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Jan. 22, 2008
Copyright © Las Vegas Review-Journal

UFC sponsor files for bankruptcy

By JOHN G. EDWARDS
REVIEW-JOURNAL

UFC fighter Randy Couture celebrates after beating Gabriel Gonzaga in their heavyweight title bout during UFC 74 at Mandalay Bay in 2007. A Las Vegas sponsor of UFC is seeking bankruptcy protection.
Photo by John Locher

The Las Vegas manufacturer and distributor of energy drink Xenergy, which sponsors the Ultimate Fighting Championship, has filed for bankruptcy protection amid claims of intimidation and death threats.

Xyience Inc., the energy drink company headquartered at 4572 Hacienda Ave., reported $42.3 million in liabilities and $5.3 million in assets. Xyience sells its energy drink through 230 convenience and grocery stores, mostly in the Southwest.

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    • The voluntary bankruptcy petition, filed on Friday, follows an involuntary petition that was filed Jan. 3 by founder and former CEO Russell Pike and others. The involuntary petition remains pending.

    The bankruptcy petitions for Xyience were filed under Chapter 11, which provides protection from creditors while the company reorganizes.

    Despite the ominous circumstances, Xyience President Omer Sattar expressed optimism.

    "We're excited about the opportunity (to reorganize the company), " he said. "Xyience has a great brand name and has a strong affiliation with the UFC."

    The UFC holds mixed martial arts fights. According to bankruptcy papers, UFC is the largest mixed martial arts organization, and mixed martial arts are the second-most popular sporting event for men ages 18 to 34, following the NFL.

    A representative for UFC President Dana White declined to make White available for comment and declined comment on behalf of the UFC.

    Frank and Lorenzo Fertitta, members of the family that founded Station Casinos, own UFC. They also are creditors of Xyience with $12.5 million in unsecured claims and $5.3 million in secured claims, according to the bankruptcy filing. Attempts to reach the Fertittas on Monday were unsuccessful.

    Sattar said the company would have filed for liquidation under Chapter 7 had not it not enjoyed the continued support of the Fertittas. Sattar said Xyience continues as a key UFC sponsor. Xyience signed a $15 million sponsorship agreement with the UFC for 2007.

    Sattar said the bankruptcy became necessary when the company was unable to raise $7.5 million more from shareholders.

    "Those negotiations, however, were derailed by a campaign of intimidations and threats led by company founder and former CEO Mr. Pike, Terry Cardenas, Ronald Solomon and Rick Klingenberg," he said.

    "Associates of Mr. Pike and Mr. Klingenberg made threats of physical violence against Xyience management and board members and, on at least one occasion, showed up uninvited at the home of one member of management," Sattar said in bankruptcy court filings.

    "Mr. Klingenberg and his brother David Bergstrom stormed into the Xyience office, cornering (Chief Financial Officer) Michael Levy in an office and refusing to allow Mr. Levy to depart until their demands were met," according to Sattar's filing.

    If their mother wasn't paid, Klingenberg and Bergstrom said "somebody was going to ... get killed," Sattar said.

    They demanded $20,000 "or else they would return the next day with guys who had a 100 percent collection rate," according to Sattar's filing.

    Attempts to reach Pike, Bergstrom and Klingenberg for comment Monday failed.

    Xyience was founded in 2004. Sales grew to $20.4 million in 2006, from $109,000 in its first year.

    Sattar's filing says the company had difficulty raising money to pay for expansion.

    When Pike resigned and tried to sell Xyience stock in California, the state's Department of Corporations issued a desist and refrain order against Xyience, according to court papers.

    Sattar said the company has obtained postbankruptcy financing enabling it to pay for a backlog of drinks being kept by the drink maker, Cott Corp. The financing will enable Xyience to avoid losing shelf space to competitors, which would be difficult to regain, he said.

    Sattar said Xyience encountered financial difficulties because it spent large sums of money on advertising and promotion but couldn't get the drink distributed in many stores. He hopes to revitalize the company by expanding its distribution to other convenience and grocery stores and by giving away samples at sporting events in hopes of developing new customers.

    Contact reporter John G. Edwards at jedwards@reviewjournal.com or (702) 383-0420.

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    Rich Bergeron wrote on February 06, 2008 05:26 PM: PLEASE DONATE TO MY LEGAL DEFENSE FUND. HELP THE LITTLE GUY BATTLE BIG BUSINESS. EVERY DOLLAR HELPS!!!!!!

    GO TO UNLIMITEDFIGHTNEWS.COM

    STOP THE INSANITY!!!!


    TTU wrote on February 06, 2008 05:24 PM: this is Russell Pike and Ron Solomon up to their old games again. They are out again raising money from unsuspecting investors. This company was just another Ponzi scheme. History repeats itself. Search on Russell Pike and Ron Solomon to see the real story.


    Rich Bergeron wrote on February 05, 2008 07:16 PM: That second comment below is obviously not from me. If you would like some real insight on this case there was an interesting radio show done on the topic recently. Check out the following link to learn more:

    http://www.youtube.com/watch?v=c5KQ7TIT6cw


    james corbet wrote on January 28, 2008 05:06 PM: Here is what should have been written in this article. Under Kirk Sanford’s and Adam Frank's management of Xyience Incorporated, there has not been a stockholder meeting for 19 months, even though Kirk Sanford and Adam Frank had repeatedly promised one. The un-elected board, which Sanford and Frank are members of, is in violation Nevada law.
    In October and November 2007, Kirk Sanford and Adam Frank, in violation of Navada law, three times ignored the request for full disclosure of corporate records by stockholders.
    In the end of May 2007, when Kirk Sanford and Adam Frank took over management and formed their “Xyience team,” May 2007 sales were $3.2 million, the last monthly sales figures for December 2007 were $160,000.00.
    When Kirk Sanford and Adam Frank took over management of Xyience, the May 2007 valuations of the company were from $200 million to $325 million, in Sanford’s and Frank’s January 18, 2008 bankruptcy filing the valuation of Xyience is negative $37 million.
    In May before Kirk Sanford and Adam Frank took over management of Xyience the shares authorized and outstanding were 60 million, now the figure is 200 million. Not one of these newly authorized shares was sold to raise capital for the company. All these shares, options and penny warrants went to Kirk Sanford, Adam Frank, the Fertittas and their “Xyience team."
    In the end of May 2007, when Bill Underhill was forced to resign as CEO by the un-elected board (i.e. Kirk Sanford, Adam Frank, Kathryn Lever and Michael Kurdziel), Underhill had procured equity financing for $25 million. The first act of Sanford and Frank was to preclude this financing, which stopped production, halted delivery to customers, lost most of the company’s major accounts and set the stage for the bankruptcy of Xyience by Sanford, Frank and their patsy Omer Sattar.


    Rich Bergeron wrote on January 25, 2008 03:26 PM: Go check out my website. unlimitedfightnews.com. It is really cool. I knew this before anyone else. Dr. Suarez, please contact me ASAP. I have some inside info for you and if I give it to you, i would like to see if you could remove the extra teeth i have in my mouth. thanks


    Rich Bergeron wrote on January 22, 2008 03:42 PM: If anyone cares to know the real facts regarding Xyience go to www.unlimitedfightnews.com/xyiencewow.htm and check out all the supporting evidence and documentation at www.unlimitedfightnews.com/id16.html


    Pimp wrote on January 22, 2008 03:41 PM: If you dont like the UFC, change the channel.


    DVEGAS IS GAY wrote on January 22, 2008 02:57 PM: Don't need to step into the gay-cage-match action. I'm hetero.

    I'll leave the gay on gay UFC action to those that can't cut it in the thinking man's world... like dvegas.

    Put a fork in it, this so-called sports is done.


    Dave wrote on January 22, 2008 01:27 PM: I would love to see death matches! Line em up from the prisons - it would be awesome. I'd pay for that. I won't pay to see some thug win a match in 1 minute, then be seen at a local bar 30 minutes later with a former porn star (i.e. Jamieson)


    David Huntington wrote on January 22, 2008 01:26 PM: I base my comments on personal observation where I witnessed beatings upon boxers when they were down and out. That is why I will never view the sport again. It is barbaric and there may be fewer injuries in this sport because the total amount of players is minimial compared to other sports.


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