponsorship and Internet downloads of events. The fight league and national tournament which complements the Internet site will generate revenues from live events, advertising, and sponsorship.
The Company expects to generate revenue from corporate sponsorships that will cross-promote the Company's various activities. The Company also has plans for future revenue streams which include television and Internet reality shows. Finally, depending upon the success of I-Fight.com, the Company has plans to duplicate the success of the Internet model across other sports and entertainment entities.
Our Directors and Executive Officers are as follows:
Directors
David Marshall, Director. Mr. Marshall is co-founder of Youbet.com, Inc. (Nasdaq:UBET), the largest legal online gaming company in the U.S. based on total wagers. Mr. Marshall served as a senior executive and director of Youbet from November 1987 to December 1999, as Chairman of the Board and Chief Executive Officer from November 1989 to June 1998 and as Vice Chairman of the Board from June 1998 to December 1999. At the request of its board of directors, Mr. Marshall returned to Youbet in March 2002 and served as its Chairman of the Board and Chief Executive Officer until September 2002. Mr. Marshall has served as Vice Chairman of the Youbet Board since September 2002. Youbet currently processes over $7 billion of wagering annually. Since Mr. Marshall's return in 2002, Youbet's stock has appreciated over 700%. Since December 1999, Mr. Marshall has also been a financial principal and/or consultant to various emerging growth companies providing finance, acquisition and operational expertise. One such company is Small World Kids, Inc. (OTCBB:SMWK), a toy company based in Los Angeles, California. He was also instrumental in the funding of InterMetro Communications Inc, a Voice-Over-Internet-Protocol company. In September 2005, Mr. Marshall founded NUI, LLC, a food & beverage, media & entertainment company focused solely on encouraging children to be smart, fit and happy.
Douglas De Luca, Chief Executive Officer of the Company, Director. Mr. De Luca is a seasoned producer with an extremely diverse background that encompasses over sixteen years of experience producing: feature films, TV series and specials, commercials, music videos, theater, and a wide variety of live events around the world. Currently, Mr. De Luca is co-executive producer for ABC's high profile, late-night vehicle, "Jimmy Kimmel Live" (now in its fourth season). Since September 2002, Douglas has worked behind the scenes to develop a diverse and broad base of strategic relationships, which have successfully helped generate revenue while providing previously untapped resources and events to the show. Just prior to Kimmel's current late-night vehicle, (1998-2002) Mr. De Luca co-executive produced the first four seasons of Comedy Central's original sketch comedy series, "The Man Show," which starred Kimmel and Adam Corolla. In 2000, De Luca helped launch ABC's groundbreaking, hit, reality show, "The Mole." His television credits include four years of producing NBC's top-rated annual special, "The World's Greatest Magic," "The Walt Disney World Christmas Parade," the "Universoul Circus," (1998), for HBO, based on the only African-American owned and operated circus in the world. From 1998 to 2002, while maintaining his executive producing responsibilities, Mr. De Luca also produced the "Circus" road tour in over 40 cities around the country. Douglas' credits producing music performances include Disney's weekly series, "Two Hour Tour," with acts such as Christina Aguilera, Enrique Iglesias, and 98 Degrees. The well-rounded Mr. De Luca's credits also include numerous documentaries for A&E, The Discovery Channel, and the History Channel. In 1998, Mr. De Luca successfully created a world class sports franchise out of the loosely organized sport of "Freestyle Motocross" when he innovatively formed a touring group of specialist to perform at arena sized venues around the country. Mr. De Luca is the Founder and Chairman of the non-profit San Gennaro Foundation through which his passion for good works and his Italian heritage have helped him shape an extremely successful charity event, quickly becoming a favored attraction for Los Angeles in just four years: The Feast of San Gennaro -- L.A.
Kurt Brendlinger, Director. In September 1985, Mr. Brendlinger started a fourteen-year career in the television production business as a producer with an initial focus on commercial and sports programming with clients including NBC Sports, Gallo Winery, Chrysler Motors, Anheuser-Busch and the Los Angeles Times. From June 1988 to January 1992, Mr. Brendlinger was the Producer/Executive in Charge of Production for Stone Stanley Productions, a company based in Hollywood, California. Mr. Brendlinger's credits include over 350 episodes of programming for distributors including Warner Bros. Television, Telepictures, USA Network, Disney Channel and the Fox Network. In January 1992, Mr. Brendlinger co-founded Slam Dunk Productions with television personality JD Roth where he served as Executive Producer from January 1992 to May 1997 for over 75 episodes of television series for the NBC network, TNT, The Disney Channel and national syndication. From June 1997 to December 2001, Mr. Brendlinger was co-founder and partner in AFA Management Partners, an asset management firm and hedge fund managing $600 million in assets in the telecommunications, Internet, media and entertainment sectors. From January 2002 to June 2004, Mr. Brendlinger was Chief Executive Officer and President of Rainmakers, Inc., an Internet marketing services company for the entertainment industry and currently serves as its Chief Executive Officer. Rainmakers has service agreements with Sony Pictures, Revolution Studios, 20th Century Fox, Dreamworks, Walden/AFG, and Initial Entertainment. Since July 2004, Mr. Brendlinger has been the Managing Director of Aaron Fleck & Associates, LLC, a registered investment advisor where he is responsible for deal sourcing, capital raising, venture capital and private equity investments and asset management.
Gary Shaw, Director and President of Live. Mr. Shaw is currently President and Chief Executive Officer of Gary Shaw Productions, LLC, one of boxing's most successful promotion companies, which he founded in 2002. The only major promoter with a regulatory background, Mr. Shaw began his professional affiliation with boxing in 1971, when he was appointed Inspector to the New Jersey State Athletic Control Commission ("NJSAC") by the chairman, former World Heavyweight Champion Jersey Joe Walcott. Mr. Shaw's 28-year tenure with NJSAC included a promotion to Chief Inspector followed by his nomination by Governor Florio and confirmation by the State Senate to the Board, formerly the NJSAC, a position he held until 1999, when he became the Chief Operating Officer of Main Events, another premier boxing promotional company. Mr. Shaw has promoted or co-promoted many of the biggest grossing fights in boxing history, including Lennox Lewis vs. Mike Tyson, the biggest grossing pay-per-fight with 1.8 million PPV buys, generating approximately $103 million in gross PPV revenue; Felix Trinidad vs. Fernando Vargas; Lennox Lewis vs. Vitali Klitschko; Winky Wright vs. Felix Trinidad; Diego Corrales vs. Jose Luis Castillo and Shane Mosley vs. Winky Wright. Mr. Shaw has also promoted or co-promoted many of our generation's greatest world champions, including: Lennox Lewis, Mike Tyson, Shane Mosley, Fernando Vargas, Arturo Gatti, Winky Wright, Manny Pacquiao, and Diego Corrales. Mr. Shaw created the initial concept and helped develop the TV series "ShoBox: The New Generation," a live boxing program that continues to run monthly on Showtime. Mr. Shaw has promoted or co-promoted events at many of the world's most famous venues, including Staples Center, Madison Square Garden, The Playboy Mansion, MGM Grand, Mandalay Bay Resort & Casino, Caesars Palace, Wynn Las Vegas, Foxwoods Resort Casino, the Mohegan Sun Hotel Casino and Chumash Casino Resort, and international events in St. Martin, China, Poland and England. Mr. Shaw has worked in partnership with HBO, Showtime, ESPN and SKY, and all have televised many of the events Mr. Shaw has promoted or co-promoted. Mr. Shaw has also negotiated the international sale of many of his televised events, including closed circuit and Pay-Per-View.
Management
William Kelly, Chief Operating Officer of the Company. In 1982, Mr. Kelly entered an eight-year career in banking and finance in Ireland that would lead him to entertainment banking in Japan, serving clients such as Walt Disney, Turner Broadcasting, Sony, Panasonic, Vestron, Lucas Film, NTT, Sega, Pioneer, Warner Bros, Orion Pictures and Softbank. In 1991 Mr. Kelly accepted an offer from Turner Broadcasting to build their Asian presence just after the Gulf War and as regional Vice President he opened offices in Tokyo, Hong Kong and expanded CNN International news bureaus across the Asian region. Thereafter in 1995, Mr. Kelly was named President of North Asia for Turner Broadcasting and throughout his tenure at Turner he is credited with distributing and expanding CNN International across the Asian region, in addition to bringing several Turner Entertainment networks to the region and launching the highly successful Cartoon Network specifically tailored for the Japan market. After Turner, Mr. Kelly joined the newly formed CNBC Asia in 1999 to expand distribution across the region and exploit new media opportunities for the business news network. He was involved in the launches of Nikkei CNBC, CNBC TV 18 (India) and created numerous strategic alliances in markets such as Taiwan, Australia, China and Korea. After his stint in Singapore for CNBC, Mr. Kelly was transferred to San Francisco to head up international for NBC Internet in San Francisco. In 2001, Mr. Kelly joined the Extreme Sports Channel as COO International, tasked with launching the network in international markets. In 2003, Mr. Kelly co-founded Television Korea 24 Inc. He successfully negotiated an equity investment by Liberty Media Corp. (later this stake was acquired by Comcast Corp.) and today tvK24 is the leading Korean language network in the U.S. with long-term carriage agreements with all the leading MSOs. Mr. Kelly was COO of tvK24 prior to recently joining RSI.
Eric Ficksman, Chief Financial Officer of the Company. Mr. Ficksman started his career as an associate at Barclays Global Investors where he worked from 1997-1999. From 1999-2001, Mr. Ficksman was a senior analyst at OneMediaPlace, a $60 million online marketplace and media exchange. At OneMediaPlace, Mr. Ficksman was the sole analyst providing strategic guidance to the executive management team and board of directors. From 2001-2002, Mr. Ficksman pursued a variety of entrepreneurial ventures including successful starting a record label and running an event promotion company. From 2002-2004, Mr. Ficksman attended full-time and received his MBA from the University of Chicago Graduate School of Business. While at the GSB, Mr. Ficksman interned at Sportscorp, a leading sports advisory boutique, where he worked on a variety of engagements in the sports and entertainment field. From 2004-2005, Mr. Ficksman managed the strategic development process at ProSports, a holding company that was attempting to roll up sports and entertainment events. Since 2005, Mr. Ficksman has been employed as a vice president at Doerge Capital, a merchant banking/ private equity firm based in Chicago. At Doerge Capital, Mr. Ficksman was responsible for deal sourcing, due diligence, capital raising, private equity investments, and financial and strategic advisory services. Mr. Ficksman received his BA in Business/Economics from the University of California at Los Angeles. Mr. Ficksman is also a licensed Series 7 representative.
The Company has entered into consulting/employment agreements as follows:
I. William Kelly -- $175,000 per year, subject to 5% annual increases
and bonus up to $50,000 based on performance to act as the Company's
Chief Operating Officer.
II. Gary Shaw -- three-year initial term at $250,000 per year to serve
as President of Live.
III. Santa Monica Capital Partners II, LLC ("SMC") -- three-year
consulting agreement to provide services relating to strategic planning,
investor relations, acquisitions, corporate governance and financing
for $30,000 per month. The members of SMC are David Marshall, Kurt
Brendlinger and Eric Pulier or their affiliates.
IV. Douglas De Luca -- $200,000 per year to act as Chief Executive
Officer.
V. Eric Ficksman -- $120,000 per year to act as Chief Financial
Officer.
The proceeds from the private placement net of estimated offering costs of $100,000 (excluding commissions payable to the placement agent) are as follows:
$10 Million
-----------
Repayment of Bridge Loan: $600,000
Payment of Bridge Loan Fee: $75,000
Shell Purchase Advisory Fee: $200,000
Fight Operations $2,950,000
Internet Operations $1,575,000
Marketing/Advertising $1,000,000
TV Production $1,325,000
Corp. Overhead/Public Company expense $1,275,000
-----------
$9,000,000
About Hunter World Markets, Inc. (HWM)
Based in Beverly, Hills, California, Hunter World Markets, Inc. (HWM) is a member of NASD and SIPC and offers investment banking, investment advisory and institutional trading to select clients with a diversity of sector and industry experience, particularly in North American and European markets. HWM has equity underwriting capabilities that include capital rising through initial public offerings and private placements. In institutional trading, HWM offers highly individualized trading services to investment advisors, asset managers, pension funds, insurance companies, hedge funds, banks and other institutional investors, and trades on all major exchanges in North America and Europe through RBC Dain Rauscher Inc.
The securities issued in the private placement and reverse merger have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
Forward-Looking Statements
Some statements contained in this release may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Editors and investors are cautioned that such forward-looking statements involve risks and uncertainties that may cause the company's actual results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to, the company's ability to generate revenues and other factors.