PROPOSAL 1.

Explanatory Note

As explained on page 10 under “Transactions with Ault and White River”, we have advanced funds to and may advance up to $3,250,000 to White River Energy Corp (“White River”), which we deem a “related party” since our two senior executive officers are officers and in one case a director of White River. The payments are being credited toward a $3,250,000 sum Ault owes White River. Following our spin-offs of two subsidiaries which we have publicly disclosed we intend to effectuate, we will redeem shares of Series A any sums paid will automatically result in our redeeming a number of shares of Series A based upon the $10,833.33 redemption price per share. The delay in redemption is designed to maximize shares of Common Stock Ault will receive in two companies we have publicly announced we are spinning off – White River and Wolf Energy Services Inc. In addition, while we delay the redemption, dividends accrue on shares which would otherwise be redeemed which also benefits Ault.

APPROVAL OF AN AMENDMENT TO ARTICLESNASDAQ 20% ISSUANCE PROPOSAL

Overview of Amendment and Related Matters

The disclosure that follows is intended to provide an overview of certain events leading up to and following the Amendment and other information that the Company believes is relevant to its stockholders’ consideration in voting on Proposal 1. These descriptions do not purport to be complete and are qualified in their entirety by the Company’s previous filings with the Securities and Exchange Commission (the “SEC”) disclosing such events and the full text of the referenced documents, as applicable, which are in some cases referenced elsewhere in this Proxy Statement and/or filed as exhibits to such previous SEC filings. Our stockholders are encouraged to review those filings and exhibits in evaluating this Proposal 1 and other matters being considered at the Special Meeting. We also attach as Annex A the Amended and Restated Series A Certificate.

The June 2022 Private Placement

On June 8, 2022, we entered into a Securities Purchase Agreement (the “SPA”) with Ault pursuant to which we sold Ault 1,200 shares of Series A, 102,881 shares of Common Stock and a warrant to purchase shares of Common Stock for a total purchase price of $12,000,000 in a private placement transaction which was exempt from registration under the Securities Act of 1933 and the rules promulgated by the SEC thereunder. The warrant, which entitled the holder to receive as many shares of Common Stock as necessary to enable it to beneficially own 49% of the outstanding Common Stock after exercise, was subsequently cancelled. The June 2022 private placement and certain material terms thereof were disclosed in a Current Report on Form 8-K filed by the Company on June 9, 2022, and certain material agreements and related documents entered into by the Company in connection therewith were filed as exhibits to that Form 8-K.

Prior Stockholder Approval of Series A and Warrant

On September 9, 2022, at the 2022 Annual Meeting of the Stockholders, the Company’s stockholders voted, among other things, to approve for purposes of complying with Nasdaq Listing Rule 5635 the issuance of shares of Common Stock underlying the Series A (before the November 2022 Amendment took effect), as well as the warrant referenced above. As disclosed in the Proxy Statement filed with the SEC and distributed to the Company’s stockholders on or about July 26, 2022 in connection with that meeting, the number of shares of Common Stock which were ultimately approved at that meeting included 5,817,167 shares of Common Stock issuable upon conversion of the Series A, plus 26,175,620 shares issuable in connection with the warrant issued to Ault in the June 2022 private placement.

The warrant was subsequently cancelled and given such cancellation and the fact that the Amendment provides for issuance under different circumstances, and further to correspondence with Nasdaq, we are asking the Company’s stockholders to approve the additional shares of Common Stock potentially issuable under the Series A by virtue of the Amendment, as more particularly described below.

Amendments to the Series A Certificate

After the June 2022 private placement, the Company effected three amendments to the Series A later in 2022. The final 2022 Amendment, which was filed with the Nevada Secretary of State on November 28, 2022 and is the subject of this Proposal 1, had the effect of increasing the number of shares of Common Stock issuable pursuant to the Series A Certificate in three ways: (1) it increased the stated value per share of Series A, which is used as the numerator in the Series A conversion formula, from $10,000 to $10,833.33; (2) it reduced the conversion price of the Series A, which is the denominator in the Series A conversion formula, by tying such conversion price to the volume-weighted average price (“VWAP”) of the Company’s Common Stock and applying a floor price $0.25 per share; and (3) it provided for the payment of dividends at a rate of $1,265 per Series A share per annum (subject to potential increase to $1,950 per Series A share per annum), in shares of Common Stock rather than cash, with the number of shares of Common Stock so payable determined by dividing the dividend rate by the as-amended conversion price. By virtue of these changes, the maximum total possible number of shares of Common Stock issuable under the Series A became 48,539,385 shares, which reflects 42,722,218 more shares than the 5,817,167 shares which our stockholders approved. We refer to these extra 42,722,218 shares which may be issued as the “Excess Shares”. The purpose of this Proposal 1 is to obtain approval of the issuance of the Excess Shares in accordance with Nasdaq Listing Rules.

For information on the voting rights of the Series A, see “Voting Rights” beginning at page 11.

Non-Compliance with Nasdaq Listing Rules

On December 27, 2022, the Company received a letter from Nasdaq notifying the Company of its noncompliance with stockholder approval requirements set forth in Listing Rule 5635(d), which as more particularly described below requires stockholder approval for transactions, other than public offerings, involving the issuance of 20% or more of the pre-transaction shares outstanding at less than the Minimum Price (as defined therein).

Additionally, the letter indicates that the Company has violated Nasdaq’s voting rights rule set forth in Listing Rule 5640. Specifically, when we entered into the November Amendment and reduced the conversion price, we failed to make the lower conversion price subject to stockholder approval resulting in a violation of Nasdaq Listing Rule 5640, which provides that existing stockholders’ voting rights cannot be disparately reduced or restricted through any corporate action or issuance. However, we are not seeking stockholder approval of the Nasdaq Listing Rule 5640 violation at the Special Meeting, as such a violation cannot be cured with stockholder approval.

In connection with the letter, the Company was given 45 days from the date of the letter to prepare and submit a plan to regain compliance with the referenced Nasdaq Listing Rules, and then up to 180 calendar days from the date of the letter to evidence compliance. As the letter indicated, if the Company’s plan is either not accepted by Nasdaq or is not adequately executed to regain compliance and remedy the matters set forth in the letter by the prescribed deadline, the Company’s Common Stock will be subject to delisting. While Listing Rule 5640 cannot be remedied by stockholder approval, the Company is seeking approval of this Proposal 1 as part of its plan to comply with Listing Rule 5635 with respect to the Amendment and all Excess Shares potentially issuable thereunder. The Company has responded to this letter with a plan to regain compliance that includes this Proposal 1 and has also responded to the other Nasdaq claims discussed below. As described under “Who is entitled to vote at the Special Meeting?” on page 2, we filed the Amended and Restated Series A Certificate and entered into a separate agreement with the principal holders of the Preferred Stock to, among other things, limit the conversion and voting rights of each series of Preferred Stock to address certain Nasdaq concerns. We are not asking you to approve the voting or conversion of the Series B or Series C at the Special Meeting.

The Company also received other correspondence from Nasdaq, including requests for information related to the Company’s sale of White River Holdings Corp. to White River Energy Corp. (“White River”) in July 2022 in exchange for shares of preferred stock of White River, the potential conflicts of interest resulting from our two senior executive officers also being the senior executive officers of White River, and our failure to have a full-time Chief Financial Officer. In addition, we received a minimum bid price deficiency notice arising from the Company’s Common Stock falling below $1.00 per share for 30 consecutive trading days. For information on the December 2022 Nasdaq correspondence and related matters, as well as subsequent developments with respect to Nasdaq, see the Company’s Current Report on Form 8-K filed on December 30, 2022, our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2022 filed on February 21, 2023, and our Current Report on Form 8-K filed on March 10, 2023.

In connection with the BitNile.com share exchange described below, on March 3, 2023 the Company received a letter from Nasdaq indicating that certain of the terms of the Series B and the Series C, which subject to various limitations are convertible into a combined total of 400,000,000 shares of the Company’s Common Stock, would constitute a change of control requiring stockholder approval under Nasdaq Listing Rule 5110. Specifically, Listing Rule 5110(a) states that “[a] Company must apply for initial listing in connection with a transaction whereby the Company combines with a non-Nasdaq entity, resulting in a change of control of the Company...” Nasdaq also asked certain questions and requested certain documents and information related to various aspects of the BitNile.com transaction and other matters, including the transaction’s valuation and the process by which it arose, was negotiation and closed.

The Series B and the Series C are each subject to limitations designed to prevent a violation of the Nasdaq Listing Rules, including subjecting full conversion and corresponding voting rights to the Company’s receipt of stockholder approval. The Company intends to seek stockholder approval at its 2023 Annual Meeting expected to be held in the late summer.

Nasdaq’s review is continuing and we cannot predict whether it will provide relief.

Subsequent Developments

While the developments described in this subsection titled “Subsequent Developments” do not directly relate to Proposal 1 or any other matter being considered at the Special Meeting, the overview that follows in this subsection is being included in this Proxy Statement to provide stockholders with what management believes to be relevant disclosure and information to their decision in voting on Proposal 1 and, to a lesser degree, Proposals 2 and 3.

BitNile.com Share Exchange

As previously disclosed in the Company’s Current Report on Form 8-K filed on March 10, 2023, on March 6, 2023, the Company closed the share exchange with Ault, which owned approximately 86% of BitNile.com, and the other stockholders of BitNile.com (which include various Ault officers and directors as well as Ault and/or BitNile.com employees) and issued such stockholders on a pro-rata basis a total of 10,000 shares of Series B and Series C with a total stated value of $100,000,000, in exchange for 100% of the outstanding shares of capital stock of BitNile.com. As a result of the transaction, BitNile.com, Inc. became the Company’s wholly-owned subsidiary. Following its acquisition of BitNile.com, the Company’s principal business focus shifted to the development and operation of a metaverse platform. Effective at the closing of this share exchange, the Company’s Board fixed the number of directors at five and appointed Henry Nisser, President and a director of Ault, as a director of the Company to fill the vacancy and as President and General Counsel of the Company.

Because of the negative covenants imposed by the Series A Certificate and a related warrant to acquire a number of shares of Common Stock as necessary to beneficially own 49% of the Company post-exercise for nominal consideration as well as the Company’s plan to spin-off its principal subsidiaries, acquisition of some business from or at the suggestion of Ault was always likely beginning with the June 8, 2022 Series A sale since the Company could not borrow money or sell any securities or make acquisitions, among other things, without Ault’s consent. In connection with the BitNile.com acquisition, the Company obtained an opinion from a third party valuation firm that the transaction was fair to the Company.

After completion of the share exchange, the Company changed its name from “Ecoark Holdings, Inc.” to “BitNile Metaverse, Inc.” and changed its ticker symbol from “ZEST” to “BNMV.”

The Company expects to seek approval for the BitNile.com transaction, including the Series B and Series C terms referenced in the Nasdaq letter and certain related matters at its 2023 Annual Meeting of Stockholders in the late summer.

Amendment and Restatement of Series A Certificate

In response to the Nasdaq correspondence described above, on April [__], 2023, the Company filed the Amended and Restated Series A Certificate to, among other things, limit the total number of shares issuable thereunder to the 5,817,167 shares our stockholders approved in September 2022, less the 1,273,404 Transferred Shares, unless and until the Company receives stockholder approval for such issuance(s) in according with Nasdaq Listing Rules. As described elsewhere in this Proxy Statement, this Proposal 1 only relates to the Excess Shares (or 42,722,218 shares) underlying the Series A pursuant to the November 2022 Amendment, and the Company expects to seek subsequent stockholder approval for additional shares of Common Stock issuable under the Series B and the Series C at its 2023 Annual Meeting of Stockholders expected to be held late this summer.

For a general overview of the terms of the Amended and Restated Series A Certificate, see below under “Overview of Amended Series A.”

Transactions with Ault and White River

The following summarizes certain material transactions that the Company entered into with Ault and/or White River following the June 2022 private placement.

On July 25, 2022, we entered into a share exchange with White River under which we transferred our oil and gas drilling assets held by White River Holdings Corp. to White River in exchange for receipt of preferred stock of White River that converts into Common Stock of White River immediately prior to our spin-off of White River Common Stock to our stockholders of record as of September 30, 2022. In connection with the Series A investment by Ault, it (or a designee) was given the right to participate up to 25% in any future oil wells drilled by the Company in its former oil and gas drilling operations. This right was later transferred into White River. Ault participated in the drilling of [__] wells and owed White River $3,250,000.

On April 4, 2023, the Company entered into an agreement with Ault and White River pursuant to which the Company agreed to pay White River up to $3,250,000. The Company and Ault agreed that in lieu of repayment of the sums advanced to White River, Ault will permit the Company to redeem shares of the Company’s Series A held by Ault by dividing the amount being reduced by the stated value of such shares, or one share of Series A for each $10,833.33 advanced to White River. The redemption cannot occur until the previously announced spin-offs by the Company of shares of Common Stock of White River and Wolf Energy Services Inc. occur which would permit Ault to receive its full dividends thereunder. The transaction was approved by independent directors of the Company at a meeting, with Mr. May abstaining. Mr. Nisser was not present.

As of April 5, 2023, the Company has advanced White River $710,000 under this transaction.

Overview of Series A

The material terms of the Series A, including the Amended and Restated Series A Certificate, are summarized below, which descriptions do not purport to be complete and are summarized in their entirety by the complete text of the Amended and Restated Series A Certificate attached as Annex A.

Series A Overview

Conversion Rights

Each share of Series A has a stated value of $10,833.33 and is convertible into a number of shares of Common Stock (the “Conversion Shares”) determined by dividing the stated value of the shares of Series A being converted by a conversion price equal to the lesser of (i) $1.00 and (ii) the higher of (A) 80% of the 10-day VWAP and (B) $0.25, subject to certain adjustment provisions. The holder’s conversion of the Series A is subject to a beneficial ownership limitation of 19.9% of the issued and outstanding Common Stock as of any applicable date, unless and until we obtain stockholder and Nasdaq approval for the conversion of more than that amount in order to comply with Nasdaq Listing Rules, and in addition the conversion and voting rights of the holders of the Preferred Stock by separate agreement are collectively limited to 19.9% of the outstanding Common Stock as of March 6, 2023 unless and until stockholder approval is obtained (collectively, the “Nasdaq Beneficial Ownership Limitation”).

The conversion rights are also limited to the approved amount of 5,817,167 shares without stockholder approval. This Proposal 1 seeks such stockholder approval.

As described above, the Amendment had the result of increasing the stated value from $10,000 to $10,833.33 and reducing the conversion price from $2.10 to as low as $0.25. Therefore, the maximum number of shares of Common Stock issuable upon conversion of the 932 shares of Series A that were outstanding as of November 28, 2022, and therefore the maximum voting power underlying those shares, increased from 4,438,096 shares of Common Stock to 40,386,655 shares of Common Stock as a result of the Amendment, not including shares of Common Stock issuable as dividends after that date as described below.

Voting Rights

Subject to the Nasdaq Beneficial Ownership Limitation, the Series A is entitled to vote with the Common Stock determined based on the voting formula of the number of shares of Series A multiplied by $10,000, with the product then and divided by $2.10, subject to limitations including the limitation to the approved amount of up to 5,817,167 shares without stockholder approval and to applicable law and the Nasdaq Listing Rules. The Amended and Restated Series A Certificate which effected these changes was designed to alleviate the voting rights violation under Nasdaq Listing Rule 5640, and as a result of the change the voting rights are no longer tied to the conversion provisions of the Series A, as amended by the November 2022 Amendment. As a result, even if this Proposal 1 is approved, such approval will not increase the voting rights of the Series A above those which were in place at June 8, 2022 when the transaction was originally entered and the terms of which were previously approved by our stockholders at the September 2022 meeting.

“Who is entitled to vote at the Special Meeting?” on page 2 for an overview of the relative voting rights of the Preferred Stock at this Special Meeting.

Dividend Rights

Effective November 1, 2022, Ault as the holder of shares of the Series A, is entitled to dividends payable only in Common Stock at an annual rate of 12.6% of the stated value, which as a result of the increase to the stated value resulting from the Amendment is equivalent to $1,365 per year per share, payable monthly until the earlier of (a) November 1, 2024, and (b) the date on which the holder no longer holds any shares of Series A. Our obligation to deliver Common Stock is subject to the Beneficial Ownership Limitation referred to in this Proxy Statement. Prior to the Amendment in November 2022, dividends on the Series A were payable in cash rather than Common Stock at a rate of 12.6% of the stated value, or $1,260 at that time, per annum per share.

We paid the November payment to Ault in cash by mistake and as a result are still owed approximately $95,000 by Ault.

Liquidation Rights

The shares of Series A have a liquidation preference over the Common Stock and any subsequent series of junior preferred stock of $10,833.33 per share of Series A, plus accrued but unpaid dividends.

Redemption

At any time beginning on or after June 8, 2024, Ault may cause us to redeem some or all of the shares of Series A it holds at a per share redemption price equal to the stated value or $10,833.33, plus any accumulated and unpaid dividends thereon. See also the disclosure under “Transactions with Ault and White River” at page 10 regarding a recent agreement related to redemption.

Negative Covenants and Approval Rights

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

Registration Rights

The Company agreed to register the sale by Ault of up to 5,246,456 shares of Common Stock, representing certain shares of Common Stock issued at the closing plus 5,143,575 of Common Stock (the number of shares permitted at the time by the Nasdaq Beneficial Ownership Limitation). This amount equals 19.9% of our outstanding Common Stock immediately prior to the closing of the June 2022 private placement in which the Series A and Common Stock were issued. We have registered the sale by filing a prospectus supplement pursuant to our registration statement on Form S-3 (File No. 333-249532), which became effective on December 29, 2020, and the base prospectus included therein. In January 2023, Ault agreed to reduce the registration of its secondary offering by $3,500,000 to enable the Company to pursue an at-the-market offering under its Form S-3.

Nasdaq Listing Rule 5635

Our Common Stock is listed on Nasdaq, and as a result, we are subject to Nasdaq’s Listing Rules, including Nasdaq Listing Rule 5635. Below is an overview of the relevant provisions of Nasdaq Listing Rule 5635 as they relate to the Nasdaq 20% Issuance Proposal. The overview does not purport to be complete and is qualified in its entirety by the full text of the Rule’s provisions, which are available on the Nasdaq’s Listing Center website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules.

Nasdaq Listing Rule 5635(d)

Nasdaq Listing Rule 5635(d) requires stockholder approval prior to an issuance of securities in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by a listed company of Common Stock equal to 20% or more of the Common Stock, or 20% or more of the voting power, that was outstanding before the issuance for less than the lower of the closing price of such Common Stock as of the date of execution of the definitive agreement with respect to such transaction and the average closing price for the five trading days immediately preceding such date. The provisions in the Series A Certificate that prevent the issuance of shares of our Common Stock upon conversion if such issuance will result in such holders beneficially owning in excess of 19.9% of our Common Stock prior to stockholder approval pursuant to the Nasdaq Beneficial Ownership Limitation were designed to avoid an issuance under the Series A that would be in excess of the Nasdaq Beneficial Ownership Limitation, and are therefore required under Nasdaq Listing Rule 5635(d). The 19.9% limitation is based upon the number of shares of Common Stock outstanding as of any given conversion date and excludes Common Stock previously sold.

We are seeking stockholder approval for the issuance of the shares of Common Stock upon conversion and as dividend payments under the Series A after giving effect to the Amendment pursuant to Nasdaq Listing Rule 5635(d) without regard to the Nasdaq Beneficial Ownership Limitation.

Nasdaq Listing Rule 5635(b)

Nasdaq Listing Rule 5635(b) requires stockholder approval prior to an issuance of securities that will result in a “change of control” of a listed company, which for Nasdaq purposes is generally deemed to occur when, as a result of an issuance, an investor or a group of investors acquires, or has the right to acquire, 20% or more of the outstanding equity or voting power of the company and such ownership or voting power would be the company’s largest ownership position. Because the Amendment provides for the potential issuance of a total of 48,539,385 shares of Common Stock, representing the shares that were previously issuable under the Series A plus the Excess Shares on which the stockholders are being asked to vote in this Proposal 1, our issuance of Common Stock pursuant to the Series A Certificate as amended by the Amendment could result in a “change of control” for purposes of Nasdaq Listing Rule 5635(b). This number is greater than 50% of the 43,558,690 shares of our Common Stock that were outstanding as of the Record Date, and therefore absent the Nasdaq Beneficial Ownership Limitation, our issuance of the Series A and subsequent Amendment thereto would constitute a “change of control” because a single entity could acquire a greater ownership position than any of our stockholders prior to the June 2022 private placement in which the Series A was issued and the November 2022 Amendment.

Accordingly, we are seeking stockholder approval pursuant to Nasdaq Listing Rule 5635(b) to permit the issuance of the Excess Shares or 42,722,218 shares, which would be in excess of the 20% maximum under Rule 5635(b), after taking into account other shares of Common Stock issued or issuable to Ault that are below the Nasdaq Beneficial Ownership Limitation contained in the Series A.

However, the above description does not give effect to the issuance of Series B and Series C following the Amendment, which together are convertible into up to 400 million shares of Common Stock, subject to stockholder approval in accordance with Nasdaq Listing Rules. The Company intends to seek separate stockholder approval for the conversion and the voting of those series of Preferred Stock and related transactions. If we obtain such stockholder approval at our 2023 Annual Meeting, the holders of the Series B and Series C can vote 400 million votes (reduced ratably for any reverse split) in addition to votes under the Series A which may be approved at the Special Meeting.

Consequences if Stockholder Approval is Not Obtained

If we fail to obtain approval for the Nasdaq 20% Issuance Proposal, Ault (or any transferee) cannot convert its Series A into Common Stock beyond the previously approved 5,817,167 shares, less the 1,273,404 Transferred Shares.

In addition, if we fail to obtain approval for Proposal 1 or otherwise take action to regain compliance with Nasdaq Listing Rule 5635, Nasdaq may take action to delist us. Certain information about the risks of a potential delisting and the actions we may take to prevent it are discussed under Proposal 3 in which we are seeking stockholder approval of a Reverse Split to regain compliance with the Nasdaq Listing Rule that requires us to maintain a minimum bid price of $1.00. In addition, further risks and uncertainties relating to our Nasdaq issues are also separately discussed elsewhere in this Proxy Statement under “Certain Risks Associated with the Nasdaq Issues and Our Efforts to Regain Compliance” on pages 23.

Description of Proposal

We are seeking stockholder approval as required by Nasdaq Listing Rule 5635 (as described above) to enable us to issue a number of shares our Common Stock pursuant to the Series A Certificate as amended by the Amendment that exceeds 20% of our outstanding Common Stock as of any applicable conversion date, reflects the 42,722,218 Excess Shares consisting of the following:

Vote Required

The affirmative vote of the holders of a majority of votes cast on the proposal, which includes those present in person or represented by proxy and entitled to vote on the matter and excludes the voting power in excess of the Series A Voting Power and also excludes the voting power held by the Series B and Series C, is necessary to approve the Nasdaq 20% Issuance Proposal. If this threshold is not obtained, the Company may adjourn the meeting to seek additional votes “FOR” Proposal 1.

The use of the “majority of votes cast” is being used in accordance with Nasdaq Marketplace Rule 5635(e)(4). We have limited the Preferred Stock votes on this Proposal 1 to the Series A Voting Power which was previously approved to ensure such Preferred Stock, the outcome of Proposal 1 and any other matters related thereto are approved in accordance with Nasdaq Listing Rules.

Broker non-votes will not affect whether this proposal is approved, but abstentions will have the same effect as a vote against the proposal. Although Nevada law is unclear, we are treating abstentions as votes cast.

Anticipated and Potential Effects of this Proposal

The issuance of the shares of our Common Stock which are the subject of the Nasdaq 20% Issuance Proposal will result in an increase in the number of shares our Common Stock that may become outstanding. This will result in a decrease to the respective ownership and voting percentage interests of our other stockholders. Our market value and our future earnings per share, if any, may be reduced.

If the Nasdaq 20% Issuance Proposal is approved, it could also result in the subsequent issuance of a total of 42,722,218 Excess Shares over the Nasdaq Beneficial Ownership Limitation in the Series A, and assuming no other issuances of our Common Stock occur, which would be dilutive to our other stockholders and could also adversely affect the market price and trading volatility of our Common Stock.

If the Nasdaq 20% Issuance Proposal is not approved, the Company’s Common Stock could be subject to delisting from Nasdaq, unless it can successfully determine and effect another means of remedying the non-compliance brought about by the Amendment, which we believe is highly unlikely.

For your consideration of the Nasdaq 20% Issuance Proposal, the above descriptions of the material terms of the Amended and Restated Series A Certificate and certain other material developments that took place following the November 2022 Amendment is set forth in this Proxy Statement to provide you with basic information concerning the Series A and related matters. However, the description above is not a substitute for reviewing the more complete disclosure about the referenced developments, as well as the full text of the referenced documents. With respect to the Series A, this includes the Amended and Restated Series A Certificate included with this Proxy Statement as Annex A.

The Board recommends that the Company’s stockholders vote “FOR” the Nasdaq 20% Proposal (this Proposal 1), and thereby permit the issuance of the 42,722,218 shares of Common Stock issuable pursuant to the Amendment. Mr. Nisser abstained from voting on this matter.

PROPOSAL 2.

APPROVAL OF INCORPORATION TOAUTHORIZED SHARE INCREASE THE AUTHORIZED COMMON STOCK

The Board has approved, and is asking the Company’s stockholders to approve the Authorized Share Increase, which is an increase in the number of authorized shares of Common Stock 100,000,000 shares to [400,000,000] shares and a proposedcorresponding amendment to the Articles to effect the Authorized Share Increase. The form of Incorporationamendment to the Articles to be filed with the Nevada Secretary of State to effect the Authorized Share Increase if we obtain stockholder approval is included in this Proxy Statement as Annex B.

Under our Articles, we are currently authorized to issue up to 100,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. As of the close of business on the Record Date, there were 43,558,690 shares of Common Stock issued and outstanding and 10,882 shares of Preferred Stock issued and outstanding, consisting of 882 shares of Series A, 8,637.5 shares of Series B and 1,362.5 shares of Series C. Additionally, as of the Record Date there were [__] shares of Common Stock underlying other outstanding derivative securities comprised of stock options, warrants and restricted stock units (“RSUs”). If Proposal 1 is approved by the stockholders, after allowing for the issuance of the Excess Shares assuming full conversion of the Series A and issuance of shares of Common Stock as dividends, and assuming for such purpose the maximum possible issuances thereunder, we would have only [__] shares of Common Stock available prior to affecting the Reverse Split for which we seek authorization in Proposal 3. As described below, we have contractual obligations which require us to increase our authorized Common Stock. While we do not plan to issue Ault or the Series C holders any portion of the extra 300 million shares prior to obtaining stockholder approval of that transaction, we have a substantial need to raise capital to support our new metaverse business which is in a startup phase as well as pay our ongoing costs, including public company costs. For this reason, and to allow for greater flexibility to issue Common Stock including for compensation awards, we are seeking stockholder approval of the Authorized Share Increase.

Purpose of the Authorized Share Increase

Assuming Proposal 1 is approved, we will be required to establish and maintain a reserve of authorized but unissued shares of Common Stock equal to approximately 145,618,155 shares (the “Series A Reserve”) for issuance pursuant to the Series A Certificate. When we effected the Amendment in November 2022, Ault understood we did not meet the Series A Reserve requirement. One principal purpose of the Authorized Share Increase is to comply with this Series A Reserve requirement in the event that Proposal 1 is approved. A second principal purpose is to have Common Stock available to permit us to raise capital. We estimate we will need approximately $[__] million to support our operations over the next 12 months. We cannot assure you that we will be successful in meeting our working capital needs but any financings will likely be very dilutive to our stockholders.

Excluding the Series B and Series C for which the Company (the “Articles Amendment”)intends to seek subsequent stockholder approval, the Company needs [__] shares of authorized Common Stock to meet its existing contractual obligations including those to Ault. Increasing the authorized number of shares of Common Stock to [400,000,000] shares would give the Company sufficient flexibility to undertake to issue Common Stock in the future as needed, including to raise capital.

Given the above outstanding securities and agreements to which the Company is subject, and specifically the need for additional authorized but unissued shares of Common Stock in order to comply with the Series A Reserve, as well as working capital needs, the Board believes it to be in the best interest of the Company to increase the number of shares of Common Stock the Company is authorized to issue from 30,000,000in order to 40,000,000 shares (the “Authorized Capital Increase”).

Background and Reasons for the Authorized Capital Increase and the Articles Amendment

Under its Articles of Incorporation, as amended,enable the Company is currently authorized to issue upcomply with its contractual obligations while also giving the Company greater flexibility to 30,000,000 shares ofoffer and sell Common Stock and 5,000,000 shares of preferred stock. As of the close of business on the Record Date, there were 26,349,099 shares of Common Stock issued and outstanding and 3,389,987 shares reserved for issuance pursuant to outstanding equity awards to employees and directors and outstanding warrants (excluding the Warrants and Placement Agent Warrants, as defined below), leaving a balance of 378,028 shares of Common Stock. As of the Record Date, there were no shares of preferred stock outstanding.

Additionally, as of the Record Date, the Company had outstanding anand/or derivative securities in future financing transactions. The Board believes that additional 3,721,739 warrants, consisting of (i) warrants to purchase 3,478,261 shares of Common Stock (the “Warrants”) at an exercise price of $5.75 per share, and (ii) warrants (the “Placement Agent Warrants”) to purchase up to 243,478 shares of Common Stock at an exercise price of $7.1875 per share. The Warrants were issued pursuant to the Securities Purchase Agreement, dated August 4, 2021 (the “SPA”), by and among the Company and a number of institutional investors in connection with the previously disclosed registered direct offering of Common Stock and Warrants (the “Offering”). The Placement Agent Warrants were issued to the placement agent as additional compensation in connection with the Offering. The Warrants and the Placement Agent Warrants provide that they will become exercisable on the effective date of an increase in the number of shares of the Company’s authorized Common Stock to 40,000,000, and under the SPA the Company has agreed to reserve a sufficient number of shares of Common Stock for issuance upon exercise of the Warrants, following such increase.

If the Authorized Capital Increase is effected following the approval of the Articles Amendment by the stockholders at the Special Meeting and filing the Articles Amendment with the Secretary of State of Nevada, and an amendment to the 2017 Plan (Proposal 2) is also approved by the stockholders at the Special Meeting, we will have a total of 40,000,000 authorized shares of Common Stock, with approximately 26,349,099 shares of Common Stock outstanding, and approximately 8,043,976 shares reserved for issuance, leaving a balance of 18,305,123 shares of common stock authorized and not reserved for any specific purpose.

Effects of the Proposed Articles Amendment

If the Articles Amendment is approved, the number of authorized shares of Common Stock will be 40,000,000. The total numberalso better position the Company to take timely advantage of market conditions as well as favorable acquisition opportunities that may become available to the Company.

If this Proposal 2 is approved, the authorized but unissued shares of Common Stock will be [__] shares of Common Stock, which again does not reflect reserve requirements with respect to the Series B and the Series C. Specifically, the Series B and the Series C require an additional 200% reserve of the shares of Common Stock underlying those series of Preferred Stock, for a total share reserve requirement of 800,000,000 shares of Common Stock thereunder. This Proposal 2 will not, and is not intended to, establish such a reserve, but is rather focused on the Series A Reserve and requirements under other outstanding derivative securities, as well as enabling greater flexibility for other issuances as described above. Subject to the requirements of such securities and the Nasdaq Listing Rules, the authorized but unissued shares of Common Stock will be issued at the direction of the Board, without stockholder approval unless required by applicable law or Nasdaq Listing Rules.

Compensation Programs

We have historically compensated our directors, officers and employees with stock options and/or RSUs in addition to salaries and other forms of cash compensation. Presently, we are providing our non-employee directors (including Ault’s designee) with RSUs equal to $12,500 per quarter.

If approved by the stockholders, the Authorized Share Increase will enable the Company will be 45,000,000, consistingto continue to compensate its directors awards under its compensation programs.

Rights of 40,000,000Additional Authorized Shares

Any newly authorized shares of Common Stock and 5,000,000 authorized shares of preferred stock. The Articles Amendment will not changehave the par value ofsame rights as the shares of the Common Stock, affect the number of shares of Common Stock outstanding ornow authorized and outstanding. The Authorized Share Increase will not affect the rights or privileges of current holders of shares of the Common Stock or have any effect on any outstanding securities, including outstanding equity awards, that are exercisable, convertible or exchangeable for shares of Common Stock, except that whennone of whom have preemptive or similar rights to acquire the Warrants and Placement Agent Warrants are exercised the existing stockholders will experience dilution.newly authorized shares.

A form of the Articles Amendment that would be filed with the Nevada Secretary of State to effect the Authorized Capital Increase is set forth in Annex A. If the stockholders approve the Articles Amendment, the Company intends to file it with the Nevada Secretary of State as soon as practicable following the Special Meeting, and the Articles Amendment will be effective upon such filing.

Potential Adverse Effects of the Proposed Amendment

Other than discussed above in this Proposal 1, the Company currently has no plans to issue any additional shares of Common Stock following the filing and effectivenessAdoption of the Articles Amendment. The Authorized CapitalShare Increase alone will not have any immediate dilutive effect on the proportionate voting power or other rights of the Company’s existing stockholders. However, any issuancethe Authorized Share Increase, if approved, will enable the Company to issue additional shares of Common Stock upon exerciseor derivative securities exercisable or convertible into Common Stock, which could have a dilutive effect on our existing stockholders and a depressive effect on our stock price.

While the Company cannot determine with certainty the exact uses of the Warrantsadditional authorized Common Stock as of the date of this Proxy Statement, certain anticipated or potential uses are summarized as follows:

In addition, the Company will be obligated to issue Common Stock underlying RSUs issued to non-employee directors in April 2023.

No Appraisal Rights

Stockholders have no rights under Chapter 78 of the Nevada Revised Statutes or under our Articles to exercise dissenters’ rights of appraisal with respect to the approval of the Authorized Share Increase.

The Board recommends that the stockholders vote “FOR” this Proposal 2.

PROPOSAL 3.

APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT

Our Board has adopted and submitted for stockholder approval an amendment to our Articles to effect a Reverse Split of all outstanding shares of our Common Stock at any time prior to December 25, 2023, if the Placement Agent Warrants or otherwiseBoard deems that it is in our and our stockholders’ best interests, at the direction ofa ratio to be determined by the Board in the future, generally without obtainingrange of one-for-[__] through one-for-[__]. Our Board will have the sole discretion to elect, as it determines to be in the best interests of the Company and our stockholders, whether or not to effect a Reverse Split, and if so, at which ratio within the approved range. Our Board believes that approval of a proposal granting this discretion to the Board, rather than approval of an immediate Reverse Split at a specified ratio, would provide the Board with maximum flexibility to react to current market conditions and other factors it deems appropriate and to therefore achieve the purposes of the Reverse Split, if implemented, and to act in the best interests of the Company and our stockholders.

The Reverse Split has been proposed for approval at the Special Meeting in order to attempt to remediate the Company’s current noncompliance with Nasdaq’s minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). On December 30, 2022, Nasdaq notified the Company that the Company was not compliant with this requirement by failing to be above $1.00 per share for 30 consecutive trading days, and that the Company has until June 28, 2023 to regain compliance by having a closing bid price of at least $1.00 per share for 10 consecutive trading days, subject to a potential 180 calendar day extension of the grace period. To qualify for the additional grace period, the Company will be required to meet the continued listing requirement for the market value of its publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second grace period, by effecting the Reverse Split if necessary. The purpose of the Reverse Split is to regain compliance with Nasdaq’s Rule and avoid delisting of our Common Stock.

To effect the Reverse Split, our Board would authorize our management to file a Certificate of Amendment to our Articles with the Nevada Secretary of State. If our Board elects to implement the approved Reverse Split within the range, the number of issued and outstanding shares of our Common Stock (as well as Common Stock underlying derivative securities such as options and warrants) would be reduced in accordance with the ratio for the selected Reverse Split. The par value of our Common Stock would remain unchanged, however the number of authorized and unissued shares of our Common Stock would increase as a result of the Reverse Split. If approved by our stockholders, our Board may nonetheless elect not to implement the Reverse Split at its sole discretion. This could occur if our Common Stock regains compliance with the Nasdaq Listing Rule prior to the termination of the applicable grace period. The proposed form of amendment to our Articles to implement the Reverse Split is attached to this Proxy Statement as Annex C.

Purpose of the Reverse Split

On December 30, 2022, the Company received a letter from Nasdaq notifying the Company of its noncompliance with Nasdaq Listing Rule 5550(a)(2) (by failing to maintain a minimum bid price for its Common Stock of at least $1.00 per share for 30 consecutive trading days.

While the letter had no immediate impact on the listing of the Company’s Common Stock, which has continued to be listed and traded on The Nasdaq Capital Market, the Company is seeking stockholder approval (unless specifically requiredof the Reverse Split to enable the Board to take action to attempt to enable the Company to regain compliance with the Nasdaq Listing Rule and continue to be listed on The Nasdaq Capital Market. By including Board discretion to effect the Reverse Split within the range, the Company will be positioned to react to market conditions and actions taken by applicable law orNasdaq to increase the Company’s chances of achieving this goal.

The Board has determined that maintaining listing on Nasdaq is an important goal, as the Board believes that the listing of our Common Stock on a principal national securities exchange enhances the liquidity of the outstanding shares as well as the Company’s ability to raise capital, each of which is considered to be a benefit to the Company and its stockholders. Additionally, the Board believes that continued listing on Nasdaq enhances visibility and credibility to the investment community with respect to our Common Stock. If, on the other hand, our Common Stock were delisted from Nasdaq and we were unable to list our securities on an alternative national securities exchange, trading of our Common Stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or a lower-tiered quotation system operated by The OTC Markets Group. In such an event, investors may find it more difficult to sell shares of our Common Stock. The result could be a depressive effect on our stock price. In addition, if our Common Stock were delisted, it would become subject to SEC rules regarding “penny stocks,” which impose additional disclosure requirements on broker-dealers and further hindrances and expenses for investors seeking to sell the securities. For these reasons and others, delisting would likely adversely affect the liquidity, trading volume and price of our Common Stock, causing the value of an investment in us to decrease and having an adverse effect on our business and an investment in us, as well as on our ability to raise capital as and when required.

While the Company hopes that approval of this Proposal 3 will enable it to regain compliance prior to the termination of the grace period, the Company intends to monitor the bid price of its Common Stock and assess its options for maintaining the listing of its Common Stock on The Nasdaq Stock Market LLC (the “Nasdaq Listing Rules”)) may, among other things, result in dilution to our stockholders at the time such additional shares are issued.Capital Market.

Additionally,Consequences relating to the Reverse Split; Interaction Between Proposal 3 and Proposal 1

If the Reverse Split is not approved under this Proposal 3 and our stock price does not otherwise increase as needed to regain compliance with Nasdaq Listing Rule 5550, we could be subject to delisting from Nasdaq. Further, even if we obtain approval for this Proposal 3, we may be unable to obtain approval for Proposal 1 or other matters which require subsequent stockholder approval or other forms of remediation to maintain our Nasdaq listing as described elsewhere in this Proxy Statement, and may as a result still be subject to delisting even if the Reverse Split is approved. Among other key differences, Proposal 1 relates to a different Nasdaq Listing Rule than this Proposal 3.

For more information on the risks and uncertainties inherent in each Nasdaq-related proposal and the potential for a Nasdaq delisting, including with respect to the Nasdaq deficiency notices and other communications we have had with Nasdaq, see below under the heading “Certain Risks Associated with the Nasdaq Issues and Our Efforts to Regain Compliance.”

Principal Effects of the Reverse Split

The Reverse Split, if implemented, will have the following principal effects:

Depending on the ratio for the Reverse Split determined by our Board, a minimum of [__] and a maximum of [__] shares of existing Common Stock will be combined into one new share of Common Stock.  The table below shows, as of the Record Date, the number of outstanding shares of Common Stock (excluding Treasury shares) that would result from the listed hypothetical reverse stock split ratios (without giving effect to the treatment of fractional shares) from the current number of outstanding shares of Common Stock which is [__] shares as of the Record Date (excluding Treasure shares):

Shares of Common Stock after the Reverse Split will be fully paid and non-assessable. The amendment will not change any of the other terms of our Common Stock. Following the Reverse Split, the shares of Common Stock will have the same voting rights and rights to dividends and distributions and will be identical in all other respects to the shares of Common Stock prior to the Reverse Split. Following the Reverse Split, we will continue to be subject to the reporting requirements of the Exchange Act.

The Reverse Split will have an increaseoverall effect of increasing the authorized but unissued shares of Common Stock. These shares may be issued by our Board in its sole discretion. Any future issuance will have the effect of diluting the percentage of stock ownership and voting rights of the present holders of our Common Stock.

Fractional Shares

No fractional shares will be issued as the result of the Reverse Split. We will round up any fractional shares resulting from the Reverse Split to the nearest whole share.

No Going Private Transaction

Notwithstanding the decrease in the number of authorizedoutstanding shares of Common Stock may make it more difficultfollowing the proposed Reverse Split, our Board does not intend for this transaction to or discourage an attemptbe the first step in a “going private transaction” within the meaning of Rule 13e-3 under the Exchange Act.

Procedure for Implementing the Reverse Split

The Reverse Split would become effective upon the filing with the Nevada Secretary of State of a Certificate of Amendment to obtain controlthe Articles as of the Company by meanstime of a takeover bid that is notfiling or such other time set forth in the Board’s determinationCertificate of Amendment (the “Effective Time”), as determined by our Board based on its evaluation as to when such action will be the most advantageous to us and our stockholders. Additionally, the Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Split if, at any time prior to the filing of the Certificate of Amendment, the Board, in its sole discretion, determines that it is no longer in the best interest of the Company and its stockholders. However, the stockholders to effect the Reverse Split. If a Certificate of Amendment effectuating the Reverse Split has not been filed with the Secretary of State of the State of Nevada by the close of business on December 25, 2023, our Board does not deemwill abandon the proposed Authorized Capital IncreaseReverse Split. Beginning at the Effective Time, each certificate representing shares of Common Stock will be deemed for all corporate purposes to evidence ownership of the number of whole shares into which the shares previously represented by the certificate were combined pursuant to the Articles Amendment as an anti-takeover measure and is not awareReverse Split.

After the Effective Time, our Common Stock will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number, used to identify our equity securities. Stock certificates with the older CUSIP number will need to be exchanged for stock certificates with the new CUSIP number by following the procedures described below.

Effect on Beneficial Owners of any attempt or plan by a third party to obtain controlCommon Stock

Upon the implementation of the Company.Reverse Split, we intend to treat shares held by stockholders through a bank, broker, custodian or other nominee in the same manner as registered stockholders whose shares are registered in their names with Pacific Stock Transfer, the Company’s Transfer Agent. Banks, brokers, custodians or other nominees will be instructed to effect the Reverse Split for their beneficial holders holding our Common Stock in street name. However, these banks, brokers, custodians or other nominees may have different procedures for processing the Reverse Split. Stockholders who hold our Common Stock with a bank, broker, custodian or other nominee and who have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees.

Effect on Registered “Book-Entry” Holders of Failure to Obtain Stockholder ApprovalCommon Stock

IfCertain registered holders of our Common Stock may hold some or all of their shares electronically in book-entry form with the Transfer Agent. These stockholders do not approve this Proposal 1 at the Special Meeting or adjournment or postponement thereof, we will be required to seek approval at another special meeting every 45 days. If we fail to obtain stockholder approval of the Authorized Capital Increase and the Articles Amendment we would not be able to complyhave stock certificates evidencing their Common Stock ownership. Such stockholders are, however, provided with our obligations under the SPA, the Warrants and the Placement Agent Warrants and could potentially face legal action for breach of contract. Additionally, we would not be able to receive the proceeds from the exercise of the Warrants and the Placement Agent Warrants.

Failure to obtain stockholder approval of this Proposal 1 will also significantly limit the Company’s flexibility in raising additional capital in the future.

Interest of Officers and Directors in Proposal 1

None of the officers or directors of the Company have any interest in this Proposal 1, except that officers and directors have in the past received, non-employee directors will, and the other officers and directors may, in the future receive equity awards as compensation for their services, and Peter Mehring will receive 63,998 restricted stock units if this Proposal 1 and Proposal 2 are approved.

Vote Required

The affirmative vote of the holders of a majority of the voting power is required to approve the Authorized Capital Increase and the Articles Amendment. An abstention with respect to this Proposal 1 will have the same effect as a vote “Against” the proposal.

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 1.

PROPOSAL 2. APPROVAL OF AN AMENDMENT TO THE 2017 OMNIBUS INCENTIVE PLAN

Our Board has approved and is asking the stockholders to approve an increase instatement reflecting the number of shares of Common Stock authorized for issuance underregistered in their accounts. Stockholders who hold shares electronically in book-entry form with the 2017 Plan from 800,000Transfer Agent will not need to 1,300,000 shares (the “Plan Amendment”).

take action. The Board originally adopted the 2017 Plan in 2017 and the stockholders approved the 2017 Plan on June 13, 2017. The 2017 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, stock appreciation rights (“SARs”), and performance shares or units and other awards. Awards mayReverse Split will automatically be granted under the 2017 Plan to our employees, directors and consultants.

Overview and Purpose of the Stockholder Approval

In order to allow the Company to responsibly address its future equity compensation needs, the Company is requesting that the stockholders approve the Plan Amendment, which will authorize an additional 500,000 shares for issuance under the 2017 Plan, thus increasing the total number of shares authorized for issuance under the 2017 Plan to 1,300,000 shares. Having a sufficient number of shares under the 2017 Plan is critical to our ability to continue to attract, retain, engage and focus highly motivated and qualified employees and directors. A copy of the Plan Amendment is attached to this Proxy Statement as Annex B.

Interest of Officers and Directors in Matters to Be Acted Upon

None of the officers or directors of the Company have any interest in this Proposal 2, except that officers and directors havereflected in the past received, non-employee directors will,Transfer Agent’s records and the other officers and directors may, in the future receive equity awards as compensation foron their services under the 2017 Plan, and Peter Mehring will receive 63,998 restricted stock units under the 2017 Plan. See “Proposal 3. Approval of Issuance of Restricted Stock Units in Exchange for Cancellation of Stock Options” for further information. The increase in available shares permitted the Company to raise a material amount of additional gross proceeds from the registered direct offering completed on August 6, 2021, enhancing the Company’s working capital position.

Vote Required

The affirmative vote of a majority of the votes cast for or against this Proposal 2 is required to approve the Plan Amendment. Abstentions will not be considered as votes cast under the Company’s bylaws, and accordingly will have no effect on the outcome of this Proposal 2.

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THIS PROPOSAL 2.

Description of the 2017 Plan

Summarized below are the principal features of the 2017 Plan. The below summary is qualified in its entirety by reference to the full text of the 2017 Plan.next statement.

BackgroundExchange of Stock Certificates

The objectivesWe expect that the Transfer Agent will act as exchange agent for purposes of implementing the exchange of stock certificates for record holders (i.e., stockholders who hold their shares directly in their own name and not through a broker) in connection with the Reverse Split. As soon as practicable after the filing of the 2017 Plan areCertificate of Amendment, registered holders of certificated pre-Reverse Split shares may be asked to optimizesurrender to the profitability and growth of the Company through incentives that are consistentTransfer Agent certificates representing pre-Reverse Split shares in exchange for a book entry with the Company’s goalsTransfer Agent or certificates representing post-Reverse Split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by us. No new stock certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and alignexecuted letter of transmittal to the personal interests of participants with those of the Company’s stockholders.Transfer Agent.

Administration and Eligibility

The 2017 Plan is administered byFor street name holders of pre-Reverse Split shares (i.e., stockholders who hold their shares through a broker), your broker will make the Compensation Committee of the Board or such other committee as the Board may select (the “Committee”).

Awards that may be granted under the 2017 Plan include restricted stock, restricted stock units, options, performance shares, performance units, SARs, and the persons eligibleappropriate adjustment to participate in the 2017 Plan include employees, officers, directors, and consultants.

Pursuant to the 2017 Plan, the Committee has the authority, in its sole discretion, subject to certain limitations, to identify the individuals entitled to receive awards, determine the size and type of individual awards, and determine the terms of the awards in a manner consistent with the 2017 Plan. As of the Record Date, we had 44 employees, five directors (two of whom are employees) and four consultants who are eligible to receive awards under the 2017 Plan. On August 16, 2021, the last reported sale price of our Common Stock on The Nasdaq Capital Market was $4.43 per share.

Limitation on Awards

Pursuant to the 2017 Plan, the number of shares subject to restricted stock awards, restricted stock units, options, SARs and performance shares, that can be granted to any one participantheld in any one fiscal year may not exceed 80,000 shares, andyour account following the aggregate compensation that can be paid pursuant to performance units or other awards granted to any one participant in any one fiscal year may not exceed $1,000,000 or a number of shares having an aggregate fair market value of $1,000,000.Effective Time.

STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.

Restricted Stock AwardsCertain Federal Income Tax Consequences

A restricted stock award givesEach stockholder is advised to consult their own tax advisor as the recipient a stock awardfollowing discussion may be limited, modified or not apply based on your particular situation.

The following discussion of the material U.S. federal income tax consequences of the Reverse Split is based on the current provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated under the Code, Internal Revenue Service (“IRS”) rulings and pronouncements and judicial decisions now in effect. Those legal authorities are subject to restriction on sale. The Committee determineschange at any time by legislative, judicial or administrative action, possibly with retroactive effect to the terms and conditions of restricted stock awards, including the number of shares of restricted stock granted, and conditions for vesting that must be satisfied, which may be based principally or solely on continued provision of services. Unless otherwise determined by the Committee and/or provided in the award agreement, the holder of a restricted stock award generally will have the rights of a stockholderReverse Split. No ruling from the date of grant ofIRS with respect to the award, includingmatters discussed below has been requested, and there is no assurance that the right to voteIRS or a court would agree with the conclusions set forth in this discussion. The following discussion assumes that the pre-split shares of Common Stock were, and post-split shares will be, held as “capital assets” as defined in the rightCode. This discussion may not address certain U.S. federal income tax consequences that may be relevant to receive cash dividendsparticular stockholders in light of their specific circumstances or to certain types of stockholders (like dealers in securities, insurance companies, foreign individuals and shareentities, financial institutions and property distributions ontax-exempt entities) that may be subject to special treatment under the shares.U.S. federal income tax laws. This discussion also does not address any tax consequences under state, local or foreign laws.

Restricted Stock UnitsPLEASE CONSULT YOUR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE REVERSE SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.

We will not recognize any gain or loss for U.S. federal income tax purposes as a result of the Reverse Split.

A restricted stock unit gives a recipientstockholder will not recognize gain or loss for U.S. federal income tax purposes on the right to receive a numberexchange of pre-Reverse Split shares of our Common Stock on the applicable vesting or other dates. Delivery of thefor post-Reverse Split shares of our Common Stock mayin the Reverse Split. A stockholder’s aggregate tax basis in the post-Reverse Split shares of our Common Stock the stockholder receives in the Reverse Split will be deferred beyond vestingthe same as determined by the Committee. The Committee determinesstockholder’s aggregate tax basis in the terms and conditionspre-Reverse Split shares of restricted stock units, includingour Common Stock the numberstockholder surrenders in exchange therefor. A stockholder’s holding period for the post-Reverse Split shares of units granted, and conditionsour Common Stock the stockholder receives in the Reverse Split will include the stockholder’s holding period for vesting that must be satisfied, which may be based principallythe pre-Reverse Split shares of our Common Stock the stockholder surrenders in exchange therefor. Stockholders who have different bases or solely on continued provisionholding periods for pre-Reverse Split shares of services. The holder of a restricted stock unit award will not have voting rights with respect to the award and possess no incidents of ownership with respect to the underlyingour Common Stock should consult their tax advisors regarding their bases or holding periods in their post-Reverse Split Common Stock.

Stock Options

The Committee may grant either incentive stock options within the meaning of Section 422(b) of the Internal Revenue Code (the “Code”), or non-qualified stock options. A stock option entitles the recipient to purchase a specified number of shares of Common Stock at a fixed price subject to terms and conditions set by the Committee, including conditions for exercise that must be satisfied, which typically are based solely on continued employment or service. The purchase price of shares of Common Stock covered by a stock option cannot be less than 100% of the fair market value of the Common Stock on the date of the grant. Additionally, the 2017 Plan provides that no incentive stock options granted to a participant who, at the time of the grant, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any subsidiary shall have an exercise price that is less than 110% of the fair market value of Common Stock on the date of the grant. Fair market value of the Common Stock is generally equal to the closing price for the Common Stock on the trading date the option is granted.

The option exercise price may be paid in cash or its equivalent, by tendering shares of Common Stock or directing the Company to withhold shares having an aggregate fair market value at the time of exercise equal to the exercise price, by broker-assisted cashless exercise, or in any other manner then permitted by the Committee, or by a combination of any of the permitted methods.

Performance Awards

The 2017 Plan provides for performance based awards, in the form of either performance shares or performance units, which are earned upon achievement of objective performance targets relative to certain performance measures. The terms and conditions of any performance-based awards granted under the 2017 Plan are set forth in award agreements which contain provisions determined by the Committee and cannot be inconsistent with the 2017 Plan. The performance criteria to be achieved during any performance period and the length of the performance period is determined by the Committee.

SARs

An SAR entitles the holder to receive, as designated by the Committee, cash or shares of Common Stock, having a value equal to the excess of the fair market value of a specified number of shares of Common Stock at the time of exercise over the exercise price established by the Committee. Pursuant to the 2017 Plan, the Committee may grant freestanding SARs, tandem SARs, or any combination of these forms of SAR.

The grant price of each SAR granted under the 2017 Plan is established by the Committee at the time the SAR is granted, provided such price shall not be less than, in case of freestanding SARs, 100% of the fair market value of Common Stock on the grant date, and the exercise price of the related option in case of tandem SARs. Shares of Common Stock delivered pursuant to the exercise of a SAR shall be subject to such conditions, restrictions and contingencies as the Committee may establish in the applicable award agreement.

Term, Termination and Amendment

No award may be granted under the 2017 Plan after June 12, 2027, the day immediately preceding the 10th anniversary of the effective date of the 2017 Plan, or such earlier date as the Board shall determine. The 2017 Plan will remain in effect with respect to outstanding awards until no awards remain outstanding. The Board may at any time, and from time to time, amend, suspend or terminate the 2017 Plan. However, no amendment shall be effected unless approved byrecommends that the stockholders of the Company to the extent that stockholder approval is necessary to satisfy applicable law or the rules of The Nasdaq Stock Market LLC, which is the securities exchange on which our Common Stock is listed, or in general with respect to an increase in the shares authorized under the 2017 Plan. No award may be granted under the 2017 Plan once it is terminated. Termination of the 2017 Plan shall not impair rights or obligations under any award granted while the 2017 Plan is in effect, except with the written consent of the grantee. Further, no such amendment may adversely affect the rights of recipients of outstanding awards under the 2017 Plan without such recipient’s consent.

The Committee may at any time, and from time to time, amend the terms of any one or more awards; provided, that the rights of the grantee under the award shall not be impaired by any such amendment, except with the consent of the grantee.

Forfeiture

The Committee may condition the grant, vesting, exercisability and other terms of the awards granted under the 2017 Plan on compliance by the participant with specified conditions relating to non-competition, confidentiality of information relating to or possessed by the Company, non-solicitation of customers, suppliers, and employees of the Company, cooperation in litigation, non-disparagement of the Company and its officers, directors and affiliates, and other restrictions upon or covenants of the participant, including during specified periods following termination of employment with or service for the Company and/or a subsidiary. All vested or unvested awards may be forfeited in the event that the recipient does not comply with such conditions.

Adjustments upon Changes in Capitalization

In the event of any equity restructuring, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, the Committee shall make an equitable adjustment (i) in the number and kind of shares authorized for issuance under the 2017 Plan, (ii) in the individual limitations, and (iii) in the number and kind of shares subject to outstanding awards, the exercise price, grant price or other price of shares subject to outstanding awards, any performance conditions relating to shares, the market price of shares, or per-share results, and other terms and conditions of outstanding awards, to prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation or liquidation, the Committee may, in its sole discretion, make an equitable adjustment as described in the foregoing sentence, to prevent dilution or enlargement of rights.

Federal Income Tax Consequences

The following is a brief summary of the principal U.S. federal income tax consequences with respect to awards granted under the 2017 Plan.

Restricted Stock Awards

The recipient of a restricted stock award does not have taxable income upon receipt of the award. When the restricted stock award is vested, the recipient will recognize ordinary income in an amount equal to the difference of the fair market value of the shares on the date of vesting and the amount paid for such restricted stock, if any.

Upon the vesting of a restricted stock award, the Company will be entitled to a corresponding income tax deduction in the tax year in which the restricted stock award vested.

The recipient may, however, elect under Section 83(b) of the Code to include as ordinary income in the year the shares are granted an amount equal to the excess of (i) the fair market value of the shares on the date of issuance, over (ii) the purchase price, if any, paid for the shares. If the Section 83(b) election is made, the recipient will not realize any additional taxable income when the shares become vested.

Restricted Stock Units

A recipient will not recognize taxable income upon the grant of a restricted stock unit, and the Company will not be entitled to a deduction, until the underlying shares are issued to the recipient, generally at the end of the vesting period. At the time of transfer, the recipient will recognize ordinary income equal to the value of the shares of Common Stock and/or cash. The Company will be entitled to a deduction equal to the income recognized by the recipient. The subsequent disposition of shares acquired pursuant to a restricted stock unit award will result in capital gain or loss (based upon the difference between the price received upon disposition and the recipient’s basis in those shares).

Stock Options

The recipient does not recognize any taxable income as a result of a grant of a non-qualified stock option. Upon exercise of a non-qualified stock option, the recipient will recognize ordinary income in an amount equal to the difference between the fair market value of the shares on the date of exercise and the exercise price. When the shares are sold, any difference between the sale price and the fair market value of the shares on the date of exercise will generally be treated as long term or short term capital gain or loss, depending on whether the stock was held for more than one year. Upon the exercise of a non-qualified stock option, the Company will be entitled to a corresponding income tax deduction in the tax year in which the option was exercised.

Upon exercising an incentive stock option, the excess of the fair market value of the shares of Common Stock acquired over the option exercise price will be an item of tax preference to the participant, which may be subject to an alternative minimum tax for the year of exercise. If no disposition of the shares is made within two years from the date of the grant or within one year after the transfer of the shares to the participant, the participant does not realize taxable income as a result of exercising the incentive stock option; the tax basis of the shares received for capital gain treatment is the option exercise price; any gain or loss realized on the sale of the shares is long-term capital gain or loss. If the recipient disposes of the shares within the two-year or one-year periods referred to above, the recipient will realize ordinary income at that time in an amount equal to the excess of the fair market value of the shares at the time of exercise (or the net proceeds of disposition, if less) over the option exercise price. For capital gain treatment on such a disposition, the tax basis of the shares will be their fair market value at the time of exercise.

Performance Awards

A recipient will not recognize taxable income upon the grant of a performance award, and the Company will not be entitled to a deduction, until the award has vested and, in case of performance units, the underlying shares are issued or cash is delivered to the recipient. Upon vesting of the performance award, the recipient will recognize ordinary income equal to the value of the shares of Common Stock and/or cash. The Company will be entitled to a deduction equal to the income recognized by the recipient. The subsequent disposition of shares acquired pursuant to a performance award will result in capital gain or loss (based upon the difference between the price received upon disposition and the recipient’s basis in those shares).

SARs

A recipient does not recognize any taxable income upon the receipt of an SAR. Upon the exercise of an SAR, the recipient will recognize ordinary income in an amount equal to the excess of the fair market value of the underlying shares of Common Stock on the exercise date over the exercise price.

Upon the exercise of an SAR, the Company is entitled to a corresponding income tax deduction in the tax year in which the SAR is exercised.

Restrictions on Transfer

None of the awards granted under the 2017 Plan are transferable other than by will or the laws of descent and distribution or pursuant to a “qualified domestic relations order” as defined in the Code; provided, that the Committee may in its discretion permit the transfer of an award to a recipient’s family members or to one or more trusts established for the benefit of such family members.

New Plan Benefits

Except as disclosed in the table and footnotes below, awards under the 2017 Plan, as amended, will be granted in such amounts and to such individuals entitled to participate in the 2017 Plan, as determined by the Committee in its sole discretion. Therefore, except as specified below, the benefits or amounts that will be received by employees, officers, directors and consultants under the 2017 Plan are currently not determinable.

ADJOURNMENT

General

The Company is asking stockholders to approve, if necessary, an adjournment of the Special Meeting to solicit additional proxies in favor of Proposals 1, 2 and 3 (the “Adjournment”). Any Adjournment of the Special Meeting for the purpose of soliciting additional proxies will allow the stockholders who have already sent in their proxies to revoke them at any time prior to the time that the proxies are used. While the Company expects that all other proposals before the Special Meeting will be approved, it is including this Proposal 4 in order to give street name holders sufficient time to vote.

Vote Required

The affirmative vote of a majority of the votes cast for or against this Proposal 4 is required to approve the Adjournment. Abstentions will not be considered as votes cast, under the Company’s bylaws, and accordingly will have nothe effect on the outcome of a vote against this Proposal 4.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTEThe Board recommends that the stockholders vote “FOR” THIS PROPOSALthis Proposal 4.

The following discussion provides an overview of certain material risks and uncertainties which the Company and its investors face arising from the Company’s recent Nasdaq issues and our efforts to remediate alleged violations of the Nasdaq Listing Rules, including Proposals 1 and 3 for which stockholder approval is being sought to comply with Nasdaq Listing Rules. See the discussions under each of those Proposals for more information.

Nasdaq has recently provided us with correspondence containing violation notices and questions arising from certain of our prior transactions, the result of which could be our Common Stock being delisted from Nasdaq.

As previously disclosed in prior SEC filings and summarized elsewhere in this Proxy Statement in the discussions under Proposal 1 and Proposal 3, beginning in December 2022 the Company received a series of notices of non-compliance and information requests and inquiries relating to the November 22 Amendment, the minimum bid price deficiency which arose in December 2022, the sale of White River Holdings Corp. to White River, and the acquisition of BitNile.com and the issuance of Series B and Series C thereunder. This Proxy Statement relates to the November 2022 Amendment and the minimum bid price deficiency, but not to the other matters on which we have received notices and other correspondence from Nasdaq. As such, if we are unable to obtain stockholder approval for Proposals 1 and 3 which are intended to cure two Nasdaq violations raised in Nasdaq correspondence, we could be subject to delisting. Further, even if we do obtain approval for Proposals 1 and 3, we may be unable to remedy the other violations(s) which we intend to address separately at our next Annual Meeting expected to be held late this summer. While we have included in the Certificates of Designation for the Company’s outstanding series of Preferred Stock and a separate agreement with the principal holders of Preferred Stock certain provisions designed to avoid or prevent violations of Nasdaq Listing Rules, and intend to cooperate with Nasdaq in an effort to regain compliance with all Nasdaq Listing Rules we have been alleged of violating, given the volume and complexity of the Nasdaq issues we face, we cannot assure you that these efforts will result in compliance or that Nasdaq will permit us to have our Common Stock remain listed.

Any of the foregoing matters could result in our Common Stock being delisted from Nasdaq. If our Common Stock is delisted from Nasdaq, we could face significant material adverse consequences, including:

If we are unable to rectify any of the above-described Nasdaq issues, including potentially for failure to timely obtain stockholder approval or for other reasons delineated elsewhere in these Risk Factors, delisting will subject us and our stockholders to the above and other adverse consequences, and could also delay or prevent us from executing our business plans with respect to the BitNile.com metaverse, effecting the announced spin-offs of Common Stock of certain entities or otherwise further our and our stockholders’ interests as described elsewhere in this Proxy Statement.

If the Reverse Split does not result in a proportionate increase in the price of our Common Stock, we may be unable to regain compliance with the Nasdaq listing requirements or meet those of another national securities exchange.

We expect that if approved the Reverse Split will increase the market price of our Common Stock so that we will be able to regain compliance with Nasdaq’s minimum bid price requirement. However, the effect of the Reverse Split on the market price of our Common Stock cannot be predicted with certainty, and the results of reverse stock splits by companies under similar circumstances have varied. It is possible that the market price of our Common Stock following the Reverse Split will not increase sufficiently for us to regain compliance with the minimum bid price requirement. For example, if our stock price were to fall too low following stockholder approval of the Reverse Split, the high end of the range of the Reverse Split, which is one-for-[__], could potentially be insufficient to enable us to comply with the minimum bid price requirement post-Reverse Split. If we are unable meet the minimum bid price requirement or other requirements under Nasdaq Listing Rules, we may not be unable continue to have or Common Stock listed on Nasdaq, and may be unable to list our Common Stock on an alternative national securities exchange. This could have a material adverse effect on our liquidity and an investment in us, and impose additional hardships on investors seeking to sell our Common Stock.

Even if the Reverse Split results in the requisite increase in the market price of our Common Stock, there is no assurance that we will be able to continue to comply with the minimum bid price requirement or other Nasdaq requirements.

Even if the Reverse Split results in the requisite increase in the market price of our Common Stock to be in compliance with the minimum bid price requirements of Nasdaq, there can be no assurance that the market price of our Common Stock following the Reverse Split will remain at the level required for continued compliance with such requirement. It is not uncommon for the market capitalization of a company’s Common Stock to decline in the period following a reverse stock split. The risk of the foregoing occurring is exacerbated by the recent market downturns and uncertainty surrounding the possibility of a recession, which many market analysis believe is increasingly likely given the recent prominent bank failures and the Federal Reserve interest rate hikes to combat inflation. We have also effected a proportionate reverse stock split previously in 2020, which was at a ratio of one-for-five wherein the authorized shares were reduced proportionately which under Nevada law allowed us to effect it without stockholder approval. Such prior reverse stock split was completed in part to assist us becoming uplisted onto Nasdaq in August 2021. If the market price of our Common Stock declines following the implementation of the Reverse Split, the percentage decline may be greater than would occur in the absence of the Reverse Split. In any event, other factors unrelated to the number of shares of our Common Stock outstanding, such as negative financial or operational results, could adversely affect the market price of our Common Stock and jeopardize our ability to meet or continue to comply with the minimum bid price requirement.

The Reverse Split may decrease the liquidity of our Common Stock.

The liquidity of our Common Stock may be adversely affected by the Reverse Split given the reduced number of shares that will be outstanding following the Reverse Split, especially if the market price of our Common Stock does not sufficiently increase as a result of the Reverse Split. In addition, the Reverse Split may decrease the number of stockholders who own round lots (less than 100 shares) of our Common Stock, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

The increased market price of our Common Stock resulting from the Reverse Split may not attract new investors, including institutional investors, and may not satisfy the investing guidelines of those investors, and consequently, the liquidity of our Common Stock may not improve.

Although we believe that a higher market price may help generate greater or broader investor interest in our Common Stock, there can be no assurance that the Reverse Split will result in a per-share price increase sufficient to attract new investors, including institutional investors. Additionally, there can be no assurance that the market price of our Common Stock will satisfy the investing guidelines of those investors. As a result, the trading liquidity of our Common Stock may not necessarily improve following the Reverse Split.

Security Ownership of Certain Beneficial Owners and ManagementPRINCIPAL STOCKHOLDERS

The following table sets forth the number of shares of the Company’s Common Stock beneficially owned as of the Record Date by (i) those persons known by the Company to be owners of more than 5% of each class of its voting stock,the Company’s outstanding Common Stock, (ii) each director, (iii) the Named Executive Officerseach named executive officer (as such term is defined in Item 402(m)(2) of Regulation S-K under the Securities Exchange Act of 1934, as amended),SEC Rules, and (iv) the Company’s current executive officers and directors as a group. Unless otherwise specified in the notes to thisthe below table, the address for each person is: c/o Ecoark Holdings,BitNile Metaverse, Inc., 303 Pearl Parkway Suite 200, San Antonio, TX 78215, Attention: Corporate Secretary.

OTHER MATTERS

The Company has no knowledge of any other matters that may come before the Special Meeting and does not intend to present any other matters.

If you do not plan to attend the Special Meeting, in order that your shares may be represented and in order to assure the required quorum, please sign, date and return your proxy promptly. In the event you are able to attend the Special Meeting, at your request, the Company will cancel your previously submitted proxy.

Annex A

Amendment to the Certificate of Designation of

Rights, Preferences and Limitations of

[__]

Annex B

Certificate of Amendment to the

Ecoark Holdings, Inc. 2017 Omnibus Incentive PlanArticles of Incorporation 

(Authorized Share Increase)

Ecoark Holdings,BitNile Metaverse, Inc. amends its 2017 Omnibus Incentive Plan (the “Plan”“Company”), a corporation incorporated under the laws of the State of Nevada, hereby certifies as follows:

Section 4.11. The name of the Plan shall be deletedCompany is BitNile Metaverse, Inc.

2. Pursuant to Sections 78.380 and replaced78.385 of the Nevada Revised Statutes, the amendment herein set forth has been duly approved by the Board of Directors and holders of a majority of the outstanding voting power of the Company.

3. Article 4 of the Articles of Incorporation is hereby by replacing the first paragraph of such Article with the following:

4.1 Number of Shares Available for Grants.

(a) Subject to adjustment as provided in Section 4.3 herein, the maximum number of Shares that may be delivered pursuant to Awards under the Plan shall be one million and three hundred thousand (1,300,000) Shares; provided that:

(i) Shares that are potentially deliverable under an Award granted under the Plan that is canceled, forfeited, settled in cash, expires or is otherwise terminated without delivery of such Shares shall not be counted as having been delivered under the Plan.

(ii) Shares that have been issued in connection with an Award of Restricted Stock that is canceled or forfeited prior to vesting or settled in cash, causing the Shares to be returned to the Company, shall not be counted as having been delivered under the Plan.

If Shares are returned to the Company in satisfaction of taxes relating to Restricted Stock, in connection with a cash out of Restricted Stock (but excluding upon forfeiture of Restricted Stock) or in connection with the tendering of Shares by a Participant in satisfaction of the Exercise Price or taxes relating to an Award, such issued Shares shall not become available again under the Plan. Each SAR issued under the Plan will be counted as one share issued under the Plan without regard to the number of Shares issued to the Participant upon exercise of such SAR.

Shares delivered pursuant to the Plan may be authorized but unissued Shares, treasury Shares or Shares purchased on the open market.

(b) Subject to adjustment as provided in Section 4.3 herein, one million and three hundred thousand (1,300,000) Shares may be delivered in connection with “full value Awards,” meaning Awards other than Options, SARs, or Other Awards for which the Participant pays the grant date intrinsic value.

(c) Notwithstanding the foregoing, for purposes of determining the number of Shares available for grant as Incentive Stock Options, only Shares that are subject to an Award that expires or is cancelled, forfeited or settled in cash shall be treated as not having been issued under the Plan.

Annex C

RESTRICTED STOCK UNIT AGREEMENT

This Restricted Stock Unit Agreement (this “Agreement”), entered into as of August 5, 2021 (the “Grant Date”), sets forth the terms and conditions of an award (this “Award”) of restricted stock units (“RSUs”) granted by Ecoark Holdings, Inc., a Nevada corporation (the “Company”), to Peter Mehring (the “Recipient”).

1. Definition and Incorporation of Certain Terms. This Award is made pursuant to the Company's 2017 Omnibus Incentive Plan (the “Plan”) and the equity award granted hereunder shall be made from the pool of equity awards authorized under the Plan. The terms of the Plan are otherwise incorporated in this Agreement. Capitalized terms used in this Agreement that are not defined in this Agreement have the meanings as used or defined in the Plan. The Recipient hereby acknowledges receipt of the Plan.

2. Award. Effective as of the Grant Date, the Recipient was granted 272,252 RSUs. In addition, upon shareholder approval of an increase in the Plan (or a new Equity Incentive Plan), the Company shall grant the Recipient an additional 63,998 RSUs (“Additional RSUs”). These Additional RSUs will be subject to an agreement substantially similar to this Agreement. In consideration for the Award, the Recipient hereby cancels 672,499 stock options as evidenced by Exhibit A.

3. Vesting.

(a) The RSUs will vest in 12 equal quarterly increments with the first vesting date being November 4, 2021, as detailed on Schedule A. All RSUs shall immediately vest upon (i) the Recipient ceasing to be an employee, advisor, director or consultant for the Company, or (ii) upon the Company or its wholly-owned subsidiary, Zest Labs, Inc., a Delaware corporation (“ZEST”), incurring a Change of Control.

(b) Vested RSUs shall be paid out in the form of shares of the Company's Common Stock with delivery of the Common Stock occurring upon the vesting dates or if vesting occurs upon a Change of Control immediately prior to the occurrence of such Change of Control.

4. Rights. The Recipient will receive no benefit or adjustment to the RSUs with respect to any cash or stock dividend, or other distributions except as provided for in the Plan. Further, the Recipient will have no voting rights with respect to the RSUs until the shares of Common Stock are delivered.

5. Restriction on Transfer. The Recipient shall not sell, transfer, pledge, hypothecate or otherwise dispose of any RSUs prior to the applicable vesting date.

6. Reservation of Right to Terminate Relationship. Nothing contained in this Agreement shall restrict the right of the Company to terminate the relationship of the Recipient at any time, with or without cause.

7. Tax Payments. The Company shall pay the federal and state income taxes (the “Taxes”) of the Recipient, and the Recipient shall have the right in his sole discretion to direct the Company to pay such Taxes by withholding of atotal number of shares of Common Stock equalcapital stock of all classes and series the corporation shall have the authority to issue is 405,000,000 shares consisting of (i) 400,000,000 shares of common stock, par value $0.001 per share, and (ii) 5,000,000 shares of preferred stock, par value $0.001 per share.

4. This Certificate of Amendment to the quotientArticles of Incorporation was duly adopted and approved by the stockholders of this Company on the ___ day of _______ 2023 in accordance with Sections 78.380 and 78.385 of the Taxes divided byNevada Revised Statutes.

IN WITNESS WHEREOF, the Fair Market Valueundersigned has executed this Certificate of the Common StockAmendment to Articles of Incorporation as of the date___ day of vesting.

8. 409A Compliance. The provisions of this Agreement and the issuance of the shares of Common Stock in respect of the RSUs is intended to comply with the short-term deferral exception as specified in Treas. Reg. § 1.409A-1(b)(4).

9. Notices and Addresses. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addressees in person, by FedEx or similar receipted delivery, as follows:________ 2023.

Annex C

Certificate of Amendment to

Articles of Incorporation 

(Reverse Split)

BitNile Metaverse, Inc. (the “Company”), a corporation incorporated under the laws of the State of Nevada, hereby certifies as follows:

1. The name of the Company is BitNile Metaverse, Inc.

2. Pursuant to Sections 78.380 and 78.385 of the Nevada Revised Statutes, the amendment herein set forth has been duly approved by the Board of Directors and holders of a majority of the outstanding voting power of the Company.

3. Article 4 of the Articles of Incorporation is hereby amended by adding the following:

As of 12:01 am Eastern Time, on _______ __, 2023 (the “Effective Time”), there shall be effected a reverse stock split (the “Reverse Split”) pursuant to which each [__] shares of common stock of the Corporation issued and outstanding immediately prior to the Effective Time (“Old Common Stock”) shall, automatically and without any action on the part of the respective holders thereof, be combined and reclassified into one share of common stock of the Corporation (“New Common Stock”). No fractional shares of New Common Stock shall be issued in connection with the Reverse Split. To the extent that any stockholder would have otherwise been deemed to own a fractional share of New Common Stock after the Effective Time as a result of the Reverse Split, such fractional share resulting from the Reverse Split shall instead be rounded up to the nearest whole share. Each holder of a certificate or certificates that immediately prior to the Effective Time represented outstanding shares of Old Common Stock (each, an “Old Certificate”) will be entitled to receive, upon surrender of such Old Certificates to the Company for cancellation, a certificate or certificates (each, a “New Certificate”) representing the number of whole shares (rounded up to the nearest whole share) of the New Common Stock into which and for which the shares of the Old Common Stock formerly represented by such Old Certificate(s) so surrendered are reclassified under the terms hereof. From and after the Effective Time, Old Certificates shall represent only the right to receive New Certificates pursuant to the provisions hereof. If more than one Old Certificate shall be surrendered at one time for the account of the same stockholder, the number of full shares of New Common Stock for which New Certificates shall be issued shall be computed on the basis of the aggregate number of shares represented by the Old Certificates so surrendered by such stockholder. The Old Certificates surrendered for exchange shall be properly endorsed and otherwise in proper form for transfer.

4. This Certificate of Amendment to the Articles of Incorporation was duly adopted and approved by the stockholders of this Company on the ___ day of _______ 2023 in accordance with Sections 78.380 and 78.385 of the Nevada Revised Statutes.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment to Articles of Incorporation as of the ___ day of ________ 2023.

or to such other address as either of them, by notice to the other may designate from time to time.

10. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.

11. Attorney’s Fees. In the event that there is any controversy or claim arising out of or relating to this Agreement, or to the interpretation, breach or enforcement thereof, and any action or proceeding is commenced to enforce the provisions of this Agreement, the prevailing party shall be entitled to a reasonable attorney's fee, costs and expenses

12. Severability. If any term or condition of this Agreement shall be invalid or unenforceable to any extent or in any application, then the remainder of this Agreement, and such term or condition except to such extent or in such application, shall not be affected hereby and each and every term and condition of this Agreement shall be valid and enforced to the fullest extent and in the broadest application permitted by law.

13. Entire Agreement. This Agreement represents the entire agreement and understanding between the parties and supersedes all prior negotiations, understandings, representations (if any), and agreements made by and between the parties. Each party specifically acknowledges, represents and warrants that they have not been induced to sign this Agreement.

14. Governing Law; Exclusive Jurisdiction. This Agreement and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided therein or performance shall be governed or interpreted according to the internal laws of the State of Nevada without regard to choice of law considerations. Any action arising out of or related to this Agreement shall only be brought in the state or federal courts located in Las Vegas, Nevada. The parties agree not to raise any objection to the venue including whether it is an inconvenient forum in the federal courts.

15. Headings. The headings in this Agreement are for the purpose of convenience only and are not intended to define or limit the construction of the provisions hereof

[Signature Page to Follow]

BitNile Metaverse, Inc.

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

NOTE: Transact such other business as may properly come before the Special Meeting or any adjournment or postponement thereof.

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

Important Notice Regarding the Availability of Proxy Materials for the Special Meeting:

The Notice and& Proxy Statement are available at www.proxyvote.com.