HUMBL Inc (HMBL)

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RECENT DEVELOPMENTS

During our fiscal year ended March 31, 2022, we made a conscious decision to enter the Bitcoin mining business. To advance that goal, we formed Agora on September 17, 2021, transferred our financial services business, Trend Discovery Holdings, to Agora and provided loans to enable it to commence its mining business and initiate its planned public offering. While that offering has been delayed to regulatory factors outside the Company’s control, we expect we will be able consummate it in the near future subject to both the regulatory environment and market conditions for both Bitcoin and the stock market in general. Agora expects to file an amendment to its Registration Statement in the next several weeks after completion of its audit for the year ended March 31, 2022.

Because of our need to raise capital for current business operations and growth of existing business lines, we entered into the Agreement with the Selling Shareholder, which is a subsidiary of BitNile Holdings, Inc. (“BitNile”) (NYSE American: NILE). BitNile is also engaged in the Bitcoin mining business and is therefore a competitor of Agora.

The Warrant provides 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 $0.001 per share. The Warrant becomes exercisable beginning after the completion by the Company of distributions to the Company’s security holders of the Company’s equity ownership of its three principal subsidiaries: Agora, Banner and Zest (the “Distributions”), provided that as of such time (i) the Warrant has been approved by the Company’s shareholders and Nasdaq, and (ii) the holder together with its affiliates does not beneficially own at least 50% of the Company’s outstanding Common Stock.

To date, discussions between BitNile have centered upon Ecoark being able to spin-off to its shareholders each of 100% of Agora, Banner and Zest Labs, Inc. Other than the initial spin-off of 80% of Agora within six months of Agora’s closing of its initial public offering, the timing of the remaining spin-offs as well as any acquisition of another business is uncertain. BitNile files reports with the SEC which investors are encouraged to review at www.SEC.gov/EDGAR.

Recently, Ecoark and Bitstream Mining LLC (“Bitstream”), an Agora subsidiary, were sued as defendants by Print Crypto Inc. (“Print”) in state court in Texas. Print is seeking to recover $256,733 plus interest and attorneys fees based on Bitstream’s alleged breach of contract. The complaint expresses no independent basis for suing Ecoark. Both defendants have filed an answer denying liability which answer includes a special exception for Ecoark since it was not a party to the contract in question. In addition, Bitstream filed a counterclaim seeking actual damages of $1.4 million it previously paid Print in addition to interest and attorneys fees. Bitstream alleges that the contract required Print to test the computers prior to delivery which Print failed to do based upon the various defects. In addition to its breach of contract claim, Bitstream is seeking actual and punitive damages alleging Print engaged in fraudulent acts.

https://www.sec.gov/Archives/edgar/data/1437491/000121390022032046/ea161398-424b5_ecoarkhold.htm