ZEST Ecoark Holdings Inc

The Platform games operate on a free-to-play model, whereby game players may collect coins free of charge through the passage of time and if a game player wishes to obtain coins above and beyond the level of free coins available to that player, the player may purchase additional coin packages (“Freemium” gaming model). Once obtained, Nile Tokens (“NT”) and Nile Coins (“NC”) (either free or purchased), cannot be redeemed for cash nor exchanged for anything outside of the Metaverse. When coins are used and played in the games, the game player could “win” and would be awarded additional coins or could “lose” and lose the future use of those coins. The Company has concluded that the coins represent both consumable goods and durables, because 1) the game player does not receive any additional benefit from the game and is not entitled to any additional rights once the coins are consumed and 2) because once coins are used for the purchase of durable goods, those goods will continue to benefit the player throughout their gaming life cycle.

Non-current assets as of September 30, 2023 and March 31, 2023 – Discontinued Operations: 

Current liabilities as of September 30, 2023 and March 31, 2023 – Discontinued Operations:

Non-current liabilities as of September 30, 2023 and March 31, 2023 – Discontinued Operations:

The Company reclassified the following operations to discontinued operations for the three and six month periods ended September 30, 2023 and 2022.

The following represents the calculation of the gain on disposal of Trend Discovery at June 17, 2022: 

On August 25, 2023, the Company sold 100% of the issued and outstanding common stock of Zest Labs, and all the assets and liabilities of Zest Labs were assumed by the Purchaser as discussed in Note 1. The net amount of property and equipment recorded in the sale was $0.

Amortization expense for the next five years and in the aggregate is as follows:

The Company has only included descriptions of warrants that are still outstanding as of September 30, 2023.

On August 6, 2021, the Company closed a $20,000,000 registered direct offering. The Company sold 115,942 shares of common stock and 115,942 warrants at $172.50 per share. The warrants are exercisable through April 8, 2025. The Company also issued the placement agent 8,116 warrants exercisable at $215.625 per share. Further information on the offering and compensation to the placement agent is contained in the prospectus supplement dated August 4, 2021. The fair value of the investor warrants was estimated to be $11,201,869 at inception and $11 as of September 30, 2023. The fair value of the placement agent warrants was estimated to be $744,530 at inception and $0 as of September 30, 2023.

On April 27, 2023, the Company closed a $6,875,000 senior secured convertible promissory note and granted the noteholders 2,100,905 warrants that expire five years from the issuance date and have a strike price of $3.28. The warrants contain a rachet provision which the Company has determined meets the criteria for accounting treatment as a derivative liability. The Company recorded a discount on the convertible note of $4,329,755, which represents the derivative liability at inception of the warrants. The fair value of the warrants was estimated to be $1,109,372 as of September 30, 2023.

The Company determined its derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of September 30, 2023 and March 31, 2023. The Black-Scholes model requires six basic data inputs: the exercise or strike price; time to expiration; the risk-free interest rate; the current stock price; the estimated volatility of the stock price in the future; and the dividend rate.

Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each warrant is estimated using the Black-Scholes valuation model. The following assumptions were used on September 30, 2023 and March 31, 2023 and at inception: 

The Company’s remaining derivative liabilities as of September 30, 2023 and March 31, 2023 associated with warrant offerings were as follows.

During the six months ended September 30, 2023 and 2022, the Company recognized changes in the fair value of the derivative liabilities of $2,231,127 and $2,892,472, respectively.

Activity related to the warrant derivative liabilities for the six months ended September 30, 2023 was as follows:

Activity related to the warrant derivative liabilities for the six months ended September 30, 2022 was as follows:

The following is a list of maturities by fiscal year as of September 30, 2023:

Interest expense on long-term debt during the three and six months ended September 30, 2023 was $9,735 and $25,528, respectively. Interest expense on long-term debt during the three and six months ended September 30, 2022 was $32,379 and $44,133, respectively.

As described in Note 19 “Commitments and Contingencies”, on November 2, 2023, the Company received a notice in the form of a letter (“Deficiency Letter”) from the Staff of the Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed below $1.00 per share for the previous 31 consecutive business days. See Note 22, “Subsequent Events”, for more information.

Negative Covenants and Approval Rights

The Certificate subjects the Company to negative covenants restricting its ability to take certain actions without prior approval from the holder(s) of a majority of the outstanding shares of RiskOn International Series A for as long as the holder(s) continue to hold at least 25% (or such higher percentage as set forth in the Certificate) of the RiskOn International Series A shares issued on the closing date under the Series A Agreement. These restrictive covenants include the following actions by the Company, subject to certain exceptions and limitations:

The above and other negative covenants in the Certificate do not apply to a reverse merger with an entity with securities quoted on a market operated by OTC Markets or listed on a national securities exchange.  

Warrant

Prior to its cancellation, the Warrant, as amended, provided Ault Lending or its assignees (the “Holder”) with the right to purchase a number of shares of common stock as would enable the Holder, together with its affiliates, to beneficially own 49% of the Company’s common stock, calculated on a fully diluted basis, at an exercise price of $0.03 per share, including the Commitment Shares and conversion shares unless sold. Subject to shareholder approval, the Warrant was to vest and become exercisable into shares of the Company’s stock if, as of June 8, 2024: (i) the Company had failed to complete the distributions to the Company’s security holders or to any other subsidiary of the Company’s equity ownership of its three principal subsidiaries: Agora, Banner Midstream and Zest Labs (or their principal subsidiaries), and/or (ii) the Holder together with its affiliates does not beneficially own at least 50% of the Company’s outstanding common stock, provided however, that the Company must retain 20% of its common stock of Agora. The Warrant was to be exercised on a cashless basis and expire on June 8, 2027.

On November 14, 2022, the Company and the Holder canceled the Warrant in exchange for $100. As the Company had substantially met the conditions under Section 1(a) of the Warrant, the Company did not compute any derivative liability on the Warrant.

Registration Rights

Pursuant to the Agreement, the Company agreed to register the sale by Ault Lending of up to 174,882 shares of common stock, representing the Commitment Shares issued at the closing plus 171,453 of the shares of common stock issuable upon conversion of the RiskOn International Series A. This amount equals 19.9% of the Company’s outstanding common stock immediately prior to the closing. The Company registered the sale by filing a prospectus supplement pursuant to the Company’s registration statement on Form S-3 (File No. 333-249532), originally filed with the SEC on October 16, 2020, as amended, which became effective on December 29, 2020, and the base prospectus included therein. On January 23, 2023, Ault Lending agreed to reduce its secondary offering of shares of the Company’s common stock issuable upon conversion of the RiskOn International Series A by $3,500,000. See Note 18 “Shareholders’ Deficit.”

The description above is not a substitute for reviewing the full text of the referenced documents, which were attached as exhibits to the Company’s Current Reports on Form 8-K as filed with the SEC on June 9, 2022, July 15, 2022 and November 29, 2022.

Preferred Stock Derivative Liability

RiskOn International Series A

As discussed herein, the Company determined that the RiskOn International Series A upon the amendment on November 28, 2022, constituted a derivative liability under ASC 815, Derivatives and Hedging (“ASC 815”). As a result of this classification, the Company determined that on November 28, 2022 (inception), the value of the derivative liability was $7,218,319.

On December 9, 2022, the RiskOn International Series A holder converted 50 shares of RiskOn International Series A into 38,015 common shares that resulted in a loss on conversion of $3,923.

The derivative liability for the RiskOn International Series A was remeasured at September 30, 2023 and was valued at $55,415, resulting in a gain of $1,604,787 in the change in fair value for the six month period ended September 30, 2023.

In addition, the Company advanced $1,205,000 during the six months ended September 30, 2023 to a third-party related to an obligation by the RiskOn International Series A shareholder and this amount will be reflected as a redemption upon the dividend that will be paid to the Company’s shareholders of record as of September 30, 2022 for the WTRV and Wolf Energy divestitures. In addition, $635,000 was advanced in the year ended March 31, 2023. The $1,840,000 has been reclassified to advances to former owners of BitNile.com.

Activity related to the preferred stock derivative liabilities for the six months ended September 30, 2023 was as follows:

RiskOn International Series B and C

On February 8, 2023, the Company entered into the SEA by and among AAI, a significant shareholder and the owner of approximately 86% of BNC, and the Minority Shareholders. The SEA provided that, subject to the terms and conditions set forth therein, the Company was to acquire the assets and assume the liabilities of BNC as well as the securities of Earnity beneficially owned by BNC (which represents approximately 19.9% of the outstanding common stock of Earnity as of the date of the SEA) which has no value, in exchange for the following: (i) 8,637.5 shares of Series B, and (ii) 1,362.5 shares of Series C. The Preferred Stock, the terms of which are summarized in more detail below, have a combined Stated Value of $100,000,000, and subject to adjustment, and subject to Nasdaq and shareholder approval, convertible into a total of up to 13,333,333 shares of the Company’s common stock. The Company has independently valued the Preferred Stock as of the date of acquisition. The combined value of the Preferred Stock issued to AAI was $53,913,000 using a blended fair value of the discounted cash flow method and option pricing method.

Pursuant to the Series B Certificate, each share of Series B is convertible into a number of shares of the Company’s common stock determined by dividing the Stated Value by $7.50, or 1,333 shares of common stock. The conversion price is subject to certain adjustments, including potential downward adjustment if the Company closes a qualified financing resulting in at least $25,000,000 in gross proceeds at a price per share that is lower than the conversion price. The Series B holders are entitled to receive dividends at a rate of 5% of the Stated Value per annum from issuance until February 7, 2033 (the “Dividend Term”). During the first two years of the Dividend Term, dividends will be payable in additional shares of Series B rather than cash, and thereafter dividends will be payable in either additional shares of Series B or cash as each holder may elect. If the Company fails to make a dividend payment as required by the Series B Certificate, the dividend rate will be increased to 12% for as long as such default remains ongoing and uncured. Each share of Series B also has an $11,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of the Company, and ranks senior to all other capital stock of the Company with respect thereto other than the Series C with which the Series B shares equal ranking.

In addition, for as long as at least 25% of the shares of Series B remain outstanding, AAI (and any transferees) has consent rights with respect to certain corporate events, including reclassifications, fundamental transactions, stock redemptions or repurchases, increases in the number of directors, and declarations or payment of dividends, and further the Company is subject to certain other negative covenants, including covenants against issuing additional shares of capital stock or derivative securities, incurring indebtedness, engaging in related party transactions, selling of properties having a value of over $50,000, altering the number of directors, and discontinuing the business of any subsidiary, subject to certain exceptions and limitations.

The terms, rights, preferences and limitations of the Series C are substantially the same as those of the Series B, except that the Series C does not hold negative covenant and consent rights. The Company is required to maintain a reserve of authorized and unissued shares of common stock equal to 200% of the shares of common stock issuable upon conversion of the Preferred Stock, which is initially 26,666,667 shares.

Pending shareholder approval of the transaction, the Preferred Stock combined are subject to a 19.9% beneficial ownership limitation. That limitation includes shares of Series A issued to Ault Lending, a wholly owned subsidiary of AAI, on June 8, 2022 and any common stock held by AAI. Certain other rights are subject to shareholder approval as described below. The SEA provides that the Company will seek shareholder approval following the closing. The entire transaction is subject to compliance with Nasdaq Rules and the voting rights provision of the B/C Certificates each contains a savings clause that nothing shall violate such Rules.

Under the SEA, while any Preferred Stock is outstanding, the Company is prohibited from redeeming or declaring or paying dividends on outstanding securities other than the Preferred Stock. Further, the SEA prohibits the Company from issuing or amending securities at a price per share below the conversion price of the Preferred Stock, or to engage in variable rate transactions, for a period of 12 months following the closing.

The SEA further provided that following the closing the Company will prepare and distribute a proxy statement and hold a meeting of its shareholders to approve each of the following: (i) the SEA and the transactions contemplated thereby, (ii) a ratification of the Third Certificate Designations of Rights, Preferences, and Limitations of the Series A, (iii) a reverse stock split with a range of between 1-for-2 and 1-for-20, (iv) a change in the Company’s name to BitNile Metaverse, Inc., (v) an increase of the Company’s authorized common stock to 1,000,000,000 shares of common stock; and (vi) any other proposals to which the parties shall mutually agree. In addition, pursuant to the SEA the Company agreed to use its reasonable best efforts to effect its previously announced spin-offs of the common stock of Wolf Energy and WTRV held by or issuable to the Company, to complete one or more financings resulting in total gross proceeds of $100,000,000 on terms acceptable to AAI, and financially support the ongoing Zest Labs litigation. The holders of the Preferred Stock will not participate in the aforementioned spin-offs and distribution. In connection with the SEA, the Company and AAI also agreed that the net litigation proceeds from the Zest Labs litigation that was ongoing as of November 15, 2022 would be held in a trust for the benefit of the Company’s shareholders of record as of such date.

In connection with the SEA, the Company also entered into a Registration Rights Agreement with AAI and the Minority Shareholders pursuant to which the Company agreed to file a registration statement on Form S-3 or Form S-1 with the SEC registering the resale by the holders of the Preferred Stock and/or the shares of common stock issuable upon conversion of the Preferred Stock, to be initially filed within 15 days of the closing, and to use its best efforts to cause such registration statement to be declared effective by the SEC within 45 days thereafter, subject to certain exceptions and limitations.

The SEA contains certain representations and warranties made by each of the Company, AAI and the Minority Shareholders. BNC’s principal business entails the development and operation of a metaverse platform, the beta for which launched on March 1, 2023. This transaction closed on March 7, 2023.

The Company determined that the Preferred Stock constituted a derivative liability under ASC 815 on the date of inception March 7, 2023. As a result of this classification, the Company determined that on March 7, 2023 (inception), the value of the derivative liability was $42,426,069.

The derivative liability for the Preferred Stock was remeasured at September 30, 2023 and is valued at $962,481, resulting in a gain of $17,868,279 in the change in fair value for the six months ended September 30, 2023. The Company has accrued $2,847,222 in dividends on the Preferred Stock as of September 30, 2023.

Activity related to the preferred stock derivative liabilities for the Preferred Stock for the six months ended September 30, 2023 was as follows:

On April 4, 2023, the Company entered into an agreement with Ault Lending and WTRV pursuant to which the Company agreed to advance to WTRV payments of up to $3.25 million (the “Amounts”), and WTRV agreed to accept the Amounts as payment of Ault Lending’s $3.25 million payable to WTRV from Ault Lending’s exercise of participation rights in oil and gas exploration and drilling ventures which WTRV granted Ault Lending in connection with its acquisition of White River Holdings Corp. in July 2022. The parties agreed that the Amounts will be treated as a credit to the sums owed to WTRV, and the Company and Ault Lending agreed that in lieu of repayment of the Amounts advanced to WTRV, Ault Lending will permit the Company to redeem shares of the RiskOn International Series A held by Ault by dividing the Amounts by the stated value of such shares, or one share of RiskOn International Series A for each $10,833 advanced to WTRV. The redemption cannot occur until the previously announced spin-offs by the Company of shares of common stock of WTRV and Wolf Energy occurs, which would permit Ault Lending to receive its full dividends thereunder.

Common Stock

The Company is authorized to issue 500,000,000 shares of common stock, par value $0.001, which followed shareholder approval on October 16, 2023. On May 4, 2023, the Company amended its Articles of Incorporation to reflect a 1-for-30 reverse stock split. The Company also reduced its authorized shares on a 1-for-30 basis going from 100,000,000 authorized shares down to 3,333,333 authorized shares. All share and per share figures are reflected on a post-split basis herein.

In the six months ended September 30, 2022, the Company issued 3,429 shares of common stock, which were the commitment shares in the AAI transaction as discussed in Note 17.

On January 24, 2023, the Company entered into an ATM Issuance Sales Agreement (the “ATM Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”), pursuant to which the Company could issue and sell from time to time, through Ascendiant, shares of the Company’s common stock, par value $0.001 per share (the “Shares”), with offering proceeds of up to $3,500,000. The ATM was terminated on June 16, 2023 after having raised approximately $3,500,000.

Under the ATM Agreement, Ascendiant was entitled to compensation of 3% of the gross proceeds from the sales of the Shares sold under the ATM Agreement. The Company also reimbursed Ascendiant for certain specified expenses, including the fees and disbursements of its legal counsel, in an amount not to exceed $30,000 as well as up to $2,500 for each quarterly and annual bring-down while the ATM Agreement was ongoing.

As of September 30, 2023, there were 163,393 unsold shares of the Company’s common stock being held by a custodian in an account owned by the Company which had not been sold during the ATM offering. It is the Company’s policy not to consider or classify these shares as issued or outstanding as it continues to own and control these shares.

The Shares were being offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission (the “SEC”) on January 24, 2023 and the accompanying base prospectus which is part of the Company’s effective Registration Statement on Form S-3 (File No. 333-249532) (the “Registration Statement”).

In the six months ended September 30, 2023, the Company issued 40,022 shares for payment of a preferred stock dividend of $300,158, and 935,452 shares in the ATM, for which it received $1,780,440. There was no common stock activity for the three months ended September 30, 2023.

As of September 30, 2023 and March 31, 2023, 2,359,306 and 1,383,832 shares of common stock were issued and outstanding, respectively.

Agora Common Stock

Agora is authorized to issue 250,000,000 shares of common stock, par value $0.001. On September 22, 2021, the Company purchased 100 shares of Agora for $10.

On October 1, 2021, the Company purchased 41,671,121 shares of Agora common stock for $4,167,112 which Agora used to purchase equipment to commence the Bitstream operations. 

In addition, between October 1 and December 7, 2021, Agora issued 4,600,000 restricted common shares to its management, non-employee directors, employees and advisors. After issuance of these shares, the Company controls approximately 90% of Agora. The future share-based compensation related to these shares that will be measured consists of $12,166,680 over a three-year period in service-based grants ($9,611,145 in year one, $1,861,096 in year two, and $694,436 in year 3) and $10,833,320 in performance-based grants ($5,416,660 for the deployment of 20 MW in the State of Texas, and $5,416,660 for the deployment of 40 MW in the State of Texas) for a total of $23,000,000. These restricted common shares were measured pursuant to ASC 718-10-50 at an estimated value per share of $5.00 and consist of both service-based and performance-based criteria.

On August 7, 2022, Agora issued 400,000 shares of common stock to its management, non-employee directors, employees and advisors. After issuance of these shares, the Company controlled approximately 89% of Agora. The future share-based compensation related to these shares that will be measured consists of $2,000,000 ranging from immediate vesting through the three-year anniversary in service-based grants. These restricted common shares were measured pursuant to ASC 718-10-50 at an estimated value per share of $5.00 and consist of service-based criteria only.

Of the 5,000,000 restricted shares of common stock — 2,833,336 shares of restricted stock are considered service grants and 2,166,664 are considered performance grants.

The performance grants vest as follows: 1,083,332 restricted common shares upon Agora deploying a 20 MW power contract in Texas; and 1,083,332 restricted common shares upon the Company deploying a 40 MW power contract in Texas. As of December 31, 2022, none of the performance criteria are probable as no contracts have been signed as the proper funding has not been secured, therefore no compensation expense is recognized in accordance with ASC 718-10-25-20 related to the performance grants. On April 12, 2022, Agora upon board of director approval accelerated the vesting of 250,000 restricted shares for deploying a 20 MW power contract in Texas; and 250,000 restricted shares for deploying a 40 MW power contract in Texas with Agora’s former Chief Financial Officer. All remaining performance grants remain unvested. 

The Company recognized $1,721,310 and $2,351,518 in share-based compensation for the three and six months ended September 30, 2023, respectively. The Company recognized $2,956,922 and $8,172,209 in share-based compensation for the three and six months ended September 30, 2022, respectively. The unrecognized share-based compensation expense as of September 30, 2023 is $8,333,320 in performance based grants and $0 in service based grants for a total of $8,333,320. It is very unlikely that the criteria established for the recognition of the performance grants will ever be satisfied.

The Company accounts for share-based payments in accordance with ASC 718, Compensation — Stock Compensation. The Company measures compensation expense for restricted stock units based on the fair value of the award on the date of grant. The grant date fair value is based on the closing market price of the Company’s common stock on the date of grant.

Share-based Compensation Expense

Share-based compensation for employees is included in salaries and salary related costs and directors and services are included in professional fees and consulting in the condensed consolidated statement of operations for the three and six months ended September 30, 2023 and 2022.

Share-based compensation for the three and six months ended September 30, 2023 for stock options and restricted stock units granted under the 2013 Incentive Stock Plan and 2017 Omnibus Incentive Stock Plan and non-qualified stock options were $0 and $258,655, respectively. Share-based compensation for the three and six months ended September 30, 2022 for stock options and restricted stock units granted under the 2013 Incentive Stock Plan and 2017 Omnibus Incentive Stock Plan and non-qualified stock options were $160,040 and $342,601, respectively.

There was $535,731 in share-based compensation accrued as of September 30, 2023 for the Company.

In the opinion of management, there are no additional legal matters involving us that would have a material adverse effect upon the Company’s financial condition, results of operations or cash flows. 

Nasdaq Compliance

On July 18, 2023, the Company received a letter (the “Letter”) from the Listing Qualifications staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company’s shareholders’ equity as reported in the 2023 Annual Report did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that a listed company’s shareholders’ equity be at least $2.5 million. As reported in the 2023 Annual Report, the Company’s shareholders’ equity as of March 31, 2023 was approximately $(13.9) million.

According to the Letter, the Company had 45 calendar days from the date of the Letter, or until September 1, 2023, to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). If the Company’s compliance plan is accepted by Nasdaq, then Nasdaq may, in its discretion, grant the Company up to 180 calendar days from the date of the Letter, or until January 14, 2024, to evidence compliance. If Nasdaq does not accept the Company’s plan, then Nasdaq may issue a staff delisting determination letter whereby the Company’s common stock will be subject to delisting. The Company would have the opportunity to appeal that decision to a Nasdaq hearings panel. The Company submitted a compliance plan, which was subsequently amended and restated, to the Staff, but as of the date of this filing, Nasdaq has not determined whether or not to accept the Company’s plan.

If the Company’s Common Stock is delisted from Nasdaq, the Company could face significant material adverse consequences, including:

If the Company is unable to rectify any of the above-described Nasdaq issues, a delisting would subject the Company and its shareholders to the above.

ELOC

On August 24, 2023, the Company entered into a purchase agreement (the “ELOC Purchase Agreement”) with Arena Business Solutions Global SPC II Ltd on behalf of and for the account of Segregated Portfolio #3 – SPC #3 (“Arena”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right to direct Arena to purchase up to an aggregate of $100,000,000 of shares of common stock over the 36-month term of the ELOC Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of the Registration Statement (as defined in the ELOC Purchase Agreement), the Company has the right to present Arena with an advance notice (each, an “Advance Notice”) directing Arena to purchase any amount up to the Maximum Advance Amount (as defined in the ELOC Purchase Agreement). On October 30, 2023, the Registration Statement related to the ELOC Purchase Agreement was declared effective by the SEC.

Non-cancelable Obligations

In the course of BNC’s gaming business in association with its Platform, the Company has entered into non-cancelable obligations with certain parties to purchase services, such as technology and the hosting of the Platform. As of September 30, 2023, the Company had outstanding non-cancelable purchase obligations with terms of one year or longer aggregating $3,000,000 and obligations with terms less than one year of $2,000,000.

The table below shows a reconciliation of the beginning and ending liabilities measured at fair value using significant unobservable inputs (Level 3) for the six months ended September 30, 2023:

S-1 Registration Statement

On October 30, 2023, the Registration Statement related to the ELOC Purchase Agreement was declared effective by the SEC. In conjunction with the ELOC Purchase Agreement, there were an indeterminable number of shares of the Company’s common stock to be issued to the Buyer equal to $4,000,000 to be issued as consideration for the Buyer’s irrevocable commitment to purchase shares of common stock (“Commitment Fee Shares”). $1 million of Commitment Fee Shares were due to be issued on each of (i) one business day after the effectiveness of the Registration Statement, and (ii) the three, six and nine months after the date of effectiveness. As of November 16, 2023, the Company received requests from the Buyer and subsequently issued 455,418 shares of common stock registered under this S-1 towards the Commitment Fee Shares.

S-3 Registration Statement and Subsequent Conversions

On October 19, 2023, the registration statement registering the shares of common stock issuable upon conversion of the senior secured convertible notes issued in April 2023 was declared effective by the SEC. As of November 16, 2023, the Company received conversion notices converting an aggregate of $264,650 of the senior secured convertible notes and subsequently issued an aggregate of 503,652 shares of common stock. 

Name and Ticker Symbol Change

Effective November 1, 2023, the Company changed its name from BitNile Metaverse, Inc., to RiskOn International, Inc. and changed its ticker symbol from BNMV to ROI. The change in both name and ticker are underscored by the Company’s commitment to developing a vertically integrated community while creating a seamless and enriched user experience.

Changes in Board of Directors Composition

On October 13, 2023, the Company appointed Robert O. Smith to its Board of Directors. Mr. Smith will serve as lead independent director and as Chairman of the Audit Committee. Mr. Smith replaces Steve Nelson who departed the Board of Directors on September 30, 2023; Mr. Nelson’s resignation was not the result of any disagreement with the Company, or its management on any matter relating to the Company’s operations, policies or practices.

Changes in Authorized Shares

On October 16, 2023, the Company, upon obtaining shareholder approval, filed a certificate of amendment to its Articles of Incorporation increasing its authorized shares of common stock from 3,333,333 to 500,000,000.

Nasdaq Compliance

On November 2, 2023, the Company received a notice in the form of a letter (“Deficiency Letter”) from the Staff of the Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed below $1.00 per share for the previous 31 consecutive business days.

In accordance with Nasdaq listing rule 5810(c)(3)(A), the Company has 180 calendar days, or until April 30, 2024, to regain compliance. The Deficiency Letter states that to regain compliance, the bid price for the Company’s common stock must close at $1.00 per share or more (the “Minimum Bid Price”) for a minimum of 10 consecutive business days during the compliance period ending April 30, 2024. In the event that the Company does not regain compliance within this 180-day period, the Company may be eligible to seek an additional compliance period of 180 calendar days if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price, and provides written notice to Nasdaq of its intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq Staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice to the Company that its common stock will be subject to delisting. At that time, the Company may appeal any such delisting determination to a Nasdaq hearings panel.

Term Note Agreement

On November 8, 2023, the Company entered into a term note (“Term Note”) agreement for a principal amount of $660,000 with an institutional investor. After accounting for an original issue discount of $60,000, the Company received proceeds of $600,000. The Term Note has a maturity date of January 7, 2024 and shall accrue interest at a rate of 10% per annum.

Series D Preferred Purchase Agreement, Related Party

On November 14, 2023, the Company entered into a securities purchase agreement (the “SPA”) with AAI, pursuant to which the Company agreed to sell to AAI 603.44 shares of newly designated Series D Convertible Preferred Stock (“Series D shares”) for a total purchase price of $15,085,931. This transaction closed on November 15, 2023. The purchase price was paid by the cancellation of $15,085,931 of cash advances made by the Purchaser to the Company between January 1, 2023 and November 9, 2023. The Series D shares each have a stated value of $25,000 per share. Each Series D share is convertible into a number of shares of the Company’s common stock determined by dividing the Stated Value by $0.51 (the “Conversion Price”), or an aggregate of 29,580,392 shares of Common Stock. The Conversion Price is subject to adjustment in the event of an issuance of Common Stock at a price per share lower than the Conversion Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. As the Conversion Price represents a premium to the closing price of the Common Stock on the date of execution of the Agreement, the conversion of the Preferred Shares is not subject to limitations on conversion.

Common Stock Issuance

On November 17, 2023, the Company issued 73,361 shares of common stock for Series A Preferred dividends.