UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON,~~Washington, D.C. 20549

~~FORM~~Form 10-Q

(Mark One)

☒ ~~Quarterly Report Pursuant to Section~~QUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) ~~of the Securities Exchange Act of~~OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, ~~2020~~2021

☐ ~~Transition Report Pursuant to Section~~TRANSITION REPORT PURSUANT TO SECTION 13 orOR 15(d) ~~of the Securities Exchange Act of~~OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~______~~_______ to ~~______~~_______

Commission File ~~No. 000-53361~~Number 001-40701

ECOARK HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada	~~Ecoark Holdings, Inc.~~	30-0680177
~~(Exact name of Registrant as specified in its charter)~~

~~Nevada~~		~~30-0680177~~
(State or other jurisdiction of incorporation or organization)		(~~IRS~~I.R.S. Employer Identification No.)

303 Pearl Parkway, Suite 200, San Antonio, TX		78215
(Address of principal executive offices)		(Zip Code)

~~303 Pearl Parkway Suite 200, San Antonio, TX 78215~~

~~(Address of principal executive offices) (Zip Code)~~

(800) 762-7293

(Registrant’s telephone number, including area code)

~~N/A~~

~~(Former name, former address and former fiscal year, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which

registered

~~None~~Common Stock

ZEST

The Nasdaq Stock Market LLC

(The Nasdaq Capital Market)

~~Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per share~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for ~~at least~~ the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or ~~for~~ such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act). Yes ☐ No ☒

~~There~~

As of February 11, 2022, there were ~~22,470,401~~26,364,099 shares of ~~the Registrant’s $0.001~~common stock, par value ~~common stock outstanding as of February 12, 2021.~~$0.001 per share, outstanding.

Ecoark Holdings, Inc.

INDEX

		Page No.
Part I. Financial Information		1

Item 1.	~~Unaudited~~ Condensed Consolidated Financial Statements	1
	~~Unaudited~~ Condensed Consolidated Balance Sheets	2
	~~Unaudited~~ Condensed Consolidated Statements of Operations	3
	~~Unaudited~~ Condensed Consolidated Statements of Changes in Stockholders’ Equity ~~(Deficit)~~	4
	~~Unaudited~~ Condensed Consolidated Statements of Cash Flows	5
	Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5569

Item 4.	Controls and Procedures	5569

Part II. Other Information		5670

Item 1.	Legal Proceedings	5670

Item 1A.	Risk Factors	5670

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5670

Item 3.	Default Upon Senior Securities	5670

Item 4.	Mine Safety Disclosures	5670

Item 5.	Other Information	5670

Item 6.	Exhibits	5771

Signatures		5872

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2020~~2021

Table of Contents

Unaudited Condensed Consolidated Balance Sheets	2
Unaudited Condensed Consolidated Statements of Operations	3
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity ~~(Deficit)~~	4
Unaudited Condensed Consolidated Statements of Cash Flows	5
Notes to Unaudited Condensed Consolidated Financial Statements	6 - 4443

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(in~~DECEMBER 31, 2021 (UNAUDITED) AND MARCH 31, 2021

(in thousands, except per share data)

DECEMBER 31, MARCH 31,
2021 2021
(unaudited)

ASSETS
CURRENT ASSETS:
Cash ($85 pledged as collateral for credit as of December 31, 2021 and March 31, 2021, respectively and $250 restricted as of December 31, 2021 and March 31, 2021, respectively) $ 864 $ 1,316
Accounts receivable, net of allowance of $209 and $709 as of December 31, 2021 and March 31, 2021, respectively 716 1,136
Inventories - Crude Oil 165 122
Prepaid expenses and other current assets 2,299 1,995

Total current assets 4,044 4,569

NON-CURRENT ASSETS:
Property and equipment, net 10,456 3,695
Intangible assets, net 1,804 2,065
Intangible assets, digital currency 16 -
Power development costs 2,000 -
Oil and gas properties, full cost-method 11,727 12,352
Capitalized drilling costs, net of depletion 2,056 2,567
Goodwill 10,225 10,225
Right of use assets - financing leases 337 445
Right of use assets - operating leases 849 479
Non-current assets of discontinued operations - 194

Total non-current assets 39,470 32,022

TOTAL ASSETS $ 43,514 $ 36,591

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 2,567 $ 3,614
Accrued liabilities 1,919 3,591
Warrant derivative liabilities 4,410 7,213
Current portion of long-term debt 698 1,056
Note payable - related parties - 578
Current portion of lease liability - financing leases 144 141
Current portion of lease liability - operating leases 326 212
Current liabilities of discontinued operations - 9

Total current liabilities 10,064 16,414

NON-CURRENT LIABILITIES
Lease liability - financing leases, net of current portion 186 295
Lease liability - operating leases, net of current portion 554 309
Long-term debt, net of current portion 143 1,012
Asset retirement obligations 1,627 1,532

Total non-current liabilities 2,510 3,148

Total Liabilities 12,574 19,562

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY (DEFICIT) (Numbers of shares rounded to thousands)
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding as of December 31, 2021 and March 31, 2021, respectively - -
Common stock, $0.001 par value, 40,000 and 30,000 shares authorized, 26,364 and 22,705 shares issued and 26,247 and 22,589 shares outstanding as of December 31, 2021 and March 31, 2021, respectively 26 23
Additional paid in capital 180,513 167,588
Accumulated deficit (147,635 ) (148,911 )
Treasury stock, at cost (1,671 ) (1,671 )

Total stockholders’ equity before non-controlling interest 31,233 17,029
Non-controlling interest (293 ) -

Total stockholders’ equity 30,940 17,029

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 43,514 $ 36,591
See notes to consolidated financial statements.

December 31, March 31,
2020 2020
(Unaudited)
ASSETS
CURRENT ASSETS
Cash ($85 and $85 pledged as collateral for credit as of December 31, 2020 and March 31, 2020, respectively and $250 and $50 restricted at December 31, 2020 and March 31, 2020, respectively) $ 7,981 $ 406
Accounts receivable, net of allowance of $709 and $500 as of December 31, 2020 and March 31, 2020, respectively 417 172
Note receivable, net of allowance of $0 and $25 as of December 31, 2020 and March 31, 2020, respectively - -
Inventories – Crude Oil 129 -
Prepaid expenses and other current assets 1,512 676
Total current assets 10,039 1,254

NON-CURRENT ASSETS
Property and equipment, net 3,921 3,965
Intangible assets, net 2,136 2,350
Oil and gas properties, full cost-method 11,795 6,135
Goodwill 10,225 10,225
Right of use assets – financing leases 480 589
Right of use assets – operating leases 480 142
Non-current assets of discontinued operations 249 249
Other assets - 7
Total non-current assets 29,286 23,662

TOTAL ASSETS $ 39,325 $ 24,916

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable $ 1,867 $ 751
Accrued liabilities 1,738 3,036
Due to prior owners 814 2,358
Warrant derivative liabilities 6,343 2,775
Current portion of long-term debt 789 6,401
Notes payable – related parties 772 2,172
Current portion of lease liability – financing leases 140 137
Current portion of lease liability – operating leases 204 85
Current liabilities of discontinued operations 228 228
Total current liabilities 12,895 17,943

NON-CURRENT LIABILITIES
Lease liability – financing leases, net of current portion 331 436
Lease liability – operating leases, net of current portion 321 74
Long-term debt, net of current portion 1,488 421
Asset retirement obligations 431 295
Total liabilities 15,466 19,169

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY (Numbers of shares rounded to thousands)
- -
Preferred stock, $0.001 par value; 5,000 shares authorized; none and 1(Series C) issued and outstanding as of December 31, 2020 and March 31, 2020, respectively - -
Common stock, $0.001 par value; 30,000 shares authorized, 22,470 shares issued and 22,353 shares outstanding as of December 31, 2020, and 40,000 shares authorized, 17,175 shares issued and 17,058 shares outstanding as of March 31, 2020 22 17
Additional paid-in-capital 165,195 135,424
Accumulated deficit (139,687 ) (128,023 )
Treasury stock, at cost (1,671 ) (1,671 )
Total stockholders’ equity 23,859 5,747

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 39,325 $ 24,916
ECOARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE AND THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(in thousands, except per share data)
NINE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2021 2020 2021 2020
(unaudited) (unaudited) (unaudited) (unaudited)
CONTINUING OPERATIONS:

REVENUES $ 19,125 $ 10,056 $ 6,135 $ 4,465
COST OF REVENUES 10,693 6,644 3,527 3,218
GROSS PROFIT 8,432 3,412 2,608 1,247

OPERATING EXPENSES
Salaries and salaries related costs 8,316 5,001 4,478 1,384
Professional and consulting fees 906 652 524 154
Oilfield supplies and repairs 2,262 1,518 1,062 644
Selling, general and administrative costs 9,005 4,799 2,623 2,528
Depreciation, amortization, depletion, and accretion 2,340 1,133 602 509
Research and development - 630 - 264

Total operating expenses 22,829 13,733 9,289 5,483

LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES) (14,397 ) (10,321 ) (6,681 ) (4,236 )

OTHER INCOME (EXPENSE)
Change in fair value of derivative liabilities 15,295 (15,901 ) 10,979 481
Gain (loss) on exchange of warrants for common stock - 19,338 - 2,755
Loss on conversion of long-term debt and accrued expenses - (3,969 ) - -
Gain (loss) on disposal of fixed assets - (105 ) - -
Loss on abandonment of oil and gas property - (83 ) - -
Gain on disposal of ARO related to sale of oil and gas property 8 - - -
Gain on sale of oil and gas property 713 - - -
Forgiveness of debt - 1,850 - 1,850
Interest expense, net of interest income (636 ) (2,473 ) (19 ) (318 )
Total other income (expense) 15,380 (1,343 ) 10,960 4,768

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS AND (PROVISION) FOR INCOME TAXES 983 (11,664 ) 4,279 532

DISCONTINUED OPERATIONS:
Loss from discontinued operations - - - -
Gain on disposal of discontinued operations - - - -
Total discontinued operations - - - -

INCOME (LOSS) FROM OPERATIONS BEFORE BENEFIT (PROVISION) FOR INCOME TAXES 983 (11,664 ) 4,279 532

BENEFIT (PROVISION) FOR INCOME TAXES - - - -

NET INCOME (LOSS) 983 (11,664 ) 4,279 532
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST 323 - 323 -

NET INCOME (LOSS) TO CONTROLLING INTEREST $ 1,306 $ (11,664 ) $ 4,602 $ 532
NET INCOME (LOSS) PER SHARE - BASIC $ 0.05 $ (0.58 ) $ 0.17 $ 0.02
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC 24,728 19,950 26,364 21,300
NET INCOME (LOSS) PER SHARE – DILUTED (see NOTE 1) $ (0.57 ) $ 0.21 $ (0.24 ) $ 0.00
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED (see NOTE 1) �� 24,728 24,103 26,364 25,453
See notes to consolidated financial statements.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
FOR THE NINE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Dollar amounts and number of shares in thousands)
Additional
Preferred Common Stock Paid-In Accumulated Treasury Non-controlling
Shares Amount Shares Amount Capital Deficit Stock Interest Total

Balance - March 31, 2020 1 $ - 17,175 $ 17 $ 135,424 $ (128,023 ) $ (1,671 ) $            - $ 5,747

Shares issued in the exercise of warrants, net of expenses - - 1,531 2 6,674 - - - 6,676
Shares issued in the exercise of stock options - - 89 - 349 - - - 349
Shares issued in conversion of debt and accrued interest - - 524 1 3,941 - - - 3,942
Shares issued in conversion of accounts payable and accrued expenses - - 93 - 677 - - - 677
Conversion of preferred shares (Series C) to common shares (1 ) - 308 - - - - - -
Share-based compensation - - - - 1,114 - - - 1,114

Net loss for the period - - - - - (21,181 ) - - (21,181 )

Balance - June 30, 2020 - - 19,720 20 148,179 (149,204 ) (1,671 ) - (2,676 )

Shares issued in the conversion of long-term debt and accrued interest - - 192 - 2,635 - - - 2,635
Shares issued services rendered - - 30 - 485 - - - 485
Shares issued in acquisition of oil and gas reserves and fixed assets - - 171 - 2,750 - - - 2,750
Shares issued in the exercise of warrants - - 1,088 1 5,575 - - - 5,576
Shares issued in the exercise of cashless stock options - - 1 - - - - - -
Share-based compensation - - - - 36 - - - 36

Net income for the period - - - - - 8,985 - - 8,985

Balance - September 30, 2020 - - 21,202 21 159,660 (140,219 ) (1,671 ) - 17,791

Shares issued in the exercise of warrants - - 376 - 2,106 - - - 2,106
Shares issued in registered direct offering, net of amount allocated to derivative liability
- - 889 1 3,010 - - - 3,011
Share-based compensation - - - - 419 - - - 419
Fractional adjustment - - 1 - - - - - -

Net income for the period - - - - - 532 - - 532

Balance - December 31, 2020 - $ - 22,468 $ 22 $ 165,195 $ (139,687 ) $ (1,671 ) $ - $ 23,859

Balance - March 31, 2021 - $ - 22,705 $ 23 $ 167,588 $ (148,911 ) $ (1,671 ) $ - $ 17,029

Shares issued in the exercise of stock options, including cashless exercises - - 20 - 28 - - - 28
Shares issued for services rendered - - 115 - 675 - - - 675
Share-based compensation - - - - 399 - - - 399

Net income for the period - - - - - 2,559 - - 2,559

Balance - June 30, 2021 - - 22,840 23 168,690 (146,352 ) (1,671 ) - 20,690

Shares issued for services rendered, net of amounts prepaid - - 45 - 92 - - - 92
Shares issued in registered direct offering, net of amount allocated to derivative liability - - 3,478 3 8,024 - - - 8,027
Share-based compensation - - - - 819 - - - 819
Fractional adjustment - - 1 - - - - - -

Net loss for the period - - - - - (5,855 ) - - (5,855 )

Balance - September 30, 2021 - - 26,364 26 177,625 (152,207 ) (1,671 ) - 23,773

Shares issued by Agora Digital Holdings, Inc. for services rendered, net of amounts prepaid - - - - 2,281 - - - 2,281
Vesting of shares issued in prior quarter - - - - 114 - - - 114
Share-based compensation - - - - 493 - - - 493
Recognition of non-controlling interest
- - - - - (30 ) - 30 -

Net income (loss) for the period - - - - - 4,602 - (323 ) 4,279

Balance - December 31, 2021 - $ - 26,364 $ 26 $ 180,513 $ (147,635 ) $ (1,671 ) $ (293 ) $ 30,940
The accompanying notes are an integral part of these ~~unaudited condensed~~ consolidated financial statements.
2

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)~~
~~(in thousands, except per share data)~~
Three Months Ended Nine Months Ended
December 31, December 31,
2020 2019 2020 2019

CONTINUING OPERATIONS:
REVENUES $ 4,465 $ 140 $ 10,056 $ 219
COST OF REVENUES 3,218 67 6,644 128
GROSS PROFIT 1,247 73 3,412 91
OPERATING EXPENSES:
Selling, general and administrative 4,710 2,232 11,970 5,464
Depreciation, amortization, depletion and accretion 509 68 1,133 216
Research and development 264 424 630 2,109
Total operating expenses 5,483 2,724 13,733 7,789
Loss from continuing operations before other income (expense) (4,236 ) (2,651 ) (10,321 ) (7,698 )

OTHER INCOME (EXPENSE):
Change in fair value of derivative liabilities 481 (2,376 ) (15,901 ) (2,392 )
Gain (loss) on exchange of warrants for common stock 2,755 (220 ) 19,338 (1,059 )
Loss on conversion of long-term debt and accrued expenses - - (3,969 ) -
Forgiveness of debt 1,850 - 1,850 -
Gain (loss) on disposal of fixed assets - 16 (105 ) 16
Loss on abandonment of oil and gas property - - (83 ) -
Interest expense, net of interest income (318 ) (188 ) (2,473 ) (323 )
Total other income (expenses) 4,768 (2,768 ) (1,343 ) (3,758 )
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES 532 (5,419 ) (11,664 ) (11,456 )

DISCONTINUED OPERATIONS:
Loss from discontinued operations - - - -
Gain on disposal of discontinued operations - - - 2
Total discontinued operations - - - 2

PROVISION FOR INCOME TAXES - - - -
NET INCOME (LOSS) $ 532 $ (5,419 ) $ (11,664 ) $ (11,454 )

NET EARNINGS (LOSS) PER SHARE
Basic: Continuing operations $ 0.02 $ (0.40 ) $ (0.58 ) $ (0.93 )
Discontinued operations - - - -
Total $ 0.02 $ (0.40 ) $ (0.58 ) $ (0.93 )

Diluted: Continuing operations $ 0.02 $ (0.40 ) $ (0.58 ) $ (0.93 )
Discontinued operations - - - -
Total $ 0.02 $ (0.40 ) $ (0.58 ) $ (0.93 )

SHARES USED IN CALCULATION OF NET EARNINGS (LOSS) PER SHARE
Basic 21,300 13,508 19,950 12,268
Diluted 24,192 13,508 19,950 12,268
~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)~~
~~NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019~~
~~(in thousands)~~
Preferred Common Additional
Paid-In- Accumulated Treasury
Shares Amount Shares Amount Capital Deficit Stock Total
Balances at March 31, 2019 - $ - 10,515 $ 11 $ 113,352 $ (115,886 ) $ (1,671 ) $ (4,194 )

Shares issued in acquisition of Trend Holdings - - 1,100 1 3,235 - - 3,236
Share-based compensation - - - - 582 - - 582
Net loss for the period - - - - - (1,646 ) - (1,646 )

Balances at June 30, 2019 - - 11,615 12 117,169 (117,532 ) (1,671 ) (2,022 )

Shares issued in exchange for warrants - - 855 1 3,292 - - 3,293
Shares issued for services rendered - - 60 - 211 - - 211
Preferred stock issuance 2 - - - 404 - - 404
Share-based compensation - - - - 630 - - 630
Net loss for the period - - - - - (4,389 ) - (4,389 )

Balances at September 30, 2019 2 - 12,530 13 121,706 (121,921 ) (1,671 ) (1,873 )
Preferred shares converted to common stock (2 ) - 752 1 (1 ) - - -
Shares issued in exchange for warrants - - 448 - 2,186 - - 2,186
Shares issued for services rendered - - 50 - 253 - - 253
Shares issued for services to be rendered - - 50 - 247 - - 247
Preferred shares issued for cash 1 - - - - - - -
Share-based compensation - - - - 1,345 - - 1,345
Net loss for the period - - - - - (5,419 ) - (5,419 )

Balances at December 31, 2019 1 $ - 13,830 $ 14 $ 125,736 $ (127,340 ) $ (1,671 ) $ (3,261 )

Balances at March 31, 2020 1 $ - 17,175 $ 17 $ 135,424 $ (128,023 ) $ (1,671 ) $ 5,747

Shares issued in the conversion of long-term debt and accrued interest - - 525 1 3,941 - - 3,942
Shares issued in the conversion of accounts payable and accrued expenses - - 93 - 677 - - 677
Preferred shares converted into common shares (1 ) - 308 - (- ) - - -
Shares issued in the exercise of warrants, net of expenses - - 1,532 2 6,674 - - 6,676
Shares issued in the exercise of stock options - - 89 - 349 - - 349
Share-based compensation - - - - 1,114 - - 1,114
Net loss for the period - - - - - (21,181 ) - (21,181 )

Balances at June 30, 2020 - - 19,722 20 148,179 (149,204 ) (1,671 ) (2,676 )

Shares issued in the conversion of long-term debt and accrued interest - - 192 - 2,635 - - 2,635
Shares issued for services rendered - - 30 - 485 - - 485
Shares issued in acquisition of oil and gas reserves and fixed assets - - 171 - 2,750 - - 2,750
Shares issued in the exercise of warrants - - 1,088 1 5,575 - - 5,576
Shares issued in the exercise of cash less stock options - - 1 - - - - -
Share-based compensation - - - - 36 - - 36
Net income for the period - - - - - 8,985 - 8,985

Balances at September 30, 2020 - - 21,204 21 159,660 (140,219 ) (1,671 ) 17,791
Shares issued in the exercise of warrants - - 376 - 2,106 - - 2,106
Common share issued for cash (net of expenses and allocation to derivative liability) - - 889 1 3,010 - - 3,011
Share-based compensation - - - - 419 - - 419
Share adjustment – reverse split - - 1 - - - - -
Net income for the period - - - - 532 - 532

Balances at December 31, 2020 - $ - 22,470 $ 22 $ 165,195 $ (139,687 ) $ (1,671 ) $ 23,859
~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(in ~~thousands)~~thousands, except per share data)
Nine Months Ended
December 31,
2020 2019
(Dollars in thousands)
Cash flows from operating activities:
Net loss $ (11,664 ) $ (11,454 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization, depletion and accretion 1,133 216
Share-based compensation 1,569 2,556
Common stock issued for services 485 463
Change in fair value of derivative liabilities 15,901 2,392
Interest expense on warrant derivative liabilities - 107
Forgiveness of debt (1,850 ) -
Bad debt 209 -
(Gain) loss on exchange of warrants (19,338 ) 1,059
Commitment fees on credit facility advances - 38
Gain (loss) on sale of fixed assets 105 (16 )
Loss on abandonment of oil and gas property 83 -
Warrants granted for interest expense 2,042 -
Warrants granted for commissions 308 -
Recovery of bad debt (25 ) -
Loss on conversion of debt and liabilities to common stock 3,969 -
Amortization of debt discount 149 -
Gain on sale of discontinued operations - (2 )
Changes in operating assets and liabilities:
Accounts receivable (454 ) 424
Inventories (129 ) -
Prepaid expenses and other current assets (562 ) 760
Amortization of right of use asset – financing leases 109 -
Amortization of right of use assets – operating leases 104 -
Other assets (4 ) 3
Interest on lease liability – financing leases (102 ) -
Interest on lease liability – operating leases (76 ) -
Accounts payable 1,116 (1,048 )
Accrued liabilities (906 ) (90 )
Net cash used in operating activities of continuing operations (7,828 ) (4,592 )
Net cash used in discontinued operations - (- )
Net cash used in operating activities (7,828 ) (4,592 )

Cash flows from investing activities:
Cash received in acquisition of Trend Holdings - 3
Advance of note receivable (275 ) -
Purchases of oil and gas properties (3,335 ) -
Proceeds from the sale of fixed assets 43 16
Proceeds received from sale of Magnolia - 5
Purchases of fixed assets (241 ) (- )
Net cash (used in) provided by investing activities of continuing operations (3,808 ) 24
Net cash used in investing activities of discontinued operations - (- )
Net cash (used in) provided by investing activities (3,808 ) 24

Cash flows from financing activities:
Proceeds from exercise of warrants, net of fees 14,359 -
Proceeds from exercise of stock options 349 -
Proceeds from issuance of common stock, net of fees 7,666 -
Proceeds from notes payable – related parties 604 403
Proceeds from long-term debt 1,869 -
Repayment of long-term debt (3,891 ) -
Repayment to prior owners (316 ) -
Repayment of notes payable – related parties (1,429 ) -
Proceeds from issuance of preferred stock, net of fees - 2,980
Proceeds from credit facility - 1,047
Net cash provided by financing activities 19,211 4,430
NET INCREASE (DECREASE) IN CASH 7,575 (138 )
Cash and restricted cash - beginning of period 406 244
Cash and restricted cash - end of period $ 7,981 $ 106

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 404 $ -
Cash paid for income taxes $ - $ -

SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Exchange of common stock for warrants $ - $ 5,479
Issuance of shares for prepaid expenses $ - $ 247
Preferred stock converted into common stock $ 2 $ -
Conversion of long-term debt and notes payable and accrued interest into common stock $ 6,577 $ -
Conversion of accounts payable and accrued expenses into common stock $ 677 $ -
Shares issued for acquisition of oil and gas reserves and fixed assets, net of asset retirement obligations $ 2,750 $ -
Note receivable offset against oil and gas reserves in acquisition of Rabb $ 304 $ -
Lease liability recognized for ROU asset $ 442 $ -

Assets acquired via acquisition of Trend Holdings.:
Current assets $ - $ 12
Goodwill $ - $ 3,222
2021 2020
(unaudited) (unaudited)
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) $ 1,306 $ (11,664 )
Adjustments to reconcile net income (loss) to net cash used in operating activities
Change in non-controlling interest (323 ) -
Depreciation, amortization, depletion, and accretion 2,340 1,133
Impairment of digital assets 1 -
Share-based compensation 1,711 1,569
Bad debt, net of recovery - 184
Change in fair value of derivative liabilities (15,295 ) 15,901
(Gain) on disposal of oil and gas property (18 ) -
Forgiveness of debt - (1,850 )
(Gain) loss on exchange of warrants - (19,338 )
Common shares issued for services 881 485
Common shares issued for services- Agora 2,281 -
Loss on sale of fixed assets - 105
Loss on abandonment of oil and gas property - 83
Warrants granted for interest expense 545 2,042
Warrants granted for commissions 744 308
Loss on conversion of debt and liabilities to common stock - 3,969
Amortization of debt discount - 149
Changes in assets and liabilities
Accounts receivable 420 (454 )
Inventory (53 ) (129 )
Prepaid expenses and other current assets (304 ) (562 )
Intangible assets - digital currencies (17 ) -
Amortization of right of use asset - financing leases 108 109
Amortization of right of use asset - operating leases 137 104
Other assets - (4 )
Interest on lease liability - financing leases (8 ) (11 )
Operating lease expense (148 ) (76 )
Accounts payable (1,056 ) 1,116
Accrued liabilities (1,672 ) (906 )
Total adjustments (9,726 ) 3,927
Net cash used in operating activities of continuing operations (8,420 ) (7,737 )
Net cash used in discontinued operations - -
Net cash used in operating activities (8,420 ) (7,737 )

CASH FLOWS FROM INVESTING ACTIVITIES
Advance of note receivable - (275 )
Payment of power development costs (2,000 ) -
Purchases of oil and gas properties, net of asset retirement obligations (304 ) (3,335 )
Proceeds from the sale of fixed assets 2 43
Purchase of fixed assets (7,085 ) (241 )
Net cash used in investing activities of continuing operations (9,387 ) (3,808 )
Net cash used in discontinued operations - -
Net cash used in investing activities (9,387 ) (3,808 )

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock in a registered direct offering, net of fees 19,230 7,666
Proceeds from exercise of warrants, net of fees - 14,359
Proceeds from exercise of stock options 28 349
Reduction of finance lease liability (98 ) (91 )
Proceeds from notes payable - related parties - 604
Repayments of notes payable - related parties (578 ) (1,429 )
Proceeds from long-term debt - 1,869
Repayment of long-term debt (1,227 ) (3,891 )
Repayment to prior owners - (316 )
Net cash provided by financing activities 17,355 19,120

NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH (452 ) 7,575

CASH AND RESTRICTED CASH - BEGINNING OF PERIOD 1,316 406

CASH AND RESTRICTED CASH - END OF PERIOD $ 864 $ 7,981

SUPPLEMENTAL DISCLOSURES
Cash paid for interest expense $ 156 $ 404
Cash paid for income taxes $ - $ -

SUMMARY OF NON-CASH ACTIVITIES:

Reclassification of assets of discontinued operations to current operations in fixed assets $ 194 $ -
Bifurcation of derivative liability in registered direct offering $ 11,203 $ -
Recognition of non-controlling interest $ 30 $ -
Preferred stock converted into common stock $ - $ 2
Conversion of long-term debt and notes payable and accrued interest into common stock $ - $ 6,577
Conversion of accounts payable and accrued liabilities into common stock $ - $ 677
Shares issued for acquisition of oil and gas reserves and fixed assets, net of asset retirement obligations $ - $ 2,750
Note receivable offset against oil and gas reserves in acquisition of Rabb $ - $ 304
Lease liability recognized for ROU asset $ 507 $ 442
~~The accompanying~~See notes ~~are an integral part of these unaudited condensed~~to consolidated financial statements.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Dollar amounts and numbers of shares that follow in this report are presented in thousands, except per share amounts and when separately disclosed, or where the context indicates otherwise.
Ecoark Holdings Inc. (“Ecoark Holdings” or the “Company”) is a diversified holding company, incorporated in the ~~state~~State of Nevada on November 19, 2007. Through Ecoark Holdings wholly owned subsidiaries, the Company has operations in three areas: (i) oil and gas, including exploration, production and drilling operations on over 20,000 cumulative acres of active mineral leases in Texas, Louisiana, and Mississippi and transportation services, (ii) post-harvest shelf-life and freshness food management technology, and (iii) financial services including ~~investments in~~preparing to launch a ~~select number of early stage startups each year.~~Bitcoin mining operation. Since the acquisition of Banner Midstream Corp. on March 27, 2020, which currently comprises the exploration, production and drilling operations, the Company has focused its efforts to a considerable extent on expanding its exploration and production footprint and capabilities by acquiring real property and working interests in oil and gas mineral leases. The Company’s principal subsidiaries consist of Ecoark, Inc. (“Ecoark”), a Delaware corporation which is the parent of Zest Labs, Inc. (“Zest Labs”), ~~440IoT Inc., a Nevada corporation (“440IoT”),~~ Banner Midstream Corp., a Delaware corporation (“Banner Midstream”) and ~~Trend Discovery~~Agora Digital Holdings, Inc., a ~~Delaware~~Nevada corporation (“Agora”) who was assigned the membership interest in Trend Discovery Holdings LLC, a Delaware limited liability corporation (all references to “Trend Holdings”). or “Trend” are now synonymous with Agora) from the Company on September 17, 2021 upon its formation.
On March 27, 2020, the Company and Banner Energy Services Corp., a Nevada corporation (“Banner Parent”), entered into a Stock Purchase and Sale Agreement (the “Banner Purchase Agreement”) to acquire Banner Midstream Corp., a Delaware corporation (“Banner Midstream”). Pursuant to the acquisition, Banner Midstream became a ~~wholly-owned~~wholly owned subsidiary of the Company and Banner Parent received shares of the Company’s common stock in exchange for all of the issued and outstanding shares of Banner Midstream.
Banner Midstream has four operating subsidiaries: Pinnacle Frac Transport LLC (“Pinnacle Frac”), Capstone Equipment Leasing LLC (“Capstone”), White River Holdings Corp. (“White River”), and Shamrock Upstream Energy LLC (“Shamrock”). Pinnacle Frac provides transportation of frac sand and logistics services to major hydraulic fracturing and drilling operations. Capstone procures and finances equipment to oilfield transportation service contractors. These two operating subsidiaries of Banner Midstream are revenue producing entities. White River and Shamrock are engaged in oil and gas exploration, production, and drilling operations on over ~~10,000~~20,000 cumulative acres of active mineral leases in Texas, Louisiana, and Mississippi.
On June 11, 2020, the Company acquired certain energy assets from SR Acquisition I, LLC for $1 as part of the ongoing bankruptcy reorganization of Sanchez Energy Corporation. The transaction includes the transfer of 262 total wells in Mississippi and Louisiana, approximately 9,000 acres of active mineral leases, and drilling production materials and equipment. The 262 total wells include 57 active producing wells, 19 active disposal wells, 136 ~~shut-in~~shut-ins with future utility wells, and 50 shut-in pending plugging wells. Included in the assignment are 4 wells in the Tuscaloosa Marine Shale formation. One of the leases acquired in this transaction was sold in November 2020.
On June 18, 2020, the Company acquired certain energy assets from SN TMS, LLC for $1 as part of the ongoing bankruptcy reorganization of Sanchez Energy Corporation. The transaction includes the transfer of wells, active mineral leases, and drilling production materials and equipment.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
On August 14, 2020, the Company entered into an Asset Purchase Agreement by and among the Company, White River E&P LLC, a Texas Limited Liability Company and a ~~wholly-owned~~wholly owned subsidiary of the Company Rabb Resources, LTD. and Claude Rabb, the sole owner of Rabb Resources, LTD. Pursuant to the Asset Purchase Agreement, the Company completed the acquisition of certain assets of Rabb Resources, LTD. The acquired assets consisted of certain real property and working interests in oil and gas mineral leases. The Company in June 2020 previously provided for bridge financing to Rabb Resources, LTD under the $225 Senior Secured Convertible Promissory Note. As consideration for entering into the Asset Purchase Agreement, the Company agreed to pay Rabb Resources, LTD. A total of $3,500 consisting of (i) $1,500 in cash, net of $304 in outstanding amounts related to the note receivable and accrued interest receivable, and (ii) $2,000 payable in common stock of the Company, which based on the closing price of the common stock as of the date of the Asset Purchase Agreement equaled 103 shares. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the Rabb Resources, LTD historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
On September 4, 2020, White River SPV 3, LLC, a ~~wholly-owned~~wholly owned subsidiary of Banner Midstream entered into an Agreement and Assignment of Oil, Gas and Mineral Lease with a privately held limited liability company (the “Assignor”). Under the Lease Assignment, the Assignor assigned a 100% working interest (75% net revenue interest) in a certain oil and gas lease covering in excess of 1,600 acres (the “Lease”), and White River paid $1,500 in cash to the Assignor. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.
On October 9, 2020, the Company and White River SPV, entered into a Participation Agreement (the “Participation Agreement”) by and among the Company, White River SPV, BlackBrush Oil & Gas, L.P. (“BlackBrush”) and GeoTerre, LLC, an unrelated ~~privately-held~~privately held limited liability company (the “Assignor”), to conduct drilling of wells in the Austin Chalk formation.
Pursuant to the Participation Agreement, the Company and White River SPV ~~have agreed, among other things, to fund 100%~~pre-funded a majority of the cost, ~~estimated to be~~ approximately ~~$4,700,~~$5,800, associated with the drilling and completion of an initial deep horizontal well in the Austin Chalk ~~formation.~~formation of which $3,387 was expensed as drilling costs. The Participation Agreement ~~requires the estimated amount of~~required the drilling costs ~~to be~~that were paid into a designated escrow account byat the commencement of the drilling in January ~~2021.~~2021, which it was. BlackBrush ~~has~~ agreed to assign to the other parties to the Participation Agreement, subject to certain exceptions and limitations specified therein, specified portions of its leasehold working interest in certain Austin Chalk formation units. The Participation Agreement provides for an initial allocation of the working interests and net revenue interests among the assignor, BlackBrush and the Company and then a re-allocation upon payout or payment of drilling and completion costs for each well drilled. Prior to payout, the Company will own 90% of the working interest and 67.5% of the net revenue interest in each well. Following payout, the Company will own 70% of working interest and 52.5% net revenue interest in each well. ~~BlackBrush also agreed to share with the Company certain seismic information relating to other wells in which the Company has no interests.~~

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
The Parties to the Participation Agreement, except for the Company, had previously entered into a Joint Operating Agreement, dated September 4, 2020 (the “Operating Agreement”) establishing an area of mutual interest, including the Austin Chalk formation, and governing the parties’ rights and obligations with respect to drilling, completion and operation of wells therein. The Participation Agreement and the Operating Agreement require, among other things, that White River SPV and the Company drill and complete at least one horizontal Austin Chalk well with a certain minimum lateral each calendar ~~year.~~year and/or maintain leasehold by paying its proportionate share of any rental payments.
In connection with the transactions contemplated by the Participation Agreement, on October 12, 2020 White River SPV entered into an Agreement and Assignment of Oil, Gas and Mineral Lease (the “Lease Assignment”) with the Assignor. Under the Lease Assignment, the Assignor assigned to White River SPV a 100% working interest (75% net revenue interest) in a certain oil and gas lease covering in excess of 400 acres (the “Lease”), and White River SPV paid approximately $600 to the Assignor. White River SPV had previously entered into an agreement with the Assignor for the assignment to White River SPV of a 100% working interest in a certain oil and gas lease covering in excess of 1,600 acres in exchange for $1,500.
On September 30, 2020, the Company and White River Energy, LLC (“White River Energy”), a ~~wholly-owned~~wholly owned subsidiary of the Company entered into three Asset Purchase Agreements (the “Asset Purchase Agreements”) with ~~privately-held~~privately held limited liability companies to acquire working interests in the Harry O’Neal oil and gas mineral lease (the “O’Neal OGML”), the related well bore, crude oil inventory and equipment. Immediately prior to the acquisition, White River Energy owned an approximately 61% working interest in the O’Neal OGML oil well and a 100% working interest in any future wells.
The purchase prices of these leases were $126, $312 and $312, respectively, totaling $750. The consideration paid to the Sellers was in the form of 68 shares of common stock. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.
In February and March 2021, the Company acquired additional leases for $916 under the Blackbrush/Deshotel lease related to the Participation Agreement.
On August 16, 2021 the Company and Shamrock Upstream Energy, LLC, a wholly-owned subsidiary of the Company entered into an agreement with a privately-held limited liability company to acquire working interests in the Luling Prospect for $250. No other assets were acquired in this transaction, nor was there any recognized ARO for this working interest. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
On September 1, 2021 the Company and White River Energy, LLC, a wholly-owned subsidiary of the Company entered into an agreement with several individuals to acquire working interests in the various leases in Concordia, LA for $54. No other assets were acquired in this transaction, nor was there any recognized ARO for this working interest. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.
Effective with the opening of trading on December 17, 2020, the Company effected a one-for-five reverse split of its issued and outstanding common stock and a simultaneous proportionate reduction of its authorized common stock. The reverse stock split was implemented without obtaining stockholder approval as permitted by Nevada law, and the authorized common stock was proportionately reduced to 40,000 shares. All share and per share figures are reflected on a post-split basis herein.
Effective December 29, 2020, the Company amended its Articles of Incorporation to reduce the authorized common stock from 40,000 shares to 30,000 shares.
On December 31, 2020, the Company completed a registered direct offering, whereby the Company issued 889 shares of common stock and 889 accompanying warrants to one institutional investor under the effective Form S-3 at $9.00 per share and accompanying warrant for a total of $8,000 in gross proceeds, before placement agent fees and other offering expenses. The warrants are exercisable for a two-year term at a strike price of $10.00 per share. The Company granted 62 warrants to the placement agent as compensation in addition to the $560 cash commission received by the placement agent. The placement agent warrants are exercisable at $11.25 per share and expire on January 2, 2023.
On April 9, 2021, a Little Rock, Arkansas jury awarded Ecoark and Zest a total of $115 million in damages which includes $65 million in compensatory damages and $50 million in punitive damages and found Walmart Inc. liable on three counts. The federal jury found that Walmart Inc. misappropriated Zest’s trade secrets, failed to comply with a written contract, and acted willfully and maliciously in misappropriating Zest’s trade secrets. The Company has filed post-trial motions to add an award for their attorneys’ fees as the prevailing party in the litigation. In addition to other post-trial motions, Walmart, Inc. has filed a renewed motion for judgment as a matter of law or, in the alternative, for remittitur or a new trial. As of the date of this Report, the court has not ruled on any of the post-trial motions.
Trend Holdings formed four subsidiaries: Bitstream Mining, LLC, a Texas Limited Liability Corp. (“Bitstream”) on May 16, 2021, REStream Processing LLC, a Texas Limited Liability Corp (“REStream”) on May 16, 2021, Trend Discovery Exploration LLC, a Texas Limited Liability Corp. (“Trend Exploration”) on May 27, 2021, and OTZI, LLC, a Delaware Limited Liability Corp. (“OTZI”) on September 2, 2021, in addition to Barrier Crest, LLC (“Barrier Crest”) that was acquired along with Trend Capital Management, Inc. (“TCM”) that was acquired by Ecoark on May 31, 2019.
The Company assigned its membership interest in Trend Holdings and its related wholly owned subsidiaries to Agora on September 22, 2021, for the sale of the initial one hundred shares for ten dollars. On October 1, 2021, the Company purchased 41,671 shares of Agora common stock for $4,167 which Agora used to purchase equipment to commence the Bitstream operations.
Agora was organized by Ecoark to enter the digital asset mining business. Because of regulatory uncertainty over digital assets being deemed to be securities, Agora’s initial focus is on mining Bitcoin which the Securities and Exchange Commission (the “SEC”) administratively determined is not a security. Because of regulatory concerns and the changing regulatory environment, Agora intends to seek opportunities to engage with cryptocurrencies that do not involve the offer or sale of any securities.
On November 19, 2021 Agora filed a registration statement on Form S-1 (File No. 333-261246) in connection with its initial public offering of 10,000,000 (ten million) units comprised of shares of common stock and warrants to purchase an equal number of shares of common stock. The Agora registration statement has undergone a series of amendments since its initial filing in November 2021 and has not yet been declared effective by the Securities and Exchange Commission. In addition, in connection with Agora public offering, Agora has applied for its common stock and warrants to be listed on The Nasdaq Capital Market.
Subject to completion of the Agora public offering and Nasdaq uplisting described below, the Company intends to issue a stock dividend through a pro rata distribution of Agora’s common stock to Ecoark’s common stockholders and holders of common stock equivalents. Ecoark plans to distribute 80% of the Agora common stock it holds to its stockholders as of a future record date to be determined upon completion of regulatory compliance. Ecoark plans to retain the remaining 20% ownership in Agora on its balance sheet. As a result of the approval by the board of directors of the Company to divest Agora, the Company has accounted for this as a disposal other than by sale. Assets to be disposed of other than by sale should continue to be classified as held and used until they are disposed of. Upon disposal, the Company must assess whether the disposed of assets qualify for discontinued operations reporting. If so, the Company will apply the presentation and disclosure requirements of ASC 205-20, and if not, the Company will apply the presentation and disclosure requirements of ASC 360-10.
On August 4, 2021, the Company’s common stock commenced trading on the Nasdaq Capital Market.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, ~~2020~~2021
On October 6, 2021, the Company held a Special Meeting of Stockholders, at which the stockholders approved (a) an amendment to the Articles of Incorporation to increase the number of shares of authorized common stock of the Company from 30,000 shares to 40,000 shares; (b) an amendment to the Ecoark Holdings, Inc. 2017 Omnibus Incentive Plan to increase the number of shares of common stock authorized for issuance under this plan from 800 shares to 1,300 shares; and (c) the issuance of 272 restricted stock units and an additional 64 restricted stock units to the President and director of the Company under this plan, in exchange for the cancellation of 672 previously issued stock options.
Overview of Agora Digital Holdings, Inc.
Bitstream
Bitstream was organized to be our principal cryptocurrency subsidiary. Bitstream has entered into a series of agreements including arranging for a reliable and economical electric power source needed to efficiently mine Bitcoin, ordering miners, housing infrastructure and other infrastructure to mine Bitcoin and locating a third-party hosting service to operate the miners and the service’s more advanced miners. Agora has spent (and agreed to spend) between $12-$14 million in connection with agreements related to establishing and commencing its operations including the agreements for land for Bitcoin mining, but not including future revenue sharing. Agora commenced initial operations for the initial miners in November 2021 and the expectation is that by March 2022 the Bitmain S19 Pro miners supplied by the hosting service will be fully operational.
Bitstream deploys and operates (or hires third parties to operate) modularized data centers (facilities) with the sole purpose of mining digital assets, with Bitcoin initially as the focus. Agora is powering these data centers by acquiring one or more long-term power contract to purchase electric power from the electric grid in Texas. As the business’ operations grow, Bitstream intends to continuously add data center facilities by reinvesting their revenues. All data centers will be remotely managed with onsite personnel for servicing and troubleshooting any operational issues. Bitstream plans to utilize the energy to power its energy intensive operations of digital asset mining. Additionally, if Texas experiences another power shortage during the winter or summer months from extreme weather conditions, Bitstream would be able to arbitrage power at favorable margins. Bitstream will do this by temporarily shutting down their cryptocurrency mining operations and selling their purchased power back to the grid at favorable margins. Last winter, during the blackout, the price per kWh exceeded $10 (ten dollars) at its peak imbalance, whereas Bitstream’s power cost is expected to be $0.023 (two and three one-hundredths cents) per kWh.

Bitstream has
● entered into a letter of intent to obtain a source of electric power in West Texas, including the initial 12 megawatts (“MW”) of power with agreement by the retail power provider to increase the available capacity at the substation to 48 MW. We have also entered into a second letter of intent for an additional 30 MW at a second location;
● paid the power management company $2,423 which includes $2,000 in power development fees and is negotiating definitive agreements (the “Power Agreement”) which if executed will allow for the increase of the facility’s electrical capacity to up to 78 MW; and
● ordered 5,000 used Canaan Avalon 841 13 tera hash per second (“TH/s”) miners for $1,350, plus shipping costs to be delivered on 1,000-unit increments, of which 4,000 miners have been delivered as of January 31, 2022; and
● entered into a long-term lease for 20 acres of land effective December 10, 2021, and a land purchase agreement for a separate 20 acres of land effective January 3, 2022.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
Mining Equipment
Because Bitstream has secured a source for 48 MW of electrical power with agreement by the power provider to increase the available capacity at the substations to 78 MW as more fully described below and expects to increase the capacity through conditional and unconditional rights to a number of sites across West Texas to up to 372 MW assuming this can be done on acceptable terms. In September 2021 Bitstream ordered 5,000 used Canaan Avalon 841 13 TH/s miners for $1,350. Delivery of the first shipment of 2,000 of these miners occurred in October 2021. Bitstream’s plan is to use trailer or shipping container-like units as housing infrastructure to house our miners. Bitstream will either build their own or partner with another third-party vendor to build entry level housing infrastructure to deploy the initial mining equipment in November 2021.
In August 2021, Bitstream entered into an agreement with a third party which will supply Bitstream with more advanced housing infrastructure in exchange for approximately $375. Delivery of these enhanced housing infrastructure is expected in early 2022. On December 10, 2021 Bitstream executed a lease agreement for 20 acres of land near the power substation upon which Bitstream will place the housing infrastructure. On January 3, 2022, the Company finalized a land purchase agreement for a separate parcel of 20 acres of land ($12.5 per acre) in West Texas for $250. The Company has an option to sell back this land to the sellers at $0.4 per acre upon cessation of the land being used as a data center.
In September 2021, Bitstream entered into a binding agreement referred to as a Memorandum of Understanding with Elite Mining Inc. (the “Hosting Company”) that will supply high speed miners, host the Company’s data center and operate the miners it installs. In Phase 1 which is a beta test phase, Bitstream paid $600 to the Hosting Company which will also supply 6 MW capacity’s worth of very high speed and efficient miners. Bitstream has an option to purchase these high-speed miners at replacement cost (which may be higher than current cost). The Hosting Company may provide hosting for third parties during Phase 1 which reduces the cash flow for Bitstream. This agreement will also allow Bitstream to utilize a minimum of 25 MW of electricity under the initial power purchase agreement in Phase 2. Bitstream can terminate the hosting agreement as soon as Bitstream has secured sufficient capital to replace the hosted Bitmain S19 Pros with their own. Once Bitstream purchases the high-efficiency miners, the Hosting Company cannot host third parties.
The Hosting Company uses immersion cooling, and other technological enhancements, for the miners it will install for Bitstream. Immersion cooling is a technique where Bitcoin mining units are submerged in a dielectric fluid to keep the integrated circuits operating at lower temperatures. When successful, this has the potential to: prolong equipment life, enhance hashing efficiencies, and provides the opportunity to “overclock” the processors, i.e., running at speeds beyond factory specified design. Overclocking, including when assisted by immersion cooling, is a technique that can be used to increase a miner’s overall hash rate.
Phase 2 is planned to begin in May 2022 which is subject to Bitstream agreeing to proceed. If Bitstream elects to enter Phase 2, it will be required to loan the Hosting Company the funds to develop a production facility in Texas on terms to be negotiated. Bitstream will have certain rights to the production facility capacity from Phase 2 and will pay the Hosting Company for its services.
In October 2021 Bitstream secured an additional 36 MWs of electrical capacity at a different West Texas location. This supplements the Company’s prior agreement to secure 12 MWs and as a result the Company will have a total of 48 MWs of electric power for immediate use and benefit to Bitstream at that location. We have also entered into a second letter of intent for an additional 30 MW at a second location. Bitstream also plans to participate in the Electric Reliability Council of Texas’ (“ERCOT”) responsive reserve market by relinquishing its power back to the Texas grid as power stabilization events are needed. Additionally, Bitstream has procured mining infrastructure to power the 42 MWs and expects the equipment and infrastructure to be delivered over the next 120 days. This mining infrastructure includes twenty-one 2,600 kilo-volt amp (KVA) or similar transformers and the Company’s first shipment of Bitcoin mining application-specific integrated circuits (“ASIC”). The Company has agreed to pay a total $3,376 for the new equipment and infrastructure as follows: (i) $506 upon the order which has been paid, (ii) $506 by November 11, 2021 which has been paid, (iii) $816 by December 15, 2021 which has been paid; and (iii) the remaining $1,857 by February 2022.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
In connection with the increase in electrical capacity, Bitstream entered into a second binding letter of intent with the power management company pursuant to which the Company has paid a total of $2,955, consisting of a $2,628 development fee and a $327 reimbursement for payments made by the power management company to the electric utility to secure the power. In addition, the Company agreed to pay a total of $450 upon the power management company signing a binding agreement to acquire or lease 20 or more acres of usable land for Bitstream’s facility and construct a transmission line to the mining site.
Once the business is operational, Bitstream intends to continuously add data center platforms by reinvesting cash and potentially utilizing leverage to scale operations. All data centers will be remotely managed with onsite personnel for servicing and troubleshooting any operational issues.
Barrier Crest provides fund administration and related services for small hedge funds. Trend Capital Management was founded in 2011. Trend Capital Management is the investment manager of and provides services and collects fees from Trend Discovery LP (“Trend LP”) and Trend Discovery SPV I, LLC (“Trend SPV”), both of which invest in securities. Trend Capital Management is not the beneficial owner of Ecoark securities held by Trend LP since it assigned to a third party not affiliated with Ecoark the power to vote and dispose of Ecoark securities. The investment capital in Trend LP and Trend SPV is from individual limited partners, and not from the Company.
Trend Exploration was assigned an 80% working interest in fourteen wells from White River SPV 2, LLC and White River E&P LLC (“Assignors”) on July 1, 2021. In accordance with ASC 205-20, there is a scope exception for oil and gas properties that use the full-cost method of accounting. Under the full-cost method of accounting, all costs associated with property acquisition, exploration, and development activities are capitalized to cost centers, which are established on a country-by-country basis. The definition of discontinued operations, however, applies to disposals of components of an entity, which is defined as the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. As a result, the definition of discontinued operations will not be operable under the full-cost method of accounting because of differences in the tracking and allocation of costs, which is at a much higher level. The Company as a result has not reflected the working interest on the fourteen wells in discontinued operations. The Trend Exploration business is identical to the business noted herein for Banner Midstream.
Principles of Consolidation
The condensed consolidated financial statements of Ecoark Holdings and its subsidiaries and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condensed consolidated financial statements have been included. Such adjustments are of a normal, recurring nature.
The unaudited condensed consolidated financial statements, and the accompanying notes, are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, ~~2020.~~2021. Therefore, the interim unaudited condensed consolidated financial statements should be read in conjunction with that Annual Report on Form 10-K.
~~In May 2018, the Ecoark Holdings Board approved a plan to sell key assets of Pioneer (including the assets of Sable) and Magnolia Solar. Both of these subsidiaries were sold in May 2019.~~
On May 31, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Trend Discovery Holdings Inc., a Delaware corporation ~~(“Trend Holdings”)~~ for the Company to acquire 100% of Trend Discovery Holdings, LLC pursuant to a merger of Trend ~~Holdings~~ with and into the Company (the “Merger”). ~~The Merger was completed,~~Trend Discovery Holdings, Inc. ceased doing business upon completion of the merger and Trend Discovery Holdings LLC is ~~now included~~the subsidiary of the Company. Upon the formation of Agora on September 17, 2021, Ecoark assigned the membership interest they owned in Trend Holdings to Agora on September 22, 2021 when the ~~consolidated financial statements.~~Company purchased 100 shares of Agora common stock for ten dollars.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
Subject to completion of the Agora public offering and Nasdaq uplisting described above, the Company intends to issue a stock dividend through a pro rata distribution of Agora’s common stock to Ecoark’s common stockholders and holders of common stock equivalents. Ecoark plans to distribute 80% of the Agora common stock it holds to its stockholders as of a future record date to be determined upon completion of regulatory compliance. Ecoark plans to retain the remaining 20% ownership in Agora on its balance sheet. As a result of the approval by the board of directors of the Company to divest Agora, the Company, has accounted for this as a disposal other than by sale. Assets to be disposed of other than by sale should continue to be classified as held and used until they are disposed of. Upon disposal, the Company must assess whether the disposed of assets qualify for discontinued operations reporting. If so, the Company will apply the presentation and disclosure requirements of ASC 205-20, and if not, the Company will apply the presentation and disclosure requirements of ASC 360-10.
On March 27, 2020, the Company and Banner Parent, entered into the Banner Purchase Agreement to acquire Banner Midstream. Pursuant to the acquisition, Banner Midstream became a ~~wholly-owned~~wholly owned subsidiary of the Company and Banner Parent received shares of the Company’s common stock in exchange for all of the issued and outstanding shares of Banner Midstream.
The Company applies the guidance of Topic 810 Consolidation of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—are consolidated except when control does not rest with the parent. Pursuant to ASC Paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree.
The Company has utilized the guidance under ASC 810-10-55-4B, Case A for a Change that has resulted in the recognition of non-controlling interest. On October 1, 2021, Agora issued restricted common stock to non-employee directors, management, employees and advisors. As a result of the restricted common share issuances, the Company owns now owns less than 100% of Agora (approximately 90.1%), The Company expects it will continue to control Agora until it completes the distribution of Agora common stock to its security holders described above; after that event occurs, it may still have sufficient equity ownership to control Agora unless one or more third parties acquire a larger equity position.
Pursuant to 810-10-55-4M, the Company has provided below the effects of ASC 810-10-50-1A(d) to disclose the effects of the changes in the Company’s ownership interest in Agora on the Company’s equity for the three months ended December 31, 2021:
Net income (loss) attributable to the Company’s stockholders $ 4,602
Increase in the Company’s additional paid-in capital for the issuance of the 4,600 restricted common shares of Agora 2,281
Change from net income (loss) attributable to the Company’s stockholders and transfers to noncontrolling interest $ 6,883
Reclassifications
The Company has reclassified certain amounts in the December 31, ~~2019~~2020 unaudited condensed consolidated financial statements to be consistent with the December 31, ~~2020~~2021 presentation. ~~Reclassifications relating~~
Noncontrolling Interests
In accordance with ASC 810-10-45 Noncontrolling Interests in Consolidated Financial Statements, the Company classifies noncontrolling interests as a component of equity within the consolidated balance sheet. In October 2021, with the issuance of restricted common stock to directors, management and advisors, the ~~discontinued operations are described in Note 2. The reclassifications had~~Company no ~~impact on net loss or net cash flows for the three and nine months ended~~longer owns 100% of Agora. As of December 31, ~~2020 and 2019.~~2021, approximately 9.1% is reflected as non-controlling interest of that entity.
9

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. These estimates include, but are not limited to, management’s estimate of provisions required for uncollectible accounts receivable, fair value of assets held for sale and assets and liabilities acquired, impaired value of equipment and intangible assets, including goodwill, asset retirement obligations, estimates of discount rates in lease, liabilities to accrue, fair value of derivative liabilities associated with warrants, cost incurred in the satisfaction of performance obligations, permanent and temporary differences related to income taxes and determination of the fair value of stock awards.
Actual results could differ from those estimates.
The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proven, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized.
Oil and Gas Properties
The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under the full cost method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs are capitalized. General and administrative costs related to production and general overhead are expensed as incurred.
All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the loss from operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method.
There was $1,445 and $380 and $0$305 and $254 in ~~depreciation,~~ depletion ~~and amortization~~ expense for the Company’s oil and gas properties for the nine ~~months ended December 31, 2020~~ and ~~2019, respectively, and $254 and $0, for the~~ three months ended December 31, 2021 and 2020, ~~and 2019,~~ respectively.
10
~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
Limitation on Capitalized Costs
Under the full-cost method of accounting, we are required, at the end of each reporting period, to perform a test to determine the limit on the book value of our oil and gas properties (the “Ceiling” test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, the excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10% and assuming continuation of existing economic conditions, of (1) estimated future gross revenues from proved reserves, which is computed using oil and gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to ~~SAB~~Staff Accounting Bulletin (“SAB”) 103, less (2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves; plus, (b) the cost of properties being amortized; plus, (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. A ceiling test was performed as of December 31, ~~2020~~2021 and there was no indication of impairment on the oil and gas properties.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
Oil and Gas Reserves
Reserve engineering is a subjective process that is dependent upon the quality of available data and interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices.
Joint Interest Activities
Certain of our exploration, development and production activities are conducted jointly with other entities and, accordingly, the consolidated financial statements reflect only our proportionate interest in such activities.
Inventories
Crude oil, products and merchandise inventories are carried at the lower of cost (last-in-first-out (LIFO)) or net realizable value. Inventory costs include expenditures and other charges directly and indirectly incurred in bringing the inventory to its existing condition and location.
Accounting for Asset Retirement Obligation
Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of the estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the ~~obligation��s~~obligation’s inception, with an offsetting increase to proved ~~properties.~~properties or to exploration costs in cost of revenue.
Revenue Recognition
The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.
The Company accounts for a contract when it has been approved and committed to, each party’s rights regarding the goods or services to be transferred have been identified, the payment terms have been identified, the contract has commercial substance, and collectability is probable. Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
Revenue recognition for multiple-element arrangements requires judgment to determine if multiple elements exist, whether elements can be accounted for as separate units of accounting, and if so, the fair value for each of the elements.
Revenue from software license agreements of Zest Labs is recognized over time or at a point in time depending on the evaluation of when the customer obtains control of the promised goods or services over the term of the agreement. For agreements where the software requires continuous updates to provide the intended functionality, revenue is recognized over the term of the agreement. For software as a service (“SaaS”) contracts that include multiple performance obligations, including hardware, perpetual software licenses, subscriptions, term licenses, maintenance and other services, the Company allocates revenue to each performance obligation based on estimates of the price that would be charged to the customer for each promised product or service if it were sold on a standalone basis. For contracts for new products and services where standalone pricing has not been established, the Company allocates revenue to each performance obligation based on estimates using the adjusted market assessment approach, the expected cost plus a margin approach or the residual approach as appropriate under the circumstances. Contracts are typically on thirty-day payment terms from when the Company satisfies the performance obligation in the contract. The Company did not have material revenue from software license agreements in the nine and three months ended December 31, 2021 and 2020, ~~and 2019,~~ respectively.
Revenue under master service agreements is recorded upon the performance obligation being satisfied. Typically, the satisfaction of the performance obligation occurs upon the frac sand load being delivered to the customer site and this load being successfully invoiced and accepted by the Company’s factoring agent.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
The Company recognizes revenue under ASC 606 for their proportionate share of revenue when: (i) the Company receives notification of the successful sale of a load of crude oil to a buyer; (ii) the buyer will provide a price based on the average monthly price of crude oil in the most recent month; and (iii) cash is received the following month from the crude oil buyer.
The Company will recognize income from digital currency mining from the provision of transaction services within digital currency networks, commonly termed “cryptocurrency mining”. As consideration for those services, the Company will receive digital currency from each specific network in which it participates (“coins”). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of receipt. The coins are recorded on the consolidated balance sheet, as intangible asset – digital currency, at their fair value less costs to sell and re-measured each reporting date, if not sooner. Revaluation gains or losses on the sale of coins for traditional (fiat) currencies will be included in the consolidated statements of operations.
The Company has entered into digital asset mining pools by executing contracts, as amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company’s entitled to a fractional share of the fixed cryptocurrency reward the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are recorded as a component of cost of revenues), for successfully adding a block to the blockchain. The terms of the agreement provides that neither party can dispute settlement terms after thirty-five days following settlement. The Company’s fractional share of the cryptocurrency generated by the pool is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.
Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation on the Company in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the reward from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time the revenue is recognized. There is no significant financing component in these transactions.
Fair value of the digital asset reward received is determined using the quoted price of the related digital asset at the time of receipt. The block reward provides an incentive for Bitcoin miners to process transactions made with the cryptocurrency. Creating an immutable record of these transactions is vital for the digital assets to work as intended. The blockchain is like a decentralized bank ledger, one that cannot be altered after being created. The miners are needed to verify the transactions and keep this ledger up to date. Block rewards, and to a lesser extent, transaction fees, are their payment for doing so. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue and held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
The Company’s cost of revenue for digital assets consists primarily of direct costs of earning the digital asset related to mining operations, including mining pool fees, electric power costs, other utilities, labor, insurance whether incurred directly from self-mining operations or reimbursed, including any revenue sharing arrangements under the hosting agreements, but excluding depreciation and amortization, which are separately stated in the Company’s Consolidated Statement of Operations.
The Company accounts for contract costs in accordance with ASC Topic 340-40, Contracts with Customers. The Company recognizes the cost of sales of a contract as expense when incurred or at the time a performance obligation is satisfied. The Company recognizes an asset from the costs to fulfil a contract only if the costs relate directly to a contract, the costs generate or enhance resources that will be used in satisfying a performance obligation in the future and the costs are expected to be recovered. The incremental costs of obtaining a contract are capitalized unless the costs would have been incurred regardless of whether the contract was obtained.
Cost of sales for Pinnacle Frac includes all direct expenses incurred to produce the revenue for the period. This includes, but is not limited to, direct employee labor, direct contract labor and fuel.
Accounts Receivable and Concentration of Credit Risk
The Company considers accounts receivable, net of allowance for doubtful accounts, to be fully collectible. The allowance is based on management’s estimate of the overall collectability of accounts receivable, considering historical losses, credit insurance and economic conditions. Based on these same factors, individual accounts are charged off against the allowance when management determines those individual accounts are uncollectible. Credit extended to customers is generally uncollateralized, however credit insurance is obtained for some customers. Past-due status is based on contractual terms.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
For Pinnacle Frac, accounts receivable is comprised of unsecured amounts due from customers that have been conveyed to a factoring agent for both with and without recourse. Pinnacle Frac receives an advance from the factoring agent of 98% of the amount invoiced to the customer within one business day. The Company recognizes revenue for 100% of the gross amount invoiced, records an expense for the 2% finance charge by the factoring agent, and realizes cash for the 98% net proceeds received. ~~The Company~~
White River has recognized an allowance for doubtful accounts of ~~$709~~$209 and ~~$500~~$209 as of December 31, ~~2020~~2021 and March 31, ~~2020,~~2021, respectively.
Fair Value Measurements
ASC 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. ASC 820 classifies these inputs into the following hierarchy:
Level 1 inputs: Quoted prices for identical instruments in active markets.
Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs: Instruments with primarily unobservable value drivers.
Digital assets will consist of cryptocurrency denominated assets and will be included in non-current assets. Digital assets will be carried at their fair value determined by the spot rate less costs to sell. The digital asset market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value will be determined by taking the price of the coins from the exchanges which the Company will most frequently use.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
Digital Assets
Digital currencies will be included in non-current assets in the consolidated balance sheets as intangible assets with indefinite useful lives. Digital assets are recorded at cost less impairment.
The Company accounts for its digital assets as indefinite-lived intangible assets in accordance with ASC 350. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital currency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.
The Company determines the fair value of its Bitcoin on a nonrecurring basis in accordance with ASC 820, based on quoted (unadjusted) prices on the active exchange that the Company has determined is its principal market for Bitcoin (Level 1 inputs). The Company performs an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices on the active exchange, indicate that it is more likely than not that any of the assets are impaired. In determining if an impairment has occurred, the Company considers the lowest price of one Bitcoin quoted on the active exchange at any time since acquiring the specific Bitcoin held by the Company. If the carrying value of a Bitcoin exceeds that lowest price, an impairment loss has occurred with respect to that Bitcoin in the amount equal to the difference between its carrying value and such lowest price.
Impairment losses are recognized as “Digital asset impairment losses” in the Company’s Consolidated Statements of Operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains (if any) are not recorded until realized upon sale, at which point they would be presented net of any impairment losses in the Company’s Consolidated Statement of Operations. In determining the gain to be recognized upon sale, the Company calculates the difference between the sales price and the carrying value of the specific Bitcoin sold immediately prior to sale.
Any impairment losses related to digital assets are included in the Digital Assets segment.
Impairment of Long-lived Assets
Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Segment Information
The Company follows the provisions of ASC 280-10 Segment Reporting. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. The Company and its chief operating decision makers determined that the Company’s operations effective with the May 31, 2019, acquisition of Trend Holdings and the March 27, 2020 acquisition of Banner Midstream ~~now consist~~consisted of three segments, ~~Trend Holdings (Finance), Banner Midstream (Commodities)~~Financial, Commodities and ~~Zest Labs (Technology).~~Technology. Effective July 1, 2021, the Company’s chief operating decision makers in discussion with the finance team determined that the Company would add a fourth reporting segment to account for their Digital Asset mining business. Additionally, on July 1, 2021 the Company will report its home office costs into the Commodity segment, charge its Technology segment a monthly overhead fee, and has recorded typical overhead expenses in their Finance and Digital Asset segments to account for this home office allocation.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
Earnings (Loss) Per Share of Common Stock

Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (“EPS”) include additional dilution from common stock equivalents, such as convertible notes, preferred stock, stock issuable pursuant to the exercise of stock options and warrants.
Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented, so only the basic weighted average number of common shares are used in the computations.
The Company has adjusted the diluted EPS for warrants classified as derivative liabilities in accordance with ASC 260-10-45 as follows:
Nine Months Ended
December 31, Three Months Ended
December 31,
2021 2020 2021 2020
Diluted EPS:
Net income (loss) to controlling interest $ 1,306 $ (11,664 ) $ 4,602 $ 532
Change in fair value of derivative liability (15,295 ) 15,901 (10,979 ) (481 )

Adjusted net income (loss) $ (13,989 ) $ 4,237 $ (6,377 ) $ 51

Weighted Average Shares Outstanding 24,728 24,103 26,364 25,453
Adjusted earnings (loss) per share $ (0.57 ) $ 0.21 $ (0.24 ) $ 0.00
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Management evaluates all of the Company’s financial instruments, including warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company generally uses a Black-Scholes model, as applicable, to value the derivative instruments at inception and subsequent valuation dates when needed. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is ~~remeasured~~re-measured at the end of each reporting period. The Black-Scholes model is used to estimate the fair value of the derivative liabilities.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021
Recently Issued Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contract’s in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU simplifies the diluted net income per share calculation in certain areas. The ASU is effective for annual and interim periods beginning after December 31, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements.
In May 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” which clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. An entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as follows: i) for a modification or an exchange that is a part of or directly related to a modification or an exchange of an existing debt instrument or line-of-credit or revolving-debt arrangements (hereinafter, referred to as a “debt” or “debt instrument”), as the difference between the fair value of the modified or exchanged written call option and the fair value of that written call option immediately before it is modified or exchanged; ii) for all other modifications or exchanges, as the excess, if any, of the fair value of the modified or exchanged written call option over the fair value of that written call option immediately before it is modified or exchanged. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
Liquidity
For the nine months ended December 31, ~~2020~~2021 and ~~2019,~~2020, the Company had a net ~~loss~~income (loss) of ~~$11,664~~$983 and ~~$11,454,~~($11,664), respectively, has a working capital deficit of ~~$2,856~~$6,020 and $11,845 as of December 31, ~~2020,~~2021 and March 31, 2021, and has an accumulated deficit as of December 31, ~~2020~~2021 of ~~$139,687.~~$147,635. As of December 31, ~~2020,~~2021, the Company has ~~$7,981~~$864 in cash and cash ~~equivalents.~~equivalents from continuing operations. The Company alleviated the substantial doubt regarding this uncertainty as of March 31, 2020 which continues to be alleviated at December 31, ~~2020~~2021 as a result of the Company’s acquisition of Banner Midstream on March 27, 2020, ~~which bring revenue generating subsidiaries with reserves of oil properties over $6,000 and existing customer relationships over $2,000,~~ coupled with the raising of ~~$14,359 in~~funds through the exercise of warrants ~~$349 in the exercise of~~and options and ~~$7,666 in a registered direct offering, net~~the sale of ~~fees of $334 in~~common stock and warrants during the year ended March 31, 2021 and through the nine months ended December 31, ~~2020.~~2021.
If the Company raises additional funds by issuing equity securities, its stockholders would experience dilution. Additional debt financing, if available, may involve covenants restricting its operations or its ability to incur additional debt. Any additional debt financing or additional equity that the Company raises may contain terms that are not favorable to it or its stockholders and require significant debt service payments, which diverts resources from other activities. If the Company is unable to obtain additional financing, it may be required to significantly scale back its business and operations. The Company’s ability to raise additional capital will be impacted by the heightened societal and regulatory focus on climate change and may also be impacted by the ~~recent outbreak of COVID-19.~~COVID-19 pandemic including the current supply chain shortages.
The Company believes that the current cash on hand and anticipated cash from operations is sufficient to conduct planned operations for one year from the issuance of the ~~unaudited condensed~~ consolidated financial statements.

~~Impact of COVID-19~~
The recent outbreak of COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity. The COVID-19 public health epidemic prevented the Company from conducting business activities at full capacity for an indefinite period of time, including due to risk of spread of the disease within these groups or due to shutdowns requested or mandated by governmental authorities.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021
Impact of COVID-19

The COVID-19 pandemic has had a profound effect on the U.S. and global economy and may continue to affect the economy and the industries in which we operate, depending on the vaccine and booster rollouts and the emergence of virus mutations including Omicron.
COVID-19 did not have a material effect on the ~~Condensed~~ Consolidated Statements of Operations or the ~~Condensed~~ Consolidated Balance Sheets ~~included~~for the nine and three months ended December 31, 2021 in ~~this Form 10-Q. However,~~contrast to the material impact it ~~did~~had in the prior fiscal year.
COVID-19 has also contributed to the supply chain disruptions which have not yet had a material ~~impact on our management’s ability~~effect for the Company. The Company will continue to ~~operate effectively and meet some of our filing deadlines. The impact included~~monitor the ~~difficulties of working remotely from home including slow Internet connection,~~supply chain shortages affecting the ~~inability of our accounting and financial officers to collaborate as effectively as they would otherwise have in an office environment and issues arising from mandatory state quarantines.~~world.

~~While~~Because the federal government and some state and local authorities are reacting to the current Omicron variant of COVID-19, it is ~~not possible at this time to estimate with sufficient certainty the impact that COVID-19 could have~~creating uncertainty on ~~the Company’s business, the continued spread of COVID-19 and the measures taken by federal, state, local and foreign governments~~whether these actions could disrupt the operation of the Company’s ~~business. The COVID-19 outbreak~~business and ~~mitigation measures have also had and may continue to have an adverse impact on global and domestic economic conditions, which could~~ have an adverse effect on the Company’s business and financial condition, including on its potential to conduct financings on terms acceptable to the Company, if at all. In addition, the Company has taken temporary precautionary measures intended to help minimize the risk of the virus to its employees, including temporarily requiring employees to work remotely, and discouraging employee attendance at in-person work-related meetings, which could negatively affect the Company’s business. These measures are continuing.Company. The extent to which the COVID-19 outbreak ~~impacts~~may impact the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES ~~Act~~Act”) includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small ~~business~~businesses are eligible for a loan to fund payroll expenses, rent and related costs. We had received funding under the PPP, and a majority of that has been forgiven.

In April 2020, the Company and one of its subsidiaries entered into PPP loans with financial ~~institutions, See Notes 11 (u) and (v).~~institutions. Of the $1,869 in PPP loans obtained this fiscal year, the Company was informed that $1,850 (including $11 in accrued interest) ~~has~~had been forgiven in the three months ended December 31, 2020. The remaining $30 with accrued interest of $2 ~~will be~~was converted into a loan that is due in May 2022, with payments of $2 per month that commenced December 19, 2020. The Company repaid this loan in full in September 2021.
NOTE 2: DISCONTINUED OPERATIONS

Pursuant to ASC 205-20, Presentation of Financial Statements – Discontinued Operations, ASC-20-45-1B, paragraph 360-10-45-15, Pinnacle Vac will be disposed of other than by sale via an abandonment and termination of operations with no intent to classify the entity or assets as Available for Sale. Pursuant to ASC 205-20-45-3A, the results of operations of Pinnacle Vac from inception to discontinuation of operations will be reclassified to a separate component of income, below Net Income/(Loss), as a Loss on Discontinued Operations.

~~All~~As of April 1, 2021, all of the equipment assets and accounts payable of Pinnacle Vac ~~and the related loan liabilities will be subsequently~~were transitioned into Capstone to continue servicing the debt. ~~The remaining current~~As a result, there are no assets ~~of Pinnacle Vac will be used to settle any outstanding current~~or liabilities of ~~Pinnacle Vac. A~~discontinued operations that remain, and no income or loss ~~contingency will be recorded if any of~~from discontinued operations for the ~~outstanding liabilities or obligations of Pinnacle Vac resulting from this abandonment are reasonably estimable~~nine and ~~likely to be incurred.~~
~~Banner Midstream made the decision to discontinue the operations of its wholly owned subsidiary, Pinnacle Vac Service LLC (“Pinnacle Vac”), effective October~~three months ended December 31, ~~2018 due to the inability of Pinnacle Vac’s management to develop a sustainable, profitable business model. The managerial staff of Pinnacle Vac was terminated on November 15, 2018~~2021 and ~~Pinnacle Vac’s rental facility at Sligo Rd. was vacated on November 15, 2018.~~2020.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021

Carrying amounts of major classes of assets and liabilities included as part of discontinued operations in the condensed consolidated balance sheet as of December 31, 2020 for Pinnacle Vac consisted of the following:
Current asset
Cash $ -
Total current assets $ -

Property and equipment, net $ 249
Non-current assets $ 249

Accounts payable $ 228
Current liabilities $ 228
~~There was no income (loss) from discontinued operations for the three and nine months ended December 31, 2020 and 2019, respectively.~~
After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance due to the uncertainty of realizing income tax benefit for all periods presented, and the income tax provision for all periods presented was considered immaterial. Thus, no separate tax provision or benefit relating to discontinued operations is included here or on the face of the consolidated statements of operations.
NOTE 3: REVENUE

The following table disaggregates the Company’s revenue by major source for the nine and three months ended December 31:

Three Months Ended
December 31, Nine Months Ended
December 31,
2020 2019 2020 2019
Revenue:
Software as a Service (“SaaS”) $ - $ - $ - $ 28
Professional Services - 140 - 191
Financial Services 165 - 359 -
Oil and Gas Production 641 - 1,317 -
Transportation Services 3,541 - 8,090 -
Fuel Rebate 80 - 157 -
Equipment Rental 38 - 133 -
$ 4,465 $ 140 $ 10,056 $ 219
Three Months Ended
December 31, Nine Months Ended
December 31,
2021 2020 2021 2020
Revenue:
Financial Services $ 175 $ 165 $ 523 $ 359
Digital asset mining 17 - 17 -
Oil and Gas Production 1,748 641 4,585 1,317
Transportation Services 4,139 3,541 13,756 8,090
Fuel Rebate 48 80 202 157
Equipment Rental 8 38 42 133
$ 6,135 $ 4,465 $ 19,125 $ 10,056

There were no significant contract asset or contract liability balances for all periods presented. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~

Subsequent to the acquisitions of Trend Discovery and Banner Midstream, the Company in 2020 recorded revenues for financial services and oil and gas services and production. For both of these entities, revenues are billed upon the completion of the performance obligations.
Collections of the amounts billed are typically paid by the customers within 30 to 60 days.

NOTE 4: INVENTORIES

The Company’s ~~inventories~~inventory as of ~~$129~~December 31, 2021 and March 31, 2021 of $165 and $122, respectively, consisted of crude oil of approximately ~~5,324~~5,187 and 6,198 barrels of unsold crude oil (these amounts are not rounded in thousands), respectively, using the lower of cost (LIFO) or net realizable value.

NOTE 5: NOTE RECEIVABLE

The Company entered into a $225 senior secured convertible promissory note on June 18, 2020 with Rabb Resources, LTD. The Company had an existing note in the amount of $25 that had not been secured, and rolled an additional $200 into Rabb Resources, LTD, whereby the entire amount became secured. The note was non-interest bearing if paid or converted within forty-five days of the issuance date of June 18, 2020 (August 2, 2020, which is the maturity date). If not paid or converted, the note bore interest at 11% per annum, paid in cash on a quarterly basis.

This note was convertible into shares of Rabb Resources, LTD. based on a valuation of Rabb Resources, LTD. into shares of that company at a value of the $225. The Company advanced an additional $50 on July 8, 2020 and $25 on August 7, 2020 to bring the total note receivable to $300. This amount plus the accrued interest receivable of $4 was due as of August 14, 2020.

On August 14, 2020, the Company entered into an Asset Purchase Agreement with Rabb Resources, LTD. which included the acquisition of real property. The purchase price for this acquisition was $3,500, of which $1,196 was paid in cash (after applying the outstanding principal of the note receivable and accrued interest receivable against the $1,500 agreed upon cash consideration) and the balance was paid in common stock of the Company. The Company accounted for this acquisition as an asset purchase (see Note ~~16)~~18). There ~~are~~were no amounts outstanding as of ~~September 30, 2020.~~December 31, 2021 and March 31, 2021, respectively.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
NOTE 6: DIGITAL ASSETS
The Company commenced their digital asset mining operations in November 2021. During the period ended December 31, 2021, the Company mined 0.34422307 Bitcoins. The value of the Bitcoin mined was approximately $17. During the period ended December 31, 2021, the Company recognized impairment of digital assets of $1, to bring the carrying value of the digital assets down to its fair value. The carrying value at December 31, 2021 was $16, which represents the lowest fair value of the Bitcoins at any time since their mining. The Company did not sell any of its digital assets at any point during the period ended December 31, 2021.
NOTE 6:7: PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of December 31, ~~2020~~2021 and March 31, ~~2020:~~2021:

December 31,
2020 March 31,
2020
Zest Labs freshness hardware $ 2,493 $ 2,493
Computers and software costs 222 222
Land 140 -
Buildings 236 -
Leasehold improvements – Pinnacle Frac 18 18
Machinery and equipment - Technology 200 200
Machinery and equipment – Commodity 3,458 3,405
Total property and equipment 6,767 6,338
Accumulated depreciation and impairment (2,846 ) (2,373 )
Property and equipment, net $ 3,921 $ 3,965

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
December 31,
2021 March 31,
2021
(unaudited)
Zest Labs freshness hardware $ 2,493 $ 2,493
Computers and software costs 222 222
Land 140 140
Buildings 236 236
Leasehold improvements – Pinnacle Frac 18 18
Mining technology equipment – Digital Asset 7,066 -
Machinery and equipment – Technology 200 200
Machinery and equipment – Commodities 3,596 3,385
Total property and equipment 13,971 6,694
Accumulated depreciation and impairment (3,515 ) (2,999 )
Property and equipment, net $ 10,456 $ 3,695

As of December 31, ~~2020~~2021 and ~~March 31,~~ 2020, the Company performed an evaluation of the recoverability of these long-lived assets. The analysis resulted in no impairment as of related to these assets.

On April 1, 2021, the Company placed back in service equipment of $201 with accumulated depreciation of $7 which were part of discontinued operations related to Pinnacle Vac. These assets are equipment related to Capstone who is servicing the debt related to the assets.
The Company ~~acquired $3,423~~ in ~~property~~April 2021 traded in a truck with a value of $5 for a new truck with a value of $3 and ~~equipment on March 27, 2020~~received cash of $2 in the ~~acquisition of Banner Midstream. In addition, $376 of land and buildings were acquired in the Rabb Resources acquisition.~~exchange.

Depreciation expense for the nine ~~months ended December 31, 2020~~ and ~~2019 was $513 and $216, respectively, and $172 and $68 for the~~ three months ended December 31, 2021 and 2020 was $516 and ~~2019,~~$513, and $170 and $172, respectively. ~~During the nine months ended December~~

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, ~~2020, the Company disposed of $188 worth of equipment that had a net value of $148 for cash proceeds of $43, resulting in a loss on disposal of $105.~~2021
NOTE 7:8: INTANGIBLE ASSETS AND GOODWILL

Intangible assets consisted of the following as of December 31, ~~2020~~2021 and March 31, ~~2020:~~2021:

December 31,
2020 March 31,
2020
Patents $ 1,013 $ 1,013
Customer relationships 2,100 2,100
Non-compete agreements – Banner Midstream 250 250
Outsourced vendor relationships 1,017 1,017
Non-compete agreements – Zest Labs 340 340
Total intangible assets 4,720 4,720
Accumulated amortization and impairment (2,584 ) (2,370 )
Intangible assets, net $ 2,136 $ 2,350
December 31,
2021 March 31,
2021
(unaudited)
Patents $ 1,013 $ 1,013
Customer relationships 2,100 2,100
Non-compete agreements – Banner Midstream 250 250
Outsourced vendor relationships 1,017 1,017
Non-compete agreements – Zest Labs 340 340
Total intangible assets 4,720 4,720
Accumulated amortization and impairment (2,916 ) (2,655 )
Intangible assets, net $ 1,804 $ 2,065

All intangible assets prior to the acquisition of Banner Midstream were fully impaired as of March 31, 2019. Those intangible assets related to the outsourced vendor relationships and non-compete agreements were recorded as part of the acquisition of 440labs.
In the acquisition of Banner Midstream, the Company acquired the customer relationships and non-compete agreements valued at $2,350. The estimated useful lives of the customer relationships isare ten years based on the estimated cash flows from those customer contracts, and the estimated useful lives of the non-compete agreement is five years amortized over a straight-line method.

Amortization expense for the nine ~~months ended December 31, 2020~~ and ~~2019 was $214 and $0, respectively, and $72 and $0 for the~~ three months ended December 31, 2021 and 2020 was $261 and ~~2019,~~$214, and $87 and $72, respectively.

The following is the future amortization of the intangibles as of December 31:

2021 $ 333
2022 280
2023 263
2024 263
2025 230
Thereafter 767
$ 2,136
2022 $ 280
2023 263
2024 263
2025 230
2026 205
Thereafter 563
$ 1,804

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
In addition to the statutory based intangible assets noted above, the Company ~~incurred~~recorded a total of $10,225 of goodwill in connection with the purchase of Trend and Banner ~~Midstream as follows:~~Midstream.

Acquisition – Trend Discovery $ 3,223
Acquisition – Banner Midstream 7,002
Goodwill – December 31, 2020 and March 31, 2020 $ 10,225
Accordingly, goodwill was as follows as of December 31, 2021:

Acquisition – Trend Discovery $ 3,223
Acquisition – Banner Midstream 7,002
Goodwill – December 31, 2021 $ 10,225
The Company assessed the criteria for impairment, and there were no indicators of impairment present as of December 31, ~~2020,~~2021, and therefore no impairment is necessary.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
NOTE 9: POWER DEVELOPMENT FEE
The Company has paid $1,000 each under two separate agreements for two different land sites to a non-related third party for a total of $2,000 in connection with the commencement of Bitstream’s Bitcoin mining operations. The payments represent the fee for securing 48 MW and 30 MW, respectively of utility capacity as defined and agreed by ERCOT West Load Zone in the Oncor Electric Delivery Company LLC (“Utility”) at the “one-span” tariff rate classification of “6.1.1.1.5 Primary greater than 10kw”. If the Utility is unable to deliver these terms as defined in the facilities extension agreement, the non-related third party is obligated to secure a new location for the Company with at least the stated capacity and same rate tariff. The non-related third party secured the 48 MW and 30 MW of available capacity by signing a distribution facilities extension agreement with the Utility and posting the required collateral. The $2,000 was used to purchase this right to the distribution facilities extension agreement which gives the Company immediate access to the 78 MW electric capacity from the Utility.
The Company also reimbursed the utility deposits paid by the non-related third party in connection with these agreements in the amount of $96 and $327, respectively. The power development fees are deemed non-refundable unless the non-related third party cannot find a suitable location within 6 months. The Company and the non-related third party are still negotiating a definitive power agreement.
The Company has classified these payments as “Power Development Costs” as a noncurrent asset on the Consolidated Balance Sheets.
NOTE 8:10: ACCRUED LIABILITIES

Accrued liabilities consisted of the following:

December 31,
2020 March 31,
2020
Professional fees and consulting costs $ 67 $ 106
Vacation and paid time off 114 126
Legal fees 24 503
Compensation 86 865
Interest 383 673
Insurance 631 548
Other 433 215
Total $ 1,738 $ 3,036
December 31,
2021 March 31,
2021
(unaudited)
Professional fees and consulting costs $ 116 $ 801
Vacation and paid time off 162 107
Legal fees 91 86
Compensation 136 734
Interest - 65
Insurance 956 1,013
Other 458 785
Total $ 1,919 $ 3,591

~~On March 27, 2020,~~During the Company assumed $2,362 of liabilities in the acquisition of Banner Midstream, and in addition, assumed $2,362 of liabilities in amounts that are due to prior owners of Banner Midstream and their subsidiaries. These amounts are non-interest bearing and due on demand. As of December 31, 2020 andyear ended March 31, ~~2020, $814 and $2,358 of~~2021, the ~~amounts due to prior owners is currently due. The~~ Company converted $1,228 of amounts due to prior owners into shares of common stock which resulted in a loss on conversion of $1,248, ~~in the nine months ended December 31, 2020. The remaining~~and $814 was paid in ~~January~~cash in the year ended March 31, 2021.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
NOTE 9:11: WARRANT DERIVATIVE LIABILITIES

The Company issued common stock and warrants in several private placements ~~in March 2017, May 2017, March 2018~~ and ~~August 2018. The March and May 2017 and March and August 2018 warrants (collectively the “Derivative~~two public offerings (“Derivative Warrant Instruments”) ~~are~~and some of these warrants have been classified as liabilities. The Derivative Warrant Instruments have been accounted for utilizing ASC 815 “Derivatives and Hedging.” The Company has incurred a liability for the estimated fair value of Derivative Warrant Instruments. The estimated fair value of the Derivative Warrant Instruments has been calculated using the Black-Scholes fair value option-pricing model with key input variables provided by management, as of the date of issuance, with changes in fair value recorded as gains or losses on revaluation in other income (expense).

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~

The Company identified embedded features in some of the ~~March and May 2017 warrants~~warrant agreements which ~~caused the warrants to be~~were classified as a liability. These embedded features included (a) the implicit right for the holders to request that the Company settle the warrants in registered shares. Since maintaining an effective registration of shares is potentially outside the control of the Company, these warrants were classified as liabilities as opposed to equity. The accounting treatment of derivative financial instruments requires that the Company treat the whole instrument as liability and record the fair value of the instrument as derivatives as of the inception date of the instrument and to adjust the fair value of the instrument as of each subsequent balance sheet date.
On October 28, 2019, the Company issued 449 shares of the Company’s common stock to investors in exchange for the March and May 2017 warrants. Upon the issuance of the 449 shares, the March and May 2017 warrants were extinguished. The fair value of the shares issued was $2,186, and the fair value of the warrants was $1,966 resulting in a loss of $220 that was recognized on the exchange.
~~The Company identified embedded features in the March and August 2018 warrants which caused the warrants to be classified as a liability. These embedded features~~equity; (b) included the right for the holders to request that the Company cash settle the warrant instruments from the holder by paying to the holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of the Derivative Warrant Instruments on the date of the consummation of a fundamental ~~transaction.~~transaction; and (c) certain price protections in the agreements. The accounting treatment of derivative financial instruments requires that the Company treat the whole instrument as liability and record the fair value of the instrument as derivatives as of the inception date of the instrument and to adjust the fair value of the instrument as of each subsequent balance sheet date.

On July 12, 2019, the March and August 2018 warrants were exchanged for 855 shares of Company common stock, and all of those warrants were extinguished. The fair value of the shares issued was $3,293, and the fair value of the warrants was $2,454 resulting in a loss of $839 that was recognized on the exchange.
As described further in Note 13 below, on August 22, 2019 the Company issued warrants that can be exercised in exchange for 784 shares of Company common stock to investors that invested in shares of Company preferred stock. The fair value of those warrants was estimated to be $1,576 at inception and on January 26, 2020, the Company entered into letter agreements with accredited institutional investors holding the warrants issued with the Company’s Series B Convertible Preferred Stock on August 21, 2019.
Pursuant to the letter agreements, the investors agreed to a cash exercise of 784 warrants at a price of $2.55 per share. The Company additionally, granted 1,176 warrants at $4.50. On January 27, 2020, the Company received approximately $2,000 in cash from the exercise of the August 2019 warrants and issued the January 2020 warrants to the investors, which have an exercise price of $4.50 and may be exercised within five years of issuance. This transaction resulted in a loss on extinguishment of $1,038.
On November 11, 2019, the Company issued warrants that can be exercised to purchase a number of shares of common stock of the Company equal to the number of shares of common stock issuable upon conversion of the Series C Preferred Stock purchased by the investors.
The fair value of those warrants was estimated to be $1,107 at inception and $543 as of March 31, 2020. The Company recognized $107 of interest expense related to the fair value of the warrants at inception that exceeded the proceeds received for the preferred stock on November 11, 2019.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
On April 15, 2020, the Company granted 40 warrants with an exercise price of $3.65 per share to extend the maturity date of the Senior Secured Debt acquired in the Banner Midstream acquisition to May 31, 2020. The Company does not believe this transaction constitutes an accounting extinguishment of debt due to a material modification of the debt instrument. The fair value of those warrants was estimated to be $84 at inception and $357 as of September 30, 2020. These warrants were exercised in the three months ended December 31, 2020.
On April 15, 2020, the Company granted 10 warrants with an exercise price of $3.65 to extend the maturity date of the Senior Secured Debt acquired in the Banner Midstream acquisition to May 31, 2020. The Company does not believe this transaction constitutes an accounting extinguishment of debt due to a material modification of the debt instrument. The fair value of those warrants was estimated to be $21 at inception and $89 as of September 30, 2020. These warrants were exercised in the three months ended December 31, 2020.
On April 15 and 16, 2020, the Company received $438 in proceeds in a loan provided by Trend Discovery SPV I. Since they were the borrower and responsible for repayment of these amounts the Company granted 200 warrants at $3.65 for collateral for the loan. The fair value of those warrants was estimated to be $419 at inception and $2,753 as of June 30, 2020. These warrants were exercised in the three months ended September 30, 2020.
On May 10, 2020, the November 2019 and January 2020 warrants were exchanged for 1,452 shares of Company common stock, and all of those warrants were extinguished resulting in a gain on extinguishment of $1,630.
On May 10, 2020, the Company issued warrants that can be exercised to purchase a number of shares of common stock of the Company. The fair value of those warrants was estimated to be $6,115 at inception and $15,620 as of June 30, 2020.
During the three months ended September 30, 2020, 881 of the May 10, 2020 of the warrants were exchanged for 881 shares of common stock of the Company for $4,847 cash. The fair value of the 295 warrants that remain as of September 30, 2020 is $2,493. In addition, on September 1, 2020, 200 April 16, 2020 warrants were exercised into 200 shares of the Company’s common stock for $730 in cash.
On September 24, 2020, the Company granted 250 warrants, for the early conversion of the April 15, 2020 warrants at a strike price of $9.65 with a term of two-years. The fair value of those warrants was estimated to be $1,265 at inception and $1,425 as of September 30, 2020. As a result of the November 14, 2020 warrant grant, the strike price was recalculated to $7.75 as there were price protections included in the warrant agreement. As a result of the closing of the registered direct offering on December 29, 2020, the grantee of the warrants waived the lowering of the strike price and the strike price reverted back to $9.65.
On November 14, 2020, the Company granted 60 warrants, for the early conversion of a portion of the September 24, 2020 warrants, with a strike price of $7.75 per share with a term of two-years. The fair value of those warrants was estimated to be $251 at inception, and ~~$350~~$13 as of December 31, ~~2020.~~2021.

On December 30, 2020, the Company granted 889 warrants, in the direct registered offering under the effective Form S-3, with a strike price of $10.00 with a term of two-years (maturity January 2, 2023). The fair value of those warrants was estimated to be $4,655 at inception and $4,653 as of December 31, 2020. During the three months ended March 31, 2021, 176 warrants were exercised for $1,760, and no shares were exercised during the nine months ended December 31, 2021. The fair value of the remaining warrants at December 31, 2021 is $133.

On December 30, 2020, the Company granted 62 warrants to the placement agent as additional compensation in connection with the registered direct offering closed December 31, 2020, exercisable at a strike price of $11.25 per share for a term of two-years (expiring January 2, 2023). The fair value of those warrants was estimated to be $308 at inception and ~~$308~~$10 as of December 31, ~~2020.~~2021.
The fair value of the 200 warrants that remain outstanding from the 250 warrants granted on September 24, 2020 as of December 31, 2021 is $21.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021
On June 30, 2021, the Company granted 200 warrants, subject to a purchase agreement entered into the same day with the warrant holder, with a strike price of $10.00 per share with a term of two-years. The fair value of those warrants was estimated to be $545 at inception, on June 30, 2021 and $74 as of December 31, 2021.

~~During~~On August 6, 2021, the ~~three months ended December 31, 2020,~~Company closed a $20,000 registered direct offering in which H.C. Wainwright & Co., LLC acted as the ~~remaining May 10, 2020 warrants were exchanged for 295~~exclusive placement agent. The Company sold 3,478 shares of common stock and 3,478 warrants at $5.75 per share. The warrants are exercisable for a three- and one-half-year period beginning when the Company increases its authorized common stock to 40,000 shares, which occurred on October 8, 2021. The Company also issued the placement agent 243 warrants exercisable at $7.1875 per share over the same period as the investor warrants but expiring on the earlier of the ~~Company for $1,623 cash. In addition, on November 13, 2020, 50 September 24, 2020 warrants were exercised into 50 shares~~three- and one-half year anniversary of the ~~Company’s common stock for $483~~date the placement agent warrants first become exercisable and August 4, 2026. Further information on the offering and compensation to the placement agent is contained in ~~cash, and on November 23, 2020, 50 April 15, 2020 warrants were exercised under a cashless exercise provision.~~the prospectus supplement dated August 4, 2021. The fair value of the ~~200~~investor warrants ~~that remain~~was estimated to be $11,203 at inception and $3,908 as of December 31, ~~2020 is $1,032.~~2021. The fair value of the placement agent warrants was estimated to be $744 at inception and $251 as of December 31, 2021.

The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, ~~2020~~2021 and March 31, ~~2020.~~2021. 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 December 31, ~~2020,~~2021 and March 31, ~~2020~~2021 and at inception:
Nine Months Ended
December 31,
2021 Year Ended
March 31,
2021
~~December 31,~~
~~2020~~ ~~March 31,~~
~~2020~~ Inception
Expected term 0.5 – 3.50 years 4.58 - 5 years ~~4.67-4.83 years~~ 5.00 years
Expected volatility 110 - 113% 94 - ~~101~~ % 95 % 101% 91% - ~~107~~ %107%
Expected dividend yield - - - -
Risk-free interest rate 0.61 - 1.74% 0.61 - ~~0.73~~1.74% % 1.50% - 2.77%
Market price $2.00 - $12.95 $3.05 - $10.00 ~~0.70~~ % ~~1.50% -2.77~~ %

The Company’s remaining derivative liabilities as of December 31, 2021 and March 31, 2021 associated with ~~the warrants~~warrant offerings are as ~~follows:~~ follows. All fully extinguished warrants liabilities are not included in the chart below.

December 31,
2020 March 31,
2020 Inception
Fair value of 276 November 11, 2019 warrants $ - $ 543 $ 1,107
Fair value of 1,176 January 27, 2020 warrants - 2,232 3,701
Fair value of 40 April 15, 2020 warrants - - 84
Fair value of 10 April 15, 2020 warrants - - 21
Fair value of 200 April 16, 2020 warrants - - 419
Fair value of 1,176 May 10, 2020 warrants - - 6,115
Fair value of 250 September 24, 2020 warrants 1,032 - 1,265
Fair value of 60 November 14, 2020 warrants 350 - 251
Fair value of 889 December 31, 2020 warrants 4,653 - 4,655
Fair value of 62 December 31, 2020 warrants 308 - 308
$ 6,343 $ 2,775
December 31,
2021 March 31,
2021 Inception
Fair value of 200 (originally 250) September 24, 2020 warrants $ 21 $ 1,349 $ 1,265
Fair value of 60 November 14, 2020 warrants 13 458 251
Fair value of 889 December 31, 2020 warrants 133 4,993 4,655
Fair value of 62 December 31, 2020 warrants 10 413 308
Fair value of 200 June 30, 2021 warrants 74 - 545
Fair value of 3,478 August 6, 2021 warrants 3,908 - 11,203
Fair value of 243 August 6, 2021 warrants 251 - 744
$ 4,410 $ 7,213

During the nine and three months ended December 31, ~~2020~~2021 and ~~2019~~2020 the Company recognized changes in the fair value of the derivative liabilities of ~~$(15,901)~~$15,295 and ~~$(2,392)~~$(15,901), ~~respectively,~~and $10,979 and $481, respectively. In addition, the Company recognized $1,289 and ~~($2,376)~~$0 in expenses related to the warrants granted for the nine and three months ended December 31, 2020 and 2019, respectively. The March and May 2017 warrants, March and August 2018 warrants, the August and November 2019 warrants, and the January 2020, April 16, 2020 and May 10, 2020 warrants were exchanged and thus were no longer outstanding as of December 31, 2020.2021.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021

Activity related to the warrant derivative liabilities for the nine months ended December 31, ~~2020~~2021 is as follows:

Beginning balance as of March 31, 2020 $ 2,775
Issuances of warrants – derivative liabilities 13,118
Warrants exchanged for common stock (25,451 )
Change in fair value of warrant derivative liabilities 15,901
Ending balance as of December 31, 2020 $ 6,343
Beginning balance as of March 31, 2021 $ 7,213
Issuances of warrants – derivative liabilities 12,492
Warrants exchanged for common stock (- )
Change in fair value of warrant derivative liabilities (15,295 )
Ending balance as of December 31, 2021 $ 4,410

Activity related to the warrant derivative liabilities for the year ended March 31, 2021 is as follows:
Beginning balance as of March 31, 2020 $ 2,775
Issuances of warrants – derivative liabilities 13,118
Warrants exchanged for common stock (27,198 )
Change in fair value of warrant derivative liabilities 18,518
Ending balance as of March 31, 2021 $ 7,213
NOTE ~~10:~~12: CAPITALIZED DRILLING COSTS AND OIL AND GAS PROPERTIES

Capitalized Drilling Costs
In January 2021, the Company commenced a drilling program on their Deshotel 24H well included in their proved reserves. The Company incurred $6,084 in costs related to this program of which $3,387 was expensed directly as drilling costs. The Company, pursuant to ASC 932 will amortize the remaining $2,697 of these costs, under the full-cost method based on the units of production method. Depletion expense for the nine and three months ended December 31, 2021 for the capitalized drilling costs was $511 and $92, respectively. As of December 31, 2021, the capitalized drilling costs were $2,056. There were no such costs for the nine and three months ended December 31, 2020.
Oil and Gas Properties
The Company’s holdings in oil and gas mineral lease (“OGML”) properties as of December 31, ~~2020~~2021 and March 31, ~~2020~~2021 are as follows:

December 31,
2020 March 31,
2020
Property acquired from Banner Midstream $ 5,895 $ 6,135
Asset purchase – June 2020 1 -
Properties acquired from Rabb Resources 3,002 -
Purchase – September 4, 2020 1,500 -
Purchase – September 30, 2020 760 -
Purchase – October 1, 2020 22 -
Purchase – October 9, 2020 615 -
Total OGML Properties $ 11,795 $ 6,135
Trend Exploration was assigned an 80% working interest in fourteen wells from the Assignors on July 1, 2021.

December 31,
2021 March 31,
2021
(unaudited)
Total OGML Properties Acquired $ 11,727 $ 12,352

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
The Company acquired the following from Banner Midstream on March 27, 2020:

Cherry et al OGML including shallow drilling rights was acquired by Shamrock from Hartoil Company on July 1, 2018.

O’Neal Family OGML and Weyerhaeuser OGML including shallow drilling rights were acquired by White River on July 1, 2019 from Livland, LLC and Hi-Tech Onshore Exploration, LLC respectively in exchange for a $125 drilling credit to be applied by Livland, LLC on subsequent drilling operations.

Taliaferro Family OGML including shallow drilling rights was acquired by White River on June 10, 2019 from Lagniappe Operating, LLC.

Kingrey Family OGML including both shallow and deep drilling rights was entered into by White River and the Kingrey Family on April 3, 2019.

Peabody Family OGML including both shallow and deep drilling rights was acquired by White River on June 18, 2019 from SR Acquisition I, LLC, a subsidiary of Sanchez Energy Corporation, for a 1% royalty retained interest in conjunction with White River executing a lease saving operation in June 2019.

As discussed in Note ~~16,~~18, the Company acquired certain leases on June 11, 2020 and June 18, 2020 in Mississippi and Louisiana valued at $2. These assets were paid entirely in cash. In addition, the Company impaired $83 of property as it let certain leases lapse.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~

As discussed in Note ~~16,~~18, on August 14, 2020, the Company entered into an Asset Purchase Agreement with Rabb Resources, LTD which included the acquisition of real property. The purchase price for this acquisition was $3,500. Of this amount, $3,224, is reflected as Oil and Gas Properties.

As discussed in Note ~~16,~~18, on September 4, 2020, the Company entered into a Lease Assignment agreement. The purchase price for this acquisition was $1,500. Of this amount, $1,500, is reflected as Oil and Gas Properties.

As discussed in Note ~~16,~~18, on September 30, 2020, the Company entered into three Asset Purchase Agreements. The purchase prices for these acquisitions were $750. Of this amount, $760, is reflected as Oil and Gas Properties.

As discussed in Note ~~16,~~18, on October 1, 2020, the Company entered into three Asset Purchase Agreements. The purchase price for these acquisitions were $22. Of this amount, $22, is reflected as Oil and Gas Properties.

As discussed in Note ~~16,~~18, on October 9, 2020, the Company entered into three Asset Purchase Agreements. The purchase price for these acquisitions were $615. Of this amount, $615, is reflected as Oil and Gas Properties.

In February and March 2021, the Company acquired additional leases for $916 under the Blackbrush/Deshotel lease related to the Participation Agreement.
On May 13, 2021, the Company’s subsidiaries White River Energy LLC and White River Operating LLC entered into a Letter Agreement for a .60 of 8/8^thEarned Working Interest with TSEA Partners LLC (“TSEA”) for their Harry O’Neal 20-10 lease in Holmes County, MS (“Letter Agreement”). Under the terms of the Letter Agreement, TSEA paid $600 to the Company to transfer the working interest to TSEA and TSEA received a $300 drilling or workover credit to use towards any authority for expenditure at Horseshoe Field. There were no amounts valued as oil and gas properties for this particular property, and as a result, the entire $600 is reflected as a gain on sale of property as well as the removal of the asset retirement obligation of $1 which brought the total gain to $601.
Effective on July 1, 2021, the Company’s subsidiary White River SPV 2, LLC closed on the sale of the Weyerhauser OGML Lease. The Company did not record a value for the property as it was acquired in a group of properties on June 11, 2021 as the entire group of properties were purchased for $1. As a result, the entire sales price of $112, which includes the sale of the existing inventory and related expenses of $12 on this well and removal of the accumulated depletion, asset retirement obligation brought the total gain to $121.
The Company had an analysis completed by an independent petroleum consulting company in March 2021 to complete the acquisition analysis within the required one-year period. There were no adjustments required from the original asset allocation on March 27, 2020.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
The following table summarizes the Company’s oil and gas activities by classification for the nine months ended December 31, ~~2020. There was no activity for the nine months~~2021 and year ended ~~December~~March 31, ~~2019:~~2021.

Activity Category March 31,
2020 Adjustments (1) December 31,
2020
Proved Developed Producing Oil and Gas Properties
Cost $ 167 $ 520 $ 687
Accumulated depreciation, depletion and amortization - (37 ) (37 )

Total $ 167 $ 483 $ 650

Undeveloped and Non-Producing Oil and Gas Properties
Cost $ 5,968 $ 5,520 $ 11,488
Accumulated depreciation, depletion and amortization - (343 ) (343 )

Total $ 5,968 $ 5,177 $ 11,145

Grand Total $ 6,135 $ 5,660 $ 11,795
Activity Category March 31,
2021 Adjustments (1) December 31,
2021
Proved Developed Producing Oil and Gas Properties
Cost $ 7,223 $ - $ 7,223
Accumulated depreciation, depletion and amortization (739 ) (929 ) (1,668 )
Changes in estimates - - -
Total $ 6,484 $ (929 ) $ 5,555

Undeveloped and Non-Producing Oil and Gas Properties
Cost $ 5,868 $ 304 $ 6,172
Changes in estimates (- ) (- ) (- )
Total $ 5,868 $ 304 $ 6,172

Grand Total $ 12,352 $ (625 ) $ 11,727

Activity Category March 31,
2020 Adjustments (1) March 31,
2021
Proved Developed Producing Oil and Gas Properties
Cost $ 167 $ 737 $ 904
Accumulated depreciation, depletion and amortization - (739 ) (739 )
Changes in estimates - 6,319 6,319
Total $ 167 $ 6,317 $ 6,484

Undeveloped and Non-Producing Oil and Gas Properties
Cost $ 5,968 $ 6,219 $ 12,187
Changes in estimates - (6,319 ) (6,319 )
Total $ 5,968 $ (100 ) $ 5,868

Grand Total $ 6,135 $ 6,217 $ 12,352
(1) ~~(1)~~
Relates to acquisitions and ~~impairments~~dispositions of reserves. For the nine months ended December 31, 2021, the Company acquired various leases in Concordia, LA and Caldwell, TX for $304, and sold a lease for $6 in Lasalle, LA.
In addition, on July 1, 2021, the Company assigned an 80% working interest in fourteen wells to their subsidiary, Trend Exploration.

24

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021

NOTE ~~11:~~13: LONG-TERM DEBT

Long-term debt consisted of the following as of December 31, ~~2020~~2021 and March 31, ~~2020:~~
December 31,
2020 March 31,
2020
Credit facility – Trend Discovery SPV 1, LLC (a) $ - $ -
Senior secured bridge loan – Banner Midstream (b) - 2,222
Note payable – LAH 1 (c) - 110
Note payable – LAH 2 (d) - 77
Note payable – Banner Midstream 1 (e) - 303
Note payable – Banner Midstream 2 (f) - 397
Note payable – Banner Midstream 3 (g) - 500
Merchant Cash Advance (MCA) loan – Banner Midstream 1 (h) - 361
MCA loan – Banner Midstream 2 (i) - 175
MCA loan – Banner Midstream 3 (j) - 28
Note payable – Banner Midstream – Alliance Bank (k) 1,090 1,239
Commercial loan – Pinnacle Frac – Firstar Bank (l) 705 952
Auto loan 1 – Pinnacle Vac – Firstar Bank (m) 31 40
Auto loan 2 – Pinnacle Frac – Firstar Bank (n) 40 52
Auto loan 3 – Pinnacle Vac – Ally Bank (o) 36 42
Auto loan 4 – Pinnacle Vac – Ally Bank (p) 38 47
Auto loan 5 – Pinnacle Vac – Ally Bank (q) 37 44
Auto loan 7 – Capstone – Ally Bank (r) 77 97
Tractor loan 6 – Capstone – Tab Bank (s) 194 235
Equipment loan – Shamrock – Workover Rig (t) - 50
Ecoark – PPP Loan (u) 29 -
Pinnacle Frac Transport – PPP Loan (v) - -
Total long-term debt 2,277 6,971
Less: debt discount   (- ) (149 )
Less: current portion (789 ) (6,401 )
Long-term debt, net of current portion $ 1,488 $ 421
~~(a)~~ On December 28, 2018, the Company entered into a $10,000 credit facility that includes a loan and security agreement (the “Agreement”) where the lender agreed to make one or more loans to the Company, and the Company may make a request for a loan or loans from the lender, subject to the terms and conditions. The Company is required to pay interest biannually on the outstanding principal amount of each loan calculated at an annual rate of 12%. The loans are evidenced by demand notes executed by the Company. The Company is able to request draws from the lender up to $1,000 with a cap of $10,000, including the $1,000 advanced on December 28, 2018 and an additional $350 advanced through March 31, 2019, resulting in a balance of $1,350 at March 31, 2019.
25
~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
~~An additional $1,137 was advanced~~2021. All debt instruments repaid during the year ended March 31, ~~2020; and $38 of commitment fees, to bring the balance of the notes payable to $2,525 at March 31, 2020. Loans made pursuant to the Agreement~~2021 are ~~secured by a security interest~~not included in the ~~Company’s collateral held with~~below chart and the ~~lender and guaranteed by the Company’s subsidiary, Zest Labs.~~chart only reflects those instruments that had a balance owed as of these dates.

The Company pays to the lender a commitment fee on the principal amount of each loan requested thereunder in the amount of 3.5% of the amount thereof. The Company also paid an arrangement fee of $300 to the lender which was paid upon execution of the Agreement. The aforementioned fees were and are netted from proceeds advanced and are recorded as interest expense. Zest Labs is a plaintiff in a litigation styled as ~~Zest Labs, Inc. vs Walmart, Inc., Case Number 4:18-cv-00500~~ filed in the United States District Court for the Eastern District of Arkansas (the “Zest Litigation”). The Company agrees that within five days of receipt by Zest Labs or the Company of any settlement proceeds from the Zest Litigation, the Company will pay or cause to be paid over to lender an additional fee in an amount equal to (i) 0.50 multiplied by (ii) the highest aggregate principal balance of the loans over the life of the loans through the date of the payment from settlement proceeds; provided, however, that such additional fee shall not exceed the amount of the settlement proceeds.
December 31,
2021 March 31,
2021
(unaudited)
Note payable – Alliance Bank (a) $ 303 $ 1,033
Commercial loan – Firstar Bank (b) 328 626
Auto loan 1 – Firstar Bank (c) 20 29
Auto loan 2 – Firstar Bank (d) - 38
Auto loan 3 – Ally Bank (e) 27 34
Auto loan 4 – Ally Bank (f) 29 35
Auto loan 7 – Ally Bank (g) - 69
Tractor loan 6 – Tab Bank (h) 134 180
Ecoark – PPP Loan (i) - 24
Total long-term debt 841 2,068
Less: current portion (698 ) (1,056 )
Long-term debt, net of current portion $ 143 $ 1,012

Subject to customary carve-outs, the Agreement contains customary negative covenants and restrictions for agreements of this type on actions by the Company including, without limitation, restrictions on indebtedness, liens, investments, loans, consolidation, mergers, dissolution, asset dispositions outside the ordinary course of business, change in business and restriction on use of proceeds. In addition, the Agreement requires compliance by the Company of covenants including, but not limited to, furnishing the lender with certain financial reports and protecting and maintaining its intellectual property rights. The Agreement contains customary events of default, including, without limitation, non-payment of principal or interest, violation of covenants, inaccuracy of representations in any material respect and cross defaults with certain other indebtedness and agreements.
~~Interest expense on the note for the nine months ended December 31, 2020 and 2019 was $0 and $193, respectively.~~
On March 31, 2020, the Company converted all principal and interest in the Trend Discovery SPV I, LLC credit facility into shares of the Company’s common stock. The conversion of $2,525 of principal and $290 of accrued interest resulted in the issuance of 771 shares of common stock at a value of $2.95 per share. This transaction resulted in a gain on conversion of $541. As a result of the conversion, there are no amounts outstanding as of March 31, 2020.
~~(b)~~(a) Senior secured bridge loan of $2,222, containing a debt discount of $132 as of March 31, 2020. This was assumed in the Banner Midstream acquisition, and fully repaid in May 2020, and was secured by machinery and equipment of Pinnacle Frac.
~~(c)~~ Unsecured note payable previously issued April 2, 2018 which was assumed by Banner Midstream in the acquisition of a previous entity. The amount was past due and bears interest at 10% per annum. This amount along with accrued interest of $22 was assumed on March 27, 2020 in the acquisition of Banner Midstream. Amount was paid off in May 2020, and $24 of accrued interest remains at December 31, 2020.
~~(d)~~ Unsecured note payable previously issued April 2, 2018 which was assumed by Banner Midstream in the acquisition of a previous entity. The amount was past due and bears interest at 10% per annum. This amount along with accrued interest of $22 was assumed on March 27, 2020 in the acquisition of Banner Midstream. Amount was paid off in May 2020, and $24 of accrued interest remains at December 31, 2020.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
~~(e)~~ Junior secured note payable issued January 16, 2019 to an unrelated third party at 10% interest. This amount along with accrued interest of $39 was assumed on March 27, 2020 in the acquisition of Banner Midstream. This note along with the accrued interest was repaid in May 2020.
~~(f)~~ Unsecured notes payable issued in June and July 2019 to an unrelated third party at 10% interest. There are three notes to this party in total. This amount along with accrued interest of $29 was assumed on March 27, 2020 in the acquisition of Banner Midstream. These notes were converted in May 2020.
~~(g)~~ Unsecured note payable issued October 2019 to an unrelated third party at 10% interest. This amount along with accrued interest of $23 was assumed on March 27, 2020 in the acquisition of Banner Midstream. The balance of this note and remaining accrued interest was converted into 86 shares of common stock in the Company’s fiscal quarter ended September 30, 2020.
~~(h)~~ ~~Merchant cash advance loan on Banner Midstream. The Company assumed $368 of this note along with accrued interest of $144. This note along with the accrued interest was repaid in May 2020.~~
~~(i)~~ ~~Merchant cash advance loan on Banner Midstream. The Company assumed $181 of this note along with accrued interest of $70. This note along with the accrued interest was repaid in May 2020.~~
~~(j)~~ ~~Merchant cash advance loan on Banner Midstream. The Company assumed $69 of this note along with accrued interest of $21. This note along with the accrued interest was repaid in May 2020.~~
~~(k)~~ Original loan date of June 14, 2019 with an original maturity date of April 14, 2020. The Company extended this loan for $1,239 at 4.95% with a new maturity date of April 14, 2025. ~~This loan and discount was assumed in~~On September 24, 2021, the ~~Banner Midstream acquisition.~~Company repaid $550 of this amount as a condition of the underlying guarantee of the note.

~~(l)~~(b) Original loan date of February 28, 2018, due ~~February 28, 2021~~December 31, 2022 at ~~the Wall Street Prime Journal Rate interest. This loan was assumed in the Banner Midstream acquisition.~~4.75%.

~~(m)~~(c) On July 20, 2018, ~~Pinnacle Vac Service~~ entered into a long-term secured note payable for $56 for a service truck maturing July 20, 2023. The note is secured by the collateral purchased and accrued interest annually at 6.50% with principal and interest payments due monthly. There is no accrued interest as of December 31, ~~2020. This note was assumed in the acquisition of Banner Midstream on March 27, 2020.~~2021.

~~(n)~~(d) On August 3, 2018, ~~Pinnacle Frac Transport~~ entered into a long-term secured note payable for $73 for a service truck maturing August 3, 2023. The note is secured by the collateral purchased and accrued interest annually at 6.50% with principal and interest payments due monthly. ~~There is no accrued interest as~~The collateral underlying the loan was stolen in March 2021, and the Company received an insurance settlement in May 2021 and promptly used those proceeds to pay off the remainder of ~~December 31, 2020. This note was assumed in~~ the ~~acquisition of Banner Midstream on March 27, 2020.~~loan balance.

~~(o)~~(e) On July 18, 2018, ~~Pinnacle Vac Service~~ entered into a long-term secured note payable for $56 for a service truck maturing August 17, 2024. The note is secured by the collateral purchased and accrued interest annually at 9.00% with principal and interest payments due monthly. There is no accrued interest as of December 31, ~~2020. This note was assumed in the acquisition of Banner Midstream on March 27, 2020.~~2021.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~

~~(p)~~(f) On July 26, 2018, ~~Pinnacle Vac Service~~ entered into a long-term secured note payable for $54 for a service truck maturing September 9, 2024. The note is secured by the collateral purchased and accrued interest annually at 7.99% with principal and interest payments due monthly. There is no accrued interest as of December 31, ~~2020. This note was assumed in the acquisition of Banner Midstream on March 27, 2020.~~2021.

~~(q)~~(g) On July 26, 2018, Pinnacle Vac Service entered into a long-term secured note payable for $54 for a service truck maturing September 9, 2024. The note is secured by the collateral purchased and accrued interest annually at 7.99% with principal and interest payments due monthly. There is no accrued interest as of December 31, 2020. This note was assumed in the acquisition of Banner Midstream on March 27, 2020.
~~(r)~~ On November 5, 2018, ~~Capstone Equipment Leasing~~ entered into four long-term secured notes payable for $140 maturing on November 5, 2021. The notes are secured by the collateral purchased and accrued interest annually at rates ranging between 6.89% and 7.87% with principal and interest payments due monthly. ~~There is no accrued interest as of December 31, 2020.~~ These ~~notes~~loans were ~~assumed~~paid in full on the ~~acquisition of Banner Midstream on March 27, 2020.~~maturity date.

~~(s)~~(h) On November 7, 2018, ~~Capstone Equipment Leasing~~ entered into a long-term secured note payable for $301 maturing on November 22, 2023. The note is secured by the collateral purchased and accrued interest annually at 10.25% with principal and interest payments due monthly. There is no accrued interest as of December 31, ~~2020. This note was assumed in the acquisition of Banner Midstream on March 27, 2020.~~2021.
(i)
~~(t)~~ ~~Equipment loan assumed in the acquisition of Banner Midstream on March 27, 2020, and repaid with accrued interest in June 2020.~~
~~(u)~~ PPP loan received by Ecoark Holdings Inc. in April 2020. Loan bears interest at 1% per annum and matures April 2022. On November 19, 2020, the Company received confirmation that $356 in principal and $2 in accrued interest has been forgiven, and this amount has been reflected in forgiveness of debt. The remaining $29, ~~will~~were to be due in monthly installments of $2 through maturity in May ~~2022.~~
~~(v)~~ ~~PPP loan received by Pinnacle Frac Transport in April 2020. Loan bears interest at 1% per annum and matures April 2022. On November 27, 2020,~~2022, however, the ~~entire loan~~Company repaid the remaining balance of ~~$1,483 and accrued interest of $9 was forgiven and this amount has been reflected as forgiveness of debt.~~$15 on August 24, 2021.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
The following is a list of maturities as of December 31:

2021 $ 789
2022 723
2023 380
2024 293
2025 92
$ 2,277
2022 $ 698
2023 127
2024 16
$ 841

During the nine months ended December 31, ~~2020,~~2021, the Company repaid $1,227 in long-term debt.
During the year ended March 31, 2021, the Company received proceeds of $1,869 in new long-term debt, repaid ~~$3,891~~$4,100 in existing long-term debt, converted $830 in existing long-term debt that resulted in a loss on conversion of $1,337, and had $1,850 forgiven in long-term debt and accrued interest. In addition, the Company converted $65 of accrued interest and paid $361 in accrued interest during this period. The Company recognized a loss of $146 on conversion of the accrued interest to common stock in the year ended March 31, 2021.
Interest expense on long-term debt during the three and nine months ended December 31, ~~2020.~~2021 and 2020 are $19 and $113 and $66 and $362, respectively.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
NOTE ~~12:~~14: NOTES PAYABLE - RELATED PARTIES

Notes payable to related parties consisted of the following as of December 31, ~~2020~~2021 and March 31, ~~2020:~~2021. All notes payable to related parties instruments repaid during the year ended March 31, 2021 are not included in the below chart and the chart only reflects those instruments that had a balance owed as of these dates.

December 31,
2020 March 31,
2020
Ecoark Holdings Board Member (a) $ 578 $ 578
Ecoark Holdings Officers (b) 61 1,242
Banner Midstream Officers (c) 133 152
Ecoark Holdings – common ownership (d) - 200
Total Notes Payable – Related Parties 772 2,172
Less: Current Portion of Notes Payable – Related Parties (772 ) (2,172 )
Long-term debt, net of current portion $ - $ -
December 31,
2021 March 31,
2021
(unaudited)
Ecoark Holdings Board Member (a) $          - $ 578
Total Notes Payable – Related Parties - 578
Less: Current Portion of Notes Payable – Related Parties (- ) (578 )
Long-term debt, net of current portion $ - $ -

(a) A board member advanced ~~$328~~$578 to the Company through ~~March 31, 2020,~~August 8, 2021, under the terms of ~~a note~~notes payable that bears interest at rates ranging between 10% ~~simple~~and 15% interest per ~~annum, and~~annum. On August 9, 2021, the ~~principal balance along~~Company repaid the entire $578 to the board member with accrued interest ~~is payable upon demand.~~of $43. Interest expense on the ~~note~~notes for the nine and three months ended December 31, 2021 and 2020 was ~~$53~~$0 and ~~$18, respectively,~~$72 and $80 is accrued as of December 31, 2020. In addition, the Company assumed $250 in notes entered into in March 2020 via the acquisition of Banner Midstream from the same board member at 15% interest. In addition, another board member advanced $4 in the six months ended September 30, 2020 which is non-interest bearing$25 and ~~due on demand, and has been repaid in the quarter ended September 30, 2020.~~$99, respectively.

~~(b)~~ William B. Hoagland, Chief Financial Officer, advanced $30 to the Company in May 2019 pursuant to a note with the same terms as the note with the board member. Randy May, CEO, advanced $45 to the Company in August 2019 pursuant to a note with the same terms as the note with the board member. Interest expense on both of these notes was $5. Both of these amounts, along with the accrued interest,
An officer of the Company advanced $45 and was repaid this amount during the year ended March 31, 2020. In addition, Randy May advanced $1,242 in five separate notes to Banner Midstream and its subsidiaries prior to the acquisition by the Company. These amounts are due at various times through December 2020 and bear interest at 10-15% interest per annum. Accrued interest on these notes as of December 31, 2020 is $241. $1,181 of these notes were repaid through December 31, 2020. This note was repaid on January 5, 2021.
~~(c)~~ An officer of Banner Midstream who remains an officer of this subsidiary advanced $152 in three separate notes to Banner Midstream and its subsidiaries prior to the acquisition by the Company and an additional $180 in four separate advances in the nine months ended December 31, 2020. These amounts are due at various times through December 2020 and bear interest at 10-15% interest per annum. Accrued interest on these notes as of December 31, 2020 is $15. $187 of these notes were repaid through December 31, 2020. This note was repaid on January 5, 2021.
~~(d)~~ A company controlled by an officer of the Company advanced $200 to Banner Midstream and its subsidiaries prior to the acquisition by the Company. These amounts were due April 15, 2020 and bears interest at 14% interest per annum. These notes were converted in May 2020.
~~During~~ the nine months ended December 31, ~~2020,~~2021.
During the year ended March 31, 2021, the Company received proceeds of ~~$604~~$954 in notes payable – related parties, repaid ~~$1,429~~$1,973 in existing notes payable – related parties, and converted $575 in existing notes payable – related parties that resulted in a loss on conversion of $1,239. In addition, the Company converted $15 of accrued interest during this period.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021

NOTE ~~13:~~15: STOCKHOLDERS’ EQUITY (DEFICIT)

Ecoark Holdings Preferred Stock

On March 18, 2016, the Company created 5,000 shares of “blank check” preferred stock, par value $0.001. ~~On August 21, 2019 (the “Effective Date”),~~The Company has designated Series B and C out of the total Preferred Shares authorized.
The Company ~~and two accredited investors~~has entered into ~~a Securities Purchase Agreement pursuant~~agreements to ~~which~~issue preferred stock over the ~~Company sold~~past several years. Currently as of December 31, 2021 and ~~issued to the investors an aggregate of 2~~March 31, 2021, there are no shares of ~~Series B Convertible Preferred Stock, par value $0.001 per share at a price~~any series of ~~$5,000 per share.~~
Pursuant to the Securities Purchase Agreement, the Company issued to each investor a warrant (a “Warrant”) to purchase a number of shares of common stock of the Company, par value $0.001 per share (“Common Stock”), equal to the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock purchased by the investor. Each Warrant has an exercise price equal to $2.55, subject to full ratchet price anti-dilution provisions in accordance with the terms of the Warrants (the “Exercise Price”) and is exercisable for five years after the Effective Date. In addition, if the market price of the Common Stock on the 11 month anniversary of the closing date of the offering is less than $2.55, holder of the warrants shall be entitled to receive additional shares of common stock based on the number of shares of common stock that would have been issuable upon conversion of the Series B Convertible Preferred Stock had the initial conversion price been equal to the market price at such time (but not less than $1.25) less the number of shares of commonpreferred stock issued ~~or issuable upon exercise of the Series B Convertible Preferred Stock based on the $2.55 conversion price.~~
The Company also agreed to amend the current exercise price of the warrants that the investors received in connection with the Securities Purchase Agreements dated March 14, 2017 (the “March Warrants”) and ~~May 22, 2017 (the “May Warrants” and, together with the March Warrants, the “Existing Securities”).~~outstanding. The Existing Securities have a current exercise price of $2.95, which was amended from $12.50 on July 12, 2019. The current exercise price for the Existing Securities shall be amended to reduce the exercise price to $2.55 on August 21, 2019, subject to adjustment pursuant to the provisions of the Existing Securities.
Each share of the Series B Preferred Stock has a par value of $0.001 per share and a stated value equal to $5,000 (the “Stated Value”) and is convertible at any time at the option of the holder into the number of shares of Common Stock determined by dividing the stated value by the conversion price of $2.55, subject to certain limitations and adjustments (the “Conversion Price”).
The Company received gross proceeds from the Private Placement of $2,000, before deducting transaction costs, fees and expenses payable by the Company. The Company intends to use the net proceeds of the Private Placement to support the Company’s general working capital requirements.
~~On August 21, 2019, the Company issued 60 shares of common stock to advisors that assisted with the securities purchase agreement and exchange agreement.~~
~~On October 15, 2019, nearly all the Series B Preferred Stock shares were converted into 752 shares of Common Stock.~~
On November 11, 2019, the Company and two accredited investors entered into a securities purchase agreement (the “Securities Purchase Agreement”) pursuant to which the Company sold and issued to the investors an aggregate of 1 share of Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), at a price of $5,000 per share (the “Private Placement”).

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
Pursuant to the Securities Purchase Agreement, the Company issued to each investor a warrant (a “Warrant”) to purchase a number of shares of common stock of the Company, par value $0.001 per share (“Common Stock”), equal to the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock purchased by the Investor. Each Warrant has an exercise price equal to $3.65, subject to full ratchet price anti-dilution provisions in accordance with the terms of the Warrants (the “Exercise Price”) and is exercisable for five years after the Effective Date. In addition, if the market price of the Common Stock for the five trading days prior to July 22, 2020 is less than $3.65, holder of the warrants shall be entitled to receive additional shares of common stock based on the number of shares of common stock that would have been issuable upon conversion of the Series C Convertible Preferred Stock had the initial conversion price been equal to the market price at such time (but not less than $1.25) less the number of shares of common stock issued or issuable upon exercise of the Series C Convertible Preferred Stock based on the $3.65 conversion price.
Each share of the Series C Preferred Stock has a par value of $0.001 per share and a stated value equal to $5,000 (the “Stated Value”) and is convertible at any time at the option of the holder into the number of shares of Common Stock determined by dividing the stated value by the conversion price of $3.65, subject to certain limitations and adjustments (the “Conversion Price”).
The Company received gross proceeds from the Private Placement of $1,000. The Company intends to use the net proceeds of the Private Placement to support the Company’s general working capital requirements.
~~In April 2020, the~~ remaining shares of preferred ~~stock in these transactions~~shares were converted ~~into 308 shares of common stock.~~during the year ended March 31, 2021.

On November 12, 2020, the Company filed with the Secretary of State of the State of Nevada, a Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Preferred Stock, par value $0.001 (“Series A-1 Preferred Stock”). The Certificate of Designation of the Series A-1 Preferred Stock was effective upon the filing to the Secretary of State of the State of Nevada. The Company has authorized one share of the Series A-1 Preferred Stock, and this share was issued on November 12, 2020. On November 27, 2020, the one share of Series A-1 Preferred Stock was redeemed. After the redemption, the Company filed a Certificate of Withdrawal with the State of Nevada, which was effective upon this filing and had the effect of amending the Company’s articles of incorporation to eliminate all references to the Series A-1 Preferred Stock.
~~The material terms of the Series A-1 Preferred Stock prior to the withdrawal was as follows:~~
~~Voting Rights~~
The Series A-1 Preferred Stock shall have the right to vote and/or consent solely on a proposal to amend the Company’s Articles of Incorporation to increase the number of shares of the Company’s common stock, that the Company is authorized to issue and to ratify the issuance of certain shares issued by the Company in excess of 100,000 shares or other issuances authorized by the stockholders voting together with the common stockholders as one class. With respect to any regular or special meeting of the stockholders to consider the Proposals, the holder of the Series A-1 Preferred Stock shall be entitled to the same notice of any regular or special meeting of the stockholders as may or shall be given to holders of Common Stock entitled to vote at such meetings. Solely with respect to such proposals, the Series A-1 Preferred Stock shall have voting power equal to 51% of the number of votes eligible to vote on the proposals at any special or annual meeting of the Company’s stockholders (with the power to take action by written consent in lieu of a stockholders meeting). The Series A-1 Preferred Stock shall not have the right to vote and/or consent on any matter other than the proposals.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
~~Automatic Cancellation~~
Any Series A-1 Preferred Stock issued and outstanding on the record date fixed by the Board of Directors or determined in accordance with the bylaws of the Company to vote and/or consent to the proposals shall be automatically surrendered to the Company and cancelled for no consideration upon the earlier of (i) the effectiveness of the amendment to the Company’s Articles of Incorporation that is authorized by stockholder approval of such Authorized Share Increase Proposal or (ii) the approval of the Ratification Proposal. Upon such surrender and cancellation, all rights of the Series A-1 Preferred Stock shall cease and terminate, and the Series A-1 Preferred Stock shall be retired and shall not be reissued.
Ecoark Holdings Common Stock

The Company is authorized to issue ~~30,000~~40,000 shares of common stock, par value $0.001. Effective with the opening of trading on December 17, 2020, the Company implemented a one-for-five reverse split of its issued and outstanding common stock and a simultaneous proportionate reduction of its authorized common stock. All share and per share figures are reflected on a post-split basis herein. Effective December 29, 2020, the Company amended its articles of incorporation to reduce its authorized common stock from 40,000 shares to 30,000 shares. On August 6, 2021, the Company’s board of directors approved the increase of the authorized common shares to 40,000. The increase became effective on October 8, 2021, following the approval in a Special Meeting of Ecoark’s Stockholders.

~~On May 31, 2019, the Company acquired Trend Discovery Holdings, Inc. for 1,100 shares of common stock. The value of this transaction was $3,237.~~
In the three months ended June 30, 2020, the Company issued 308 shares of common stock in April and May 2020 to convert the remaining shares of ~~preferred~~Series B Preferred Stock and Series C ~~shares;~~Preferred Stock; 1,531 shares of common stock in the exercise of warrants; 89 shares in the exercise of stock options; 93 shares of common stock in the conversion of accounts payable and accrued expenses; and 524 shares of common stock in the conversion of long-term debt, notes payable – related parties and accrued interest.

In the three months ended September 30, 2020, the Company issued 1,088 shares of common stock in the exercise of warrants; ~~1 shares~~one share in the exercise of stock options; 31 shares of common stock for services rendered; 171 shares of common stock to acquire assets; and 192 shares of common stock in the conversion of long-term debt, notes payable – related parties and accrued interest.

In the three months ended December 31, 2020, the Company issued 376 shares of common stock in the exercise of warrants.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
On December 31, 2020, the Company completed a registered direct offering of common stock and warrants, whereby the Company issued 889 shares of common stock and 889 accompanying warrants to purchase common stock to one institutional investor under the effective Form S-3 at $9.00 per share and accompanying warrant for a total of $8,000 in gross proceeds, before placement agent fees and other offering expenses. The warrants are exercisable for a two-year term at a strike price of $10.00 per share. The Company granted 62 warrants to the placement agent as compensation in addition to the $560 cash commission received by the placement agent. The placement agent warrants are exercisable at $11.25 per share and expire on January 2, 2023.

~~As of December~~In the three months ended March 31, ~~2020, 22,470~~2021, the Company issued 176 shares of common stock ~~were~~in the exercise of warrants for $1,760, and 59 shares for the exercise of stock options for $153.
In the three months ended June 30, 2021, the Company issued ~~and 22,353~~115 shares of common stock ~~were outstanding, net of 117 treasury shares. As of~~valued at $675 which had been accrued for at March 31, ~~2020, 17,175~~2021 in consulting fees under a contract entered into February 2, 2021. In addition, the Company issued 20 shares of common stock ~~were~~in exercise of stock options for cash ($28) and in a cashless exercise.
In the three months ended September 30, 2021, the Company issued ~~and 17,058~~3,478 shares of common stock ~~were outstanding, net~~in a registered direct offering for $20,000, and 45 shares of ~~117 treasury shares.~~

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~common stock for services rendered valued at $241. A portion of the shares ($149) issued are for future services and will be expensed upon completion of these services.

~~Share-based Compensation~~In the three months ended December 31, 2021, the Company did not issue any shares of common stock.

Share-based compensation expense of $1,795 and $1,569 and $577 and $419, respectively is included in selling, general and administrative expense in the condensed consolidated statements of operations for the nine and three months ended December 31, 2021 and 2020, respectively for the 2013 Incentive Stock Plan, 2017 Omnibus Incentive Plan and for the Company’s Non-Qualified Stock Options. There were no expenses related to warrant grants in these periods. There is $84 in share-based compensation expense for the three months ended December 31, 2021 that has been accrued as ~~follows:~~ of December 31, 2021.

2013
Incentive Stock Plan 2017
Omnibus Incentive Plan Non-Qualified Stock Options
Common
Stock
Total
Nine months ended December 31, 2020
Employees/Directors $       - $ 277 $ 1,069 $ 479 $ 1,825
Services - 25 198 6 229
$ - $ 302 $ 1,267 $ 485 $ 2,054

Nine months ended December 31, 2019
Employees/Directors $ - $ 700 $ 1,529 $ - $ 2,229
Amortization of services cost - 175 152 463 790
$ - $ 875 $ 1,681 $ 463 $ 3,019
In order to have sufficient authorized capital to raise the $20,000, on August 4, 2021, an officer and director of the Company agreed to cancel stock options in exchange for a lesser number of restricted stock units, subject to future vesting. In accordance with the restricted stock agreement, the director was granted 272 RSUs that vest over 12 quarterly increments, in exchange for cancelling 672 stock options. In addition, on October 6, 2021, this officer and director received 64 additional RSUs. The expense related to the modification of these grants is included in the share-based compensation expense in the three months ended September 30, 2021.
As of December 31, 2021, 26,364 shares of common stock were issued and 26,247 shares of common stock were outstanding, net of 117 treasury shares.
Agora Common Stock
Agora is authorized to issue 250,000 shares of common stock, par value $0.001. On September 22, 2021, the Company purchased one hundred shares of Agora for ten dollars.
On October 1, 2021, the Company purchased 41,671 shares of Agora common stock for $4,167 which Agora used to purchase equipment to commence the Bitstream operations.
In addition, between October 1 and December 7, 2021, Agora issued 4,600 restricted common shares to its management team and directors. After issuance of these restricted shares, Ecoark controls approximately 90.1% of Agora, and will recognize a non-controlling interest. The future stock-based compensation related to these restricted shares that will be measured over a three-year period is $23,000. 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. The stock-based compensation recognized for the nine and three months ended December 31, 2021 for these restricted shares is $2,281.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
NOTE ~~14:~~16: COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are presently involved in the following legal ~~proceedings in Arkansas and Florida.~~proceedings. To the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties or businesses are subject, which would reasonably be likely to have a material adverse effect on the Company.

● On August 1, 2018, Ecoark Holdings, Inc. and Zest Labs, Inc. filed a complaint against Walmart Inc. in the United States District Court for the Eastern District of Arkansas, Western Division. The complaint includes claims for violation of the Arkansas Trade Secrets Act, violation of the Federal Defend Trade Secrets Act, breach of contract, unfair competition, unjust enrichment, breach of the covenant of good faith and fair dealing, conversion and fraud. On April 9, 2021, a Little Rock, Arkansas jury awarded Ecoark and Zest a total of $115 million in damages which includes $65 million in compensatory damages and $50 million in punitive damages and found Walmart Inc. liable on three claims. The federal jury found that Walmart Inc. misappropriated Zest’s trade secrets, failed to comply with a written contract, and acted willfully and maliciously in misappropriating Zest’s trade secrets. We expect Walmart to continue to vigorously defend the litigation and to oppose the verdict in post-trial motions and an appeal. The Company has filed post-trial motions to add an award for their attorneys’ fees as the prevailing party in the litigation. In addition to other post-trial motions, Walmart, Inc. has filed a renewed motion for judgment as a matter of law or, in the alternative, for remittitur or a new trial. As of the date of this Report, the court has not ruled on any of the post-trial motions.
●
On September 21, 2021, Ecoark Holdings, Inc. and Zest Labs, Inc. filed a complaint against Deloitte Consulting, LLP (“Deloitte”) in the Eight Judicial District Court in Clark County, Nevada. The complaint is for violation of the Nevada Uniform Trade Secret Act and will also be seeking a preliminary and permanent injunction, attorney’s fees, and punitive damages. The damages at issue are ~~seeking monetary damages~~in the hundreds of millions of dollars. Zest Labs, Inc. began working with Deloitte in 2016, in a confidential matter in a pilot program that Zest Labs, Inc. had been engaged for by a large customer. Zest Labs, Inc. engaged in significant discussions, presentations, demonstrations, and ~~other related relief to~~information downloads with Deloitte who specifically acknowledged that this information was confidential. This complaint is in the ~~extent it is deemed proper by the court.~~very early stages, with motions filed on both sides and an initial hearing set for March 8, 2022. The Company ~~does not believe that expenses incurred in pursuing~~cannot reasonably determine the complaint have had a material effect on the Company’s net income or financial condition for the fiscal year ended March 31, 2020 or any individual fiscal quarter. On October 22, 2018, the Court issued an order initially setting a trial date of June 1, 2020, which has been delayed due to COVID-19. The trial date has been rescheduled to March 29, 2021.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
● On December 12, 2018, a complaint was filed against the Company in the Twelfth Judicial Circuit in Sarasota County, Florida by certain investors who invested in the Company before it was public. The complaint alleges that the investment advisors who solicited the investors to invest into the Company made omissionsoutcome and ~~misrepresentations concerning the Company and the shares. The Company filed a motion to dismiss the complaint which is pending.~~potential reward at this time.

● On January 15, 2021, Simon Abrahms filed a notice of dismissal without prejudice of the class action lawsuit which was filed in the United States District Court of the District of Nevada on November 9, 2020 against the Company and members of its Board of Directors. This lawsuit is discussed in more detail in the Company’s revised definitive proxy statement on Schedule 14A filed on December 11, 2020. The Company’s stockholders ratified the corporate action giving rise to this litigation at a special meeting that was held on December 29, 2020. As a result, the Company expects that its sole remaining liability is to reimburse the plaintiff for his reasonable attorneys’ fees.
On July 15, 2021, the Company and its directors entered into a Settlement and Mutual Release resolving the legal fees it agreed to pay when it settled a class action that was settled without any financial consequences other than paying agreed upon legal fees. The Company paid $50 to the Plaintiff’s attorneys.

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

Joint Participation Agreement

On October 9, 2020, the Company and White River SPV, entered into a Participation Agreement (the “Participation Agreement”) by and among the Company, White River SPV, BlackBrush Oil & Gas, L.P. (“BlackBrush”) and GeoTerre, LLC, an unrelated privately-held limited liability company (the “Assignor”), to conduct drilling of wells in the Austin Chalk formation.

Pursuant to the Participation Agreement, the Company and White River SPV ~~have agreed, among other things, to fund~~funded 100% of the cost, ~~estimated to be~~ approximately ~~$4,700,~~$5,800, associated with the drilling and completion of an initial deep horizontal well in the Austin Chalk formation. The Participation Agreement ~~requires the estimated amount of~~required the drilling costs ~~to be~~that were paid into a designated escrow account byat the commencement of the drilling in January ~~2021.~~2021, which it was. BlackBrush ~~has~~ agreed to assign to the other parties to the Participation Agreement, subject to certain exceptions and limitations specified therein, specified portions of its leasehold working interest in certain Austin Chalk formation units. The Participation Agreement provides for an initial allocation of the working interests and net revenue interests among the assignor, BlackBrush and the Company and then a re-allocation upon payout or payment of drilling and completion costs for each well drilled. Prior to payout, the Company will own 90% of the working interest and 67.5% of the net revenue interest in each well. Following payout, the Company will own 70% of working interest and 52.5% net revenue interest in each well. ~~BlackBrush also agreed to share with the Company certain seismic information relating to other wells in which the Company has no interests.~~

The Parties to the Participation Agreement, except for the Company, had previously entered into a Joint Operating Agreement, dated September 4, 2020 (the “Operating Agreement”) establishing an area of mutual interest, including the Austin Chalk formation, and governing the parties’ rights and obligations with respect to drilling, completion and operation of wells therein. The Participation Agreement and the Operating Agreement require, among other things, that White River SPV and the Company drill and complete at least one horizontal Austin Chalk well with a certain minimum lateral each calendar ~~year.~~year and/or maintain leasehold by paying its proportionate share of any rental payments.

~~In connection with~~Bitstream Commitments on Purchase Obligations
As discussed in the ~~transactions contemplated by the Participation Agreement, on October 12, 2020 White River SPV~~overview of Bitstream in Note 1, Bitstream has entered into ~~an Agreement and Assignment~~a number of Oil, Gas and Mineral Lease (the “Lease Assignment”) with the Assignor. Under the Lease Assignment, the Assignor assigned to White River SPV a 100% working interest (75% net revenue interest) in a certain oil and gas lease covering in excess of 400 acres (the “Lease”), and White River SPV paid approximately $600 to the Assignor. White River SPV had previously entered into an agreement with the Assignoragreements for the ~~assignment~~procurement of land, electricity and equipment necessary to ~~White River SPV~~run its business. Bitstream has estimated this commitment to be approximately $12-$14 million over the next three months inclusive of ~~a 100% working interest in a certain oil and gas lease covering in excess of 1,600 acres in exchange for $1,500.~~
what has been spent to date.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021

NOTE ~~15:~~17: CONCENTRATIONS

Customer Concentration. Four and ~~two~~three customers, all in the commodity segment accounted for more than 10% of the accounts receivable balance at December 31, ~~2020~~2021 and March 31, ~~2020~~2021 for a total of ~~58%~~75% and ~~63%~~76% of accounts receivable, respectively. In addition, two and one ~~customer represents~~customers represent approximately ~~61%~~72% and ~~64%~~61% of total revenues for the Company for the nine months ended December 31, 2021 and 2020, ~~and 2019, respectively,~~respectively. In addition, one and three customers represent approximately 57% and ~~one customer represents approximately~~ 87% ~~and 63%~~ of total revenues for the Company for the three months ended December 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Supplier ~~Concentration.~~Concentration. Certain of the raw materials, components and equipment used by the Company in the manufacture of its products are available from single-sourced vendors. Shortages could occur in these essential materials and components due to an interruption of supply or increased demand in the industry. If the Company were unable to procure certain materials, components or equipment at acceptable prices, it would be required to reduce its manufacturing operations, which could have a material adverse effect on its results of operations. In addition, the Company may make prepayments to certain suppliers or enter into minimum volume commitment agreements. Should these suppliers be unable to deliver on their obligations or experience financial difficulty, the Company may not be able to recover these prepayments.

The Company occasionally maintains cash balances in excess of the FDIC insured limit. The Company does not consider this risk to be material.

Commodity price risk

We are exposed to fluctuations in commodity prices for oil and natural gas. Commodity prices are affected by many factors, including but not limited to, supply and demand.

NOTE ~~16:~~18: ACQUISITIONS

~~Trend Discovery Holdings, Inc.~~
On May 31, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Trend Discovery Holdings Inc., a Delaware corporation (“Trend Holdings”) for the Company to acquire 100% of Trend Holdings pursuant to a merger of Trend Holdings with and into the Company (the “Merger”). The Merger was completed as agreed in the Merger Agreement, the Company is the surviving entity in the Merger and the separate corporate existence of Trend Holdings has ceased to exist. Pursuant to the Merger, each of the 1,000 issued and outstanding shares of common stock of Trend Holdings was converted into 1,100 shares of the Company’s common stock. No cash was paid relating to the acquisition.
The Company acquired the assets and liabilities noted below in exchange for the 1,100 shares and accounted for the acquisition in accordance with ASC 805. Based on the fair values at the effective date of acquisition the purchase price was recorded as follows:
Cash $ 3
Receivables 10
Other assets 1
Goodwill 3,223
$ 3,237

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
The Acquisition has been accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition consideration price was allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. The fair value measurements utilize estimates based on key assumptions of the Acquisition, and historical and current market data. The excess of the purchase price over the total of estimated fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed is recognized as goodwill. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed for Trend Holdings, we have engaged a third-party independent valuation specialist. The Company has recognized the purchase price allocations based on historical inputs and data as of May 31, 2019.
The allocation of the purchase price is based on the best information available, amongst other things: (i) the valuation of the fair values and useful lives of tangible assets acquired; (ii) valuations and useful lives for intangible assets; (iii) valuation of accounts payable and accrued expenses; and (iv) the fair value of non-cash consideration.
~~The Company had an independent valuation consultant confirm the valuation of Trend Holdings and the allocation of the intangible assets.~~
~~The goodwill is not expected to be deductible for tax purposes.~~
~~Banner Midstream~~
On March 27, 2020, the Company and Banner Parent, entered into the Banner Purchase Agreement to acquire Banner Midstream. Pursuant to the acquisition, Banner Midstream became a wholly-owned subsidiary of the Company and Banner Parent received shares of the Company’s common stock in exchange for all of the issued and outstanding shares of Banner Midstream.
The Company issued 1,789 shares of common stock (which Banner Parent issued to certain of its noteholders) and assumed $11,774 in debt and lease liabilities of Banner Midstream. The Company’s Chief Executive Officer and another director recused themselves from all board discussions on the acquisition of Banner Midstream as they are stockholders and/or noteholders of Banner Midstream. The transaction was approved by all of the disinterested members of the Board of Directors of the Company. The Chairman and CEO of Banner Parent is a former officer of the Company and is currently the Principal Accounting Officer of the Company and Chief Executive Officer and President of Banner Midstream.

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
The Company acquired the assets and liabilities noted below in exchange for the 1,789 shares and accounted for the acquisition in accordance with ASC 805. Based on the fair values at the effective date of acquisition the purchase price was recorded as follows (subject to adjustment):
Cash (including restricted cash) $ 205
Accounts receivables 110
Prepaid expenses and other current assets 585
Machinery and equipment 3,426
Oil and gas properties 6,135
Customer relationships 2,100
Trade name 250
Right of use assets 731
Assets of discontinued operations 249
Goodwill 7,002
Intercompany advance (1,000 )
Accounts payable (268 )
Accrued liabilities (2,362 )
Due to prior owners (2,362 )
Lease liabilities (732 )
Liabilities of discontinued operations (228 )
Asset retirement obligation (295 )
Notes payable – related parties (1,844 )
Long-term debt (6,836 )
$ 4,866
The consideration paid for Banner Midstream was in the form of 1,789 shares of stock at a fair value of $2.72 per share or $4,866. The Company had an independent valuation consultant perform a valuation of Banner Midstream.
The Acquisition has been accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition consideration price was allocated to the assets acquired and liabilities assumed based on their preliminary estimated fair values. The fair value measurements utilize estimates based on key assumptions of the Acquisition, and historical and current market data. The excess of the purchase price over the total of the estimated fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed is recognized as goodwill. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Banner Midstream, we have engaged a third-party independent valuation specialist. The Company has estimated the preliminary purchase price allocations based on historical inputs and data as of March 27, 2020. The preliminary allocation of the purchase price is based on the best information available and is pending, amongst other things: (i) the finalization of the valuation of the fair values and useful lives of tangible assets acquired; (ii) the finalization of the valuations and useful lives for the reserves and intangible assets acquired; (iii) finalization of the valuation of accounts payable and accrued expenses; and (iv) finalization of the fair value of non-cash consideration.
During the measurement period (which is the period required to obtain all necessary information that existed at the acquisition date, or to conclude that such information is unavailable, not to exceed one year), additional assets or liabilities may be recognized, or there could be changes to the amounts of assets or liabilities previously recognized on a preliminary basis, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of these assets or liabilities as of that date.
~~The goodwill is not expected to be deductible for tax purposes.~~

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
The following ~~table shows the unaudited pro-forma results~~represent acquisitions for the nine months ended December 31, ~~2019, as if the acquisitions had occurred on April 1, 2019. These unaudited pro forma results of operations are based on the historical financial statements~~2021 and ~~related notes of Trend Holdings, Banner Midstream (which includes White River and Shamrock) and the Company.~~year ended March 31, 2021.

Nine Months Ended
December 31,
2019
(Unaudited)
Revenues $ 7,788
Net loss $ (15,540 )
Net loss per share $ (1.27 )
Energy Assets

On June 11, 2020, the Company acquired certain energy assets from SR Acquisition I, LLC for $1 as part of the ongoing bankruptcy reorganization of Sanchez Energy Corporation. The transaction includes the transfer of 262 total wells in Mississippi and Louisiana, approximately 9,000 acres of active mineral leases, and drilling production materials and equipment. The 262 total wells include 57 active producing wells, 19 active disposal wells, 136 ~~shut-in~~shut-ins with future utility wells, and 50 shut-in pending plugging wells. Included in the assignment are 4 wells in the Tuscaloosa Marine Shale formation.

On June 18, 2020, the Company acquired certain energy assets from SN TMS, LLC for $1 as part of the ongoing bankruptcy reorganization of Sanchez Energy Corporation. The transaction includes the transfer of wells, active mineral leases, and drilling production materials and equipment.

The Company accounted for these acquisitions as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the Rabb Resources, LTD. historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
Rabb Resources

On August 14, 2020, the Company entered into an Asset Purchase Agreement by and among the Company, White River E&P LLC, a Texas Limited Liability Company and a wholly-owned subsidiary of the Company Rabb Resources, LTD. and Claude Rabb, the sole owner of Rabb Resources, LTD. Pursuant to the Asset Purchase Agreement, the Company completed the acquisition of certain assets of Rabb Resources, LTD. The acquired assets consisted of certain real property and working interests in oil and gas mineral leases. The Company in June 2020 previously provided for bridge financing to Rabb Resources, LTD under the $225 Senior Secured Convertible Promissory Note. As consideration for entering into the Asset Purchase Agreement, the Company agreed to pay Rabb Resources, LTD. A total of $3,500 consisting of (i) $1,500 in cash, net of $304 in outstanding amounts related to the note receivable and accrued interest receivable, and (ii) $2,000 payable in common stock of the Company, which based on the closing price of the common stock as of the date of the Asset Purchase Agreement equaled 103 shares. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the Rabb Resources, LTD. historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.

Building $ 236
Land 140
Oil and Gas Properties 3,224
Asset retirement obligation (100 )
$ 3,500

~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~Unrelated Third Party

Building $ 236
Land 140
Oil and Gas Properties 3,224
Asset retirement obligation (100 )
$ 3,500
~~Unrelated Third Party~~
On September 4, 2020, White River SPV 3, LLC, a wholly-owned subsidiary of Banner Midstream entered into an Agreement and Assignment of Oil, Gas and Mineral Lease with GeoTerre Operating, LLC, a privately held limited liability company (the “Assignor”). Under the Lease Assignment, the Assignor assigned a 100% working interest (75% net revenue interest) in a certain oil and gas lease covering in excess of 1,600 acres (the “Lease”), and White River paid $1,500 in cash to the Assignor. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.

O’Neal Family

On September 30, 2020, the Company and White River Energy, LLC entered into three asset purchase agreements (the “Asset Purchase Agreements”) with privately-held limited liability companies to acquire working interests in the Harry O’Neal oil and gas mineral lease (the “O’Neal OGML”), the related well bore, crude oil inventory and equipment. Immediately prior to the acquisition, White River Energy owned an approximately 61% working interest in the O’Neal OGML oil well and a 100% working interest in any future wells.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
The purchase prices of these leases were $126, $312 and $312, respectively, totaling $750. The consideration paid to the Sellers was in the form of 68 shares of common stock. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.

Oil and Gas Properties $ 760
Asset retirement obligation (10 )
$ 750
Luling Prospect

On August 16, 2021 the Company and Shamrock Upstream Energy, LLC, a wholly-owned subsidiary of the Company entered into an agreement with a privately-held limited liability company to acquire working interests in the Luling Prospect for $250. No other assets were acquired in this, nor was there any recognized ARO for this working interest. The manager of the privately held limited liability company is related through marriage to the Chairman and CEO of the Company, however the acquisition was determined to be at arms’ length. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.
Oil and gas properties $ 250
$ 250
Concordia Leases
On September 1, 2021 the Company and White River Energy, LLC, a wholly-owned subsidiary of the Company entered into an agreement with several individuals to acquire working interests in the various leases in Concordia, LA for $54. No other assets were acquired in this, nor was there any recognized ARO for this working interest. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.
Working interest in oil and gas wells $ 54
$ 54

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021
NOTE ~~17:~~19: FAIR VALUE MEASUREMENTS

The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:

Level 1 – quoted prices for identical instruments in active markets;

Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Financial instruments consist principally of cash, accounts receivable and other receivables, accounts payable and accrued liabilities, notes payable, and amounts due to related parties. The fair value of cash is determined based on Level 1 inputs. There were no transfers into or out of “Level 3” during the nine months ended December 31, ~~2020~~2021 and ~~2019.~~2020. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. The Company records the fair value of the of the warrant derivative liabilities disclosed in accordance with ASC 815, Derivatives and Hedging. The fair values of the derivatives were calculated using the Black-Scholes Model. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in other income (expense) in the consolidated statement of operations. The following table presents assets and liabilities that are measured and recognized at fair value on a recurring basis as of:

December 31 2020 Level 1 Level 2 Level 3 Total Gains and (Losses)
Warrant derivative liabilities - - $ 6,343 $ (15,901 )

March 31, 2020
Warrant derivative liabilities - - $ 2,775 $ (369 )
Level 1 Level 2 Level 3 Total Gains
and (Losses)
December 31, 2021
Warrant derivative liabilities $ - $       - $ 4,410 $ 15,295
Digital assets 16 - - (1 )

March 31, 2021
Warrant derivative liabilities $ - $ - $ 7,213 $ (18,518 )

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
NOTE ~~18:~~20: SEGMENT INFORMATION

The Company follows the provisions of ASC 280-10 Disclosures about Segments of an Enterprise and Related Information. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making operating decisions. ~~As of December 31, 2020, and for~~Effective July 1, 2021, the ~~nine months ended December 31, 2020,~~Company’s chief operating decision makers in discussion with the finance team determined that the Company operated in three segments. The segments are Financial Services (Trend Holdings), Technology (Zest Labs (which includes the operations of 440IoT Inc.)), and Commodities (Banner Midstream). As of December 31, 2019 andwould add a fourth reporting segment to account for ~~the nine months ended December 31, 2019,~~their Digital Asset mining business. Additionally, on July 1, 2021 the Company ~~operated~~began reporting its home office costs into the Commodity segment, charge its Technology segment a monthly overhead fee, and has recorded typical overhead expenses in ~~two~~their Finance and Digital Asset segments ~~only (Technology and Financial).~~to account for this home office allocation.
Nine Months Ended December 31, 2021 Digital
Assets Commodities Financial Technology Total
Segmented operating revenues $ 18 $ 18,583 $ 524 $ - $ 19,125
Cost of revenues 93 10,600 - - 10,693
Gross profit (loss) (75 ) 7,983 524 - 8,432
Total operating expenses net of depreciation, amortization, depletion, accretion and impairment 3,694 13,784 686 2,325 20,489
Depreciation, amortization, depletion, accretion and impairment 21 2,176 - 143 2,340
Other (income) expense 29 (14,094 ) (216 ) (1,099 ) (15,380 )
Income (loss) from continuing operations $ (3,819 ) $ 6,117 $ 54 $ (1,369 ) $ 983
Three Months Ended December 31, 2021 Digital
Assets Commodities Financial Technology Total
Segmented operating revenues $ 18 $ 5,941 $ 176 $ - $ 6,135
Cost of revenues 93 3,434 - - 3,527
Gross profit (loss) (75 ) 2,507 176 - 2,608
Total operating expenses net of depreciation, amortization, depletion, accretion and impairment 3,286 4,254 415 732 8,687
Depreciation, amortization, depletion, accretion and impairment 21 549 - 32 602
Other (income) expense 29 (10,993 ) 4 - (10,960 )
Income (loss) from continuing operations $ (3,411 ) $ 8,697 $ (243 ) $ (764 ) $ 4,279

Segmented assets as of December 31, 2021
Property and equipment, net $ 7,045 $ 3,262 $ - $ 149 $ 10,456
Oil and Gas Properties/Capitalized drilling costs $ - $ 13,783 $ - $ - $ 13,783
Intangible assets, net $ - $ 1,804 $ - $ - $ 1,804
Goodwill $ - $ 7,002 $ 3,223 $ - $ 10,225
Capital expenditures $ 7,066 $ 19 $ - $ - $ 7,085

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, ~~2020~~
Nine Months Ended December 31, 2020 Commodities Financial Technology Total
Segmented operating revenues $ 9,697 $ 359 $ - $ 10,056
Cost of revenues 6,644 - - 6,644
Gross profit 3,053 359 - 3,412
Total operating expenses net of depreciation, amortization, depletion and accretion 9,916 331 2,353 12,600
Depreciation, amortization, depletion and accretion 945 - 188 1,133
Other (income) expense 1,501 (26 ) (132 ) 1,343
Income (loss) from continuing operations $ (9,309 ) $ 54 $ (2,409 ) $ (11,664 )
Three Months Ended December 31, 2020 Commodities Financial Technology Total
Segmented operating revenues $ 4,300 $ 165 $ - $ 4,465
Cost of revenues 3,218 - - 3,218
Gross profit 1,082 165 - 1,247
Total operating expenses net of depreciation, amortization, depletion and accretion 3,965 137 872 4,974
Depreciation, amortization, depletion and accretion 447 - 62 509
Other (income) expense (3,769 ) (166 ) (833 ) (4,768 )
Income (loss) from continuing operations $ 439 $ 194 $ (101 ) $ 532

Segmented assets as of December 31, 2020
Property and equipment, net $ 3,567 $ - $ 354 $ 3,921
Oil and Gas Properties $ 11,795 $ - $ - $ 11,795
Intangible assets, net $ 9,138 $ 3,223 $ - $ 12,361
Capital expenditures $ 617 $ - $ - $ 617
Nine Months Ended December 31, 2019 Commodities Financial Technology Total
Segmented operating revenues $          - $ 95 $ 124 $ 219
Cost of revenues - - 128 128
Gross profit (loss) - 95 (4 ) 91
Total operating expenses net of depreciation, amortization, depletion and accretion - 406 7,167 7,573
Depreciation, amortization, depletion and accretion - - 216 216
Other (income) expense - - 3,758 3,758
Loss from continuing operations $ - $ (311 ) $ (11,145 ) $ (11,456 )
2021

Nine Months Ended December 31, 2020 Commodities Financial Technology Total
Segmented operating revenues $ 9,697 $ 359 $ - $ 10,056
Cost of revenues 6,644 - - 6,644
Gross profit 3,053 359 - 3,412
Total operating expenses net of depreciation, amortization, depletion and accretion 9,916 331 2,353 12,600
Depreciation, amortization, depletion and accretion 945 - 188 1,133
Other (income) expense 1,501 (26 ) (132 ) 1,343
Income (loss) from continuing operations $ (9,309 ) $ 54 $ (2,409 ) $ (11,664 )
Three Months Ended December 31, 2020 Commodities Financial Technology Total
Segmented operating revenues $ 4,300 $ 165 $ - $ 4,465
Cost of revenues 3,218 - - 3,218
Gross profit 1,082 165 - 1,247
Total operating expenses net of depreciation, amortization, depletion and accretion 3,965 137 872 4,974
Depreciation, amortization, depletion and accretion 447 - 62 509
Other (income) expense (3,769 ) (166 ) (833 ) (4,768 )
Income (loss) from continuing operations $ 439 $ 194 $ (101 ) $ 532
Segmented assets as of December 31, 2020
Property and equipment, net $ 3,567 $ - $ 354 $ 3,921
Oil and Gas Properties $ 11,795 $ - $ - $ 11,795
Intangible assets, net $ 2,136 $ - $ - $ 2,136
Goodwill $ 7,002 $ 3,223 $ - $ 10,225
Capital expenditures $ 617 $ - $ - $ 617

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021

Three Months Ended December 31, 2019 Commodities Financial Technology Total
Segmented operating revenues $         - $ 44 $ 96 $ 140
Cost of revenues - - 67 67
Gross profit - 44 29 73
Total operating expenses net of depreciation, amortization, depletion and accretion - 206 2,450 2,656
Depreciation, amortization, depletion and accretion - - 68 68
Other (income) expense - - 2,768 2,768
Loss from continuing operations $ - $ (162 ) $ (5,257 ) $ (5,419 )

Segmented assets as of December 31, 2019
Property and equipment, net $ - $ - $ 608 $ 608
Oil and Gas Properties $ - $ - $ - $ -
Intangible assets, net $ - $ 3,223 $ - $ 3,223
Capital expenditures $ - $ - $ - $ -
NOTE ~~19:~~21: LEASES

The Company has adopted ASU No. 2016-02, Leases (Topic 842), as of April 1, 2019 and will account for their leases in terms of the right of use assets and offsetting lease liability obligations under this pronouncement. The Company had had only short-term leases up through the acquisition of Banner Midstream. The Company acquired a right of use asset and lease liability ~~of $731 and $732, respectively~~ on March 27, 2020. The Company recorded these amounts at present value, in accordance with the standard, using discount rates ranging between 2.5% and ~~6.8%~~11.36%. The right of use asset is composed of the sum of all lease payments, at present value, and is amortized straight line over the life of the expected lease term. For the expected term of the lease the Company used the initial terms ranging between 42 and 60 months. Upon the election by the Company to extend the lease for additional years, that election will be treated as a lease modification and the lease will be reviewed for remeasurement. This lease will be treated as an operating lease under the new standard. In addition, the Company entered into a new thirty-nine month operating lease for office space in September 2020 which also is included in the right of use asset and lease liabilities.re-measurement.

The Company has chosen to implement this standard using the modified retrospective model approach with a cumulative-effect adjustment, which does not require the Company to adjust the comparative periods presented when transitioning to the new guidance. The Company has also elected to utilize the transition related practical expedients permitted by the new standard. The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a modified retrospective approach. Adoption of the new standard did not result in an adjustment to retained earnings for the Company.

The Company’s portfolio of leases contains both finance and operating leases that relate primarily to the commodity ~~segment.~~and digital asset segments. As of December 31, ~~2020,~~2021, the value of the unamortized lease right of use asset is ~~$960,~~$1,186, of which ~~$480~~$337 is from financing leases (through maturity at June 30, 2024) and ~~$480~~$849 is from operating leases (through maturity at ~~November 30, 2023)~~October 31, 2026). As of December 31, ~~2020,~~2021, the Company’s lease liability was ~~$996,~~$1,210, of which ~~$471~~$330 is from financing leases and ~~$525~~$880 is from operating leases.
Maturity of lease liability for the operating leases for the period ended December 31,
2022 $ 329
2023 $ 301
2024 $ 87
2025 $ 92
2026 $ 82
Imputed interest $ (11 )
Total lease liability $ 880
Disclosed as:
Current portion $ 326
Non-current portion $ 554
Maturity of lease liability for the financing leases for the period ended December 31,
2022 $ 151
2023 $ 143
2024 $ 52
2025 $ -
Imputed interest $ (16 )
Total lease liability $ 330
Disclosed as:
Current portion $ 144
Non-current portion $ 186
Amortization of the right of use asset for the period ended December 31,
2022 $ 461
2023 $ 416
2024 $ 144
2025 $ 88
2026 $ 77

Total $ 1,186

ECOARK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)

DECEMBER 31, ~~2020~~2021

Maturity of lease liability for the operating leases for the period ended December 31,
2021 $ 204
2022 $ 184
2023 $ 139
2024 $ -
Imputed interest $ (2 )

Total lease liability $ 525
Disclosed as:
Current portion $ 204
Non-current portion $ 321
Maturity of lease liability for the financing leases for the period ended December 31,
2021 $ 145
2022 $ 150
2023 $ 153
2024 $ 41
Imputed interest $ (18 )

Total lease liability $ 471
Disclosed as:
Current portion $ 140
Non-current portion $ 331
Amortization of the right of use asset for the period ended December 31,
2021 $ 332
2022 $ 313
2023 $ 263
2024 $ 52
2025 $ -

Total $ 960
Total Lease Cost

43
~~ECOARK HOLDINGS, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~
~~(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)~~
~~DECEMBER 31, 2020~~
~~Total Lease Cost~~
Individual components of the total lease cost incurred by the Company is as follows:

Three months ended
December 31,
2020 Nine months ended
December 31,
2020
Operating lease expense $    54 $ 106

Finance lease expense
Depreciation of capitalized finance lease assets 34 103
Interest expense on finance lease liabilities 3 11

Total lease cost $ 91 $ 220
Three months ended
December 31,
2021 Nine months ended
December 31,
2021
(unaudited) (unaudited)
Operating lease expense $ 72 $ 178

Finance lease expense
Depreciation of capitalized finance lease assets 57 127
Interest expense on finance lease liabilities 2 8
Total lease cost $ 131 $ 313
Three months ended
December 31,
2020 Nine
months ended
December 31,
2020
(unaudited) (unaudited)
Operating lease expense $ 54 $ 106

Finance lease expense
Depreciation of capitalized finance lease assets 34 103
Interest expense on finance lease liabilities 3 11

Total lease cost $ 91 $ 220
NOTE ~~20:~~22: ASSET RETIREMENT OBLIGATIONS

In conjunction with the approval permitting the Company to resume drilling in the existing fields, the Company has recorded an asset retirement obligation (“ARO”) based upon the plan submitted in connection with the permit. The ARO results from the Company’s responsibility to abandon and reclaim their net share of all working interest properties and facilities.
The following table summarizes activity in the Company’s ARO for the nine months ended December 31, 2021 and year ended March 31, 2021:
December 31,
2021 March 31,
2021
(unaudited)
Balance, beginning of period $ 1,532 $ 295
Accretion expense 118 64
Reclamation obligations settled - -
Disposition due to sale of property (23 ) -
Additions - 111
Changes in estimates - 1,062
Balance, end of period $ 1,627 $ 1,532
Total ARO at December 31, 2021 and March 31, 2021 shown in the table above consists of amounts for future plugging and abandonment liabilities on our wellbores and facilities based on third-party estimates of such costs, adjusted for inflation for the periods ended December 31, ~~2020~~2021 and March 31, ~~2020:~~2021, respectively. These values are discounted to present value at 10% per annum for the periods ended December 31, 2021 and March 31, 2021. The Company disposed of a portion of their properties and wrote off the balance of ARO associated with that disposal of $23 in sales of some of the Company’s properties.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
NOTE 23: RELATED PARTY TRANSACTIONS

December 31,
2020 March 31,
2020
Balance, beginning of period $ 295 $ -
Accretion expense 26 -
ARO liability acquired in Banner Midstream acquisition - 295
Reclamation obligations settled - -
Additions and changes in estimates 110 -
Balance, end of period $ 431 $ 295
On May 31, 2019 the Company acquired Trend Holdings. Pursuant to the merger, the one thousand issued and outstanding shares of common stock of Trend Holdings were converted into 1,100 shares of the Company’s Common Stock with an approximate dollar value of $3,237 based on the closing price per share of Common Stock on the closing date of the merger. William B. Hoagland, the Company’s Chief Financial Officer, was President and a principal stockholder of Trend Holdings and received 550 shares of Common Stock, pursuant to the merger.
Trend Capital Management is the general partner or manager of, and provides services and collects fees from entities including Trend LP and Trend SPV, respectively. However, Trend Capital Management is not the investment manager of these entities, nor the beneficial owner of Ecoark securities held by Trend LP nor Trend SPV since it assigned the sole power to vote and direct all investment activities which will impact the entities’ economic performance to an independent third party not affiliated with Ecoark. The investment capital in Trend LP and Trend SPV is from individual limited partners and members, and not from the Company. Trend Capital Management does not have the obligation to absorb losses or the right to receive benefits that could be significant as a result of the entities’ performance. Trend Capital Management does not have any ownership of or a controlling financial interest in Trend LP nor Trend SPV and therefore management has concluded consolidation of these entities with Trend Capital Management is not required.
Jay Puchir, the Company’s Treasurer, served as a consultant to the Company from May 2019 to March 2020 and was paid solely in stock options totaling 40 stock options at an exercise price of $3.15 per share. In addition, any outstanding notes with Mr. Puchir have been repaid along with all accrued interest.
Gary Metzger, a director, advanced $578 to the Company through March 31, 2020, under the terms of notes payable that bears interest at rates ranging between 10% and 15% interest per annum. These notes along with all accrued interest were repaid in August 2021.
On March 27, 2020, the Company issued 1,789 shares of its common stock to Banner Energy Services, Inc. (“Banner Energy”) and assumed approximately $11,774 in debt and lease liabilities of Banner Midstream. The Company’s Chief Executive Officer and another then director, John Cahill, recused themselves from all board discussions on the acquisition of Banner Midstream as they were stockholders and/or noteholders of Banner Midstream. The transaction was approved by all of the disinterested members of the Board. The Chairman and CEO of Banner Energy is the Treasurer of the Company and Chief Executive Officer and President of Banner Midstream. Included in the shares issued in this transaction, John Cahill received 164 shares of common stock and Jay Puchir received 548 shares of common stock. At the time of this transaction, Mr. Cahill and his brother were also members of Shamrock Upstream Energy LLC, a subsidiary of Banner Midstream.
In the Banner Midstream acquisition, Randy S. May, Chief Executive Officer and Chairman, was the holder of approximately $1,242 in notes payable by Banner Midstream and its subsidiaries, which were assumed by the Company in the transaction. Additionally, Mr. May held a note payable by Banner Energy in the amount of $2,000 in principal and accrued interest, which was converted into 2,740 shares of Common Stock (on a pre-reverse stock split basis) as a result of the transaction. Neither of these amounts remain outstanding.
On August 31, 2021, William B. Hoagland, the Chief Financial Officer of the Company, and Chief Executive Officer of Agora, transferred 550 shares of Ecoark common stock to Trend LP, of which Mr. Hoagland owns an approximately 25% of Trend LP. He also owns 39.6% of Trend SPV. Following the transfer, Trend LP owns 713 shares of Ecoark common stock. Additionally, Trend SPV holds 344 shares of Ecoark common stock and 460 warrants to purchase Ecoark common stock.
Ecoark has made periodic loans to Agora to permit it to begin its cryptocurrency mining business. On November 13, 2021, Agora issued Ecoark a $7.5 million term note which accrues 10% per annum interest and is due September 30, 2022. As of December 31, 2021, Agora owed principal of $4,459 and interest of $32 to Ecoark. These amounts have been eliminated in consolidation.

ECOARK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLAR AMOUNTS AND SHARES IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 2021
NOTE ~~21:~~24: SUBSEQUENT EVENTS

Subsequent to December 31, ~~2020,~~2021, the Company had the following transactions:

InOn January ~~2021,~~3, 2022, the Company finalized a land purchase agreement for a parcel of 20 acres of land ($12.5 per acre) in West Texas for $250. This land purchase relates to a separate parcel from the 20 acre parcel covered by a lease agreement entered into by the Company in December 2021. The Company has an option to sell back the purchased land to the sellers at $0.4 per acre upon cessation of the land being used as a data center. Additionally, we have already paid ~~$814 in amounts due~~approximately $1,100 to ~~Shamrock sellers that were owed from March 27, 2020,~~a power broker for 12 MW of electricity at this site, and ~~repaid $194 in notes payable~~we have committed to ~~related parties.~~pay approximately $3,200 by completion of the facility anticipated to be paid over the two-month period commencing January 2022 for the infrastructure and source of 30 MW of electricity needed to operate at the capacity intended at our West Texas facilities

On January 15, 2021, Simon Abrahms filed a notice of dismissal without prejudice of the class action lawsuit which was filed in the United States District Court of the District of Nevada on November 9, 2020 against the Company and members of its Board of Directors. This lawsuit is discussed in more detail in the Company’s revised definitive proxy statement on Schedule 14A filed on December 11, 2020. The Company’s stockholders ratified the corporate action giving rise to this litigation at a special meeting that was held on December 29, 2020. As a result, the Company expects that its sole remaining liability is to reimburse the plaintiff for his reasonable attorneys’ fees.
~~On January 15, 2021, the Company commenced the drilling of an oil well (“JV Drill”) with a budgeted authority for expenditure (“AFE”) totaling $4,640.~~
On February ~~12, 2021,~~2, 2022, Peter Mehring, a director and executive officer, gave notice of his intent to resign as an executive officer and director effective on February 11, 2022. Mr. Mehring resigned as a result of his entering into an Employment Agreement with a leading Internet service company. He also entered into a Consulting Agreement with the Company.
Under the Consulting Agreement, Mr. Mehring will advise the Company ~~executed an agreement~~(including Zest Labs) on its current intellectual property litigation and matters relating to ~~acquire an 80% working interest in an additional 1,218 acres~~ZEST’s intellectual property as well as provide transition services. The Consulting Agreement is for a one-year term. The Company agreed to pay Mr. Mehring $17 per month. His unvested stock awards will continue to vest during the term and the expiration date on any stock awards will be extended for one year following the termination.
Trend Exploration completed the auction of ~~oil~~two lots of overriding royalty interests (ORRIs). Trend Exploration posted them to EnergyNet and ~~gas mineral leases~~the auction ended February 3, 2022. The sale is for the Mississippi ORRIs and the Louisiana ORRIs for a total of $335. The buyers in the ~~leasehold area contiguous~~auction have two business days to ~~the current JV Drill project. On February 12, 2021, the Company made a payment of $225~~place funds into escrow and then up to ~~fund the portion of the lease to be recorded in Avoyelles Parish, Louisiana. The Company owes a final payment of $353 on March 15, 2021~~ten business days for the ~~portion of the lease~~funds to ~~be recorded in St. Landry Parish, Louisiana.~~leave escrow.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and notes thereto presented in this Report as well as our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2021.
Effective with the opening of trading on December 17, 2020, the Company implemented a one-for-five reverse split of its issued and outstanding common stock and a simultaneous proportionate reduction of its authorized common stock. All share and per share figures are reflected on a post-split basis herein.
Dollar amounts and number of shares ~~below~~in this Item 2 are expressed in thousands, except per share ~~amounts.~~and per barrel amounts and when separately disclosed, or where the context indicates otherwise.

OVERVIEW

Ecoark Holdings ~~Inc. (“Ecoark Holdings” or the “Company”)~~ is a diversified holding company, incorporated in the state of Nevada on November 19, 2007. Through Ecoark Holdings wholly owned subsidiaries, the Company has operations in three areas: (i) oil and gas, including exploration, production and drilling operations on over 20,000 cumulative acres of active mineral leases in Texas, Louisiana, and Mississippi and transportation services, (ii) post-harvest shelf-life and freshness food management technology, ~~and~~ (iii) financial services including investing in a select number of early stage startups, ~~each year.~~ and (iv) a recently launched cryptocurrency mining business designed to assist with electric power opportunities in a deregulated market which exists in Texas.
The Company’s subsidiaries consist of Ecoark, Inc. (“Ecoark”), a Delaware corporation which is the parent of Zest Labs, Inc. (“Zest Labs”), 440IoT Inc., a Nevada corporation (“440IoT”), Banner Midstream Corp., a Delaware corporation (“Banner Midstream”) and Trend Discovery Holdings Inc., a Delaware corporation (“Trend Holdings”).
See Note 16 to Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the information regarding the merger with Trend Discovery Holdings Inc. in May 2019 and the acquisition ofinclude Banner Midstream Corp. (“Banner Midstream”) ~~in March 2020.~~
~~Banner Midstream has four operating subsidiaries:~~, White River Holdings Corp. (“White River”), Shamrock Upstream Energy LLC (“Shamrock”), Pinnacle Frac Transport LLC (“Pinnacle Frac”), Capstone Equipment Leasing LLC (“Capstone”), ~~White River Holdings Corp.~~Zest Labs, Inc. (“~~White River”~~Zest Labs”), and ~~Shamrock Upstream Energy~~Agora Digital Holdings, Inc., a Nevada corporation (“Agora”) who was assigned the membership interest in Trend Discovery Holdings LLC, a Delaware limited liability corporation (“~~Shamrock”~~Trend Holdings”). as well as all of Agora’s recently formed subsidiaries as discussed herein, (all references to “Trend Holdings” or “Trend” are now synonymous with Agora) from the Company on September 17, 2021 upon its formation.
On August 4, 2021, the Company’s common stock commenced trading on the Nasdaq Capital Market.
Pinnacle Frac
Through Pinnacle Frac the Company provides transportation of frac sand and logistics services to major hydraulic fracturing and drilling operations. Capstone procures and finances equipment to oilfield transportation service contractors. ~~These two operating subsidiaries of Banner Midstream are revenue producing entities.~~

White River and Shamrock
Through White River and Shamrock, we are engaged in oil and gas exploration, production, and drilling operations on over ~~10,000~~20,000 cumulative acres of active mineral leases in Texas, Louisiana, and Mississippi.

~~Since~~Zest Labs
Zest Labs’ goal is to offer freshness management solutions for fresh food growers, suppliers, processors, distributors, grocers and restaurants. Our efforts with respect to the ~~acquisition of Banner Midstream on March 27, 2020, which currently comprises the exploration, production and drilling operations, the Company has focused its efforts~~freshness food management solution have to a considerable ~~extent~~degree been focused on ~~expanding~~preparing for trial and appeals in our previously disclosed lawsuit against Walmart, Inc.
Agora Digital Holdings, Inc.
Through Agora we provide financial services and collect fees from entities which invest in securities and operate a digital asset mining company as described in more detail below.

The Company assigned its ~~exploration~~membership interest in Trend Holdings and ~~production footprint and capabilities by acquiring real property and working interests in oil and gas mineral leases.~~
its related wholly owned subsidiaries to Agora on September 22, 2021, for the sale of the initial one hundred shares for ten dollars. On ~~June 11, 2020,~~October 1, 2021, the Company ~~acquired certain energy assets from SR Acquisition I, LLC~~purchased 41,671 shares of Agora common stock for ~~$1 as part of~~$4,167 which Agora used to purchase equipment to commence the ongoing bankruptcy reorganization of Sanchez Energy Corporation. The transaction includes the transfer of 262 total wells in Mississippi and Louisiana, approximately 9,000 acres of active mineral leases, and drilling production materials and equipment. The 262 total wells include 57 active producing wells, 19 active disposal wells, 136 shut-in with future utility wells, and 50 shut-in pending plugging wells. Included in the assignment are 4 wells in the Tuscaloosa Marine Shale formation.
On June 18, 2020, the Company acquired certain energy assets from SN TMS, LLC for $1 as part of the ongoing bankruptcy reorganization of Sanchez Energy Corporation. The transaction includes the transfer of wells, active mineral leases, and drilling production materials and equipment.
Bitstream operations.

~~On August 14, 2020, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, White River E&P~~Trend Holdings formed four subsidiaries, Bitstream Mining, LLC, a Texas Limited Liability Company (“Bitstream”) on May 16, 2021, REStream Processing LLC, a Texas Limited Liability Corp (“REStream”). on May 16, 2021, Trend Discovery Exploration LLC, a Texas Limited Liability Corp. (“Trend Exploration”) on May 27, 2021, and OTZI, LLC, a ~~wholly-owned subsidiary~~Delaware Limited Liability Corp. (“OTZI”) on September 2, 2021, in addition to Barrier Crest, LLC (“Barrier Crest”) that was acquired along with Trend Capital Management, Inc. (“TCM”) that was acquired by Ecoark on May 31, 2019. REStream and OTZI are currently inactive subsidiaries.
Agora was organized by Ecoark to enter the digital asset mining business. Because of regulatory uncertainty over digital assets being deemed to be securities, Agora’s initial focus is on mining Bitcoin which the SEC administratively determined is not a security. Because of regulatory concerns and the changing regulatory environment, Agora intends to seek opportunities to engage with cryptocurrencies that do not involve the offer or sale of any securities.
On November 19, 2021 Agora filed a registration statement on Form S-1 in connection with its initial public offering of 10,000,000 (ten million) units comprised of shares of common stock and warrants to purchase an equal number of shares of common stock. The Form S-1 has not yet been declared effective. See Note to the Consolidated Financial Statements.
Subject to completion of the Agora public offering and Nasdaq uplisting, the Company intends to issue a stock dividend through a pro rata distribution of Agora’s common stock to Ecoark’s common stockholders and holders of common stock equivalents. Ecoark plans to distribute 80% of the Agora common stock it holds to its stockholders as of a future record date to be determined upon completion of regulatory compliance. Ecoark plans to retain the remaining 20% ownership in Agora on its balance sheet. As a result of the approval by the board of directors of the Company ~~Rabb Resources, LTD.~~to divest Agora, the Company, has accounted for this as a disposal other than by sale. Assets to be disposed of other than by sale should continue to be classified as held and ~~Claude Rabb,~~used until they are disposed of. Upon disposal, the Company must assess whether the disposed of assets qualify for discontinued operations reporting. If so, the Company will apply the presentation and disclosure requirements of ASC 205-20, and if not, the Company will apply the presentation and disclosure requirements of ASC 360-10.
Overview of Agora Digital Holdings, Inc.
The following is a brief overview of each of the principal subsidiaries that the Company operates through Agora, the Company’s newly formed, majority-owned subsidiary.
Bitstream
Bitstream was organized to be our principal cryptocurrency subsidiary. Bitstream has entered into a series of agreements including procuring land to install mining equipment, arranging for a reliable and economical electric power source needed to efficiently mine Bitcoin, ordering miners, housing infrastructure and other infrastructure to mine Bitcoin and locating a third-party hosting service to operate the miners and the service’s more advanced miners. Agora has spent (and agreed to spend) between $12-$14 million in connection with these agreements, not including future revenue sharing. Agora brought online miners that began operating in early November 2021, the Bitmain S19 Pro miners supplied by the hosting service.
Bitstream anticipates that they will deploy and operate modularized data centers (facilities) with the sole purpose of mining digital assets, with Bitcoin initially as the focus. Agora is powering these data centers through acquiring a long-term power contract to purchase electric power from the electric grid in Texas. Once the business’ operations grow, Bitstream intends to continuously add data center facilities by reinvesting their revenues. All data centers will be remotely managed with onsite personnel for servicing and troubleshooting any operational issues. Bitstream plans to utilize the energy to power its energy intensive operations of digital asset mining. Additionally, if Texas experiences another power shortage during the winter or summer months from extreme weather conditions, Bitstream would be able to arbitrage power at favorable margins. Bitstream will do this by temporarily shutting down their cryptocurrency mining operations and sell their purchased power back to the grid at favorable margins. Last winter, during the blackout, the price per kWh exceeded $10 (ten dollars) at its peak imbalance, whereas Bitstream’s power cost is expected to be $0.023 (two and three one hundredths) per kWh.

Bitstream is expected to be the focal point of the Company’s Agora operations during the next 12 months. For this reason, set forth below is a more detailed overview of Bitstream’s developments, planned operations and the cryptocurrency assets and industry in which it operates.
Trend Exploration
On July 1, 2021, Trend Exploration acquired oil and gas leases with producing oil wells in Louisiana. Trend Exploration was formed to provide an environmental, social and governance (“ESG”) solution to Bitstream’s need for affordable electric power does not intend to be an oil and gas exploration company. Trend Exploration was assigned an 80% working interest in fourteen wells from White River SPV 2, LLC and White River E&P LLC (“Assignors”) on July 1, 2021. In accordance with ASC 205-20, there is a scope exception for oil and gas properties that use the full-cost method of accounting. Under the full-cost method of accounting, all costs associated with property acquisition, exploration, and development activities are capitalized to cost centers, which are established on a country-by-country basis. The definition of discontinued operations, however, applies to disposals of components of an entity, which is defined as the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. As a result, the definition of discontinued operations will not be operable under the full-cost method of accounting because of differences in the tracking and allocation of costs, which is at a much higher level. The Company as a result has not reflected the working interest on the fourteen wells in discontinued operations. The Trend Exploration business is identical to the business noted herein for Banner Midstream.
Trend Capital Management
Trend Capital Management is the general partner or manager of, and provides services and collects fees from entities including Trend Discovery LP (“Trend LP”) and Trend Discovery SPV I, LLC (“Trend SPV”), respectively. However, Trend Capital Management is not the investment manager of these entities, nor the beneficial owner of ~~Rabb Resources, LTD. Pursuant~~Ecoark securities held by Trend LP nor Trend SPV since it assigned the sole power to vote and direct all investment activities which will impact the ~~Asset Purchase Agreement,~~entities’ economic performance to an independent third party not affiliated with Ecoark. The investment capital in Trend LP and Trend SPV is from individual limited partners and members, and not from the ~~Company completed~~Company. Trend Capital Management does not have the obligation to absorb losses or the right to receive benefits that could be significant as a result of the entities’ performance. Trend Capital Management does not have any ownership of or a controlling financial interest in Trend LP nor Trend SPV and therefore management has concluded consolidation of these entities with Trend Capital Management is not required.
Barrier Crest
Barrier Crest provides fund administration and fund formation services to institutional investors. Barrier Crest provides fund administration services to Trend LP and Trend SPV. Barrier Crest provides fund administration and related services for small hedge funds. Trend Holdings owns an entity which is the general partner but not the investment manager of two investment funds. These investment funds own shares of Ecoark and one also owns warrants of Ecoark.
Part of the financial services strategy envisions the acquisition of ~~certain~~a broker-dealer to engage in the digital assets markets. As of ~~Rabb Resources, LTD.~~the date of this Report, we are not negotiating any potential acquisition. We plan to focus on a target as soon as we can.
Cryptocurrency Mining Overview
Distributed blockchain technology is a decentralized or distributed and encrypted ledger that is designed to offer a secure, efficient, verifiable, and permanent way of storing records and other information without the need for intermediaries. Cryptocurrencies serve multiple purposes. They can serve as a medium of exchange, store of value or unit of account. Examples of cryptocurrencies include Bitcoin, Bitcoin Cash, and Litecoin.
Bitcoin was first introduced in 2008 and was first introduced as a means of exchange in 2009. Bitcoin is a consensus network that enables a new payment system and a completely new form of digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitstream believes Bitcoin can be viewed as cash for the Internet. The ~~acquired assets consisted~~Bitcoin network shares a public ledger called the “blockchain.” This ledger contains every transaction ever processed, allowing a user’s computer to verify the validity of ~~certain real property~~each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending Bitcoins rewards from their own Bitcoin addresses. In addition, anyone can process transactions using the computing power of specialized hardware and earn a reward in Bitcoins for this service. This process is often called “mining.”
In November 2021, Bitstream commenced the mining of Bitcoin by acquiring miners to solve complex cryptographic algorithms to support the Bitcoin blockchain (in a process known as “solving a block”). In return for solving a block, Bitstream receives a Bitcoin.

Bitstream mines Bitcoin using specialized computer equipment referred to as “miners.” Miners measure their capability in terms of processing power, which is known in the industry as “hashing” power. Hashing power is measured in terms of the number of hashing algorithms solved (or “hashes”) per second, which is the miner’s “hash rate.” Generally speaking, miners with greater hashing power and in turn a higher hash rate relative to other miners attempting to solve a block have a higher chance of solving the block and receiving a cryptocurrency award. However, although newer generations of miners advertise improved energy efficiency, increasing hash rate generally requires greater electrical power, which increases the cost of solving a block and, therefore, the relative cost of mining a cryptocurrency. As additional miners competed for the limited supply of blocks, individuals found that they were working ~~interests~~for months without finding a block and receiving any reward for their mining efforts. To address this variance, miners started organizing into pools to share mining rewards more evenly on a pro rata basis based on total hashing capacity contributed to the mining pool. Bitstream will be participating in ~~oil~~a mining pool. As of the date of this Report, Bitstream is in the process of paying for and ~~gas mineral leases.~~receiving delivery of the necessary infrastructure and equipment to commence mining operations using a total of 48 megawatts (“MW”) of electricity, which through conditional and unconditional rights to two sites in West Texas may be increased to up to 372 MW assuming this can be done so on acceptable terms.
Mining Equipment
In September 2021 Bitstream ordered 5,000 used Canaan Avalon 841 13 TH/s miners for $1,350. Delivery of 4,000 of these miners occurred as of January 31, 2022. Bitstream’s plan is to use trailer or shipping container-like units as housing infrastructure to house our miners. Bitstream will either build their own or partner with another third-party vendor to build entry level housing infrastructure to deploy the initial mining equipment in November. In August 2021, Bitstream entered into an agreement with a third party which will supply Bitstream with more advanced housing infrastructure in exchange for approximately $375. Delivery of these enhanced housing infrastructure is expected in the first calendar quarter of 2022.
Effective December 10, 2021, Bitstream entered into a lease agreement for 20 acres of land near the power substation upon which we will place the housing infrastructure. The lease is for an initial term of 10 years and a subsequent term of 10 years, pursuant to which Bitstream will pay the lessor a monthly payment equal to 3% of the electricity cost. If we do not use the leased land for 12 consecutive months, the lease will terminate. On January 3, 2022, the Company entered into a land purchase agreement for a separate parcel of twenty acres of land ($12.5 per acre) in West Texas for $250. The Company has an option to sell back this land to the sellers at $0.4 (four hundred) per acre upon cessation of the land being used as a data center.
In September 2021, Bitstream entered into a binding agreement referred to as a Memorandum of Understanding with Elite Mining Inc. (the “Hosting Company”) that will supply high speed miners, host the Company’s data center and operate the miners it installs. In Phase 1 which is a beta test phase, Bitstream paid $600 to the Hosting Company which will also supply 6 MW capacity’s worth of very high speed and efficient miners in ~~June 2020 previously provided~~the first calendar quarter of 2022. Bitstream has an option to purchase these high-speed miners at replacement cost (which may be higher than current cost). The Hosting Company may provide hosting for ~~bridge financing~~third parties during Phase 1 which reduces the cash flow for Bitstream. This agreement will also allow Bitstream to ~~Rabb Resources, LTD~~utilize a minimum of 25 MW of electricity under the ~~$225 Senior Secured Convertible Promissory Note. As consideration~~initial power purchase agreement in Phase 2. Bitstream can terminate the hosting agreement as soon as Bitstream has secured sufficient capital to replace the hosted Bitmain S19 Pros with their own. Once Bitstream purchases the high-efficiency miners, the Hosting Company cannot host third parties.
Phase 2 is planned to begin in May 2022 which is subject to Bitstream agreeing to proceed. If Bitstream elects to enter Phase 2, it will be required to loan the Hosting Company the funds to develop a production facility in Texas on terms to be negotiated. Bitstream will have certain rights to the production facility capacity from Phase 2 and will pay the Hosting Company for ~~entering~~its services.
In late 2021 Bitstream secured an additional 36 MWs of electrical capacity at a different West Texas location. This supplements Agora’s prior agreement to secure 12 MWs and as a result Agora will have a total of 48 MWs of electric power for immediate use and benefit to Agora at that location. Bitstream also entered into a second letter of intent for an additional 30 MW at a second location. Bitstream also plans to participate in the ~~Asset Purchase Agreement,~~Electric Reliability Council of Texas’ (“ERCOT”) responsive reserve market by relinquishing its power back to the Texas grid as power stabilization events are needed.
Additionally, Bitstream has procured mining infrastructure to power the 48 MWs at one location and expects the equipment and infrastructure to be delivered over the next 135 days. This mining infrastructure includes twenty-one 2,600 kilo-volt amp (KVA) or similar transformers and Agora’s first shipment of Bitcoin mining application-specific integrated circuits (“ASIC”). Agora has agreed to pay a total $3,685 for the new equipment and infrastructure as follows: (i) $506 upon the order which has been paid, (ii) $506 by November 11, 2021, which has been paid and (iii) $816 paid on December 15, 2021; (iv) $1,856 by February 2022.
In connection with the increase in electrical capacity, Bitstream entered into a second binding letter of intent with the power management company pursuant to which the Company has paid a total of $2,955, consisting of a $2,628 development fee and a $327 reimbursement for payments made by the power management company to the electric utility to secure the power. Of this amount $1,326 has already been paid. In addition, the Company agreed to pay ~~Rabb Resources, LTD. A~~a total of ~~$3,500 consisting~~$450 upon the power management company signing a binding agreement to acquire or lease 20 or more acres of (i) $1,500 in cash, net of $304 in outstanding amounts related to the note receivable and accrued interest receivable, and (ii) $2,000 payable in common stock of the Company, which based on the closing price of the common stockusable land. Bitstream is currently negotiating an agreement for this but as of the date of this Report, no agreement has been executed.

Once the ~~Asset Purchase Agreement equaled 103 shares.~~business is operational, Bitstream intends to continuously add data center platforms by reinvesting cash and potentially utilizing leverage to scale operations. All data centers will be remotely managed with onsite personnel for servicing and troubleshooting any operational issues.
Commodities Segment
For the nine and three months ended December 31, 2021, the Company’s consolidated revenues from continuing operations consisted almost exclusively of the revenues from, and most of our expenses were related to, the Commodities segment. In our Commodities segment, our activities are primarily directed at the conventional enhancement and development of all productive formations throughout our Louisiana and Mississippi leasehold positions of over 20,000 acres. We intend to continue to enhance and develop our reserves and increase production through exploration activities on our prolific inventory of potential drilling locations.
Key Terms and Metrics
In connection with the management of our businesses, we identify, measure and assess a variety of operating metrics. In the Commodities segment, the principal metrics we use in managing our businesses are set forth below:
“Bbl” – Bbl means barrel of crude oil. Metric used by management to specify the unit of measure (“in barrels”) from which the Company’s midstream customers use to incrementally purchase oil from the Company. Barrels are used as a unit of measure universally across the oil industry so the Company’s adoption of barrels to measure units of oil is a standard practice.
“Mbbl” – Mbbl means a thousand barrels of oil. See comments on “Bbl” metric. “Mbbl” is a standard for measuring larger quantities of barrels of oil in thousands of units.
“Production (Gross)” – Production (Gross) is defined as barrels of oil produced before accounting for working interests from non-mineral owning parties. Metric used by management to specify the total number of barrels of oil produced from a given oil well. Gross production includes both the barrels owned by the oil and gas mineral owners as well as the drilling and investing group who funded and drilled the well which are considered the working interest owners. Gross production is a standard term used universally across the oil industry, so the Company’s adoption of this term is a standard practice.
“Production (Net)” – Production (Net) is defined as the net barrels of oil produced after deducting the ownership portion owned by the mineral owning parties. Unless otherwise specified, management assumes that the mineral ownership portion of a well is 25%, so a 100% working interest would result in a 75% Net Production or Net Revenue interest after accounting for the ownership portion of oil production owned by the mineral owners.
Segment Reporting for the Nine and Three Months Ended December 31, 2021 and 2020:
Prior to August 26, 2021, the Company operated in three segments. The ~~Company accounted for this acquisition as an asset acquisition under ASC 805~~segments are Financial Services (Trend Holdings), Technology (Zest Labs), and Commodities (Banner Midstream). Effective July 1, 2021, the Company’s chief operating decision makers in discussion with the finance team determined that the Company ~~has early adopted~~would add a fourth reporting segment to account for their Digital Asset mining business. Additionally, beginning on July 1, 2021 the ~~amendments of Regulation S-X dated May 21, 2020~~Company began reporting its home office costs into the Commodity segment, charging its Technology segment a monthly overhead fee, and has ~~concluded that~~recorded typical overhead expenses in their Finance and Digital Asset segments to account for this ~~acquisition was not significant. Accordingly,~~home office allocation.
Nine Months Ended December 31, 2021 Digital
Assets Commodities Financial Technology Total
Segmented operating revenues $ 18 $ 18,583 $ 524 $ - $ 19,125
Cost of revenues 93 10,600 - - 10,693
Gross profit (loss) (75 ) 7,983 524 - 8,432
Total operating expenses net of depreciation, amortization, depletion, accretion and impairment 3,694 13,784 686 2,325 20,489
Depreciation, amortization, depletion, accretion and impairment 21 2,176 - 143 2,340
Other (income) expense 29 (14,094 ) (216 ) (1,099 ) (15,380 )
Income (loss) from continuing operations $ (3,819 ) $ 6,117 $ 54 $ (1,369 ) $ 983

Three Months Ended December 31, 2021 Digital
Assets Commodities Financial Technology Total
Segmented operating revenues $ 18 $ 5,941 $ 176 $ - $ 6,135
Cost of revenues 93 3,434 - - 3,527
Gross profit (loss) (75 ) 2,507 176 - 2,608
Total operating expenses net of depreciation, amortization, depletion, accretion and impairment 3,286 4,254 415 732 8,687
Depreciation, amortization, depletion, accretion and impairment 21 549 - 32 602
Other (income) expense 29 (10,993 ) 4 - (10,960 )
Income (loss) from continuing operations $ (3,411 ) $ 8,697 $ (243 ) $ (764 ) $ 4,279

Segmented assets as of December 31, 2021
Property and equipment, net $ 7,045 $ 3,262 $ - $ 149 $ 10,456
Oil and Gas Properties/Capitalized drilling costs $ - $ 13,783 $ - $ - $ 13,783
Intangible assets, net $ - $ 1,804 $ - $ - $ 1,804
Goodwill $ - $ 7,002 $ 3,223 $ - $ 10,225
Capital expenditures $ 7,066 $ 19 $ - $ - $ 7,085
Nine Months Ended December 31, 2020 Commodities Financial Technology Total
Segmented operating revenues $ 9,697 $ 359 $ - $ 10,056
Cost of revenues 6,644 - - 6,644
Gross profit 3,053 359 - 3,412
Total operating expenses net of depreciation, amortization, depletion and accretion 9,916 331 2,353 12,600
Depreciation, amortization, depletion and accretion 945 - 188 1,133
Other (income) expense 1,501 (26 ) (132 ) 1,343
Income (loss) from continuing operations $ (9,309 ) $ 54 $ (2,409 ) $ (11,664 )
Three Months Ended December 31, 2020 Commodities Financial Technology Total
Segmented operating revenues $ 4,300 $ 165 $ - $ 4,465
Cost of revenues 3,218 - - 3,218
Gross profit 1,082 165 - 1,247
Total operating expenses net of depreciation, amortization, depletion and accretion 3,965 137 872 4,974
Depreciation, amortization, depletion and accretion 447 - 62 509
Other (income) expense (3,769 ) (166 ) (833 ) (4,768 )
Income (loss) from continuing operations $ 439 $ 194 $ (101 ) $ 532

Segmented assets as of December 31, 2020
Property and equipment, net $ 3,567 $ - $ 354 $ 3,921
Oil and Gas Properties $ 11,795 $ - $ - $ 11,795
Intangible assets, net $ 2,136 $ - $ - $ 2,136
Goodwill $ 7,002 $ 3,223 $ - $ 10,225
Capital expenditures $ 617 $ - $ - $ 617

Third Quarter 2021 Operating Highlights
● Revenue for three months ended December 31, 2021 were $6,135, an increase of $1,670 compared to same period in prior year.
● We recorded net income of $4,279 for the third quarter ended December 31, 2021, as a result of a $10,979 increase in the fair value of derivative liabilities.
● Our average production was 231 Gross (164 Net) barrels of oil per day during the three months ended December 31, 2021.
● During the three months ended December 31, 2021, we had no new successful drilling activity as the focus has been on well re-entries.
● We have entered into a number of agreements through Bitstream for the procurement of land, electricity and equipment necessary to run its business. Bitstream has estimated this commitment to be approximately $12-$14 million over the next three months inclusive of what has been spent to date.
Key Trends
Commodity Prices
In early March 2020, oil prices dropped sharply and continued to decline, briefly reaching negative levels as a result of multiple factors affecting the ~~amendment,~~supply and demand in global oil and natural gas markets, including (i) actions taken by OPEC members and other exporting nations impacting commodity price and production levels and (ii) a significant decrease in demand due to the ~~presentation~~ongoing COVID-19 pandemic. However, certain restrictions on conducting business that were implemented in response to the COVID-19 pandemic have been lifted as improved treatments and vaccinations for COVID-19 have been rolled-out globally since late 2020. As a result, oil and natural gas market prices have improved in response to the increase in demand and global and United States reductions in drilling. However, in recent periods oil and natural gas prices have experienced increased volatility due to the uncertainty related to the Delta and Omicron variant of the ~~Rabb Resources, LTD historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.~~virus.

On September 4, 2020, White River SPV 3, LLC, a wholly-owned subsidiary of Banner Midstream entered into an Agreement and Assignment of Oil, Gas and Mineral Lease with a privately held limited liability company (the “Assignor”). Under the Lease Assignment, the Assignor assigned a 100% working interest (75% net revenue interest) in a certain oil and gas lease covering in excess of 1,600 acres (the “Lease”), and White River paid $1,500 in cash to the Assignor. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21,During 2020 and ~~has concluded that this acquisition~~2021, the posted NYMEX WTI price for crude oil ranged from $(37.63) to $84.65 per Bbl. On December 31, 2021, the NYMEX WTI price for crude oil was ~~not significant. Accordingly, as~~$75.21 per Bbl. Commodity prices have historically been volatile and we cannot predict events which may lead to future fluctuations in these prices.

Impact of COVID-19
The COVID-19 pandemic previously had a ~~result of~~profound effect on the ~~amendment,~~U.S. and global economy and may continue to affect the ~~presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.~~
On October 9, 2020, the Company and White River SPV, entered into a Participation Agreement (the “Participation Agreement”) by and among the Company, White River SPV, BlackBrush Oil & Gas, L.P. (“BlackBrush”) and GeoTerre, LLC, an unrelated privately-held limited liability company (the “Assignor”), to conduct drilling of wells in the Austin Chalk formation.
Pursuant to the Participation Agreement, the Company and White River SPV have agreed, among other things, to fund 100% of the cost, estimated to be approximately $4,700, associated with the drilling and completion of an initial deep horizontal well in the Austin Chalk formation. The Participation Agreement requires the estimated amount of the drilling costs to be paid into a designated escrow account by the commencement of drilling in January 2021. BlackBrush has agreed to assign to the other parties to the Participation Agreement, subject to certain exceptions and limitations specified therein, specified portions of its leasehold working interest in certain Austin Chalk formation units. The Participation Agreement provides for an initial allocation of the working interests and net revenue interests among the assignor, BlackBrusheconomy and the Company and then a re-allocation upon payout or payment of drilling and completion costs for each well drilled. Following payout, the Company will own 70% of working interest and 52.5% net revenue interest in each well. BlackBrush also agreed to share with the Company certain seismic information relating to other wellsindustries in which we operate, depending on the ~~Company has no interests.~~
The Parties to the Participation Agreement, except for the Company, had previously entered into a Joint Operating Agreement, dated September 4, 2020 (the “Operating Agreement”) establishing an area of mutual interest, including the Austin Chalk formation, and governing the parties’ rights and obligations with respect to drilling, completion and operation of wells therein. The Participation Agreementvaccine rollouts and the ~~Operating Agreement require, among other things, that White River SPV and~~emergence of virus mutations as well as the ~~Company drill and complete at least one horizontal Austin Chalk well with a certain minimum lateral each calendar year.~~impact of supply chain disruptions.

In connection with the transactions contemplated by the Participation Agreement, on October 12, 2020 White River SPV entered into an Agreement and Assignment of Oil, Gas and Mineral Lease (the “Lease Assignment”) with the Assignor. Under the Lease Assignment, the Assignor assigned to White River SPV a 100% working interest (75% net revenue interest) in a certain oil and gas lease covering in excess of 400 acres (the “Lease”), and White River SPV paid approximately $600 to the Assignor. White River SPV had previously entered into an agreement with the Assignor for the assignment to White River SPV of a 100% working interest in a certain oil and gas lease covering in excess of 1,600 acres in exchange for $1,500.
On September 30, 2020, the Company and White River Energy, LLC (“White River Energy”), a wholly-owned subsidiary of the Company entered into three asset purchase agreements (the “Asset Purchase Agreements”) with privately-held limited liability companies to acquire working interests in the Harry O’Neal oil and gas mineral lease (the “O’Neal OGML”), the related well bore, crude oil inventory and equipment. Immediately prior to the acquisition, White River Energy owned an approximately 61% working interest in the O’Neal OGML oil well and a 100% working interest in any future wells.
The purchase prices of these leases were $126, $312 and $312, respectively, totaling $750. The consideration paid to the Sellers was in the form of 68 shares of common stock. The Company accounted for this acquisition as an asset acquisition under ASC 805 and that the Company has early adopted the amendments of Regulation S-X dated May 21, 2020 and has concluded that this acquisition was not significant. Accordingly, as a result of the amendment, the presentation of the historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, were not required to be presented.
~~Reverse Stock Split~~
Effective with the opening of trading on December 17, 2020, the Company implemented a one-for-five reverse split of its issued and outstanding common stock and a simultaneous proportionate reduction of its authorized common stock. The reverse stock split was effected without obtaining stockholder approval as permitted by Nevada law, and the authorized common stock was proportionately reduced to 40,000 shares. All share and per share figures are reflected on a post-split basis herein.
~~Ratification of Authorized Capital Increase~~
At the special meeting held on December 29, 2020, the stockholders of the Company ratified the previously approved increase of the number of shares of common stock the Company is authorized to issue from 20,000 shares to 40,000 shares.
~~Authorized Capital Reduction~~
~~Effective December 29, 2020, the Company amended its articles of incorporation to reduce its authorized common stock from 40,000 to 30,000.~~
~~Registered Direct Offering of Common Stock and Warrants~~
On December 30, 2020, the Company completed a registered direct offering, whereby the Company issued 889 shares of common stock and 889 accompanying warrants to purchase common stock to one institutional investor under the effective Form S-3 at $9.00 per share and accompanying warrant for a total of $8,000 in gross proceeds, before placement agent fees and other offering expenses. The warrants are exercisable for a two-year term at a strike price of $10.00 per share. The Company granted 62 warrants to the placement agent as compensation in addition to the $560 cash commission received by the placement agent. The placement agent warrants are exercisable at $11.25 per share and expire on January 2, 2023.
Our principal executive offices are located at 303 Pearl Parkway, Suite 200, San Antonio, TX 78215, and our telephone number is (800) 762-7293. Our website address is http://ecoarkusa.com/. Our website and the information contained on, or that can be accessed through, our website will not be deemed to be incorporated by reference in and are not considered part of this report.
~~Impact of COVID-19~~
The recent outbreak of COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity. The COVID-19 public health epidemic prevented the Company from conducting business activities at full capacity for an indefinite period of time, including due to risk of spread of the disease within these groups or due to shutdowns requested or mandated by governmental authorities.
COVID-19 did not have a material effect on the ~~Unaudited Condensed~~ Consolidated Statements of Operations or the ~~Unaudited Condensed~~ Consolidated Balance Sheets for fiscal 2021 included in this Form ~~10-Q. However, it did have a~~10-Q in contrast to the material impact ~~on our management’s ability~~it had in the prior fiscal year.
Because the federal government and some state and local authorities are reacting to ~~operate effectively. The impact included~~ the ~~difficulties~~current Omicron variant of working remotely from home including slow Internet connection, the inability of our accounting and financial officers to collaborate as effectively as they would otherwise have in an office environment and issues arising from mandatory state quarantines.

~~While~~COVID-19, it is ~~not possible at this time to estimate with sufficient certainty the impact that COVID-19 could have~~creating uncertainty on ~~the Company’s business, the continued spread of COVID-19 and the measures taken by federal, state, local and foreign governments~~whether these actions could disrupt the operation of the Company’s ~~business. The COVID-19 outbreak~~business and ~~mitigation measures have also had and may continue to have an adverse impact on global and domestic economic conditions, which could~~ have an adverse effect on the ~~Company’s business and financial condition,~~Company. For example, outbreaks in early calendar year 2022 arising from the more contagious Omicron variant resulted in labor shortages including ~~on its potential~~with respect to ~~conduct financings on terms acceptable to~~truck drivers. Additionally, the ~~Company, if at all. In addition, the Company~~pandemic has taken temporary precautionary measures intended to help minimize the risk of the virus to its employees, including temporarily requiring employees to work remotely, and discouraging employee attendance at in-person work-related meetings,been a contributing factor in supply shortages which ~~could negatively affect the Company’s business. These measures are continuing.~~have been pervasive in many industries. The extent to which the COVID-19 outbreak ~~impacts~~and other adverse developments may impact the Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small ~~business~~businesses are eligible for a loan to fund payroll expenses, rent and related costs. We had received funding under the PPP, and a majority of that as indicated in our ~~Unaudited~~ Consolidated Statement of Operations has been forgiven.

Critical Accounting Policies, Estimates and Assumptions

The critical accounting policies listed below are those the Company deems most important to their operations.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. These estimates include, but are not limited to, management’s estimate of provisions required for uncollectible accounts receivable, fair value of assets held for sale and assets and liabilities acquired, impaired value of equipment and intangible assets, including goodwill, asset retirement obligations, estimates of discount rates in lease, liabilities to accrue, fair value of derivative liabilities associated with warrants, cost incurred in the satisfaction of performance obligations, permanent and temporary differences related to income taxes and determination of the fair value of stock awards.
Actual results could differ from those estimates.
The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proven, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized.

Oil and Gas Properties
The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under the full cost method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs are capitalized. General and administrative costs related to production and general overhead are expensed as incurred.
All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the loss from operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method.
Limitation on Capitalized Costs
Under the full-cost method of accounting, we are required, at the end of each reporting period, to perform a test to determine the limit on the book value of our oil and gas properties (the “Ceiling” test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, the excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10% and assuming continuation of existing economic conditions, of (1) estimated future gross revenues from proved reserves, which is computed using oil and gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to Staff Accounting Bulletin (“SAB”) 103, less (2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves; plus, (b) the cost of properties being amortized; plus, (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties.
Oil and Gas Reserves
Reserve engineering is a subjective process that is dependent upon the quality of available data and interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In ~~reading~~addition, physical factors such as results of drilling, testing and ~~understanding~~production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices.
Inventories
Crude oil, products and merchandise inventories are carried at the lower of cost (last-in-first-out (LIFO)) or net realizable value. Inventory costs include expenditures and other charges directly and indirectly incurred in bringing the inventory to its existing condition and location.
Accounting for Asset Retirement Obligation
Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of the estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties or to exploration costs in cost of revenues.

Revenue Recognition
The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.
The Company accounts for a contract when it has been approved and committed to, each party’s rights regarding the goods or services to be transferred have been identified, the payment terms have been identified, the contract has commercial substance, and collectability is probable. Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.
Revenue recognition for multiple-element arrangements requires judgment to determine if multiple elements exist, whether elements can be accounted for as separate units of accounting, and if so, the fair value for each of the elements.
Revenue from software license agreements of Zest Labs is recognized over time or at a point in time depending on the evaluation of when the customer obtains control of the promised goods or services over the term of the agreement. For agreements where the software requires continuous updates to provide the intended functionality, revenue is recognized over the term of the agreement. For software as a service (“SaaS”) contracts that include multiple performance obligations, including hardware, perpetual software licenses, subscriptions, term licenses, maintenance and other services, the Company allocates revenue to each performance obligation based on estimates of the price that would be charged to the customer for each promised product or service if it were sold on a standalone basis. For contracts for new products and services where standalone pricing has not been established, the Company allocates revenue to each performance obligation based on estimates using the adjusted market assessment approach, the expected cost plus a margin approach or the residual approach as appropriate under the circumstances. Contracts are typically on thirty-day payment terms from when the Company satisfies the performance obligation in the contract.
Revenue under master service agreements is recorded upon the performance obligation being satisfied. Typically, the satisfaction of the performance obligation occurs upon the frac sand load being delivered to the customer site and this load being successfully invoiced and accepted by the Company’s factoring agent.
The Company recognizes their proportionate share of revenue under ASC 606 when: (i) the Company receives notification of the successful sale of a load of crude oil to a buyer; (ii) the buyer will provide a price based on the average monthly price of crude oil in the most recent month; and (iii) cash is received the following month from the crude oil buyer.
The Company will recognize income from digital currency mining from the provision of transaction services within digital currency networks, commonly termed “cryptocurrency mining”. As consideration for those services, the Company will receive digital currency from each specific network in which it participates (“coins”). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of receipt. The coins are recorded on the consolidated balance sheet, as intangible asset – digital currency, at their fair value less costs to sell and re-measured each reporting date, if not sooner. Revaluation gains or losses on the sale of coins for traditional (fiat) currencies will be included in the consolidated statements of operations.
The Company has entered into digital asset mining pools by executing contracts, as amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company’s entitled to a fractional share of the fixed cryptocurrency reward the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are recorded as a component of cost of revenues), for successfully adding a block to the blockchain. The terms of the agreement provides that neither party can dispute settlement terms after thirty-five days following settlement. The Company’s fractional share of the cryptocurrency generated by the pool is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.

Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation on the Company in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the reward from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time the revenue is recognized. There is no significant financing component in these transactions.
Fair value of the digital asset reward received is determined using the quoted price of the related digital asset at the time of receipt. The block reward provides an incentive for Bitcoin miners to process transactions made with the cryptocurrency. Creating an immutable record of these transactions is vital for the digital assets to work as intended. The blockchain is like a decentralized bank ledger, one that cannot be altered after being created. The miners are needed to verify the transactions and keep this ledger up to date. Block rewards, and to a lesser extent, transaction fees, are their payment for doing so. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue and held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations.
The Company’s cost of revenue for digital assets consists primarily of direct costs of earning the digital asset related to mining operations, including mining pool fees, electric power costs, other utilities, labor, insurance whether incurred directly from self-mining operations or reimbursed, including any revenue sharing arrangements under the hosting agreements, but excluding depreciation and amortization, which are separately stated in the Company’s Consolidated Statement of Operations.
The Company accounts for contract costs in accordance with ASC Topic 340-40, Contracts with Customers. The Company recognizes the cost of sales of a contract as expense when incurred or at the time a performance obligation is satisfied. The Company recognizes an asset from the costs to fulfil a contract only if the costs relate directly to a contract, the costs generate or enhance resources that will be used in satisfying a performance obligation in the future and the costs are expected to be recovered. The incremental costs of obtaining a contract are capitalized unless the costs would have been incurred regardless of whether the contract was obtained.
Cost of sales for Pinnacle Frac includes all direct expenses incurred to produce the revenue for the period. This includes, but is not limited to, direct employee labor, direct contract labor and fuel.

Fair Value Measurements
ASC 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. ASC 820 classifies these inputs into the following hierarchy:
Level 1 inputs: Quoted prices for identical instruments in active markets.
Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs: Instruments with primarily unobservable value drivers.
Digital assets will consist of cryptocurrency denominated assets and will be included in noncurrent assets. Digital assets will be carried at their fair value determined by the spot rate less costs to sell. The digital asset market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value will be determined by taking the price of the coins from the exchanges which the Company most frequently uses.
Digital Assets
Digital currencies will be included in non-current assets in the consolidated balance sheets as intangible assets with indefinite useful lives. Digital assets are recorded at cost less impairment.
The Company accounts for its digital assets as indefinite-lived intangible assets in accordance with ASC 350. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital currency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether It is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.
The Company determines the fair value of its Bitcoin on a nonrecurring basis in accordance with ASC 820, based on quoted (unadjusted) prices on the active exchange that the Company has determined is its principal market for Bitcoin (Level 1 inputs). The Company performs an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted (unadjusted) prices on the active exchange, indicate that it is more likely than not that any of the assets are impaired. In determining if an impairment has occurred, the Company considers the lowest price of one Bitcoin quoted on the active exchange at any time since acquiring the specific Bitcoin held by the Company. If the carrying value of a Bitcoin exceeds that lowest price, an impairment loss has occurred with respect to that Bitcoin in the amount equal to the difference between its carrying value and such lowest price.
Impairment losses are recognized as “Digital asset impairment losses” in the Company’s Consolidated Statements of Operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains (if any) are not recorded until realized upon sale, at which point they would be presented net of any impairment losses in the Company’s Consolidated Statement of Operations. In determining the gain to be recognized upon sale, the Company calculates the difference between the sales price and the carrying value of the specific Bitcoin sold immediately prior to sale.
Any impairment losses related to digital assets are included in the Digital Assets segment.

Impairment of Long-lived Assets
Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Segment Information
The Company follows the provisions of ASC 280-10 Segment Reporting. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. The Company and its chief operating decision makers determined that the Company’s operations effective with the May 31, 2019, acquisition of Trend Holdings and the March 27, 2020 acquisition of Banner Midstream now consist of three segments, Agora (Finance), Banner Midstream (Commodities) and Zest Labs (Technology). Effective July 1, 2021, the Company’s chief operating decision makers in discussion with the finance team determined that the Company would add a fourth reporting segment to account for their Digital Asset mining business. Additionally, effective on July 1, 2021 the Company will report its home office costs into the Commodity segment, charge its Technology segment a monthly overhead fee, and has recorded typical overhead expenses in their Finance and Digital Asset segments to account for this home office allocation.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Management evaluates all of the Company’s financial instruments, including warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company generally uses a Black-Scholes model, as applicable, to value the derivative instruments at inception and subsequent valuation dates when needed. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-measured at the end of each reporting period. The Black-Scholes model is used to estimate the fair value of the derivative liabilities.
Recently Issued Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contract’s in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU simplifies the diluted net income per share calculation in certain areas. The ASU is effective for annual and interim periods beginning after December 31, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is currently evaluating the impact that this new guidance will have on its consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” which clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. An entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as follows: i) for a modification or an exchange that is a part of or directly related to a modification or an exchange of an existing debt instrument or line-of-credit or revolving-debt arrangements (hereinafter, referred to as a “debt” or “debt instrument”), as the difference between the fair value of the modified or exchanged written call option and the fair value of that written call option immediately before it is modified or exchanged; ii) for all other modifications or exchanges, as the excess, if any, of the fair value of the modified or exchanged written call option over the fair value of that written call option immediately before it is modified or exchanged. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, ~~liquidity~~cash flows or disclosures.
Production Data – Nine and capital resources, one should be aware of key policies, judgments and assumptions that are important to the portrayal of financial conditions and results. The Company has recently entered into the commodity business through its acquisition of Banner Midstream. The Company has included several new accounting policies related to this segment of this business.Three Months Ended December 31, 2021

~~Our revenues from periods prior to fiscal 2020 were generated principally from the sale of hardware. In~~The following tables set forth our production data for the nine months ended December 31, ~~2020, revenues were principally from professional services from our financing segment as well as oil~~2021 and ~~gas services related to~~2020:
Nine Months Ended December 31,
2021 2020
Bbls Bbls
Gross Net Gross Net
Production Data:
By State/County
Mississippi
Holmes 1,657 1,243 - -
Amite 9,540 7,621 9,963 7,956
Wilkinson 10,576 8,197 7,565 6,046
Pike 1,192 923 481 391
22,965 17,984 18,009 14,393

Louisiana
Catahoula 4,871 3,649 2,711 2,159
Concordia 6,463 3,039 4,592 2,105
Tensas 2,627 1,970 1,737 1,291
Lasalle 609 330 887 480
Avoyelles 37,976
25,858
2,204 1,668
52,546 34,847 12,132 7,703

Total 75,511 52,830 30,141 22,096

The following tables set forth our production ~~transportation and logistics service business contained in Banner Midstream.~~
A significant percentage of our operating expenses results from non-cash share-based compensation, which is typical of technology companies as well as costs related to our exploration and driver costs.
For the share-based compensation, we have granted shares, options and warrants to employees, consultants and investors as incentives to generate success for the Company instead of making cash payments. The accounting calculations for this type of compensation can be complex and are derived from models like the Black-Scholes option pricing model that requires judgment in making assumptions and developing estimates.
We have also invested heavily in research and development expenses. Those investments have required cash payments principally for the development of our software solutions and the testing of those solutions in our labs and on some customer projects. We have not capitalized any of that development effort, so there are no research and development costs to amortize in the future.
We have been conservative in our treatment of income taxes. Our historical losses have resulted in net operating losses for tax purposes. Applying accounting policies, we have recorded a “valuation allowance” against both current and future tax benefits of the losses. We will not recognize any benefits until such time as we are assured that we will generate taxable income.

~~RESULTS OF OPERATIONS~~
~~Overview~~
~~The discussion below addresses the Company’s operations and liquidity which were impacted by the acquisition of Trend Holdings in May 2019 and Banner Midstream in March 2020 as described above.~~
~~Results of Operations for the Three Months Ended December 31, 2020 and 2019~~
~~Revenues~~
~~Revenues~~data for the three months ended December 31, 2021 and 2020:
Three Months Ended December 31,
2021 2020
Bbls Bbls
Gross Net Gross Net
Production Data:
By State/County
Mississippi
Holmes 1,518 1,139 - -
Amite 3,357 2,694 4,011 3,207
Wilkinson 3,086 2,392 2,710 2,169
Pike 433 339 368 299
8,395 6,563 7,089 5,674

Louisiana
Catahoula 1,626 1,439 1,224 955
Concordia 3,044 1,379 2,070 987
Tensas 941 705 578 429
Lasalle - - 315 171
Avoyelles 7,269 4,980 701 531
12,880 8,504 4,888 3,073

Total 21,275 15,067 11,977 8,747
RESULTS OF OPERATIONS FOR CONTINUING OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2021 AND 2020 ~~were $4,465~~
Revenues
The following table shows revenues for the nine months ended December 31, 2021 and 2020:
Nine Months Ended
December 31,
2021 2020
Oil and Gas Operations $ 4,585 $ 1,317
Transportation Services and Other Revenue 14,000 8,380
Financial Segment 523 359
Digital Asset Segment 17 -
Technology Segment - -
Total $ 19,125 $ 10,056

Oil, Natural Gas and Natural Gas Liquids Revenues. Our revenues are a function of oil production volumes sold and average sales prices received for those volumes.
Nine Months Ended
December 31,
2021 2020
Revenues:
Oil and natural gas sales, net of taxes $ 4,766 $ 1,316
Other 35 -
Total revenues $ 4,801 $ 1,316
Our oil revenues for the nine months ended December 31, 2021 increased by $3,450, or 262%, to $4,766 from $1,316 as compared to ~~$140~~the nine months ended December 31, 2020. There was an increase in revenue for the three months ended December 31, ~~2019, an increase of $4,325. The increase was primarily~~2021 versus the three months ended September 30, 2021 due to ~~the addition of the~~higher average oil ~~and gas operations as the result of the Banner Midstream acquisition on March 27, 2020. Revenues were comprised of $165 and $44~~prices in ~~the financing segment; $0 and $96 in the technology segment; and $4,300 and $0 in the commodity segment for~~ the three months ended December 31, ~~2020 and 2019, respectively.~~2021, offset by slower production in our main producing well.

The increase in oil production during the nine months ended December 31, 2021 as compared to the same period in 2020 resulted in $1,959 of the total increase due to more wells operational in 2021 versus 2020. The remaining revenue increase of $1,491 was due to an increase in oil prices during the nine months ended December 31, 2021 as compared to the same period in 2020.
Average daily production sold increased by 92 barrels of oil per day (“BOPD”) to 199 BOPD during the nine months ended December 31, 2021 from 107 BOPD during the nine months ended December 31, 2020.
Cost of Revenues and Gross Profit

~~Cost~~The following table shows costs of revenues for the ~~three~~nine months ended December 31, ~~2020~~2021 and 2020:
Nine Months Ended
December 31,
2021 2020
Total $ 10,693 $ 6,644
The increase in cost of revenue was ~~$3,218 as compared~~primarily due to ~~$67~~increased owner operator and fuel expenses of $10,094 for the ~~three~~nine months ended December 31, ~~2019, an increase of $3,151. The increase was primarily due~~2021 compared to the addition of the oil and gas operations as the result of the Banner Midstream acquisition on March 27, 2020. Cost of Revenues was comprised of $0 and $0 in the financing segment; $0 and $67 in the technology segment; and $3,218 and $0 in the commodity segment$5,865 for the ~~three~~nine months ended December 31, ~~2020 and 2019, respectively. Gross margins decreased from 52%~~2020.
Operating Expenses
The following table shows operating expenses by segment for the ~~three~~nine months ended December 31, ~~2019 to 28% for the three months December 31, 2020 due to changes in inventory of crude oil.~~2021 and 2020:

~~Operating Expenses~~
Nine Months Ended
December 31,
2021 2020
Segment
Commodity segment $ 15,960 $ 10,861
Technology segment 2,468 2,541
Digital Assets Segment 3,715 -
Financial Segment 686 331
Total $ 22,829 $ 13,733

~~Operating~~
The following table shows operating expenses for the ~~three~~nine months ended December 31, ~~2020 were $5,483 as compared to $2,724 for the three months ended December 31, 2019, an increase of $2,759. Operating expenses were comprised of $137~~2021 and $206 in the financing segment; $934 and $2,518 in the technology segment; and $4,412 and $0 in the commodity segment for the three months ended December 31, 2020 and 2019, respectively. The $2,759 increase was due principally to the expenses, including wages and consulting fees, related to the addition of the oil and gas operations as the result of the Banner Midstream acquisition on March 27, 2020 and the depreciation, depletion, amortization and accretion for Banner Midstream in 2020, partially offset by the reduction in the Zest Labs selling expenses.
2020:

Nine Months Ended
December 31,
2021 2020
Operating Expenses
Salaries and salaries related costs $ 8,316 $ 5,001
Professional and consulting fees 906 652
Oilfield supplies and repairs 2,262 1,518
Selling, general and administrative costs 9,005 4,799
Depreciation, amortization, depletion, and accretion 2,340 1,133
Research and development - 630
$ 22,829 $ 13,733
Selling, General and Administrative

~~Selling,~~The following table shows selling, general and administrative expenses for the ~~three~~nine months ended December 31, 2021 and 2020:
Nine Months Ended
December 31,
2021 2020
Selling, general and administrative costs
Capital Raising Costs $ 2,130 $ 773
Insurance 2,346 839
Legal/Audit/Accounting expenses 1,071 1,116
Factoring expenses 319 214
Equipment Rental 283 38
Development Costs 105 -
Other 2,751 1,819
$ 9,005 $ 4,799
Insurance expense for nine months ended December 31, 2020 were $4,710 compared with $2,232 for the three months ended December 31, 2019. Cost reduction initiatives were focused on salary related and professional fees for the technology segment offset by the costs incurred for Banner Midstream as this was acquiredincluded a one-time adjustment in ~~March 2020. These were offset by changes in share-based compensation which for the three month period ended December 31, 2020 were not comparable to 2019.~~commodity segment.

Depreciation, Amortization, Depletion and Accretion

~~Depreciation,~~The following table shows depreciation, amortization, depletion and accretion expenses for the ~~three~~nine months ended December 31, 2021 and 2020:
Nine Months Ended
December 31,
2021 2020
Depletion of proved oil and natural gas properties $ 934 $ 380
Depletion of drilled wells 510 -
Depreciation of sand frac transportation equipment 344 324
Depreciation of midstream assets 8 1
Depreciation of technology segment assets 143 188
Depreciation of Bitstream mining assets 21 -
Amortization of intangible assets 262 214
Asset retirement obligation accretion 118 26
Depreciation, depletion and amortization expense $ 2,340 $ 1,133
The increase in depletion of proved oil and natural gas properties of $554 for the nine months ended December 31, 2021 as compared to the nine months ended December 31, 2020 ~~were $509~~is primarily due to full nine months of operations in 2021 compared to ~~$68 for the three~~less than seven months ~~ended December 31, 2019. Depreciation, amortization,~~in 2020. Increase in depletion of drilled wells due to completion of Deshotel #24 well in March 2021.
Research and ~~accretion expenses were comprised of $0~~Development
Research and $0development expense decreased from $630 in the ~~financing segment; $62 and $68 in the technology segment; and $447 and $0 in the commodity segment for the three~~nine months ended December 31, 2020 and 2019, respectively. The $441 increase resulted primarily from the acquisition of Banner Midstream and the depletion and accretion is the result of the oil and gas properties maintained by Banner Midstream. The technology and financing segment do not have depletion or accretion.
~~Research and Development~~
~~Research and development expense decreased 38%~~ to ~~$264~~zero in the ~~three~~nine months ended December 31, ~~2020 compared with $424 in the three months ended December 31, 2019.~~2021. The ~~$160~~$630 reduction in costs ~~related primarily~~is due to the ~~maturing~~completion of the development of the Zest Labs freshness solutions.

Other Income (Expense)

The following table shows other income (expense) for the nine months ended December 31, 2021 and 2020:
Nine Months Ended
December 31,
2021 2020
Change in fair value of derivative liabilities $ 15,295 $ (15,901 )
Gain (loss) on exchange of warrants for common stock - 19,338
Loss on conversion of long-term debt and accrued expenses - (3,969 )
Gain (loss) on disposal of fixed assets - (105 )
Loss on abandonment of oil and gas property - (83 )
Gain on disposal of ARO related to sale of oil and gas property 8 -
Gain on sale of oil and gas property 713 -
Forgiveness of debt - 1,850
Interest expense, net of interest income (636 ) (2,473 )
Other income (expense) $ 15,380 $ (1,343 )
Change in fair value of derivative liabilities for the ~~three~~nine months ended December 31, ~~2020~~2021 was a non-cash gain ~~of $481~~ as compared to a non-cash loss ~~of ($2,376)~~ for the ~~three~~nine months ended December 31, ~~2019.~~2020. The ~~$2,857~~$31,196 increase was a result of the fluctuation in the stock price ~~in the three months ended~~at December 31, ~~2020~~2021 compared to ~~the three months ended~~ December 31, ~~2019. In addition, there~~2020.
There was a ~~non-cash~~ gain in the ~~three months~~period ended December 31, 2020 from the extinguishment of the derivative liabilities that when converted to shares of common stock of ~~$2,755 compared to ($220)~~$19,338. In addition, in ~~the three months ended December 31, 2019. In~~ the period ended December 31, 2020, there was a ~~forgiveness~~loss on the conversion of debt ~~related~~and other liabilities to ~~the PPP loans in the amount~~shares of ~~$1,850.~~common stock of $3,969.

Interest expense, net of interest income, for the ~~three~~nine months ended December 31, 2020 ~~was $318 as compared to $188 for the three months ended December 31, 2019. The increase~~ was the result of the interest incurred on the debt assumed in the Banner Midstream acquisition, the amortization of debt discount of $149 as well as the value related to the granting of warrants for interest of ~~$252.~~$1,265. For the nine months ended December 31, 2021, value related to the granting of warrants for interest was $545.

Oil, Natural Gas and Natural Gas Liquids Costs and Expenses
Nine Months Ended
December 31,
2021 2020
Costs and expenses (income):
Production $ 407 $ 516
Exploration, abandonment, and impairment 397 8
Oilfield supplies and repairs 1,517 1,423
Oil & Gas production taxes 162 106
General and administrative 1,552 3,245
Depreciation and amortization 25 115
Depletion 1,445 380
Accretion 118 26
Gain on sale of oil and gas property (721 ) -
Loss on abandonment of oil and gas property - 82
Net Income ~~(Loss)~~(loss)

The following table shows net income (loss) for the nine months ended December 31, 2021 and 2020:
Nine Months Ended
December 31,
2021 2020
Commodities Segment $ 6,117 $ (9,309 )
Financial Segment 54 54
Digital Assets Segment (3,819 ) -
Technology Segment (1,369 ) (2,409 )
Net Income (loss) $ 983 $ (11,664 )
Net income from continuing operations for the ~~three~~nine months ended December 31, ~~2020 was $532 as compared to a net loss of ($5,419) for the three months ended December 31, 2019. The $5,951 increase in net income was~~2021 increased primarily due to the non-cash changes in the fair value of the derivative liability of $15,295 and the non-cash losses incurred on the conversion of debt and expense to equity in the nine months ended December 31, 2020 of $3,969, offset by the non-cash gain on the exchange of warrants for common stock ~~described herein as well as the forgiveness of debt on the PPP loans. The net income (loss) was comprised of $194 and ($162)~~ in the ~~financing segment; ($101)~~nine months ended December 31, 2020 of $19,338.

RESULTS OF OPERATIONS FOR CONTINUING OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
Revenues
The following table shows revenues for the three months ended December 31, 2021 and ~~($5,257)~~2020:
Three Months Ended
December 31,
2021 2020
Oil and Gas Operations $ 1,748 $ 641
Transportation Services and Other Revenue 4,195 3,659
Financial Segment 175 165
BTC Mining 17 -
Technology Segment - -
Total $ 6,135 $ 4,465
Oil, Natural Gas and Natural Gas Liquids Revenues. Our revenues are a function of oil production volumes sold and average sales prices received for those volumes.
Three Months Ended
December 31,
2021 2020
Revenues:
Oil and natural gas sales, net of taxes $ 1,957 $ 640
Other - -
Total revenues $ 1,957 $ 640
Our oil revenues for the three months ended December 31, 2021 increased by $1,317, or 206%, to $1,957 from $640 during the three months ended December 31, 2020. The increase in oil production during the ~~technology segment;~~three months ended December 31, 2021 as compared to the same period in 2020 resulted in $782 of the total increase due to more wells operational in 2021 versus 2020. The remaining revenue increase of $535 was due to an increase in oil prices during the three months ended December 31, 2021 as compared to the same period in 2020.
Average daily production sold increased by 71 barrels of oil per day (“BOPD”) to 163 BOPD during the three months ended December 31, 2021 from 92 BOPD during the three months ended December 31, 2020.
Cost of Revenues and ~~net income~~Gross Profit
The following table shows costs of ~~$439~~revenues for the three months ended December 31, 2021 and $02020:
Three Months Ended
December 31,
2021 2020
Total $ 3,527 $ 3,218
The increase in cost of revenue was primarily due to increased owner operator and fuel expenses of $3,367 for the ~~commodity~~three months ended December 31, 2021 compared to $2,733 for the three months ended December 31, 2020.

Operating Expenses
The following table shows operating expenses by segment for the three months ended December 31, ~~2020~~2021 and ~~2019, respectively.~~2020:

Three Months Ended
December 31,
2021 2020
Segment
Commodity segment $ 4,803 $ 4,412
Technology segment 764 934
Digital Assets segment 3,307 -
Financial segment 415 137
Total $ 9,289 $ 5,483
~~Results of Operations~~
The following table shows operating expenses for the ~~Nine Months Ended December 31, 2020 and 2019~~
~~Revenues~~
~~Revenues for the nine~~three months ended December 31, ~~2020 were $10,056 as compared to $219 for the nine months ended December 31, 2019, an increase of $9,837. The increase was primarily due to the addition of the oil~~2021 and gas operations as the result of the Banner Midstream acquisition on March 27, 2020. Revenues were comprised of $359 and $96 in the financing segment; $0 and $123 in the technology segment; and $9,697 and $0 in the commodity segment for the nine months ended December 31, 2020 and 2019, respectively.2020:

~~Cost of Revenues and Gross Profit~~
Three Months Ended
December 31,
2021 2020
Operating Expenses
Salaries and salaries related costs $ 4,478 $ 1,384
Professional and consulting fees 524 154
Oilfield supplies and repairs 1,062 644
Selling, general and administrative costs 2,623 2,528
Depreciation, amortization, depletion, and accretion 602 509
Research and development - 264
$ 9,289 $ 5,483

Cost of revenues for the nine months ended December 31, 2020 was $6,644 as compared to $128 for the nine months ended December 31, 2019, an increase of $6,516. The increase was primarily due to the addition of the oil and gas operations as the result of the Banner Midstream acquisition on March 27, 2020. Cost of Revenues was comprised of $0 and $0 in the financing segment; $0 and $128 in the technology segment; and $6,644 and $0 in the commodity segment for the nine months ended December 31, 2020 and 2019, respectively. Gross margins decreased from 42% for the nine months ended December 31, 2019 to 34% for the nine months ended December 31, 2020 due to costs involved with executing the projects and changes in inventory of crude oil.
~~Operating Expenses~~
Operating expenses for the nine months ended December 31, 2020 were $13,733 as compared to $7,789 for the nine months ended December 31, 2019, an increase of $5,944. Operating expenses were comprised of $331 and $406 in the financing segment; $2,541 and $7,383 in the technology segment; and $10,861 and $0 in the commodity segment for the nine months ended December 31, 2020 and 2019, respectively. The $5,944 increase was due principally to the expenses, including wages and consulting fees, related to the addition of the oil and gas operations as the result of the Banner Midstream acquisition on March 27, 2020 and the depreciation, depletion, amortization and accretion for Banner Midstream in 2020, partially offset by the reduction in the Zest Labs selling expenses.
Selling, General and Administrative

~~Selling,~~The following table shows selling, general and administrative expenses for the ~~nine~~three months ended December 31, ~~2020 were $11,970 compared with $5,464 for the nine months ended December 31, 2019. Cost reduction initiatives were focused on salary related~~2021 and ~~professional fees for the technology segment offset by the costs incurred for Banner Midstream as this was acquired in March 2020.~~2020:

Three Months Ended
December 31,
2021 2020
Selling, general and administrative costs
Capital Raising Costs $ 4 $ 773
Insurance 820 552
Legal/Audit/Accounting expenses 424 407
Factoring expenses 98 135
Equipment Rental 124 4
Development Costs 105 -
Other 1,048 657
$ 2,623 $ 2,528

Depreciation, Amortization, Depletion and Accretion

~~Depreciation,~~The following table shows depreciation, amortization, depletion and accretion expenses for the ~~nine~~three months ended December 31, 2021 and 2020:
Three Months Ended
December 31,
2021 2020
Depletion of proved oil and natural gas properties $ 212 $ 255
Depletion of drilled wells 92 -
Depreciation of sand frac transportation equipment 117 110
Depreciation of technology segment assets 32 62
Depreciation of Bitstream mining assets 21 -
Amortization of intangible assets 88 72
Asset retirement obligation accretion 40 10
Depreciation, depletion and amortization expense $ 602 $ 509
The decrease in depletion of proved oil and natural gas properties of $43 for the three months ended December 31, 2021 as compared to the three months ended December 31, 2020 ~~were $1,133 compared~~is primarily due to ~~$216 for the nine months ended December 31, 2019. Depreciation, amortization,~~an adjustment of projected lifetime production at wells purchased in August 2020, offset by additional wells being depleted. Increase in depletion ~~and accretion expenses were comprised~~ of ~~$0 and $0~~drilled wells was due to completion of Deshotel #24 well in the financing segment; $188 and $216 in the technology segment; and $945 and $0 in the commodity segment for the nine months ended December 31, 2020 and 2019, respectively. The $917 increase resulted primarily from the acquisition of Banner Midstream and the depletion and accretion is the result of the oil and gas properties maintained by Banner Midstream. The technology and financing segment do not have depletion or accretion.
March 2021.

Research and Development

Research and development expense decreased ~~70% to $630~~from $264 in the ~~nine~~three months ended December 31, 2020 ~~compared with $2,109~~to zero in the ~~nine~~three months ended December 31, ~~2019.~~2021. The ~~$1,479~~$264 reduction in costs ~~related primarily~~is due to the ~~maturing~~completion of the development of the Zest Labs freshness solutions.

Other Income (Expense)

The following table shows other income (expense) for the three months ended December 31, 2021 and 2020:
Three Months Ended
December 31,
2021 2020
Change in fair value of derivative liabilities $ 10,979 $ 481
Gain (loss) on exchange of warrants for common stock - 2,755
Loss on conversion of long-term debt and accrued expenses - -
Gain on disposal of ARO related to sale of oil and gas property - -
Gain on sale of oil and gas property - -
Forgiveness of debt - 1,850
Interest expense, net of interest income (19 ) (318 )
Other income (expense) $ 10,960 $ 4,768
Change in fair value of derivative liabilities for the ~~nine~~three months ended December 31, ~~2020~~2021 was a non-cash ~~loss of ($15,901)~~gain, same as ~~compared to a non-cash loss of ($2,392)~~ for the ~~nine~~three months ended December 31, ~~2019.~~2020. The ~~$13,509 decrease~~$10,498 increase was a result of the fluctuation in the stock price ~~in the nine months ended~~at December 31, 2021 compared to December 31, 2020 ~~compared to the nine months ended December 31, 2019. In addition, there~~as well as issuance of warrants August 2021
There was a ~~non-cash~~ gain in the ~~nine months~~period ended December 31, 2020 from the extinguishment of the derivative liabilities that when converted to shares of common stock of ~~$19,338 compared to ($1,059)~~$2,755. In addition, in ~~the prior year period. In~~ the period ended December 31, 2020, there was a ~~non-cash~~ loss on the conversion of debt and other liabilities to shares of common stock of ~~$3,969, a gain on forgiveness of debt of PPP loans of $1,850 and a loss on the sale of fixed assets and abandonment of oil and gas properties of $105 and $83, respectively.~~$1,775.

Interest expense, net of interest income, for the ~~nine~~three months ended December 31, 2020 ~~was $2,473 as compared to $323 for the nine months ended December 31, 2019. The increase~~ was the result of the interest incurred on the debt assumed in the Banner Midstream acquisition, the amortization of debt discount of $149 as well as the value related to the granting of warrants for interest of ~~$2,042~~$1,265. For the three months ended December 31, 2021, value related to the granting of warrants for interest was $0.

Oil, Natural Gas and ~~the amortization of debt discount of $149.~~Natural Gas Liquids Costs and Expenses

Three Months Ended
December 31,
2021 2020
Costs and expenses (income):
Production $ 128 $ 352
Exploration, abandonment, and impairment - 8
Oilfield supplies and repairs 750 630
Oil & Gas production taxes 83 47
General and administrative 624 1,099
Depreciation and amortization 9 110
Depletion 305 254
Accretion 40 10
Gain on sale of oil and gas property - -
Loss on abandonment of oil and gas property - -
Net ~~Loss~~Income (loss)

The following table shows net income (loss) for the three months ended December 31, 2021 and 2020:
Three Months Ended
December 31,
2021 2020
Commodities Segment $ 8,697 $ 439
Financial Segment (243 ) 194
Digital Assets Segment (3,411 ) -
Technology Segment (764 ) (101 )
Net Income (loss) $ 4,279 $ 532
Net ~~loss~~income from continuing operations for the ~~nine~~three months ended December 31, ~~2020 was $11,664 as compared to $11,456 for the nine months ended December 31, 2019. The $208 decrease in net loss was~~2021 increased primarily due to the non-cash changes in the fair value of the derivative liability and the non-cash ~~losses incurred on the conversion of debt to equity, offset by the non-cash~~ gain on the exchange of warrants for common stock ~~and forgiveness of debt of the PPP loans described herein. The net income (loss) was comprised of $54 and ($311)~~ in the ~~financing segment; ($2,409) and ($11,145) in the technology segment; and net loss of ($9,309) and $0 in the commodity segment for the nine~~three months ended December 31, 2021 and 2020, offset by the non-cash losses incurred on the conversion of debt and ~~2019, respectively.~~expense to equity in the three months ended December 31, 2020.

~~Liquidity and Capital Resources~~LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

Net cash used in operating activities was ($~~7,828)~~8,420) for the nine months ended December 31, ~~2020,~~2021, as compared to net cash used in operating activities of ($~~4,592)~~7,737) for the nine months ended December 31, ~~2019.~~2020. Cash used in operating activities is related to the Company’s net ~~loss~~income (loss) partially offset by non-cash expenses, including share-based compensation and the change in the fair value of the derivative liability and net losses incurred in the conversion of debt and liabilities to shares of common stock as well as losses on the sale of fixed assets and abandonment of oil and gas properties.

Net cash ~~used in~~provided by (used in) investing activities was ~~($3,808)~~$(9,387) for the nine months ended December 31, ~~2020,~~2021, as compared to ~~$24~~($3,808) net cash ~~provided~~used in investing activities for the nine months ended December 31, ~~2019.~~2020. Net cash used in investing activities in ~~2020~~2021 related to the purchase of fixed assets of ($7,085), payment for power development costs of ($2,000) and oil and gas properties of $(304), offset by sale of fixed assets of $2. For the nine months ended December 31, 2020, the cash used in investing activities related to advancement of a note receivable of ~~$275,~~($275), and the net purchases of fixed assets and oil and gas ~~properties.~~properties including drilling costs of $(3,533).

Net cash provided by(used) in financing activities for the nine months ended December 31, ~~2020~~2021 was ~~$19,211~~$17,355 that included ~~$22,374 (net~~$19,230 of ~~fees) raised via~~proceeds from issuance of common stock and warrants, net of fees, and $28 in ~~a direct registered offering, stock for~~proceeds received from the exercise of ~~warrants and~~ stock options, offset by ~~proceeds and~~$1,805 in repayments of ~~long-term debt and notes payable including related parties of $3,163.~~debt. This compared with the cash provided by financing activities in the nine months ended December 31, ~~2019 amounts~~2020 of ~~$4,430 provided by financing~~$19,120 that included ~~$1,047 provided through~~$14,359 from the ~~credit facility, $2,980~~exercise of warrants, $349 from the exercise of stock options, $2,473 from proceeds received from ~~the sale of preferred stock~~debt form related and ~~$403~~non-related parties, $7,666 from ~~proceeds from advances from related parties.~~
~~To date we have financed our operations through sales~~issuance of common stock, net of fees offset by ($5,320) from payments on debt to both related and ~~the issuance of debt.~~non-related parties and ($316) in payments to prior owners.

~~In addition to these transactions,~~On August 6, 2021, the Company inclosed a registered direct offering (the “Offering”) of 3,478 shares of the ~~period~~Company’s common stock and warrants to purchase 3,478 shares of common stock (the “Warrants”) to institutional investors at a purchase price per share and accompanying Warrant of $5.75 and received net proceeds of approximately $18,249 after deducting fees payable to the placement agent and offering expenses payable by the Company. We have spent and will continue to spend a majority of the net proceeds from ~~April 1, 2020 through December 31, 2020, entered into~~this offering to pay the ~~following transactions:~~expenses and equipment related to our digital asset mining operation and a portion of the proceeds will continue to be spent on new drilling projects as previously announced. Additionally, approximately $1,000 will be used to fund new intellectual property litigation legal fees and filings.

~~(a)~~ On April 16, 2020, the Company received $386 in Payroll Protection Program funding related to Ecoark Holdings, and the Company also received on April 13, 2020, $1,482 in Payroll Protection Program funds for Pinnacle Frac LLC, a subsidiary of Banner Midstream. All but $29 has been forgiven as of December 31, 2020.
~~(b)~~ ~~On May 1, 2020, an institutional investor elected to convert its remaining shares of Series B Preferred shares into 32 common shares.~~
The Warrants have an exercise price equal to $5.75 per share and will expire April 8, 2025.

~~(c)~~ ~~On April 1 and May 5, 2020, two institutional investors elected to convert their 1 Series C Preferred share into 276 common shares.~~
~~(d)~~ On May 10, 2020, the Company received approximately $6,294 from accredited institutional investors holding 276 warrants issued on November 13, 2019 with an exercise price of $3.65 and holding 1,176 warrants with an exercise price of $4.50. The Company agreed to issue to these investors an additional number of warrants as a condition of their agreement to exercise the November 2019 warrants.
~~(e)~~ On December 31, 2020, the Company completed a registered direct offering, whereby the Company issued 889 shares of common stock and 889 accompanying warrants to purchase common stock to one institutional investor under the effective Form S-3 at $9.00 per share and accompanying warrant for a total of $8,000 in gross proceeds, before placement agent fees and other offering expenses. The warrants are exercisable for a two-year term at a strike price of $10.00 per share. The Company granted 62 warrants to the placement agent as compensation in addition to the $560 cash commission received by the placement agent The placement agent warrants are exercisable at $11.25 per share and expire on January 2, 2023.

At December 31, ~~2020~~2021 we had cash (including restricted cash) of ~~$7,981,~~$864 and ~~$3,955~~$205 as of February ~~1, 2021.~~10, 2022 from continuing operations. We had a working capital deficit of ~~$2,856~~$6,020 and ~~$16,689~~$11,845 as of December 31, ~~2020~~2021 and March 31, ~~2020,~~2021, respectively. The decrease in the working capital deficit is the result of the non-cash change in the fair value of the derivative liabilities and repayments of long-term debt offset by the ~~repayment~~net changes in accounts payable and ~~conversion of debt and liabilities to shares of common stock. These liabilities were assumed in the Banner Midstream in March 2020.~~ accrued expenses.
The Company ~~believes it~~ has adequate capital resources to meet its cash requirements during the next 12 months.

~~The Company raised approximately $14,359 in warrant exercises~~We expect that in the ~~nine months ended December 31, 2020 as well as $8,001 in a registered direct offering. We expect that~~long term the revenue generating operations ~~of Banner Midstream~~in our Commodities segment will continue to improve the liquidity of the Company moving forward. ~~However, going forward,~~The Company’s capital program for production enhancement and development is expected to be significantly focused on exploiting legacy acreage positions that are economically viable at today’s oil prices. We anticipate that management’s focus on legacy acreage enhancement and development will positively benefit the ~~effect~~balance sheet by producing hydrocarbons during a time of increasing demand after the ~~pandemic~~negative impacts of COVID-19.
The amount and timing of our capital expenditures are largely discretionary and within our control. We could choose to defer a portion of these planned capital expenditures depending on a variety of factors, including but not limited to the success of our drilling activities, prevailing and anticipated prices for oil, the availability of necessary equipment, infrastructure and capital, ~~markets may limit~~the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other interest owners. We currently continue to execute on our ~~ability~~strategy to ~~raise~~reinvest cash flow from operations to enhance, develop and increase oil production, strengthening our balance sheet. We intend to continue monitoring commodity prices and overall market conditions and can adjust capital deployment in response to changes in commodity prices and overall market conditions.
We monitor and adjust our projected capital expenditures for our operations in response to the results of our drilling activities, changes in prices, availability of financing, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, contractual obligations, internally generated cash flow and other factors both within and outside our control. If we require additional capital, we may seek such capital through traditional reserve base borrowings, joint venture partnerships, production payment financing, asset sales, offerings of debt and/or equity securities or other means. There is no assurance that the needed capital will be available on ~~the~~acceptable terms or at all. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our drilling programs, which could result in a loss of acreage through lease expirations. In addition, we may not be able to complete acquisitions that may be favorable to us ator finance the ~~time we need it, if at all.~~ capital.

Bitstream Expenditures
As ~~disclosed~~of February 10, 2022, the Company has paid unaffiliated third parties a total of $4,755 and is obligated to pay certain of these third parties an additional $8,686 in ~~Note 1, COVID-19 has had an impact on~~connection with Bitstream and the establishment of its cryptocurrency mining facilities and operations. Depending upon the availability of capital, Bitstream may spend material additional sums.
Contractual Obligations
Our contractual obligations are included in our ~~management’s ability~~Notes to ~~operate effectively. The challenges related to remote work and travel restrictions~~the Unaudited Condensed Consolidated Financial Statements. To the extent that ~~we as a smaller company have faced in striving~~funds generated from our operations, together with our existing capital resources, are insufficient to meet ~~our disclosure obligations in~~future requirements, we will be required to obtain additional funds through equity or debt financings. No assurance can be given that any additional financing will be made available to us or will be available on acceptable terms should such a ~~timely manner while taking the steps to protect the health and safety of our employees have impacted, and may continue to further impact, our ability to raise additional capital.~~need arise.

The Company has agreed to fund 100% of the cost, estimated to be approximately $4,700, associated with the drilling and completion of an initial deep horizontal well in the Austin Chalk formation as part of their Participation Agreement with Blackbrush Oil & Gas, L.P. The Company paid the amount of the drilling costs into a designated escrow account by the commencement of the drilling, which occurred in January 2021.
Off-Balance Sheet Arrangements

As of December 31, ~~2020~~2021 and March 31, ~~2020,~~2021, we had no off-balance sheet arrangements.

Cautionary Note Regarding Forward Looking Statements

This ~~report~~Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the expected ~~increase in~~ revenues from existing and new drilling projects in our oil and gas operations, plans and prospects for our new digital assets mining business including developing mining facilities and delivery of related infrastructure, power and equipment, increasing the electric power supply for our cryptocurrency mining operations, our planned participation in ERCOT and ability to sell power at favorable margins during shortages, the use and benefits of immersion cooling technology for our cryptocurrency mining operations, prospective future litigation, the initial public offering and uplisting of Agora’s securities and our anticipated stock dividend involving Agora common stock thereafter, regulatory changes in the oil and gas industry, our capital program for production enhancement and development, the potential acquisition of a broker-dealer, our anticipated capital expenditures, and future liquidity. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including: any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors that could cause actual results to differ from those in the forward-looking statements include, among other things, volatility of oil and Bitcoin prices, the risks arising from the new impact of the COVID-19 pandemic, including its future effect on the U.S. and global economies including the oil and ~~on our Company,~~gas and cryptocurrency markets, competition, government regulation or action, the costs and results of drilling and cryptocurrency mining activities, risks inherent in drilling operations, availability of equipment, services, resources and personnel required to conduct operating activities, ability to replace reserves and uncertainties related to reserve estimates, contingencies in our development of cryptocurrency mining facilities in West Texas including the ~~Company’s ability to raise additional capital on acceptable terms when needed,~~need for sufficient land and energy and regulatory approvals and uncertainties related to ongoing litigation, risks related to potential impact of natural disasters, any delays or difficulties in the completion of the initial public offering and uplisting of Agora securities or our planned distribution of Agora common stock thereafter, including delays or challenges in obtaining the requisite approvals, risks and uncertainties related to the new digital asset mining business, and cybersecurity risks. Further information on our risk factors is contained in our filings with the SEC, including our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021 filed on November 10, 2021, our Annual Report on Form 10-K for the year ended March 31, ~~2020~~2021 filed on June 30, 2021 and our prospectus supplement dated August 4, 2021. Further, with respect to Agora and its subsidiaries, Agora’s registration statement on Form ~~S-3 filed on October 16, 2020, as amended by Amendment~~S-1 (File No. ~~1 filed on December 22, 2020,~~333-261246) sets forth additional risks and ~~Amendment No. 2 filed on December 28, 2020.~~uncertainties specific to its business after giving effect to its initial public offering and related transactions and events more particularly described therein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, our principal executive and financial officers have concluded that as of the end of the period covered by this report the Company’s disclosure controls and procedures were effective.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Principal Financial Officer (Principal Financial and Accounting Officer), as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting

~~During~~There were no material changes in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, ~~2020, we remediated~~2021 that have materially affected, or are reasonably likely to materially affect, our previously identified material weakness. This material weakness related to improper segregation of duties. We addressed our lack of segregation of duties by hiring additional personnel in our accounting and financing departments to ensure that proper controls are adhered to. With the changes in force, we believe that there is effective internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS

~~Except as set forth~~Other than discussed below, during the period covered by this ~~Quarterly Report on Form 10-Q~~report, there ~~have been~~were no material ~~changes to~~developments in the ~~description of~~ legal proceedings ~~set forth~~disclosed in our Annual Report on Form 10-K for the year ended March 31, ~~2020.~~2021.

On August 1, 2018, the Company and Zest Labs filed a complaint against Walmart Inc. in the United States District Court for the Eastern District of Arkansas, Western Division. The complaint includes claims for violation of the Arkansas Trade Secrets Act, violation of the Federal Defend Trade Secrets Act, breach of contract, unfair competition, unjust enrichment, breach of the covenant of good faith and fair dealing, conversion and fraud. The Company and Zest Labs are seeking monetary damages and other related relief to the extent it is deemed proper by the court. The Company does not believe that expenses incurred in pursuing the complaint have had a material effect on the Company’s net income or financial condition for the fiscal year ended March 31, 2020 or any individual fiscal quarter. On October 22, 2018, the Court issued an order initially setting a trial date of June 1, 2020, which has been delayed due to COVID-19. The trial date has been rescheduled to March 29, 2021.
● As previously disclosed, on August 1, 2018, Ecoark Holdings, Inc. and Zest Labs, Inc. filed a complaint against Walmart Inc. in the United States District Court for the Eastern District of Arkansas, Western Division. The complaint includes claims for violation of the Arkansas Trade Secrets Act, violation of the Federal Defend Trade Secrets Act, breach of contract, unfair competition, unjust enrichment, breach of the covenant of good faith and fair dealing, conversion and fraud. On April 9, 2021, a Little Rock, Arkansas jury awarded Ecoark and Zest a total of $115 million in damages which includes $65 million in compensatory damages and $50 million in punitive damages and found Walmart Inc. liable on three claims. The federal jury found that Walmart Inc. misappropriated Zest’s trade secrets, failed to comply with a written contract, and acted willfully and maliciously in misappropriating Zest’s trade secrets. We expect Walmart to continue to vigorously defend the litigation and to oppose the verdict in post-trial motions and an appeal. The Company has filed post-trial motions to add an award for their attorneys’ fees as the prevailing party in the litigation. In addition to other post-trial motions, Walmart, Inc. has filed a renewed motion for judgment as a matter of law or, in the alternative, for remittitur or a new trial. As of the date of this Report, the court has not ruled on any of the post-trial motions.

● On September 21, 2021, Ecoark Holdings, Inc. and Zest Labs, Inc. filed a complaint against Deloitte Consulting, LLP (“Deloitte”) in the Eight Judicial District Court in Clark County, Nevada. The complaint alleges violation of the Nevada Uniform Trade Secret Act and in addition to compensatory damages will also be seeking a preliminary and permanent injunction, attorney’s fees, and punitive damages. The damages at issue are in the hundreds of millions of dollars. Zest Labs, Inc. began working with Deloitte in 2016, in a confidential matter in a pilot program that Zest Labs, Inc. had been engaged for by a large customer. Zest Labs, Inc. engaged in significant discussions, presentations, demonstrations, and information downloads with Deloitte who specifically acknowledged that this information was confidential. This complaint is in the very early stages, with motions filed on both sides and an initial hearing set for March 8, 2022. The Company cannot reasonably determine the outcome and potential reward at this time.
On January 15, 2021, Simon Abrahms filed a notice of dismissal without prejudice of the class action lawsuit which was filed in the United States District Court of the District of Nevada on November 9, 2020 against the Company and members of its Board of Directors. This lawsuit is discussed in more detail in the Company’s revised definitive proxy statement on Schedule 14A filed on December 11, 2020. The Company’s stockholders ratified the corporate action giving rise to this litigation at a special meeting that was held on December 29, 2020. As a result, the Company expects that its sole remaining liability is to reimburse the plaintiff for his reasonable attorneys’ fees.
ITEM 1A. RISK FACTORS

~~See~~Investing in our common stock involves a high degree of risk. Investors should review the risk factors ~~included~~described in ~~the registration statement~~our Quarterly Report on Form ~~S-3~~10-Q for the six months ended September 30, 2021 filed on ~~October 16, 2020, as amended by Amendment No. 1~~November 10, 2021, in addition to those disclosed in our Annual Report on Form 10-K for the year ended March 31, 2021 filed on ~~December 22, 2020 and Amendment No. 2 filed on December 28, 2020, and the prospectus supplement filed on December~~June 30, ~~2020.~~2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On November 16, 2020, the Company issued to Randy May, the Chief Executive Officer, one share of the newly designated Series A-1 Preferred Stock, par value $0.001 per share (the “Series A-1 Preferred Stock”) in exchange for one dollar. The issuance of the Series A-1 Preferred Stock was exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.Not applicable.

On November 27, 2020, the one share of Series A-1 Preferred Stock was redeemed. After the redemption, the Company filed with the Secretary of State of Nevada a Certificate of Withdrawal with respect to the Series A-1 Preferred Stock, which was effective upon filing.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.
ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.
ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Incorporated by Reference
Filed or
Furnished
No. Exhibit Description Form Date Number Herewith
3.1 Articles of Incorporation, as amended Filed
3.2 Amended and Restated Bylaws 8-K 4/28/17 3.1
4.1 Form of Warrant 8-K 12/30/20 4.1
4.2 Form of Placement Agent Warrant 8-K 12/30/20 4.2
10.1 Agreement and Assignment of Oil, Gas and Mineral Lease dated September 3, 2020 Filed
10.2 Agreement and Assignment of Oil, Gas and Mineral Lease dated October 12, 2020 Filed
10.3 Participation Agreement, dated October 9, 2020, by and among the Company, BlackBrush Oil & Gas, LP, White River SPV 3 LLC and GeoTerre Operating, LLC Filed
10.4 Form of Securities Purchase Agreement, dated December 29, 2020, by and between the Company and the Purchaser* 8-K 12/30/20 10.1
10.5 Engagement Agreement dated December 23, 2020 by and between the Company and H.C. Wainwright & Co., LLC 8-K 12/30/20 10.2
31.1 Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 Filed
31.2 Certification of Principal Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 Filed
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished**
32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished**
101.INS XBRL Instance Document Filed
101.SCH XBRL Taxonomy Extension Schema Document Filed
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed
101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed
101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed
Incorporated by Reference
Filed or
Furnished

Exhibit No. Exhibit Description Form Date Number Herewith
3.1(a) Articles of Incorporation, as amended 10-Q 2/12/21 3.1
3.1(b) Certificate of Amendment to Articles of Incorporation 8-K 10/12/21 3.1
3.2(a) Amended and Restated Bylaws 8-K 4/28/17 3.1
3.2(b) Amendment to Bylaws 8-K 8/30/21 3.1
4.1 Form of Warrant 8-K 8/5/21 4.1
4.2 Form of Placement Agent Warrant 8-K 8/5/21 4.2
10.1 Restricted Stock Unit Agreement, dated October 6, 2021, between the Company and Peter Mehring** 8-K 10/12/21 10.1
10.2 Peter Mehring Consulting Agreement
8-K

2/4/22

10.1

31.1 Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 Filed
31.2 Certification of Principal Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 Filed
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished*
32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished*
101.INS Inline XBRL Instance Document. Filed
101.SCH Inline XBRL Taxonomy Extension Schema Document. Filed
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. Filed
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. Filed
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. Filed
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. Filed
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). Filed

* Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish to the SEC a copy of any omitted schedule and/or exhibit upon request.
** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

** Exhibits and/or Schedules have been omitted. The Company hereby agrees to furnish to the SEC upon request any omitted information.
+ Portions of this exhibit have been omitted as permitted by the rules of the SEC. The information excluded is both (i) not material and (ii) would be competitively harmful if publicly disclosed. The Company undertakes to submit a marked copy of this exhibit for review by the SEC Staff, to the extent it has not been previously provided, and provide supplemental materials to the SEC Staff promptly upon request.
Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to our Corporate Secretary at Ecoark Holdings, Inc., 303 Pearl Parkway Suite #200, San Antonio, Texas 78215.

~~SIGNATURES~~

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Ecoark Holdings, Inc.

Date: February ~~12, 2021~~11, 2022 By: /s/ ~~RANDY MAY~~Randy May
Randy May
Chief Executive Officer

Date: February ~~12, 2021~~11, 2022 By: /s/ ~~WILLIAM~~William B. ~~HOAGLAND~~Hoagland
William B. Hoagland
Chief Financial Officer
58

iso4217:USD compsci:item

	DECEMBER 31,			MARCH 31,
	2021			2021
	(unaudited)

ASSETS
CURRENT ASSETS:
Cash ($85 pledged as collateral for credit as of December 31, 2021 and March 31, 2021, respectively and $250 restricted as of December 31, 2021 and March 31, 2021, respectively)	$	864		$	1,316
Accounts receivable, net of allowance of $209 and $709 as of December 31, 2021 and March 31, 2021, respectively		716			1,136
Inventories - Crude Oil		165			122
Prepaid expenses and other current assets		2,299			1,995

Total current assets		4,044			4,569

NON-CURRENT ASSETS:
Property and equipment, net		10,456			3,695
Intangible assets, net		1,804			2,065
Intangible assets, digital currency		16			-
Power development costs		2,000			-
Oil and gas properties, full cost-method		11,727			12,352
Capitalized drilling costs, net of depletion		2,056			2,567
Goodwill		10,225			10,225
Right of use assets - financing leases		337			445
Right of use assets - operating leases		849			479
Non-current assets of discontinued operations		-			194

Total non-current assets		39,470			32,022

TOTAL ASSETS	$	43,514		$	36,591

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
CURRENT LIABILITIES
Accounts payable	$	2,567		$	3,614
Accrued liabilities		1,919			3,591
Warrant derivative liabilities		4,410			7,213
Current portion of long-term debt		698			1,056
Note payable - related parties		-			578
Current portion of lease liability - financing leases		144			141
Current portion of lease liability - operating leases		326			212
Current liabilities of discontinued operations		-			9

Total current liabilities		10,064			16,414

NON-CURRENT LIABILITIES
Lease liability - financing leases, net of current portion		186			295
Lease liability - operating leases, net of current portion		554			309
Long-term debt, net of current portion		143			1,012
Asset retirement obligations		1,627			1,532

Total non-current liabilities		2,510			3,148

Total Liabilities		12,574			19,562

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY (DEFICIT) (Numbers of shares rounded to thousands)
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding as of December 31, 2021 and March 31, 2021, respectively		-			-
Common stock, $0.001 par value, 40,000 and 30,000 shares authorized, 26,364 and 22,705 shares issued and 26,247 and 22,589 shares outstanding as of December 31, 2021 and March 31, 2021, respectively		26			23
Additional paid in capital		180,513			167,588
Accumulated deficit		(147,635	)		(148,911	)
Treasury stock, at cost		(1,671	)		(1,671	)

Total stockholders’ equity before non-controlling interest		31,233			17,029
Non-controlling interest		(293	)		-

Total stockholders’ equity		30,940			17,029

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	43,514		$	36,591

	December 31,			March 31,
	2020			2020
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash ($85 and $85 pledged as collateral for credit as of December 31, 2020 and March 31, 2020, respectively and $250 and $50 restricted at December 31, 2020 and March 31, 2020, respectively)	$	7,981		$	406
Accounts receivable, net of allowance of $709 and $500 as of December 31, 2020 and March 31, 2020, respectively		417			172
Note receivable, net of allowance of $0 and $25 as of December 31, 2020 and March 31, 2020, respectively		-			-
Inventories – Crude Oil		129			-
Prepaid expenses and other current assets		1,512			676
Total current assets		10,039			1,254

NON-CURRENT ASSETS
Property and equipment, net		3,921			3,965
Intangible assets, net		2,136			2,350
Oil and gas properties, full cost-method		11,795			6,135
Goodwill		10,225			10,225
Right of use assets – financing leases		480			589
Right of use assets – operating leases		480			142
Non-current assets of discontinued operations		249			249
Other assets		-			7
Total non-current assets		29,286			23,662

TOTAL ASSETS	$	39,325		$	24,916

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	1,867		$	751
Accrued liabilities		1,738			3,036
Due to prior owners		814			2,358
Warrant derivative liabilities		6,343			2,775
Current portion of long-term debt		789			6,401
Notes payable – related parties		772			2,172
Current portion of lease liability – financing leases		140			137
Current portion of lease liability – operating leases		204			85
Current liabilities of discontinued operations		228			228
Total current liabilities		12,895			17,943

NON-CURRENT LIABILITIES
Lease liability – financing leases, net of current portion		331			436
Lease liability – operating leases, net of current portion		321			74
Long-term debt, net of current portion		1,488			421
Asset retirement obligations		431			295
Total liabilities		15,466			19,169

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY (Numbers of shares rounded to thousands)
		-			-
Preferred stock, $0.001 par value; 5,000 shares authorized; none and 1(Series C) issued and outstanding as of December 31, 2020 and March 31, 2020, respectively		-			-
Common stock, $0.001 par value; 30,000 shares authorized, 22,470 shares issued and 22,353 shares outstanding as of December 31, 2020, and 40,000 shares authorized, 17,175 shares issued and 17,058 shares outstanding as of March 31, 2020		22			17
Additional paid-in-capital		165,195			135,424
Accumulated deficit		(139,687	)		(128,023	)
Treasury stock, at cost		(1,671	)		(1,671	)
Total stockholders’ equity		23,859			5,747

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	39,325		$	24,916

		NINE MONTHS ENDED						THREE MONTHS ENDED
		DECEMBER 31,						DECEMBER 31,
		2021			2020			2021			2020
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
CONTINUING OPERATIONS:

REVENUES		$	19,125		$	10,056		$	6,135		$	4,465
COST OF REVENUES			10,693			6,644			3,527			3,218
GROSS PROFIT			8,432			3,412			2,608			1,247

OPERATING EXPENSES
Salaries and salaries related costs			8,316			5,001			4,478			1,384
Professional and consulting fees			906			652			524			154
Oilfield supplies and repairs			2,262			1,518			1,062			644
Selling, general and administrative costs			9,005			4,799			2,623			2,528
Depreciation, amortization, depletion, and accretion			2,340			1,133			602			509
Research and development			-			630			-			264

Total operating expenses			22,829			13,733			9,289			5,483

LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES)			(14,397	)		(10,321	)		(6,681	)		(4,236	)

OTHER INCOME (EXPENSE)
Change in fair value of derivative liabilities			15,295			(15,901	)		10,979			481
Gain (loss) on exchange of warrants for common stock			-			19,338			-			2,755
Loss on conversion of long-term debt and accrued expenses			-			(3,969	)		-			-
Gain (loss) on disposal of fixed assets			-			(105	)		-			-
Loss on abandonment of oil and gas property			-			(83	)		-			-
Gain on disposal of ARO related to sale of oil and gas property			8			-			-			-
Gain on sale of oil and gas property			713			-			-			-
Forgiveness of debt			-			1,850			-			1,850
Interest expense, net of interest income			(636	)		(2,473	)		(19	)		(318	)
Total other income (expense)			15,380			(1,343	)		10,960			4,768

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS AND (PROVISION) FOR INCOME TAXES			983			(11,664	)		4,279			532

DISCONTINUED OPERATIONS:
Loss from discontinued operations			-			-			-			-
Gain on disposal of discontinued operations			-			-			-			-
Total discontinued operations			-			-			-			-

INCOME (LOSS) FROM OPERATIONS BEFORE BENEFIT (PROVISION) FOR INCOME TAXES			983			(11,664	)		4,279			532

BENEFIT (PROVISION) FOR INCOME TAXES			-			-			-			-

NET INCOME (LOSS)			983			(11,664	)		4,279			532
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST			323			-			323			-

NET INCOME (LOSS) TO CONTROLLING INTEREST		$	1,306		$	(11,664	)	$	4,602		$	532
NET INCOME (LOSS) PER SHARE - BASIC		$	0.05		$	(0.58	)	$	0.17		$	0.02
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC			24,728			19,950			26,364			21,300
NET INCOME (LOSS) PER SHARE – DILUTED (see NOTE 1)		$	(0.57	)	$	0.21		$	(0.24	)	$	0.00
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED (see NOTE 1)	��		24,728			24,103			26,364			25,453

										Additional
	Preferred					Common Stock				Paid-In		Accumulated			Treasury			Non-controlling
	Shares			Amount		Shares		Amount		Capital		Deficit			Stock			Interest			Total

Balance - March 31, 2020		1		$	-		17,175	$	17	$	135,424	$	(128,023	)	$	(1,671	)	$	-		$	5,747

Shares issued in the exercise of warrants, net of expenses		-			-		1,531		2		6,674		-			-			-			6,676
Shares issued in the exercise of stock options		-			-		89		-		349		-			-			-			349
Shares issued in conversion of debt and accrued interest		-			-		524		1		3,941		-			-			-			3,942
Shares issued in conversion of accounts payable and accrued expenses		-			-		93		-		677		-			-			-			677
Conversion of preferred shares (Series C) to common shares		(1	)		-		308		-		-		-			-			-			-
Share-based compensation		-			-		-		-		1,114		-			-			-			1,114

Net loss for the period		-			-		-		-		-		(21,181	)		-			-			(21,181	)

Balance - June 30, 2020		-			-		19,720		20		148,179		(149,204	)		(1,671	)		-			(2,676	)

Shares issued in the conversion of long-term debt and accrued interest		-			-		192		-		2,635		-			-			-			2,635
Shares issued services rendered		-			-		30		-		485		-			-			-			485
Shares issued in acquisition of oil and gas reserves and fixed assets		-			-		171		-		2,750		-			-			-			2,750
Shares issued in the exercise of warrants		-			-		1,088		1		5,575		-			-			-			5,576
Shares issued in the exercise of cashless stock options		-			-		1		-		-		-			-			-			-
Share-based compensation		-			-		-		-		36		-			-			-			36

Net income for the period		-			-		-		-		-		8,985			-			-			8,985

Balance - September 30, 2020		-			-		21,202		21		159,660		(140,219	)		(1,671	)		-			17,791

Shares issued in the exercise of warrants		-			-		376		-		2,106		-			-			-			2,106
Shares issued in registered direct offering, net of amount allocated to derivative liability		-			-		889		1		3,010		-			-			-			3,011
Share-based compensation		-			-		-		-		419		-			-			-			419
Fractional adjustment		-			-		1		-		-		-			-			-			-

Net income for the period		-			-		-		-		-		532			-			-			532

Balance - December 31, 2020		-		$	-		22,468	$	22	$	165,195	$	(139,687	)	$	(1,671	)	$	-		$	23,859


Balance - March 31, 2021		-		$	-		22,705	$	23	$	167,588	$	(148,911	)	$	(1,671	)	$	-		$	17,029

Shares issued in the exercise of stock options, including cashless exercises		-			-		20		-		28		-			-			-			28
Shares issued for services rendered		-			-		115		-		675		-			-			-			675
Share-based compensation		-			-		-		-		399		-			-			-			399

Net income for the period		-			-		-		-		-		2,559			-			-			2,559

Balance - June 30, 2021		-			-		22,840		23		168,690		(146,352	)		(1,671	)		-			20,690

Shares issued for services rendered, net of amounts prepaid		-			-		45		-		92		-			-			-			92
Shares issued in registered direct offering, net of amount allocated to derivative liability		-			-		3,478		3		8,024		-			-			-			8,027
Share-based compensation		-			-		-		-		819		-			-			-			819
Fractional adjustment		-			-		1		-		-		-			-			-			-

Net loss for the period		-			-		-		-		-		(5,855	)		-			-			(5,855	)

Balance - September 30, 2021		-			-		26,364		26		177,625		(152,207	)		(1,671	)		-			23,773

Shares issued by Agora Digital Holdings, Inc. for services rendered, net of amounts prepaid		-			-		-		-		2,281		-			-			-			2,281
Vesting of shares issued in prior quarter		-			-		-		-		114		-			-			-			114
Share-based compensation		-			-		-		-		493		-			-			-			493
Recognition of non-controlling interest		-			-		-		-		-		(30	)		-			30			-

Net income (loss) for the period		-			-		-		-		-		4,602			-			(323	)		4,279

Balance - December 31, 2021		-		$	-		26,364	$	26	$	180,513	$	(147,635	)	$	(1,671	)	$	(293	)	$	30,940

	Preferred					Common				Additional Paid-In-			Accumulated			Treasury
	Shares			Amount		Shares		Amount		Capital			Deficit			Stock			Total
Balances at March 31, 2019		-		$	-		10,515	$	11	$	113,352		$	(115,886	)	$	(1,671	)	$	(4,194	)

Shares issued in acquisition of Trend Holdings		-			-		1,100		1		3,235			-			-			3,236
Share-based compensation		-			-		-		-		582			-			-			582
Net loss for the period		-			-		-		-		-			(1,646	)		-			(1,646	)

Balances at June 30, 2019		-			-		11,615		12		117,169			(117,532	)		(1,671	)		(2,022	)

Shares issued in exchange for warrants		-			-		855		1		3,292			-			-			3,293
Shares issued for services rendered		-			-		60		-		211			-			-			211
Preferred stock issuance		2			-		-		-		404			-			-			404
Share-based compensation		-			-		-		-		630			-			-			630
Net loss for the period		-			-		-		-		-			(4,389	)		-			(4,389	)

Balances at September 30, 2019		2			-		12,530		13		121,706			(121,921	)		(1,671	)		(1,873	)
Preferred shares converted to common stock		(2	)		-		752		1		(1	)		-			-			-
Shares issued in exchange for warrants		-			-		448		-		2,186			-			-			2,186
Shares issued for services rendered		-			-		50		-		253			-			-			253
Shares issued for services to be rendered		-			-		50		-		247			-			-			247
Preferred shares issued for cash		1			-		-		-		-			-			-			-
Share-based compensation		-			-		-		-		1,345			-			-			1,345
Net loss for the period		-			-		-		-		-			(5,419	)		-			(5,419	)

Balances at December 31, 2019		1		$	-		13,830	$	14	$	125,736		$	(127,340	)	$	(1,671	)	$	(3,261	)

Balances at March 31, 2020		1		$	-		17,175	$	17	$	135,424		$	(128,023	)	$	(1,671	)	$	5,747

Shares issued in the conversion of long-term debt and accrued interest		-			-		525		1		3,941			-			-			3,942
Shares issued in the conversion of accounts payable and accrued expenses		-			-		93		-		677			-			-			677
Preferred shares converted into common shares		(1	)		-		308		-		(-	)		-			-			-
Shares issued in the exercise of warrants, net of expenses		-			-		1,532		2		6,674			-			-			6,676
Shares issued in the exercise of stock options		-			-		89		-		349			-			-			349
Share-based compensation		-			-		-		-		1,114			-			-			1,114
Net loss for the period		-			-		-		-		-			(21,181	)		-			(21,181	)

Balances at June 30, 2020		-			-		19,722		20		148,179			(149,204	)		(1,671	)		(2,676	)

Shares issued in the conversion of long-term debt and accrued interest		-			-		192		-		2,635			-			-			2,635
Shares issued for services rendered		-			-		30		-		485			-			-			485
Shares issued in acquisition of oil and gas reserves and fixed assets		-			-		171		-		2,750			-			-			2,750
Shares issued in the exercise of warrants		-			-		1,088		1		5,575			-			-			5,576
Shares issued in the exercise of cash less stock options		-			-		1		-		-			-			-			-
Share-based compensation		-			-		-		-		36			-			-			36
Net income for the period		-			-		-		-		-			8,985			-			8,985

Balances at September 30, 2020		-			-		21,204		21		159,660			(140,219	)		(1,671	)		17,791
Shares issued in the exercise of warrants		-			-		376		-		2,106			-			-			2,106
Common share issued for cash (net of expenses and allocation to derivative liability)		-			-		889		1		3,010			-			-			3,011
Share-based compensation		-			-		-		-		419			-			-			419
Share adjustment – reverse split		-			-		1		-		-			-			-			-
Net income for the period		-			-				-		-			532			-			532

Balances at December 31, 2020		-		$	-		22,470	$	22	$	165,195		$	(139,687	)	$	(1,671	)	$	23,859

	●	ordered 5,000 used Canaan Avalon 841 13 tera hash per second (“TH/s”) miners for $1,350, plus shipping costs to be delivered on 1,000-unit increments, of which 4,000 miners have been delivered as of January 31, 2022; and

	●	entered into a long-term lease for 20 acres of land effective December 10, 2021, and a land purchase agreement for a separate 20 acres of land effective January 3, 2022.

Net income (loss) attributable to the Company’s stockholders	$	4,602
Increase in the Company’s additional paid-in capital for the issuance of the 4,600 restricted common shares of Agora		2,281
Change from net income (loss) attributable to the Company’s stockholders and transfers to noncontrolling interest	$	6,883

	Nine Months Ended December 31,						Three Months Ended December 31,
	2021			2020			2021			2020
Diluted EPS:
Net income (loss) to controlling interest	$	1,306		$	(11,664	)	$	4,602		$	532
Change in fair value of derivative liability		(15,295	)		15,901			(10,979	)		(481	)

Adjusted net income (loss)	$	(13,989	)	$	4,237		$	(6,377	)	$	51

Weighted Average Shares Outstanding		24,728			24,103			26,364			25,453
Adjusted earnings (loss) per share	$	(0.57	)	$	0.21		$	(0.24	)	$	0.00

Current asset
Cash	$	-
Total current assets	$	-

Property and equipment, net	$	249
Non-current assets	$	249

Accounts payable	$	228
Current liabilities	$	228

	December 31, 2020			March 31, 2020
Zest Labs freshness hardware	$	2,493		$	2,493
Computers and software costs		222			222
Land		140			-
Buildings		236			-
Leasehold improvements – Pinnacle Frac		18			18
Machinery and equipment - Technology		200			200
Machinery and equipment – Commodity		3,458			3,405
Total property and equipment		6,767			6,338
Accumulated depreciation and impairment		(2,846	)		(2,373	)
Property and equipment, net	$	3,921		$	3,965

	December 31, 2021			March 31, 2021
	(unaudited)
Zest Labs freshness hardware	$	2,493		$	2,493
Computers and software costs		222			222
Land		140			140
Buildings		236			236
Leasehold improvements – Pinnacle Frac		18			18
Mining technology equipment – Digital Asset		7,066			-
Machinery and equipment – Technology		200			200
Machinery and equipment – Commodities		3,596			3,385
Total property and equipment		13,971			6,694
Accumulated depreciation and impairment		(3,515	)		(2,999	)
Property and equipment, net	$	10,456		$	3,695

	December 31, 2020			March 31, 2020
Patents	$	1,013		$	1,013
Customer relationships		2,100			2,100
Non-compete agreements – Banner Midstream		250			250
Outsourced vendor relationships		1,017			1,017
Non-compete agreements – Zest Labs		340			340
Total intangible assets		4,720			4,720
Accumulated amortization and impairment		(2,584	)		(2,370	)
Intangible assets, net	$	2,136		$	2,350

Acquisition – Trend Discovery	$	3,223
Acquisition – Banner Midstream		7,002
Goodwill – December 31, 2020 and March 31, 2020	$	10,225

	December 31, 2020		March 31, 2020
Professional fees and consulting costs	$	67	$	106
Vacation and paid time off		114		126
Legal fees		24		503
Compensation		86		865
Interest		383		673
Insurance		631		548
Other		433		215
Total	$	1,738	$	3,036

	Nine Months Ended December 31, 2021			Year Ended March 31, 2021
	~~December 31,~~ ~~2020~~				~~March 31,~~ ~~2020~~				Inception
Expected term	0.5 – 3.50 years		4.58 - 5 years				~~4.67-4.83 years~~				5.00 years
Expected volatility	110 - 113%		94 - ~~101~~	%			95	%	101%		91% - ~~107~~	%107%
Expected dividend yield		-		-		-				-
Risk-free interest rate	0.61 - 1.74%		0.61 - ~~0.73~~1.74%	%	1.50% - 2.77%
Market price	$2.00 - $12.95		$3.05 - $10.00			~~0.70~~	%			~~1.50% -2.77~~	%

Beginning balance as of March 31, 2020	$	2,775
Issuances of warrants – derivative liabilities		13,118
Warrants exchanged for common stock		(25,451	)
Change in fair value of warrant derivative liabilities		15,901
Ending balance as of December 31, 2020	$	6,343

Beginning balance as of March 31, 2021	$	7,213
Issuances of warrants – derivative liabilities		12,492
Warrants exchanged for common stock		(-	)
Change in fair value of warrant derivative liabilities		(15,295	)
Ending balance as of December 31, 2021	$	4,410

	December 31, 2020		March 31, 2020
Property acquired from Banner Midstream	$	5,895	$	6,135
Asset purchase – June 2020		1		-
Properties acquired from Rabb Resources		3,002		-
Purchase – September 4, 2020		1,500		-
Purchase – September 30, 2020		760		-
Purchase – October 1, 2020		22		-
Purchase – October 9, 2020		615		-
Total OGML Properties	$	11,795	$	6,135

Activity Category	March 31, 2020		Adjustments (1)			December 31, 2020
Proved Developed Producing Oil and Gas Properties
Cost	$	167	$	520		$	687
Accumulated depreciation, depletion and amortization		-		(37	)		(37	)

Total	$	167	$	483		$	650

Undeveloped and Non-Producing Oil and Gas Properties
Cost	$	5,968	$	5,520		$	11,488
Accumulated depreciation, depletion and amortization		-		(343	)		(343	)

Total	$	5,968	$	5,177		$	11,145

Grand Total	$	6,135	$	5,660		$	11,795

	December 31, 2020			March 31, 2020
Credit facility – Trend Discovery SPV 1, LLC (a)	$	-		$	-
Senior secured bridge loan – Banner Midstream (b)		-			2,222
Note payable – LAH 1 (c)		-			110
Note payable – LAH 2 (d)		-			77
Note payable – Banner Midstream 1 (e)		-			303
Note payable – Banner Midstream 2 (f)		-			397
Note payable – Banner Midstream 3 (g)		-			500
Merchant Cash Advance (MCA) loan – Banner Midstream 1 (h)		-			361
MCA loan – Banner Midstream 2 (i)		-			175
MCA loan – Banner Midstream 3 (j)		-			28
Note payable – Banner Midstream – Alliance Bank (k)		1,090			1,239
Commercial loan – Pinnacle Frac – Firstar Bank (l)		705			952
Auto loan 1 – Pinnacle Vac – Firstar Bank (m)		31			40
Auto loan 2 – Pinnacle Frac – Firstar Bank (n)		40			52
Auto loan 3 – Pinnacle Vac – Ally Bank (o)		36			42
Auto loan 4 – Pinnacle Vac – Ally Bank (p)		38			47
Auto loan 5 – Pinnacle Vac – Ally Bank (q)		37			44
Auto loan 7 – Capstone – Ally Bank (r)		77			97
Tractor loan 6 – Capstone – Tab Bank (s)		194			235
Equipment loan – Shamrock – Workover Rig (t)		-			50
Ecoark – PPP Loan (u)		29			-
Pinnacle Frac Transport – PPP Loan (v)		-			-
Total long-term debt		2,277			6,971
Less: debt discount		(- )			(149	)
Less: current portion		(789	)		(6,401	)
Long-term debt, net of current portion	$	1,488		$	421

~~(c)~~	Unsecured note payable previously issued April 2, 2018 which was assumed by Banner Midstream in the acquisition of a previous entity. The amount was past due and bears interest at 10% per annum. This amount along with accrued interest of $22 was assumed on March 27, 2020 in the acquisition of Banner Midstream. Amount was paid off in May 2020, and $24 of accrued interest remains at December 31, 2020.

~~(d)~~	Unsecured note payable previously issued April 2, 2018 which was assumed by Banner Midstream in the acquisition of a previous entity. The amount was past due and bears interest at 10% per annum. This amount along with accrued interest of $22 was assumed on March 27, 2020 in the acquisition of Banner Midstream. Amount was paid off in May 2020, and $24 of accrued interest remains at December 31, 2020.

~~(f)~~	Unsecured notes payable issued in June and July 2019 to an unrelated third party at 10% interest. There are three notes to this party in total. This amount along with accrued interest of $29 was assumed on March 27, 2020 in the acquisition of Banner Midstream. These notes were converted in May 2020.

~~(g)~~	Unsecured note payable issued October 2019 to an unrelated third party at 10% interest. This amount along with accrued interest of $23 was assumed on March 27, 2020 in the acquisition of Banner Midstream. The balance of this note and remaining accrued interest was converted into 86 shares of common stock in the Company’s fiscal quarter ended September 30, 2020.

(i)
~~(t)~~	~~Equipment loan assumed in the acquisition of Banner Midstream on March 27, 2020, and repaid with accrued interest in June 2020.~~

~~(u)~~	PPP loan received by Ecoark Holdings Inc. in April 2020. Loan bears interest at 1% per annum and matures April 2022. On November 19, 2020, the Company received confirmation that $356 in principal and $2 in accrued interest has been forgiven, and this amount has been reflected in forgiveness of debt. The remaining $29, ~~will~~were to be due in monthly installments of $2 through maturity in May ~~2022.~~

~~(v)~~	~~PPP loan received by Pinnacle Frac Transport in April 2020. Loan bears interest at 1% per annum and matures April 2022. On November 27, 2020,~~2022, however, the ~~entire loan~~Company repaid the remaining balance of ~~$1,483 and accrued interest of $9 was forgiven and this amount has been reflected as forgiveness of debt.~~$15 on August 24, 2021.

	December 31, 2020			March 31, 2020
Ecoark Holdings Board Member (a)	$	578		$	578
Ecoark Holdings Officers (b)		61			1,242
Banner Midstream Officers (c)		133			152
Ecoark Holdings – common ownership (d)		-			200
Total Notes Payable – Related Parties		772			2,172
Less: Current Portion of Notes Payable – Related Parties		(772	)		(2,172	)
Long-term debt, net of current portion	$	-		$	-

	December 31, 2021			March 31, 2021
	(unaudited)
Ecoark Holdings Board Member (a)	$	-		$	578
Total Notes Payable – Related Parties		-			578
Less: Current Portion of Notes Payable – Related Parties		(-	)		(578	)
Long-term debt, net of current portion	$	-		$	-

~~(c)~~	An officer of Banner Midstream who remains an officer of this subsidiary advanced $152 in three separate notes to Banner Midstream and its subsidiaries prior to the acquisition by the Company and an additional $180 in four separate advances in the nine months ended December 31, 2020. These amounts are due at various times through December 2020 and bear interest at 10-15% interest per annum. Accrued interest on these notes as of December 31, 2020 is $15. $187 of these notes were repaid through December 31, 2020. This note was repaid on January 5, 2021.

~~(d)~~	A company controlled by an officer of the Company advanced $200 to Banner Midstream and its subsidiaries prior to the acquisition by the Company. These amounts were due April 15, 2020 and bears interest at 14% interest per annum. These notes were converted in May 2020.

	2013 Incentive Stock Plan		2017 Omnibus Incentive Plan		Non-Qualified Stock Options		Common Stock		Total
Nine months ended December 31, 2020
Employees/Directors	$	-	$	277	$	1,069	$	479	$	1,825
Services		-		25		198		6		229
	$	-	$	302	$	1,267	$	485	$	2,054

Nine months ended December 31, 2019
Employees/Directors	$	-	$	700	$	1,529	$	-	$	2,229
Amortization of services cost		-		175		152		463		790
	$	-	$	875	$	1,681	$	463	$	3,019

Cash (including restricted cash)	$	205
Accounts receivables		110
Prepaid expenses and other current assets		585
Machinery and equipment		3,426
Oil and gas properties		6,135
Customer relationships		2,100
Trade name		250
Right of use assets		731
Assets of discontinued operations		249
Goodwill		7,002
Intercompany advance		(1,000	)
Accounts payable		(268	)
Accrued liabilities		(2,362	)
Due to prior owners		(2,362	)
Lease liabilities		(732	)
Liabilities of discontinued operations		(228	)
Asset retirement obligation		(295	)
Notes payable – related parties		(1,844	)
Long-term debt		(6,836	)
	$	4,866

	Nine Months Ended December 31, 2019
	(Unaudited)
Revenues	$	7,788
Net loss	$	(15,540	)
Net loss per share	$	(1.27	)

Building	$	236
Land		140
Oil and Gas Properties		3,224
Asset retirement obligation		(100	)
	$	3,500