UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period
ended:
For the transition period from _______ to _______
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (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 | ||
The Nasdaq Stock Market LLC (The |
Securities registered pursuant to Section 12(g) of the Act: None
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.
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).
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 Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
State the number of shares outstanding of each of the issuer’s classes
of common stock, as of the latest practicable date:
TABLE OF CONTENTS
i
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.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
RISKON INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2023 | March 31, 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Investment - White River Energy Corp. (“WTRV”) | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets of discontinued operations held for sale | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets, operating leases | ||||||||
| Other non-current assets | ||||||||
| Non-current assets of discontinued operations/held for sale | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Dividends payable | ||||||||
| Accrued liabilities | ||||||||
| Derivative liabilities | ||||||||
| Current portion of long-term debt | ||||||||
| Advances - former parent of Bitnile.com, Inc. (“BNC”) | ||||||||
| Current portion of convertible note payable | ||||||||
| Current portion of lease liability - operating leases | ||||||||
| Current liabilities of discontinued operations/held for sale | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG TERM LIABILITIES | ||||||||
| Operating lease liability, non-current | ||||||||
| Long-term debt net of current portion | ||||||||
| Non-current liabilities of discontinued operations/held for sale | ||||||||
| TOTAL LIABILITIES | ||||||||
| SHAREHOLDERS’ DEFICIT: | ||||||||
| Preferred stock, $ | ||||||||
| Series B Preferred stock, | ||||||||
| Series C Preferred stock, | ||||||||
| Common Stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit before non-controlling interest | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
RISKON INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Hospitality and VIP experience revenue | $ | $ | $ | $ | ||||||||||||
| Gaming revenue | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating expenses: | ||||||||||||||||
| Depreciation, amortization and impairment | ||||||||||||||||
| Bad debt | ||||||||||||||||
| Selling, general and administration | ||||||||||||||||
| Salaries and professional consulting fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Change in fair value of derivative liabilities | ||||||||||||||||
| Dividend expense | ( | ) | ( | ) | ||||||||||||
| Amortization of discounts | ( | ) | - | ( | ) | - | ||||||||||
| Loss on disposal of fixed assets | ( | ) | ( | ) | ||||||||||||
| Interest income (expense), net of interest income | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other (expense) income | ( | ) | ||||||||||||||
| Loss from continuing operations before discontinued operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Discontinued operations | ||||||||||||||||
| Loss from discontinued operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (loss) on disposal of discontinued operations | ( | ) | ( | ) | ||||||||||||
| Total gain (loss) discontinued operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interest | ||||||||||||||||
| Net loss to controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less preferred stock dividends | ||||||||||||||||
| Net loss to controlling interest of common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share – basic and diluted | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
RISKON INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(UNAUDITED)
| Common Stock | Additional Paid in | Accumulated | Non-controlling | Total Shareholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | interest | Deficit | |||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Shares issued for cash under at-the-market (“ATM”), net of fees | ||||||||||||||||||||||||
| Shares issued for preferred stock dividends | ||||||||||||||||||||||||
| Shares issued by Agora Digital Holdings, Inc. (“Agora”) for services rendered, net of amounts prepaid | - | |||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Net income | - | ( | ) | |||||||||||||||||||||
| Balance, June 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Shares issued by Agora for services rendered, net of amounts prepaid | - | |||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Common Stock | Additional Paid in | Accumulated | Treasury | Non-controlling | Total Shareholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Stock | interest | Deficit | ||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Shares issued for commitment for preferred stock offering, net of expenses | ||||||||||||||||||||||||||||
| Shares issued by Agora for services rendered, net of amounts prepaid | - | |||||||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Preferred dividends | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, June 30, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Shares issued in conversion of preferred stock to common stock | ||||||||||||||||||||||||||||
| Shares issued in settlement | ( | ) | ||||||||||||||||||||||||||
| Shares issued by Agora for services rendered, net of amounts prepaid | - | |||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||
| Disposal of subsidiaries in reverse merger transactions | - | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Preferred stock dividends | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
The accompanying notes are an integral part of these unauditodensed consolidated financial statements.
3
RISKON INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended September 30, | ||||||||
| Cash flows from operating activities: | 2023 | 2022 | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Change in non-controlling interest | ( | ) | ( | ) | ||||
| Amortization of discount | ||||||||
| Depreciation, amortization and impairment | ||||||||
| Legal costs for ATM facility | ||||||||
| Share-based compensation | ||||||||
| (Gain) loss on disposal of Zest Labs, Inc. (“Zest Labs”) and other fixed assets | ( | ) | ||||||
| Loss on disposal of WTRV and Banner Midstream Corp. (“Banner Midstream”) | ||||||||
| Gain on disposal of Trend Discovery Holdings, LLC (“Trend Discovery”) | ( | ) | ||||||
| Common shares issued for services | ||||||||
| Development expenses reduced from refund of power development costs | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||
| Shares issued for preferred dividend | ||||||||
| Common stock issued for services - Agora | ||||||||
| Commitment fees on long-term debt | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other current assets | ||||||||
| Accrued interest receivable | ( | ) | ||||||
| Amortization of right of use asset - operating leases | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Dividends payable | ||||||||
| Operating lease | ( | ) | ( | ) | ||||
| Total adjustments | ( | ) | ||||||
| Net cash used in operating activities of continued operations | ( | ) | ( | ) | ||||
| Net cash provided by discontinued operations | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from the sale of power development costs | ||||||||
| Purchase of fixed assets | ( | ) | ||||||
| Net cash provided by investing activities of continuing operations | ||||||||
| Net cash used in investing activities of discontinued operations | ( | ) | ||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from former parent of BNC | ||||||||
| Redemption of preferred stock | ( | ) | ||||||
| Proceeds from note - related party | ||||||||
| Payments on note - related party | ( | ) | ||||||
| Payments of long-term debt | ( | ) | ( | ) | ||||
| Proceeds from long-term debt | ||||||||
| Proceeds from the sale of common stock under ATM, net | ||||||||
| Proceeds from convertible note | ||||||||
| Proceeds from the sale of preferred stock | ||||||||
| Net cash provided by financing activities of continuing operations | ||||||||
| Net cash used in financing activities of discontinued operations | ||||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES | ||||||||
| Cash paid for interest expense | $ | $ | ||||||
| SUMMARY OF NON-CASH ACTIVITIES | ||||||||
| Issuance costs on mezzanine equity | $ | $ | ||||||
| Reclassification of convertible notes and warrants to derivative liability | $ | $ | ||||||
| Non-controlling interest recorded in consolidation of Enviro Technologies US, Inc. | $ | $ | ||||||
| Preferred shares converted into common stock | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
RISKON INTERNATIONAL, INC. AND SUBSIDIAIRES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 (“ROI”
or the “Company”). The Company 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 former owner of
Through September 30, 2023, the Company’s former wholly owned subsidiaries, with the exception of Agora, 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 September 30, 2023. The comparative financial statements for the three and six months ended September 30, 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 Company’s former subsidiary Zest Labs,
along with the Company and Zest Labs Holdings, LLC (owned by Gary Metzger, a current board member of the Company and therefore a related
party) (the “Purchaser”), entered into a stock purchase agreement dated August 25, 2023, whereby the Purchaser purchased
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. 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.
5
The Platform games operate on a free-to-play model, whereby game players may collect coins free of charge through the passage of time and if a game player wishes to obtain coins above and beyond the level of free coins available to that player, the player may purchase additional coin packages (“Freemium” gaming model). Once obtained, Nile Tokens (“NT”) and Nile Coins (“NC”) (either free or purchased), cannot be redeemed for cash nor exchanged for anything outside of the Metaverse. When coins are used and played in the games, the game player could “win” and would be awarded additional coins or could “lose” and lose the future use of those coins. The Company has concluded that the coins represent both consumable goods and durables, because 1) the game player does not receive any additional benefit from the game and is not entitled to any additional rights once the coins are consumed and 2) because once coins are used for the purchase of durable goods, those goods will continue to benefit the player throughout their gaming life cycle.
2. LIQUIDITY AND GOING CONCERN
For the three and six months ended September 30,
2023, the Company had a net loss to controlling interest of common shareholders of $(
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 shareholders 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 Series A preferred stock issued to Ault Lending, LLC (formerly Digital Power Lending,
LLC) (“Ault Lending”) in conjunction with a $
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. The accompanying financial statements for the three and six month periods ended September 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 $
On October 30, 2023,
the registration statement related to the $
6
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 filed with the 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 2023 Annual Report. Results of the three and six months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending March 31, 2024.
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, the Company no longer owns
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 is 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:
| 1. | Metaverse access – Provide access to main game content. |
| 2. | 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. | |
| 4. | Rewarded – SweepCoins (“SC”) – Users can use SC to enter sweepstakes type games with a potential to win both digital goods and real world cash redemptions. |
While the revenue received from the sale of NT and NC’s (collectively the “coins”) is currently nominal, the Company believes that its operation of the BitNile.com website could be a scalable source of revenue in the future. Additionally, the Company expects the website will be a mechanism to help increase its brand reputation and recognition by participants, which the Company believes will result in the acquisition and monetization of new users to the site.
During the three and six month periods ended September
30, 2023 and 2022, the Company recognized $
7
Hospitality and VIP Services Revenue
Hospitality revenue currently consists of revenue from services provided to groups at certain social functions and sporting events. The Company also 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 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 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, The Company also uses certain subcontractors that it selects and hires to help transfer services to the end customer. The Company has evaluated its agreements with its food and service subcontractors and based on the preceding, the Company determined that 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
The Company occasionally maintains cash balances in excess of the Federal Deposit Insurance Corporation insured limit. The Company does not consider this risk to be material.
Net Loss Per Share
Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted loss per share 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.
Recently Issued Accounting Standards
The Company does not expect that any recently issued accounting guidance will have a significant effect on its condensed consolidated financial statements.
4. DISCONTINUED OPERATIONS
As discussed in Note 1 and the 2023 Annual Report, during the year
ended March 31, 2023, the Company sold all of its subsidiaries, other than Agora and Zest Labs. On August 25, 2023, the Company sold
Current assets as of September 30, 2023 and March 31, 2023 – Discontinued Operations:
| September 30, 2023 | March 31, 2023 | |||||||
| Wolf Energy | $ | $ | ||||||
| Prepaid expenses | ||||||||
| $ | $ | |||||||
8
| September 30, 2023 | March 31, 2023 | |||||||
| Wolf Energy | $ | $ | ||||||
| $ | $ | |||||||
| September 30, 2023 | March 31, 2023 | |||||||
| Wolf Energy | $ | $ | ||||||
| Zest Accounts payable | ||||||||
| Zest Accrued expenses | ||||||||
| $ | $ | |||||||
| September 30, 2023 | March 31, 2023 | |||||||
| Wolf Energy | $ | $ | ||||||
| $ | $ | |||||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | $ | $ | - | $ | |||||||||||
| Operating expenses | ||||||||||||||||
| Wolf Energy – net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other loss | - | ( | ) | - | ( | ) | ||||||||||
| Net loss from discontinued operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Secured note receivable | $ | |||
| Cash | ( | ) | ||
| Accounts receivable | ( | ) | ||
| Prepaid expenses | ( | ) | ||
| Goodwill | ( | ) | ||
| Other assets | ( | ) | ||
| Accounts payable and accrued expenses | ||||
| Gain on disposal of discontinued operations | $ |
9
5. BUSINESS COMBINATIONS/DIVESTITURES
BNC
On March 7, 2023, the Company acquired BNC from AAI. The Company accounted for this acquisition as an asset purchase as BNC did not meet the definition of a business as discussed in ASC 805 and Accounting Standards Update (“ASU”) 2017-01.
| Prepaid expenses | $ | |||
| Property and equipment | ||||
| Intangible assets | ||||
| Accounts payable and accrued expenses | ( | ) | ||
| Due to BNC former parent | ( | ) | ||
| Notes payable | ( | ) | ||
| Total assets and liabilities | $ | ( | ) |
| Series B and Series C Preferred Stock | $ | |||
| Total consideration | $ |
The acquisition has been accounted for as a purchase
of assets. The Company recognized a loss on the acquisition as of March 7, 2023 of $
Zest Labs
On August 25, 2023, the Company sold
The Company sold the assets and liabilities of Zest Labs noted below at fair value.
| Prepaid expenses | $ | |||
| Accounts payable and accrued expenses | ( | ) | ||
| Total assets and liabilities | $ | ( | ) |
The Company recorded a gain on disposal of Zest
Labs of $
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.
As part of each of the Company’s social functions or events, the Company offers the option to request catering services for an additional
charge. For the three and six months ended September 30, 2023 the Company recognized $
The Company had related party hospitality service
sales of $
10
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 for the acquisition of Trend Discovery. The Trend Ventures Note is in the principal amount of $
On May 15, 2023, Agora
and Trend Ventures, LP entered into a First Amendment of Senior Secured Promissory Note (“First Amendment”), to amend the
Trend Ventures Note. The First Amendment amended the following clauses of the Trend Ventures Note: (a) the principal amount was amended
from $
As of September 30, 2023, the Company has established a full reserve for the principal and accrued interest receivable.
8. INVESTMENT – SERIES A CONVERTIBLE PREFERRED STOCK – WTRV
On July 25, 2022, the Company entered into a Share
Exchange Agreement pursuant to which it sold to WTRV its oil and gas production business, which was part of the commodities segment. The
Company received
As of September 30, 2023, the Company has determined that it is not the primary beneficiary, and this transaction has not resulted in the Company controlling WTRV as the preferred shares have not yet been converted into common stock, and the Company does not have the power to direct activities of WTRV, control the board of directors of WTRV and WTRV is not reliant upon funding by the Company moving forward; therefore the Company concluded that WTRV is not a variable interest entity as of September 30, 2023.
9. INVESTMENT – COMMON STOCK – 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
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
11
10. INVESTMENT – EARNITY
As part of the acquisition of BNC, the Company
acquired BNC’s
11. PROPERTY AND EQUIPMENT
| September 30, 2023 | March 31, 2023 | |||||||
| (unaudited) | ||||||||
| Zest Labs freshness hardware, equipment and computer costs | $ | $ | ||||||
| Land | ||||||||
| Furniture | ||||||||
| Auto – BNC | ||||||||
| Equipment – BNC | ||||||||
| Mining technology equipment– Bitcoin | ||||||||
| Auto – Bitcoin | ||||||||
| Total property and equipment | ||||||||
| Accumulated depreciation and impairment | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense for the three and six months
ended September 30, 2023 was $
Effective September 30, 2023, the Company impaired
$
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, cases 23-51490 and 23-51491, respectively.
12. INTANGIBLE ASSETS
| September 30, 2023 | March 31, 2023 | |||||||
| Trademarks | $ | $ | ||||||
| Developed technology | ||||||||
| Accumulated amortization - trademarks | ( | ) | ( | ) | ||||
| Accumulated amortization - developed technology | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
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
Amortization expense for the three and six months
ended September 30, 2023 was $
12
On August 25, 2023, the Company sold
| Remaining fiscal year 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| $ |
13. ACCRUED EXPENSES
| September 30, 2023 | March 31, 2023 | |||||||
| Professional fees and consulting costs | $ | $ | ||||||
| Platform hosting fees | ||||||||
| Compensation vacation and paid time off | ||||||||
| Sponsorship | ||||||||
| Interest | ||||||||
| Accrued legal contingencies | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
14. 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 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.
13
The Company has only included descriptions of warrants that are still outstanding as of September 30, 2023.
On August 6, 2021, the Company closed a $
On April 27, 2023, the Company closed a $
The Company determined its derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of September 30, 2023 and March 31, 2023. The Black-Scholes model requires six basic data inputs: the exercise or strike price; time to expiration; the risk-free interest rate; the current stock price; the estimated volatility of the stock price in the future; and the dividend rate.
Changes to these inputs could produce a significantly
higher or lower fair value measurement.
| Six Months Ended September 30, 2023 | Year Ended March 31, 2023 | Inception | ||||||||||
| Expected term | ||||||||||||
| Expected volatility | ||||||||||||
| Expected dividend yield | ||||||||||||
| Risk-free interest rate | ||||||||||||
| Market price | $ | $ |
| September 30, 2023 | March 31, 2023 | |||||||
| Fair value of | $ | $ | ||||||
| Fair value of | ||||||||
| Fair value of | ||||||||
| $ | $ | |||||||
During the six months ended September 30, 2023
and 2022, the Company recognized changes in the fair value of the derivative liabilities of $
14
| Beginning balance as of March 31, 2023 | $ | |||
| Issuances of warrants – derivative liabilities | ||||
| Warrants exchanged for common stock | ||||
| Change in fair value of warrant derivative liabilities | ( | ) | ||
| Ending balance as of September 30, 2023 | $ |
| Beginning balance as of March 31, 2022 | $ | |||
| Issuances of warrants – derivative liabilities | - | |||
| Warrants exchanged for common stock | ||||
| Change in fair value of warrant derivative liabilities | ( | ) | ||
| Ending balance as of September 30, 2022 | $ |
15. LONG-TERM DEBT
| September 30, 2023 | March 31, 2023 | |||||||
| Credit facility -Trend Discovery SPV 1, LLC (a) | $ | $ | ||||||
| Auto loan – Ford (b) | ||||||||
| Auto loan – Cadillac (c) | ||||||||
| Total long-term debt | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long-term debt, net of current portion | $ | $ | ||||||
| (a) |
| (b) |
| (c) |
15
| Remaining 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| $ |
Interest expense on long-term debt during the
three and six months ended September 30, 2023 was $
16. NOTES PAYABLE
Related Parties
AAI advanced the Company $
Convertible Notes
On April 27, 2023, the
Company sold $
| Beginning balance as of March 31, 2023 | $ | |||
| Issuance of convertible notes | ||||
| Less: original issue discount - inception | ( | ) | ||
| Amortization of discounts | ||||
| Less: debt discount – reclassification to derivative liability (*) | ( | ) | ||
| Ending balance as of September 30, 2023 | $ |
| (*) |
| Beginning balance as of March 31, 2023 | $ | |||
| Issuances of convertible note – derivative liabilities | ||||
| Change in fair value of convertible note derivative liabilities | ( | ) | ||
| Ending balance as of September 30, 2023 | $ |
16
17. PREFERRED STOCK
RiskOn International Series A
On June 8, 2022, the Company entered into a Securities
Purchase Agreement (the “Series A Agreement”) with Ault Lending, pursuant to which the Company sold Ault Lending
Conversion Rights
Prior to the November 2022 amendment described
below, each share of RiskOn International Series A had a stated value of $
| September 30, 2023 | March 31, 2023 | |||||||
| Expected term | ||||||||
| Expected volatility | ||||||||
| Expected dividend yield | ||||||||
| Risk-free interest rate | ||||||||
| Market price | $ | $ |
17
As described in Note 19 “Commitments
and Contingencies”, on November 2, 2023, the Company received a notice in the form of a letter (“Deficiency Letter”)
from the Staff of the Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price
for the Company’s common stock had closed below $
Negative Covenants and Approval Rights
The Certificate subjects the Company to negative
covenants restricting its ability to take certain actions without prior approval from the holder(s) of a majority of the outstanding
shares of RiskOn International Series A for as long as the holder(s) continue to hold at least
| (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 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
On November 14, 2022, the Company and the Holder
canceled the Warrant in exchange for $
18
Registration Rights
Pursuant to the Agreement,
the Company agreed to register the sale by Ault Lending of up to
The description above is not a substitute for reviewing the full text of the referenced documents, which were attached as exhibits to the Company’s Current Reports on Form 8-K as filed with the SEC on June 9, 2022, July 15, 2022 and November 29, 2022.
Preferred Stock Derivative Liability
RiskOn International Series A
As discussed herein, the Company determined that
the RiskOn International Series A upon the amendment on November 28, 2022, constituted a derivative liability under ASC 815, Derivatives
and Hedging (“ASC 815”). As a result of this classification, the Company determined that on November 28, 2022 (inception),
the value of the derivative liability was $
On December 9, 2022, the RiskOn International
Series A holder converted
The derivative liability for the RiskOn International
Series A was remeasured at September 30, 2023 and was valued at $
In addition, the Company advanced $
| Beginning balance as of March 31, 2023 | $ | |||
| Reclassification – advances former owners of BitNile.com | ||||
| Advances to third-party that will be considered redemption of Series A | ( | ) | ||
| Change in fair value of preferred stock derivative liabilities | ( | ) | ||
| Ending balance as of September 30, 2023 | $ |
RiskOn International Series B and C
On February 8, 2023,
the Company entered into the SEA by and among AAI, a significant shareholder and the owner of approximately
19
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 $
In addition, for as
long as at least
The terms, rights, preferences
and limitations of the Series C are substantially the same as those of the Series B, except that the Series C does not hold negative covenant
and consent rights. The Company is required to maintain a reserve of authorized and unissued shares of common stock equal to
Pending shareholder approval
of the transaction, the Preferred Stock combined are subject to a
Under the SEA, while any Preferred Stock is outstanding, the Company is prohibited from redeeming or declaring or paying dividends on outstanding securities other than the Preferred Stock. Further, the SEA prohibits the Company from issuing or amending securities at a price per share below the conversion price of the Preferred Stock, or to engage in variable rate transactions, for a period of 12 months following the closing.
The SEA further provided
that following the closing the Company will prepare and distribute a proxy statement and hold a meeting of its shareholders to approve
each of the following: (i) the SEA and the transactions contemplated thereby, (ii) a ratification of the Third Certificate Designations
of Rights, Preferences, and Limitations of the Series A, (iii) a reverse stock split with a range of between 1-for-2 and 1-for-20, (iv)
a change in the Company’s name to BitNile Metaverse, Inc., (v) an increase of the Company’s authorized common stock to
20
In connection with the SEA, the Company also entered into a Registration Rights Agreement with AAI and the Minority Shareholders pursuant to which the Company agreed to file a registration statement on Form S-3 or Form S-1 with the SEC registering the resale by the holders of the Preferred Stock and/or the shares of common stock issuable upon conversion of the Preferred Stock, to be initially filed within 15 days of the closing, and to use its best efforts to cause such registration statement to be declared effective by the SEC within 45 days thereafter, subject to certain exceptions and limitations.
The SEA contains certain representations and warranties made by each of the Company, AAI and the Minority Shareholders. BNC’s principal business entails the development and operation of a metaverse platform, the beta for which launched on March 1, 2023. This transaction closed on March 7, 2023.
The Company determined that the Preferred Stock
constituted a derivative liability under ASC 815 on the date of inception March 7, 2023. As a result of this classification, the Company
determined that on March 7, 2023 (inception), the value of the derivative liability was $
The derivative liability for the Preferred Stock
was remeasured at September 30, 2023 and is valued at $
| Beginning balance as of March 31, 2023 | $ | |||
| Change in fair value of preferred stock derivative liabilities | ( | ) | ||
| Ending balance as of September 30, 2023 | $ |
On April 4, 2023, the Company entered into an
agreement with Ault Lending and WTRV pursuant to which the Company agreed to advance to WTRV payments of up to $
18. SHAREHOLDERS’ DEFICIT
RiskOn International Series A
As of March 31, 2022, there were shares of
any series of preferred stock issued and outstanding. On June 8, 2022, as noted in Note 17, the Company issued
As of September 30, 2023 and March 31, 2023,
the Company had issued Series B and Series C, as noted in Note 17, and has
21
Common Stock
The Company is authorized to issue
In the six months ended September 30, 2022, the
Company issued
On January 24, 2023,
the Company entered into an ATM Issuance Sales Agreement (the “ATM Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”),
pursuant to which the Company could issue and sell from time to time, through Ascendiant, shares of the Company’s common stock,
par value $
Under the ATM Agreement,
Ascendiant was entitled to compensation of
As of September 30,
2023, there were
The Shares were being offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission (the “SEC”) on January 24, 2023 and the accompanying base prospectus which is part of the Company’s effective Registration Statement on Form S-3 (File No. 333-249532) (the “Registration Statement”).
In the six months ended September 30, 2023, the
Company issued
As of September 30, 2023 and March 31, 2023,
Agora Common Stock
Agora is authorized to issue
On October 1, 2021, the Company purchased
In addition, between October 1 and December 7,
2021, Agora issued
22
On August 7, 2022, Agora issued
Of the
The performance grants vest as follows:
The Company recognized $
The Company accounts for share-based payments in accordance with ASC 718, Compensation — Stock Compensation. The Company measures compensation expense for restricted stock units based on the fair value of the award on the date of grant. The grant date fair value is based on the closing market price of the Company’s common stock on the date of grant.
Share-based Compensation Expense
Share-based compensation for employees is included in salaries and salary related costs and directors and services are included in professional fees and consulting in the condensed consolidated statement of operations for the three and six months ended September 30, 2023 and 2022.
Share-based compensation for the three and six
months ended September 30, 2023 for stock options and restricted stock units granted under the 2013 Incentive Stock Plan and 2017 Omnibus
Incentive Stock Plan and non-qualified stock options were $
There was $
19. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is presently involved in the following legal proceedings. To the best of the Company’s knowledge, no governmental authority is contemplating any proceeding to which the Company is a party or to which any of its properties or businesses are subject, which would reasonably be likely to have a material adverse effect on the Company.
| ● | On August 1, 2018, ROI and Zest Labs filed a complaint against Walmart, Inc. (“Walmart”) 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 ROI and Zest Labs a total of $ |
23
| ● | On April 22, 2022, BitStream and ROI were sued in Travis County, Texas District Court (Docket #79176-0002) by Print Crypto Inc. in the amount of $ |
| ● | On July 15, 2022, Bitstream and two of their 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 $ |
| ● | On October 17, 2022, Bitstream was a party to a petition filed in Ward County District Court by VA Electrical Contractors, LLC in the amount of $ |
In the opinion of management, there are no additional legal matters involving us that would have a material adverse effect upon the Company’s financial condition, results of operations or cash flows.
Nasdaq Compliance
On July 18, 2023, the
Company received a letter (the “Letter”) from the Listing Qualifications staff (the “Staff”) of the Nasdaq Stock
Market LLC (“Nasdaq”) indicating that the Company’s shareholders’ equity as reported in the 2023 Annual Report
did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that
a listed company’s shareholders’ equity be at least $
According to the Letter, the Company had 45 calendar days from the date of the Letter, or until September 1, 2023, to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). If the Company’s compliance plan is accepted by Nasdaq, then Nasdaq may, in its discretion, grant the Company up to 180 calendar days from the date of the Letter, or until January 14, 2024, to evidence compliance. If Nasdaq does not accept the Company’s plan, then Nasdaq may issue a staff delisting determination letter whereby the Company’s common stock will be subject to delisting. The Company would have the opportunity to appeal that decision to a Nasdaq hearings panel. The Company submitted a compliance plan, which was subsequently amended and restated, to the Staff, but as of the date of this filing, Nasdaq has not determined whether or not to accept the Company’s plan.
If the Company’s Common Stock is delisted from Nasdaq, the Company could face significant material adverse consequences, including:
| ● | it may adversely affect its ability to raise capital which is needed to stay operational; |
| ● | a limited availability of market quotations for the Company common stock; |
| ● | reduced liquidity with respect to the Company’s common stock; |
| ● | a determination that the Company’s common stock is a “penny stock” which will require broker-dealers trading in the common stock to adhere to more stringent rules, resulting in a reduced level of trading activity in the secondary trading market for the common stock; and |
| ● | being in default under the transaction documents entered into with the investors in the April 27, 2023 financing. |
If the Company is unable to rectify any of the above-described Nasdaq issues, a delisting would subject the Company and its shareholders to the above.
24
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 $
Non-cancelable Obligations
In the course of BNC’s
gaming business in association with its Platform, the Company has entered into non-cancelable obligations with certain parties to purchase
services, such as technology and the hosting of the Platform. As of September 30, 2023, the Company had outstanding non-cancelable purchase
obligations with terms of one year or longer aggregating $
20. FAIR VALUE MEASUREMENTS
The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:
Level 1 – quoted prices for identical instruments in active markets;
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and
Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Financial instruments consist principally of cash, 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 or six months ended September 30, 2023 and 2022. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.
Fair value estimates are made at a specific point
in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature
and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions
could significantly affect the estimates. The Company records the fair value of the of the warrant derivative liabilities disclosed in
accordance with ASC 815. The fair values of the derivatives were calculated using the Black-Scholes Model. The fair value of the derivative
liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in other income (expense) in the condensed
consolidated statement of operations.
| Level 1 | Level 2 | Level 3 | Total Gains and (Losses) | |||||||||||||
| September 30, 2023 | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Investment – WTRV | ||||||||||||||||
| March 31, 2023 | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | |||||||||||||
| Bitcoin | ( | ) | ||||||||||||||
| Investment – WTRV | ( | ) | ||||||||||||||
25
| Beginning balance as of March 31, 2023 | $ | ( | ) | |
| Issuance – convertible notes with warrants | ( | ) | ||
| Net change in unrealized (depreciation) appreciation included in earnings | ||||
| Ending balance as of September 30, 2023 | $ |
21. RELATED PARTY TRANSACTIONS
In connection with the hospitality services the Company offers, the Company and certain customers enter into separate arrangements with respect to sponsorships it provides in addition to a number of ongoing commercial relationships, including license agreements.
As of September 30, 2023 and March 31, 2023, the
Company had related party receivables of $
See 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. The Company’s Chief Executive Officer and Chief Financial Officer hold similar positions in WTRV.
In the six month period ended September 30, 2023,
the Company was advanced an additional $
The Company’s former subsidiary Zest Labs,
along with the Company and Zest Labs Holdings, LLC (owned by Gary Metzger, a current board member of the Company and therefore a related
party) (the “Purchaser”), entered into a stock purchase agreement dated August 25, 2023, whereby the Purchaser purchased
Revenues and Accounts Receivable
The Company had related party hospitality service
sales of $
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 $
22. SUBSEQUENT EVENTS
Chapter 7 Bankruptcy Filing of Agora and Bitstream
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.
26
S-1 Registration Statement
On October 30, 2023, the Registration
Statement related to the ELOC Purchase Agreement was declared effective by the SEC. In conjunction with the ELOC Purchase Agreement,
there were an indeterminable number of shares of the Company’s common stock to be issued to the Buyer equal to $
S-3 Registration Statement and Subsequent Conversions
On
October 19, 2023, the registration statement registering the shares of common stock issuable upon
conversion of the senior secured convertible notes issued in April 2023 was declared effective
by the SEC. As of November 16, 2023, the Company received conversion notices converting an aggregate of $
Name and Ticker Symbol Change
Effective November 1, 2023, the Company changed its name from BitNile Metaverse, Inc., to RiskOn International, Inc. and changed its ticker symbol from BNMV to ROI. The change in both name and ticker are underscored by the Company’s commitment to developing a vertically integrated community while creating a seamless and enriched user experience.
Changes in Board of Directors Composition
On October 13, 2023, the Company appointed Robert O. Smith to its Board of Directors. Mr. Smith will serve as lead independent director and as Chairman of the Audit Committee. Mr. Smith replaces Steve Nelson who departed the Board of Directors on September 30, 2023; Mr. Nelson’s resignation was not the result of any disagreement with the Company, or its management on any matter relating to the Company’s operations, policies or practices.
Changes in Authorized Shares
On October 16, 2023, the Company, upon obtaining
shareholder approval, filed a certificate of amendment to its Articles of Incorporation increasing its authorized shares of common stock
from
Nasdaq Compliance
On November 2, 2023,
the Company received a notice in the form of a letter (“Deficiency Letter”) from the Staff of the Nasdaq stating that the
Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed
below $
In accordance with Nasdaq
listing rule 5810(c)(3)(A), the Company has 180 calendar days, or until April 30, 2024, to regain compliance. The Deficiency Letter states
that to regain compliance, the bid price for the Company’s common stock must close at $
Term Note Agreement
On November 8, 2023,
the Company entered into a term note (“Term Note”) agreement for a principal amount of $
Series D Preferred Purchase Agreement, Related Party
On November 14, 2023, the Company entered into
a securities purchase agreement (the “SPA”) with AAI, pursuant to which the Company agreed to sell to AAI 603.44 shares of
newly designated Series D Convertible Preferred Stock (“Series D shares”) for a total purchase price of $
Common Stock Issuance
On November 17, 2023, the Company issued
27
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.; 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 BitNile.com, Inc. (“BNC”), a significant shareholder of the Company, and the minority 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 securities of Earnity, Inc. beneficially owned by BNC (which represents approximately 19.9% of the outstanding 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. 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 September 30, 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 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. On August 28, 2023, we executed a spin-off of 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 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.
Through BNC, we are primarily engaged in the development and operation of an online metaverse platform (the “Metaverse”). The Metaverse represents a significant development in the online metaverse landscape, offering immersive, interconnected digital experiences that are inclusive, engaging, and dynamic. 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. Our virtual world, located at BitNile.com, 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 and Nile Coins (either free or purchased) cannot be redeemed for cash or 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.
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Our current and planned products and experiences are:
| ● | Virtual markets. The platform facilitates 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. The platform allows users to shop for a diverse range of real world products and VIP experiences. |
| ● | Gaming. The platform provides an extensive selection of gaming options, including participation in games, sweepstakes and social gaming experiences, such as Blackjack. |
| ● | Sweepstakes gaming. The platform features a dedicated gaming zone for users to engage in sweepstakes gaming, offering opportunities to win virtual and real money. |
| ● | Contests of skill. The platform organizes competitions for users to showcase their talents and compete against others for prizes and recognition in various disciplines. |
| ● | Building private spaces. The platform allows users to construct and customize their dream homes or private spaces. |
| ● | Socialization and connectivity. The platform’s ongoing mission will be to foster global connections by enabling users to interact with individuals from around the world, forming new friendships, collaborating on projects or engaging in conversations within various social hubs. |
| ● | Real and virtual concerts. We expect the platform to host live and virtual concerts within the metaverse, featuring performances from both real world and virtual artists, allowing users to attend and enjoy shows in an immersive environment. |
Our Business Strategy
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. 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 our BitNile.com metaverse 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 and customer expectations.
We expect to generate revenue in fiscal 2024 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.
Competition
The Company faces competition from existing metaverse platforms and new entrants. Key competitors include:
| ● | Established metaverse platforms, such as Decentraland, The Sandbox, and Second Life, as well as companies that develop 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. |
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Regulatory Environment
The Company operates within a complex and evolving regulatory landscape, with key considerations including:
| ● | 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 2,100,905 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 $3,334,246 which represents the derivative liability at inception of the warrants. The fair value of the warrants was estimated to be $1,109,183 as of September 30, 2023. |
| ● | On May 4, 2023, the Company amended its Articles of Incorporation to effectuate 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. The Company has reflected this reverse split retroactively in their condensed consolidated financial statements pursuant to SAB Topic 4C. |
| ● | 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 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 $4,443,870, 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 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, 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. |
| ● |
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.
According to the letter, the Company had 45 calendar days from the date of the letter to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). If the Company’s compliance plan is accepted by Nasdaq, then Nasdaq may, in its discretion, grant the Company up to 180 calendar days from the date of the Letter, or until January 14, 2024, to evidence compliance. If Nasdaq does not accept the Company’s plan, then Nasdaq may issue a staff delisting determination letter whereby the Company’s common stock will be subject to delisting. The Company would have the opportunity to appeal that decision to a Nasdaq hearings panel. The Company submitted a compliance plan, which was subsequently amended and restated, to the staff, but as of the date of this filing, Nasdaq has not determined whether or not to accept the Company’s plan. |
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| ● | 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, 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. |
| ● | 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 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 2, 2023, the Company received a letter from the Listing Qualifications staff of Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed below $1.00 per share for the previous 31 consecutive business days.
In accordance with Nasdaq listing rule 5810(c)(3)(A), the Company has 180 calendar days, or until April 30, 2024, to regain compliance. The Deficiency Letter states that to regain compliance, the bid price for the Company’s common stock must close at $1.00 per share or more (the “Minimum Bid Price”) for a minimum of 10 consecutive business days during the compliance period ending April 30, 2024. In the event that the Company does not regain compliance within this 180-day period, the Company may be eligible to seek an additional compliance period of 180 calendar days if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price, and provides written notice to Nasdaq of its intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq Staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice to the Company that its common stock will be subject to delisting. At that time, the Company may appeal any such delisting determination to a Nasdaq hearings panel. |
| ● | 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 cancellation of $15,085,930.69 of cash advances made by AAI to us between January 1, 2023 and November 9, 2023.
The terms of the Preferred Shares as set forth in the Certificates of Designations of the Rights, Preferences and Limitations of the Series D Convertible Preferred Stock (the “Certificate”). The Preferred Shares each have a stated value of $25,000 per share (the “Stated Value”). Pursuant to the Certificate, each Preferred Share is convertible into a number of shares of our 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.
The Preferred Shares holders are entitled to receive dividends at a rate of 10% of the Stated Value per annum from issuance until November 14, 2033 (the “Dividend Term”). During the first two years of the Dividend Term, dividends will be payable, in our option, in additional Preferred Shares rather than cash, and thereafter dividends will be payable in either additional Preferred Shares or cash as the majority holder may elect. If the Company fails to make a dividend payment as required by the Certificate, the dividend rate will be increased to 15% for as long as such default remains ongoing and uncured. Each Preferred Share also has a $25,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of our company, and ranks senior to all our other capital stock with respect thereto other than the existing Series B Preferred Stock and Series C Preferred Stock, with which the Preferred Shares shall have equal ranking. Each Preferred Share is entitled to vote, on an as-converted basis, with the common stock at a rate of 0.9 votes per share of common stock into which the Preferred Share is convertible.
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In addition, for as long as at least 25% of the Preferred Shares remain outstanding, AAI must consent 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 we are subject to certain 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 $50,000, altering the number of directors, and discontinuing the business of any subsidiary, subject to certain exceptions and limitations.
The Agreement provides the holders of Preferred Shares with most favored nations rights in the event we offer securities with more favorable terms than the Preferred Shares for as long as the Preferred Shares remain outstanding. Under the Agreement, while any Preferred Shares are outstanding, we are prohibited from redeeming or declaring or paying dividends on outstanding securities other than the Preferred Shares. Further, the Agreement prohibits us from issuing or amending securities at a price per share below the Conversion Price, or to engage in variable rate transactions, for a period ending on the earlier of (i) four (4) years from the Closing Date and (ii) the date that AAI holds less than 250 Preferred Shares.
Segment Reporting for the Three and Six Months Ended September 30, 2023 and 2022
As a result of the sales of WTRV and Banner Midstream, and the immaterial nature of the operations of Zest Labs and Agora, we no longer segregate our operations.
Results of Operations
The discussion of our results of operations should be evaluated considering that our primary subsidiaries were sold in the year ended March 31, 2023 and their results of operations are now treated as discontinued operations. Accordingly, period to period comparisons may not be meaningful.
Continuing Operations For the Three Months Ended September 30, 2023 and 2022
| Three Months Ended September 30, | Change | Change | ||||||||||||||
| 2023 | 2022 | ($) | (%) | |||||||||||||
| Hospitality and VIP experience revenue | $ | 17,700 | $ | - | $ | 17,700 | 100 | % | ||||||||
| Gaming revenue | 1,500 | - | 1,500 | 100 | % | |||||||||||
| Cost of revenue | 28,422 | 88,212 | (59,790 | ) | -68 | % | ||||||||||
| Gross loss | (9,222 | ) | (88,212 | ) | 78,990 | 90 | % | |||||||||
| Operating expenses: | ||||||||||||||||
| Depreciation, amortization and impairment | 4,032,157 | 1,668,555 | 2,363,602 | 142 | % | |||||||||||
| Bad debt | 55,548 | - | 55,548 | 100 | % | |||||||||||
| Selling, general and administration | 7,030,891 | 1,621,728 | 5,409,163 | 334 | % | |||||||||||
| Salaries and professional consulting fees | 2,619,762 | 3,625,044 | (1,005,282 | ) | -28 | % | ||||||||||
| Total operating expenses | 13,738,358 | 6,915,327 | 6,823,031 | 99 | % | |||||||||||
| Operating loss | (13,747,580 | ) | (7,003,539 | ) | (6,744,041 | ) | -96 | % | ||||||||
| Other (expense) income | ||||||||||||||||
| Change in fair value of warrant derivative liabilities | 1,862,290 | 3,286,004 | (1,423,714 | ) | -43 | % | ||||||||||
| Dividend expense | (1,553,458 | ) | - | 1,553,458 | 100 | % | ||||||||||
| Amortization of discounts | (2,161,211 | ) | - | 2,161,211 | 100 | % | ||||||||||
| Loss on disposal of fixed assets | - | (570,772 | ) | (570,772 | ) | -100 | % | |||||||||
| Interest expense, net of interest income | 41,499 | (281,900 | ) | 323,399 | -115 | % | ||||||||||
| Total other (expense) income | (1,810,880 | ) | 2,433,332 | (4,244,212 | ) | -174 | % | |||||||||
| Loss from continuing operations before discontinued operations | (15,558,460 | ) | (4,570,207 | ) | (10,988,253 | ) | -240 | % | ||||||||
| Discontinued operations | ||||||||||||||||
| Loss from discontinued operations | (385,242 | ) | (7,629,448 | ) | ||||||||||||
| Gain (loss) on disposal of discontinued operations | 683,152 | (12,534,900 | ) | |||||||||||||
| Total gain (loss) discontinued operations | 297,910 | (20,164,348 | ) | |||||||||||||
| Net loss | $ | (15,260,550 | ) | $ | (24,734,555 | ) | ||||||||||
Revenue and Gross Loss
During the three-month period ended September 30, 2023, we had increased revenues of $19,200 and decreased gross loss of $78,990 compared to the three-month period ended September 30, 2022, primarily due to prior year salary and wage expenses coupled with the hospitality sales, which began in the three-month period ended September 30, 2023.
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Operating Loss and Operating Expenses
During the three months ended September 30, 2023, our operating loss increased by $7 million, from $7 million for the three-month period ended September 30, 2022, to $14 million for the three-month period ended September 30, 2023, primarily due to increased advertising expenses and platform hosting fees coupled with increased travel, legal and management expenses of approximately $5 million and $2 million, respectively.
Loss from Continuing Operations
We had increased loss from continuing operations for the period of approximately $11 million, from $5 million for the three-month period ended September 30, 2022, to $16 million for the three-month period ended September 30, 2023, due to the increase of our operating loss of approximately $7 million, the amortization of derivative discounts expense of $2 million and dividend expenses of approximately $2 million.
Continuing Operations For the Six Months Ended September 30, 2023 and 2022
| Six Months Ended September 30, | Change | Change | ||||||||||||||
| 2023 | 2022 | ($) | (%) | |||||||||||||
| Hospitality and VIP experience revenue | $ | 62,850 | $ | - | $ | 62,850 | 100 | % | ||||||||
| Gaming revenue | 1,500 | - | 1,500 | 100 | % | |||||||||||
| Cost of revenue | 114,722 | 182,074 | (67,352 | ) | -37 | % | ||||||||||
| Gross loss | (50,372 | ) | (182,074 | ) | 131,702 | 72 | % | |||||||||
| Operating expenses: | ||||||||||||||||
| Depreciation, amortization and impairment | 4,169,039 | 1,713,651 | 2,455,388 | 143 | % | |||||||||||
| Bad debt | 108,963 | - | 108,963 | 100 | % | |||||||||||
| Selling, general and administration | 16,864,801 | 2,460,929 | 14,403,872 | 585 | % | |||||||||||
| Salaries and professional consulting fees | 4,211,660 | 9,582,893 | (5,371,233 | ) | -56 | % | ||||||||||
| Total operating expenses | 25,354,463 | 13,757,473 | 11,596,990 | 84 | % | |||||||||||
| Operating loss | (25,404,835 | ) | (13,939,547 | ) | (11,465,288 | ) | -82 | % | ||||||||
| Other income (expense) | ||||||||||||||||
| Change in fair value of derivative liabilities | 22,982,843 | 2,892,472 | 20,090,371 | 695 | % | |||||||||||
| Dividend expense | (3,150,680 | ) | - | 3,150,680 | 100 | % | ||||||||||
| Amortization of discounts | (2,584,384 | ) | - | 2,584,834 | 100 | % | ||||||||||
| Loss on disposal of fixed assets | - | (570,772 | ) | (570,772 | ) | -100 | % | |||||||||
| Interest expense, net of interest income | (221,036 | ) | (318,728 | ) | (97,692 | ) | -31 | % | ||||||||
| Total other income | 17,026,743 | 2,002,972 | 15,023,771 | 750 | % | |||||||||||
| Loss from continuing operations before discontinued operations | (8,378,092 | ) | (11,936,575 | ) | (3,558,483 | ) | -30 | % | ||||||||
| Discontinued operations | ||||||||||||||||
| Loss from discontinued operations | (2,104,888 | ) | (11,699,050 | ) | ||||||||||||
| Gain (loss) on disposal of discontinued operations | 683,152 | (11,823,395 | ) | |||||||||||||
| Total loss from discontinued operations | (1,421,736 | ) | (23,522,445 | ) | ||||||||||||
| Net loss | $ | (9,799,828 | ) | $ | (35,459,020 | ) | ||||||||||
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Revenue and Gross Loss
During the six-month period ended September 30, 2023, we had increased revenues of $64,350 and decreased gross loss of $131,702 compared to the six-month period ended September 30, 2022, primarily due to prior year salary and wage expenses coupled with hospitality and VIP experience sales, which began in the six-month period ended September 30, 2023.
Operating Loss and Operating Expenses
During the six months ended September 30, 2023, our operating loss increased by $11 million, from $14 million for the six-month period ended September 30, 2022, to $25 million for the six-month period ended September 30, 2023, primarily due to advertising and hospitality expenses, platform hosting fees and travel expenses of approximately $11 million, $2 million and $2 million, respectively. These expenses were partially offset by a decrease in salaries and professional fees of approximately $4 million.
Loss from Continuing Operations
We had decreased loss from continuing operations for the period of approximately $4 million, from $12 million for the six-month period ended September 30, 2022, to $8 million for the six-month period ended September 30, 2023, due to the gain of $18 million of other income primarily due to a change in the fair value of derivative liabilities and a gain on disposal of discontinued operations in 2023, partially offset by increased dividend expenses coupled with our increased operating loss of approximately $3 million and $11 million, respectively.
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, accounts payable and capital expenditures.
Net cash used in operating activities of continuing operations was approximately $16 million for the six month period ended September 30, 2023, as compared to approximately $14 million in the prior year period. The $2 million increase in the current period was primarily due to the change in the fair value of derivative liabilities of approximately $23 million, partially offset by no loss on disposal of WTRV and Banner Midstream of $12 million, depreciation amortization and impairment of approximately $4 million and dividends payable, gain on disposal of discontinued operations and legal expenses of $5 million.
Net cash provided by investing activities decreased due to no cash being provided in the current year period by discontinued operations.
Net cash provided by financing activities increased by approximately $2 million primarily, due to the proceeds from parent of $7 million and the proceeds from the sale of common stock and convertible notes of $7 million in the current year period offset by proceeds from the proceeds related to the sale of preferred stock of $12 million in the prior year period.
As of September 30, 2023, we had $1,554 in cash and cash equivalents. 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 we need to raise capital to support our operations, raising substantial doubt about our ability to continue as a going concern. We recently acquired BNC and have generated nominal revenue as of September 30, 2023. The accompanying financial statements for the three and six month periods ended September 30, 2023 have been prepared assuming we will continue as a going concern, but our ability to continue as a going concern is dependent on our obtaining adequate capital to fund operating losses until we establish continued revenue streams and 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 we will be successful in accomplishing any of our plans. If we are unable to obtain the necessary additional financing on a timely basis, we will be required to delay, reduce or perhaps even cease the operation of our business. Our ability to continue as a going concern is dependent upon our ability to successfully secure other sources of financing and attain profitable operations. In our fourth fiscal quarter ended March 31, 2023, we raised $1,715,439 from the sales of our common stock related to an “At-the-Market” (“ATM”) offering, with an additional approximate $1,800,000 raised in the first fiscal quarter of 2024. In addition, on April 27, 2023, we 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 our assets and certain of our subsidiaries, including BNC. The proceeds received have gone towards working capital until we can generate the necessary funds from our operations. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. See “Risk Factors” included in our 2023 Annual Report filed with the Securities and Exchange Commission SEC on July 14, 2023.
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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; and
Level 3 inputs: Instruments with primarily unobservable value drivers.
The carrying values of our 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
We do not currently use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks and do not expect to in the current fiscal year. Management evaluates all of our financial instruments, including warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. We 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, are remeasured at the end of each reporting period. The Black-Scholes model is used to estimate the fair value of the derivative liabilities.
Recently Issued Accounting Standards
In 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. We do not expect this guidance to have a material impact on our condensed consolidated financial statements.
35
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 which began April 1, 2023, did not have a material impact on our condensed consolidated financial statements.
Our management has considered all recent accounting pronouncements issued since the last audit of our financial statements. Our management believes that these recent pronouncements will not have a significant effect on our financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the 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 is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
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 Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon our evaluation, each of our principal executive officer and principal financial officer has concluded that the Company’s internal control over financial reporting was not effective as of the 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 March 31, 2023, 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 our internal control policies and procedures; and |
| 4. | The Company’s financial reporting is carried out with the assistance of an outside financial consultant. |
36
Planned Remediation
Management continues to work to improve its controls related to our material weaknesses. Management will continue to implement measures to remediate material weaknesses, such that these controls are designed, implemented, and operating effectively. We plan to rectify these weaknesses by implementing written policies and procedures for our internal control of financial reporting, and hiring additional accounting personnel at such time as we have sufficient financial and human capital resources to do so. In order to achieve the timely implementation of the above, management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis:
Revenue Recognition. We intend on enhancing the design of existing controls and implementing new controls over the review of the application and recording of revenue for customer contracts under the guidance outlined in ASC 606. We also intend 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.
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.
These material weaknesses will not be considered to be remediated until the applicable remediated controls are operating for a 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 statements included in the 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 September 30, 2023, there were no significant changes in our internal control over financial 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 materially affect our internal control over financial reporting.
37
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
There are no updates or changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended March 31, 2023, as supplemented by the risk factors set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, 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.
38
ITEM 6. EXHIBITS
| * | 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. |
39
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.
| RiskOn International, Inc. | ||
| Date: November 20, 2023 | By: | /s/ Randy May |
| Randy May | ||
| Chief Executive Officer | ||
| Date: November 20, 2023 | By: | /s/ Jay Puchir |
| Jay Puchir | ||
| Chief Financial Officer | ||
40
Exhibit 31.1
CERTIFICATION
I, Randy May, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of RiskOn International, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: November 20, 2023
| /s/ Randy May | ||
| Name: | Randy May | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
Exhibit 31.2
CERTIFICATION
I, Jay Puchir, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of RiskOn International, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Dated: November 20, 2023
| /s/ Jay Puchir | ||
| Name: | Jay Puchir | |
| Title: | Chief Financial Officer | |
| (Principal Accounting Officer) | ||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of RiskOn International, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 20, 2023 | By: | /s/ Randy May |
| Name: | Randy May | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) |
| Date: November 20, 2023 | By: | /s/ Jay Puchir |
| Name: | Jay Puchir | |
| Title: | Chief Financial Officer | |
| (Principal Accounting Officer) |
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares |
Sep. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, shares issued | 2,359,306 | 1,383,832 |
| Common stock, shares outstanding | 2,359,306 | 1,383,832 |
| Series A Preferred Stock | ||
| Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
| Preferred stock, shares issued | 882 | 882 |
| Preferred stock, shares outstanding | 882 | 882 |
| Series B Preferred Stock | ||
| Preferred stock, shares issued | 8,637.5 | 8,637.5 |
| Preferred stock, shares outstanding | 8,637.5 | 8,637.5 |
| Series C Preferred Stock | ||
| Preferred stock, shares issued | 1,362.5 | 1,362.5 |
| Preferred stock, shares outstanding | 1,362.5 | 1,362.5 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Income Statement [Abstract] | ||||
| Hospitality and VIP experience revenue | $ 17,700 | $ 62,850 | ||
| Gaming revenue | 1,500 | 0 | 1,500 | 0 |
| Cost of revenue | 28,422 | 88,212 | 114,722 | 182,074 |
| Gross loss | (9,222) | (88,212) | (50,372) | (182,074) |
| Operating expenses: | ||||
| Depreciation, amortization and impairment | 4,032,157 | 1,668,555 | 4,169,039 | 1,713,651 |
| Bad debt | 55,548 | 108,963 | ||
| Selling, general and administration | 7,030,891 | 1,621,728 | 16,864,801 | 2,460,929 |
| Salaries and professional consulting fees | 2,619,762 | 3,625,044 | 4,211,660 | 9,582,893 |
| Total operating expenses | 13,738,358 | 6,915,327 | 25,354,463 | 13,757,473 |
| Operating loss | (13,747,580) | (7,003,539) | (25,404,835) | (13,939,547) |
| Other income (expense) | ||||
| Change in fair value of derivative liabilities | 1,862,290 | 3,286,004 | 22,982,843 | 2,892,472 |
| Dividend expense | (1,553,458) | (3,150,680) | ||
| Amortization of discounts | (2,161,211) | (2,584,384) | ||
| Loss on disposal of fixed assets | (570,772) | (570,772) | ||
| Interest income (expense), net of interest income | 41,499 | (281,900) | (221,036) | (318,728) |
| Total other (expense) income | (1,810,880) | 2,433,332 | 17,026,743 | 2,002,972 |
| Loss from continuing operations before discontinued operations | (15,558,460) | (4,570,207) | (8,378,092) | (11,936,575) |
| Discontinued operations | ||||
| Loss from discontinued operations | (385,242) | (7,629,448) | (2,104,888) | (11,699,050) |
| Gain (loss) on disposal of discontinued operations | 683,152 | (12,534,900) | 683,152 | (11,823,395) |
| Total gain (loss) discontinued operations | 297,910 | (20,164,348) | (1,421,736) | (23,522,445) |
| Net loss | (15,260,550) | (24,734,555) | (9,799,828) | (35,459,020) |
| Net loss attributable to non-controlling interest | 742,645 | 1,748,947 | 1,227,524 | 2,320,208 |
| Net loss to controlling interest | (14,517,905) | (22,985,608) | (8,572,304) | (33,138,812) |
| Less preferred stock dividends | 341,325 | 384,476 | ||
| Net loss to controlling interest of common shareholders | $ (14,517,905) | $ (23,326,933) | $ (8,572,304) | $ (33,523,288) |
| Net loss continuing operations (in Dollars per share) | $ (6.59) | $ (5.07) | $ (4.02) | $ (13.4) |
| Net gain (loss) discontinued operations (in Dollars per share) | 0.13 | (22.35) | (0.68) | (26.4) |
| Net loss per share-basic (in Dollars per share) | $ (6.47) | $ (27.42) | $ (4.7) | $ (39.8) |
| Weighted average common shares – basic (in Shares) | 2,359,306 | 902,115 | 2,084,672 | 890,959 |
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Income Statement [Abstract] | ||||
| Net income (loss) continuing operations - Diluted | $ (6.59) | $ (5.07) | $ (4.02) | $ (13.40) |
| Net loss discontinued operations -diluted | 0.13 | (22.35) | (0.68) | (26.40) |
| Net income (loss) per share - diluted | $ (6.47) | $ (27.42) | $ (4.70) | $ (39.80) |
| Weighted average common shares – diluted (in Shares) | 2,359,306 | 902,115 | 2,084,672 | 890,959 |
Description of Business |
6 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Description of Business [Abstract] | |
| DESCRIPTION OF BUSINESS | 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 (“ROI” or the “Company”). The Company 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 former owner of 100% of BNC and a significant shareholder of the Company, and the minority shareholders of BNC (the “Minority Shareholders”). BNC was transferred to the Company upon the closing of the SEA. 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 securities of Earnity, Inc. (“Earnity”) beneficially owned by BNC (which represents approximately 19.9% of the outstanding common stock of Earnity 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 AAI (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. 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.
Through September 30, 2023, the Company’s former wholly owned subsidiaries, with the exception of Agora, 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 September 30, 2023. The comparative financial statements for the three and six months ended September 30, 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 Company’s former subsidiary Zest Labs, along with the Company and Zest Labs Holdings, LLC (owned by Gary Metzger, a current board member of the Company and therefore a related party) (the “Purchaser”), entered into a stock purchase agreement dated August 25, 2023, whereby the Purchaser purchased 100% of the issued and outstanding common stock of Zest Labs from the Company 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 the Company’s shareholders of record as of November 15, 2022. The Company recorded a gain on disposal of Zest Labs of $683,152 in this transaction. Zest Labs is no longer a subsidiary of the Company, and all of the assets and liabilities of have been assumed by the Purchaser.
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. 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.
The Platform games operate on a free-to-play model, whereby game players may collect coins free of charge through the passage of time and if a game player wishes to obtain coins above and beyond the level of free coins available to that player, the player may purchase additional coin packages (“Freemium” gaming model). Once obtained, Nile Tokens (“NT”) and Nile Coins (“NC”) (either free or purchased), cannot be redeemed for cash nor exchanged for anything outside of the Metaverse. When coins are used and played in the games, the game player could “win” and would be awarded additional coins or could “lose” and lose the future use of those coins. The Company has concluded that the coins represent both consumable goods and durables, because 1) the game player does not receive any additional benefit from the game and is not entitled to any additional rights once the coins are consumed and 2) because once coins are used for the purchase of durable goods, those goods will continue to benefit the player throughout their gaming life cycle. |
Liquidity and Going Concern |
6 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Liquidity and Going Concern [Abstract] | |
| LIQUIDITY AND GOING CONCERN | 2. LIQUIDITY AND GOING CONCERN
For the three and six months ended September 30, 2023, the Company had a net loss to controlling interest of common shareholders of $(14,517,905) and $(8,572,304), respectively. In addition, the Company had a working capital deficit of $(24,544,923) and $(25,095,950) as of September 30, 2023 and March 31, 2023, respectively, and had an accumulated deficit as of September 30, 2023 of $(217,249,742). As of September 30, 2023, the Company had $1,554 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 shareholders 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 Series A preferred stock issued to Ault Lending, LLC (formerly Digital Power Lending, LLC) (“Ault Lending”) in conjunction with a $12,000,000 financing in June 2022, and the Company’s Series B and C preferred stock issued to AAI in conjunction with the purchase of the majority of the issued and outstanding stock of BNC.
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. The accompanying financial statements for the three and six month periods ended September 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 six months ended September 30, 2023. 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.
On October 30, 2023, the registration statement related to the $100,000,000 equity line of credit purchase agreement was declared effective by the SEC. See Note 19, “Commitments and Contingencies”, for more information. On November 8, 2023, the Company issued a term note (“Term Note”) in a principal amount of $660,000 with an institutional investor and received $600,000 in proceeds. See Note 22, “Subsequent Events,” for more information. |
Basis of Presentation and Significant Accounting Policies |
6 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||
| Basis of Presentation and Significant Accounting Policies [Abstract] | ||||||||||||||||
| BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 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 filed with the 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 2023 Annual Report. Results of the three and six months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending March 31, 2024.
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, the Company no longer owns 100% of Agora. As of September 30, 2023 and 2022, approximately 11% and 9.1%, respectively, is reflected as non-controlling interest of that entity. In addition, the Company 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 is 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:
While the revenue received from the sale of NT and NC’s (collectively the “coins”) is currently nominal, the Company believes that its operation of the BitNile.com website could be a scalable source of revenue in the future. Additionally, the Company expects the website will be a mechanism to help increase its brand reputation and recognition by participants, which the Company believes will result in the acquisition and monetization of new users to the site.
During the three and six month periods ended September 30, 2023 and 2022, the Company recognized $1,500 of revenue 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. The Company also 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 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 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, The Company also uses certain subcontractors that it selects and hires to help transfer services to the end customer. The Company has evaluated its agreements with its food and service subcontractors and based on the preceding, the Company determined that 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
The Company occasionally maintains cash balances in excess of the Federal Deposit Insurance Corporation insured limit. The Company does not consider this risk to be material.
Net Loss Per Share
Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted loss per share 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.
Recently Issued Accounting Standards
The Company does not expect that any recently issued accounting guidance will have a significant effect on its condensed consolidated financial statements. |
Discontinued Operations |
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| Discontinued Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DISCONTINUED OPERATIONS | 4. DISCONTINUED OPERATIONS
As discussed in Note 1 and the 2023 Annual Report, during the year ended March 31, 2023, the Company sold all of its subsidiaries, other than Agora and Zest Labs. On August 25, 2023, the Company sold 100% of the issued and outstanding stock of Zest Labs to the Purchaser (see Note 1). The Company’s loss from discontinued operations includes Banner Midstream , Trend Discovery, and Zest Labs for the three and six months ended September 30, 2022, which were sold in three separate transactions on July 25, 2022, September 7, 2022 and August 25, 2023, respectively. In addition on June 17, 2022, Agora sold all of its non-Bitcoin operations to a third party. The Company reflects the assets and liabilities of Wolf Energy as discontinued operations, as the Company has a 66% voting interest in Wolf Energy that will be part of the Company’s dividend to its shareholders upon the effective S-1 registration Wolf Energy has filed with the SEC.
Current assets as of September 30, 2023 and March 31, 2023 – Discontinued Operations:
Non-current assets as of September 30, 2023 and March 31, 2023 – Discontinued Operations:
Current liabilities as of September 30, 2023 and March 31, 2023 – Discontinued Operations:
Non-current liabilities as of September 30, 2023 and March 31, 2023 – Discontinued Operations:
The Company reclassified the following operations to discontinued operations for the three and six month periods ended September 30, 2023 and 2022.
The following represents the calculation of the gain on disposal of Trend Discovery at June 17, 2022:
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Business Combinations/Divestitures |
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| Business Combinations/Divestitures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS COMBINATIONS/DIVESTITURES | 5. BUSINESS COMBINATIONS/DIVESTITURES
BNC
On March 7, 2023, the Company acquired BNC from AAI. The Company accounted for this acquisition as an asset purchase as BNC did not meet the definition of a business as discussed in ASC 805 and Accounting Standards Update (“ASU”) 2017-01.
The Company acquired the assets and liabilities of BNC noted below at fair value.
The consideration paid for the acquisition of BNC was as follows (see Note 17):
The acquisition has been accounted for as a purchase of assets. The Company recognized a loss on the acquisition as of March 7, 2023 of $54,484,279 in the condensed consolidated statements of operations.
Zest Labs
On August 25, 2023, the Company 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 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 of November 15, 2022.
The Company sold the assets and liabilities of Zest Labs noted below at fair value.
The Company recorded a gain on disposal of Zest Labs of $683,152 for the six and three months ended September 30, 2023. |
Revenue |
6 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Revenue [Abstract] | |
| REVENUE | 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. As part of each of the Company’s social functions or events, the Company offers the option to request catering services for an additional charge. For the three and six months ended September 30, 2023 the Company recognized $19,200 and $64,350, respectively, of revenue from hospitality and VIP experience services and gaming and $0 in 2022.
The Company had related party hospitality service sales of $17,700 and $62,850 for the three and six month period ended September 30, 2023, respectively, and $0 for the three and six month period ended September 30, 2022. |
Senior Secured Promissory Note Receivable |
6 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Senior Secured Promissory Note Receivable [Abstract] | |
| SENIOR SECURED PROMISSORY NOTE RECEIVABLE | 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 for the acquisition of Trend Discovery. The Trend Ventures Note is in the principal amount of $4,250,000, bears interest at the rate of 5% per annum, and was to mature June 16, 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 a 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 Trend Ventures Note. The First Amendment amended the following clauses of the Trend Ventures Note: (a) the principal amount was amended from $4,250,000 to $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 September 30, 2023, the Company has established a full reserve for the principal and accrued interest receivable. |
Investment – Series A Convertible Preferred Stock – WTRV |
6 Months Ended |
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Sep. 30, 2023 | |
| Investment – Series A Convertible Preferred Stock – White River Energy Corp [Abstract] | |
| INVESTMENT – SERIES A CONVERTIBLE PREFERRED STOCK – WTRV | 8. INVESTMENT – SERIES A CONVERTIBLE PREFERRED STOCK – WTRV
On July 25, 2022, the Company entered into a Share Exchange Agreement pursuant to which it sold to WTRV its oil and gas production business, which was part of the 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 WTRV’s common stock to its shareholders. The S-1 was declared effective by the SEC on September 29, 2023, file number 333-268707, but the Company has not yet elected to convert the Series A preferred stock as it is still determining next steps on the previously proposed distribution of shares.
As of September 30, 2023, the Company has determined that it is not the primary beneficiary, and this transaction has not resulted in the Company controlling WTRV as the preferred shares have not yet been converted into common stock, and the Company does not have the power to direct activities of WTRV, control the board of directors of WTRV and WTRV is not reliant upon funding by the Company moving forward; therefore the Company concluded that WTRV is not a variable interest entity as of September 30, 2023. |
Investment – Common Stock – Wolf Energy Services, Inc. |
6 Months Ended |
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Sep. 30, 2023 | |
| Investment - Common Stock - Wolf Energy Services, Inc. [Abstract] | |
| INVESTMENT – COMMON STOCK – WOLF ENERGY SERVICES, INC. | 9. INVESTMENT – COMMON STOCK – 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. 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. The Company has determined that as of September 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 September 30, 2023 and March 31, 2023. Since the Company will be distributing to its shareholders a stock dividend to all common and preferred 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. |
Investment – Earnity |
6 Months Ended |
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Sep. 30, 2023 | |
| Investment -Earnity, Inc. [Abstract] | |
| INVESTMENT – EARNITY | 10. INVESTMENT – EARNITY
As part of the acquisition of BNC, the Company acquired BNC’s 19.9% ownership in Earnity, a company that aimed to democratize access to the broadest array of cryptocurrency assets in a secure, educational, and community-oriented platform to global customers. In the purchase of BNC, the Company allocated no value to this investment. Subsequent to the Company’s acquisition of BNC, Earnity permanently ceased operations. |
Property and Equipment |
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| Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | 11. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of September 30, 2023 and March 31, 2023:
Depreciation expense for the three and six months ended September 30, 2023 was $32,420 and $65,319, respectively. Depreciation expense for the three and six months ended September 30, 2022 was $15,661 and $48,560, 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 Bitstream Mining LLC (“Bitstream”) that had $1,784,189 in accumulated depreciation. The $3,895,753 of net property and equipment remaining was impaired as the Company deemed the assets without value as they have been unable to commence mining operations, either for themselves or from others through hosting arrangements, and is not expected to.
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, cases 23-51490 and 23-51491, respectively. |
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Intangible Assets |
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| Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS | 12. INTANGIBLE ASSETS
Intangible assets consisted of the following as of September 30, 2023 and March 31, 2023:
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.
Amortization expense for the three and six months ended September 30, 2023 was $103,983 and $207,967, respectively, and $0 for the three and six months ended September 30, 2022.
On August 25, 2023, the Company sold 100% of the issued and outstanding common stock of Zest Labs, and all the assets and liabilities of Zest Labs were assumed by the Purchaser as discussed in Note 1. The net amount of property and equipment recorded in the sale was $0.
Amortization expense for the next five years and in the aggregate is as follows:
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Accrued Expenses |
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| Accrued Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCRUED EXPENSES | 13. ACCRUED EXPENSES
Accrued expenses consisted of the following as of September 30, 2023 and March 31, 2023:
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Warrant Derivative Liabilities |
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| Warrant Derivative Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WARRANT DERIVATIVE LIABILITIES | 14. 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 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.
The Company has only included descriptions of warrants that are still outstanding as of September 30, 2023.
On August 6, 2021, the Company closed a $20,000,000 registered direct offering. The Company sold 115,942 shares of common stock and 115,942 warrants at $172.50 per share. The warrants are exercisable through April 8, 2025. The Company also issued the placement agent 8,116 warrants exercisable at $215.625 per share. Further information on the offering and compensation to the placement agent is contained in the prospectus supplement dated August 4, 2021. The fair value of the investor warrants was estimated to be $11,201,869 at inception and $11 as of September 30, 2023. The fair value of the placement agent warrants was estimated to be $744,530 at inception and $0 as of September 30, 2023.
On April 27, 2023, the Company closed a $6,875,000 senior secured convertible promissory note and granted the noteholders 2,100,905 warrants that expire five years from the issuance date and have a strike price of $3.28. The warrants contain a rachet provision which the Company has determined meets the criteria for accounting treatment as a derivative liability. The Company recorded a discount on the convertible note of $4,329,755, which represents the derivative liability at inception of the warrants. The fair value of the warrants was estimated to be $1,109,372 as of September 30, 2023.
The Company determined its derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of September 30, 2023 and March 31, 2023. The Black-Scholes model requires six basic data inputs: the exercise or strike price; time to expiration; the risk-free interest rate; the current stock price; the estimated volatility of the stock price in the future; and the dividend rate.
Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each warrant is estimated using the Black-Scholes valuation model. The following assumptions were used on September 30, 2023 and March 31, 2023 and at inception:
The Company’s remaining derivative liabilities as of September 30, 2023 and March 31, 2023 associated with warrant offerings were as follows.
During the six months ended September 30, 2023 and 2022, the Company recognized changes in the fair value of the derivative liabilities of $2,231,127 and $2,892,472, respectively.
Activity related to the warrant derivative liabilities for the six months ended September 30, 2023 was as follows:
Activity related to the warrant derivative liabilities for the six months ended September 30, 2022 was as follows:
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Long-Term Debt |
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| Long-Term Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LONG-TERM DEBT | 15. LONG-TERM DEBT
Long-term debt included in continuing operations consisted of the following as of September 30, 2023 and March 31, 2023:
The following is a list of maturities by fiscal year as of September 30, 2023:
Interest expense on long-term debt during the three and six months ended September 30, 2023 was $9,735 and $25,528, respectively. Interest expense on long-term debt during the three and six months ended September 30, 2022 was $32,379 and $44,133, respectively. |
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Notes Payable |
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| Notes Payable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTES PAYABLE | 16. NOTES PAYABLE
Related Parties
AAI advanced the Company $781,897 and $7,510,520 during the three and six months ended September 30, 2023, respectively. The advances were used for working capital purposes, were unsecured, interest-free and had no fixed terms of repayment as of September 30, 2023.
Convertible Notes
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. 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, 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 price. The conversion option meets the criteria of a derivative instrument, and the convertible note has been discounted $4,686,817 for the day one derivative liability. In addition, the Company has recorded $1,375,000 in original issue discount, which is being amortized using the interest method over the term of the note. Amortization of the original issue discount related to the convertible note was $345,628 and $586,724 for the three and six months ended September 30, 2023. Amortization of the conversion option and warrant derivative instruments related to the convertible note was $1,997,660 for the six months ended September 30, 2023.
Activity related to the convertible note derivative liabilities for the six months ended September 30, 2023 was as follows:
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Preferred Stock |
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| Preferred Stock [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREFERRED STOCK | 17. PREFERRED STOCK
RiskOn International Series A
On June 8, 2022, the Company entered into a Securities Purchase Agreement (the “Series A Agreement”) with Ault Lending, pursuant to which the Company sold Ault Lending 1,200 shares of Series A Convertible Redeemable Preferred Stock (the “RiskOn International 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 RiskOn International Series A and the Commitment Shares, the “Securities”) for a total original purchase price of $12,000,000. Ault Lending is a subsidiary of AAI. The Company determined that the classification of the RiskOn International Series A was mezzanine equity as the option to convert the shares belong to Ault Lending. A description of the material transaction components are as follows:
Conversion Rights
Prior to the November 2022 amendment described below, each share of RiskOn International 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 RiskOn International 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 RiskOn International Series A, unless and until the Company obtains shareholder and The Nasdaq Stock Market (“Nasdaq”) approval for the conversion of more than that amount, in order to comply with Nasdaq Rules. Shareholder 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 shareholders meeting seeking such shareholder approval at the September 9, 2022 meeting. The shares of RiskOn International 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 Ault Lending, amended the Certificate of Designations of Rights, Preferences and Limitations (the “Certificate”) of the RiskOn International Series A previously issued to Ault Lending to: (i) increase the stated value of the RiskOn International Series A from $10,000 to $10,833.33; (ii) provide for the dividends payable under the RiskOn International Series A to be payable in common stock rather than cash effective November 1, 2022; and (iii) reduce the conversion price of the RiskOn International 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 RiskOn International 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 a debt modification as opposed to a debt extinguishment as 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 RiskOn International Series A. As a result of this modification, the Company recognized a debt modification expense of $879,368. Upon reclassification to preferred stock liability, the Company analyzed the terms and determined that 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.
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 on September 30, 2023 and March 31, 2023:
As described in Note 19 “Commitments and Contingencies”, on November 2, 2023, the Company received a notice in the form of a letter (“Deficiency Letter”) from the Staff of the Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed below $1.00 per share for the previous 31 consecutive business days. See Note 22, “Subsequent Events”, for more information.
Negative Covenants and Approval Rights
The Certificate subjects the Company to negative covenants restricting its ability to take certain actions without prior approval from the holder(s) of a majority of the outstanding shares of RiskOn International Series A for as long as the holder(s) continue to hold at least 25% (or such higher percentage as set forth in the Certificate) of the RiskOn International Series A shares issued on the closing date under the Series A Agreement. These restrictive covenants include the following actions by the Company, subject to certain exceptions and limitations:
The above and other negative covenants in the Certificate do not apply to a reverse merger with an entity with securities quoted on a market operated by OTC Markets or listed on a national securities exchange.
Warrant
Prior to its cancellation, the Warrant, as amended, provided Ault Lending or its assignees (the “Holder”) with the right to purchase a number of shares of common stock as would enable the Holder, together with its affiliates, to beneficially own 49% of the Company’s common stock, calculated on a fully diluted basis, at an exercise price of $0.03 per share, including the Commitment Shares and conversion shares unless sold. Subject to shareholder approval, the Warrant was to vest and become exercisable into shares of the Company’s stock if, as of June 8, 2024: (i) the Company had failed to complete the distributions to the Company’s security holders or to any other subsidiary of the Company’s equity ownership of its three principal subsidiaries: Agora, Banner Midstream and Zest Labs (or their principal subsidiaries), and/or (ii) the Holder together with its affiliates does not beneficially own at least 50% of the Company’s outstanding common stock, provided however, that the Company must retain 20% of its common stock of Agora. The Warrant was to be exercised on a cashless basis and expire on June 8, 2027.
On November 14, 2022, the Company and the Holder canceled the Warrant in exchange for $100. As the Company had substantially met the conditions under Section 1(a) of the Warrant, the Company did not compute any derivative liability on the Warrant.
Registration Rights
Pursuant to the Agreement, the Company agreed to register the sale by Ault Lending of up to 174,882 shares of common stock, representing the Commitment Shares issued at the closing plus 171,453 of the shares of common stock issuable upon conversion of the RiskOn International Series A. This amount equals 19.9% of the Company’s outstanding common stock immediately prior to the closing. The Company registered the sale by filing a prospectus supplement pursuant to the Company’s registration statement on Form S-3 (File No. 333-249532), originally filed with the SEC on October 16, 2020, as amended, which became effective on December 29, 2020, and the base prospectus included therein. On January 23, 2023, Ault Lending agreed to reduce its secondary offering of shares of the Company’s common stock issuable upon conversion of the RiskOn International Series A by $3,500,000. See Note 18 “Shareholders’ Deficit.”
The description above is not a substitute for reviewing the full text of the referenced documents, which were attached as exhibits to the Company’s Current Reports on Form 8-K as filed with the SEC on June 9, 2022, July 15, 2022 and November 29, 2022.
Preferred Stock Derivative Liability
RiskOn International Series A
As discussed herein, the Company determined that the RiskOn International Series A upon the amendment on November 28, 2022, constituted a derivative liability under ASC 815, Derivatives and Hedging (“ASC 815”). As a result of this classification, the Company determined that on November 28, 2022 (inception), the value of the derivative liability was $7,218,319.
On December 9, 2022, the RiskOn International Series A holder converted 50 shares of RiskOn International Series A into 38,015 common shares that resulted in a loss on conversion of $3,923.
The derivative liability for the RiskOn International Series A was remeasured at September 30, 2023 and was valued at $55,415, resulting in a gain of $1,604,787 in the change in fair value for the six month period ended September 30, 2023.
In addition, the Company advanced $1,205,000 during the six months ended September 30, 2023 to a third-party related to an obligation by the RiskOn International Series A shareholder and this amount will be reflected as a redemption upon the dividend that will be paid to the Company’s shareholders of record as of September 30, 2022 for the WTRV and Wolf Energy divestitures. In addition, $635,000 was advanced in the year ended March 31, 2023. The $1,840,000 has been reclassified to advances to former owners of BitNile.com.
Activity related to the preferred stock derivative liabilities for the six months ended September 30, 2023 was as follows:
RiskOn International Series B and C
On February 8, 2023, the Company entered into the SEA by and among AAI, a significant shareholder and the owner of approximately 86% of BNC, and the Minority Shareholders. The SEA provided that, subject to the terms and conditions set forth therein, the Company was to acquire the assets and assume the liabilities of BNC as well as the securities of Earnity beneficially owned by BNC (which represents approximately 19.9% of the outstanding common stock of Earnity as of the date of the SEA) which has no value, in exchange for the following: (i) 8,637.5 shares of Series B, and (ii) 1,362.5 shares of Series C. The Preferred Stock, the terms of which are summarized in more detail below, have a combined Stated Value of $100,000,000, and subject to adjustment, and subject to Nasdaq and shareholder approval, convertible into a total of up to 13,333,333 shares of the Company’s common stock. The Company has independently valued the Preferred Stock as of the date of acquisition. The combined value of the Preferred Stock issued to AAI was $53,913,000 using a blended fair value of the discounted cash flow method and option pricing method.
Pursuant to the Series B Certificate, each share of Series B is convertible into a number of shares of the Company’s common stock determined by dividing the Stated Value by $7.50, or 1,333 shares of common stock. The conversion price is subject to certain adjustments, including potential downward adjustment if the Company closes a qualified financing resulting in at least $25,000,000 in gross proceeds at a price per share that is lower than the conversion price. The Series B holders are entitled to receive dividends at a rate of 5% of the Stated Value per annum from issuance until February 7, 2033 (the “Dividend Term”). During the first two years of the Dividend Term, dividends will be payable in additional shares of Series B rather than cash, and thereafter dividends will be payable in either additional shares of Series B or cash as each holder may elect. If the Company fails to make a dividend payment as required by the Series B Certificate, the dividend rate will be increased to 12% for as long as such default remains ongoing and uncured. Each share of Series B also has an $11,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of the Company, and ranks senior to all other capital stock of the Company with respect thereto other than the Series C with which the Series B shares equal ranking.
In addition, for as long as at least 25% of the shares of Series B remain outstanding, AAI (and any transferees) has consent rights with respect to certain corporate events, including reclassifications, fundamental transactions, stock redemptions or repurchases, increases in the number of directors, and declarations or payment of dividends, and further the Company is subject to certain other negative covenants, including covenants against issuing additional shares of capital stock or derivative securities, incurring indebtedness, engaging in related party transactions, selling of properties having a value of over $50,000, altering the number of directors, and discontinuing the business of any subsidiary, subject to certain exceptions and limitations.
The terms, rights, preferences and limitations of the Series C are substantially the same as those of the Series B, except that the Series C does not hold negative covenant and consent rights. The Company is required to maintain a reserve of authorized and unissued shares of common stock equal to 200% of the shares of common stock issuable upon conversion of the Preferred Stock, which is initially 26,666,667 shares.
Pending shareholder approval of the transaction, the Preferred Stock combined are subject to a 19.9% beneficial ownership limitation. That limitation includes shares of Series A issued to Ault Lending, a wholly owned subsidiary of AAI, on June 8, 2022 and any common stock held by AAI. Certain other rights are subject to shareholder approval as described below. The SEA provides that the Company will seek shareholder approval following the closing. The entire transaction is subject to compliance with Nasdaq Rules and the voting rights provision of the B/C Certificates each contains a savings clause that nothing shall violate such Rules.
Under the SEA, while any Preferred Stock is outstanding, the Company is prohibited from redeeming or declaring or paying dividends on outstanding securities other than the Preferred Stock. Further, the SEA prohibits the Company from issuing or amending securities at a price per share below the conversion price of the Preferred Stock, or to engage in variable rate transactions, for a period of 12 months following the closing.
The SEA further provided that following the closing the Company will prepare and distribute a proxy statement and hold a meeting of its shareholders to approve each of the following: (i) the SEA and the transactions contemplated thereby, (ii) a ratification of the Third Certificate Designations of Rights, Preferences, and Limitations of the Series A, (iii) a reverse stock split with a range of between 1-for-2 and 1-for-20, (iv) a change in the Company’s name to BitNile Metaverse, Inc., (v) an increase of the Company’s authorized common stock to 1,000,000,000 shares of common stock; and (vi) any other proposals to which the parties shall mutually agree. In addition, pursuant to the SEA the Company agreed to use its reasonable best efforts to effect its previously announced spin-offs of the common stock of Wolf Energy and WTRV held by or issuable to the Company, to complete one or more financings resulting in total gross proceeds of $100,000,000 on terms acceptable to AAI, and financially support the ongoing Zest Labs litigation. The holders of the Preferred Stock will not participate in the aforementioned spin-offs and distribution. In connection with the SEA, the Company and AAI also agreed that the net litigation proceeds from the Zest Labs litigation that was ongoing as of November 15, 2022 would be held in a trust for the benefit of the Company’s shareholders of record as of such date.
In connection with the SEA, the Company also entered into a Registration Rights Agreement with AAI and the Minority Shareholders pursuant to which the Company agreed to file a registration statement on Form S-3 or Form S-1 with the SEC registering the resale by the holders of the Preferred Stock and/or the shares of common stock issuable upon conversion of the Preferred Stock, to be initially filed within 15 days of the closing, and to use its best efforts to cause such registration statement to be declared effective by the SEC within 45 days thereafter, subject to certain exceptions and limitations.
The SEA contains certain representations and warranties made by each of the Company, AAI and the Minority Shareholders. BNC’s principal business entails the development and operation of a metaverse platform, the beta for which launched on March 1, 2023. This transaction closed on March 7, 2023.
The Company determined that the Preferred Stock constituted a derivative liability under ASC 815 on the date of inception March 7, 2023. As a result of this classification, the Company determined that on March 7, 2023 (inception), the value of the derivative liability was $42,426,069.
The derivative liability for the Preferred Stock was remeasured at September 30, 2023 and is valued at $962,481, resulting in a gain of $17,868,279 in the change in fair value for the six months ended September 30, 2023. The Company has accrued $2,847,222 in dividends on the Preferred Stock as of September 30, 2023.
Activity related to the preferred stock derivative liabilities for the Preferred Stock for the six months ended September 30, 2023 was as follows:
On April 4, 2023, the Company entered into an agreement with Ault Lending and WTRV pursuant to which the Company agreed to advance to WTRV payments of up to $3.25 million (the “Amounts”), and WTRV agreed to accept the Amounts as payment of Ault Lending’s $3.25 million payable to WTRV from Ault Lending’s exercise of participation rights in oil and gas exploration and drilling ventures which WTRV granted Ault Lending in connection with its acquisition of White River Holdings Corp. in July 2022. The parties agreed that the Amounts will be treated as a credit to the sums owed to WTRV, and the Company and Ault Lending agreed that in lieu of repayment of the Amounts advanced to WTRV, Ault Lending will permit the Company to redeem shares of the RiskOn International Series A held by Ault by dividing the Amounts by the stated value of such shares, or one share of RiskOn International Series A for each $10,833 advanced to WTRV. The redemption cannot occur until the previously announced spin-offs by the Company of shares of common stock of WTRV and Wolf Energy occurs, which would permit Ault Lending to receive its full dividends thereunder. |
Shareholders' Deficit |
6 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Stockholders' Deficit [Abstract] | |
| SHAREHOLDERS’ DEFICIT | 18. SHAREHOLDERS’ DEFICIT
RiskOn International Series A
As of March 31, 2022, there were shares of any series of preferred stock issued and outstanding. On June 8, 2022, as noted in Note 17, the Company issued 1,200 shares of RiskOn International Series A, and as of September 30, 2023 and March 31, 2023, there were 882 shares of RiskOn International Series A issued and outstanding.
As of September 30, 2023 and March 31, 2023, the Company had issued Series B and Series C, as noted in Note 17, and has 8,637.5 and 1,362.5 shares of Series B and Series C, respectively, outstanding, which were issued March 7, 2023.
Common Stock
The Company is authorized to issue 500,000,000 shares of common stock, par value $0.001, which followed shareholder approval on October 16, 2023. On May 4, 2023, the Company amended its Articles of Incorporation to reflect a 1-for-30 reverse stock split. The Company also reduced its authorized shares on a 1-for-30 basis going from 100,000,000 authorized shares down to 3,333,333 authorized shares. All share and per share figures are reflected on a post-split basis herein.
In the six months ended September 30, 2022, the Company issued 3,429 shares of common stock, which were the commitment shares in the AAI transaction as discussed in Note 17.
On January 24, 2023, the Company entered into an ATM Issuance Sales Agreement (the “ATM Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”), pursuant to which the Company could issue and sell from time to time, through Ascendiant, shares of the Company’s common stock, par value $0.001 per share (the “Shares”), with offering proceeds of up to $3,500,000. The ATM was terminated on June 16, 2023 after having raised approximately $3,500,000.
Under the ATM Agreement, Ascendiant was entitled to compensation of 3% of the gross proceeds from the sales of the Shares sold under the ATM Agreement. The Company also reimbursed Ascendiant for certain specified expenses, including the fees and disbursements of its legal counsel, in an amount not to exceed $30,000 as well as up to $2,500 for each quarterly and annual bring-down while the ATM Agreement was ongoing.
As of September 30, 2023, there were 163,393 unsold shares of the Company’s common stock being held by a custodian in an account owned by the Company which had not been sold during the ATM offering. It is the Company’s policy not to consider or classify these shares as issued or outstanding as it continues to own and control these shares.
The Shares were being offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission (the “SEC”) on January 24, 2023 and the accompanying base prospectus which is part of the Company’s effective Registration Statement on Form S-3 (File No. 333-249532) (the “Registration Statement”).
In the six months ended September 30, 2023, the Company issued 40,022 shares for payment of a preferred stock dividend of $300,158, and 935,452 shares in the ATM, for which it received $1,780,440. There was no common stock activity for the three months ended September 30, 2023.
As of September 30, 2023 and March 31, 2023, 2,359,306 and 1,383,832 shares of common stock were issued and outstanding, respectively.
Agora Common Stock
Agora is authorized to issue 250,000,000 shares of common stock, par value $0.001. On September 22, 2021, the Company purchased 100 shares of Agora for $10.
On October 1, 2021, the Company purchased 41,671,121 shares of Agora common stock for $4,167,112 which Agora used to purchase equipment to commence the Bitstream operations.
In addition, between October 1 and December 7, 2021, Agora issued 4,600,000 restricted common shares to its management, non-employee directors, employees and advisors. After issuance of these shares, the Company controls approximately 90% of Agora. The future share-based compensation related to these shares that will be measured consists of $12,166,680 over a three-year period in service-based grants ($9,611,145 in year one, $1,861,096 in year two, and $694,436 in year 3) and $10,833,320 in performance-based grants ($5,416,660 for the deployment of 20 MW in the State of Texas, and $5,416,660 for the deployment of 40 MW in the State of Texas) for a total of $23,000,000. These restricted common shares were measured pursuant to ASC 718-10-50 at an estimated value per share of $5.00 and consist of both service-based and performance-based criteria.
On August 7, 2022, Agora issued 400,000 shares of common stock to its management, non-employee directors, employees and advisors. After issuance of these shares, the Company controlled approximately 89% of Agora. The future share-based compensation related to these shares that will be measured consists of $2,000,000 ranging from immediate vesting through the three-year anniversary in service-based grants. These restricted common shares were measured pursuant to ASC 718-10-50 at an estimated value per share of $5.00 and consist of service-based criteria only.
Of the 5,000,000 restricted shares of common stock — 2,833,336 shares of restricted stock are considered service grants and 2,166,664 are considered performance grants.
The performance grants vest as follows: 1,083,332 restricted common shares upon Agora deploying a 20 MW power contract in Texas; and 1,083,332 restricted common shares upon the Company deploying a 40 MW power contract in Texas. As of December 31, 2022, none of the performance criteria are probable as no contracts have been signed as the proper funding has not been secured, therefore no compensation expense is recognized in accordance with ASC 718-10-25-20 related to the performance grants. On April 12, 2022, Agora upon board of director approval accelerated the vesting of 250,000 restricted shares for deploying a 20 MW power contract in Texas; and 250,000 restricted shares for deploying a 40 MW power contract in Texas with Agora’s former Chief Financial Officer. All remaining performance grants remain unvested.
The Company recognized $1,721,310 and $2,351,518 in share-based compensation for the three and six months ended September 30, 2023, respectively. The Company recognized $2,956,922 and $8,172,209 in share-based compensation for the three and six months ended September 30, 2022, respectively. The unrecognized share-based compensation expense as of September 30, 2023 is $8,333,320 in performance based grants and $0 in service based grants for a total of $8,333,320. It is very unlikely that the criteria established for the recognition of the performance grants will ever be satisfied.
The Company accounts for share-based payments in accordance with ASC 718, Compensation — Stock Compensation. The Company measures compensation expense for restricted stock units based on the fair value of the award on the date of grant. The grant date fair value is based on the closing market price of the Company’s common stock on the date of grant.
Share-based Compensation Expense
Share-based compensation for employees is included in salaries and salary related costs and directors and services are included in professional fees and consulting in the condensed consolidated statement of operations for the three and six months ended September 30, 2023 and 2022.
Share-based compensation for the three and six months ended September 30, 2023 for stock options and restricted stock units granted under the 2013 Incentive Stock Plan and 2017 Omnibus Incentive Stock Plan and non-qualified stock options were $0 and $258,655, respectively. Share-based compensation for the three and six months ended September 30, 2022 for stock options and restricted stock units granted under the 2013 Incentive Stock Plan and 2017 Omnibus Incentive Stock Plan and non-qualified stock options were $160,040 and $342,601, respectively.
There was $535,731 in share-based compensation accrued as of September 30, 2023 for the Company. |
Commitments and Contingencies |
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| Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | 19. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is presently involved in the following legal proceedings. To the best of the Company’s knowledge, no governmental authority is contemplating any proceeding to which the Company is a party or to which any of its properties or businesses are subject, which would reasonably be likely to have a material adverse effect on the Company.
In the opinion of management, there are no additional legal matters involving us that would have a material adverse effect upon the Company’s financial condition, results of operations or cash flows.
Nasdaq Compliance
On July 18, 2023, the Company received a letter (the “Letter”) from the Listing Qualifications staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company’s shareholders’ equity as reported in the 2023 Annual Report did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1) for the Nasdaq Capital Market, which requires that a listed company’s shareholders’ equity be at least $2.5 million. As reported in the 2023 Annual Report, the Company’s shareholders’ equity as of March 31, 2023 was approximately $(13.9) million.
According to the Letter, the Company had 45 calendar days from the date of the Letter, or until September 1, 2023, to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). If the Company’s compliance plan is accepted by Nasdaq, then Nasdaq may, in its discretion, grant the Company up to 180 calendar days from the date of the Letter, or until January 14, 2024, to evidence compliance. If Nasdaq does not accept the Company’s plan, then Nasdaq may issue a staff delisting determination letter whereby the Company’s common stock will be subject to delisting. The Company would have the opportunity to appeal that decision to a Nasdaq hearings panel. The Company submitted a compliance plan, which was subsequently amended and restated, to the Staff, but as of the date of this filing, Nasdaq has not determined whether or not to accept the Company’s plan.
If the Company’s Common Stock is delisted from Nasdaq, the Company could face significant material adverse consequences, including:
If the Company is unable to rectify any of the above-described Nasdaq issues, a delisting would subject the Company and its shareholders to the above.
ELOC
On August 24, 2023, the Company entered into a purchase agreement (the “ELOC Purchase Agreement”) with Arena Business Solutions Global SPC II Ltd on behalf of and for the account of Segregated Portfolio #3 – SPC #3 (“Arena”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right to direct Arena to purchase up to an aggregate of $100,000,000 of shares of common stock over the 36-month term of the ELOC Purchase Agreement. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of the Registration Statement (as defined in the ELOC Purchase Agreement), the Company has the right to present Arena with an advance notice (each, an “Advance Notice”) directing Arena to purchase any amount up to the Maximum Advance Amount (as defined in the ELOC Purchase Agreement). On October 30, 2023, the Registration Statement related to the ELOC Purchase Agreement was declared effective by the SEC.
Non-cancelable Obligations
In the course of BNC’s gaming business in association with its Platform, the Company has entered into non-cancelable obligations with certain parties to purchase services, such as technology and the hosting of the Platform. As of September 30, 2023, the Company had outstanding non-cancelable purchase obligations with terms of one year or longer aggregating $3,000,000 and obligations with terms less than one year of $2,000,000. |
Fair Value Measurements |
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| Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FAIR VALUE MEASUREMENTS | 20. FAIR VALUE MEASUREMENTS
The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by U.S. generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:
Level 1 – quoted prices for identical instruments in active markets;
Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and
Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
Financial instruments consist principally of cash, 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 or six months ended September 30, 2023 and 2022. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. The Company records the fair value of the of the warrant derivative liabilities disclosed in accordance with ASC 815. The fair values of the derivatives were calculated using the Black-Scholes Model. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in other income (expense) in the condensed consolidated statement of operations. The following table presents assets and liabilities that were measured and recognized at fair value on a recurring basis as of:
The table below shows a reconciliation of the beginning and ending liabilities measured at fair value using significant unobservable inputs (Level 3) for the six months ended September 30, 2023:
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Related Party Transactions |
6 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | 21. RELATED PARTY TRANSACTIONS
In connection with the hospitality services the Company offers, the Company and certain customers enter into separate arrangements with respect to sponsorships it provides in addition to a number of ongoing commercial relationships, including license agreements.
As of September 30, 2023 and March 31, 2023, the Company had related party receivables of $62,200 and $0, respectively. All receivables at September 30, 2023 were attributable to a single customer.
See 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. The Company’s Chief Executive Officer and Chief Financial Officer hold similar positions in WTRV.
In the six month period ended September 30, 2023, the Company was advanced an additional $7,510,520 from AAI.
The Company’s former subsidiary Zest Labs, along with the Company and Zest Labs Holdings, LLC (owned by Gary Metzger, a current board member of the Company and therefore a related party) (the “Purchaser”), entered into a stock purchase agreement dated August 25, 2023, whereby the Purchaser purchased 100% of the issued and outstanding common stock of Zest Labs from the Company 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 the Company’s shareholders of record as of November 15, 2022. The Company recorded a gain on disposal of Zest Labs of $683,152 in this transaction. Zest Labs is no longer a subsidiary of the Company, and all of the assets and liabilities of have been assumed by the Purchaser.
Revenues and Accounts Receivable
The Company had related party hospitality service sales of $17,700 and $41,150 for the three and six months ended September 30, 2023, respectively, and $0 in the three and six months ended September 30, 2022.
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 $507,576 and $1,395,842 of costs for the three and six months ended September 30, 2023, respectively, and $0 for the three and six months ended September 30, 2022. |
Subsequent Events |
6 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | 22. SUBSEQUENT EVENTS
Chapter 7 Bankruptcy Filing of Agora and Bitstream
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.
S-1 Registration Statement
On October 30, 2023, the Registration Statement related to the ELOC Purchase Agreement was declared effective by the SEC. In conjunction with the ELOC Purchase Agreement, there were an indeterminable number of shares of the Company’s common stock to be issued to the Buyer equal to $4,000,000 to be issued as consideration for the Buyer’s irrevocable commitment to purchase shares of common stock (“Commitment Fee Shares”). $1 million of Commitment Fee Shares were due to be issued on each of (i) one business day after the effectiveness of the Registration Statement, and (ii) the three, six and nine months after the date of effectiveness. As of November 16, 2023, the Company received requests from the Buyer and subsequently issued 455,418 shares of common stock registered under this S-1 towards the Commitment Fee Shares.
S-3 Registration Statement and Subsequent Conversions
On October 19, 2023, the registration statement registering the shares of common stock issuable upon conversion of the senior secured convertible notes issued in April 2023 was declared effective by the SEC. As of November 16, 2023, the Company received conversion notices converting an aggregate of $264,650 of the senior secured convertible notes and subsequently issued an aggregate of 503,652 shares of common stock.
Name and Ticker Symbol Change
Effective November 1, 2023, the Company changed its name from BitNile Metaverse, Inc., to RiskOn International, Inc. and changed its ticker symbol from BNMV to ROI. The change in both name and ticker are underscored by the Company’s commitment to developing a vertically integrated community while creating a seamless and enriched user experience.
Changes in Board of Directors Composition
On October 13, 2023, the Company appointed Robert O. Smith to its Board of Directors. Mr. Smith will serve as lead independent director and as Chairman of the Audit Committee. Mr. Smith replaces Steve Nelson who departed the Board of Directors on September 30, 2023; Mr. Nelson’s resignation was not the result of any disagreement with the Company, or its management on any matter relating to the Company’s operations, policies or practices.
Changes in Authorized Shares
On October 16, 2023, the Company, upon obtaining shareholder approval, filed a certificate of amendment to its Articles of Incorporation increasing its authorized shares of common stock from 3,333,333 to 500,000,000.
Nasdaq Compliance
On November 2, 2023, the Company received a notice in the form of a letter (“Deficiency Letter”) from the Staff of the Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company’s common stock had closed below $1.00 per share for the previous 31 consecutive business days.
In accordance with Nasdaq listing rule 5810(c)(3)(A), the Company has 180 calendar days, or until April 30, 2024, to regain compliance. The Deficiency Letter states that to regain compliance, the bid price for the Company’s common stock must close at $1.00 per share or more (the “Minimum Bid Price”) for a minimum of 10 consecutive business days during the compliance period ending April 30, 2024. In the event that the Company does not regain compliance within this 180-day period, the Company may be eligible to seek an additional compliance period of 180 calendar days if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price, and provides written notice to Nasdaq of its intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq Staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice to the Company that its common stock will be subject to delisting. At that time, the Company may appeal any such delisting determination to a Nasdaq hearings panel.
Term Note Agreement
On November 8, 2023, the Company entered into a term note (“Term Note”) agreement for a principal amount of $660,000 with an institutional investor. After accounting for an original issue discount of $60,000, the Company received proceeds of $600,000. The Term Note has a maturity date of January 7, 2024 and shall accrue interest at a rate of 10% per annum.
Series D Preferred Purchase Agreement, Related Party
On November 14, 2023, the Company entered into a securities purchase agreement (the “SPA”) with AAI, pursuant to which the Company agreed to sell to AAI 603.44 shares of newly designated Series D Convertible Preferred Stock (“Series D shares”) for a total purchase price of $15,085,931. This transaction closed on November 15, 2023. The purchase price was paid by the cancellation of $15,085,931 of cash advances made by the Purchaser to the Company between January 1, 2023 and November 9, 2023. The Series D shares each have a stated value of $25,000 per share. Each Series D share is convertible into a number of shares of the Company’s common stock determined by dividing the Stated Value by $0.51 (the “Conversion Price”), or an aggregate of 29,580,392 shares of Common Stock. The Conversion Price is subject to adjustment in the event of an issuance of Common Stock at a price per share lower than the Conversion Price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. As the Conversion Price represents a premium to the closing price of the Common Stock on the date of execution of the Agreement, the conversion of the Preferred Shares is not subject to limitations on conversion.
Common Stock Issuance
On November 17, 2023, the Company issued 73,361 shares of common stock for Series A Preferred dividends. |
Accounting Policies, by Policy (Policies) |
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| Basis of Presentation and Significant Accounting Policies [Abstract] | ||||||||||||||||
| Basis of Presentation | 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 filed with the 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 2023 Annual Report. Results of the three and six months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending March 31, 2024. |
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| Noncontrolling Interests | 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, the Company no longer owns 100% of Agora. As of September 30, 2023 and 2022, approximately 11% and 9.1%, respectively, is reflected as non-controlling interest of that entity. In addition, the Company 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. |
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| Significant Accounting Policies | 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. |
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| Gaming Revenue | Gaming Revenue Gaming revenue is 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:
While the revenue received from the sale of NT and NC’s (collectively the “coins”) is currently nominal, the Company believes that its operation of the BitNile.com website could be a scalable source of revenue in the future. Additionally, the Company expects the website will be a mechanism to help increase its brand reputation and recognition by participants, which the Company believes will result in the acquisition and monetization of new users to the site. During the three and six month periods ended September 30, 2023 and 2022, the Company recognized $1,500 of revenue from Metaverse coin sales.
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| Hospitality and VIP Services Revenue | Hospitality and VIP Services Revenue Hospitality revenue currently consists of revenue from services provided to groups at certain social functions and sporting events. The Company also 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 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 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, The Company also uses certain subcontractors that it selects and hires to help transfer services to the end customer. The Company has evaluated its agreements with its food and service subcontractors and based on the preceding, the Company determined that 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. |
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| Concentrations | Concentrations The Company occasionally maintains cash balances in excess of the Federal Deposit Insurance Corporation insured limit. The Company does not consider this risk to be material. |
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| Net Loss Per Share | Net Loss Per Share Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted loss per share 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. |
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| Recently Issued Accounting Standards | Recently Issued Accounting Standards The Company does not expect that any recently issued accounting guidance will have a significant effect on its condensed consolidated financial statements. |
Discontinued Operations (Tables) |
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| Discontinued Operations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Current Assets | Current assets as of September 30, 2023 and March 31, 2023 – Discontinued Operations:
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| Schedule of Non-Current Assets | Non-current assets as of September 30, 2023 and
March 31, 2023 – Discontinued Operations:
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| Schedule of Current Liabilities | Current liabilities as of September 30, 2023
and March 31, 2023 – Discontinued Operations:
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| Schedule of Non-Current Liabilities | Non-current liabilities as of September 30, 2023
and March 31, 2023 – Discontinued Operations:
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| Schedule of Operations to Discontinued Operations | The Company reclassified the following operations
to discontinued operations for the three and six month periods ended September 30, 2023 and 2022.
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| Schedule of Calculation of the Gain on Disposal of Trend Discovery | The following represents the calculation of the gain on disposal of
Trend Discovery at June 17, 2022:
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Business Combinations/Divestitures (Tables) |
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| Business Combinations/Divestitures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Acquired the Assets and Liabilities | The Company acquired the assets and liabilities
of BNC noted below at fair value.
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| Schedule of Consideration Paid for the Acquisition | The consideration paid for the acquisition of
BNC was as follows (see Note 17):
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Property and Equipment (Tables) |
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| Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment | Property and equipment consisted of the following
as of September 30, 2023 and March 31, 2023:
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Intangible Assets (Tables) |
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| Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets | Intangible assets consisted of the following
as of September 30, 2023 and March 31, 2023:
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| Schedule of Amortization Expense | Amortization expense for the next five years
and in the aggregate is as follows:
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Accrued Expenses (Tables) |
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| Accrued Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accrued Expenses | Accrued expenses consisted of the following as
of September 30, 2023 and March 31, 2023:
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Warrant Derivative Liabilities (Tables) |
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| Warrant Derivative Liabilities (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value of Each Warrant is Estimated Using the Black-Scholes Valuation Model | The fair value of each warrant is estimated using the Black-Scholes valuation model. The following
assumptions were used on September 30, 2023 and March 31, 2023 and at inception:
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| Schedule of Derivative Liabilities | Activity related to the convertible note derivative
liabilities for the six months ended September 30, 2023 was as follows:
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| Schedule of Warrant Derivative Liabilities | Activity related to the warrant derivative liabilities
for the six months ended September 30, 2023 was as follows:
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| Warrant [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrant Derivative Liabilities (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Liabilities | The Company’s remaining derivative liabilities
as of September 30, 2023 and March 31, 2023 associated with warrant offerings were as follows.
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Long-Term Debt (Tables) |
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| Long-Term Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-Term Debt | Long-term debt included in continuing operations
consisted of the following as of September 30, 2023 and March 31, 2023:
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| Schedule of Maturities | The following is a list of maturities by fiscal
year as of September 30, 2023:
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Notes Payable (Tables) |
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| Notes Payable [Abstract] | ||||||||||||||||||||||||||||||||||
| Schedule of Amortization of Discount Related to the Convertible Note | Amortization of the conversion option and warrant derivative
instruments related to the convertible note was $1,997,660 for the six months ended September 30, 2023.
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| Schedule of Convertible Note Derivative Liabilities | Activity related to the convertible note derivative
liabilities for the six months ended September 30, 2023 was as follows:
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Preferred Stock (Tables) - Preferred Stock [Member] |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Preferred Stock Liability is Estimated Using the Black Scholes Valuation Model | 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 on September 30, 2023 and March 31, 2023:
|
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| Schedule of Activity Related to the Preferred Stock Derivative Liabilities | Activity related to the preferred stock derivative
liabilities for the six months ended September 30, 2023 was as follows:
|
Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Assets and Liabilities that are Measured and Recognized at Fair Value on a Recurring Basis | The following table presents assets and liabilities that were measured and recognized at fair
value on a recurring basis as of:
|
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| Schedule of Reconciliation of the Beginning and Ending Liabilities | The table below shows a reconciliation of the
beginning and ending liabilities measured at fair value using significant unobservable inputs (Level 3) for the six months ended September
30, 2023:
|
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Liquidity and Going Concern (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
Nov. 08, 2023 |
Apr. 27, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Oct. 30, 2023 |
Mar. 31, 2023 |
|
| Liquidity and Going Concern (Details) [Line Items] | ||||||
| Net income (loss) to controlling interest of common stockholders | $ (14,517,905) | $ 8,572,304 | ||||
| Working capital | (24,544,923) | $ (25,095,950) | ||||
| Accumulated Other Comprehensive Income (Loss), Net of Tax | (217,249,742) | |||||
| Cash and cash equivalents | 1,554 | 66,844 | ||||
| Market capital raise amount | 3,500,000 | $ 3,500,000 | ||||
| Convertible Notes Payable | $ 6,875,000 | |||||
| Gross proceeds | $ 5,500,000 | |||||
| Equity line of credit | $ 100,000,000 | |||||
| Principal amount | $ 660,000 | |||||
| Institutional investor received | $ 600,000 | |||||
| Convertible Preferred Stock [Member] | ||||||
| Liquidity and Going Concern (Details) [Line Items] | ||||||
| Convertible preferred stock | $ 12,000,000,000,000 | |||||
Discontinued Operations (Details) |
Aug. 25, 2023 |
Sep. 30, 2023 |
|---|---|---|
| Discontinued Operations (Details) [Line Items] | ||
| Issued and outstanding stock percenatge | 100.00% | |
| Business Combination [Member] | Wolf Energy Services, Inc. [Member] | ||
| Discontinued Operations (Details) [Line Items] | ||
| Percentage of voting | 66.00% |
Discontinued Operations (Details) - Schedule of Current Assets - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Schedule of Current Assets [Abstract] | ||
| Wolf Energy | $ 60,860 | $ 1,297,801 |
| Prepaid expenses | 4,908 | |
| Current assets of discontinued operations held for sale | $ 60,860 | $ 1,302,709 |
Discontinued Operations (Details) - Schedule of Non-Current Assets - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Discontinued Operations (Details) - Schedule of Non-Current Assets [Line Items] | ||
| Total non-current assets | $ 259,790 | $ 984,071 |
| Wolf Energy Services, Inc. [Member] | ||
| Discontinued Operations (Details) - Schedule of Non-Current Assets [Line Items] | ||
| Total non-current assets | $ 259,790 | $ 984,071 |
Discontinued Operations (Details) - Schedule of Current Liabilities - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Discontinued Operations (Details) - Schedule of Current Liabilities [Line Items] | ||
| Total current liabilities | $ 1,750,910 | $ 3,569,672 |
| Wolf Energy Services, Inc. [Member] | ||
| Discontinued Operations (Details) - Schedule of Current Liabilities [Line Items] | ||
| Total current liabilities | 1,750,910 | 2,952,257 |
| Zest Accounts Payable [Member] | ||
| Discontinued Operations (Details) - Schedule of Current Liabilities [Line Items] | ||
| Total current liabilities | 532,279 | |
| Zest Accrued Expenses [Member] | ||
| Discontinued Operations (Details) - Schedule of Current Liabilities [Line Items] | ||
| Total current liabilities | $ 85,136 |
Discontinued Operations (Details) - Schedule of Non-Current Liabilities - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Discontinued Operations (Details) - Schedule of Non-Current Liabilities [Line Items] | ||
| Total non-current liabilities | $ 1,108,955 | $ 377,786 |
| Wolf Energy Services, Inc. [Member] | ||
| Discontinued Operations (Details) - Schedule of Non-Current Liabilities [Line Items] | ||
| Total non-current liabilities | $ 1,108,955 | $ 377,786 |
Discontinued Operations (Details) - Schedule of Operations to Discontinued Operations - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of Operations to Discontinued Operations [Abstract] | ||||
| Revenue | $ 3,795,607 | $ 10,955,153 | ||
| Operating expenses | 7,259,381 | $ 576,343 | 18,256,453 | |
| Wolf Energy – net loss | (385,242) | (3,826,919) | (1,528,545) | (3,836,919) |
| Other loss | (338,755) | (560,831) | ||
| Net loss from discontinued operations | $ (385,242) | $ (7,629,448) | $ (2,104,888) | $ (11,699,050) |
Discontinued Operations (Details) - Schedule of Calculation of the Gain on Disposal of Trend Discovery |
12 Months Ended |
|---|---|
|
Jun. 17, 2022
USD ($)
| |
| Schedule of Calculation of the Gain on Disposal of Trend Discovery [Abstract] | |
| 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 |
Business Combinations/Divestitures (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 25, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Mar. 07, 2023 |
|
| Business Combinations/Divestitures (Details) [Line Items] | ||||
| Recognized loss on acquisition | $ 54,484,279 | |||
| Loss on disposal amount | $ 683,152 | $ (570,772) | ||
| Zest Labs [Member] | ||||
| Business Combinations/Divestitures (Details) [Line Items] | ||||
| Percentage of issued and outstanding | 100.00% | |||
| Loss on disposal amount | $ 683,152 | |||
Business Combinations/Divestitures (Details) - Schedule of Acquired the Assets and Liabilities |
Sep. 30, 2023
USD ($)
|
|---|---|
| BNC [Member] | |
| Business Combinations/Divestitures (Details) - Schedule of Acquired the Assets and Liabilities [Line Items] | |
| Prepaid expenses | $ 620,616 |
| Property and equipment | 330,190 |
| Intangible assets | 6,239,000 |
| Accounts payable and accrued expenses | (3,186,513) |
| Due to BNC former parent | (4,404,350) |
| Notes payable | (170,222) |
| Total assets and liabilities | (571,279) |
| Zest Labs [Member] | |
| Business Combinations/Divestitures (Details) - Schedule of Acquired the Assets and Liabilities [Line Items] | |
| Prepaid expenses | 2,454 |
| Accounts payable and accrued expenses | (685,606) |
| Total assets and liabilities | $ (683,152) |
Business Combinations/Divestitures (Details) - Schedule of Consideration Paid for the Acquisition |
6 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Asset Acquisition, Contingent Consideration [Line Items] | |
| Total consideration | $ 53,913,000 |
| Series B and Series C Preferred Stock [Member] | |
| Asset Acquisition, Contingent Consideration [Line Items] | |
| Total consideration | $ 53,913,000 |
Revenue (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Mar. 31, 2022 |
|
| Revenue [Line Items] | |||||
| Revenue | $ 19,200 | $ 64,350 | |||
| Revenue from hospitality | $ 0 | ||||
| Sales service amount | $ 62,850 | $ 0 | |||
| Hospitality and Vip Service [Member] | |||||
| Revenue [Line Items] | |||||
| Sales service amount | $ 17,700 | $ 0 | |||
Senior Secured Promissory Note Receivable (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
May 15, 2023 |
Sep. 30, 2023 |
|
| Senior Secured Promissory Note Receivable [Line items] | ||
| Principal amount | $ 4,250,000 | |
| Interest rate percentage | 5.00% | 5.00% |
| Minimum [Member] | ||
| Senior Secured Promissory Note Receivable [Line items] | ||
| Principal amount | $ 4,250,000 | |
| Maturity date | May 15, 2025 | |
| Maximum [Member] | ||
| Senior Secured Promissory Note Receivable [Line items] | ||
| Principal amount | $ 4,443,870 | |
| Maturity date | Jun. 16, 2025 | |
| Trend Ventures Note [Member] | ||
| Senior Secured Promissory Note Receivable [Line items] | ||
| Maturity date | Jun. 16, 2025 |
Investment – Series A Convertible Preferred Stock – WTRV (Details) - Series A Convertible Preferred Stock [Member] |
Jul. 25, 2022
shares
|
|---|---|
| Investment – Series A Convertible Preferred Stock – WTRV (Details) [Line Items] | |
| Shares Received | 1,200 |
| Convertible shares of common stock | 42,253,521 |
Investment – Common Stock – Wolf Energy Services, Inc. (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Aug. 23, 2022 |
Sep. 30, 2023 |
|
| Investment of Common Stock [Abstract] | ||
| Acquired shares issued (in Shares) | 51,987,832 | |
| Issued and outstanding, percentage | 100.00% | |
| Investment value (in Dollars) | $ 5,328,753 | |
| Voting common shares, percentage | 66.00% |
Investment – Earnity (Details) |
Sep. 30, 2023 |
|---|---|
| Earnity, Inc [Member] | |
| Investment – Earnity (Details) [Line Items] | |
| Acquired ownership interest percentage | 19.90% |
Property and Equipment (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|---|
Aug. 25, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Property and Equipment (Details) [Line Items] | |||||
| Depreciation expenses | $ 32,420 | $ 15,661 | $ 65,319 | $ 48,560 | |
| Impaired assets amount | 5,679,942 | ||||
| Property and equipment net remaining | 3,895,753 | 3,895,753 | |||
| Zest Labs [Member] | |||||
| Property and Equipment (Details) [Line Items] | |||||
| Percentage of issued and outstanding | 100.00% | ||||
| Net amount of property and equipment | 0 | 0 | |||
| Accumulated depreciation | $ 1,784,189 | $ 1,784,189 | |||
Intangible Assets (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|---|
Aug. 25, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Mar. 31, 2023 |
|
| Intangible Assets [Abstract] | ||||||
| Estimated useful lives | 15 years | 15 years | ||||
| Amortization expense | $ 103,983 | $ 0 | $ 207,967 | $ 0 | ||
| Percentage of shares issued and outstanding common stock | 100.00% | |||||
| Net amount of property and equipment | $ 0 | $ 471,329 | $ 471,329 | $ 4,432,403 | ||
Intangible Assets (Details) - Schedule of Intangible Assets - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible assets, net | $ 5,996,372 | $ 6,204,339 |
| Trademarks [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Total intangible assets | 5,097,000 | 5,097,000 |
| Developed technology [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Total intangible assets | 1,142,000 | 1,142,000 |
| Accumulated amortization - trademarks [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Accumulated amortization | (198,217) | (28,317) |
| Accumulated amortization - developed technology [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Accumulated amortization | $ (44,411) | $ (6,344) |
Intangible Assets (Details) - Schedule of Amortization Expense |
Sep. 30, 2023
USD ($)
|
|---|---|
| Schedule of Amortization Expense [Abstract] | |
| Remaining fiscal year 2024 | $ 207,967 |
| 2025 | 415,933 |
| 2026 | 415,933 |
| 2027 | 415,933 |
| 2028 | 415,933 |
| Thereafter | 4,124,673 |
| Intangible assets, net | $ 5,996,372 |
Accrued Expenses (Details) - Schedule of Accrued Expenses - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Schedule of Accrued Expenses [Abstract] | ||
| Professional fees and consulting costs | $ 354,488 | $ 790,214 |
| Platform hosting fees | 1,000,000 | |
| Compensation vacation and paid time off | 353,633 | 138,262 |
| Sponsorship | 200,000 | 500,000 |
| Interest | 79,232 | 61,722 |
| Accrued legal contingencies | 414,027 | |
| Other | 461,738 | 68,160 |
| Total | $ 2,863,118 | $ 1,558,358 |
Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
|---|---|---|
| Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities [Line Items] | ||
| Fair Value Warrants | $ 1,109,383 | $ 6,264 |
| August 6, 2021 [Member] | ||
| Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities [Line Items] | ||
| Fair Value Warrants | 11 | 5,974 |
| August 6, 2021 One [Member] | ||
| Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities [Line Items] | ||
| Fair Value Warrants | 290 | |
| April 27, 2023 [Member] | ||
| Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities [Line Items] | ||
| Fair Value Warrants | $ 1,109,372 |
Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities (Parentheticals) |
Sep. 30, 2023
shares
|
|---|---|
| August 6, 2021 [Member] | |
| Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities (Parentheticals) [Line Items] | |
| Number of warrants | 115,942 |
| Date of offering | Aug. 06, 2021 |
| August 6, 2021 One [Member] | |
| Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities (Parentheticals) [Line Items] | |
| Number of warrants | 8,116 |
| Date of offering | Aug. 06, 2021 |
| April 27, 2023 [Member] | |
| Warrant Derivative Liabilities (Details) - Schedule of Derivative Liabilities (Parentheticals) [Line Items] | |
| Number of warrants | 2,100,905 |
| Date of offering | Apr. 27, 2023 |
Warrant Derivative Liabilities (Details) - Schedule of Warrant Derivative Liabilities - USD ($) |
6 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of Warrant Derivative Liabilities [Abstract] | ||
| Beginning balance | $ 6,264 | $ 4,318,630 |
| Issuances of warrants – derivative liabilities | 3,334,246 | |
| Warrants exchanged for common stock | ||
| Change in fair value of warrant derivative liabilities | (2,231,127) | (2,892,472) |
| Ending balance | $ 1,109,383 | $ 1,426,158 |
Long-Term Debt (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Mar. 06, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Feb. 16, 2022 |
Dec. 28, 2018 |
|
| Long-Term Debt [Line Items] | |||||||
| Credit facility amount | $ 10,000,000 | ||||||
| Annual rate percentage | 12.00% | ||||||
| Accrued interest | $ 8,707 | $ 8,707 | |||||
| Interest accrued | 70,429 | 70,429 | |||||
| Long term secured note payable | $ 80,324 | ||||||
| Maturity date | Feb. 13, 2028 | ||||||
| Repaid amount | $ 170,222 | ||||||
| Loan bears interest rate | 14.18% | ||||||
| Interest expense | $ 9,735 | $ 32,379 | $ 25,528 | $ 44,133 | |||
| Security Agreement [Member] | |||||||
| Long-Term Debt [Line Items] | |||||||
| Debt description | 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 $570,000 being disbursed directly to the Company. | ||||||
| Long-Term Secured Note Payable [Member] | |||||||
| Long-Term Debt [Line Items] | |||||||
| Debt percentage | 5.79% | ||||||
Long-Term Debt (Details) - Schedule of Long-Term Debt - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
||||||
|---|---|---|---|---|---|---|---|---|
| Debt Instrument [Line Items] | ||||||||
| Total long-term debt | $ 513,481 | $ 529,372 | ||||||
| Less: current portion | (325,699) | (323,818) | ||||||
| Long-term debt, net of current portion | 187,782 | 205,554 | ||||||
| Credit facility -Trend Discovery SPV 1, LLC [Member] | ||||||||
| Debt Instrument [Line Items] | ||||||||
| Total long-term debt | [1] | 291,036 | 291,036 | |||||
| Auto loan – Ford [Member] | ||||||||
| Debt Instrument [Line Items] | ||||||||
| Total long-term debt | [2] | 62,064 | 68,114 | |||||
| Auto loan – Cadillac [Member] | ||||||||
| Debt Instrument [Line Items] | ||||||||
| Total long-term debt | [3] | $ 160,381 | $ 170,222 | |||||
| ||||||||
Long-Term Debt (Details) - Schedule of Maturities |
Sep. 30, 2023
USD ($)
|
|---|---|
| Long Term Debt [Abstract] | |
| 2024 | $ 325,699 |
| 2025 | 38,804 |
| 2026 | 43,512 |
| 2027 | 48,869 |
| 2028 | 45,884 |
| Thereafter | 10,713 |
| Total | $ 513,481 |
Notes Payable (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Apr. 27, 2023 |
Dec. 09, 2022 |
Sep. 30, 2023 |
Sep. 30, 2023 |
||||
| Notes Payable [Line Items] | |||||||
| Related party | $ 781,897 | $ 7,510,520 | |||||
| Convertible note amount | $ 4,686,817 | 4,686,817 | [1] | ||||
| Amortization debt discount | 1,375,000 | ||||||
| Amortization of conversion option | $ 3,923 | 1,997,660 | |||||
| Convertible Notes Payable [Member] | |||||||
| Notes Payable [Line Items] | |||||||
| Original issue discount | 6,875,000 | 1,375,000 | 1,375,000 | ||||
| Gross proceeds | $ 5,500,000 | ||||||
| Matured date | Apr. 27, 2024 | ||||||
| Convertible common stock price per share increase (in Dollars per share) | $ 3.28 | ||||||
| Convertible common stock price per share decrease (in Dollars per share) | $ 3.28 | ||||||
| Amortization debt discount | $ 345,628 | $ 586,724 | |||||
| |||||||
Notes Payable (Details) - Schedule of Amortization of Discount Related to the Convertible Note - USD ($) |
6 Months Ended | |||||
|---|---|---|---|---|---|---|
Apr. 27, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
||||
| Schedule Of Amortization Of Discount Related To The Convertible Note Abstract | ||||||
| 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 | 2,584,384 | $ 41,086 | ||||
| Less: debt discount – reclassification to derivative liability (*) | $ (4,686,817) | (4,686,817) | [1] | |||
| Ending balance as of September 30, 2023 | $ 3,397,567 | |||||
| ||||||
Notes Payable (Details) - Schedule of Convertible Note Derivative Liabilities - Convertible Notes Payable [Member] |
6 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Notes Payable (Details) - Schedule of Convertible Note Derivative Liabilities [Line Items] | |
| 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 | (1,278,650) |
| Ending balance as of September 30, 2023 | $ 73,672 |
Preferred Stock (Details) - USD ($) |
1 Months Ended | 6 Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 04, 2023 |
Feb. 08, 2023 |
Feb. 07, 2023 |
Dec. 09, 2022 |
Nov. 14, 2022 |
Jun. 08, 2022 |
Jan. 23, 2023 |
Nov. 30, 2022 |
Sep. 30, 2023 |
Mar. 31, 2023 |
Mar. 07, 2023 |
Nov. 28, 2022 |
Mar. 31, 2022 |
|
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Preferred stock shares issued (in Shares) | |||||||||||||
| Common stock shares issued (in Shares) | 2,359,306 | 1,383,832 | |||||||||||
| Original purchase amount | $ 100 | $ 12,000,000 | |||||||||||
| Converted shares amount | $ 4,329,755 | ||||||||||||
| Beneficial ownership limitation | 19.90% | ||||||||||||
| Beneficial ownership limitation, description | The shares of RiskOn International 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. | ||||||||||||
| Description of agreement purchaser | On November 28, 2022, the Company, following an agreement with Ault Lending, amended the Certificate of Designations of Rights, Preferences and Limitations (the “Certificate”) of the RiskOn International Series A previously issued to Ault Lending to: (i) increase the stated value of the RiskOn International Series A from $10,000 to $10,833.33; (ii) provide for the dividends payable under the RiskOn International Series A to be payable in common stock rather than cash effective November 1, 2022; and (iii) reduce the conversion price of the RiskOn International 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 RiskOn International 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 a debt modification as opposed to a debt extinguishment as 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 RiskOn International Series A. As a result of this modification, the Company recognized a debt modification expense of $879,368. Upon reclassification to preferred stock liability, the Company analyzed the terms and determined that 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. | ||||||||||||
| Common stock closed per share (in Dollars per share) | $ 1 | ||||||||||||
| Holders percentage | 25.00% | ||||||||||||
| Equity, description | (i)payment or declaration of any dividend (other than pursuant to the RiskOn International 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. | ||||||||||||
| Warrant, description | Prior to its cancellation, the Warrant, as amended, provided Ault Lending or its assignees (the “Holder”) with the right to purchase a number of shares of common stock as would enable the Holder, together with its affiliates, to beneficially own 49% of the Company’s common stock, calculated on a fully diluted basis, at an exercise price of $0.03 per share, including the Commitment Shares and conversion shares unless sold. Subject to shareholder approval, the Warrant was to vest and become exercisable into shares of the Company’s stock if, as of June 8, 2024: (i) the Company had failed to complete the distributions to the Company’s security holders or to any other subsidiary of the Company’s equity ownership of its three principal subsidiaries: Agora, Banner Midstream and Zest Labs (or their principal subsidiaries), and/or (ii) the Holder together with its affiliates does not beneficially own at least 50% of the Company’s outstanding common stock, provided however, that the Company must retain 20% of its common stock of Agora. The Warrant was to be exercised on a cashless basis and expire on June 8, 2027. | ||||||||||||
| Outstanding common stock percentage | 19.90% | ||||||||||||
| Conversion amount | $ 3,923 | $ 1,997,660 | |||||||||||
| Derivative liabilities | $ 7,218,319 | ||||||||||||
| Converted share (in Shares) | 38,015 | ||||||||||||
| Advances | $ 635,000 | ||||||||||||
| Advances to former owners | $ 1,840,000 | ||||||||||||
| Conversion of the preferred stock (in Shares) | 26,666,667 | ||||||||||||
| Total gross proceeds | $ 100,000,000 | ||||||||||||
| Fair value of discounted cash flow method | $ 53,913,000 | ||||||||||||
| Selling of properties amount | $ 50,000 | ||||||||||||
| Percentage of common stock shares | 200.00% | ||||||||||||
| Shares of common stock (in Shares) | 1,000,000,000 | ||||||||||||
| Series A [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Preferred stock shares issued (in Shares) | 1,200 | 882 | |||||||||||
| Conversion amount | $ 3,500,000 | ||||||||||||
| Value of derivative liability | $ 55,415 | ||||||||||||
| Change in fair value | 1,604,787 | ||||||||||||
| Advanced third-party related to obligation amount | 1,205,000 | ||||||||||||
| Preferred stock dividend amount | $ 10,833 | ||||||||||||
| Common Stock [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Common stock shares issued (in Shares) | 3,429 | ||||||||||||
| Common stock convertible per share (in Dollars per share) | $ 63 | ||||||||||||
| BitNile Metaverse Series A [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Common stock shares issued (in Shares) | 171,453 | ||||||||||||
| Converted shares amount | $ 10,000 | ||||||||||||
| Series A Preferred Stock [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Preferred stock shares issued (in Shares) | 882 | 882 | |||||||||||
| Converted share (in Shares) | 50 | ||||||||||||
| BitNile Metaverse Series B and C [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Outstanding common stock percentage | 19.90% | ||||||||||||
| Series B [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Common stock shares issued (in Shares) | 1,333 | ||||||||||||
| Common stock convertible per share (in Dollars per share) | $ 7.5 | ||||||||||||
| Outstanding common stock percentage | 25.00% | ||||||||||||
| Conversion of the preferred stock (in Shares) | 8,637.5 | ||||||||||||
| Gross proceeds | $ 25,000,000 | ||||||||||||
| Dividend rate | 5.00% | 12.00% | |||||||||||
| Preferred Stock, Dividend Payment Terms | two | ||||||||||||
| Liquidation preference | $ 11,000 | ||||||||||||
| Series C [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Conversion of the preferred stock (in Shares) | 1,362.5 | ||||||||||||
| Preferred Stock [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Beneficial ownership limitation | 19.90% | ||||||||||||
| Value of derivative liability | $ 962,481 | $ 42,426,069 | |||||||||||
| Total gross proceeds | $ 100,000,000 | ||||||||||||
| Preferred shares issued (in Shares) | 13,333,333 | ||||||||||||
| Change in fair value | 17,868,279 | ||||||||||||
| Series B and Series C [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Accrued dividend | $ 2,847,222 | ||||||||||||
| Ault Alliance, Inc [Member] | BitNile Metaverse Series B and C [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Ownership percentage | 86.00% | ||||||||||||
| Series A Agreement [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Common stock shares issued (in Shares) | 174,882 | ||||||||||||
| Ault Lending LLC [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Advance payments | $ 3,250,000 | ||||||||||||
| White River Energy Corp [Member] | |||||||||||||
| Preferred Stock (Details) [Line Items] | |||||||||||||
| Advance payments | $ 3,250,000 | ||||||||||||
Commitments and Contingencies (Details) - USD ($) |
1 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Aug. 24, 2023 |
Jul. 15, 2022 |
Apr. 09, 2021 |
Oct. 17, 2022 |
Apr. 22, 2022 |
Sep. 30, 2023 |
Jul. 18, 2023 |
Mar. 31, 2023 |
|
| Commitments and Contingencies (Details) [Line Items] | ||||||||
| Damages value | $ 115,000,000 | |||||||
| Punitive damages | 50,000,000 | |||||||
| Purchased equipment | $ 414,027 | $ 1,666,187 | $ 256,733 | |||||
| Stockholders’ equity | $ (13,495,012) | $ (9,613,477) | ||||||
| Purchase aggregate amount | $ 100,000,000 | |||||||
| Walmart Inc. [Member] | ||||||||
| Commitments and Contingencies (Details) [Line Items] | ||||||||
| Compensatory damages | 65,000,000 | |||||||
| Maximum [Member] | ||||||||
| Commitments and Contingencies (Details) [Line Items] | ||||||||
| Subsequently reduced | 110,000,000 | |||||||
| Purchase aggregating obligations | 3,000,000 | |||||||
| Minimum [Member] | ||||||||
| Commitments and Contingencies (Details) [Line Items] | ||||||||
| Subsequently reduced | $ 60,000,000 | |||||||
| Purchase aggregating obligations | $ 2,000,000 | |||||||
| Nasdaq Compliance [Member] | ||||||||
| Commitments and Contingencies (Details) [Line Items] | ||||||||
| Stockholders’ equity | $ 2,500,000 | $ 13.9 | ||||||
Fair Value Measurements (Details) - Schedule of Reconciliation of the Beginning and Ending Liabilities |
6 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Schedule of Reconciliation of the Beginning and Ending Liabilities [Abstract] | |
| Beginning balance as of March 31, 2023 | $ (10,637,441) |
| Issuance – convertible notes with warrants | (4,686,817) |
| Net change in unrealized (depreciation) appreciation included in earnings | 22,982,843 |
| Ending balance as of September 30, 2023 | $ 7,658,585 |
Related Party Transactions (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Related Party Transactions [Abstract] | |||||
| Additional amount | $ 781,897 | $ 7,510,520 | |||
| Issued and outstanding common stock rate | 100.00% | ||||
| Gain (loss) on disposal of discontinued operations | (683,152) | $ 12,534,900 | $ (683,152) | $ 11,823,395 | |
| Related party hospitality service sales amount | 17,700 | 0 | 41,150 | 0 | |
| Allocated of ault alliance inc. | 507,576 | $ 0 | 1,395,842 | $ 0 | |
| Zest Labs Holdings, LLC [Member] | |||||
| Related Party Transactions [Abstract] | |||||
| Gain (loss) on disposal of discontinued operations | 683,152 | ||||
| Related Party [Member] | |||||
| Related Party Transactions [Abstract] | |||||
| Receivables | $ 62,200 | 62,200 | $ 0 | ||
| Additional amount | $ 7,510,520 | ||||