UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~June 30,~~ December 31, 2023

☐ ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 001-40701

~~BITNILE METAVERSE,~~RISKON INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

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

~~303 Pearl Parkway,~~ 11411 Southern Highlands Pkwy, Suite ~~200, San Antonio, TX~~240, Las Vegas, NV		~~78215~~89141		(800)762-7293
(Address of principal executive offices)		(Zip Code)		(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol

Name of each exchange on which
registered

Common Stock, $0.001 par value per share

~~BNMV~~ROI

The Nasdaq Stock Market LLC

(The Nasdaq Capital Market)

Securities registered pursuant to Section 12(g) of the Act: None

I~~ndicate~~Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ xNo ☐¨

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ xNo ☐¨

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

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

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

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~2,359,306~~32,634,808 shares of common stock as of ~~August 18, 2023.~~February 16, 2024.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	14

	Condensed Consolidated Balance Sheets as of ~~June 30,~~December 31, 2023 (unaudited) and March 31, 2023	14

	Condensed Consolidated Statements of Operations for the three and nine months ended ~~June 30,~~December 31, 2023 and 2022 (unaudited)	25

	Condensed Consolidated Statement of Changes in ~~Stockholders’~~Shareholders’ Deficit for the three and nine months ended ~~June 30,~~December 31, 2023 and 2022 (unaudited)	3

	~~Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2023 and 2022 (unaudited)~~	46

	Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2023 and 2022 (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	58

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2628

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3335

Item 4.	Controls and Procedures	3335

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	3537

Item 1A.	Risk Factors	3537

Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	37

Item 6.	Exhibits	38

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “goals,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “will,” “would,” “should,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management’s expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this report and our Annual Report on Form 10-K for the year ended March 31, 2023, particularly the “Risk Factors” sections of such reports. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements in this Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of the date of filing of this Quarterly Report on Form 10-Q. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty to update such statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure may be required by law.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

~~BITNILE METAVERSE,~~RISKON INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	December 31, 2023			March 31, 2023
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	101,487		$	65,838
Accounts receivable		63,246			-
Investment - White River Energy Corp. (“WTRV”)		9,224,785			9,224,785
Prepaid expenses and other current assets		376,360			1,200,157
Assets in bankruptcy		-			21,911
Current assets of discontinued operations held for sale		60,860			1,302,709
TOTAL CURRENT ASSETS		9,826,738			11,815,400

Property and equipment, net		336,593			323,816
Intangible assets, net		5,892,389			6,204,339
Right-of-use assets, operating leases		264,519			-
Other non-current assets		256,000			-
Non-current assets in bankruptcy		124,973			4,447,891
Non-current assets of discontinued operations/held for sale		259,790			984,071
TOTAL ASSETS	$	16,961,002		$	23,775,517

LIABILITIES AND SHAREHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable	$	10,813,484		$	3,503,179
Accrued liabilities		922,498			1,101,447
Dividends payable		1,342,259			-
Derivative liabilities		1,375,063			19,862,226
Notes and related party advances		944,739				-
Current portion of long-term debt		313,860			311,542
Advances - former parent of Bitnile.com, Inc. (“BNC”)		3,760,857			5,782,643
Liabilities in bankruptcy		3,259,928			3,061,430
Current portion of convertible note payable		4,559,619			-
Current portion of lease liability - operating leases		16,765			-
Current liabilities of discontinued operations/held for sale		1,750,910			3,569,672
TOTAL CURRENT LIABILITIES		29,059,982			37,192,139

LONG TERM LIABILITIES
Operating lease liability, non-current		219,492			-
Long-term debt net of current portion		132,336			149,716
Non-current liabilities of discontinued operations/held for sale		1,108,955			377,786
TOTAL LIABILITIES		30,520,765			37,719,641
Commitment and contingencies
SHAREHOLDERS’ DEFICIT
Preferred stock, $0.001 par value, 5,000,000 shares authorized; Series A Preferred stock, 703 and 882 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively		-			-
Series B Preferred stock, 8,883.4 and 8,637.5 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively		-			-
Series C Preferred stock, 1,401.3 and 1,362.5 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively		-			-
Series D Preferred stock, 611.2 and 0 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively		-			-
Common stock, $0.001 par value, 500,000,000 shares authorized; 10,734,744 and 1,383,832 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively		10,735			1,384
Additional paid-in capital		224,229,296			199,062,577
Accumulated deficit		(232,241,623	)		(208,677,438	)
Total shareholders’ deficit before non-controlling interest		(8,001,592	)		(9,613,477	)
Non-controlling interest		(5,558,171	)		(4,330,647	)
TOTAL SHAREHOLDERS’ DEFICIT		(13,559,763	)		(13,944,124	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	16,961,002		$	23,775,517

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

June 30,
2023 March 31,
2023
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,005 $ 66,844
Accounts receivable 3,900 -
Investment - White River Energy Corp. (“WTRV”) 9,224,785 9,224,785
Prepaid expenses and other current assets 807,197 1,215,065
Current assets of discontinued operations held for sale 1,384,224 1,297,801
TOTAL CURRENT ASSETS 11,422,111 11,804,495

Property and equipment, net 4,399,504 4,432,403
Intangible assets, net 6,100,356 6,204,339
Right-of-use assets, operating leases 307,913 339,304
Other noncurrent assets 10,905 10,905
Non-current assets of discontinued operations/held for sale 417,237 984,071
TOTAL ASSETS $ 22,658,026 $ 23,775,517

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable $ 10,406,830 $ 6,225,887
Dividends payable 1,597,222 -
Accrued liabilities 1,351,251 1,643,494
Convertible note - derivative liability 323,085 -
Preferred stock and warrant derivative liabilities, net 2,895,664 19,862,226
Current portion of long-term debt 324,737 323,818
Advances - former parent of Bitnile.com, Inc. 6,564,541 5,782,643
Current portion of convertible note payable 241,096 -
Current portion of lease liability - operating leases 100,142 110,120
Current liabilities of discontinued operations/held for sale 3,591,359 2,952,257
TOTAL CURRENT LIABILITIES 27,395,927 36,900,445

LONG TERM LIABILITIES
Operating lease liability, non-current 215,150 235,856
Long-term debt net of current portion 196,816 205,554
Non-current liabilities of discontinued operations/held for sale 364,076 377,786
TOTAL LIABILITIES 28,171,969 37,719,641

STOCKHOLDER’S DEFICIT:
Preferred stock, $0.001 par value, 5,000,000 shares authorized Series A Preferred stock, 882 shares issued and outstanding as of June 30 and March 31, 2023 - -
Series B Preferred stock, 8,637.5 shares issued and outstanding as of June 30 and March 31, 2023 - -
Series C Preferred stock, 1,362.5 shares issued and outstanding as of June 30 and March 31, 2023 - -
Common Stock, $0.001 par value, 3,333,333 shares authorized, 2,359,306 and 1,383,832 shares issued and outstanding as of June 30, 2023 and March 31, 2023, respectively 2,359 1,384
Additional paid-in capital 202,031,061 199,062,577
Accumulated deficit (202,731,837 ) (208,677,438 )
Total stockholders’ deficit before non-controlling interest (698,417 ) (9,613,477 )
Non-controlling interest (4,815,526 ) (4,330,647 )
TOTAL STOCKHOLDERS’ DEFICIT (5,513,943 ) (13,944,124 )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 22,658,026 $ 23,775,517

RISKON INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended December 31,						Nine Months Ended December 31,
	2023			2022			2023			2022
RiskOn360 revenue	$	240,356		$	-		$	240,356		$	-
BitNile.com and service revenue		-			-			64,350			-
Cost of revenue		2,058,024			-			2,172,746			-
Gross loss		(1,817,668	)		-			(1,868,040	)		-

Operating expenses
Salaries		1,038,788			241,403			2,461,243			917,215
Professional and consulting fees		359,745			123,288			790,221			248,015
Selling, general and administration		6,897,295			1,089,816			23,175,273			2,386,655
Depreciation and amortization		125,016			-			371,223			-
Total operating expenses		8,420,844			1,454,507			26,797,960			3,551,885
Operating loss		(10,238,512	)		(1,454,507	)		(28,666,000	)		(3,551,885	)
Other income (expense)
Change in fair value of derivative liabilities		824,475			6,124,833			23,807,318			9,017,305
Dividend expense		(1,589,046	)		-			(4,739,726	)		-
Loss on conversion of derivative liability to common stock in conversion of preferred stock		-			(3,923	)		-			(3,923	)
Gain on conversion of notes and derivative liability		2,563			-			2,563			-
Loss on disposal of fixed assets		(2,454	)		-			(2,454	)		-
Loss on redemption of Series A preferred stock		(1,938,587	)					(1,938,587	)
Amortization of discounts		(1,588,474	)		-			(4,172,858	)		-
Interest (expense) income, net of interest income		(25,219	)		87,611			(70,764	)		(77,353	)
Total other (expense) income		(4,316,742	)		6,208,521			12,885,492			8,936,029
(Loss) gain from continuing operations before discontinued operations		(14,555,254	)		4,754,014			(15,780,508	)		5,384,144
Discontinued operations
Loss from discontinued operations		(243,863	)		(2,327,043	)		(9,501,589	)		(26,592,798	)
Gain (loss) on disposal of discontinued operations		-			-			683,152			(11,823,395	)
Total loss from discontinued operations		(243,863	)		(2,327,043	)		(8,818,437	)		(38,416,193	)
Net (loss) income		(14,799,117	)		2,426,971			(24,598,945	)		(33,032,049	)
Net income attributable to non-controlling interest		-			322,351			1,227,524			2,642,559

Net (loss) income to controlling interest		(14,799,117	)		2,749,322			(23,371,421	)		(30,389,490	)
Less preferred stock dividends		192,764			99,737			192,764			484,213
Net (loss) income to controlling interest of common shareholders	$	(14,991,881	)	$	2,649,585		$	(23,564,185	)	$	(30,873,703	)

Net (loss) income per share – basic and diluted
Net (loss) income from continuing operations	$	(3.31	)	$	5.00		$	(5.53	)	$	5.90
Net loss from discontinued operations	$	(0.06	)	$	(2.45	)	$	(3.09	)	$	(42.11	)
Net (loss) income per share	$	(3.37	)	$	2.55		$	(8.62	)	$	(36.21	)
Weighted average common shares – basic and diluted		4,387,130			949,996			2,854,949			912,320

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~BITNILE METAVERSE,~~RISKON INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2023 AND 2022

(UNAUDITED)

Three Months Ended
June 30,
2023 2022

Hospitality and VIP experience revenue $ 45,150 $ -
Cost of revenue 86,300 93,862
Gross loss (41,150 ) (93,862 )

Operating expenses:
Depreciation, amortization and impairment 136,882 45,097
Bad debt 53,415 -
Selling, general and administration 10,160,441 1,688,064
Salaries and professional consulting fees 1,841,711 6,542,948
Total operating expenses 12,192,449 8,276,109
Operating loss (12,233,599 ) (8,369,971 )
Other income (expense)
Change in fair value of warrant derivative liabilities 2,197,348 (393,532 )
Change in fair value of preferred stock derivative liabilities 17,893,969 -
Change in fair value of convertible note derivative liability 1,029,237 -
Derivative expense (182,077 ) -
Amortization of original issue discount (241,096 ) -
Dividend expense (1,597,222 ) -
Interest expense, net of interest income (262,535 ) (36,828 )
Total other income (expense) 18,837,624 (430,360 )
Income (loss) from continuing operations before discontinued operations 6,604,025 (8,800,331 )
Discontinued operations
Loss from discontinued operations (1,143,303 ) (2,635,818 )
Gain on disposal of discontinued operations - 711,505
Total loss discontinued operations (1,143,303 ) (1,924,313 )
Net income (loss) 5,460,722 (10,724,644 )
Net loss attributable to non-controlling interest 484,879 571,261

Net income (loss) to controlling interest 5,945,601 (10,153,383 )
Less preferred stock dividends - 43,151
Net income (loss) to controlling interest of common shareholders $ 5,945,601 $ (10,196,534 )

Net income (loss) per share – basic and diluted (See Note 1)
Net income (loss) continuing operations: $ 3.65 $ (10.00 )
Net loss discontinued operations: $ (0.63 ) $ (2.19 )
Net income (loss) per share 3.02 (12.19 )
Weighted average common shares – basic and diluted (See Note 1) 1,807,020 879,632


	Common Stock				Additional Paid-in		Accumulated				Non-controlling			Total Shareholders’
	Shares		Amount		Capital		Deficit				interest			Deficit
Balance, March 31, 2023		1,383,832	$	1,384	$	199,062,577	$	(208,677,438	)	-	$	(4,330,647	)	$	(13,944,124	)
Shares issued for cash under at-the-market (“ATM”), net of fees		935,452		935		1,779,505		-		-		-			1,780,440
Shares issued for preferred stock dividends		40,022		40		300,118		-		-		-			300,158
Shares issued by Agora Digital Holdings, Inc. (“Agora”) for services rendered, net of amounts prepaid		-		-		630,206		-		-		-			630,206
Share-based compensation		-		-		258,655		-		-		-			258,655
Net income		-		-		-		5,945,601		-		(484,879	)		5,460,722
Balance, June 30, 2023		2,359,306		2,359		202,031,061		(202,731,837	)	-		(4,815,526	)		(5,513,943	)
Shares issued by Agora for services rendered, net of amounts prepaid		-		-		1,721,310		-		-		-			1,721,310
Net loss		-		-		-		(14,517,905	)	-		(742,645	)		(15,260,550	)
Balance, September 30, 2023		2,359,306		2,359		203,752,371		(217,249,742	)	-		(5,558,171	)		(19,053,183	)
Shares issued for preferred stock dividends		73,361		73		550,159		-		-		-			550,232
Shares issued under equity line of credit (“ELOC”) agreement		6,974,156		6,974		1,057,922		-		-		-			1,064,896
Shares issued for commitment to ELOC offering		634,152		635		384,498		-		-		-			385,133
Shares issued in the conversion of the senior convertible note		693,769		694		358,427		-		-		-			359,121
Series D shares issued for conversion of liabilities		-		-		15,085,931		-		-		-			15,085,931
Series D dividends		-		-		192,764		(192,764	)	-		-			-
Series B and C shares issued for payment-in-kind (“PIK”) dividends		-		-		2,847,224		-		-		-			2,847,224
Net loss		-		-		-		(14,799,117	)	-		-			(14,799,117	)
Balance, December 31, 2023		10,734,744	$	10,735	$	224,229,296	$	(232,241,623	)	-	$	(5,558,171	)	$	(13,559,763	)


	Common Stock				Additional Paid-in			Accumulated			Treasury			Non-controlling			Total Shareholders’
	Shares		Amount		Capital			Deficit			Stock			interest			Deficit
Balance, March 31, 2022		878,803	$	879	$	183,271,546		$	(158,868,204	)	$	(1,670,575	)	$	(599,058	)	$	22,134,588
Shares issued for commitment for preferred stock offering, net of expenses		3,429		3		193,413			-			-			-			193,416
Shares issued by Agora for services rendered, net of amounts prepaid		-		-		5,215,287			-			-			-			5,215,287
Share-based compensation		-		-		182,561			-			-			-			182,561
Net loss		-		-		-			(10,153,204	)		-			(571,261	)		(10,724,465	)
Preferred dividends		-		-		-			(43,151	)		-			-			(43,151	)
Balance, June 30, 2022		882,232		882		188,862,807			(169,064,559	)		(1,670,575	)		(1,170,319	)		16,958,236
Shares issued in conversion of preferred stock to common stock		42,540		43		2,636,761			-			-			-			2,636,804
Shares issued in settlement		14,430		14		(625,589	)		-			1,670,575			-			1,045,000
Shares issued by Agora for services rendered, net of amounts prepaid		-		-		2,956,922			-			-			-			2,956,922
Share-based compensation		-		-		160,040			-			-			-			160,040
Disposal of subsidiaries in reverse merger transactions		-		-		-			28,871,171			-			532,949			29,404,120
Net loss		-		-		-			(22,985,608	)		-			(1,748,947	)		(24,734,555	)
Preferred stock dividends		-		-		-			(341,325	)		-			-			(341,325	)
Balance, September 30, 2022		939,202		939		193,990,941			(163,520,321	)		-			(2,386,317	)		28,085,242
Shares issued in conversion of preferred stock to common stock		38,015		38		545,551												545,589
Shares issued in conversion of preferred stock dividends		4,661		5		104,558												104,563
Shares issued by Agora for services rendered, net of amounts prepaid						791,491												791,491
Share-based compensation		-		-		128,086			-			-			-			128,086
Net loss		-		-		-			2,749,322			-			(322,351	)		2,426,971
Preferred stock dividends		-		-		-			(99,737	)		-			-			(99,737	)
Balance, December 31, 2022		981,878	$	982	$	195,560,627		$	(160,870,736	)	$	-		$	(2,708,668	)	$	31,982,205

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~BITNILE METAVERSE,~~RISKON INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES IN STOCKHOLDERS’ DEFICIT~~CASH FLOWS

~~FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022~~

(UNAUDITED)


	For the Nine Months Ended December 31,
Cash flows from operating activities:	2023			2022
Net loss	$	(23,564,185	)	$	(30,873,703	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in non-controlling interest		(1,227,524	)		(2,642,559	)
Amortization of discount		4,172,858			47,515
Depreciation, amortization and impairment		371,223			-
Legal costs for ATM facility		110,000			-
Increase from former parent of BNC overhead allocation		1,748,537			-
Debt modification expense		-			879,368
Share-based compensation		258,655			470,687
(Gain) loss on disposal of Zest Labs, Inc. (“Zest Labs”) and other fixed assets		(683,152	)		-
Change in fair value of derivative liabilities		(23,807,318	)		(6,138,960	)
Derivative income		-			(2,878,345	)
Loss on conversion of derivative liabilities to common stock		-			3,923
Shares issued for preferred dividend		850,277			-
Gain on conversion of note payable and derivative liability		(2,563	)		-
Loss on disposal of WTRV and Banner Midstream		-			12,534,900
Gain on disposal of Trend Discovery Holdings, LLC (“Trend Discovery”)		-			(711,505	)
Shares of common stock issued for services		-			1,045,000
Commitment fees on long-term debt		510,238			17,681
Changes in operating assets and liabilities
Accounts receivable		(63,246	)		-
Prepaid expenses and other current assets		788,484			(46,654	)
Dividend payable		4,382,359			-
Amortization of right of use asset - operating leases		(5,488	)		-
Operating lease expense		61,425			-
Accounts payable		6,896,278			298,539
Accrued liabilities		(178,949	)		287,563
Total adjustments		(5,817,906	)		3,167,153
Net cash used in operating activities of continued operations		(29,382,091	)		(27,706,550	)
Net cash provided by discontinued operations		8,824,813			15,321,082
Net cash used in operating activities		(20,557,278	)		(12,385,468	)
Cash flows from investing activities:
Investment – securities		(250,000	)		-
Purchase of fixed assets		(72,050	)		-
Net cash used in investing activities of continuing operations		(322,050	)		-
Net cash provided by investing activities of discontinued operations		-			517,221
Net cash (used in) provided by investing activities		(322,050	)		517,221
Cash flows from financing activities:
Proceeds from former parent of BNC, net		13,253,948			-
Redemption of preferred stock		(1,305,000	)		-
Proceeds from note - related party		80,000			741,000
Payments on note - related party		-			(616,000	)
Proceeds from long-term debt		800,000			487,500
Payments of long-term debt		(24,202	)		(819,562	)
Proceeds from convertible note		5,390,000			-
Proceeds from the sale of common stock under ATM		1,655,335			-
Proceeds from the sale of common stock under ELOC		1,064,896			-
Proceeds from the sale of preferred stock		-			12,000,000
Net cash provided by financing activities of continuing operations		20,914,977			11,792,938
Net cash provided by financing activities of discontinued operations		-			23,359
Net cash provided by financing activities		20,914,977			11,816,297
Net increase (decrease) in cash and cash equivalents		35,649			(51,950	)
Cash at beginning of period		65,838			78,723
Cash at end of period	$	101,487		$	26,773

SUPPLEMENTAL DISCLOSURES
Cash paid for interest expense	$	17,713		$	11,173

SUMMARY OF NON-CASH ACTIVITIES
Reclassification of convertible notes and warrants to derivative liability	$	4,686,817		$	-
Reclassification of redemption of Series A to due to BMC former parent	$	-		$	-
Recognition of new operating lease right-of-use assets and lease liabilities	$	270,007		$	-
Issuance costs on mezzanine equity	$	-		$	193,416
Preferred stock dividend paid in shares of common stock	$	-		$	104,563
Non-controlling interest recorded in consolidation of Enviro Technologies US, Inc.	$	-		$	2,003,211
Preferred shares converted into common stock	$	-		$	3,182,416
Mezzanine equity reclassified to liability upon amendment	$	-		$	9,551,074

Common Stock Additional
Paid in Accumulated Non-controlling Total Stockholders’
Shares Amount Capital Deficit interest Deficit
Balance, March 31, 2023 1,383,832 $ 1,384 $ 199,062,577 $ (208,677,438 ) $ (4,330,647 ) $ (13,944,124 )
Shares issued for cash under ATM, net of fees 935,452 935 1,779,505 - - 1,780,440
Shares issued for preferred stock dividends 40,022 40 300,118 - - 300,158
Shares issued by Agora Digital Holdings, Inc. for services rendered, net of amounts prepaid - - 630,206 - - 630,206
Share-based compensation - - 258,655 - - 258,655
Net income (loss) - - - 5,945,601 (484,879 ) 5,460,722
Balance, June 30, 2023 2,359,306 $ 2,359 $ 202,031,061 $ (202,731,837 ) $ (4,815,526 ) $ (5,513,943 )

Common Stock Additional
Paid in Accumulated Treasury Non-controlling Total Stockholders’
Shares Amount Capital Deficit Stock interest Deficit
Balance, March 31, 2022 878,803 $ 879 $ 183,271,546 $ (158,868,204 ) $ (1,670,575 ) $ (599,058 ) $ 22,134,588
Shares issued for commitment for preferred stock offering, net of expenses 3,429 3 193,413 - - - 193,416
Shares issued by Agora Digital Holdings, Inc. for services rendered, net of amounts prepaid - - 5,215,287 - - - 5,215,287
Share-based compensation - - 182,561 - - - 182,561
Net loss - - - (10,153,383 ) - (571,261 ) (10,724,644 )
Preferred dividends - - - (43,151 ) - - (43,151 )
Balance, June 30, 2022 882,232 $ 882 $ 188,862,807 $ (169,064,738 ) $ (1,670,575 ) $ (1,170,319 ) $ 16,958,057

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~BITNILE METAVERSE, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(UNAUDITED)~~

For the Three Months Ended
June 30,
Cash flows from operating activities: 2023 2022
Net income (loss) $ 5,460,722 $ (10,724,644 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Change in non-controlling interest (484,879 ) (571,261 )
Amortization of discount 241,096 -
Depreciation, amortization, impairment, depletion, and accretion 136,882 35,975
Impairment - digital assets - 9,122
Legal costs for ATM facility 110,000 -
Share-based compensation 258,655 182,561
Change in fair value of warrant derivative liabilities (2,197,348 ) 393,532
Change in fair value of preferred stock derivative liabilities (17,893,969 ) -
Change in fair value of convertible note derivative liability (1,029,237 ) -
Derivative (income) expense 182,077 -
Shares issued for preferred dividend 300,158 -
Common stock issued for services - Agora Digital Holdings, Inc. 630,206 5,215,287
Commitment fees on long-term debt - 17,681
Changes in operating assets and liabilities
Accounts receivable (3,900 ) -
Prepaid expenses 407,868 490,491
Accrued interest receivable - (8,385 )
Dividends payable 1,597,222 -
Amortization of right of use asset - operating leases 31,391 29,914
Accounts payable 4,180,943 144,528
Accrued expenses 192,636 1,006,473
Operating lease liability (30,684 ) (28,541 )
Total adjustments (13,370,883 ) 6,917,377
Net cash used in operating activities of continued operations (7,910,161 ) (3,807,267 )
Net cash provided by (used in) discontinued operations 1,105,803 (4,706,432 )
Net cash used in operating activities (6,804,358 ) (8,513,699 )
Cash flows from investing activities:
Discontinued operations - 5,083,299
Cash provided by investing activities - 5,083,299
Cash flows from financing activities:
Proceeds from former parent of Bitnile.com, Inc. 781,898 -
Redemption of preferred stock (1,205,000 ) -
Proceeds from note - related party - 616,000
Payments on note - related party - (616,000 )
Payments of long-term debt (7,819 ) (588,769 )
Proceeds from long-term debt - 487,500
Proceeds from the sale of common stock under ATM, net 1,780,440 -
Proceeds from convertible note 5,390,000 -
Proceeds from the exercise of warrants into common stock - 12,000,000
Net cash provided by financing activities of continuing operations 6,739,519 11,898,731
Net cash used in financing activities of discontinued operations - (291,141 )
Net cash provided by financing activities 6,739,519 11,607,590
Net (decrease) increase in cash and cash equivalents (64,839 ) 8,177,190
Cash at beginning of period 66,844 85,073
Cash at end of period $ 2,005 $ 8,262,263

SUPPLEMENTAL DISCLOSURES
Cash paid for interest expense $ 11,173 $ 1,602
SUMMARY OF NON-CASH ACTIVITIES
Issuance costs on mezzanine equity $ - $ 193,416
Reclassification of convertible notes and warrants to derivative liability $ 5,682,077 $ -

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~BITNILE METAVERSE,~~RISKON INTERNATIONAL, INC. AND SUBSIDIAIRES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~JUNE 30,~~DECEMBER 31, 2023

(UNAUDITED)

1. DESCRIPTION OF BUSINESS

Overview

On March 15, 2023, Ecoark Holdings Inc. changed its name to BitNile Metaverse Inc. and subsequently on November 1, 2023, it changed its name to RiskOn International, Inc (“~~BitNile Metaverse”~~ROI” or the “Company”). The Company also changed its ticker symbol from BNMV to ROI. The change in both name and ticker is underscored by the Company’s commitment to developing a vertically integrated community while creating a seamless and enriched user experience. The Company is a holding company, incorporated in the State of Nevada on November 19, 2007.

On ~~February 8,~~August 25, 2023, the Company’s former subsidiary Zest Labs, along with the Company ~~entered into~~and Zest Labs Holdings, LLC (owned by Gary Metzger, a ~~Share Exchange Agreement (the “SEA”) by and among Ault Alliance, Inc. (“AAI”), the former owner of 100% of BitNile.com, Inc. (“BNC”), a significant shareholder~~current board member of the Company and therefore a related party) (the “Purchaser”), entered into a stock purchase agreement, whereby the ~~minority stockholders of BNC (the “Minority Shareholders”). BNC was transferred to the Company upon the closing~~Purchaser purchased 100% of the ~~SEA. The SEA provides that, subject to the terms~~issued and conditions set forth therein, the Company will acquire all of the outstanding shares of capital stock of BNC as well as the common stock of Earnity, Inc. beneficially owned by BNC (which represents approximately 19.9% of the outstanding common stock of ~~Earnity, Inc. as of~~Zest Labs from the ~~date of the SEA),~~Company in exchange for the ~~following: (i) 8,637.5 shares~~Purchaser agreeing to distribute any net proceeds from any new or ongoing intellectual property litigation or the sale or licensing of ~~newly designated Series B Convertible Preferred Stock~~any intellectual property of Zest Labs to the Company’s shareholders of record as of November 15, 2022. As a result, Zest Labs is no longer a subsidiary of the ~~Company to be issued to AAI (the “Series B”),~~Company. All the assets and ~~(ii) 1,362.5 shares of newly designated Series C Convertible Preferred Stock of~~liabilities have been assumed by the Purchaser and the Company ~~to be issued to~~recorded a gain of $683,152 from the ~~Minority Shareholders (the “Series C,” and together with the Series B, the “Preferred Stock”). The Series B and the Series C, the terms~~disposal of which are summarized in more detail below, each have a stated value of $10,000 per share (the “Stated Value”), for a combined stated value of $100,000,000, and subject to adjustment are convertible into a total of up to 13,333,333 shares of the Company’s common stock, which represent approximately 92.4% of the Company outstanding common stock on a fully diluted basis. The Company has independently valued the Preferred Stock as of the date of acquisition. The combined value of the Preferred Stock issued to AAI was $53,913,000 using a blended fair value of the discounted cash flow method and option pricing method. See Note 5 for the details on the asset purchase as BNC did not meet the accounting definition of a business and Note 17 for details on the Series B and C Preferred Stock.Zest Labs.

Through ~~June 30,~~December 31, 2023, the Company’s former wholly owned subsidiaries ~~with the exception of Agora Digital Holdings, Inc., a Nevada corporation (“Agora”) and Zest Labs, Inc. (“Zest Labs”)~~ have been treated for accounting purposes as divested. Please refer to our Annual Report for the year ended March 31, 2023 (“2023 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on July 14, 2023 for details on all of our prior subsidiaries that were divested in the year ended March 31, 2023 and an overview of the business conducted in those subsidiaries. This quarterly report on Form 10-Q (the “Report”) includes only those subsidiaries as of ~~June 30,~~December 31, 2023. The comparative financial statements for the three and nine months ended ~~June 30,~~December 31, 2022 reflect the operations of those subsidiaries that were sold during the year ended March 31, 2023 as discontinued operations in the condensed consolidated statements of operations and as assets and liabilities of discontinued operations on the condensed consolidated balance sheets.

The BitNile.com metaverse (the “Metaverse”) represents a significant development in the online metaverse ~~landscape, offering immersive, interconnected digital experiences that are inclusive, engaging, and dynamic.~~landscape. By integrating various elements such as virtual markets, real world goods marketplaces and VIP experiences, gaming, social activities, sweepstakes, gambling, and more, the Company aims to revolutionize the way people interact online. The Company’s growing virtual world, BitNile.com (the “Platform”) is accessible via any device using any web browser, without requiring permissions, downloads, or apps, and the Platform can be enjoyed without the need for bulky and costly virtual reality headsets.

~~Our games operate on a free-to-play model, whereby game players may collect coins free of charge through~~The Company’s subsidiary RiskOn360, Inc., organizes and holds business training and coaching conferences and learning seminars in certain cities across the passage of time and if a game player wishes to obtain coins above and beyond the level of free coins available to that player, the player may purchase additional coin packages (“Freemium” gaming model). Once obtained, Nile Tokens (“NT”) and Nile Coins (“NC”), (either free or purchased) cannot be redeemed for cash nor exchanged for anything outside of the Metaverse. When coinsUnited States. The curated events are used and played in the games, the game player could “win” and would be awarded additional coins or could “lose” and lose the future use of those coins. We have concluded that the coins represent both consumable goods and durables, because 1) the game player does not receive any additional benefit from the game and is not entitled to any additional rights once the coins are consumed and 2) because once coins are useddesigned for the ~~purchase of durable goods, those goods will continue~~attendees to ~~benefit the player throughout their gaming life cycle.~~learn from keynote speakers and panelists and have intimate networking opportunities.

In ~~December 2022, Agora entered into a Master Services Agreement (“MSA”) with Sentinum, Inc. (formerly, BitNile, Inc.), a Nevada corporation and~~November 2023, the Company formed wholly owned subsidiary GuyCare, Inc. (“GuyCare”). GuyCare will provide health and wellness services as a core part of ~~AAI (“Sentinum”), governing the relationship between the parties~~creating a sound and ~~the services provided by Agora~~successful individual, specializing in men’s health. The clinics are expected to ~~the Company, which include providing the Company with digital asset mining hosting services~~provide discreet and confidential care, ensuring men’s health and well-being through proven therapeutic interventions and innovative wellness programs. The first GuyCare clinic opened in ~~exchange for a monthly fee to be set out in applicable service orders. The terms of that MSA have not been met due to lack of capital by the Company to bring its 12MW of hosting power online.~~January 2024.

The Company ~~holds no cryptocurrency~~is focused on the development, promotion, and awareness of artificial intelligence (“AI”) integration, and primarily within the business community. In cooperation with Meetkai, the Company aims to cultivate businesses and individuals by offering a technology solution with high growth potential. The Company’s flagship product, "askROI," is ~~not an owner~~a generative AI platform built upon a proprietary large language model. Businesses and individuals alike can leverage askROI's capabilities for tasks such as research optimization, content creation, streamlined communication, and workflow improvement. The Company’s ultimate vision for askROI is to create a one-stop-shop for individuals and businesses to access generative AI products. The Company plans to regularly integrate new tools and products within the askROI platform to continually expand the capabilities and opportunities within askROI.

Bankruptcy Filings

On November 1, 2023, Agora and Bitstream Mining LLC (“Bitstream”), Agora’s sole operating subsidiary, filed petitions for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Western District of ~~any digital wallets containing currencies other than fiat currency.~~Texas. As a result, the Company deemed Agora as a discontinued operation for the periods ended March 31 and December 31, 2023. The cases are still pending before the court. See note 21, “Subsequent Events” for additional information on recent developments related to the cases.

2. LIQUIDITY AND GOING CONCERN

For the three and nine months ended ~~June 30,~~December 31, 2023, ~~and 2022,~~ the Company had a net ~~income (loss)~~loss to controlling interest of common ~~stockholders~~shareholders of ~~$5,945,601~~$(14,799,117) and ~~$(10,196,534)~~$(23,371,421), ~~respectively,~~respectively. In addition, the Company had ~~negative~~ working capital deficits of ~~$(15,973,816)~~$(19,233,244) and ~~$(25,095,950)~~$(25,095,950) as of ~~June 30,~~December 31, 2023 and March 31, 2023, respectively, and had an accumulated deficit as of ~~June 30,~~December 31, 2023 of ~~$(202,731,837)~~$(232,241,623). As of ~~June 30,~~December 31, 2023, the Company had ~~$2,005~~$101,487 in cash and cash equivalents.

The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company sold its interests in Banner Midstream in two separate transactions on July 25, 2022 and September 7, 2022. In addition, it sold the non-core business of Trend Discovery on June 17, 2022. The Company expects to distribute the common stock it received (or issuable upon conversion of preferred stock) in the sales to its stockholders upon the effective registration statements for the two entities the companies were sold to. See Note 17, “Preferred Stock” for information on the Company’s recent $12 million convertible preferred stock financing. That financing has restrictive covenants that require approval of the investor for the Company to engage in any equity or debt financing.

The Company believes that the current cash on hand is not sufficient to conduct planned operations for one year from the issuance of the condensed consolidated financial ~~statements, and it needs to raise capital to support its operations, raising substantial doubt about its ability to continue as a going concern.~~statements. The accompanying financial statements ~~for the period ended June 30, 2023~~ have been prepared assuming the Company will continue as a going concern, but the ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes continued revenue streams and becomes profitable. Management’s plans to ~~continue as a going concern include raising~~raise additional capital through sales of equity securities and borrowing. However, management cannot provide any assurances that the Company will ~~be successful~~succeed in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be required to delay, reduce or perhaps even cease the operation of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations. The Company raised approximately $3,500,000 in an At-the-Market capital raise during the fourth fiscal quarter of the year ended March 31, 2023 and the three months ended June 30, 2023. In addition, on

On October 30, 2023, the registration statement related to the $100,000,000 equity line of credit purchase agreement (the “ELOC Purchase Agreement”) was declared effective by the SEC. During the quarter ended December 31, 2023, the Company raised $1,064,896 from the sale of its common stock related to the ELOC Purchase Agreement. See note 16, “Shareholders’ Deficit” for additional information.

On October 16, 2023 and November 8, 2023, the Company issued terms notes in gross amounts of $210,000 and $660,000, respectively, with an institutional investor and received $800,000 in proceeds. See note 14, “Notes Payable” for additional information.

3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The Company has made estimates and judgments affecting the amounts reported in the Company’s condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s 2023 Annual Report ~~on Form 10-K for the year ended March 31, 2023,~~ filed with the ~~Securities and Exchange Commission (the “SEC”)~~SEC on July 14, 2023. The consolidated balance sheet as of March 31, 2023 was derived from the Company’s audited 2023 financial statements contained in the ~~above referenced~~ 2023 Annual Report. Results of the three and nine months ended ~~June 30,~~December 31, 2023 are not necessarily indicative of the results to be expected for the full year ending March 31, 2024.

~~Reclassifications~~

The Company has reclassified certain amounts in the June 30, 2022 condensed consolidated financial statements to be consistent with the June 30, 2023 presentation, including the reclassification of our prior subsidiaries that were sold as discontinued operations. These changes had no impact on the Company’s financial position or result of operations for the periods presented.

Noncontrolling Interests

In accordance with Accounting Standards Codification (“ASC”) 810-10-45~~Noncontrolling Interests in Consolidated Financial Statements,~~, the Company classifies noncontrolling interests as a component of equity within the condensed consolidated balance sheet. In ~~October 2021 and July 2022, with the issuance of restricted common stock to directors, management and advisors,~~addition, the Company ~~no longer owns 100% of Agora. As of June 30, 2023 and 2022, approximately 11% and 9.1%, respectively, is~~ reflected ~~as non-controlling interest of that entity. In addition, we have reflected~~ 34% of Wolf Energy Services, Inc. (“Wolf Energy”) as noncontrolling interests as the Company currently represents approximately 66% of the voting interests in Wolf Energy.

Significant Accounting Policies

Other than as noted below, there have been no material changes to the Company’s significant accounting policies previously disclosed in the 2023 Annual Report.

~~Gaming Revenue~~

Gaming revenue will be recognized from the Metaverse website primarily through the sale of tokens or coins that provide the end user with interactive entertainment (game play) and durable goods principally for the PC and mobile platforms. The Company primarily offers the following:

~~Metaverse access – Provide access to main game content.~~

~~Sale of NTs – NT’s can be used for additional digital game play only~~

	3.	~~Sale of NCs –NC’s can be used to participate in games of skill, buy durable goods, etc. all within the digital platform~~
	9

~~SweepCoins (“SC”) – Users can use SC to enter sweepstakes type games with a potential to win both digital goods and real world cash and prizes.~~

While the revenue received from the sale of NT and NC’s (collectively the “coins”) is currently nominal, we believe that our operation of the BitNile.com website could be a scalable source of revenue in the future. Additionally, we expect the website will be a mechanism to help increase our brand reputation and recognition by participants, which we believe will result in the acquisition and monetization of new users to the site.

~~During the three month periods ended June 30, 2023 and 2022 we recognized no revenues from Metaverse coin sales.~~

Hospitality and VIP Services Revenue

Hospitality revenue ~~currently~~ consists of revenue from services provided to groups at certain social functions and sporting events. WeThe Company also ~~sell~~sells real world VIP experiences and one-of-a-kind products. Hospitality and VIP service revenue is generated through contracts with customers whereby the customer agrees to pay a contract rate, determined based on common industry prices, for the services ~~we provide.~~the Company provides.

The Company recognizes revenue when performance obligations to provide food and services are satisfied at the point in time when the food and services are received by the customer, which is when the event is held and services are complete.

The Company recognizes revenue on a gross basis due to the fact that ~~we have~~it has control over the food and services and the ability to direct the offerings to multiple end consumers while also ultimately determining the relative pricing offered for the services. For certain events, weThe Company also ~~use~~uses certain subcontractors that ~~we select~~it selects and ~~hire~~hires to help transfer services to the end customer. ~~We have~~The Company has evaluated ~~our~~its agreements with ~~our~~its food and service subcontractors and based on the preceding, wethe Company determined that ~~the Company~~it is the principal in such arrangements and the third-party food and service suppliers are the agent in accordance with ASC 606, Revenue from Contracts with Customers. As the principal, the Company recognizes revenue in the gross amount and as such, recognizes any fees paid to subcontractors as cost of revenues. Any future changes in these arrangements or to the Company’s games and related method of distribution may result in a different conclusion.

~~Concentrations~~RiskOn360 Revenue

RiskOn360 revenue consists of revenue from services provided to attendees of business and coaching conference events. Revenue is generated through contracts whereby a customer agrees to pay a contract price for services provided by the Company at individual conferences organized and held by the Company.

The Company ~~occasionally maintains cash balances in excess of~~recognizes revenue when the ~~Federal Deposit Insurance Corporation insured limit. The Company does not consider this risk to be material.~~

~~Segment Reporting~~

~~As of June 30, 2023 Agora has not been able to secure additional funding to be able~~performance obligations to provide the learning event and related services are satisfied at the point in time when the services and ~~infrastructure to Sentinum as~~products are received by the ~~MSA previously entered into contemplated. As Agora has not engaged in any business activities, it~~customer, which is ~~uncertain if financing will be obtained in order to build out~~when the ~~hosting facility to be able to engage in business activities~~conference is completed, and ~~there are no operations for management to evaluate Agora as an operating segment, the Company does not segregate its operations as most of the continuing operations relate to BNC.~~all obligations have been satisfied.

Net ~~Income (Loss)~~Loss Per Share

Basic net ~~income (loss)~~loss per common share is computed using the weighted average number of common shares outstanding. Diluted ~~earnings (loss)~~loss per share ~~(“EPS”) include~~includes additional dilution from common stock equivalents, such as convertible notes, preferred stock, stock issuable pursuant to the exercise of stock options and warrants.

Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented, so only the basic weighted average number of common shares are used in the computations.

~~During~~Anti-dilutive securities, which are convertible into or exercisable for the ~~three months ended the Company reported net income which was the result~~Company’s common stock, consisted of the change in fair value of the derivative liabilities. Removing the mark to market impact leads to a net loss which is anti-dilutive in nature. Therefore, there will be no dilutive impact resulting from the change in the fair value of the derivative liabilities since all dilutive instruments are out of the money.following at December 31, 2023 and March 31, 2023:

Schedule of anti-dilutive shares	December 31,		March 31,
	2023		2023
Warrants		2,358,297		264,058
Convertible notes		12,753,705		-
Convertible preferred stock		44,858,151		14,607,333
Total		59,970,153		14,864,725

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements To Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 requires public entities to disclose information about the reportable segments’ significant expenses on an interim and annual basis to enable investors to develop more decision-useful financial analyses. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Entities must adopt the changes to the segment reporting guidance on a retrospective basis. Early adoption is permitted. The Company ~~does not expect that any recently issued accounting guidance will have a significant effect on its condensed consolidated~~elected to early adopt ASU 2023-07. See note 20, “Segment Information” for the Company’s process in determining reportable segments and certain financial ~~statements.~~data of each segment.

4. DISCONTINUED OPERATIONS

As discussed in ~~Note~~note 1 and ~~in our~~the 2023 Annual Report, during the year ended March 31, 2023, wethe Company sold all of ~~our~~its subsidiaries, other than Agora and Zest Labs. ~~Our loss from discontinued operations includes Banner Midstream Corp~~On August 25, 2023, the Company sold 100% of the issued and ~~Trend Discovery for~~outstanding stock of Zest Labs to the three months ended June 30, 2022 which was sold in two separate transactions on July 25, 2022 and September 7, 2022. In addition on June 17, 2022, Agora sold all of its non-Bitcoin operations to a third party. We reflectPurchaser (see note 1). The Company reflects the assets and liabilities of Wolf Energy ~~Services, Inc.~~ as discontinued operations, as ~~we have~~the Company has a 66% voting interest in ~~this company~~Wolf Energy that will be part of ~~our~~the Company’s dividend to ~~the~~its shareholders upon the ~~effective S-1 registration it has~~conversion of the preferred shares to common shares and the subsequent disbursement.

The Company’s loss from discontinued operations includes Trend Discovery, White River Corp, Banner Midstream, Zest Labs and Agora for the three and nine months ended December 31, 2023 and 2022, which were sold in four separate transactions on June 17, 2022, July 25, 2022, September 7, 2022, August 25, 2023, respectively, and Agora which filed ~~with~~for bankruptcy on November 1, 2023. The assets and liabilities of Agora as of December 31, 2023 are reflected on the ~~SEC.~~ condensed consolidated balance sheet separately as assets and liabilities in bankruptcy.

Current assets as of ~~June 30,~~December 31, 2023 and March 31, 2023– Discontinued Operations:

June 30,
2023 March 31,
2023
Wolf Energy Services, Inc. $ 1,384,224 $ 1,297,801
$ 1,384,224 $ 1,297,801

Schedule of current assets	December 31, 2023		March 31, 2023
Wolf Energy	$	60,860	$	1,297,801
Prepaid expenses		-		4,908
	$	60,860	$	1,302,709

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

June 30,
2023 March 31,
2023
Wolf Energy Services, Inc. $ 417,237 $ 984,071
$ 417,237 $ 984,071

Schedule of non-current assets	December 31, 2023		March 31, 2023
Wolf Energy	$	259,790	$	984,071
	$	259,790	$	984,071

Current liabilities as of ~~June 30,~~December 31, 2023 and March 31, 2023– Discontinued Operations:

June 30,
2023 March 31,
2023
Wolf Energy Services, Inc. $ 3,591,359 $ 2,952,257
$ 3,591,259 $ 2,952,257

Schedule of current liabilities	December 31, 2023		March 31, 2023
Wolf Energy	$	1,750,910	$	2,952,257
Zest accounts payable		-		532,279
Zest accrued expenses		-		85,136
	$	1,750,910	$	3,569,672

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

June 30,
2023 March 31,
2023
Wolf Energy Services, Inc. $ 364,076 $ 377,786
$ 364,076 $ 377,786

Schedule of non-current liabilities		December 31, 2023				March 31, 2023
Wolf Energy		$	1,108,955			$	377,786

The Company reclassified the following operations to discontinued operations for the three and nine months ended ~~June 30,~~December 31, 2023 and ~~2022, respectively.~~2022.

Schedule of operations to discontinued operations
							Three Months Ended December 31,						Nine Months Ended December 31,
	2023			2022			2023			2022			2023			2022
Revenue	$	-		$	7,034,839		$	-		$	-		$	-		$	10,955,153
Operating expenses		-			9,271,487			243,863			1,858,833			7,384,561			32,681,991
Wolf Energy Services, Inc. – net loss		(1,143,303	)		-
Wolf Energy – net loss								-			(468,210	)		(1,528,545	)		(4,305,129	)
Other loss		-			399,170			-			-			(174,456	)		(560,831	)
Net loss from discontinued operations	$	(1,143,303	)	$	(2,635,818	)	$	(243,863	)	$	(2,327,043	)	$	(9,087,562	)	$	(26,592,798	)

~~The following represents the calculation of the gain on disposal of Trend Discovery at June 17, 2022:~~ 5. BUSINESS COMBINATIONS/DIVESTITURES

Secured note receivable $ 4,250,000
Cash (27,657 )
Accounts receivable (222,400 )
Prepaid expenses (99,566 )
Goodwill (3,222,799 )
Other assets (284 )
Accounts payable and accrued expenses 34,211
Gain on disposal of discontinued operations $ 711,505

9Zest Labs

~~5. ASSET PURCHASE~~

On ~~March 7,~~August 25, 2023, the Company ~~acquired BNC~~sold 100% of the issued and outstanding stock of Zest Labs to the Purchaser (see note 1) in consideration for the Purchaser agreeing to distribute any net proceeds from ~~AAI. The Company accounted for this acquisition~~any new or ongoing intellectual property litigation or the sale or licensing of any intellectual property of Zest Labs to the Company’s shareholders of record as ~~an asset purchase as BNC did not meet the definition~~ of ~~a business as discussed in ASC 805 and ASU 2017-01.~~November 15, 2022.

The Company ~~acquired~~sold the assets and liabilities of ~~BNC~~Zest Labs noted below at fair value.

Prepaid expenses $ 620,616
Property and equipment 330,190
Intangible assets 6,239,000
Accounts payable and accrued expenses (3,186,513 )
Due to BitNile.com former parent (4,404,350 )
Notes payable (170,222 )
$ (571,279 )

Schedule of acquired the assets and liabilities
Prepaid expenses	$	2,454
Accounts payable and accrued expenses		(685,606	)
Total assets and liabilities	$	(683,152	)

The ~~consideration paid~~Company recorded a gain on disposal of Zest Labs of $683,152 for the ~~acquisition of BNC was as follows (see Note 17):~~nine months ended December 31, 2023.

Series B and Series C Preferred Stock $ 53,913,000
Total consideration $ 53,913,000

The Acquisition has been accounted for as a purchase of assets. The Company recognized a loss on the acquisition of $54,484,279 as a result of this acquisition in the condensed consolidated Statements of operations on March 7, 2023.

6. REVENUE

The Company recognizes revenue when it transfers promised services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those services. ~~For the three months ended June 30, 2023 the Company recognized $45,150 of revenue from hospitality and VIP experience services.~~

~~As part of each social function or event, there is the option to request catering~~Revenues recorded for our services ~~for an additional charge. The hospitality and VIP services revenues~~provided were ~~$45,150 and $0, respectively, for the three months ended June 30, 2023 and 2022.~~as follows:

Schedule of revenue
	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
RiskOn360 revenue	$	240,356	$	-	$	240,356	$	-
BitNile.com and service revenue		-		-		64,350		-
Total	$	240,356	$	-	$	304,706	$	-

WeThe Company had related party hospitality service sales of ~~$41,250~~$0 and $0$62,850 for the three ~~month period~~and nine months ended ~~June 30,~~December 31, 2023, respectively, and ~~2022, respectively.~~$0 for the three and nine months ended December 31, 2022.

7. SENIOR SECURED PROMISSORY NOTE RECEIVABLE

Agora was issued a Senior Secured Promissory Note by Trend Ventures, LP (“Trend Ventures Note”) on June 16, ~~2022. The Trend Ventures Note was the consideration paid to Agora~~2022, for the acquisition of Trend ~~Discovery Holdings.~~Discovery. The Trend Ventures Note is in the principal amount of ~~$4,250,000,~~$4,250,000, bears interest at the rate of 5% per annum, and was to mature June 16, ~~2025.~~2025. Under the Trend Ventures Note, Trend Ventures, LP has agreed to make interest-only payments, in arrears on a monthly basis commencing on June 30, 2022 and continuing thereafter until June 16, 2023. Beginning on June 30, 2023, Trend Ventures, LP agreed to make 24 consecutive equal monthly payments of principal each in an amount which would fully amortize the principal, plus accrued interest. All principal and any unpaid accrued interest will be due and payable on or before the maturity date. The Trend Ventures Note will be granted a first lien senior secured interest as set forth in the Security Agreement executed on the same date as the Trend Ventures Note, by and among Trend Ventures, LP, its future subsidiaries (each a guarantor) and Agora dated as of June 16, 2022. Trend has not made any interest payments on the Trend Ventures Note.

On May 15, 2023, Agora and Trend Ventures, LP entered into a First Amendment of Senior Secured Promissory Note (“First Amendment”), to amend the ~~$4,250,000 senior secured promissory note entered into June 16, 2022.~~Trend Ventures Note. The First Amendment amended the following clauses of the ~~original note:~~Trend Ventures Note: (a) the principal amount was amended from ~~$4,250,000~~$4,250,000 to ~~$4,443,870,~~$4,443,870, which includes all of the accrued interest through May 15, 2023; (b) the maturity date was amended from June 16, 2025 to May 15, ~~2025;~~2025; and (c) the interest rate shall remain at 5%, and any additional accrued interest under the ~~Default Rate~~default rate shall be mutually waived by both parties. No payments on either principal or interest shall be due until the new maturity date.

On November 1, 2023, Agora and Bitstream Mining LLC (“Bitstream”), Agora’s sole operating subsidiary, filed petitions for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Western District of Texas. The Trend Ventures Note was included as part of the bankruptcy estate. As of ~~June 30,~~December 31, 2023, the Company has established a full reserve for the principal and accrued interest receivable. See note 21, “Subsequent Events” for additional information on recent developments related to the cases.

8. INVESTMENTS

~~8. INVESTMENT~~Series A Convertible Preferred Stock – ~~SERIES A CONVERTIBLE PREFERRED STOCK –~~ WTRV

On July 25, 2022, the Company entered into a Share Exchange Agreement pursuant to which ~~that day~~ it sold to WTRV its oil and gas production business, which iswas part of the ~~Commodities~~commodities segment. The Company received 1,200 shares of WTRV’s Series A Convertible Preferred Stock, which becomes convertible into 42,253,521 shares of WTRV common stock upon such time as (A) WTRV has filed a Form S-1 with the SEC and such Form S-1 has been declared effective, or is no longer subject to comments from the Staff of the SEC, and (B) the Company elects to distribute shares of ~~its~~WTRV’s common stock to its ~~stockholders. Based~~shareholders. The S-1 was declared effective by the SEC on ~~the lower of cost or market, the value of the investment was determined to be $30,000,000. As of June 30,~~September 29, 2023, ~~WTRV has not had its registration statement declared effective. The Company engaged an independent valuation consultant who has determined there is a $20,775,215 loss on this investment and~~file number 333-268707, but the Company has ~~subsequently marked~~not yet elected to convert the ~~investment down to $9,224,785~~Series A preferred stock as it is still determining next steps on the previously proposed distribution of March 31, 2023 and has reflected this in the consolidated statement of operations for the year ended March 31, 2023 based on various approaches and methods of valuation including the market approach and the precedent transaction method. There has been no further write down of this investment as of June 30, 2023.shares.

As of ~~June 30,~~December 31, 2023, the Company has determined that itWTRV is ~~not the primary beneficiary, and~~a variable interest entity, but this transaction has not resulted in the Company controlling WTRV, as the ~~preferred shares are unable to be converted until the effectiveness of the registration statement being filed for WTRV,~~Company does not have the power to direct activities of WTRV or control the ~~Board~~board of ~~Directors~~directors of ~~WTRV and WTRV is not reliant upon funding by~~WTRV. Based on this determination the Company ~~moving forward; therefore the Company concluded that WTRV is~~does not ~~a variable interest entity, or VIE, as of June 30, 2023.~~consolidate WTRV.

~~9. INVESTMENT~~Common Stock – ~~COMMON STOCK – WOLF ENERGY SERVICES, INC.~~Wolf Energy Services, Inc.

On August 23, 2022, the Company entered into a Share Exchange Agreement (the “Agreement”) with Wolf Energy and Banner Midstream. Pursuant to the Agreement, upon the terms and subject to the conditions set forth therein, the Company acquired 51,987,832 shares of Wolf Energy common stock in exchange for all of the capital stock of Banner Midstream owned by the Company, which represents 100% of the issued and outstanding shares (the “Exchange”). Following the closing of the Agreement which occurred on September 7, 2022, Banner Midstream continues as a wholly owned subsidiary of Wolf Energy. Based on the lower of cost or market, the value of the investment was determined to be $5,328,753. On September 7, 2022, the Exchange was completed, and Banner Midstream became a wholly owned subsidiary of Wolf Energy. The Company has determined that as of June 30, 2023, there is no loss on this investment. 

The Company has determined that this transaction has resulted in the Company having a controlling interest in Wolf Energy as the common stock issued represents approximately 66% of the voting common stock of Wolf Energy common stock outstanding at ~~June 30,~~December 31, 2023 and March 31, 2023. Since the Company will be distributing to its ~~stockholders~~shareholders a stock dividend to all common and preferred ~~stockholders~~shareholders with a stock dividend date of September 30, 2022, the Company has reflected Wolf Energy, in discontinued operations as the Company intends to hold no shares and thus no voting interest upon the effectiveness of a registration statement for Wolf Energy, and the investment has been eliminated in ~~the~~ consolidation.

~~10. INVESTMENT – EARNITY, INC.~~

~~As part of the acquisition of BitNile.com, the Company acquired BNC’s 19.9% ownership in Earnity, Inc., a company that aimed~~ Subsequent to ~~democratize access to the broadest array of cryptocurrency assets in a secure, educational,~~September 30, 2023, Wolf Energy and community-oriented platform to global customers. In the purchase of BNC, the Company allocated no value to this investment. Additionally, subsequent to the acquisition of the Company’s acquisition of BNC, Earnity, Inc. hasBanner Midstream have permanently ceased operations.

~~11.~~ 9. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of ~~June 30,~~December 31, 2023 and March 31, 2023:

June 30,
2023 March 31,
2023

Zest Labs freshness hardware, equipment and computer costs $ 2,915,333 $ 2,915,333
Land 125,000 125,000
Furniture 40,074 40,074
Auto – BNC 220,786 220,786
Equipment – BNC 109,404 109,404
Mining technology equipment– Bitcoin 5,639,868 5,639,868
Auto – Bitcoin 91,132 91,132
Total property and equipment 9,141,597 9,141,597
Accumulated depreciation and impairment (4,742,093 ) (4,709,194 )
Property and equipment, net $ 4,399,504 $ 4,432,403

Schedule of property and equipment	December 31, 2023			March 31, 2023
	(unaudited)
Auto – BNC		232,406			232,406
Equipment – BNC		84,404			84,604
Computers and software		-			90,000
Equipment		45,050			-
Equipment – GuyCare		27,000			-
Total property and equipment⁽¹⁾		388,860			407,010
Accumulated depreciation		(52,267	)		(83,194	))
Property and equipment, net	$	336,593		$	323,816

~~As of June 30, 2023, the Company performed an evaluation of the recoverability of these long-lived assets. There has been no impairment for the three months ended June 30, 2023 and 2022.~~

(1)

As of December 31, 2023, $90,000 of the Company’s gross property, plant, and equipment, was fully depreciated, retired and no gain or loss was recognized from the disposal.

Depreciation expense for the three and nine months ended ~~June~~December 31, 2023 was $21,033 and $59,273, respectively. On August 25, 2023, the Company sold 100% of the issued and outstanding common stock of Zest Labs, and all the assets and liabilities of Zest Labs were assumed by the Purchaser as discussed in note 1. The net amount of property and equipment recorded in the sale was $0.

Effective September 30, 2023, the Company impaired $5,679,942 of gross fixed assets related to Agora and ~~2022~~Bitstream that had $1,784,189 in accumulated depreciation. The $3,895,753 of net property and equipment remaining was ~~$32,899~~impaired as the Company deemed the assets without value as they had been unable to commence mining operations, either for themselves or from others through hosting arrangements, and ~~$35,975, respectively.~~ was not expected to. During the three months ended December 31, 2023, the Company determined certain Agora leased property was abandoned and therefore fully impaired the remaining lease right of use asset, which had a balance of $247,969.

~~12.~~ On November 1, 2023, both Agora and Bitstream filed petitions for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Western District of Texas. As a result, Agora’s assets, which represent only one parcel of land in West Texas, have been disclosed as non-current assets in bankruptcy.

10. INTANGIBLE ASSETS

Intangible assets consisted of the following as of ~~June 30,~~December 31, 2023 and March 31, 2023:

June 30,
2023 March 31,
2023

Trademarks $ 5,097,000 $ 5,097,000
Developed technology 1,142,000 1,142,000
Accumulated amortization - trademarks (113,268 ) (28,317 )
Accumulated amortization - developed technology (25,376 ) (6,344 )
Intangible assets, net $ 6,100,356 $ 6,204,339

On March 7, 2023, the Company acquired trademarks and developed technology in the acquisition of BNC. These intangible assets were valued by an independent valuation consultant utilizing various methods including the discounted cash flow and option-pricing methods, and the estimated remaining useful life of these assets was estimated to be fifteen years.

Schedule of intangible assets	December 31, 2023			March 31, 2023

Trademarks	$	5,097,000		$	5,097,000
Developed technology		1,142,000			1,142,000
Accumulated amortization - trademarks		(283,167	)		(28,317	)
Accumulated amortization - developed technology		(63,444	)		(6,344	)
Intangible assets, net	$	5,892,389		$	6,204,339

Amortization expense for the three and nine months ended ~~June 30,~~December 31, 2023 was $103,983and ~~2022~~$311,950, respectively, and $0 for the three and nine months ended December 31, 2022.

On August 25, 2023, the Company sold 100% of the issued and outstanding common stock of Zest Labs, and all the assets and liabilities of Zest Labs were assumed by the Purchaser as discussed in note 1. The net amount of property and equipment recorded in the sale was ~~$103,983 and $0, respectively.~~ $0.

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

2024 $ 415,933
2025 415,933
2026 415,933
2027 415,933
2028 415,933
Thereafter 4,020,691
$ 6,100,356

Schedule of amortization expense
Remaining fiscal year 2024	$	103,983
2025		415,933
2026		415,933
2027		415,933
2028		415,933
Thereafter		4,124,674
	$	5,892,389

~~13.~~ 11. ACCRUED EXPENSES

Accrued expenses consisted of the following as of ~~June 30,~~December 31, 2023 and March 31, 2023:

Schedule of accrued expenses
	June 30, 2023		March 31, 2023		December 31, 2023		March 31, 2023

Professional fees and consulting costs	$	788,230	$	703,869		662,176		440,215
Vacation and paid time off		120,375		77,919
Legal fees		48,019		171,481
Compensation paid time off						121,789		73,375
Sponsorship		200,000		500,000		-		500,000
Compensation		60,343		60,343
Interest		70,429		61,722		104,453		61,722
Other		63,855		68,160		34,080		26,135
Total	$	1,351,251	$	1,643,494	$	922,498	$	1,101,447

~~14.~~ 12. WARRANT DERIVATIVE LIABILITIES

The Company identified embedded features in some of the warrant agreements which were classified as a liability. These embedded features included (a) the implicit right for the holders to request that the Company settle the warrants in registered shares. Since maintaining an effective registration of shares is potentially outside the control of the Company, these warrants were classified as liabilities as opposed to equity; (b) the right for the holders to request that the Company cash settle the warrant instruments from the holder by paying to the holder an amount of cash equal to the Black-Scholes value of the remaining unexercised portion of the ~~Derivative Warrant Instruments~~derivative warrant instruments on the date of the consummation of a fundamental transaction; and (c) certain price protections in the agreements. The accounting treatment of derivative financial instruments requires that the Company treat the whole instrument as a liability and record the fair value of the instrument as derivatives as of the inception date of the instrument and to adjust the fair value of the instrument as of each subsequent balance sheet date.

~~We have~~The Company has only included descriptions of warrants that are still outstanding as of ~~June 30,~~December 31, 2023.

On August 6, 2021, the Company closed a ~~$20,000,000~~$20,000,000 registered direct offering. The Company sold 115,942 shares of common stock and 115,942 warrants at ~~$172.50~~$172.50 per share. The warrants are exercisable through April 8, 2025. The Company also issued the placement agent 8,116 warrants exercisable at ~~$215,625~~$215.625 per share. Further information on the offering and compensation to the placement agent is contained in the prospectus supplement dated August 4, 2021. The fair value of the investor warrants was estimated to be ~~$11,201,869~~$11,201,869 at inception and ~~$123~~$0 as of ~~June 30,~~December 31, 2023. The fair value of the placement agent warrants was estimated to be ~~$744,530~~$744,530 at inception and $6$0 as of ~~June 30,~~December 31, 2023.

On April 27, 2023, the Company closed a ~~$6,875,000~~$6,875,000 senior secured convertible promissory note and ~~with the senior secured convertible note, the Company~~ granted the noteholders ~~2,728,175~~2,100,905 warrants that expire five years from the issuance date and have a strike price of ~~$3.28.~~$3.28. The warrants contain a rachet provision which the Company has determined meets the criteria for accounting treatment as a derivative liability. The Company recorded a discount on the convertible note of ~~$4,329,755~~$3,334,246, which represents the warrant derivative liability at ~~inception of the warrants.~~inception. The fair value of the warrants was estimated to be ~~$2,138,542~~$436,408 as of ~~June 30,~~December 31, 2023.

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

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

Schedule of fair value of each warrant is estimated using the black-scholes valuation model

~~Three~~ Nine
Months Ended
~~June 30,~~December 31,
2023

Year Ended
March 31,
2023

Inception

Expected term

1 – 5 years

0.25 – 1.85 years

5.00 years

Expected volatility

110 – ~~113%~~138%

107 – 110%

91% – 107%

Expected dividend yield

Risk-free interest rate

3.48 – ~~3.81%~~4.59%

2.98 – 3.88%

1.50% – 2.77%

Market price

$~~0.99~~0.33 – ~~$4.50~~$4.50

$5.40 – ~~$39.00~~$39.00

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

Schedule of derivative liabilities
	June 30, 2023		March 31, 2023		December 31, 2023		March 31, 2023

Fair value of 115,942 August 6, 2021 warrants	$	123	$	5,974	$	-	$	5,974
Fair value of 8,116 August 6, 2021 warrants		6		290		-		290
Fair value of 2,728,175 April 27, 2023 warrants		2,138,542		-
Fair value of 2,100,905 April 27, 2023 warrants						436,408		-
	$	2,138,671	$	6,264	$	436,408	$	6,264

During the ~~three~~nine months ended ~~June 30,~~December 31, 2023 and 2022, the Company recognized changes in the fair value of the derivative liabilities of ~~$2,197,348~~$2,904,102 and ~~$(393,532)~~$(4,274,183), respectively.

Activity related to the warrant derivative liabilities for the ~~three~~nine months ended ~~June 30,~~December 31, 2023 was as follows:

Schedule of warrant derivative liabilities
Beginning balance as of March 31, 2023	$	6,264		$	6,264
Issuances of warrants – derivative liabilities		4,329,755			3,334,246
Warrants exchanged for common stock		-			-
Change in fair value of warrant derivative liabilities		(2,197,348	)		(2,904,102	)
Ending balance as of June 30, 2023	$	2,138,671
Ending balance as of December 31, 2023				$	436,408

Activity related to the warrant derivative liabilities for the ~~three~~nine months ended ~~June 30,~~December 31, 2022 was as follows:

Beginning balance as of March 31, 2022 $ 4,318,630
Issuances of warrants – derivative liabilities -
Warrants exchanged for common stock -
Change in fair value of warrant derivative liabilities (393,532 )
Ending balance as of June 30, 2022 $ 3,925,098

Beginning balance as of March 31, 2022	$	4,318,630
Issuances of warrants – derivative liabilities		-
Warrants exchanged for common stock		-
Change in fair value of warrant derivative liabilities		(4,274,183	)
Ending balance as of December 31, 2022	$	44,447

~~15.~~ 13. LONG-TERM DEBT

Long-term debt included in continuing operations consisted of the following as of ~~June 30,~~December 31, 2023 and March 31, ~~2023. All debt instruments repaid during~~2023:

Schedule of long-term debt
	December 31, 2023			March 31, 2023

Credit facility -Trend Discovery SPV 1, LLC	$	291,036		$	291,036
Auto loan		155,160			170,222
Total long-term debt		446,196			461,258
Less: current portion		(313,860	)		(311,542	)
Long-term debt, net of current portion	$	132,336		$	149,716

On December 28, 2018, the Company entered into a $10,000,000 credit facility that includes a loan and security agreement where the lender agreed to make one or more loans to the Company, and the Company may make a request for a loan or loans from the lender, subject to the terms and conditions. The Company is required to pay interest biannually on the outstanding principal amount of each loan calculated at an annual rate of 12%. The loans are evidenced by demand notes executed by the Company. The Company is able to request draws from the lender up to $1,000,000 with a cap of $10,000,000. In the year ended March 31, 2022, the Company borrowed $595,855, which included $25,855 in commitment fees, with the balance of $570,000 being disbursed directly to the Company. Interest incurred for the nine months ended December 31, 2023 ~~are not included in the below chart~~was $26,313 and ~~the chart only reflects those instruments that had a balance owed~~total accrued as of ~~these dates.~~ December 31, 2023 was $88,035. With the sale of Trend Holdings, the Company can no longer access this line of credit.

June 30,
2023 March 31,
2023

Credit facility -Trend Discovery SPV 1, LLC (a) $ 291,036 $ 291,036
Auto loan – Ford (b) 65,111 68,114
Auto loan – Cadillac (c) 165,406 170,222
Total long-term debt 521,553 529,372
Less: current portion (324,737 ) (323,818 )
Long-term debt, net of current portion $ 196,816 $ 205,554

~~(a)~~16

On December 28, 2018, the Company entered into a $10,000,000 credit facility that includes a loan and security agreement where the lender agreed to make one or more loans to the Company, and the Company may make a request for a loan or loans from the lender, subject to the terms and conditions. The Company is required to pay interest biannually on the outstanding principal amount of each loan calculated at an annual rate of 12%. The loans are evidenced by demand notes executed by the Company. The Company is able to request draws from the lender up to $1,000,000 with a cap of $10,000,000. In the year ended March 31, 2022, the Company borrowed $595,855, which includes $25,855 in commitment fees, with the balance of $570,000 being deposited directly into the Company. Interest incurred for the three months ended June 30, 2023 was $8,707 and accrued as of June 30, 2023 was $70,429. With the sale of Trend Holdings, we can no longer access this line of credit.

~~(b)~~

On February 16, 2022, the Company entered into a long-term secured note payable for $80,324 for a service truck maturing February 13, 2028. The note is secured by the collateral purchased and accrues interest annually at 5.79% with principal and interest payments due monthly. There is no accrued interest as of June 30, 2023.

~~(c)~~

~~On March 6, 2023 in the acquisition of BNC, the Company assumed an auto loan for a Cadillac in the amount of $170,222. The loan bears interest at 14.18% and matures December 2028.~~

On February 16, 2022, Agora entered into a long-term secured note payable for $80,324 for a service truck maturing February 13, 2028. The note is secured by the collateral purchased and accrues interest annually at 5.79% with principal and interest payments due monthly. In December 2023, the ownership of the service truck was transferred to a former employee in exchange the former employee assumed the outstanding balance related to this loan due to the bankruptcy filing. There was no gain or loss recognized on the transfer and there is no accrued interest in discontinued operations as of December 31, 2023.

The following is a list of maturities by fiscal year as of ~~June 30:~~December 31, 2023:

2024	$	324,737
Schedule of maturities
Remaining 2024			$	296,441
2025		37,719		23,662
2026		42,277		27,303
2027		47,464		31,505
2028		48,349		36,354
Thereafter		21,007		30,931
	$	521,553	$	446,196

Interest expense on long-term debt during the three and nine months ended ~~June 30,~~December 31, 2023 was $5,704and $17,713, respectively. Interest expense on long-term debt during the three and nine months ended December 31, 2022 ~~were $15,793~~was $9,461 and ~~$11,754,~~$50,888, respectively.

~~16.~~ 14. NOTES PAYABLE

Related Parties

~~AAI~~Ault Alliance Inc. (“AAI”) advanced the Company ~~$781,898~~$3,805,088 and $11,315,608, net of repayments of $383,885 and $2,683,627 during the three and nine months ended ~~June 30, 2023.~~December 31, 2023, respectively. The advances were used for working capital purposes, were unsecured, interest-free and ~~had~~have no fixed terms of ~~repayment~~repayment.

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

Related Party Advances

During the quarter ended December 31, 2023, an officer of AAI and current Company board member advanced the Company $90,000. The advance has no interest, unless it goes into default, and includes an original issue discount of $10,000. The advance was due and payable on the maturity date of January 19, 2024. As of the maturity date we had made payments of $60,000 and therefore the principal balance outstanding is now in default and accruing interest at 18% per annum. The advance was used for working capital purposes and recorded as a related party advance.

Term Note Agreements

On November 8, 2023, the Company entered into a term note agreement for a principal amount of $660,000 with an institutional investor. After accounting for an original issue discount of $60,000, the Company received proceeds of $600,000. Amortization of the original issue discount related to the note for the three and nine months ended December 31, 2023 was $53,000. Accrued interest related to the note for the three and nine months ended December 31, 2023 was $9,584. The note has a maturity date of January 7, 2024 and accrues interest at a rate of 10% per annum. The Company did not made repayments on the note as of ~~June 30, 2023.~~December 31, 2023 or January 7, 2024, which is now in default.

On October 16, 2023, the Company entered into a term note agreement for a principal amount of $210,000 with an institutional investor. After accounting for an original issue discount of $10,000, the Company received proceeds of $200,000. Amortization of the original issue discount related to the note for the three and nine months ended December 31, 2023 was $10,000. Accrued interest related to the note for the three and nine months ended December 31, 2023 was $6,835. The note had a maturity date of November 16, 2023 and an interest at a rate of 10% per annum. The Company did not made repayments on the note as of December 31, 2023, which is now in default and accumulating interest at 18% per annum.

Convertible Notes

On April 27, 2023, the Company sold ~~$6.875~~$6.875 million of principal face amount senior secured convertible notes with an original issue discount to sophisticated investors for gross proceeds to the Company of ~~$5.5~~$5.4 million. The notes mature on April 27, 2024 and are secured by all of the assets of the Company and certain of its subsidiaries, including BNC. There is no interest on the convertible notes unless there is an event of default. The notes are convertible into shares of common stock at ~~$3.28,~~$3.28, however there is a rachet provision in the convertible note that enables the holders of the notes to receive a lower conversion rate upon future issuances by the Company that fall below the ~~$3.28~~$3.28 price. The conversion option meets the criteria of a derivative instrument, and the convertible note has been discounted ~~$5,500,000~~$4,686,817 for the day one derivative liability. In addition, the Company has recorded ~~$1,375,000~~$1,375,000 in original issue discount, which is being amortized ~~over~~using the interest method ~~for~~over the term of the note. Amortization of the original issue discount related to the convertible note was ~~$241,096~~$345,628 and $932,353 for the three and nine months ended ~~June 30, 2023.~~December 31, 2023, respectively. Amortization of the conversion option and warrant derivative instruments related to the convertible note was $1,178,107 and $3,175,767 for the three and nine months ended December 31, 2023, respectively.

Beginning balance as of March 31, 2023 $ -
Issuance of convertible notes 6,875,000
Less: Original issue discount - inception (1,375,000 )
Amortization of original issue discount 241,096
Less: Debt discount – reclassification to derivative liability (5,500,000 )
Ending balance as of June 30, 2023 $ 241,096

Schedule of amortization of discount related to the convertible note
Beginning balance as of March 31, 2023	$	-
Issuance of convertible notes		6,875,000
Less: original issue discount – inception		(1,375,000	)
Amortization of discounts		4,108,120
Principal converted to common stock and gain on conversion		(361,683	)
Less: debt discount – reclassification to derivative liability ^(*)		(4,686,818	)
Ending balance as of December 31, 2023	$	4,559,619

(*)

This amount also includes discount related to the warrants issued with the convertible note (see note 12).

Activity related to the convertible note derivative liabilities for the ~~three~~nine months ended ~~June 30,~~December 31, 2023 iswas as follows:

Beginning balance as of March 31, 2023 $ -
Issuances of convertible note – derivative liabilities 1,352,322
Change in fair value of convertible note derivative liabilities (1,029,237 )
Ending balance as of June 30, 2023 $ 323,085

Schedule of convertible note derivative liabilities
Beginning balance as of March 31, 2023	$	-
Issuances of convertible note – derivative liabilities		1,352,322
Change in fair value of convertible note derivative liabilities		(597,714	)
Ending balance as of December 31, 2023	$	754,608

~~17.~~ 15. PREFERRED STOCK

~~BitNile Metaverse Series A~~Preferred Stock Derivative Liability

~~On June 8, 2022, the~~RiskOn International Series A

The Company entered into a Securities Purchase Agreement (the “Series A Agreement”) with Ault Lending ~~LLC (formerly Digital Power Lending, LLC), a California limited liability company (the “Purchaser”),~~on June 8, 2022, and as amended November 28, 2022, pursuant to which the Company sold ~~the Purchaser~~ Ault Lending 1,200 shares of Series A Convertible Redeemable Preferred Stock (the ~~“BitNile Metaverse Series~~“Series A”), 3,429 shares of common stock ~~(the “Commitment Shares”)~~ and a warrant to purchase shares of common stock (the “Warrant,” ~~and together with the BitNile Metaverse Series A and the Commitment Shares, the “Securities”~~) ~~for a total original purchase price of $12,000,000.~~. The ~~Purchaser is a subsidiary of AAI. The Company determined that the classification of the BitNile Metaverse Series A~~Warrant was ~~mezzanine equity as the option to convert the shares belongs to the Purchaser. A description of the material transaction components are as follows:~~cancelled on November 14, 2022.

~~Conversion Rights~~

~~Prior~~The amendment to the November 2022 amendment described below, each share of BitNile Metaverse Series A had a stated value of $10,000 and was convertible into shares of common stock at a conversion price of $63.00 per share, subject to customary adjustment provisions. The holder’s conversion of the BitNile Metaverse Series A was subject to a beneficial ownership limitation of 19.9% of the issued and outstanding common stock as of any conversion date of the BitNile Metaverse Series A, unless and until the Company obtains stockholder and The Nasdaq Stock Market (“Nasdaq”) approval for the conversion of more than that amount, in order to comply with Nasdaq Rules. Stockholder approval was obtained on September 9, 2022. In addition, the conversion rights in general did not become effective until July 23, 2022, which is one day after the record date for the stockholders meeting seeking such stockholder approval at the September 9, 2022 meeting. The shares of BitNile Metaverse Series A as amended are also subject to a 4.99% beneficial ownership limitation, which may be increased to up to 9.9% by the holder by giving 61 days’ notice to the Company.

~~On November 28, 2022, the Company, following an agreement with the Purchaser, the Company amended~~ the Certificate of ~~Designations~~Designation of Rights, Preferences and Limitations ~~(the “Certificate”)~~ of the ~~BitNile Metaverse~~ Series A previously issued to the Purchaser to: (i) increase the stated value of the BitNile Metaverse Series A from $10,000 to $10,833.33; (ii) provide for the dividends payable under the BitNile Metaverse Series A to be payable in common stock rather than cash effective November 1, 2022, and (iii) reduce the conversion price of the BitNile Metaverse Series A from $63.00 to the lesser of (a) $30.00 or (b) the higher of (1) 80% of the 10-day daily volume weighted average price, or (2) $7.50. The amendment on November 28, 2022 constituted a modification ~~to the classification of the BitNile Metaverse Series A~~ from mezzanine equity to ~~liability. The Company determined in accordance with ASC 470-50-40, that the amendment would be accounted for as~~liability and was considered a debt ~~modification as opposed to a debt extinguishment as~~modification. Upon the amendment did not meet the 10% threshold when comparing the present value of the remaining cash flows to the value to the original terms of the BitNile Metaverse Series A. As a result of this modification, the Company recognized a debt modification expense of $879,368. Upon reclassification to preferred stock liability and analysis of terms, the Company ~~analyzed the terms and determined that~~deemed the preferred stock liability ~~was considered a derivative liability and measured the derivative liability at inception (November 28, 2022). This measurement resulted in a gain of $2,878,345.~~

~~As described in Note 19~~ “Commitments and Contingencies”, Nasdaq is alleging that the November 2022 amendment to the Series A violated its voting and stockholder approval requirements, and has also done so with regard to the recent BNC transaction, although the Company plans to seek stockholder approval for both transactions subject to Nasdaq approval therefore and make any modifications Nasdaq requires.

Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of the preferred stock liability is estimated using the Black-Scholes valuation model. The following assumptions were used for the three months ended June 30, 2023 and year ended March 31, 2023:

	June 30, 2023	March 31, 2023
~~Expected term~~	~~1.66 – 2.00 years~~	~~1.66 – 2.00 years~~
~~Expected volatility~~	~~108 – 110%~~	~~108 – 110%~~
~~Expected dividend yield~~	-	-
~~Risk-free interest rate~~	~~3.48 – 3.88%~~	~~3.48 – 3.88%~~
~~Market price~~	~~$1.15 – $22.80~~	~~$3.60 – $22.80~~

~~Negative Covenants and Approval Rights~~

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

~~(i)~~

~~payment or declaration of any dividend (other than pursuant to the BitNile Metaverse Series A Certificate);~~

~~(ii)~~

~~investment in, purchase or acquisition of any assets or capital stock of any entity for an amount that exceeds $100,000 in any one transaction or $250,000, in the aggregate;~~

~~(iii)~~

~~issuance of any shares of common stock or other securities convertible into or exercisable or exchangeable for shares of common stock;~~

~~(iv)~~

~~incurrence of indebtedness, liens, or guaranty obligations, in an aggregate amount in excess of $50,000 in any individual transaction or $100,000 in the aggregate with customary exceptions.~~

~~(v)~~

~~sale, lease, transfer or disposal of any of its properties having a value calculated in accordance with GAAP of more than $50,000;~~

~~(vi)~~

~~increase in any manner the compensation or fringe benefits of any of its directors, officers, employees; and~~

(~~vii~~)

~~merger or consolidation with, or purchase a substantial portion of the assets of, or by any other manner the acquisition or combination with any business or entity.~~

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

~~Warrant~~

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

On November 14, 2022, the Company and the Warrant holder canceled the warrant which was originally issued to the holder on June 8, 2022, as subsequently amended and restated, in exchange for $100 as the Company has substantially met the conditions under Section 1(a) of the Warrant, therefore, the Company did not compute any derivative liability on the warrants.

~~Registration Rights~~

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

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

~~Preferred Stock Derivative Liability~~

~~BitNile Metaverse Series A~~

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

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

The derivative liability for the ~~BitNile Metaverse~~ Series A was remeasured at ~~June 30,~~December 31, 2023 and iswas valued at ~~$169,323,~~$6,961, resulting in a gain of ~~$1,490,879~~$48,454 and $1,653,241 in the change in fair ~~value.~~value for the three and nine months ended December 31, 2023, respectively. Additionally, at December 31, 2023, Ault Lending redeemed 179.1 shares of Series A, which resulted in a gain on conversion of the derivative liability of $1,413.

In addition, ~~during March 2023~~ the Company advanced ~~$635,000~~$100,000 and ~~$1,205,000~~$1,305,000 during the three and nine months ended ~~June 30,~~December 31, 2023, respectively, to a third-party related to an obligation by ~~the BitNile Metaverse Series A shareholder~~Ault Lending and this amount ~~will be~~has been reflected as a redemption upon the dividend ~~that will be~~ paid to ~~the Company’s shareholders of record~~Ault Lending as of ~~September 30, 2022 for~~December 31, 2023. In addition, $635,000 was advanced in the ~~WTRV and Wolf Energy Services Corp. divestitures.~~year ended March 31, 2023 which was reclassified to advances from AAI, the former parent of BNC.

Activity related to the preferred stock derivative liabilities for the ~~three~~nine months ended ~~June 30,~~December 31, 2023 iswas as follows:

Schedule of activity related to the preferred stock derivative liabilities
Beginning balance as of March 31, 2023	$	1,025,202		$	1,025,202
Advances to third-party that will be considered redemption of Series A		(1,205,000	)
Reclassification – advances former parent of BitNile.com, Inc.					1,940,000
Redemption of Series A					(1,305,000	)
Change in fair value of preferred stock derivative liabilities		(1,490,879	)		(1,653,241	)
Ending balance as of June 30, 2023	$	(1,670,677	)
Gain on conversion of derivative liability					(1,413	)
Ending balance as of December 31, 2023				$	5,548

~~BitNile Metaverse~~The Company has accrued $56,669, in dividend payable on the Series ~~B and C~~A preferred stock for the three months ended December 31, 2023.

On ~~February 8,~~April 4, 2023, the Company entered into ~~the SEA by~~an agreement with Ault Lending and among AAI, a significant shareholder, the owner of approximately 86% of BNC, and the Minority Stockholders. The SEA provided that, subject to the terms and conditions set forth therein, the Company was to acquire the assets and assume the liabilities of BNC as well as the common stock of Earnity, Inc. beneficially owned by BNC (which represents approximately 19.9% of the outstanding common stock of Earnity, Inc. as of the date of the SEA) which has no value, in exchange for the following: (i) 8,637.5 shares of Series B, and (ii) 1,362.5 shares of Series C. The Preferred Stock, the terms of which are summarized in more detail below, have a combined Stated Value of $100,000,000, and subject to adjustment are, subject to Nasdaq and shareholder approval, convertible into a total of up to 13,333,333 shares of the Company’s common stock, which represent approximately 92.4% of the Company’s outstanding common stock on a fully diluted basis. The Company has independently valued the Preferred Stock as of the date of acquisition. The combined value of the Preferred Stock issued to AAI was $53,913,000 using a blended fair value of the discounted cash flow method and option pricing method.

The terms of the Preferred Stock as set forth in the Certificates of Designations of the Rights, Preferences and Limitations of each such series of Preferred Stock (each, a “Certificate,” and together the “Certificates”) are essentially identical except the Series B is super voting and must approve any modification of various negative covenants and certain other corporate actions as more particularly described below.

Pursuant to the Series B Certificate, each share of Series B is convertible into a number of shares of the Company’s common stock determined by dividing the Stated Value by $7.50, or 1,333 shares of common stock. The conversion price is subject to certain adjustments, including potential downward adjustment if the Company closes a qualified financing resulting in at least $25,000,000 in gross proceeds at a price per share that is lower than the conversion price. The Series B holders are entitled to receive dividends at a rate of 5% of the Stated Value per annum from issuance until February 7, 2033 (the “Dividend Term”). During the first two years of the Dividend Term, dividends will be payable in additional shares of Series B rather than cash, and thereafter dividends will be payable in either additional shares of Series B or cash as each holder may elect. If the Company fails to make a dividend payment as required by the Series B Certificate, the dividend rate will be increased to 12% for as long as such default remains ongoing and uncured. Each share of Series B also has an $11,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of the Company, and ranks senior to all other capital stock of the Company with respect thereto other than the Series C with which the Series B shares equal ranking. Each share of Series B is entitled to vote with the Company’s common stock at a rate of 300 votes per share of common stock into which the Series B is convertible.

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

~~The terms, rights, preferences and limitations of the Series Care~~substantially the same as those of the Series B, except that the Series B holds negative covenant and consent rights, and Series C holders vote with the Company’s common stock on an as-converted basis. The Company is required to maintain a reserve of authorized and unissued shares of common stock equal to 200% of the shares of common stock issuable upon conversion of the Preferred Stock, which is initially 26,666,667 shares.

Pending stockholder approval of the transaction, the Preferred Stock combined are subject to a 19.9% beneficial ownership limitation. That limitation includes shares of Series A issued to AAI on June 8, 2022 and any common stock held by AAI. Certain other rights are subject to stockholder approval as described below. The SEA provides that the Company will seek stockholder approval following the closing. The entire transaction is subject to compliance with Nasdaq Rules and the Certificates each contain a savings clause that nothing shall violate such Rules. Nasdaq may nonetheless disregard the savings clause.

Under the SEA, effective at the closing AAI is entitled to appoint three of the Company’s directors, and following receipt of approval from the Company’s stockholders, a majority of the Company’s directors. The SEA also provides the holders of Preferred Stock with most favored nations rights in the event the Company offers securities with more favorable terms than the Preferred Stock for as long as the Preferred Stock remains outstanding. Under the SEA, while any Preferred Stock is outstanding, the Company is prohibited from redeeming or declaring or paying dividends on outstanding securities other than the Preferred Stock. Further, the SEA prohibits the Company from issuing or amending securities at a price per share below the conversion price of the Preferred Stock, or to engage in variable rate transactions, for a period of 12 months following the closing.

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

~~In connection with the SEA, the Company also entered into a Registration Rights Agreement with AAI and the Minority Shareholders~~ pursuant to which the Company agreed to ~~file~~advance to WTRV payments of up to $3.25 million (the “Amounts”), and WTRV agreed to accept the Amounts as payment of Ault Lending’s $3.25 million payable to WTRV. The parties agreed that the Amounts will be treated as a ~~registration statement on Form S-3 or Form S-1 with~~credit to the ~~SEC registering~~sums owed to WTRV, and the ~~resale~~Company and Ault Lending agreed that in lieu of repayment of the Amounts advanced to WTRV, Ault Lending will permit the Company to redeem shares of the RiskOn International Series A held by Ault by dividing the Amounts by the ~~holders~~stated value of ~~the Preferred Stock and/~~such shares, or ~~the~~one share of RiskOn International Series A for each $10,833 advanced to WTRV. As of December 31, 2023, Ault Lending had redeemed $1,940,000 of advances for approximately 179 shares of ~~common stock issuable upon conversion of the Preferred Stock, to be initially filed within 15 days of the closing,~~Series A.

RiskOn International Series B and ~~to use its best efforts to cause such registration statement to be declared effective by the SEC within 45 days thereafter, subject to certain exceptions and limitations.~~C

The ~~SEA contains certain representations~~Company entered into a share exchange agreement with AAI on February 8, 2023 and ~~warranties made~~subsequently closed the transaction on March 7, 2023, in which the Company acquired the assets and liabilities of BNC and securities of Earnity beneficially owned by ~~each~~BNC in exchange of the ~~Company, AAI~~issuance of 8,637.5 shares of Series B preferred stock (“Series B”) and ~~the Minority Shareholders. Upon the closing,~~1,362.5 shares of Series C preferred stock (“Series C”), both of which isare convertible into common stock subject to the ~~closing~~terms of their respective Certificate of Designation of Rights, Preference and Limitations (collectively, “Certificates”). Additionally, pursuant to the terms and conditions of the Certificates, Series B and Series C holders are entitled to receive dividends in the form of additional shares or cash following the dividend payment set forth in the ~~SEA, including among other conditions the parties obtaining a fairness opinion from a national independent valuation firm~~Certificates. As of December 31, 2023, there were 8,883.4 shares of Series B and ~~satisfactory completion~~1,401.3 shares of ~~due diligence by each~~Series C issued and outstanding. As of March 31, 2023, the Company had 8,637.5and ~~AAI, BNC will continue as a wholly owned subsidiary~~1,362.5 shares of ~~the Company. BNC’s principal business entails the development~~Series B and ~~operation of a metaverse platform, the beta for which launched on March 1, 2023. This transaction closed on March 7, 2023.~~Series C, respectively, issued and outstanding.

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

~~The derivative liability for the preferred stock Preferred Stock was remeasured~~$42,426,069 at June 30, 2023 and is valued at $2,427,669 resulting in a gain of $16,403,090 in the change in fair value for the three months ended June 30, 2023. The Company has accrued $1,597,222 in dividends on the Series B and C Preferred stock as of June 30, 2023.inception.

Activity related to the preferred stock derivative liabilities for the ~~Preferred Stock~~Series B and Series C for the ~~three~~nine months ended ~~June 30,~~December 31, 2023 iswas as follows:

Schedule of activity related to the preferred stock derivative liabilities
Beginning balance as of March 31, 2023	$	18,830,760		$	18,830,760
Change in fair value of preferred stock derivative liabilities		(16,403,090	)		(18,642,362	)
Ending balance as of June 30, 2023	$	2,427,670
Ending balance as of December 31, 2023				$	188,398

The Company has accrued $1,285,591 in dividend payable on the Series B and Series C as of December 31, 2023.

The fair value of the Series A, Series B and Series C liability is estimated using the Black-Scholes valuation model. Changes to the inputs could produce a significantly higher or lower fair value measurement. The following assumptions were used on December 31, 2023 and March 31, 2023:

Schedule of preferred stock liability is estimated using the black scholes valuation model
	December 31, 2023	March 31, 2023
Expected term	1.66 – 2.00 years	1.66 – 2.00 years
Expected volatility	108 – 138%	108 – 110%
Expected dividend yield	-	-
Risk-free interest rate	3.48 – 4.88%	3.48 – 3.88%
Market price	$1.15 – $22.80	$3.60 – $22.80

RiskOn International Series D

On ~~April 4,~~November 14, 2023, the Company entered into ~~an agreement~~the SPA with ~~Ault Lending, LLC (“Ault”) and WTRV~~AAI, pursuant to which the Company agreed to ~~advance~~sell to ~~WTRV payments~~AAI 603.44 shares of ~~up to $3.25 million (the “Amounts”), and WTRV agreed to accept~~Series D for a total purchase price of $15,085,931. This transaction closed on November 15, 2023. The purchase price was paid by the ~~Amounts as payment~~cancellation of ~~Ault’s $3.25 million payable to WTRV from Ault’s exercise~~$15,085,931 of participation rights in oil and gas exploration and drilling ventures which WTRV granted Ault in connection with its acquisition of White River Holdings Corp. in July 2022. The parties agreed that the Amounts will be treated as a creditcash advances made by AAI to the ~~sums owed to WTRV,~~Company between January 1, 2023 and ~~the Company and Ault agreed that in lieu~~November 9, 2023. Each share of ~~repayment~~Series D has a stated value of ~~the Amounts advanced to WTRV, Ault will permit the Company to redeem~~$25,000 per share. Each share of Series D is convertible into a number of shares of the Company’s ~~Series A Convertible Redeemable Preferred Stock (the “Series A”) held by Ault~~common stock determined by dividing the ~~Amounts~~Stated Value by the ~~stated value~~Conversion Price. The Conversion Price is subject to adjustment in the event of ~~such shares, or one share of Series A for each $10,833.33 advanced to WTRV. The redemption cannot occur until the previously announced spin-offs by the Company of shares~~an issuance of common stock at a price per share lower than the Conversion Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. As the Conversion Price represents a premium to the closing price of ~~WTRV and Wolf Energy Services Inc. occur which would permit Ault~~the common stock on the date of execution of the Agreement, the conversion of the Series D is not subject to ~~receive its full dividends thereunder.~~

~~18. STOCKHOLDERS’ DEFICIT~~

~~BitNile Metaverse Preferred Stock~~limitations on conversion.

As ~~of March 31, 2022, there were~~ no ~~shares of any series of preferred stock issued~~Series D is not mandatorily redeemable and ~~outstanding. On June 8, 2022, as noted in Note 17, “Preferred Stock”,~~has no embedded features requiring bifurcation, the Company determined that the Series D should be classified as equity in accordance with ASC 480 and ASC 815 as of November 14, 2023, the date of inception. As a result of this classification, the Company determined that the fair value of the Series D was $15,085,931 at inception.

The Company issued ~~1,200 shares of~~$192,765 in paid-in-kind dividends on the Series D during the three and nine months ended December 31, 2023.

For the three and nine months ended December 31, 2023, the Company recorded $1,589,046 and $4,739,726, respectively, in dividend expense related to Series A, Series B and ~~as of June 30, 2023 and March 31, 2023, there are 882 shares of preferred stock issued and outstanding.~~

Series C. As of ~~June 30, 2023 and March~~December 31, 2023, the Company has ~~issued Series B and Series C as noted~~a total of $1,342,259 in ~~Note 17 and has 8,637.5 and 1,362.5 shares of Series B and C, respectively, outstanding, which were issued March 7, 2023.~~accrued dividends.

16. SHAREHOLDERS’ DEFICIT

~~BitNile Metaverse~~ Common Stock

~~The Company is authorized to issue 3,333,333 shares of common stock, par value $0.001 which followed stockholder approval on September 9, 2022.~~ On May 4, 2023, the Company amended its Articles of Incorporation to reflect a 1-for-30 reverse stock split. The Company also reduced its authorized shares on a 1-for-30 basis going from 100,000,000 authorized shares down to 3,333,333 authorized shares. ~~All share and per share figures are reflected on a post-split basis herein.~~

~~In the three months ended June 30, 2022,~~On October 16, 2023, the Company ~~issued 3,429~~amended its Articles of Incorporation to increase its authorized shares of common stock ~~which were the commitment shares in the AAI transaction as discussed in Note 17.~~

~~On January 24, 2023, the Company entered into an At-The-Market (“ATM”) Issuance Sales Agreement (the “Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”), pursuant~~from 3,333,333 to which the Company may issue and sell from time to time, through Ascendiant, shares of the Company’s common stock, par value $0.001 per share (the “Shares”), with offering proceeds of up to $3,500,000. The ATM was terminated on June 16, 2023 after having raised approximately $3,500,000.500,000,000 shares.

As of ~~June 30,~~December 31, 2023, there were 163,393 unsold shares of the Company’s common stock ~~being~~ held by a custodian in an account owned by the Company which had not been sold during the ATM offering. It is the Company’s policy not to consider or classify these shares as issued or outstanding as weit continues to own and control these shares.

~~Sales~~On October 19, 2023, the registration statement registering the shares of common stock issuable upon conversion of the ~~Shares, if any, may be made~~senior secured convertible notes issued in April 2023 was declared effective by ~~any method permitted by law deemed to be~~the SEC. As of December 31, 2023, the Company received conversion notices converting an ~~“at-the-market” offering as defined in Rule 415~~aggregate of $359,121 of the ~~Securities Act~~senior secured convertible notes and subsequently issued an aggregate of ~~1933 (the “Securities Act”), including without limitation sales made directly on or through The Nasdaq Capital Market, the trading market for the Company’s~~693,769 shares of common stock, on any other existing trading market in the United States for the Company’s common stock, to or through a market maker, directly to Ascendiant as principal for its account in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, in privately negotiated transactions, in block trades, or through a combination of any such methods of sale. Ascendiant will use commercially reasonable efforts to sell on the Company’s behalf all of the Shares requested to be sold by the Company, consistent with its normal trading and sales practices, subject to the terms of the Agreement. Under the Agreement, Ascendiant will be entitled to compensation of 3% of the gross proceeds from the sales of the Shares sold under the Agreement. The Company also agreed to reimburse Ascendiant for certain specified expenses, including the fees and disbursements of its legal counsel, in an amount not to exceed $30,000 as well as up to $2,500 for each quarterly and annual bring-down while the Agreement is ongoing.stock.

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

In the three and nine months ended ~~June 30,~~December 31, 2023, the Company issued ~~40,022~~73,361 and 113,383 shares of common stock, respectively, for payment of a preferred stock ~~dividend~~dividends of ~~$300,158~~$550,232 and ~~935,452~~$850,390, respectively. During the nine months ended December 31, 2023, the Company issued 916,976 shares of common stock from the ATM, for which it received $1,655,335.

ELOC

On August 24, 2023, the Company entered into a purchase agreement (the “ELOC Purchase Agreement”) with Arena Business Solutions Global SPC II Ltd on behalf of and for the account of Segregated Portfolio #3 – SPC #3 (“Arena”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right to direct Arena to purchase up to an aggregate of $100,000,000 of shares of common stock over the 36-month term of the ELOC Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of a registration statement, the Company has the right to present Arena with an advance notice (each, an “Advance Notice”) directing Arena to purchase any amount up to the Maximum Advance Amount (as defined in the ~~ATM which we received $1,780,440.~~ELOC Purchase Agreement). On October 30, 2023, a registration statement related to the ELOC Purchase Agreement was declared effective by the SEC.

As of ~~June 30, 2023 and March~~December 31, 2023, ~~2,359,306~~the Company issued and ~~1,383,832~~sold an aggregate of 6,974,156 shares of common stock ~~were~~from the ELOC, for total gross proceeds of $1,064,896, and the Company also issued ~~and outstanding, respectively.~~634,152 shares of common stock to Arena as consideration for its irrevocable commitment to purchase shares of common stock at the Company’s sole discretion, which equated to a value of $385,133.

Agora Common Stock

~~Agora is authorized to issue 250,000,000 shares of common stock, par value $0.001. On September 22, 2021, the~~The Company purchased ~~100~~41,671,221 shares of Agora ~~for $10.~~

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

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

~~On August 7, 2022, Agora issued 400,000~~ shares of common stock to its management, non-employee directors, employees and ~~advisors. After issuance of these shares,~~advisors, as result the Company was issued 5,000,000 restricted common stock and the Company controlled approximately 89% of Agora.

The restricted shares of common stock consists of 2,833,336 shares of restricted stock are considered service grants and 2,166,664 are considered performance grants. The future ~~stock-based~~share-based compensation related to ~~these~~the 4,600,000 shares issued in 2021 will be measured consists of $12,166,680 over a three-year period in service-based grants and $10,833,320 in performance-based grants for a total of $23,000,000. The future share-based compensation related to the 400,000 shares issued in 2022 that will be measured consists of $2,000,000 ranging from immediate vesting through the three-year anniversary in service-based grants. These restricted common shares were measured pursuant to ASC 718-10-50 at an estimated value per share of ~~$5.00~~$5.00 and consist of both service-based ~~criteria only.~~

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

The performance grants vest ~~as follows: 1,083,332 restricted common shares~~ upon ~~Agora deploying a 20 MW power contract in Texas;~~deployment of certain contracts and ~~1,083,332 restricted common shares upon the Company deploying a 40 MW power contract in Texas. As of December 31, 2022, none~~approval of the performance criteria are probable as no contracts have been signed as the proper funding has not been secured, therefore no compensation expense is recognized in accordance with ASC 718-10-25-20 related to the performance grants.board of directors. On April 12, 2022, Agora upon board of director approval accelerated the vesting of ~~250,000~~a total of 500,000 restricted shares for deploying ~~a 20 MW~~two power ~~contract in Texas; and 250,000 restricted shares for deploying a 40 MW power contract~~contracts in Texas with Agora’s former Chief Financial Officer. All remaining 1,666,664 performance grants remain unvested.

~~The~~Within discontinued operations, the Company recognized ~~$630,206~~$0 and ~~$5,215,287~~$2,610,174 in ~~stock-based~~Agora share-based compensation for the three and nine months ended ~~June 30,~~December 31, 2023, respectively. The Company recognized $791,491and $8,963,700 in share-based compensation for the three and nine months ended December 31, 2022, respectively. The unrecognized ~~stock-based~~share-based compensation expense as of ~~June 30,~~December 31, 2023 is ~~$8,333,320~~$8,333,320 in performance based grants and ~~$1,721,312~~$0 in service based ~~grants~~grants. It is very unlikely that the criteria established for ~~a total of $10,054,632.~~

~~The Company accounts for stock-based payments in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). During~~ the year ended March 31, 2022, in addition to the value measured by the 4,600,000 restricted stock grants, stock-based compensation consists primarily of restricted stock units granted to a Company employee while employed by the Company. The Company measures compensation expense for restricted stock units based on the fair valuerecognition of the ~~award on the date~~performance grants will ever be satisfied. As Agora filed for Chapter 7 bankruptcy in November of ~~grant. The grant date fair value is based on the closing market price of the Company’s common stock on the date of grant.~~2023 and ceased operations, there will be no future expense recognized.

Share-based Compensation Expense

Share-based compensation for employees is included in salaries and salary related costs and directors and services are included in professional fees and consulting in the condensed consolidated statement of operations for the three and nine months ended ~~June 30,~~December 31, 2023 and 2022.

Share-based compensation for the three and nine months ended ~~June 30,~~December 31, 2023 for stock options and restricted stock units granted under the 2013 Incentive Stock Plan and 2017 Omnibus Incentive Stock Plan and non-qualified stock options were $0 and $8,810, respectively. Share-based compensation for the three and nine months ended December 31, 2022 for stock options and restricted stock units granted under the 2013 Incentive Stock Plan and 2017 Omnibus Incentive Stock Plan and non-qualified stock options were ~~$258,655~~$470,687 and ~~$182,561,~~$1,711,466, respectively.

~~There is $438,231~~The Company accrued $535,731 in share-based compensation ~~accrued~~expense as of ~~June 30, 2023 for BitNile Metaverse and $237,499 accrued in Agora for a total of $675,730.~~December 31, 2023.

17. 20

~~19.~~ COMMITMENTS AND CONTINGENCIES

GuyCare Operating Lease

During the three months ended December 31, 2023, the Company entered into a non-cancellable lease agreement with a three and one-half year term. The lease commenced on December 1, 2023. The discount rate used for the lease was the Company’s incremental borrowing rate of 10.0%, as an implicit rate was not readily determinable in the lease. The Company recorded $270,007 in right of use operating lease assets and right of use operating lease liabilities as a result of this transaction.

The Company reported $264,519 of right of use assets, $16,765 of right of use current liabilities and $219,492 right of use non-current liabilities as of December 31, 2023, as compared to $0 of right of use assets, right of use current and non-current liabilities as March 31, 2023. The expense for this operating lease for both the three and nine months ended December 31, 2023 and 2022 was $7,738 and $0, respectively, which is included in selling, general and administrative expenses in the condensed consolidated statement of operations.

Legal Proceedings

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

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On August 1, 2018, BitNile Metaverse and Zest Labs filed a complaint against Walmart Inc. in the United States District Court for the Eastern District of Arkansas, Western Division. The complaint includes claims for violation of the Arkansas Trade Secrets Act, violation of the Federal Defend Trade Secrets Act, breach of contract, unfair competition, unjust enrichment, breach of the covenant of good faith and fair dealing, conversion and fraud. On April 9, 2021, a Little Rock, Arkansas jury awarded BitNile Metaverse and Zest Labs a total of $115 million in damages (subsequently reduced to $110 million) which includes $65 million in compensatory damages (subsequently reduced to $60 million) and $50 million in punitive damages and found Walmart Inc. liable on three claims. The federal jury found that Walmart Inc. misappropriated Zest Labs’ trade secrets, failed to comply with a written contract, and acted willfully and maliciously in misappropriating Zest Labs’ trade secrets. We expect Walmart to continue to vigorously defend the litigation and to oppose the verdict in post-trial motions and an appeal. BitNile Metaverse has filed post-trial motions to add an award for its attorneys’ fees as the prevailing party in the litigation. In addition to other post-trial motions, Walmart, Inc. has filed a renewed motion for judgment as a matter of law or, in the alternative, for remittitur or a new trial. As of the date of this Report, the court has allowed post-trial discovery but has not ruled on the motion for new trial.

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On April 22, 2022, BitStream ~~Mining~~ and ~~BitNile Metaverse~~the Company were sued in Travis County, Texas District Court (Docket #79176-0002) by Print Crypto Inc. in the amount of ~~$256,733.28~~$256,733 for failure to pay for equipment purchased to operate ~~BitStream Mining’s~~BitStream’s Bitcoin mining operation. The defendants intend to vigorously defend themselves and have filed counterclaims in the 353rd Judicial District in Travis County, Texas on May 6, 2022 for fraudulent inducement, breach of contract, and for payment of attorney’s fees and costs. ~~BitNile Metaverse~~The Company provided additional documents to ~~our~~its attorneys on October 7, 2022, and there is no update since then. The Company has accrued the full amount of the claim in its condensed consolidated financial statements as of ~~June 30,~~December 31, 2023.

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On July 15, 2022, ~~BitStream Mining~~Bitstream and two of their ~~Management~~management were parties to a petition filed in Ward County District Court by 1155 Distributor Partners-Austin, LLC d/b/a Lonestar Electric Supply in the amount of ~~$414,026.83~~$414,027 for failure to pay for equipment purchased to operate ~~the Company’s~~Bitstream’s Bitcoin mining operation. The Company filed a petition to remove one of its ~~Management~~management from the claim in December 2022, and there is no update since then. The Company has accrued the full amount of the claim within liabilities in bankruptcy in its condensed consolidated ~~financial statements~~balance sheet as of ~~June 30,~~December 31, 2023.

●

On October 17, 2022, BitStream Mining was a party to a petition filed in Ward County District Court by VA Electrical Contractors, LLC in the amount of $1,666,187.18 for failure to pay for equipment purchased to operate the Company’s Bitcoin mining operation. The Company’s registered agent was served with this lawsuit on January 3, 2023, the Company answered the claim in January, and is in process of supplying documents for discovery. The Company has accrued the full amount of the claim in its consolidated financial statements as of June 30, 2023.

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

Nasdaq Compliance

On ~~December 27, 2022,~~July 18, 2023, the Company received a letter (the “Shareholder Deficiency Letter”) from the Staff of Nasdaq ~~notifying~~indicating that the ~~Company of its noncompliance with stockholder approval requirements set forth~~Company’s shareholders’ equity as reported in the 2023 Annual Report did not satisfy the continued listing requirement under Nasdaq Listing Rule ~~5635(d),~~5550(b)(1) for the Nasdaq Capital Market, which requires ~~stockholder approval for transactions, other than public offerings, involving the issuance of 20% or more of the pre-transaction shares outstanding~~that a listed company’s shareholders’ equity be at ~~less than the Minimum Price (as defined therein). Additionally, the letter indicates that the Company violated Nasdaq’s voting rights rule set forth in Listing Rule 5640. The matters described~~least $2.5 million. As reported in the ~~letter relate to an amendment to~~2023 Annual Report, the ~~Certificate~~Company’s shareholders’ equity as of ~~Designation of Rights, Preferences and Limitations (the “Certificate”~~March 31, 2023 was approximately $(13.9) of the Series A, shares of which were issued by the Company on June 8, 2022 in a private placement transaction which was previously disclosed on a Current Report on Form 8-K filed on June 9, 2022. Specifically, the Company amended the Certificate on November 28, 2022 to: (i) increase the stated value of the Series A from $10,000 to $10,833.33; (ii) provide for the dividends payable under the Series A to be payable in Common Stock rather than cash effective beginning November 1, 2022, and (iii) reduce the conversion price of the Series A from $63.00 to the lesser of (1) $30.00 and (2) the higher of (A) 80% of the 10-day daily volume weighted average price and (B) $7.50 (the “Amendment”). million.

According to the ~~letter,~~Shareholder Deficiency Letter, the Company was required to obtain stockholder approval to effect the Amendment because the Series A as amended provides for the potential issuance of 1,733,333 shares of Common Stock at less than the Minimum Price under Listing Rule 5635(d), and the Amendment also violates Listing Rule 5640 by providing the holder of the Series A with voting rights on an as-converted basis with the Series A convertible into Common Stock at a discount, thereby violating Listing Rule 5640.

~~In the letter, the Company was provided~~had 45 calendar days from the date of the ~~letter,~~Shareholder Deficiency Letter, or until ~~February 10,~~September 1, 2023, to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). In response to the ~~referenced Listing Rules,~~Shareholder Deficiency Letter received in July 2023, the Company’s submitted a compliance plan on August 25, 2023, which was subsequently amended and ~~if such plan is accepted by~~restated (collectively, the "Compliance Plans”) in September 2023 to the Staff. On December 1, 2023, Nasdaq notified the Company ~~can receive an extension of up~~that it rejected the Compliance Plans. The Company appealed the Staff’s determination to ~~180 calendar days from the date of the letter to evidence compliance. However, if~~delist the Company’s ~~plan is not accepted by Nasdaq, or is not sufficiently executed~~common stock to ~~regain compliance and remedy the matters set forth in the letter,~~a Hearings Panel (the “Panel”). The Panel will hear the Company’s ~~Common Stock~~appeal on February 29, 2024. The Panel will ~~be subject to delisting. In~~consider all violations against the Voting Rights Rule (including the incident for the Letter received in January 2024) in connection with the ~~letter the Company was also requested to furnish Nasdaq with certain documents and information related to its sale of WTRV.~~Company’s appeal.

~~In connection with the December 27~~^th ~~letter, the Company was also requested to provide certain documents and information related to its sale of WTRV, including as it pertains to the $30,000,000 in preferred stock value being carried on~~

If the Company’s balance sheet as consideration for the sale of the entity. According to the correspondence, the request was made under Listing Rule 5250 which provides that a listed company will provide Nasdaq with requested information deemed necessary to make a determination regarding such company’s continued listing.

Further, on December 30, 2022, the Company received another letter from the Nasdaq notifying the Company of its noncompliance with 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 business days and providing the Company with a 180 calendar day grace period to regain compliance with the Listing Rule 5550(a)(2), subject to a potential 180 calendar day extension, as described below. To regain compliance, the Company’s Common Stock must have a minimum closing bid price of at least $1.00 per share for at least 10 consecutive business days within the grace period which ended on June 28, 2023. 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 a reversecommon stock ~~split if necessary, which would also require stockholder approval unless completed with a proportionate reduction in our authorized Common Stock under our Articles of Incorporation.~~

On January 26, 2023, Nasdaq sent an email to the Company raising 13 questions concerning the WTRV transaction, WTRV’s business, seeking verification that the Company had in fact transferred $3 million to WTRV last July and questioning the time allocations of the two senior executive officers of the Company and WTRV, among other things. The Company responded on February 15.

~~The Company provided responses to Nasdaq on January 11, 2023, February 10, 2023 and February 15, 2023.~~

~~If our Common Stock~~ is delisted from Nasdaq, wethe Company could face significant material adverse consequences, including:

●

it may adversely affect ~~the Company’s~~its ability to raise capital which ~~it needs~~is needed to stay operational;

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a limited availability of market quotations for ~~our Common Stock;~~its common stock;

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reduced liquidity with respect to ~~our Common Stock;~~the Company’s common stock;

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a determination that ~~our shares of Common Stock are~~the Company’s common stock is a “penny stock” which will require broker-dealers trading in ~~our Common Stock~~the common stock to adhere to more stringent rules, ~~possibly~~ resulting in a reduced level of trading activity in the secondary trading market for ~~our Common Stock;~~the common stock; and

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being in default under the transaction documents entered into with the investors in the April 27, 2023 financing.

If ~~we are~~the Company is unable to rectify any of the above-described Nasdaq issues, ~~for failure to timely obtain stockholder approval,~~ a delisting ~~will~~would subject usthe Company and ~~our stockholders~~its shareholders to the above and other adverse consequences and could also delay us from effecting the announced spin-offs of common stock of WTRV and Wolf Energy certain entities as described elsewhere in this Report. See “Risk Factors” contained elsewhere in this Report.above.

On June 21, 2023, the Company received a letter from the Listing Qualifications staff of Nasdaq (the “Letter”) notifying the Company that the Staff has determined that the Company has violated Nasdaq’s voting rights rule set forth in Listing Rule 5640 (the “Voting Rights Rule”). The alleged violation of the Voting Rights Rule relates to the issuance of (i) 8,637.5 shares of the Series B, and (ii) 1,362.5 shares of the Series C in connection with the acquisition of BNC as well as the securities of Earnity, Inc. beneficially owned by BNC (collectively, the “Assets”) pursuant to the SEA by and among the Company, AAI and the minority stockholders of BNC, which was previously disclosed on Current Reports on Form 8-K filed by the Company on February 14, 2023 and March 10, 2023. The Series B and C Preferred Stock has a collective stated value of $100,000,000 (the “Stated Value”), and votes on an as-converted basis, representing approximately 92.4% of the Company’s outstanding voting power on a fully diluted basis at the time of issuance.

According to the Letter, because the Preferred Stock was not issued for cash, the Staff compared the value of the Assets to the Stated Value and determined that the value of the Assets was less than the Stated Value and that the voting rights attributable to the Series B and C Preferred Stock has the effect of disparately reducing the voting rights of the Company’s existing shareholders. The Staff looked at the total assets and stockholders’ equity of BNC as of March 5, 2023, as well as the market capitalization of AAI prior to entering into the Agreement and immediately after closing of the transaction in determining, in Staff’s opinion, the value of the Assets. The Letter did not make any reference to the projections prepared by AAI as to the future potential of the business of BNC nor to the independent valuation obtained by the Company prior to closing of the transaction, which supported the Stated Value of the Preferred Stock for the total value of the Assets, both of which the Company provided to the Staff prior to receipt of the Letter.

According to the Letter, Nasdaq determined that the voting rights of the Series B and C Preferred Stock, voting on an as-converted basis, are below the minimum price per share of the Company’s common stock at the time of the issuance of the Series B and C Preferred Stock. Additionally, Nasdaq determined that the Series B provides the holder the right to appoint a majority of the Company’s board of directors when such representation is not justified by the relative contribution of the Series B pursuant to the Agreement.

Under the Voting Rights Rule, a company cannot create a new class of security that votes at a higher rate than an existing class of securities or take any other action that has the effect of restricting or reducing the voting rights of an existing class of securities. As such, according to the Letter, the issuance of the Series B and C Preferred Stock violated the Voting Rights Rule because the holders of the Series B and C Preferred Stock are entitled to vote on an as-converted basis, thus having greater voting rights than holders of common stock, and the Series B is entitled to a disproportionate representation on the Company’s board of directors.

According to the Letter, the Company has 45 calendar days from the date of the Letter, or until August 7, 2023, to submit a plan to regain compliance with the Voting Rights Rule, and if such plan is accepted by Nasdaq, the Company can receive an extension of up to 180 calendar days from the date of the Letter to evidence compliance. However, if the Company’s plan is not accepted by Nasdaq, the Company’s common stock will be subject to delisting. The Company would have the right to appeal that decision to a hearings panel. On July 28, 2023, the Company responded and submitted a plan to regain compliance with the Voting Rights Rule.

On May 8, 2023, the Company received a letter from the Listing Qualifications staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Staff has determined to delist the Company’s common stock, par value $0.001 per share (the “Common Stock”) from The Nasdaq Capital Market, effective May 17, 2023, pursuant to Listing Rule 5810(c)(3)(A)(iii), as the Company’s common stock traded below $0.10 per share for 10 consecutive trading days.

On May 12, 2023, the Company issued a press release announcing a 1-for-30 reverse stock split of its outstanding common stock which will be effective for trading purposes as of the commencement of trading on May 15, 2023.

~~On May 26, 2023, the Company received a letter from Nasdaq stating that the Company’s bid price deficiency had been cured.~~

~~ELOC~~

On June 5, 2023, the Company entered into a purchase agreement (the “ELOC Purchase Agreement”) with Arena Business Results, LLC (“Arena”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Arena to purchase up to an aggregate of $100,000,000 of shares of our common stock over the 36-month term of the ELOC Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of the Registration Statement (as defined in the ELOC Purchase Agreement), we have the right to present Arena with an advance notice (each, an “Advance Notice”) directing Arena to purchase any amount up to the Maximum Advance Amount (as described below).

Non-cancelable Obligations

In the course of ~~our~~the BitNile.com gaming business and in association with ~~our~~its Platform, the Company ~~enters~~has entered into non-cancelable obligations with certain parties to purchase services, such as technology and the hosting of ~~our metaverse platform.~~the Platform. As of ~~June 30,~~December 31, 2023, the Company had outstanding non-cancelable purchase obligations with terms of one year or longer aggregating ~~$4,000,000~~$2,000,000 and obligations with terms less than one year of ~~$2,000,000.~~$1,000,000.

~~20.~~ 18. FAIR VALUE MEASUREMENTS

~~The Company measures~~ASC Topic 820, “Fair Value Measurements and ~~discloses the estimated~~Disclosures,” establishes a hierarchy that prioritizes fair value ~~of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are~~measurements based on ~~reliable available~~the types of inputs ~~of observable data. The hierarchy requires~~used for the ~~use of observable market data when available.~~various valuation techniques (market approach, income approach and cost approach). The three-level hierarchy is defined as follows:

Level 1 – quoted prices for identical instruments in active ~~markets;~~markets for identical assets or liabilities;

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

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

~~Financial instruments consist principally~~The carrying values of cash, prepaid expenses, other receivables, accounts payable and accrued liabilities, notes payable, and amounts due to related parties. The fair value of cash is determined based on Level 1 inputs. There were no transfers into or out of “Level 3” during the three months ended June 30, 2023 and 2022. The recorded values of all other financial instrumentsparties approximate ~~its~~their current fair values because of their nature and respective relatively short maturity dates or durations.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. The Company measures and records the fair value of the ~~of the warrant~~ derivative liabilities disclosed in accordance with ASC ~~815,~~ ~~Derivatives and Hedging~~.815. The fair values of the derivatives were calculated using the Black-Scholes ~~Model.~~Model which requires us to make assumptions, including expected term, risk-free rate, expected volatility and expected dividend yield. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in other income (expense) in the condensed consolidated statement of operations.

The following table presents assets and liabilities that ~~are~~were measured and recognized at fair value on a recurring basis as of:

Level 1 Level 2 Level 3 Total Gains
and (Losses)
June 30, 2023
Warrant derivative liabilities $ - $ - $ 2,138,671 $ 2,197,348
Convertible note - - 323,085 1,029,237
Preferred stock derivative liabilities - - 756,992 17,893,969
Investment – WTRV - - 9,224,785 -

March 31, 2023
Warrant derivative liabilities - $ - $ 6,264 $ 4,312,366
Preferred stock derivative liabilities - - 19,855,962 28,611,760
Bitcoin - - - (9,122 )
Investment – WTRV - - 9,224,785 (20,775,215 )
Schedule of assets and liabilities that are measured and recognized at fair value on a recurring basis
Level 1 Level 2 Level 3 Total Gains
and (Losses)
December 31, 2023
Derivative liabilities $ - $ - $ 1,375,063 $ 23,807,318
Investment – WTRV - - 9,224,785 -

March 31, 2023
Derivative liabilities - $ - $ 19,862,226 $ 32,924,126
Bitcoin - - - (9,122 )
Investment – WTRV - - 9,224,785 (20,775,215 )

There were no transfers between Level 1, 2 or 3 during the nine months ended December 31, 2023.
The table below shows a reconciliation of the beginning and ending liabilities measured at fair value using significant unobservable inputs (Level 3) for the ~~three~~nine months ended ~~June 30,~~December 31, 2023:
Schedule of reconciliation of the beginning and ending liabilities
Beginning balance as of March 31, 2023 $ (10,637,441 ) $ (10,637,441 )
Issuance – convertible notes with warrants (5,682,077 ) (4,686,817 )
Net change in unrealized (depreciation) appreciation included in earnings 21,120,554
Ending balance as of June 30, 2023 $ 4,801,036
Redemption of derivative liabilities and preferred, net 633,338
Net change in fair value included in earnings 23,807,318
Ending balance as of December 31, 2023 $ 7,849,722

~~The balances in the derivative liabilities are net of $1,840,000 which is related to Series A preferred shares to be redeemed.~~
19.
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~~21. LEASES~~
~~As of June 30, 2023, the value of the unamortized lease right of use asset is $307,913 (through maturity at October 31, 2026). As of June 30, 2023, the Company’s lease liability was $315,292.~~
~~Maturity of lease liability for the operating leases for the period ended June 30,~~
2024 $ 113,356
2025 96,157
2026 99,042
2027 33,338
Imputed interest (26,601 )
Total lease liability $ 315,292
Current portion $ 100,142
Non-current portion $ 215,150
~~Amortization of the right of use asset for the period ended June 30,~~
2024 $ 101,140
2025 $ 85,565
2026 $ 90,101
2027 $ 31,107
Total $ 307,913
~~Total Lease Cost~~
~~Operating lease expenses for the three months ended both June 30, 2023 and 2022 were $35,588.~~
~~22.~~ RELATED PARTY TRANSACTIONS
In connection with the hospitality services ~~we offer,~~the Company offers, the Company and certain customers enter into separate arrangements with respect to sponsorships ~~we provide~~the Company provides in addition to a number of ongoing commercial relationships, including license ~~Agreements.~~agreements.
See ~~Note~~note 8 for the investment in ~~WTRV and Note 17 for the preferred stock issued in the year ended March 31, 2023 with a significant shareholder. Our~~WTRV. The Company’s previous Chief Executive Officer and Chief Financial Officer ~~hold~~held similar positions in ~~WTRV.~~WTRV at the time of the investment.
In the three ~~month period~~and nine months ended ~~June 30,~~December 31, 2023, the Company was advanced ~~an additional $781,898~~$5,743,428 and $13,253,948, respectively, from AAI. ~~As of June 30, 2023 $6,564,541 remains outstanding.~~
Revenues and Accounts Receivable

WeThe Company had related party hospitality service sales of ~~$41,150~~$0 and ~~$0 as of~~$58,950 for the three ~~month period~~and nine months ended ~~June 30,~~December 31, 2023, respectively, and $0 in the three and nine months ended December 31, 2022. As of December 31, 2023 and ~~2022,~~March 31, 2023, the Company had related party receivables of $62,200 and $0, respectively.

Allocation of General Corporate Expenses
AAI provides use of certain assets, human resources and other executive services to the Company. The accompanying financial statements include allocations of these expenses. The allocation method calculates the appropriate share of costs to the Company by using the percentage of time spent working on and building the Company’s business. The Company believes the allocation methodology used is reasonable and has been consistently applied, and results in an appropriate allocation of costs incurred. However, these allocations may not be indicative of the cost had the Company been a stand-alone entity or of future services. AAI allocated ~~$888,267~~$388,695 and $0$1,784,537 of costs for the three and nine months ended ~~June~~December 31, 2023, respectively, and $0 for the three and nine months ended December 31, 2022.
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20. SEGMENT INFORMATION
The Company determines its operating segments based on how the chief operating decision maker ("CODM") views and analyzes each segments' operations, performance and allocates resources. Milton “Todd” Ault, Chairman of the board and CEO as of January 2024, is the CODM. The CODM utilizes net loss as the measure of segment profit or loss.
From September 30, 2022 through September 30, 2023, the Company had one aggregated reporting segment, which included the continuing operations related to Agora, Zest Labs and BitNile.com. Most of the limited continuing operations were related to Agora and the BitNile.com metaverse while Zest Labs operations were immaterial.
In the current fiscal quarter, with the launch of operations of RiskOn360 and the reclassification of Agora to discontinued operations, the Company changed its presentation of operating results. Herein, the Company reports the following two reporting segments: (1) BitNile.com and services (“BNS”) and (2) RiskOn360. Separate financial information for BNS and RiskOn360 is evaluated by the CODM to allocate resources and assess performance. As GuyCare had immaterial operations as of December 31, 2023, the Company did not review the business separately and its operations are not separately reported herein.
BNS is composed of operations from products and services provided in the Metaverse Platform and hospitality services provided in our sponsored racing events where the Platform is advertised. Management does not consider hospitality as a separate operating segment from the Metaverse Platform as the hospitality activities are considered incidental to the sponsorships and would not continue if the sponsorships were discontinued.
The Company’s segments do not engage in transactions with one another. The two reporting segments use certain shared infrastructure, and each segment is presented with its direct costs and an allocation of shared overhead costs.
BNS began operations during fiscal year 2023 and RiskOn360 started operations in November 2023. During the three and nine months ended December 31, 2022, ~~respectively.~~the Company did not have businesses providing BNS or RiskOn360 products and services and therefore there is no meaningful comparative information for the prior year periods presented. Additionally, the financial information as of and for the three and nine months ended December 31, 2022 in the condensed consolidated financial statements relates to the holding company, Ecoark Holdings, Inc. (later renamed BitNile Metaverse, Inc. and currently RiskOn International, Inc.).
The table below highlights the Company's revenues, expenses and net loss for each reportable segment and is reconciled to net loss on a consolidated basis for the three months ended December 31, 2023.
Schedule of segment reporting information
December 31, 2023
BNS RiskOn360 Other¹ Total
RiskOn360 revenues $ - $ 240,356 $ - $ 240,356
BNS revenue - - - -
Cost of revenue - 2,058,024 - 2,058,024
Operating loss before other expenses - (1,817,668 ) - (1,817,668 )

Operating expenses
Salaries 690,752 202,786 145,250 1,038,788
Professional fees 359,745 - - 359,745
Selling, general and administration 5,893,520 969,420 34,355 6,897,295
Depreciation and amortization 123,104 1,912 - 125,016
Total 7,067,121 1,174,118 179,605 8,420,844

Loss from continuing operations (7,067,121 ) (2,991,786 ) (179,605 ) (10,238,512 )
Other expense (4,316,742 ) - - (4,316,742 )
Loss from discontinued operations - - (243,863 ) (243,863 )
Net Loss $ (11,383,863 ) $ (2,991,786 ) $ (423,468 ) $ (14,799,117 )
¹ The Other category includes GuyCare expenses and loss from discontinued operations.
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The table below highlights the Company’s revenues, expenses and net loss for each reportable segment and is reconciled to net loss on a consolidated basis for the nine months ended December 31, 2023:
December 31, 2023
BNS RiskOn360 Other² Total
RiskOn360 revenues $ - $ 240,356 $ - $ 240,356
BNS revenue 64,350 - - 64,350
Cost of revenue 114,722 2,058,024 - 2,172,746
Operating loss before other expenses (50,372 ) (1,817,668 ) - (1,868,040 )

Operating expenses
Salaries 2,113,207 202,786 145,250 2,461,243
Professional fees 790,221 - - 790,221
Selling, general and administration 22,171,498 969,420 34,355 23,175,273
Depreciation and amortization 369,311 1,912 - 371,223
Total 25,444,237 1,174,118 179,605 26,797,960

Loss from continuing operations (25,494,609 ) (2,991,786 ) (179,605 ) (28,666,000 )
Other income 12,885,492 - - 12,885,492
Loss from discontinued operations - - (8,818,437 ) (8,818,437 )
Net Loss $ (12,609,117 ) $ (2,991,786 ) $ (8,998,042 ) $ (24,598,945 )
² The Other category includes GuyCare expenses and loss from discontinued operations.
21. SUBSEQUENT EVENTS
Nasdaq Compliance
On January 9, 2024, the Company received a letter (the “Letter”) from the Listing Qualifications staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Staff has determined that the Company has violated Nasdaq’s voting rights rule set forth in Listing Rule 5640 (the “Voting Rights Rule”). The Voting Rights Rule states that a company cannot create a new class of security that votes at a higher rate than an existing class of securities or take any other action that has the effect of restricting or reducing the voting rights of an existing class of securities. The alleged violation of the Voting Rights Rule relates to the issuance of 603.44 shares of newly designated Series D Convertible Preferred Stock in exchange for the cancellation of $15,085,930 of cash advances made by Ault Alliance, Inc. (“AAI”) to the Company between January 1 and November 9, 2023, pursuant to the Securities Purchase Agreement (the “Agreement”) by and between the Company and AAI. See note 15, “Preferred Stocks” for the terms of the Preferred Stock.
According to the Letter, Nasdaq determined the Preferred Stock violates the Voting Rights Rule because the Preferred Stock could convert at a discount to the price of the Common Stock on the date of execution of the Agreement, and because the Preferred Stock votes on an as-converted basis. The Company notes that the violation is based on a hypothetical situation in the future, in which the anti-dilution protection triggers a ratchet down of the Conversion Price below the minimum price per share of the Company’s common stock at the time of the issuance of the Preferred Stock.
S-3 Registration Statement
On January 17, 2024, the Company filed a shelf registration statement, which was amended on February 8, 2024, for the sale of common stock, preferred stock, warrants, rights, units or a combination therefore, having an aggregate initial offering price not exceeding $25,000,000. The preferred stock, warrants, rights and units may be convertible, exercisable or exchangeable for common stock or preferred stock or other securities of the Company. The registration statement was declared effective by the SEC on February 14, 2024.
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S-1 Registration Statement
On January 23, 2024, the Company filed a registration statement, which was amended on February 7, 2024, related to the offer and resale of up to 40,000,000 shares of common stock under the ELOC Purchase Agreement. The registration statement was declared effective by the SEC on February 9, 2024.
Changes in Board of Directors Composition and Management
Effective January 29, 2024 (the “Effective Date”), the Company accepted the resignations of (i) Randy May, its former Chairman of the Board of Directors (the “Board”) in such capacity, and as the Company’s Chief Executive Officer, and (ii) Jay Puchir, its former Chief Financial Officer, each of which was submitted to the Company on January 28, 2024. On the Effective Date, Mr. Milton “Todd” Ault was appointed as its Chairman of the Board and Chief Executive Officer, William B. Horne and Steve J. Smith were appointed to the Board of Directors, Kayson Pulsipher was appointed as Chief Financial Officer, Joseph M. Spaziano as Chief Operating Officer and Douglas Gintz as Chief Technology Officer.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on July 14, 2023.
Overview
On March 15, 2023, Ecoark Holdings, Inc. changed its name to BitNile Metaverse, Inc. ~~(“BitNile Metaverse” or the~~; subsequently, on November 1, 2023 it changed its name to RiskOn International, Inc. (the “Company”) and is a holding company incorporated in the State of Nevada on November 19, 2007. On February 8, 2023, the Company entered into a Share Exchange Agreement (the “SEA”) by and among Ault Alliance, Inc. (“AAI”), the owner of approximately 86% of ~~BNC,~~BitNile.com, Inc. (“BNC”), a significant shareholder of the Company, and the minority ~~stockholders~~shareholders of BNC (the “Minority Shareholders”). The SEA provides that, subject to the terms and conditions set forth therein, the Company will acquire all of the outstanding shares of capital stock of BNC as well as the ~~common stock~~securities of Earnity, Inc. beneficially owned by BNC (which represents approximately 19.9% of the outstanding ~~common stock~~securities of Earnity, Inc. as of the date of the SEA), in exchange for the following: (i) 8,637.5 shares of newly designated Series B Convertible Preferred Stock of the Company to be issued to Ault (the “Series B”), and (ii) 1,362.5 shares of newly designated Series C Convertible Preferred Stock of the Company to be issued to the Minority Shareholders (the “Series C,” and together with the Series B, the “Preferred Stock”). The Series B and the Series C, the terms of which are summarized in more detail below, each have a stated value of $10,000 per share, ~~(the “Stated Value”),~~ for a combined stated value of $100,000,000, and subject to adjustment, are convertible into a total of up to 13,333,333 shares of the Company’s common ~~stock, which represent approximately 92.4% of the Company outstanding common stock on a fully diluted basis.~~stock. The Company has independently valued the Series B and Series C as of the date of acquisition. The combined value of the shares issued to Ault was $53,913,000 using a blended fair value of the discounted cash flow method and option pricing method. ~~See Note 5 for the details on the asset purchase as BNC did not meet the accounting definition of a business and Note 17 for details on the Series B and C Preferred Stock.~~
Through ~~June~~September 30, ~~2023,~~2022, the Company’s former wholly owned subsidiaries with the exception of Agora Digital Holdings, Inc., a Nevada corporation (“Agora”) and Zest Labs, Inc. (“Zest Labs”) have been treated for accounting purposes as divested. ~~Please refer~~Refer to our Annual Report for the year ended March 31, 2023 (“2023 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on July 14, 2023 for details on all of our prior subsidiaries that were divested in the year ended March 31, 2023 and an overview of the business conducted in those subsidiaries. ~~This report includes only those subsidiaries as~~On August 28, 2023, we executed a spin-off of ~~June 30, 2023.~~Zest Labs, which owns intellectual property relating to agriculture shelf life and freshness management, pursuant to a stock purchase agreement whereby we sold all of the outstanding shares of Zest Labs, Inc. to Zest Labs Holding, LLC. The comparative financial statements for the three and six months ended ~~June~~September 30, 2022 reflect the operations of those subsidiaries that were sold during the year ended March 31, 2022 as discontinued operations in the condensed consolidated statements of operations and as assets and liabilities of discontinued operations on the condensed consolidated balance sheets.
~~The Metaverse represents groundbreaking development in~~Through December 31, 2023, the ~~online metaverse landscape, offering immersive, interconnected digital experiences that are inclusive, engaging,~~Company’s former wholly owned subsidiaries, Agora and ~~dynamic. By integrating various elements such~~Wolf Energy Services have been treated for accounting purposes as ~~virtual markets, real world goods marketplaces~~divested.
Our Business Strategy
BitNile.com and VIP experiences, gaming, social activities, sweepstakes, gambling, and more, the Company aims to revolutionize the way people interact online. The Company’s rapidly growing virtual world, BNC (the “Platform”services (“BNS”) ~~is accessible via any device using any web browser, without requiring permissions, downloads, or apps, and the Platform can be enjoyed without the need for bulky and costly virtual reality headsets.~~
Our games operate on a free-to-play model, whereby game players may collect coins free of charge through the passage of time and if a game player wishes to obtain coins above and beyond the level of free coins available to that player, the player may purchase additional coin packages (“Freemium” gaming model). Once obtained, Nile Tokens (“NT”) and Nile Coins (“NC”), (either free or purchased) cannot be redeemed for cash nor exchanged for anything outside of the Metaverse. When coins are used and played in the games, the game player could “win” and would be awarded additional coins or could “lose” and lose the future use of those coins. We have concluded that the coins represent both consumable goods and durables, because 1) the game player does not receive any additional benefit from the game and is not entitled to any additional rights once the coins are consumed and 2) because once coins are used for the purchase of durable goods, those goods will continue to benefit the player throughout their gaming life cycle.
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~~Our Hospitality services currently consists of catering services provided to groups at certain social functions and sporting events. We also sell real world VIP experiences and one-of-a-kind products.~~
~~The Company’s metaverse business strategy revolves around creating a seamless, all-encompassing Platform that caters to various user needs and interests. The Platform’s strategic pillars include:~~
● ~~Leveraging cutting-edge technology to offer a user-friendly, browser-based platform compatible with VR headsets and other modern devices;~~
● ~~Providing a diverse range of products and real world VIP experiences that cater to users with different interests and preferences;~~
● ~~Fostering global connections and a sense of community among users, encouraging socialization and collaboration; and~~
● ~~Ensuring continuous innovation to stay ahead of industry trends and customer expectations.~~
~~The Company targets a broad audience, including:~~
● ~~Tech-savvy individuals seeking immersive digital experiences;~~
● ~~Gamers of all skill levels interested in a diverse array of gaming options;~~
● ~~Collectors and traders of digital assets, such as virtual real estate, digital art, and unique collectibles;~~
● ~~Shoppers seeking a convenient, intuitive platform for purchasing real world goods; and~~
● ~~Users seeking social interaction and global connectivity in a virtual environment.~~
~~The Company offers an extensive range of products and experiences, including:~~
● ~~Virtual markets: Sales of digital assets the Company as well as third party vendors like virtual real estate, digital art, user customizations, and unique collectibles;~~
● ~~Real world goods marketplaces: A platform for shopping a diverse range of real world products and VIP experiences;~~
● ~~Gaming: a selection of gaming options, including participation in games, sweepstakes, and social gaming experiences;~~
● ~~Sweepstakes gaming: A dedicated gaming zone for sweepstakes gaming, offering opportunities to win virtual and real money;~~
● ~~Contests of skill: competitions where users can showcase their talents and win prizes;~~
● ~~Building private spaces: A feature allowing users to construct and customize their dream homes or private spaces;~~
● ~~Social hubs for users to interact with individuals from around the world; and~~
● ~~Unique virtual and real world experiences, such as live and virtual concerts, conferences, and other events.~~
The metaverse industry is experiencing rapid growth and expansion, driven by advancements in technology, increased interest in virtual experiences and the rise of digital economies. ~~Key~~Our business strategy revolves around creating a seamless, all-encompassing platform that caters to various user needs and interests.
The strategic pillars for the growth of the platform include (i) leveraging cutting-edge technology to offer a user-friendly, browser-based platform compatible with virtual reality headsets and other modern devices for an enhanced experience, (ii) providing a diverse range of products and experiences that caters to users with different interests and preferences, (iii) fostering global connections and a sense of community among users, encouraging socialization and collaboration, and (iv) focusing on continuous innovation to stay ahead of industry trends ~~include:~~and customer expectations.
We expect to generate revenue in fiscal year 2024 and 2025 through the sale of tokens or coins that provide our end users with interactive entertainment (game play) and durable goods principally for the personal computer and mobile platforms.
Hospitality service revenue and expenses are generated through services and hosting provided to groups at certain social functions and sporting events. Hospitality service revenue is generated through contracts with customers whereby the customer agrees to pay a contract rate, determined based on common industry prices, for the services the Company provides.
● ~~The integration of virtual and physical worlds;~~
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● ~~The emergence of virtual economies and markets; and~~
● ~~The growing importance of socialization and community-building in digital spaces.~~
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RiskOn360
~~Competition~~
RiskOn360 is a versatile educational global success conference series specifically tailored for business owners and entrepreneurs. What distinguishes RiskOn360 is its approach to education, providing training in-person in multiple cities, making it accessible to learners across the United States.
The ~~Company faces competition from existing metaverse platforms~~company's commitment extends beyond mere knowledge transfer; it focuses on empowering individuals to achieve greater success and ~~new entrants. Key competitors include:~~
● ~~Established metaverse platforms, such as Decentraland, The Sandbox, and Second Life, as well as companies that focus on development of metaverse tools and platforms such as META;~~
● ~~Gaming-focused platforms, like Fortnite and Roblox; and~~
● ~~Social media platforms that integrate metaverse elements, such as Facebook’s Horizon Workrooms.~~
~~Regulatory Environment~~
confidence in their entrepreneurial pursuits. The ~~Company operates within~~conferences are expertly crafted to not only impart essential business knowledge but also to build confidence among learners, enabling them to make informed and effective business decisions.
The curriculum is a ~~complex~~blend of theoretical knowledge and ~~evolving regulatory landscape,~~practical application, designed to be engaging and relevant regardless of the industry the learners are in. The learners participate in in-person sessions and are guaranteed an interactive and hands-on learning experience. This approach is particularly effective in ensuring that theoretical concepts are well understood and can be applied practically in real business contexts. The conference topics are based on real life experiences and scenarios across multiple industries and case studies. This ensures that learners are well-equipped to navigate the challenges of the business world confidently.
RiskOn360 aims to be an invaluable resource for individuals looking to enhance their business and entrepreneurial skills and empower the learners with ~~key considerations including:~~the necessary skills and confidence to succeed and excel in their business ventures.
● ~~Data privacy and protection regulations, such as GDPR and CCPA;~~
● ~~Compliance with gaming and gambling regulations in various jurisdictions; and~~
● ~~Intellectual property rights and digital asset ownership.~~
Recent Developments
During the current fiscal year ending March 31, 2024, the Company engaged in the following transactions:
● ● ~~The Company raised approximately $3,500,000 in an At-the-Market capital raise during the fourth fiscal quarter of the year ended March 31, 2023 and the three months ended June 30, 2023.~~ ~~The ATM was terminated on June 16, 2023 after having raised approximately $3,500,000.~~
● On April 27, 2023, the Company closed a $6,875,000 senior secured convertible promissory note, ~~(see Note 14),~~ and with the senior secured convertible note, the Company granted the noteholders ~~2,728,175~~2,100,905 warrants that expire five years from the issuance date and have a strike price of $3.28. The warrants due contain a rachet provision which the Company has determined meets the criteria for treatment as a derivative liability. The Company recorded a discount on the convertible note of $4,329,755 which represents the derivative liability at inception of the warrants. The fair value of the warrants was estimated to be $2,138,542 as of June 30, 2023.

● ● On May 4, 2023, the Company amended ~~their Certificate~~its Articles of Incorporation ~~for~~to effectuate a 1-for-30 reverse stock split. The Company also reduced ~~their~~its authorized shares on a 1-for-30 basis going from 100,000,000 authorized shares down to 3,333,333 authorized shares. The Company has reflected this reverse split retroactively in their condensed consolidated financial statements pursuant to SAB Topic 4C. On October 16, 2023, the Company, upon obtaining shareholder approval, filed a certificate of amendment to its Articles of Incorporation increasing its authorized shares of common stock from 3,333,333 to 500,000,000.

● ● On May 8, 2023, the Company received a letter from the Listing Qualifications staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Staff has determined to delist the Company’s common stock, par value $0.001 per share (the “Common Stock”) from The Nasdaq Capital Market, effective May 17, 2023, pursuant to Listing Rule 5810(c)(3)(A)(iii), as the Company’s common stock traded below $0.10 per share for 10 consecutive trading days. On May 12, 2023, the Company issued a press release announcing a 1-for-30 reverse stock split of its outstanding common stock which ~~will be~~was effective for trading purposes as of the commencement of trading on May 15, 2023. On May 26, 2023, the Company received a letter from Nasdaq stating that the Company’s bid price deficiency had been cured.
● ● On May 15, 2023, Agora and Trend Ventures, LP entered into a First Amendment of Senior Secured Promissory Note (“First Amendment”), to amend the $4,250,000 senior secured promissory note entered into June 16, 2022. The First Amendment amended the following clauses of the original note: (a) the principal amount was amended from $4,250,000 to ~~$4,443,869.86,~~$4,443,870, which includes all of the accrued interest through May 15, 2023; (b) the maturity date was amended from June 16, 2025 to May 15, 2025; and (c) the interest rate shall remain at 5%, and any additional accrued interest under the Default Rate shall be mutually waived by both parties. No payments on either principal or interest shall be due until the new maturity date. As of June 30, 2023, the Company has ~~established~~had a full reserve established for the principal and accrued interest receivable.
● On June 21, 2023, the Company received a letter from the Listing Qualifications staff of Nasdaq notifying the Company that the Staff has determined that the Company has violated Nasdaq’s voting rights rule set forth in Listing Rule 5640 (the “Voting Rights Rule”). The alleged violation of the Voting Rights Rule relates to the issuance of (i) 8,637.5 shares of the Series B, and (ii) 1,362.5 shares of the Series C in connection with the acquisition of BNC as well as the securities of Earnity, Inc. beneficially owned by BNC (collectively, the “Assets”) pursuant to the SEA by and among the Company, Ault Alliance Inc. (“AAI”) and the minority shareholders of BNC, which was previously disclosed on Current Reports on Form 8-K filed by the Company on February 14, 2023 and March 10, 2023.
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● On July 18, 2023, the Company received a letter from the Listing Qualifications staff of Nasdaq indicating that the Company’s shareholders’ equity as reported in the 2023 Annual Report did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that a listed company’s shareholders’ equity be at least $2.5 million. As reported in the 2023 Annual Report, the Company’s shareholders’ equity as of March 31, 2023 was approximately $(13.9) million.
The Company submitted a compliance plan, which was subsequently amended and restated, to the staff. On December 1, 2023, Nasdaq notified the Company that it rejected the Compliance Plans. The Company has appealed the Staff’s determination to delist the Company’s Common Stock to a Hearings Panel (the “Panel”). The Panel will hear the Company’s appeal on February 29, 2024. The Panel will consider all violations against the Voting Rights Rule in connection with the Company’s appeal.
● On ~~June 5,~~August 24, 2023, the Company entered into a purchase agreement (the “ELOC Purchase Agreement”) with Arena Business ~~Results, LLC~~Solutions Global SPC II Ltd on behalf of and for the account of Segregated Portfolio #3 – SPC #3 (“Arena”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right to direct Arena to purchase up to an aggregate of $100,000,000 of shares of our common stock over the 36-month term of the ELOC Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of the Registration Statement (as defined in the ELOC Purchase Agreement), we have the right to present Arena with an advance notice (each, an “Advance Notice”) directing Arena to purchase any amount up to the Maximum Advance Amount. The Registration Statement was declared effective on October 30, 2023.
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● On August 25, 203, we, Zest Labs and Zest Labs Holdings, LLC (owned by Gary Metzger, a current board member of our company) (the “Purchaser”), entered into a stock purchase agreement, whereby the Purchaser purchased 100% of the issued and outstanding common stock of Zest Labs from us in exchange for the Purchaser agreeing to distribute any net proceeds from any new or ongoing intellectual property litigation or the sale or licensing of any intellectual property of Zest Labs to our shareholders of record as of November 15, 2022.
● On ~~June 21,~~September 28, 2023, the Company amended the Certificate of Designations for each of the Series B Preferred Stock and the Series C Preferred Stock to eliminate all voting rights of these series of preferred stock. On October 16, 2023, Nasdaq notified the Company that it had regained compliance with the Voting Rights Rule.
● On November 1, 2023, both Agora and Bitstream, filed voluntary petitions for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Texas. The bankruptcy cases are being administered under case numbers 23-51490 and 23-51491,respectively. The cases are still pending before the court.
● On November 2, 2023, the Company received a letter from the Listing Qualifications staff of Nasdaq ~~notifying the Company that the Staff has determined~~stating that the Company ~~has violated Nasdaq’s voting rights rule set forth~~was not in compliance with Nasdaq Listing Rule ~~5640 (the “Voting Rights Rule”). The alleged violation of~~5550(a)(2) because the Voting Rights Rule relates to the issuance of (i) 8,637.5 shares of the Series B, and (ii) 1,362.5 shares of the Series C in connection with the acquisition of BNC as well as the securities of Earnity, Inc. beneficially owned by (collectively, the “Assets”) pursuant to the SEA by and among the Company, AAI and the minority stockholders of BNC, which was previously disclosed on Current Reports on Form 8-K filed by the Company on February 14, 2023 and March 10, 2023. The Series B and C Preferred Stock has a collective stated value of $100,000,000 (the “Stated Value”), and votes on an as-converted basis, representing approximately 92.4% ofbid price for the Company’s ~~outstanding voting power on a fully diluted basis at~~common stock had closed below $1.00 per share for the ~~time of issuance.~~previous 31 consecutive business days.

According to the Letter, because the Preferred Stock was not issued for cash, the Staff compared the value of the Assets to the Stated Value and determined that the value of the Assets was less than the Stated Value and that the voting rights attributable to the Series B and C Preferred Stock has the effect of disparately reducing the voting rights of the Company’s existing shareholders. The Staff looked at the total assets and stockholders’ equity of BNC as of March 5, 2023, as well as the market capitalization of AAI prior to entering into the Agreement and immediately after closing of the transaction in determining, in Staff’s opinion, the value of the Assets. The Letter did not make any reference to the projections prepared by AAI as to the future potential of the business of BNC nor to the independent valuation obtained byIn accordance with Nasdaq listing rule 5810(c)(3)(A), the Company ~~prior~~has 180 calendar days, or until April 30, 2024, to ~~closing of~~regain compliance. The Deficiency Letter states that to regain compliance, the ~~transaction, which supported the Stated Value of the Preferred Stock~~bid price for ~~the total value of the Assets, both of which the Company provided to the Staff prior to receipt of the Letter.~~
~~According to the Letter, Nasdaq determined that the voting rights of the Series B and C Preferred Stock, voting on an as-converted basis, are below the minimum price per share of~~ the Company’s common stock must close at $1.00 per share or more (the “Minimum Bid Price”) for a minimum of 10 consecutive business days during the ~~time of~~compliance period ending April 30, 2024. In the ~~issuance of the Series B and C Preferred Stock. Additionally, Nasdaq determined~~event that the ~~Series B provides the holder the right to appoint a majority of the Company’s board of directors when such representation is~~Company does not ~~justified by the relative contribution of the Series B pursuant to the Agreement.~~
Under the Voting Rights Rule, a company cannot create a new class of security that votes at a higher rate than an existing class of securities or take any other action that has the effect of restricting or reducing the voting rights of an existing class of securities. As such, according to the Letter, the issuance of the Series B and C Preferred Stock violated the Voting Rights Rule because the holders of the Series B and C Preferred Stock are entitled to vote on an as-converted basis, thus having greater voting rights than holders of common stock, and the Series B is entitled to a disproportionate representation on the Company’s board of directors.
~~According to the Letter,~~regain compliance within this 180-day period, the Company ~~has 45 calendar days from the date~~may be eligible to seek an additional compliance period of ~~the Letter, or until August 7, 2023, to submit a plan to regain compliance with the Voting Rights Rule, and if such plan is accepted by Nasdaq, the Company can receive an extension of up to~~ 180 calendar days ~~from~~if it meets the ~~date~~continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the ~~Letter~~Minimum Bid Price, and provides written notice to ~~evidence compliance.~~Nasdaq of its intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the ~~Company’s plan~~Nasdaq Staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not ~~accepted by~~eligible, Nasdaq will provide notice to the ~~Company’s~~Company that its common stock will be subject to delisting. ~~The~~At that time, the Company ~~would have the right to~~may appeal ~~that decision~~any such delisting determination to a Nasdaq hearings panel. ~~On July 28,~~
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● On November 14, 2023, we entered into a Securities Purchase Agreement (the “Agreement”) with AAI, pursuant to which we sold to AAI 603.44 shares of newly designated Series D Convertible Preferred Stock (the “Preferred Shares”) for a total purchase price of $15,085,930.69 (the “Transaction”). The Transaction closed on November 15, 2023 (the “Closing Date”).
The purchase price was paid by the ~~Company responded and submitted a plan~~cancellation of $15,085,930.69 of cash advances made by AAI to ~~regain compliance with the Voting Rights Rule.~~
~~Segment Reporting for the Three Months Ended June 30,~~us between January 1, 2023 and ~~2022~~
~~As a result~~November 9, 2023. The terms of the ~~sales~~Preferred Shares as set forth in the Certificates of ~~WTRV and Banner Midstream, and the immaterial nature~~Designations of the ~~operations of Zest Labs, the Company no longer segregates its operations as most~~Rights, Preferences and Limitations of the ~~continuing operations are related to Agora.~~Series D Convertible Preferred Stock (the “Certificate”) include conversion terms and dividend payout terms. The Preferred Shares each have a stated value of $25,000 per share (the “Stated Value”).
● On January 17, 2024, the filed registration statement under a shelf registration process any combination of common stock, preferred stock, warrants, rights or units having an aggregate initial offering price not exceeding $25,000,000. The preferred stock, warrants, rights and units may be convertible, exercisable or exchangeable for common stock or preferred stock or other securities of ours.
● On January 23, 2024, the Registration Statement related to the offer and resale of up to 40,000,000 shares of common stock, par value $0.001 per share, of the Company, by Arena Business Solutions Global SPC II, Ltd., on behalf of and for the account of Segregated Portfolio #3 – SPC #3 (the “Selling Stockholder”). The shares included in this prospectus consist of (i) shares of our common stock that we may, in our discretion, elect to issue and sell to the Selling Stockholder, from time to time after the date of this prospectus, pursuant to the ELOC Purchase Agreement we entered into with the Selling Stockholder, in which the Selling Stockholder has committed to purchase from us. We are registering the resale of up to 40,000,000 of common stock issuable to the Selling Stockholder under the Purchase Agreement. The Purchase Agreement provides that we have the right to direct the Selling Stockholder to purchase up to an aggregate of $100 million of shares of our common stock (the “Maximum Commitment Amount”), of which $3,006,996 was previously registered, and, as consideration for the Selling Stockholder entering into the Purchase Agreement, we are required to issue to the Selling Stockholder, as a commitment fee, a number of shares of common stock having an aggregate dollar value equal to $4 million, of which $1,366,331 was previously registered. See the section titled “Committed Equity Financing” for a description of the Purchase Agreement and the section titled “Selling Stockholder” for additional information regarding the Selling Stockholder.
● Effective January 29, 2024, the Company (i) accepted the resignations of Randy May, its former Chairman of the Board of Directors (the “Board”) and as the Company’s Chief Executive Officer, and Jay Puchir, its former Chief Financial Officer, (ii) appointed Mr. Milton “Todd” Ault as its Chairman of the Board and Chief Executive Office (Mr. Ault was appointed to the Board on January 4, 2024), (iii) appointed William B. Horne and Steve J. Smith to the Board and (iv) appointed Kayson Pulsipher as Chief Financial Officer, Joseph M. Spaziano as Chief Operating Officer, Douglas Gitntz as Chief Technology Officer.
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29

Consolidated Results of Continuing Operations
The ~~discussion of~~results below do not include our ~~results of~~discontinued operations ~~should be evaluated considering that our primary subsidiaries were sold in the year ended March 31, 2023 and their results of operations are now treated as discontinued operations. Accordingly,~~activity, accordingly, period to period comparisons may not be meaningful.
Consolidated Continuing Operations ~~For~~for the Three Months Ended ~~June 30,~~December 31, 2023 and 2022
December 31,
2023 2022 Change ($) Change (%)
RiskOn360 revenue $ 240,356 $ - $ 240,356 100 %
Cost of revenue 2,058,024 - 2,058,024 100 %
Gross loss (1,817,668 ) - (1,817,668 ) 100 %

Operating expenses
Salaries 1,038,788 241,403 797,385 330 %
Professional and consulting fees 359,745 123,288 236,457 192 %
Selling, general and administration 6,897,295 1,089,816 5,807,479 533 %
Depreciation and amortization 125,016 - 125,016 100 %
Total operating expenses 8,420,844 1,454,507 6,966,337 479 %
Operating loss (10,238,512 ) (1,454,507 ) (8,784,005 ) 604 %
Other (expense) income
Change in fair value of derivative liabilities 824,475 6,124,833 (5,300,358 ) -87 %
Dividend expense (1,589,046 ) - 1,589,046 100 %
Loss on conversion of derivative liability to common stock in conversion of preferred stock - (3,923 ) (3,923 ) -100 %
Gain on conversion of notes 2,563 - 2,563 100 %
Loss on disposal of fixed assets (2,454 ) - 2,454 100 %
Amortization of discounts (1,588,474 ) - 1,588,474 100 %
Loss on redemption of Series A preferred stock (1,938,587 ) - 1,938,587 100 %
Interest (expense) income, net of interest income (25,219 ) 87,611 (112,830 ) 129 %
Total other (expense) income (4,316,742 ) 6,208,521 (10,525,263 ) 170 %
(Loss) gain from continuing operations before discontinued operations (14,555,254 ) 4,754,014 (19,309,268 ) 406 %
Discontinued operations
Loss from discontinued operations (243,863 ) (2,327,043 )
Total loss discontinued operations (243,863 ) (2,327,043 )
Net (loss) income $ (14,799,117 ) $ 2,426,971
Three Months Ended
June 30,
2023 2022 Change ($) Change (%)
Hospitality and VIP experience revenue $ 45,150 $ - $ 45,150 100 %
Cost of revenue 86,300 93,862 (7,562 ) -8 %
Gross loss (41,150 ) (93,862 ) 52,712 56 %

Operating expenses:
Depreciation, amortization and impairment 136,882 45,097 91,785 204 %
Bad debt 53,415 - 53,415 100 %
Selling, general and administration 10,160,441 1,688,064 8,472,377 502 %
Salaries and professional consulting fees 1,841,711 6,542,948 (4,701,237 ) -72 %
Total operating expenses 12,192,449 8,276,109 3,916,340 47 %
Operating loss (12,233,599 ) (8,369,971 ) (3,863,628 ) 46 %
Other income (expense)
Change in fair value of warrant derivative liabilities 2,197,348 (393,532 ) 2,590,880 -658 %
Change in fair value of preferred stock derivative liabilities 17,893,969 - 17,893,969 100 %
Change in fair value of convertible note derivative liability 1,029,237 - 1,029,237 100 %
Derivative expense (182,077 ) - (182,077 ) 100 %
Amortization of original issue discount (241,096 ) - (241,096 ) 100 %
Dividend expense (1,597,222 ) - (1,597,222 ) 100 %
Interest expense, net of interest income (262,535 ) (36,828 ) (225,707 ) 613 %
Total other income (expense) 18,837,624 (430,360 ) 19,267,894 4848 %
Income (loss) from continuing operations before discontinued operations 6,604,025 (8,800,331 ) 15,404,356 193 %
Discontinued operations
Loss from discontinued operations (1,143,303 ) (2,635,818 )
Gain on disposal of discontinued operations - 711,505
Total loss discontinued operations (1,143,303 ) (1,924,313 )
Net income (loss) $ 5,460,722 $ (10,724,644 )
Revenue and Gross Loss
~~During the three-month period ended June 30, 2023, we had increased revenues of $45,150~~Revenue and ~~decreased~~ gross loss during the three months ended December 31, 2023 were $0.2 million and $2.0 million, respectively. The revenue and increased cost of ~~$52,712 compared~~revenue was attributable to the ~~three month period ended June 30, 2022, primarily due to hospitality and VIP experience~~RiskOn360 conference held during the period. We did not have revenue or cost of sales ~~that began in~~during the three ~~month period~~months ended ~~June 30, 2023. Additionally, the Company ceased its Bitcoin mining in the year ended March~~December 31, ~~2023.~~2022.
Operating Loss and Operating Expenses

During the three months ended ~~June 30,~~December 31, 2023, our operating loss increased by ~~$3,863,628~~ ~~compared to~~$9 million, from $1 million for the ~~three-month period~~three months ended ~~June 30, 2022, primarily~~December 31, 2022. The increase was due to ~~increased~~increases in advertising expenses, gross loss, salary expense and ~~hospitality expenses,~~ platform ~~hosting~~ fees ~~and travel expenses~~ of approximately $7$5 million, $2 million, $1 million and $1 million, respectively. ~~These increased expenses were partially offset by decreased salaries and professional fees of approximately $5 million.~~
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~~Income (Loss)~~Loss from Continuing Operations

~~The Company had increased income~~Loss from continuing operations for the ~~period~~three months ended December 31, 2023 was $15 million compared to income from continuing operations for the three months ended December 31, 2022 of $5 million. The increase of approximately ~~$15.4~~$19 million ~~due to the gain of $19.3 million of other income and (expenses)~~was primarily due to ~~a gain in the fair value of derivative liabilities and derivative income of approximately $21 million in 2023, partially offset by~~ the increase of our operating loss of approximately $9 million coupled with the decreased gain on the remeasurement of fair value for the derivative liabilities of approximately $5 million, increased amortization of original issuance and derivative discounts expense of $2 million, loss on redemption of Series A preferred stock of $2 million and dividend expenses of approximately $1 million.
Consolidated Continuing Operations For the Nine Months Ended December 31, 2023 and 2022
December 31,
2023 2022 Change ($) Change (%)
RiskOn360 revenue $ 240,356 $ - $ 240,356 100 %
BitNile.com and service revenue 64,350 - 64,350 100 %
Cost of revenue 2,172,746 - 2,172,746 100 %
Gross loss (1,868,040 ) - (1,868,040 ) 100 %

Operating expenses
Salaries 2,461,243 917,215 1,544,028 168 %
Professional and consulting fees 790,221 248,015 542,206 219 %
Selling, general and administration 23,175,273 2,386,655 20,788,618 871 %
Depreciation and amortization 371,223 - 371,223 100 %
Total operating expenses 26,797,960 3,551,885 23,246,075 654 %
Operating loss (28,666,000 ) (3,551,885 ) (25,114,115 ) 707 %
Other (expense) income
Change in fair value of derivative liabilities 23,807,318 9,017,305 14,790,013 164 %
Dividend expense (4,739,726 ) - 4,739,726 100 %
Loss on conversion of derivative liability to common stock in conversion of preferred stock - (3,923 ) 3,923 -100 %
Gain on conversion of notes 2,563 - 2,563 100 %
Loss on disposal of fixed assets (2,454 ) - 2,454 100 %
Amortization of discounts (4,172,858 ) - 4,172,858 100 %
Loss on redemption of Series A preferred stock (1,938,587 ) 1,938,587 100 %
Interest income (expense), net of interest income (70,764 ) (77,353 ) 6,589 -9 %
Total other income 12,885,492 8,936,029 3,949,463 44 %
(Loss) gain from continuing operations before discontinued operations (15,780,508 ) 5,384,144 (21,164,652 ) 393 %
Discontinued operations
Loss from discontinued operations (9,501,589 ) (26,592,798 )
Gain (loss) on disposal of discontinued operations 683,152 (11,823,395 )
Total loss discontinued operations (8,818,437 ) (38,416,193 )
Net loss $ (24,598,945 ) $ (33,032,049 )
Revenue and Gross Loss
Revenue and gross loss during the nine months ended December 31, 2023 were $0.3 million and $2.2 million, respectively. The revenue and increased cost of revenue was attributable to the RiskOn360 conference held during the period as well as sales of Hospitality services. We did not have revenue or cost of sales during the nine months ended December 31, 2022.
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Operating Loss and Operating Expenses
During the nine months ended December 31, 2023, our operating loss increased by $25 million, from $4 million for the nine months ended December 31, 2022. The increase was primarily due to increases in sponsorship and advertising expenses, platform fees, cost of sales and travel expenses of approximately $18 million, $3 million, $2 million, $2 million, respectively.
Loss from Continuing Operations
Loss from continuing operations for the nine months ended December 31, 2023 was $16 million compared to income from continuing operations for the nine months ended December 31, 2022 of $5 million. The increase of $21 million was due to the increase of our operating loss of $25 million, loss on redemption of Series A preferred stock of $2 million, increased dividend expense of $5 million and amortization of discounts of $4 million, partially offset by the increased gain on the change in fair value of the derivative liabilities of approximately $15 million.
Business Segment Results for the Three and Nine Months Ended December 31, 2023 and 2022
As discussed in note 20, we changed the presentation of our segment operating results in the quarter ended December 31, 2023, and all amounts are presented under the new reporting segment structure. We have two reporting segments: the BitNile.com Metaverse & Hospitality segment and the RiskOn360 segment. Both were acquired in March 2023 as a part of the SEA agreement with AAI. GuyCare was formed and launched in November 2023 and had nominal operations during the three and nine months ended December 31, 2023, and is therefore considered an immaterial operating segment. We had no operations relating to Metaverse & Hospitality or RiskOn360 during the three months ended December 31, 2022.
The financial information as of and for the three and nine months ended December 31, 2022 in the condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q relates to Ecoark Holdings (later renamed BitNile Metaverse and currently named RiskOn International), a holding company, and the discontinued operations of Wolf Energy, Agora and Zest. The results of operations from Agora and Zest are included in discontinued operations for the three and nine months ended December 31, 2023.
As there is no meaningful financial information relating to our new segments compared to prior period segments, management has no additional discussion and comparative analysis to disclose. The significant activities and transactions of both periods are discussed in the notes to the financial statements and in the discussion and analysis of the consolidated results of continuing operations above.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are revenue generated from operations, levels of accounts receivable, ~~and~~ accounts payable and capital expenditures.
Net cash used in operating activities of continuing operations was approximately $8$29 million for the ~~three month period~~nine months ended ~~June 30,~~December 31, 2023, as compared to approximately $4$28 million in the prior year period. ~~The $4 million increase~~Significant changes impacting net cash used in operating activities during the ~~current period was~~nine months ended December 31, 2023 as compared to nine months ended December 31, 2022 were primarily due to ~~the~~(i) a $7 million reduction in loss from continuing operations, (ii) change in the fair value of derivative liabilities of approximately ~~$21~~$18 million ~~and decreased common shares issued for services~~during the nine months ended December 31, compared to $6 million in the prior year period, (iii) gain on disposal of Zest of approximately $5$1 million ~~partially offset by decreased~~compared to a loss of $13 million on the disposal of previous subsidiaries in the prior year period, and (iv) increased changes in accounts payable of ~~approximately~~$7 million, dividends payable of $5 million and amortization of discount of $4 million.
Net cash ~~provided by~~used in investing activities ~~decreased~~during the nine months ended December 31, 2023 increased due to fixed asset purchases and an investment in a simple agreement for future equity, partially offset by no cash being provided induring the ~~current year period~~nine months ended December 31, 2023 by discontinued operations.
Net cash provided by financing activities ~~decreased~~during the nine months ended December 31, 2023 increased by approximately $5$9 million, primarily due to nothe proceeds from AAI of $13 million and the proceeds from the sale of common stock and convertible notes of $8 million during the nine months ended December 31, 2023, offset by proceeds to the sale of preferred stock ~~which was~~of $12 million in the prior year ~~period partially offset by proceeds from the convertible note of approximately $5 million coupled with the proceeds related to the ATM of approximately $2 million.~~period.
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As of ~~June 30,~~December 31, 2023, ~~the Company has $2,005~~we had $101,487 in cash and cash equivalents. ~~The Company believes~~We believe that the current cash on hand is not sufficient to conduct planned operations for one year from the issuance of the condensed consolidated financial statements, and ~~it needs~~we need to raise capital to support ~~its~~our operations, raising substantial doubt about ~~its~~our ability to continue as a going concern. ~~The Company has recently~~We acquired ~~BNC and~~BitNile.com in March 2023, which has generated nominal revenue as of ~~June 30,~~December 31, 2023. The accompanying financial statements for the three and nine month ~~period~~periods ended ~~June 30,~~December 31, 2023 have been prepared assuming ~~the Company~~we will continue as a going concern, but ~~the~~our ability ~~of the Company~~ to continue as a going concern is dependent on ~~the Company~~our obtaining adequate capital to fund operating losses until ~~it establishes~~we establish continued revenue streams and ~~becomes~~become profitable. Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing. However, management cannot provide any assurances that ~~the Company~~we will be successful in accomplishing any of ~~its~~our plans. If ~~the Company is not able~~we are unable to obtain the necessary additional financing on a timely basis, ~~the Company~~we will be required to delay, reduce or perhaps even cease the operation of ~~its~~our business. ~~The ability~~As discussed in note 2, “Liquidity and Going Concern” above, during the current fiscal year, we received $5 million in proceeds from the sale of senior secured convertible notes in April 2023, $1 million from the ~~Company to continue~~issuance of term notes in October and December 2023, and as ~~a going concern is dependent upon its ability to successfully secure other sources~~ of ~~financing and attain profitable operations. In the Company’s fourth fiscal quarter ended March~~December 31, 2023, ~~the Company~~we have raised ~~$1,715,439~~$1 million from the ~~sales~~sale of ~~its~~ common stock related to ~~an “At-the-Market” (“ATM”) offering, with an additional approximate $1,800,000 raised in~~ the this first fiscal quarter of 2024. In addition, on April 27, 2023, the Company sold $6.875 million of principal face amount senior secured convertible notes with an original issue discount to sophisticated investors for gross proceeds to the company of $5.5 million. The notes mature on April 27, 2024 and are secured by all of the assets of the Company and certain of its subsidiaries, including BNC.ELOC purchase agreement. The proceeds received have gone towards working capital until ~~the Company~~we can generate the necessary funds from ~~their~~our operations.
The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if ~~the Company is~~we are unable to continue as a going concern. See “Risk Factors” included in our ~~Annual Report for the year ended March 31, 2023 (“~~2023 Annual ~~Report”)~~Report filed with the Securities and Exchange Commission ~~(“SEC”)~~SEC on July 14, 2023.
~~Cautionary Note Regarding Forward Looking Statements~~
This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding closing the SEA with Ault, the potential terms, timing and success of the planned spin-offs by us to our security holders of WTRV’s and Wolf Energy’s common stock, our ability to raise capital, our plans to maintain our Nasdaq listing, the expected changes to Agora’s business, our expectations with respect to future developments in our ongoing litigation, and our liquidity. All statements other than statements of historical fact are “forward-looking statements” including: any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.
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Critical Accounting Estimates
The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include the possibility that the BNC platform may not create positive operating cash flows, the non-acceptance of such platform by consumers, the acceptance of advertisers and others may not be as expected, the lack of the ability to
A complete ~~timelines~~discussion of our planned spin-offs and any regulatory, registration or other delays and uncertainties due to factors beyond our control, the inability to obtain stockholder approval of (i) the acquisition of BNC and the issuance of more than 19.9% of our common stock to Ault, the potential for a recession which may result, supply chain shortages, any issues which could result in unfavorable outcomes of one or both of our ongoing Zest Labs lawsuits, the outcome of the lawsuits against Agora, and the availability of capital on acceptable terms when needed or at all including all risks relating to the capital markets in general and small public companies in particular. Further information on the risks and uncertainties affecting our businesscritical accounting estimates is ~~contained~~included in our ~~Annual Report on~~ Form 10-K for the ~~fiscal~~ year ended March 31, ~~2023 under Part I. Item 1A. – Risk Factors. We undertake~~2023. There have been no ~~obligation~~material changes to ~~publicly update or revise any forward-looking statements, whether~~our critical accounting policies and estimates as ~~the result of new information, future events or otherwise.~~
~~Our condensed consolidated financial statements are prepared~~compared to those disclosed in accordance with accounting principles generally accepted in the United States. The accounting principles we use require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and amounts of income and expenses during the reporting periods presented. We believe in the quality and reasonablenessour Form 10-K. For a description of our critical accounting ~~policies; however, materially different amounts may be reported under different conditions or using assumptions different from those that we have applied. The accounting~~ policies ~~that have been identified as critical~~and estimates, see Part I, Item 1, note 3, "Basis of Presentation and Significant Accounting Policies" in our notes to ~~our business operations and to understanding~~ the ~~results of our operations pertain to valuation of inventories, accruals of certain liabilities including product warranties, and useful lives of assets.~~consolidated financial statements in this Quarterly Report on Form 10-Q.
Recently Issued Accounting ~~Pronouncements~~Standards
See Part I, Item 1, note 3, "Basis of Presentation and Significant Accounting Policies" in our notes to the consolidated financial statements in this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements as of the date of this Quarterly Report on Form 10-Q.
Our management has considered all recent accounting pronouncements issued since the last audit of our financial statements. Our management believes that these recent pronouncements, other than those discussed in note 3, will not have a significant effect on our financial statements.
~~Critical Accounting Estimates~~
~~Fair Value Measurements~~
~~ASC 820~~ ~~Fair Value Measurements~~ defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. ASC 820 classifies these inputs into the following hierarchy:
~~Level 1 inputs: Quoted prices for identical instruments in active markets.~~
Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
~~Level 3 inputs: Instruments with primarily unobservable value drivers.~~
The carrying values of the Company’s financial instruments such as cash, accounts payable, and accrued expenses approximate their respective fair values because of the short-term nature of those financial instruments.
~~Derivative Financial Instruments~~
The Company does not currently use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks, but may explore hedging oil prices in the current fiscal year. Management evaluates all of the Company’s financial instruments, including warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company generally uses a Black-Scholes model, as applicable, to value the derivative instruments at inception and subsequent valuation dates when needed. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is remeasured at the end of each reporting period. The Black-Scholes model is used to estimate the fair value of the derivative liabilities.
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~~Recently Issued Accounting Standards~~
In October 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, ~~Revenue from Contracts with Customers~~. The guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The guidance should be applied prospectively to acquisitions occurring on or after the effective date. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The Company does not expect this guidance to have a material impact on its condensed consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, which requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The guidance is effective for fiscal years beginning after December 15, 2019. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), which pushes back the effective date for public business entities that are smaller reporting companies, as defined by the SEC, to fiscal years beginning after December 15, 2022. Early adoption is permitted. The adoption of ASU 2016-13 beginning April 1, 2023 did not have a material impact on our condensed consolidated financial statements.
~~The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.~~
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
~~Our management, with the participation of our principal executive officer and principal financial officers,~~We have ~~evaluated the effectiveness of our~~established disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based upon their evaluation, our principal executive officer and our principal financial officer concluded that, solely as a result of the material weaknesses identified by management and described in our 2023 Annual Report, our disclosure controls and procedures were not effectivedesigned to ensure that ~~material~~ information ~~relating to the Company~~ required to be disclosed byin the ~~Company in~~ reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and ~~to ensure that such information~~ is accumulated and communicated to management, including ~~our Chief Executive Officer~~the principal executive officer and ~~Chief Financial Officer, as appropriate~~principal financial officer, to allow timely decisions regarding required disclosure.
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~~Changes~~Our principal executive officer and principal financial officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in ~~Internal Control Over Financial Reporting~~
~~Except for~~Rules 13a-15(e) and 15d-15(e) under the ~~material weaknesses identified~~Exchange Act) as of the end of the period covered by ~~management~~this quarterly report. Based upon our evaluation, each of our principal executive officer and ~~described in our 2023 Annual Report, there were no changes in our~~principal financial officer has concluded that the Company’s internal control over financial reporting ~~during~~was not effective as of the ~~quarter~~end of the period covered by this Quarterly Report on Form 10-Q because the Company has not yet completed its remediation of the material weaknesses previously identified and disclosed in the Company’s Annual Report on Form 10-K for the year ended ~~June 30,~~March 31, 2023, ~~that have materially affected, or that are reasonably likely~~the end of its most recent fiscal year.
Management has identified the following material weaknesses:
1. The Company does not have sufficient segregation of duties within accounting functions;
2. Lack of formal review procedures including multiple level of review over accounting financial reporting process due to the small size of its accounting staff;
3. The Company does not have sufficient written documentation of internal control policies and procedures; and
4. The Company’s financial reporting is carried out with the assistance of an outside financial consultant.
Planned Remediation
Management has taken and is taking steps to ~~materially affect, our internal control over~~rectify these weaknesses through (i) hiring qualified accounting, financial ~~reporting.~~
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~~Remediation~~
~~Revenue Recognition~~~~. We intend on enhancing the design of existing controls~~reporting and key management personnel with public experience, (ii) engaging external advisors to assist in documenting, designing and implementing ~~new~~internal controls ~~over~~to ensure proper communication of critical information, review and approvals, and (iii) enhancing policies, procedures, and documentation for significant areas of accounting,
including each area where a material weakness was identified. Management has an increased focus and commitment in its efforts to remediate the ~~review~~identified material weaknesses.
Additionally, in order to achieve the timely implementation of the ~~application~~above, management has commenced the following actions and ~~recording of revenue~~will continue to assess additional opportunities for ~~customer contracts under the guidance outlined in ASC 606. We also intend~~remediation on implementing more thorough reviews of contracts by evaluating contractual terms and determining whether certain contracts should be consolidated, involve related parties and the proper timing of revenue recognition. These reviews will include more comprehensive contractual analysis from our legal team while ensuring qualified resources are involved and adequate oversight is performed during the internal technical accounting review process.an ongoing basis:
Accounts Receivable. We intend on enhancing the design of existing controls and implementing new controls over the processing and review of accounts receivable billings. We plan to supplement our accounting staff with more experienced personnel. We will also evaluate information system capabilities in order to reduce the manual calculations within this business process.
Complex Financial Instruments. We will design and implement controls to properly identify and implement the proper accounting treatment and classifications of our complex financial instruments to ensure our equity accounting and treatment is in accordance with U.S. generally accepted accounting principles. We intend to accomplish this by implementing more thorough reviews of certain details regarding all rights, penalties, record holders and negative covenants of the financial instruments in order to apply the correct accounting guidance (liabilities vs. equity vs. temporary equity).
Fair value estimates. We will design and implement additional control activities to ensure controls related to fair value estimates (including controls that validate the reasonableness, completeness and accuracy of information, data and assumptions), are properly designed, implemented and documented.
~~While these actions and planned actions~~These material weaknesses will not be considered to be remediated until the applicable remediated controls are ~~subject to ongoing management evaluation and will require validation and testing of the design and~~ operating ~~effectiveness of internal controls over~~for a ~~sustained~~sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Despite the existence of these material weaknesses, we believe that the condensed consolidated financial ~~reporting cycles, we are committed to~~statements included in the ~~continuous improvement~~period covered by this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles.
Changes in Internal Controls Over Financial Reporting
Except as detailed above, during the fiscal quarter ended December 31, 2023, there were no significant changes in our internal control over financial ~~reporting. We will continue~~reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to ~~diligently review~~materially affect our internal control over financial reporting.
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34

PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the period covered by this report, there were no material developments in the legal proceedings disclosed in our Annual Report on Form 10-K for the year ended March 31, 2023.
ITEM 1A. RISK FACTORS
~~Investing in our common stock involves a high degree of risk. Investors should review~~There are no updates or changes to the risk factors ~~described~~set forth in our Annual Report on Form 10-K for the year ended March 31, ~~2023. In addition, investors should consider~~2023, as supplemented by the risk factors ~~described below.~~
~~Although we reported net income~~set forth in our Quarterly Report on Form 10-Q for the ~~three months ended June 30, 2023, such results are unrelated to our actual performance.~~
~~During the first~~ quarter ended June 30, 2023, we reported net operating income from continuing operations of approximately $6.6 million. Investors should consider that the income arose from GAAP which provides that our derivative liabilities operate inversely to our stock price. If our stock price in a given quarter goes down, we recognize non-cash income. Conversely if our stock price goes up, we report a non-cash loss.2023.
~~There is substantial doubt about our ability to continue as a going concern.~~
The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company sold its interests in Banner Midstream in two separate transactions on July 25, 2022 and September 7, 2022. In addition, it sold the non-core business of Trend Discovery on June 17, 2022. The Company expects to distribute the common stock it received (or issuable upon conversion of preferred stock) in the sales to its stockholders upon the effective registration statements for the two entities the companies were sold to. See Note 17, “Preferred Stock” for information on the Company’s recent $12 million convertible preferred stock financing. That financing has restrictive covenants that require approval of the investor for the Company to engage in any equity or debt financing.

The Company believes that the current cash on hand is not sufficient to conduct planned operations for one year from the issuance of the condensed consolidated financial statements, and it needs to raise capital to support their operations, raising substantial doubt about its ability to continue as a going concern. The Company has recently acquired BNC and generated nominal revenues as of June 30, 2023. The accompanying financial statements for the period ended June 30, 2023 have been prepared assuming the Company will continue as a going concern, but the ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it establishes continued revenue streams and becomes profitable. Management’s plans to continue as a going concern include raising additional capital through sales of equity securities and borrowing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. If the Company is not able to obtain the necessary additional financing on a timely basis, the Company will be required to delay, reduce or perhaps even cease the operation of its business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully secure other sources of financing and attain profitable operations. The Company raised approximately $3,500,000 in an At-the-Market capital raise during the fourth fiscal quarter of the year ended March 31, 2023 and the three months ended June 30, 2023. ~~The ATM was terminated on June 16, 2023 after having raised approximately $3,500,000.~~ In addition, on April 27, 2023, the Company sold $6.875 million of principal face amount senior secured convertible notes with an original issue discount to sophisticated investors for gross proceeds to the company of $5.5 million. The notes mature on April 27, 2024 and are secured by all of the assets of the Company and certain of its subsidiaries, including BNC.
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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.
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 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 violated Nasdaq’s voting rights rule set forth in Listing Rule 5640. The matters described in the letter relate to an amendment to the Certificate of Designation of Rights, Preferences and Limitations (the “Certificate”) of the Series A, shares of which were issued by the Company on June 8, 2022 in a private placement transaction which was previously disclosed on a Current Report on Form 8-K filed on June 9, 2022. Specifically, the Company amended the Certificate on November 28, 2022 to: (i) increase the stated value of the Series A from $10,000 to $10,833.33; (ii) provide for the dividends payable under the Series A to be payable in Common Stock rather than cash effective beginning November 1, 2022, and (iii) reduce the conversion price of the Series A from $63.00 to the lesser of (1) $30.00 and (2) the higher of (A) 80% of the 10-day daily volume weighted average price and (B) $7.50 (the “Amendment”). According to the letter, the Company was required to obtain stockholder approval to effect the Amendment because the Series A as amended provides for the potential issuance of 1,733,333 shares of Common Stock at less than the Minimum Price under Listing Rule 5635(d), and the Amendment also violates Listing Rule 5640 by providing the holder of the Series A with voting rights on an as-converted basis with the Series A convertible into Common Stock at a discount, thereby violating Listing Rule 5640.
In the letter, the Company was provided 45 calendar days from the date of the letter, or until February 10, 2023, to submit a plan to regain compliance with the referenced Listing Rules, and if such plan is accepted by Nasdaq, the Company can receive an extension of up to 180 calendar days from the date of the letter to evidence compliance. However, if the Company’s plan is not accepted by Nasdaq, or is not sufficiently executed to regain compliance and remedy the matters set forth in the letter, the Company’s Common Stock will be subject to delisting. In connection with the letter the Company was also requested to furnish Nasdaq with certain documents and information related to its sale of WTRV.
~~In connection with the December 27~~^th letter, the Company was also requested to provide certain documents and information related to its sale of WTRV, including as it pertains to the $30,000,000 in preferred stock value being carried on the Company’s balance sheet as consideration for the sale of the entity. According to the correspondence, the request was made under Listing Rule 5250 which provides that a listed company will provide Nasdaq with requested information deemed necessary to make a determination regarding such company’s continued listing.
Further, on December 30, 2022, the Company received another letter from the Nasdaq notifying the Company of its noncompliance with 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 business days and providing the Company with a 180 calendar day grace period to regain compliance with the Listing Rule 5550(a)(2), subject to a potential 180 calendar day extension, as described below. To regain compliance, the Company’s Common Stock must have a minimum closing bid price of at least $1.00 per share for at least 10 consecutive business days within the grace period which ended on June 28, 2023. 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 a reverse stock split if necessary, which would also require stockholder approval unless completed with a proportionate reduction in our authorized Common Stock under our Articles of Incorporation.
On January 26, 2023, Nasdaq sent an email to the Company raising 13 questions concerning the WTRV transaction, WTRV’s business, seeking verification that the Company had in fact transferred $3 million to WTRV last July and questioning the time allocations of the two senior executive officers of the Company and WTRV, among other things. The Company responded on February 15, 2023.
~~The Company provided responses to Nasdaq on January 11, 2023, February 10, 2023 and February 15, 2023.~~
~~If our Common Stock is delisted from Nasdaq, we could face significant material adverse consequences, including:~~
● ~~it may adversely affect the Company’s ability to raise capital which it needs to stay operational;~~
● ~~a limited availability of market quotations for our Common Stock;~~
● ~~reduced liquidity with respect to our Common Stock;~~
● a determination that our shares of Common Stock are a “penny stock” which will require broker-dealers trading in our Common Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our Common Stock; and
● ~~being in default under the transaction documents entered into with the investors in the April 27, 2023 financing.~~
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If we are unable to rectify any of the above-described Nasdaq issues, for failure to timely obtain stockholder approval, a delisting will subject us and our stockholders to the above and other adverse consequences and could also delay us from effecting the announced spin-offs of common stock of WTRV and Wolf Energy certain entities as described elsewhere in this Report.
On June 21, 2023, the Company received a letter from the Listing Qualifications staff of Nasdaq notifying the Company that the Staff has determined that the Company has violated Nasdaq’s voting rights rule set forth in Listing Rule 5640 (the “Voting Rights Rule”). The alleged violation of the Voting Rights Rule relates to the issuance of (i) 8,637.5 shares of the Series B, and (ii) 1,362.5 shares of the Series C in connection with the acquisition of BNC as well as the securities of Earnity, Inc. beneficially owned by BNC (collectively, the “Assets”) pursuant to the SEA by and among the Company, AAI and the minority stockholders of BNC, which was previously disclosed on Current Reports on Form 8-K filed by the Company on February 14, 2023 and March 10, 2023. The Series B and C Preferred Stock has a collective stated value of $100,000,000 (the “Stated Value”), and votes on an as-converted basis, representing approximately 92.4% of the Company’s outstanding voting power on a fully diluted basis at the time of issuance.
According to the Letter, because the Preferred Stock was not issued for cash, the Staff compared the value of the Assets to the Stated Value and determined that the value of the Assets was less than the Stated Value and that the voting rights attributable to the Series B and C Preferred Stock has the effect of disparately reducing the voting rights of the Company’s existing shareholders. The Staff looked at the total assets and stockholders’ equity of BNC as of March 5, 2023, as well as the market capitalization of AAI prior to entering into the Agreement and immediately after closing of the transaction in determining, in Staff’s opinion, the value of the Assets. The Letter did not make any reference to the projections prepared by AAI as to the future potential of the business of BNC nor to the independent valuation obtained by the Company prior to closing of the transaction, which supported the Stated Value of the Preferred Stock for the total value of the Assets, both of which the Company provided to the Staff prior to receipt of the Letter.
According to the Letter, Nasdaq determined that the voting rights of the Series B and C Preferred Stock, voting on an as-converted basis, are below the minimum price per share of the Company’s common stock at the time of the issuance of the Series B and C Preferred Stock. Additionally, Nasdaq determined that the Series B provides the holder the right to appoint a majority of the Company’s board of directors when such representation is not justified by the relative contribution of the Series B pursuant to the Agreement.
Under the Voting Rights Rule, a company cannot create a new class of security that votes at a higher rate than an existing class of securities or take any other action that has the effect of restricting or reducing the voting rights of an existing class of securities. As such, according to the Letter, the issuance of the Series B and C Preferred Stock violated the Voting Rights Rule because the holders of the Series B and C Preferred Stock are entitled to vote on an as-converted basis, thus having greater voting rights than holders of common stock, and the Series B is entitled to a disproportionate representation on the Company’s board of directors.
According to the Letter, the Company has 45 calendar days from the date of the Letter, or until August 7, 2023, to submit a plan to regain compliance with the Voting Rights Rule, and if such plan is accepted by Nasdaq, the Company can receive an extension of up to 180 calendar days from the date of the Letter to evidence compliance. However, if the Company’s plan is not accepted by Nasdaq, the Company’s common stock will be subject to delisting. The Company would have the right to appeal that decision to a hearings panel. On July 28^th~~, the Company responded and submitted a plan to regain compliance with the Voting Rights Rule.~~
On May 8, 2023, the Company received a letter from the Listing Qualifications staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the Staff has determined to delist the Company’s common stock, par value $0.001 per share (the “Common Stock”) from The Nasdaq Capital Market, effective May 17, 2023, pursuant to Listing Rule 5810(c)(3)(A)(iii), as the Company’s common stock traded below $0.10 per share for 10 consecutive trading days.
On May 12, 2023, the Company issued a press release announcing a 1-for-30 reverse stock split of its outstanding common stock which will be effective for trading purposes as of the commencement of trading on May 15, 2023.
On May 26, 2023, the Company received a letter from Nasdaq stating that the Company’s bid price deficiency had been cured, and that the Company was in compliance with all applicable listing standards.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
~~None.~~
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None.
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ITEM 6. EXHIBITS
Exhibit No. Exhibit Description
3.1 Articles of Incorporation, dated November 20, 2007, as amended. Incorporated by reference to the Current Report on Form 10-Q filed on February 12, 2021 as Exhibit 3.1 thereto.
3.2 Amended and Restated Bylaws effective as of April 24, 2017. Incorporated by reference to the Current Report on Form 8-K filed on April 28, 2017 as Exhibit 3.1 thereto.
3.3 Certificate of Amendment to Articles of Incorporation dated October 8, 2021. Incorporated by reference to the Current Report on Form 8-K filed on October 12, 2021 as Exhibit 3.1 thereto.
3.4 Certificate of Amendment of Articles of Incorporation, as amended, effective October 16, 2023. Incorporated by reference to the Current Report on Form 8-K filed on October 17, 2023 as Exhibit 3.1 thereto.
3.5 Certificate of Amendment to Articles of Incorporation effective November 1, 2023. Incorporated by reference to the Current Report on Form 8-K filed on October 31, 2023 as Exhibit 3.1 thereto.
3.6 First Amendment to Amended and Restated Bylaws. Incorporated by reference to the Current Report on Form 8-K filed on August 30, 2021 as Exhibit 3.1 thereto.
~~3.5~~3.7 Second Amendment to Amended and Restated Bylaws. Incorporated by reference to the Current Report on Form 8-K filed on June 9, 2022 as Exhibit 3.2 thereto.
~~3.6~~ Certificate of Designation for Series A Convertible Redeemable Preferred Stock dated June 8, 2022. Incorporated by reference to the Current Report on Form 8-K filed on June 9, 2022 as Exhibit 3.1 thereto.
~~3.7~~
Certificate of Amendment to the Certificate of Designation for the Series A Convertible Redeemable Preferred Stock, dated June 22, 2022. Incorporated by reference to the Current Report on Form 8-K filed on June 27, 2022 as Exhibit 3.1 thereto.
3.8 ~~Form of HUMBL Series C Certificate of Designation, dated August 11, 2022. Incorporated by reference to the Current Report on Form 8-K filed on August 16, 2022 as Exhibit 10.2 thereto.~~
~~3.9~~ Second Certificate of Amendment to the Certificate of Designation for the Series A Convertible Redeemable Preferred Stock, dated July 14, 2022. Incorporated by reference to the Current Report on Form 8-K filed on July 15, 2022 as Exhibit 3.1 thereto.
~~3.10~~ ~~Form of Fortium Series A Certificate of Designation, dated July 22, 2022. Incorporated by reference to the Current Report on Form 8-K filed on July 29, 2022 as Exhibit 10.2 thereto.~~
~~3.11~~
Third Certificate of Amendment to the Certificate of Designation for the Series A Convertible Redeemable Preferred Stock, dated November 28, 2022. Incorporated by reference to the Current Report on Form 8-K filed on November 30, 2022 as Exhibit 3.1 thereto.
~~3.12~~ Form of Certificate of Designations of Rights, Preferences and Limitations of Series B Convertible Preferred Stock, dated March 6, 2023. Incorporated by reference to the Current Report on Form 8-K filed on March 10, 2023 as Exhibit 4.1 thereto.
~~3.13~~3.9 Form of Certificate of Designations of Rights, Preferences and Limitations of Series C Convertible Preferred Stock, dated March 6, 2023. Incorporated by reference to the Current Report on Form 8-K filed on March 10, 2023 as Exhibit 4.2 thereto.
~~3.14~~3.10 Form of Certificate of Amendment to the Form of Certificate of Designations of Rights, Preferences and Limitations of Series B Convertible Preferred Stock, dated March 7, 2023. Incorporated by reference to the Current Report on Form 8-K filed on March 10, 2023 as Exhibit 4.3 thereto.
~~3.15~~ 3.11 Form of Certificate of Amendment to the Form of Certificate of Designations of Rights, Preferences and Limitations of Series C Convertible Preferred Stock, dated March 7, 2023. Incorporated by reference to the Current Report on Form 8-K filed on March 10, 2023 as Exhibit 4.4 thereto.
~~3.16~~ 3.12 Articles of Merger, dated March 17, 2023. Incorporated by reference to the Current Report on Form 8-K filed on March 21, 2023 as Exhibit 3.1 thereto.
~~3.17~~ 3.13 Certificate of Change, dated May 4, 2023. Incorporated by reference to the Current Report on Form 8-K filed on May 10, ~~2023~~2024 as Exhibit 3.1 ~~thereto.~~thereto.
~~3.18~~ 3.14 ~~Certificate of Amendment to the~~Amended and Restated Certificate of Designation of Rights, Preferences and Limitations of Series A Convertible Redeemable Preferred Stock, dated May 9, 2023. Incorporated by reference to the Current Report on Form 8-K filed on May 10, 2023 as Exhibit 3.2 thereto.
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~~10.1~~3.15 ~~Letter Agreement~~Certificate of Amendment to the Certificate of Designation of Rights, Preferences and Limitations of Series B Convertible Preferred Stock, dated ~~April 4,~~September 28, 2023. Incorporated by reference to the Current Report on Form 8-K filed on ~~April 6,~~September 29, 2023 as Exhibit 3.1 thereto.
3.16 Certificate of Amendment to the Certificate of Designation of Rights, Preferences and Limitations of Series C Convertible Preferred Stock, dated September 28, 2023. Incorporated by reference to the Current Report on Form 8-K filed on September 29, 2023 as Exhibit 3.2 thereto.
3.17 Form of Certificate of Designations of Rights, Preferences and Limitations of Series D Convertible Preferred Stock. Incorporated by reference to the Current Report on Form 8-K filed on November 15, 2023 as Exhibit 4.1 thereto.
10.1 Amendment No. 1 to the Purchase Agreement, dated as of October 18, 2023, by and between the Company and Arena Business Solutions Global SPC II, LTD., on behalf of and for the account of Segregated Portfolio #3 – SPC #3. Incorporated by reference to the Current Report on Form 8-K filed on October 20, 2023 as Exhibit 10.1 thereto.
10.2 ~~Form of~~ Securities Purchase Agreement, dated ~~April 27, 2023.~~as of November 14, 2023, by and between RiskOn International, Inc. and Ault Alliance, Inc. Incorporated by reference to the Current Report on Form 8-K filed on ~~April 28,~~November 15, 2023 as Exhibit 10.1 thereto.
~~10.4~~31.1 ~~Form of Registration Rights Agreement dated April 27, 2023. Incorporated by reference to the Current Report on Form 8-K filed on April 28, 2023 as Exhibit 10.3 thereto.~~
~~10.5~~ ~~Form of AAI Guaranty dated April 27, 2023. Incorporated by reference to the Current Report on Form 8-K filed on April 28, 2023 as Exhibit 10.4 thereto.~~
~~10.6~~ ~~Form of Subsidiary Guaranty dated April 27, 2023. Incorporated by reference to the Current Report on Form 8-K filed on April 28, 2023 as Exhibit 10.5 thereto.~~
~~10.7~~ ~~Form of Voting Agreement dated April 27, 2023. Incorporated by reference to the Current Report on Form 8-K filed on April 28, 2023 as Exhibit 10.6 thereto.~~
~~10.8~~ ~~Form of Lockup Agreement dated April 27, 2023. Incorporated by reference to the Current Report on Form 8-K filed on April 28, 2023 as Exhibit 10.7 thereto.~~
~~10.9~~ ~~Form of Security Agreement dated April 27, 2023. Incorporated by reference to the Current Report on Form 8-K filed on April 28, 2023 as Exhibit 10.2 thereto.~~
10.10* Purchase Agreement, dated as of June 5, 2023, between BitNile Metaverse, Inc. and Arena Business Results, LLC. Incorporated by reference to the Current Report on Form 8-K filed on June 9, 2023 as Exhibit 10.1 thereto.
~~31.1~~ Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.
31.2 Certification of ~~Principal~~Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.
32.1** Certification of Chief Executive and Chief Financial Officer ~~pursuant to 18 U.S.C.~~required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 ~~as adopted pursuant to Section 906~~of Chapter 63 of Title 18 of the ~~Sarbanes-Oxley Act of 2002~~United States Code.
32.2** ~~Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
101.INS Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Certain schedules and other attachments have been omitted. The Company undertakes to furnish the omitted schedules and attachments to the Securities and Exchange Commission upon request.
** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to our Corporate Secretary at BitNile Metaverse, Inc., 303 Pearl Parkway Suite #200, San Antonio, Texas 78215.
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SIGNATURES
~~SIGNATURES~~
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
~~BitNile Metaverse,~~RiskOn International, Inc.
Date: ~~August 21, 2023~~February 20, 2024 By: /s/ ~~Randy May~~Milton C. Ault, III
~~Randy May~~Milton C. Ault, III
Chief Executive Officer
Date: ~~August 21, 2023~~February 20, 2024 By: /s/ ~~Jay Puchir~~Kayson Pulsipher
~~Jay Puchir~~Kayson Pulsipher
Chief Financial Officer
4039

~~iso4217:USD xbrli:shares~~

	Three Months Ended June 30,
	2023			2022

Hospitality and VIP experience revenue	$	45,150		$	-
Cost of revenue		86,300			93,862
Gross loss		(41,150	)		(93,862	)

Operating expenses:
Depreciation, amortization and impairment		136,882			45,097
Bad debt		53,415			-
Selling, general and administration		10,160,441			1,688,064
Salaries and professional consulting fees		1,841,711			6,542,948
Total operating expenses		12,192,449			8,276,109
Operating loss		(12,233,599	)		(8,369,971	)
Other income (expense)
Change in fair value of warrant derivative liabilities		2,197,348			(393,532	)
Change in fair value of preferred stock derivative liabilities		17,893,969			-
Change in fair value of convertible note derivative liability		1,029,237			-
Derivative expense		(182,077	)		-
Amortization of original issue discount		(241,096	)		-
Dividend expense		(1,597,222	)		-
Interest expense, net of interest income		(262,535	)		(36,828	)
Total other income (expense)		18,837,624			(430,360	)
Income (loss) from continuing operations before discontinued operations		6,604,025			(8,800,331	)
Discontinued operations
Loss from discontinued operations		(1,143,303	)		(2,635,818	)
Gain on disposal of discontinued operations		-			711,505
Total loss discontinued operations		(1,143,303	)		(1,924,313	)
Net income (loss)		5,460,722			(10,724,644	)
Net loss attributable to non-controlling interest		484,879			571,261

Net income (loss) to controlling interest		5,945,601			(10,153,383	)
Less preferred stock dividends		-			43,151
Net income (loss) to controlling interest of common shareholders	$	5,945,601		$	(10,196,534	)

Net income (loss) per share – basic and diluted (See Note 1)
Net income (loss) continuing operations:	$	3.65		$	(10.00	)
Net loss discontinued operations:	$	(0.63	)	$	(2.19	)
Net income (loss) per share		3.02			(12.19	)
Weighted average common shares – basic and diluted (See Note 1)		1,807,020			879,632

	Common Stock				Additional Paid in		Accumulated			Non-controlling			Total Stockholders’
	Shares		Amount		Capital		Deficit			interest			Deficit
Balance, March 31, 2023		1,383,832	$	1,384	$	199,062,577	$	(208,677,438	)	$	(4,330,647	)	$	(13,944,124	)
Shares issued for cash under ATM, net of fees		935,452		935		1,779,505		-			-			1,780,440
Shares issued for preferred stock dividends		40,022		40		300,118		-			-			300,158
Shares issued by Agora Digital Holdings, Inc. for services rendered, net of amounts prepaid		-		-		630,206		-			-			630,206
Share-based compensation		-		-		258,655		-			-			258,655
Net income (loss)		-		-		-		5,945,601			(484,879	)		5,460,722
Balance, June 30, 2023		2,359,306	$	2,359	$	202,031,061	$	(202,731,837	)	$	(4,815,526	)	$	(5,513,943	)

	For the Three Months Ended June 30,
Cash flows from operating activities:	2023			2022
Net income (loss)	$	5,460,722		$	(10,724,644	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Change in non-controlling interest		(484,879	)		(571,261	)
Amortization of discount		241,096			-
Depreciation, amortization, impairment, depletion, and accretion		136,882			35,975
Impairment - digital assets		-			9,122
Legal costs for ATM facility		110,000			-
Share-based compensation		258,655			182,561
Change in fair value of warrant derivative liabilities		(2,197,348	)		393,532
Change in fair value of preferred stock derivative liabilities		(17,893,969	)		-
Change in fair value of convertible note derivative liability		(1,029,237	)		-
Derivative (income) expense		182,077			-
Shares issued for preferred dividend		300,158			-
Common stock issued for services - Agora Digital Holdings, Inc.		630,206			5,215,287
Commitment fees on long-term debt		-			17,681
Changes in operating assets and liabilities
Accounts receivable		(3,900	)		-
Prepaid expenses		407,868			490,491
Accrued interest receivable		-			(8,385	)
Dividends payable		1,597,222			-
Amortization of right of use asset - operating leases		31,391			29,914
Accounts payable		4,180,943			144,528
Accrued expenses		192,636			1,006,473
Operating lease liability		(30,684	)		(28,541	)
Total adjustments		(13,370,883	)		6,917,377
Net cash used in operating activities of continued operations		(7,910,161	)		(3,807,267	)
Net cash provided by (used in) discontinued operations		1,105,803			(4,706,432	)
Net cash used in operating activities		(6,804,358	)		(8,513,699	)
Cash flows from investing activities:
Discontinued operations		-			5,083,299
Cash provided by investing activities		-			5,083,299
Cash flows from financing activities:
Proceeds from former parent of Bitnile.com, Inc.		781,898			-
Redemption of preferred stock		(1,205,000	)		-
Proceeds from note - related party		-			616,000
Payments on note - related party		-			(616,000	)
Payments of long-term debt		(7,819	)		(588,769	)
Proceeds from long-term debt		-			487,500
Proceeds from the sale of common stock under ATM, net		1,780,440			-
Proceeds from convertible note		5,390,000			-
Proceeds from the exercise of warrants into common stock		-			12,000,000
Net cash provided by financing activities of continuing operations		6,739,519			11,898,731
Net cash used in financing activities of discontinued operations		-			(291,141	)
Net cash provided by financing activities		6,739,519			11,607,590
Net (decrease) increase in cash and cash equivalents		(64,839	)		8,177,190
Cash at beginning of period		66,844			85,073
Cash at end of period	$	2,005		$	8,262,263

SUPPLEMENTAL DISCLOSURES
Cash paid for interest expense	$	11,173		$	1,602
SUMMARY OF NON-CASH ACTIVITIES
Issuance costs on mezzanine equity	$	-		$	193,416
Reclassification of convertible notes and warrants to derivative liability	$	5,682,077		$	-

	June 30, 2023		March 31, 2023
Wolf Energy Services, Inc.	$	1,384,224	$	1,297,801
	$	1,384,224	$	1,297,801

Secured note receivable	$	4,250,000
Cash		(27,657	)
Accounts receivable		(222,400	)
Prepaid expenses		(99,566	)
Goodwill		(3,222,799	)
Other assets		(284	)
Accounts payable and accrued expenses		34,211
Gain on disposal of discontinued operations	$	711,505

Prepaid expenses	$	620,616
Property and equipment		330,190
Intangible assets		6,239,000
Accounts payable and accrued expenses		(3,186,513	)
Due to BitNile.com former parent		(4,404,350	)
Notes payable		(170,222	)
	$	(571,279	)

Series B and Series C Preferred Stock		$	53,913,000
Total consideration		$	53,913,000

	June 30, 2023			March 31, 2023

Zest Labs freshness hardware, equipment and computer costs	$	2,915,333		$	2,915,333
Land		125,000			125,000
Furniture		40,074			40,074
Auto – BNC		220,786			220,786
Equipment – BNC		109,404			109,404
Mining technology equipment– Bitcoin		5,639,868			5,639,868
Auto – Bitcoin		91,132			91,132
Total property and equipment		9,141,597			9,141,597
Accumulated depreciation and impairment		(4,742,093	)		(4,709,194	)
Property and equipment, net	$	4,399,504		$	4,432,403

	Level 1		Level 2		Level 3		Total Gains and (Losses)
June 30, 2023
Warrant derivative liabilities	$	-	$	-	$	2,138,671	$	2,197,348
Convertible note		-		-		323,085		1,029,237
Preferred stock derivative liabilities		-		-		756,992		17,893,969
Investment – WTRV		-		-		9,224,785		-

March 31, 2023
Warrant derivative liabilities		-	$	-	$	6,264	$	4,312,366
Preferred stock derivative liabilities		-		-		19,855,962		28,611,760
Bitcoin		-		-		-		(9,122	)
Investment – WTRV		-		-		9,224,785		(20,775,215	)

Schedule of assets and liabilities that are measured and recognized at fair value on a recurring basis
	Level 1		Level 2		Level 3		Total Gains and (Losses)
December 31, 2023
Derivative liabilities	$	-	$	-	$	1,375,063	$	23,807,318
Investment – WTRV		-		-		9,224,785		-

March 31, 2023
Derivative liabilities		-	$	-	$	19,862,226	$	32,924,126
Bitcoin		-		-		-		(9,122	)
Investment – WTRV		-		-		9,224,785		(20,775,215	)

Schedule of reconciliation of the beginning and ending liabilities
Beginning balance as of March 31, 2023	$	(10,637,441	)	$	(10,637,441	)
Issuance – convertible notes with warrants		(5,682,077	)		(4,686,817	)
Net change in unrealized (depreciation) appreciation included in earnings		21,120,554
Ending balance as of June 30, 2023	$	4,801,036
Redemption of derivative liabilities and preferred, net					633,338
Net change in fair value included in earnings					23,807,318
Ending balance as of December 31, 2023				$	7,849,722

2024	$	113,356
2025		96,157
2026		99,042
2027		33,338
Imputed interest		(26,601	)
Total lease liability	$	315,292
Current portion	$	100,142
Non-current portion	$	215,150

Schedule of segment reporting information
	December 31, 2023
	BNS			RiskOn360			Other¹			Total
RiskOn360 revenues	$	-		$	240,356		$	-		$	240,356
BNS revenue		-			-			-			-
Cost of revenue		-			2,058,024			-			2,058,024
Operating loss before other expenses		-			(1,817,668	)		-			(1,817,668	)

Operating expenses
Salaries		690,752			202,786			145,250			1,038,788
Professional fees		359,745			-			-			359,745
Selling, general and administration		5,893,520			969,420			34,355			6,897,295
Depreciation and amortization		123,104			1,912			-			125,016
Total		7,067,121			1,174,118			179,605			8,420,844

Loss from continuing operations		(7,067,121	)		(2,991,786	)		(179,605	)		(10,238,512	)
Other expense		(4,316,742	)		-			-			(4,316,742	)
Loss from discontinued operations		-			-			(243,863	)		(243,863	)
Net Loss	$	(11,383,863	)	$	(2,991,786	)	$	(423,468	)	$	(14,799,117	)

	December 31, 2023
	BNS			RiskOn360			Other²			Total
RiskOn360 revenues	$	-		$	240,356		$	-		$	240,356
BNS revenue		64,350			-			-			64,350
Cost of revenue		114,722			2,058,024			-			2,172,746
Operating loss before other expenses		(50,372	)		(1,817,668	)		-			(1,868,040	)

Operating expenses
Salaries		2,113,207			202,786			145,250			2,461,243
Professional fees		790,221			-			-			790,221
Selling, general and administration		22,171,498			969,420			34,355			23,175,273
Depreciation and amortization		369,311			1,912			-			371,223
Total		25,444,237			1,174,118			179,605			26,797,960

Loss from continuing operations		(25,494,609	)		(2,991,786	)		(179,605	)		(28,666,000	)
Other income		12,885,492			-			-			12,885,492
Loss from discontinued operations		-			-			(8,818,437	)		(8,818,437	)
Net Loss	$	(12,609,117	)	$	(2,991,786	)	$	(8,998,042	)	$	(24,598,945	)

	●	~~Leveraging cutting-edge technology to offer a user-friendly, browser-based platform compatible with VR headsets and other modern devices;~~

	●	~~Providing a diverse range of products and real world VIP experiences that cater to users with different interests and preferences;~~

	●	~~Fostering global connections and a sense of community among users, encouraging socialization and collaboration; and~~

	●	~~Tech-savvy individuals seeking immersive digital experiences;~~

	●	~~Gamers of all skill levels interested in a diverse array of gaming options;~~

	●	~~Collectors and traders of digital assets, such as virtual real estate, digital art, and unique collectibles;~~

	●	~~Shoppers seeking a convenient, intuitive platform for purchasing real world goods; and~~

	●	~~Virtual markets: Sales of digital assets the Company as well as third party vendors like virtual real estate, digital art, user customizations, and unique collectibles;~~

	●	~~Real world goods marketplaces: A platform for shopping a diverse range of real world products and VIP experiences;~~

	●	~~Gaming: a selection of gaming options, including participation in games, sweepstakes, and social gaming experiences;~~

	●	~~Sweepstakes gaming: A dedicated gaming zone for sweepstakes gaming, offering opportunities to win virtual and real money;~~

	●	~~Contests of skill: competitions where users can showcase their talents and win prizes;~~

	●	~~Building private spaces: A feature allowing users to construct and customize their dream homes or private spaces;~~

	●	~~Social hubs for users to interact with individuals from around the world; and~~

	●	~~Established metaverse platforms, such as Decentraland, The Sandbox, and Second Life, as well as companies that focus on development of metaverse tools and platforms such as META;~~

	●	~~Gaming-focused platforms, like Fortnite and Roblox; and~~