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White River Energy Corp. – ‘S-1/A’ on 8/22/23

On:  Tuesday, 8/22/23, at 5:38pm ET   ·   As of:  8/23/23   ·   Accession #:  1493152-23-29866   ·   File #:  333-268707

Previous ‘S-1’:  ‘S-1/A’ on 7/25/23   ·   Next:  ‘S-1/A’ on 9/7/23   ·   Latest:  ‘S-1/A’ on 9/27/23   ·   29 References:   By:  White River Energy Corp. – ‘10-Q’ on 11/8/23 for 9/30/23 By:  White River Energy Corp. – Latest ‘S-1/A’ on 9/27/23 By:  White River Energy Corp. – ‘S-1/A’ on 9/19/23 By:  White River Energy Corp. – Next ‘S-1/A’ on 9/7/23 To:  White River Energy Corp. – ‘10-Q’ on 8/11/23 for 6/30/23 To:  White River Energy Corp. – ‘8-K’ on 7/19/23 for 7/13/23 To:  White River Energy Corp. – ‘8-K’ on 7/7/23 for 7/1/23 To:  White River Energy Corp. – ‘S-1/A’ on 7/5/23 To:  White River Energy Corp. – ‘10-K’ on 6/29/23 for 3/31/23 To:  White River Energy Corp. – ‘S-1/A’ on 3/29/23 To:  White River Energy Corp. – ‘8-K’ on 3/23/23 for 3/17/23 To:  White River Energy Corp. – ‘8-K’ on 12/9/22 for 12/5/22 To:  White River Energy Corp. – ‘S-1’ on 12/7/22 To:  White River Energy Corp. – ‘8-K’ on / for 12/2/22 To:  White River Energy Corp. – ‘8-K’ on 11/28/22 for 11/22/22 To:  White River Energy Corp. – ‘10-Q’ on 11/14/22 for 9/30/22 To:  White River Energy Corp. – ‘8-K’ on 10/25/22 for 10/19/22 To:  White River Energy Corp. – ‘8-K’ on 9/30/22 for 9/28/22 To:  White River Energy Corp. – ‘8-K’ on 9/27/22 for 9/22/22 To:  White River Energy Corp. – ‘8-K’ on 9/20/22 for 9/16/22 To:  White River Energy Corp. – ‘8-K’ on 8/25/22 for 7/29/22 To:  White River Energy Corp. – ‘8-K’ on 8/19/22 for 8/15/22 To:  White River Energy Corp. – ‘10-Q’ on 8/12/22 for 6/30/22 To:  White River Energy Corp. – ‘8-K’ on 7/29/22 for 7/25/22 To:  White River Energy Corp. – ‘10-K’ on 3/15/22 for 12/31/21 To:  White River Energy Corp. – ‘8-K’ on 12/3/21 for 12/2/21 To:  White River Energy Corp. – ‘8-K’ on 9/20/21 for 9/14/21 To:  White River Energy Corp. – ‘10-K’ on 2/4/21 for 12/31/20 To:  White River Energy Corp. – ‘10-Q’ on 12/4/20 for 9/30/20 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 8/23/23  White River Energy Corp.          S-1/A       8/22/23  107:16M                                    M2 Compliance LLC/FA

Document/Exhibit                   Description                      Pages   Size 

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                (Policies)                                                       
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                Summary of Significant Accounting Policies                       
                (Details Narrative)                                              
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                (Parenthetical)                                                  
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                (Details Narrative)                                              
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                (Details)                                                        
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                Effective Tax Rate (Details)                                     
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                (Details)                                                        
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As filed with the Securities and Exchange Commission on August 22, 2023

Registration No. 333-268707

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 i Amendment No. 8 to

FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

 i White River Energy Corp
(Exact name of Registrant as specified in its charter)

 i 609 W/ Dickson St.,  i Suite 102 G

 i Fayetteville,  i AR,  i 72701
 i (800)  i 203-5610
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 i Randy May
Chief Executive Officer
White River Energy Corp
 i 609 W/ Dickson St.,  i Suite 102 G

 i Fayetteville,  i AR,  i 72701
 i (800)  i 203-5610
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Michael Harris, Esq.
Constantine Christakis, Esq.
Nason, Yeager, Gerson, Harris & Fumero, P.A.
3001 PGA Boulevard, Suite 305
Palm Beach Gardens, Florida 33410
(561) 686-3307

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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 of 1934.

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 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

The information in this Prospectus is not complete and may be changed. The Selling Stockholders may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is declared effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED August 22, 2023

WHITE RIVER ENERGY CORP

PROSPECTUS

61,987,044 Shares of Common stock

13,155,682 Warrants to Purchase Shares of Common Stock

This Prospectus relates to the distribution (the “Spin-Off”) by Ecoark Holdings, Inc., now known as BitNile Metaverse, Inc. (“Ecoark”) of 42,253,521 shares of common stock, par value $0.0001 per share (the “Spin-Off Shares”) of White River Energy Corp (“White River,” the “Company,” “we,” “our,” or “us”), a Nevada corporation, to the holders of Ecoark common stock and convertible preferred stock (on an as-converted basis). We are also registering the issuance of up to an additional 1,000 shares of common stock to account for the rounding up of fractional shares that would otherwise be distributable to the Ecoark record holders as Spin-Off Shares (“Fractional Shares”), and unless expressly noted or the context clearly dictates otherwise, the up to 1,000 Fractional Shares are also included in references to “Spin-Off Shares” in this Prospectus. This Prospectus also relates to the offering and resale by the selling stockholders identified herein (the “Selling Stockholders”) of up to 19,733,523 shares of the common stock of White River (the “PIPE Shares”) and up to 13,155,682 warrants to purchase shares of common stock of White River (the “Warrants,” and together with the PIPE Shares, collectively, the “PIPE Securities”), which consists of shares of common stock issuable upon conversion of 263.1126308 outstanding shares of the Company’s Series C Convertible Preferred Stock (the “Series C”) and exercise of Warrants representing 200% warrant coverage issued in private placement transactions from October 2022 through April 2023 in a private investment in public equity offering by the Company (the “PIPE Offering”). The PIPE Shares and the Spin-Off Shares, are collectively referred to as the “Shares,” and together with the Warrants, the securities being offered hereby are collectively referred to as the “Securities.” The above number of PIPE Securities assumes that 80% of the 30-day VWAP (as defined in the Series C Certificate of Designation) of the Company’s common stock for the period ending 10 trading days prior to effectiveness of the Registration Statement of which this Prospectus is a part is at least $1.00. If that number is lower, the number of PIPE Securities will be higher. See “The Private Placement” and “Selling Stockholders” for more information.

The Company is not selling any securities in this offering, and therefore will not receive any proceeds from the distribution of Spin-Off Shares by Ecoark and the sale of the PIPE Securities by the Selling Stockholders. However, we will receive gross proceeds upon the exercise of the Warrants if exercised for cash.

Spin-Off

The Spin-Off Shares of our common stock will be distributed to Ecoark holders of common stock and convertible preferred stock as of the record date of September 30, 2022 (the “Record Date”), on an as-converted basis for the preferred stock, meaning the holder of Ecoark’s outstanding convertible preferred stock as of the Record Date will also receive shares of White River common stock as if the shares of Ecoark common stock underlying their preferred stock were issued and outstanding (subject to beneficial ownership limitations) calculated as of the Record Date. As of the Record Date, there were 28,176,055 shares of Ecoark common stock outstanding and 4,438,096 shares of Ecoark common stock were issuable upon conversion of the convertible preferred stock, although the latter amount disregards the beneficial ownership limitations. No Fractional Shares of our common stock will be issued in the Spin-Off, and any Fractional Share of our common stock in the Spin-Off will be rounded up to the nearest whole share. We have agreed to issue Ecoark Fractional Shares to account for this rounding approach.

PIPE Securities

After the Spin-Off takes place, the Selling Stockholders may sell the PIPE Securities described in this Prospectus in a number of different ways and at varying prices. The prices at which the Selling Stockholders may sell the PIPE Securities in this offering will be determined by the prevailing market price for the shares of our common stock or in negotiated transactions. See “Plan of Distribution” for more information about how the Selling Stockholders may sell the Securities being registered pursuant to this Prospectus. Each Selling Stockholder may be deemed an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933 (the “Securities Act”). The Selling Stockholders have informed us that they do not currently have any agreement or understanding, directly or indirectly, with any person to distribute the PIPE Securities. The Selling Stockholders will not receive their PIPE Securities until after the Spin-Off has taken place.

We have agreed to pay the expenses of the registration of the shares of our common stock offered and sold under the Registration Statement under the Spin-Off and by the Selling Stockholders. Each Selling Stockholder will pay any commissions and applicable to the Securities it sells.

Our common stock issued is traded on the OTCQB under the symbol “WTRV.” Our Warrants are expected to trade on the OTCQB under the symbol “WTRVW.” On August 15, 2023, the last reported sale price of our common stock on the OTCQB was $1.10.

Investing in our securities involves various risks. See “Risk Factors” beginning on page 4 of this Prospectus for a discussion of information that should be considered in connection with an investment in our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus is ________, 2023

Table of Contents

You should rely only on information contained in this Prospectus. We have not authorized anyone to provide you with information that is different from that contained in this Prospectus. The Selling Stockholders are not offering to sell or seeking offers to buy securities in jurisdictions where offers and sales are not permitted. We are responsible for updating this Prospectus to ensure that all material information is included and will update this Prospectus to the extent required by law.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus contains, in addition to historical information, certain forward-looking statements, that includes information relating to future events, future financial performance, strategies, business opportunities, expectations including our goals and projections with respect to the planned Spin-Off by Ecoark of our common stock issuable upon conversion of its preferred stock, the expected results from and trends and developments in our oil and gas drilling and related activities, future plans for and anticipated transactions and relationships with respect to our oil and gas portfolio and operations and potential acquisition of a broker-dealer, our working capital needs and liquidity issues, expectations with respect to Ault Energy and the resale of working interests, and potential financings through the sale of our common stock or other securities, the subsequent use and sufficiency of the proceeds from any capital raising methods we may undertake to fund our operations. Such forward-looking statements include those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such statements.

In some cases, you can identify forward-looking statements by terminology, such as “may,” “should,” “would,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “continue,” “plan,” “potential” and similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Prospectus or incorporated herein by reference.

You should read this Prospectus and the documents we have filed as exhibits to the Registration Statement, of which this Prospectus is part, completely and with the understanding that our actual future results may be materially different from what we expect. You should not assume that the information contained in this Prospectus or any prospectus supplement is accurate as of any date other than the date on the front cover of those documents.

Risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from those expressed or implied in our written or oral forward-looking statements may be found in this Prospectus under the heading “Risk Factors.”

Forward-looking statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this Prospectus particularly our forward-looking statements, by these cautionary statements.

RISK FACTORS

Investing in our common stock involves a high degree of risk. Investors should carefully consider the following Risk Factors before deciding whether to invest in the Company. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations or our financial condition. If any of the events discussed in the Risk Factors below occur, our business, consolidated financial condition, results of operations or prospects could be materially and adversely affected. In such case, the value and marketability of the common stock could decline.

Risks Relating to Our Financial Condition

Because we have a limited operating history as a standalone oil and gas company, we cannot predict our future results.

White River’s oil and gas operations were operated under Ecoark as a portion of a larger public holding company with greater diversification and access to capital. Given our limited operating history as a standalone entity, it may be difficult to evaluate our future performance or prospects. You should consider the uncertainties that we may encounter as a company that should still be considered an early-stage oil and gas company. These uncertainties include:

If we are not able to address successfully some or all of these uncertainties, we may not be able to expand our business, compete effectively or achieve profitability.

We have incurred net losses since our inception and may continue to experience losses and negative cash flow in the future.

We have not been profitable since inception and have incurred significant operating losses and negative cash flow from operations particularly after our acquisition of White River Holdings. We recorded a net loss of approximately $43,089,977 and $6,922,753 for the fiscal year ended March 31, 2023 (“FY 2023”) and the fiscal year ended March 31, 2022 (“FY 2022”), respectively. For the three months ended June 30, 2023 (“FQ 23”), we incurred a net loss of $13,786,241 compared to a net loss of $1,986,544 for the three months ended June 30, 2022 (“FQ 22”). We may continue to incur losses and experience negative cash flows from operations for the foreseeable future. If we cannot achieve positive cash flow from operations or net income, we may need to raise additional capital on acceptable terms.

Because we require additional capital to fund our business objectives and support our growth, our inability to generate and obtain such capital could harm our business, operating results, financial condition and prospects.

Over the past two years, White River Holdings, increased its operating expenses in supporting its business of oil and gas exploration and drilling and consummating acquisitions of oil and gas properties. Included in our expenses is $150,000 per month in salary to two new officers of the management company for the Fund. We intend to continue to make substantial investments to fund our business and support our growth. Although we recently raised $6,577,816 in a Private Placement, we may desire to increase our drilling activity or acquire additional oil and gas properties. In addition, White River Energy Partners Management I LLC (the “Manager”), a subsidiary of the Company, is seeking to raise capital for the Fund in which the Manager is the managing general partner. In order to reduce dilution, our plan is to use investments into the Fund to support our drilling activities. However, through August 13, 2023, we have only raised $3,250,000 of the $50 million offering. See the Risk Factor on page 21 relating to issues with respect to capital raising for the Fund.

If we are unable to obtain adequate financing, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be adversely impacted. In addition, our inability to generate or obtain the financial resources needed may require us to delay, scale back, or eliminate some or all of our operations and business objectives and sell some of our assets.

Further, if we (as contrasted to the drilling Fund discussed in this Prospectus) raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity or debt securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.

Our ability to access capital markets could be limited.

From time-to-time, we may need to access capital markets to obtain long-term and short-term financing. However, our ability to access capital markets could be limited or adversely affected by, among other things, oil and gas prices, interest rates, our asset base, our track record in the industry, and the health or market perceptions of the drilling and overall oil and gas industry and the global economy. In addition, many of the factors that affect our ability to access capital markets, including the liquidity of the overall capital markets in general and the lack of liquidity for our common stock and the state of the economy and/or the oil and gas industry, among others, are outside of our control. There have also been efforts in recent years aimed at the investment community, including leading investment advisors, sovereign wealth funds, public pension funds, universities and other groups, promoting the divestment of fossil fuel equities as well as pressuring lenders and other financial services companies to limit or curtail activities with companies engaged in the extraction of fossil fuel reserves, which, if successful, could limit our ability to access capital markets. No assurance can be given that we will be able to access capital markets on terms acceptable to us when required to do so, which could adversely affect our business, financial condition and results of operations.

Since the Company’s executive officers are involved in other oil and gas ventures, and received certain interests and rights in our oil and gas drilling and production efforts pursuant to their Employment Agreements, conflicts of interest may arise.

Jay Puchir, the Company’s Chief Financial Officer, also serves as manager of the managing general partner of the Fund. The Company will act as the driller for the Fund and expects to receive management fees. While the Company’s management believes working with the Fund will benefit the Company, the Company and the Fund may compete with each other in drilling opportunities which creates a conflict of interest. To the extent that we have capital available to invest in drilling for our own account and the Fund participates either with us, or separately, to the extent that a well is successful, this conflict can adversely affect us. At the same time, we benefit if the well is not successful.

Additionally, pursuant to their respective Employment Agreements, each of Messrs. May and Puchir were granted a 5% overriding royalty interest or carried working interest (either, the “ORRI”) from the Company and its subsidiaries in any and all successfully drilled and completed oil and/or gas wells, as well as participation right of 15% and 10%, respectively, in the funding and ownership interest in any drilling or participation by the Company or any subsidiary in the drilling by a third party of an oil and gas well, which does not include the Fund but will include any other investment funds the Company sponsors. As of the date of this Prospectus, Messrs. May and Puchir have not exercised their participation rights in any of the Company’s drilling projects. The initial terms of their Employment Agreements are five years, subject in each case to renewal. While these arrangements are intended to directly align these officers’ incentives with the Company’s oil and gas exploration, drilling and production efforts by compensating them for the success of such ventures, they also directly divert any revenue generated by these ventures to these officers and away from the Company, which may be adverse to the Company and its stockholders. For example, a well that could have been profitable, or our operations as a whole, may not be profitable where it otherwise would have been as a result of the ORRI or the election of participation rights. Messrs. May and Puchir also have personal oil and gas investments which may also compete with the Company. These conflicts of interest may adversely affect our operations and financial condition, divert management’s time and attention away from running our primary business and result in our management to providing business opportunities to the Fund instead of the Company, any of which could materially adversely affect us.

Further, because each of Messrs. May and Puchir are also executive officers of Ecoark, they divert their limited time and attention to both entities and their respective businesses, and as a result conflicts of interest may arise that could be materially adverse to us.

Any of these or other endeavors that those involved in our operations chooses to pursue could materially harm our operations and ability to execute our business plan.

Because we have agreed with the Fund that we will subject to our cash availability and at the election of each partner redeem the investments of its partners, we may not have the capital to meet this obligation.

In order to attract investors to the Fund, subject to available cash we agreed to offer to redeem the investments of its partners (other than our subsidiary which is the managing general partner) within 90 days of the earlier of (i) 42 months after termination of the Fund’s offering, or (ii) June 30, 2027. As of the date of this Prospectus, the Fund has raised $3,250,000. The Company has extended the term of the Fund’s offering to December 31, 2023. The redemption price to be offered will be based upon the value of the units determined using a “PV20” industry formula conducted by an independent valuation firm selected by the Manager. See “Business-The Fund” at page 54.

We plan to launch a second limited partnership on or about January 1, 2024 and seek to raise up to $200 million with similar terms and conditions including redemption. We are hopeful that we receive approval to acquire the broker-dealer and that will assist us in raising substantially more money for the Fund and the second limited partnership. See the Risk Factors beginning at page 20.

We cannot predict what our financial condition or oil and drilling business will be on the redemption date(s), including whether we will have sufficient cash to meet our ongoing obligations and capital requirements. Because we have committed to offering to redeem partnership units, we are subject to the further risk that after making such payments, we will be unable to fund our ongoing operations or other capital commitments. While our redemption obligation is subject to our cash availability, if we have sufficient cash and use it to meet this obligation, our existing shareholders may be materially and adversely affected unless we can monetize the existing working interests held by the Fund through sale or borrowings. Usage of a substantial amount of cash could materially and adversely affect our ability to manage our business and carry on our oil and gas exploration activities. If we elect to borrow funds to redeem partners, we may incur substantial debt service obligations which will create additional expenses for us and may adversely affect our ability to buy drilling equipment, drill for new oil, and pay our obligations. In such an event, we would be forced to raise capital from one or more debt or equity financings to enable us to meet our working capital needs, which financings could be extremely dilutive, require us to pay high interest rates, dividends or other unfavorable financial terms, impose substantial restrictions on our operations or corporate governance, and contain other terms that are adverse to us and/or our other investors. If after redeeming partners, we encounter the events listed above, we may be required to cease operations. Further, if a dispute arises in connection with the Fund and its investors regarding the Company’s obligation to pay Fund investors and/or the amounts involved, the Company’s limited resources and personnel may need to be deployed towards such litigation, and we could be exposed to other adverse consequences as a result of such litigation, regardless of merit or outcome.

If we are unable to collect sums due to us for certain participation rights, we could experience material adverse consequences on our business and financial condition.

As described elsewhere in this Prospectus under “Business-Key Developments,” in connection with its participation rights in various drilling projects, as of August 4, 2023 Ault Energy, LLC (“Ault Energy”), a subsidiary of Ault Alliance, Inc. [NYSE American: AULT] (“Ault”) owes us $1,745,569 in obligations related to various drilling projects. We entered into an agreement on April 4, 2023 with Ecoark and Ault (dated March 29, 2023) with the goal of permitting Ecoark to pay us the sums due on behalf of Ault. However, due to Ecoark’s lack of cash resources, we may not receive any further amounts. Further, the Company also has very limited cash resources as of the date of this Prospectus in part due to the failure of Ault Energy and Ecoark to pay these obligations. As a result, as a practical matter, the Company’s most realistic option is to provide notice to Ault Energy that it will terminate Ault’s rights under the Participation Agreement and either find other investors or if the well begins production use the production that Ault would have received to fund the Company’s operations. The failure to receive the sums due has exacerbated the Company’s liquidity problems. The failure to receive the payments could have a material adverse effect on our business and financial condition, and your investment in us. The Company has reserved the sums due from Ault Energy as of June 30, 2023.

Because we have not entered into a Transition Services Agreement with Ecoark, we may encounter certain risks which could result in damages to us.

Often in spin-offs, the company distributing the dividend or the parent and the company being spun-off enter into a Transition Services Agreement outlining the rights and responsibilities between the parties and providing for payment to cover services usually rendered by the parent company. Because we operate independently of Ecoark and have control of all of our assets, we did not think we needed any agreement which would the parties’ respective rights and obligations following the spin-off. However, if we are incorrect in this conclusion, we could encounter difficulty in proving our ownership of any assets or face liabilities to third parties for acts committed by Ecoark prior to the distribution. Once control of Ecoark changes, we may not be able to prove our ownership or we may to defend an asserted liability. If incur legal fees in seeking to prove title or lose control of any assets or if we are found liable for actions that were predominately due to Ecoark’s actions, we may be required to sue Ecoark since we have no contractual indemnification rights. Any costs or damages may be material and we cannot assure you we will be able to collect from Ecoark even if we are successful.

Risks Relating to Our Oil and Gas Exploration and Production Operations

We have significant ongoing capital requirements that could affect our operations if we are unable to generate sufficient cash from operations or obtain financing on favorable terms.

The Company’s drilling plan entails extracting oil reserves across its approximately 34,000 acres of shallow and deep drilling rights. The Company has purchased a deep drilling rig to further vertically integrate its operations. However, with historically high oil prices, ancillary services related to drilling and producing oil wells have risen significantly. The Company is largely vertically integrated, since its exploration and drilling activities are primarily conducted in-house except for (i) wire line services to obtain exploratory data, (ii) concrete procurement and installation at well sites, and (iii) seismic and geophysical services.

We expect to pay for projected capital expenditures related to exploring and drilling additional oil wells with cash flows from operations or the proceeds from equity sales, including the Company’s recent financings. If we were unable to generate sufficient cash from operations, we would need to seek alternative sources of capital to meet our capital requirements. To the extent that our working capital is insufficient, we may have to scale back operations including our drilling activity.

Since analyzing a well’s potential is very risky, our management may make errors in assessing the potential of wells which could lead to limited revenue.

In our efforts to acquire, explore, and drill interests in oil and gas wells, management will assess reports about the recoverable reserves, future oil and gas prices, operating costs, potential liabilities, and other factors relating to the wells. These assessments are necessarily inexact, and their accuracy is inherently questionable and uncertain. The review of a subject property in connection with its acquisition assessment may not reveal all existing or potential problems or permit it to become sufficiently familiar with the property to fully assess its deficiencies and capabilities. Management and other personnel involved in the process may not inspect every well, and may not be able to observe structural and environmental problems even if it does inspect a well. If problems are identified, various affiliates, vendors, contractors, or third parties may be unwilling or unable to provide effective contractual protection against all or part of those problems. Any acquisition of property interests may not be economically successful, and unsuccessful acquisitions may have a material adverse effect on the Company’s financial condition, and future results of operations.

Unless we develop new reserves, reserves we acquire and subsequent production will decline, which would adversely affect our future cash flows and results of operations.

Producing oil reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Unless we conduct successful ongoing exploration and development activities or continually acquire properties containing proven reserves, our proven reserves will decline as those reserves are produced. Our future reserves and production, and therefore our future cash flow and results of operations, are highly dependent on our success in efficiently and economically finding or acquiring recoverable reserves. We may not be able to develop, find or acquire sufficient reserves to replace our current and future production. Further, our projections about a well’s production prospects could prove to be incorrect. If we are unable to replace our current and future production, the value of our reserves will decrease, and our business, financial condition and results of operations would be materially and adversely affected. If our estimates provide to be incorrect now or in the future, for some or all of the wells we are exploring and producing from, it could materially adversely affect our operating results.

The loss of any of, or a material reduction in orders from, our largest customers would materially and adversely affect our results of operations and financial condition.

Our oil and gas business is and has been characterized by a high degree of customer concentration and reliance on a very limited number of customers for our revenue. The loss of any of these customers, particularly Plains Marketing, LP, a leading midstream energy company which we frequently rely on for our sales, or a material reduction in their purchases from us spending activities generally, would have a material adverse effect on our financial condition, liquidity and results of operations.

Since our exploration and production operations are subject to stringent environmental, oil and gas-related and occupational safety and health laws and regulations, noncompliance with such laws and regulations could expose us to material costs and liabilities.

Our exploration and production operations are subject to stringent federal, state and local laws and regulations governing, among other things, the drilling activities, production rates, the size and shape of drilling and spacing units or proration units, the transportation and sale of crude oil, gas, and the discharging of materials into the environment and environmental protection. These laws and regulations may limit the amount of oil and gas we can produce or limit the number of wells or the locations where we can drill.

Further, we are required to obtain and maintain numerous environmental and oil and gas-related permits, approvals and certificates from various federal, state and local governmental agencies in connection with our exploration and production operations, and may incur substantial costs in doing so. If we acquire gas wells we may in the future be charged royalties on gas emissions or required to incur certain capital expenditures for air pollution control equipment or other air emissions-related issues. Additionally, our operations are subject to a number of federal and state laws and regulations, including the federal occupational safety and health and comparable state statutes, aimed at protecting the health and safety of employees.

Another significant risk inherent in drilling plans is the need to obtain drilling permits from local, state, federal and other governmental authorities, as appropriate. Delays in obtaining regulatory approvals and drilling permits, including delays which jeopardize our ability to realize the potential benefits from leased properties within the applicable lease periods, the failure to obtain a drilling permit for a well, or the receipt of a permit with unreasonable conditions or costs could have materially adverse effects on our ability to capitalize on proposed projects. As long as the Biden Administration or a successor Democratic Administration holds the Office of President, we expect the permitting process on federal lands will be marked by delays and refusals.

Although we will use third party contractors to handle delivery of crude oil and by-products, we may be subject to environmental liabilities for the acts of the contractors arising from the hauling and handling of hazardous materials, air emissions from our vehicles and facilities, and engine idling and discharge. Our operations involve the risks of environmental damage and hazardous waste disposal, among others. If we are involved in an accident involving hazardous substances, if there are releases of hazardous substances we transport, if soil or groundwater contamination is found at our facilities or results from our operations, or if we are found to be in violation of applicable environmental laws or regulations, we could owe clean-up costs and incur related liabilities, including substantial fines or penalties or civil and criminal liability, any of which could have a materially adverse effect on our business and operating results.

Failure to comply with these laws and regulations may subject us to sanctions, including administrative, civil or criminal penalties, remedial clean-ups or corrective actions, delays in permitting or performance of projects, natural resource damages and other liabilities. In addition, these laws and regulations may be amended and additional laws and regulations may be adopted in the future with more stringent legal requirements.

Our operations may generate waste that may be subject to the Federal Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes. The EPA and various state agencies have limited the approved methods of disposal for certain hazardous and nonhazardous waste. Furthermore, certain waste generated by natural gas and oil operations that are currently exempt from treatment as hazardous waste may in the future be designated as hazardous waste and therefore become subject to more rigorous and costly operating and disposal requirements.

The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), RCRA and analogous state laws impose liability, without regard to fault or the legality of the original conduct, on specified classes of persons that are considered to have contributed to the release of a hazardous substance into the environment. These classes of persons include the owner or operator of the disposal site or sites where the release occurred and companies that disposed or arranged for the disposal of the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources, and for the costs of certain health studies. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.

Our operations also may become subject to the Clean Air Act (“CAA”) and comparable state and local requirements. In 1990, Congress adopted amendments to the CAA containing provisions that have resulted in the gradual imposition of certain pollution control requirements with respect to air emissions. The EPA and states have developed and continue to develop regulations to implement these requirements. We are also subject to a variety of federal, state, local and international permitting and registration requirements relating to protection of the environment. While the Company believes it is in substantial compliance with current applicable environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse effect on its operations, but it cannot be certain.

Legislation, regulations or government actions related to climate change, greenhouse gas emissions and sustainability initiatives and other “ESG” laws, regulations and government action, could result in increased compliance and operating costs and reduced demand for fossil fuels, and concern in financial and investment markets over greenhouse gasses and fossil fuel production could adversely affect demand for our products, limit our access to capital and materially and adversely affect our future operating results.

As described under “Business-Government Regulations”, our operations are regulated extensively at the federal, state and local levels, and lawmakers and government agencies continue to consider potential new laws and regulations that would regulate or otherwise affect our industry. Environmental and other governmental laws and regulations have increased the costs to plan, design, drill, install, operate and abandon oil and natural gas wells. The trend in recent years has been increased scrutiny and regulatory oversight of the oil and gas industry, including among other things increasingly the proposal of new laws and regulations aimed at reducing or restricting oil and gas production and use. For example, in a rulemaking notice in mid-November 2022, the EPA announced a new calculation that would raise the damage estimate referred to as the “Social Cost of Carbon” of from $51 per metric ton, which had been the rate for the last several years, to $190 per metric ton by 2022 and as much as $410 by the year 2080. This amount is expected to guide or influence numerous laws and regulations in the future that are designed to reduce carbon emissions and the harm they cause to the environment. Under these laws and regulations, we could also be liable for personal injuries, property damage and other damages. In addition, failure to comply with these laws and regulations may result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties and fines.

The adoption and implementation of these and other similar regulations could require us to incur material costs to monitor and report on greenhouse gas emissions or install new equipment to reduce emissions of greenhouse gases associated with our operations. In addition, these regulatory initiatives could drive down demand for our products and services in the oil and gas industry by stimulating demand for alternative forms of energy that do not rely on combustion of fossil fuels that serve as a major source of greenhouse gas emissions, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. This could have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.

Because of the trend to use alternative energy technologies rather than oil and gas, it could have a material adverse effect on our results of operations.

Since our business depends on the level of activity in the oil and natural gas industry, any improvement in or new discoveries of alternative energy technologies that increase the use of alternative forms of energy and reduce the demand for oil and natural gas could have a material adverse effect on our business, financial condition and results of operations. As the United States and certain other countries transition to electric vehicles and as certain states in the United States are banning any usage of gas as a fuel, the oil and gas business is adversely affected. We will be further subject to state regulatory efforts such as California’s announced goal of eliminating the sale of vehicles which use gas by 2035. Automobile manufacturers are beginning to announce that they will only manufacture electric vehicles in the future. President Biden has also stated that the 2022 retail price rise in the price of gasoline was part of a plan to transition to electric vehicles.

As an example, in August 2022, the California Air Resources Board passed a rule banning the sale of gas vehicles by 2035, requiring 35% of new passenger vehicles sold by 2026 to be electric or otherwise not using gas with the number rising to 68% by 2030. It has been reported that more than a dozen states typically follow California which is the largest market for the sale of passenger vehicles. To date, New York, New Jersey, Massachusetts, Maryland, Washington and Oregon have followed California. The State of Washington has enacted a Rule similar to California. California also enacted a law effective July 1, 2022 banning the sale of gas powered lawn mowers and leaf blowers starting in 2024. Further in late September 2022 the California Air Resources Board banned natural gas heaters and furnaces by 2030. In May 2023 New York State passed a law banning gas stoves and furnaces, with limited exceptions, for all new buildings less than seven stories by 2026 and taller buildings by 2029. As this and the other trends outlined above are implemented, the Company could incur material and adverse effects on its results of operations.

Because we expect the SEC will adopt most, if not all of its proposed climate change rules, as a small producer, the compliance costs may adversely affect our future results of operating and financial condition, which effects may be material.

On March 21, 2022, the SEC released proposed rule changes that would require new climate-related disclosure in SEC filings, including certain climate-related metrics and greenhouse gas emissions, information about climate-related targets and goals, transition plans, if any, and extensive attestation requirements. In addition to requiring filers to quantify and disclose direct emissions data, the new rules would also require disclosure of climate impact arising from the operations and uses by the filer’s business partners and contractors and end-users of the filer’s products and/or services. If adopted as proposed, the rule changes would apply to the Company and result in us incurring material additional compliance and reporting costs, including monitoring, collecting, analyzing and reporting the new metrics and implementing systems and procuring additional internal and external personnel with the requisite skills and expertise to serve those functions. Such costs are likely to adversely affect our future results of operations and financial condition, which may be material. We expect the rule will be adopted in 2023 and be effective beginning at some point within a relatively short time period following adoption. We cannot predict the outcome of litigation which we expect will challenge any new climate change rules.

If Congress enacts the proposed price gouging bill, it could have a material adverse effect on our oil and gas operations and the Fund.

Senator Elizabeth Warren and others have introduced legislation aimed at rising gasoline and other prices and would empower the Federal Trade Commission (“FTC”) to investigate and penalize companies with “unconscionably excessive price increases.” The proposed legislation does not define what this phrase means so it will permit the FTC to define it. While we cannot predict whether the legislation will pass, the recent election and the apparent Republican control of the House of Representatives may mean the proposed bill will not be enacted. If it does pass, the FTC will enact Rules although it is possible it may enact an emergency Rule like other regulatory agencies have recently done. Any such legislation will likely affect gasoline prices. We believe price controls will have a material adverse effect on the Company and the Fund.

Because competition in the oil and natural gas industry is intense, we may be unable to effectively compete with larger companies with greater financial, technical and managerial resources.

We are a relatively small participant in the United States onshore oil and gas exploration and drilling industry and we face significant competition from major energy companies with substantial financial, technical, management, and other resources as well as large and other privately-held businesses which have competitive advantages. While we are mostly vertically integrated, our cost of operations is dependent in part on certain third-party services, and competition for these services can be significant, especially in times when commodity prices are high. Similarly, if and as we grow we will compete for trained, qualified personnel, and in times of lower prices for oil, we and other companies with similar production profiles may not be able to attract and retain this talent. Conversely, some of our competitors have a broader portfolio properties, assets and rights that in many cases enable them to both explore and drill wider geographic areas with a greater likelihood of success and/or complete the exploration, drilling, distribution and sale processes at lower costs while also offering related services to third parties.

Our ability to acquire and develop reserves in the future, and maintain and grow our customer base will depend on our ability to evaluate and select suitable properties and assets and to consummate transactions in a highly competitive environment for acquiring such properties and assets, marketing oil and gas, securing and compensating trained personnel and meeting demand for our products and services. Also, there is substantial competition for capital available for investment in the oil and gas industry. Our competitors may be able to pay more to acquire working interests in oil and gas leases as well as for personnel, property and services and to attract capital at lower rates. Because of our small size, we may be more affected than larger competitors. Further, the current inflation the United States is facing will affect us more that many well capitalized competitors.

The potential lack of availability of, or cost of, drilling rigs, equipment, supplies, personnel and crude oil field services could adversely affect our ability to execute on a timely basis our exploration and development plans within our budget.

We currently own three drilling rigs which can perform deep vertical and horizontal/directional drilling projects in depths of up to 34,000 feet, and three workover rigs. When the prices of crude oil increase, or the demand for equipment and services is greater than the supply in certain areas, we could encounter an increase in the cost of securing a deep drilling rig capable of performing lateral drilling projects in the Tuscaloosa Marine Shale. In addition, larger producers may be more likely to secure access to such equipment by offering more lucrative terms. If we are unable to acquire access to such resources, or can obtain access only at higher prices, our ability to convert our reserves into cash flow could be delayed and the cost of producing those reserves could increase significantly. In addition to increasing our costs, we may face the possibility of poorly rendered services or faulty or damaged equipment coupled with potential damage to downhole reservoirs and personnel injuries. Such issues can increase the actual cost of services, extend the time to secure such services and add costs for damages due to accidents sustained from the overuse of equipment and inexperienced personnel. All of these factors may adversely affect our results of operations and financial condition.

Drilling for and producing crude oil involves significant risks and uncertainties that could adversely affect our business, financial condition or results of operations.

Our drilling and production activities are subject to many risks, including the risk that we will not discover commercially productive reservoirs. Drilling for crude oil can be unprofitable, not only from dry holes, but from productive wells that do not produce sufficient revenues to return a profit. In addition, our drilling and producing operations may be curtailed, delayed or cancelled as a result of other factors, including but not limited to:

Some of the listed factors have occurred and adversely affected our business and reduced revenue. Any of these risks can cause substantial losses, including personal injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution, environmental contamination, clean-up responsibilities, loss of wells, repairs to resume operations; and regulatory fines or penalties. Further, our exposure to operational risks may increase as our drilling activity expands.

We may not be insured or fully insured against certain of the above operational risks, either due to unavailability of such insurance or the high premiums and deductibles. The occurrence of an event that is not covered in full or in part by insurance could have a material adverse impact on our business, financial condition and results of operations.

Because of the speculative nature of drilling oil and gas wells, we cannot guarantee any return on your investment.

Oil and natural gas exploration is an inherently speculative activity. Before the drilling of a well, we cannot predict with absolute certainty the volume of oil and natural gas recoverable from the well; or the time it will take to recover the oil and gas.

In addition, oil and gas wells by their nature are depleting assets with respect to which production could last anywhere from a few months to more than 30 years. As a result, annual production will naturally decline over the life of a well, and so too will returns to investors.

Even if targeted wells are completed and produce oil and gas in commercial quantities, it may not produce enough oil and gas to pay for the costs of drilling and completing the well.

Because the oil and gas drilling business is very cyclical, we may face a downturn which in turn can adversely affect our business.

Between inflation, supply chain shortages and the war in Ukraine, among other factors, the price of oil has spiked in 2022 with peak oil prices over $122 per barrel of oil for WTI crude on June 8, 2022, which was the highest level in over 10 years. However, as the economy is seemingly worsening, the price of crude oil fell to early January levels with WTI crude at $78.74 on September 24, 2022, although the price increased to above $90 in early November 2022. As of August 4, 2023, WTI crude oil traded at approximately $82.82 per barrel. Changes in oil and natural gas prices (and specifically downwards trends or the lack of an increase) will have a significant adverse impact on our cash flow. Lower oil and gas prices may not only impact our revenues, but also may reduce the amount of oil and gas that we can produce economically. Historically, oil and gas prices have been volatile, and it is likely that they will continue to be volatile in the future. At some point, the regulatory factors facing fossil fuels and the drilling for oil as well as a recession may make oil drilling financially unattractive. In that event, our results of operations may be materially and adversely affected.

The volatility of oil and natural gas prices could also hamper our ability to produce oil and gas economically. Oil and natural gas prices are volatile, and a decline in prices could significantly, adversely affect both profitability and overall financial health of the Company. The oil and gas industry has experienced severe downturns characterized by oversupply and/or weak-to-zero demand.

Our future revenues from exploration and production operations, cash flows, and carrying value of our oil and gas properties will depend on oil prices. Commodity prices, including oil, are highly volatile and may fluctuate widely in response to relatively minor changes in supply and demand and market uncertainty. Additional factors which may affect oil prices and which are beyond our control include but are not limited to, the following factors:

Because oil prices have been volatile, there can be no certainty as to if, when and to what extent they may decline in the future. Further, while higher oil prices generally provide benefits to our drilling operations to the extent we have productive wells during the high price periods, they also pose increased costs in drilling additional wells.

Our operating results fluctuate due to the effect of seasonality, adverse weather or other natural occurrences that generally impact the oil and gas industry.

Operating levels of the oil industry have historically been lower in the winter months because of adverse weather conditions. More recently, we have experienced slowdowns from heavy rains and tornadoes. Accordingly, our revenue generally follows a seasonal pattern. Revenue can also be affected by other adverse weather conditions, holidays and the number of business days during a given period because revenue is directly related to the available working days. From time-to-time, we may suffer short-term impacts from severe weather and similar events, such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes, and explosions that could materially harm our results of operations or make our results of operations more volatile.

Because we may be subject to various claims and lawsuits in the ordinary course of business, increases in the amount or severity of these claims and lawsuits could adversely affect us.

In the ordinary course of our planned business, we may be exposed to various claims and litigation related to commercial disputes, personal injury, property damage, environmental liability and other matters. If we incur increases in litigation or serious claims, there are developments in legislative or regulatory trends, or our employees or contractors incur a catastrophic accident or series of accidents, involving property damage, personal injury, or environmental liability it could have a material adverse effect on our operating results and financial condition.

The extension of our active oil and gas mineral leases are in some cases subject to performing continuous drilling operations.

Our oil and gas mineral leases may contain acreage that is either held by production or not. In order to extend the leased acreage not held by production, the Company must maintain minimum continuous drilling operations in order to extend these leases to future periods. Further, at least one of our leases requires us to drill a new well every 270 days in order to maintain the rights, and our failure to do so would result in us losing the rights unless the owner agrees to a waiver or extension. The Company’s inability to perform operations during any given period could result in the Company’s losing the rights to future operations on that lease. The Company had until August 18, 2023 to begin drilling another well on this lease to maintain this lease, and commenced drilling a well by that deadline, thereby extending the aforementioned deadline under the lease for another 270 days.

We may be required to meet future drilling conditions and lack the capital to protect our interest in one or more wells.

In addition to the requirements under our current interests, we may acquire interests in wells that require continuous drilling in order to maintain our interest. In the past, White River Holdings a then subsidiary of Ecoark was unable to meet the drilling condition, which permitted our Chief Executive Officer (who is also Ecoark’s Chief Executive Officer) to personally acquire a portion of the working interest when he made the required investment. Because we may acquire oil and gas mineral leases that may require future drilling to maintain the leasehold interest, if we do the Company will be required to invest in future drilling in order to extend these leases to future periods or lose the interest in any such leases. If we lack the capital, our affiliates may acquire the leases by investing their own capital.

Our ability to spread the risks of drilling among many wells may be limited.

Our ability to spread risks through diversification will be related to our ability to obtain the necessary capital and other resources needed to evaluate a well’s prospects and deploy drilling equipment, as well as acquire and maintain drilling rights. Limited capital will force us to drill fewer wells, or forego opportunities management deems to be attractive, which decreases our ability to spread the risks of drilling and mitigate the possibility of deploying our limited resources towards a successful drilling venture. In addition, our revenue and ability to achieve or maintain profitability may decrease if management is unable to find enough suitable well locations to be drilled. While we have approximately 34,000 acres to select drilling locations from, there can be no assurance that we will be successful in drilling in a manner or pace that enables us to generate sufficient revenue at low enough costs to become profitable.

The Company may face issues with title defects, which could result in losses in leases which the Fund acquires.

There may be defects in the title to the leases on which the Company’s wells are drilled. In certain instances, the Company may elect not to obtain title opinions or take certain other due diligence related actions that could have otherwise unveiled problems, due to cost, timing or other constraints. Thus, the Company may experience losses from title defects which arose during drilling that would have been disclosed by such due diligence. Also, the Company may waive title requirements for the leases on which the Company’s wells are drilled. Any failure of title of working interest transferred to the Company could materially adversely affect our operating results and business.

We may be required to record significant non-cash impairment charges related to a reduction in the carrying value of our proved oil and gas properties, which could materially and adversely affect our results of operations.

We will perform assessments of our oil and gas properties whenever events or circumstances indicate that the carrying value of those assets may not be recoverable. In order to perform these assessments, management will use various observable and unobservable inputs, including management’s outlooks for (i) proved reserves and risk-adjusted probable and possible reserves, (ii) commodity prices, (iii) production costs, (iv) capital expenditures and (v) production. Significant or extended price declines could result in the need to adjust the carrying value of our proved oil and gas properties by recording non-cash impairment charges. To the extent such assessments indicate a reduction of the estimated useful life or estimated future cash flows, the carrying value of the oil and gas properties may not be recoverable and therefore we may be required to record an impairment charge reducing the carrying value of the proved properties to their fair value. For FY 2023, we recorded impairment charges of $8,018,217 relating to goodwill impairment and $5,487,665 in impairment of our oil and gas reserves related to White River Holdings. While we no longer record any goodwill as an asset, we do have over $4,500,000 of oil and gas assets recorded on our balance sheet at March 31, 2023. If oil and natural gas prices decline in the future, we may be required to record impairment charges related to these intangible assets, which would materially and adversely affect our results of operations in the period incurred.

Similar to many companies, we have experienced a spike in our insurance costs, which could have a material adverse effect on our operating results.

Insurance premiums have recently escalated, and we are facing a similar increase in our insurance costs. Our future insurance and claims expense might exceed historical levels, which could reduce our earnings. We self-insure or maintain a high deductible for a portion of our claims exposure resulting from workers’ compensation, auto liability, general liability, cargo and property damage claims, as well as associated health insurance. Estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult. This, along with legal expenses, incurred but not reported claims and other uncertainties can cause unfavorable differences between actual claim costs and our reserve estimates. We plan to reserve for anticipated losses and expenses and periodically evaluate and adjust our claims reserves to reflect our experience. However, ultimate results may differ from our estimates, which could result in losses over our reserved amounts.

We maintain insurance with licensed insurance carriers above the amounts which we retain. Although we believe our general liability and related insurance limits should be sufficient to cover reasonably expected claims, the amount of one or more claims could exceed our coverage limits. If any claim were to exceed our coverage, we would be required to bear the excess, in addition to our other self-insured/retained amounts. As a result, our insurance and claims expense could increase, or we could raise our self-insured retention or deductible when our policies are renewed or replaced. Our operating results and financial condition could be materially and adversely affected if (i) cost per claim, premiums, or the number of claims significantly exceed our estimates, (ii) there is one or more claims in excess of our coverage limits, (iii) our insurance carriers refuse to pay our insurance claims or (iv) we experience a claim for which coverage is not provided.

General Risks

Because the COVID-19 pandemic had a material adverse effect on crude oil prices and the economy, the uncertainty relating to its continuation may have a future adverse effect on our business, results of operations, and future prospects.

While COVID-19 seems to no longer threaten the economy as it did, supply chain shortages seem to have evolved from COVID-19. Moreover, the risk of a serious new COVID-19 strain or other serious virus evolving remains.

Disruptions and/or uncertainties related to a new strain of COVID-19 for a sustained period of time could have a material adverse impact on our business, results of operations and financial condition. Supply chain delays and shortages of equipment, or increased transportation, labor or other costs which may result from COVID-19 could have a material adverse effect on our financial condition and results of operations. The Company has not experienced any national shortages of supplies related to COVID-19 or any other issues, but periodically experiences minor temporary delays on a regional basis on materials, equipment, and other services due to general supply and demand curves from vendors in the Louisiana and Mississippi area.

Disruptions and/or uncertainties related to a new strain of COVID-19 for a sustained period of time could have a material adverse impact on our business, results of operations and financial condition. Supply chain delays and shortages of equipment, or increased transportation, labor or other costs which may result could have a material adverse effect on our financial condition and results of operations. 

Furthermore, the effect of another serious COVID-19 outbreak on financial markets and on our Company may limit our ability to raise additional capital in the future on the terms acceptable to us at the time we need it, or at all.

Because of the Russian invasion of Ukraine, as well as high inflation and increased Federal Reserve interest rates in response, and the recent banking crisis, the effect on the capital markets and the economy is uncertain, and we may have to deal with a recessionary economy and economic uncertainty including possible adverse effects upon the oil and gas industry and other industries.

Following of the Russian invasion of Ukraine, certain events have affected the global and United States economy including continued inflation, Federal Reserve interest rate increases in response, prominent bank failures and weaknesses, volatility in the prices of oil and gas, declines in portions of the capital markets, and large Western companies ceasing to do business in Russia. The duration of this war and its impact are at best uncertain, and continuation may result in prolonged volatility in the global energy sector, and Internet access issues if Russia, for example, conducted illicit cyber activities. The economy may be headed into a recession with uncertain and potentially severe impacts upon public companies and us. We cannot predict how this will affect the market for oil and gas, but the impact may be adverse.

Our future success depends on our ability to retain and attract high-quality personnel, and the efforts, abilities and continued service of our senior management.

Our future success depends on our ability to attract, hire, train and retain a number of highly skilled employees and on the service and performance of our senior management team and other key personnel for each of our subsidiaries particularly with the planned expansion of our operations. The loss of the services of our executive officers or other key employees including two key new employees hired to raise capital for the Fund and inadequate succession planning could cause substantial disruption to our business operations, deplete our institutional knowledge base and erode our competitive advantage, which would adversely affect our business. Competition for qualified personnel possessing the skills necessary to implement our strategy is intense, and we may fail to attract or retain the employees necessary to execute our business model successfully. We do not have “key person” life insurance policies covering any of our executive officers.

Our success will depend to a significant degree upon the continued efforts of our key management, engineering and other personnel, many of whom would be difficult to replace. In particular, we believe that our future success is highly dependent on Randy May, our Chief Executive Officer and Chairman, and Jay Puchir, our Chief Financial Officer. If any members of our management team leave our employment, our business could suffer, and the share price of our common stock could decline.

If we cannot manage our growth effectively, our results of operations would be materially and adversely affected.

We have recently experienced significant growth in our operations commencing with and following the White River Holdings acquisition. Our business model relies on our rapidly growing our oil and gas drilling business. Businesses that grow rapidly often have difficulty managing their growth while maintaining their compliance and quality standards. If we grow as rapidly as we anticipate, we will need to expand our management by recruiting and employing additional executive and key personnel capable of providing the necessary support. There can be no assurance that our management, along with our staff, will be able to effectively manage our growth. Our failure to meet the challenges associated with rapid growth could materially and adversely affect our business and operating results.

We will have a highly concentrated portfolio of assets and operate in a limited number of markets, and therefore face risks surrounding a lack of diversification.

Our current operations and revenue generating activities are conducted exclusively through White River Holdings, which is focused on oil and gas drilling. Thus, an investment in our Company will not provide diversity as to asset type and industry, as we are focused solely on oil and gas assets in the energy sector. Additionally, while we intend to expand our portfolio as capital becomes available, our oil and gas portfolio and operations are presently geographically concentrated in the relatively small territory of Louisiana and Mississippi. This lack of diversification could cause us to face difficulties in establishing material revenue, particularly if adverse external forces such as market or regulatory changes occur, and we may be unable to recover from these developments, in which case your investment would be at risk.

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

Upon the effectiveness of the Registration Statement of which this Prospectus is a part, we will become subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Sarbanes-Oxley Act which requires, among other things, that public companies maintain effective disclosure controls and procedures and internal control over financial reporting.

Any failure to maintain effective controls or any difficulties encountered in their implementation or improvement in the future could cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired, which could result in loss of investor confidence and could have an adverse effect on our stock price.

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business.

The federal securities laws require us to comply with SEC reporting requirements relating to our business and securities. Following the effectiveness of the Registration Statement of which this Prospectus is a part we will be required to file reports which we now file voluntarily as well as comply with the proxy rules, among other things. Complying with these reporting and other regulatory obligations is time-consuming and will result in increased costs to us which could have a negative effect on our financial condition or business. We will be subject to the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act. These requirements may place a strain on our systems and resources. We will be required to file annual, quarterly and current reports with the SEC disclosing certain aspects and developments of our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Further, the recently adopted cybersecurity rules which we will have to comply with by the summer of 2024 will increase our compliance costs as will the climate change rules. To date, we file reports on a voluntary basis and have concluded in our Annual Report on Form 10-K for FY 2023 for example, that our disclosure controls are not effective. To maintain and improve the effectiveness of our disclosure controls and procedures, we will need to commit significant resources, hire additional accounting personnel and provide for additional management oversight. We intend to implement additional procedures and processes for the purpose of addressing the standards and requirements applicable to SEC reporting companies. Sustaining our growth will also require us to commit additional managerial, operational and financial resources to identifying competent professionals to join our Company and to maintain appropriate operational and financial systems to adequately support our intended expansion. These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our results of operations, financial condition or business.

Risks Relating to Our Planned Acquisition of a Broker-Dealer and Certain Other Regulatory Matters.

A failure or delay in the acquisition of a broker-dealer, including due to regulatory requirements of the broker-dealer, may adversely affect our business and results of operations.

Broker-dealers are subject to intense laws and regulations enacted by national, and state governments, including those administered by the SEC. Additionally, broker-dealers are subject to FINRA oversight and must also comply with money laundering laws and know your customers laws. Self-regulatory organizations and related licenses and certifications often come with their own rules and processes with which we will need to comply to effect these types of transactions. Broker-dealers are regulated by the SEC, states in which they operate and by FINRA, and self-regulatory organizations of which they may be members. The SEC requires registration and certain periodic public disclosure about the broker-dealer unless an exemption from registration is available. Before a FINRA member firm may engage in a change of control transaction, FINRA Rule 1017 requires the member to file an application for approval at least 30 days prior to the transaction. Under the Rule, FINRA then has authority to review and potentially reject the application, in which case the transaction would not be able to go forward.

Therefore, our business plan as it relates to acquiring a broker-dealer through which to enable us to proceed with oil and gas funding activities could be materially delayed or even prevented by FINRA and/or the SEC rules and application and review processes, much of which will be beyond our control given that a significant source of the information and documentation FINRA or the SEC requests will come from the firm we are targeting to acquire. We filed the change of control application with FINRA in February 2023. For further information on this application, see page 59 of this Prospectus. If we do obtain FINRA approval to acquire a broker-dealer, we will become subject to the SEC’s and FINRA’s rules and requirements through the acquired entity, which together impose significant ongoing compliance requirements with respect to the financial condition (including net capital minimums), reporting, recordkeeping and audit requirements, supervisory and corporate governance mandates, customer relationships and communications and other requirements affecting the products and services offered by the broker-dealer. See the Risk Factor titled “If we obtain a broker-dealer, we will become subject to numerous regulatory requirements imposed by a variety of different private and public agencies, which could restrict our operations or impede our growth” for more information about the potential applicable requirements. Additionally, various states require registration which provides such states with the ability to regulate the broker-dealer including the power to inspect records.

Compliance with SEC and FINRA rules and regulations and other requirements in connection with acquisitions and ongoing operations are often capital intensive and time-consuming, can divert management’s and personnel’s attention from important operational matters, and may prevent us from ultimately achieving our goals within the desired timeframes, on favorable terms or at all. These requirements are often ambiguous, fact sensitive and context specific, which further magnifies the risk of exposure and/or the expense of compliance. Litigation or enforcement proceedings may arise involving large amounts of damages or fees, and defending against such litigation is costly. For the foregoing reasons, failure to comply with applicable laws or regulations, as interpreted and applied, and deployment of human and capital resources towards compliance and/or defense efforts, could have a material adverse effect on our business, including our ability to negotiate and complete transactions, and on our ability to execute our business plan and generate material revenue therefrom.

If we are unable to acquire the broker-dealer, our ability to raise capital for the Fund may be materially and adversely affected while at the same time we have made significant financial commitments to two new executives, the ultimate amounts of which remain uncertain.

If we fail to close the acquisition of the broker-dealer under the MIPA, the intended benefits of the Fund and any future fund, particularly the raising of non-dilutive capital to be deployed towards the Company’s oil and gas projects, may not be realized. Because of our limited success in raising capital for the Fund, we recruited two senior executives who have been registered representatives for other broker-dealers. See “Executive Compensation.” Because of their history in the securities business, we have been advised that they cannot sell Fund units for us unless they are associated with a registered broker-dealer. If we cannot acquire the broker-dealer, we are subject to a number of risks including:

For the first two years (through May 8, 2025), each executive’s base salary will be a draw against commissions. If an executive’s commissions in a given month exceed the base salary, the executive will receive the difference and if commissions for a month are less, the executive does not have any obligation to pay the difference to the Company. Although the executives have agreed that if the broker-dealer is a subsidiary of the Company, at least 30% of the commissions charged will be retained by the subsidiary and not paid to the executives or sales persons they supervise, an independent broker-dealer may charge more and thereby reduce sums payable to the executives, which can reduce their incentive to sell. In addition, an independent broker-dealer serving as a placement agent may delay selling Fund units as it carries out its due diligence obligations, may elect not to sell units or may at a later date elect not to sell units. All of these events can affect the Company’s ability to raise capital for the Fund. For more information on the Employment Agreements, see “Executive Compensation.”

Accordingly, if we do not acquire the broker-dealer or obtain another broker-dealer to raise capital for the Fund, or otherwise manage our capital expenditures in these pursuits, our liquidity and business will be materially adversely affected.

If we obtain a broker-dealer, we will become subject to numerous regulatory requirements imposed by a variety of different private and public agencies, which could restrict our operations or impede our business plan and growth.

If we acquire a broker-dealer, we will become subject to a number of laws, regulations, rules and policies aimed at protecting investors and preserving the integrity of the financial markets. These requirements can be costly to comply with, divert management’s attention away from other important matters, and may have the effect of hindering our growth as a result. For example, among the laws, regulations, rules and policies to which the broker-dealer must comply with are:

While we expect the future operations of any broker-dealer we acquire to be limited, we may be subject to additional or different rules depending on the operations of the broker-dealer we acquire, and any future business we develop following the acquisition. Costs of compliance with these requirements is expected to be significant, and failure to comply would expose us to the risk of regulatory enforcement, civil liability, suspension or withdrawal of the license or registration to operate as a broker-dealer, any of which would materially adversely affect us.

If the Company was subject to the Investment Company Act of 1940 or the 1940 Act, we would be required to expend significant resources towards compliance and we may have to discontinue operations because of the costs, and could also be exposed to other adverse consequences.

The 1940 Act generally defines an “investment company” to include (i) an issuer that is engaged in the business of investing, reinvesting, owning, holding or trading in securities and that owns investment securities having a value exceeding 40% its unconsolidated assets, excluding cash items and securities issued by the federal government, or (ii) an issuer which is or holds itself out to be primarily engaged investing, reinvesting, owning, holding or trading in securities. There are various exceptions to the definition, and there are also exemptions provided under the 1940 Act, that apply in certain enumerated circumstances.

In the past, we held investment securities of a public company which we received on March 27, 2020 which made us an investment company since we had no operations at the time. Under a Rule of the SEC, “transient” investment companies have one year to cease being an investment company, provided such a company have a bona fide intent to engage in a business other than that of investing, reinvesting, owning, holding or trading in securities as evidenced by such company’s business activities and appropriate resolution of its Board of Directors. We did not comply with this one year requirement since, although our management initially sought to spin-off the shares to our stockholders, when that was not feasible our management began the process of selling the shares after the holding period under Rule 144 Securities Act ended. After the holding period ended, our then sole officer and director was faced with further delays arising from administrative difficulties in arranging and effecting sales before the Company could begin selling the shares. Further, he recognized that to sell all of the shares in a very brief timeframe could collapse the market for the stock which generally was not liquid. Ultimately, the shares were fully liquidated by February 2022, which was 11 months after the one year period afforded under the 1940 Act Rule described above. Because at all times, we had the specific intent to divest of these shares rather than invest in the public company, we believe were not an investment company based upon our goal of acquiring or developing an operating business and not investing in investment securities.

While there are a few SEC Staff interpretations which we believe support our position that our business objectives, operations and characteristics did not result in investment company status, the SEC may not agree with this position. The 1940 Act permits the SEC to require us to register or sue us to require us to register as an investment company. If that were to occur, we would be required to expend substantial capital resources to comply, and would likely not have sufficient capital to comply and accordingly we would cease operations. Further, the SEC could seek to impose monetary penalties and/or injunctive relief, alleging that we acted in violation of the 1940 Act during the period in which we were an investment company and not registered. In addition, it is possible that a private investor could sue us seeking some kind of relief under the 1940 Act.

We do not believe we and our subsidiaries are an investment company for the following reasons:

  ● A review of the Company’s and White River Holdings’ historical development reflects that neither entity was involved in investment company type activities with the Company’s brief period as a transient investment company and excluding the Fund.

  ● The Company’s public representations of its and White River Holdings’ activities reflect both companies are engaged in the exploration, drilling and production of oil and gas.

  ● Our officers and directors have focused their time on behalf of the Company on its oil and gas activities.

  ● Our respective revenues have solely come from our oil and gas activities.

Each of our subsidiaries, except for the Fund which we treat as a subsidiary solely for accounting purposes, do not come within the definition of an investment company.

As for the Fund, its activities may be deemed to come within the definition of an investment company. However, the Fund does not intend to sell partnership units to more than 100 investors so it is expected to meet the 1940 Act’s exclusion under Section 3(c)(1) from the definition of an investment company.

In addition, Section 3(c)(9) of the 1940 Act provides an exemption a business in which substantially all of its business consists of owning or holding interests in oil and gas leases or other interests. We believe that our ownership and operation of White River Holdings since July 25, 2022 exempts us and the Fund since our sole business is engaging in exploration, operation and development of oil wells which is an active business. It is possible the SEC or a court may not agree with our position notwithstanding prior SEC interpretations to the contrary.  

If we are required to register under the Investment Advisers Act, our ability to conduct business could be materially adversely affected.

The Investment Advisers Act of 1940 (the “Investment Advisers Act”), contains substantive legal requirements that regulate the manner in which “investment advisers” required to register under the Investment Advisers Act are permitted to conduct their business activities. The term “investment adviser” is defined as any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities, subject to a number of enumerated exceptions from the definition. Other than the Manager, which manages the Fund, none of the Company or its other subsidiaries, or the Fund itself, would meet this definition.

With respect to the Manager, while it may be deemed to provide investment advice to the Fund, Rule 203(m)-1(a) promulgated under the Investment Advisers Act exempts from the registration requirements of that Act an investment adviser with its principal office and place of business in the U.S. and which both (i) acts solely as an investment adviser to one or more qualifying private funds; and (ii) manages private fund assets of less than $150 million. (“Private Fund Exemption”).

Under Rule 203(m)-1(d), an investment adviser may treat as a private fund for purposes of the exemption an issuer that qualifies for an exclusion from the definition of an investment company under Section 3(c)(1) of the 1940 Act, which is described in the Risk Factor above titled “The Company may become subject to the requirements of the 1940 Act, which would limit the Company’s business operations and require the Company to expend and deploy significant resources towards compliance with such regulatory regime” as applicable to the Fund. Because the Manager’s activities solely relate to the Fund, which qualifies for exemption from the investment company definition provided for under Section 3(c)(1) of the 1940 Act because it has no more than 100 beneficial owners and has not and is not conducting a public offering of such securities, and also has less than $150 million in assets under management, the Manager qualifies for this exception.

Because its assets under management are less than $25 million, the Manager is not required to register, and is in fact precluded from registering, as an investment adviser with the SEC, but is subject to the state investment adviser regulations of the State of Colorado, where its principal office and place of business are located. As an exempt reporting advisor, notice filings are made with the state of Colorado.

Although exempt from registration under the Investment Advisers Act, the Manager is required to file an annual/materially changing truncated Form ADV with the SEC as an “exempt reporting adviser” pursuant to the terms of the registration exemption on which it relies. While provisions of the Investment Advisers Act that apply only to registered investment advisers do not apply to exempt reporting advisers, as an exempt reporting adviser the Manager is subject to some of the requirements and regulations of the Investment Advisers Act, including, among other things, conflict of interest, advertising performance information, anti- money laundering, fiduciary duties to advisory clients, recordkeeping and regulatory reporting requirements, disclosure obligations, limitations on agency cross and principal transactions between an adviser and its advisory clients, anti-corruption rules relating to investors associated with U.S. state or local governments, and general anti-fraud prohibitions. In addition, the SEC is authorized under the Investment Advisers Act to require an exempt reporting adviser such as the Manager to maintain records and provide reports, and to examine these advisers’ records.

While we believe our current practices do not require us or any of our subsidiaries to register as an investment adviser under the Investment Advisers Act, if a regulator were to disagree with our analysis with respect to the Manager or any other portion of our business, the Manager, the Company or another subsidiary may be required to register as an investment adviser and to comply with the Investment Advisers Act. Registering as an investment adviser could adversely affect our method of operation and revenues. For example, registered investment advisers under the Investment Advisers Act are subject to burdensome compliance requirements. It could be difficult for us to comply with these obligations without meaningful changes to our business operations, and there is no guarantee that we could do so successfully. If we were ever deemed to be subject to, and in non-compliance with, Investment Advisers Act requirements, we could also be subject to various penalties, including administrative or judicial proceedings that might result in censure, fines, civil penalties, cease-and-desist orders or other adverse consequences, as well as private rights of action, any of which could materially adversely affect our business.

Risks Relating to our Common Stock

Because of the number of shares of common stock issuable upon conversion and exercise of outstanding securities and vesting of RSUs, holders of our common stock will experience substantial future dilution.

There are 10,833,800 shares of our common stock issued and outstanding as of the date of this Prospectus. We will be obligated to issue all or very many of the following shares of common stock which will dilute our current stockholders:(1) approximately 42,254,521 shares of common stock to be issued in the Spin-Off by Ecoark, (2) at least 6,577,841 shares of common stock issuable upon conversion of our Series C (which are subject to potential upward adjustment), (3) at least 13,155,632 shares of common stock issuable upon exercise of five-year Warrants (which are subject to potential upward adjustment), (4) at least 2,777,778 shares of common stock issuable upon conversion of two 10% Original Issue Discount Senior Secured Convertible Promissory Notes and underlying a related Consulting Agreement (which are subject to potential upward adjustment), and (5) up to approximately 23,575,000 shares underlying outstanding RSUs subject to certain vesting and share delivery conditions.

Based on our capital structure as described above, the issuance of the shares of common stock pursuant to the outstanding derivative securities and anticipated transactions, many of which are expected to occur in the near term, will cause significant dilution to the Company’s other investors whereby their respective percentage ownership in our Company will experience a drastic decline. As a result, the voting rights, dividend rights, and other perceived benefits of holding our common stock will be diluted due to the new stockholders. Further, a majority of the newly issued shares will be freely tradeable because the transactions are being registered on a pending registration statement, so the per-share price of our common stock could decline.

If we are not successful, you may lose your entire investment.

Prospective investors should be aware that if we are not successful in our business, their entire investment in the Company could become worthless. Even if the Company is successful, we can provide no assurances that investors will derive a profit from their investment. We need additional capital to meet our obligations and achieve our business objectives, and we cannot guarantee we will be successful in locating additional required capital as and when needed or that any such amounts will be sufficient for us to establish material revenue growth. If we are not successful, you may lose your entire investment.

The price of our common stock is subject to volatility, including for reasons unrelated to our operating performance, which could lead to losses by investors and costly securities litigation.

The trading price of our common stock is likely to be highly volatile and could fluctuate in response to a number of factors, some of which may be outside our control, including but not limited to, the following factors:

The stock market is subject to significant price and volume fluctuations. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against such a company. Litigation initiated against us, whether or not successful, could result in substantial costs and diversion of our management’s attention and Company resources, which could harm our business and financial condition.

Any future impairment in the carrying value of our intangible assets could depress our stock price.

Following our acquisition of White River Holdings in July 2022, we had a significant amount of goodwill and other intangible assets on our balance sheet. Intangible assets must be evaluated for impairment annually or more frequently if events indicate it is warranted. If the carrying value of a reporting unit or asset exceeds its current fair value, the unit or asset is considered impaired. Events and conditions that could result in impairment in the value of our intangible assets include, but are not limited to, significant negative industry or economic trends, significant decline in the Company’s stock price for a sustained period of time, significant decline in market capitalization relative to net book value, limited funding that could delay our operations and the execution of our business plan, significant changes in the manner of use of the assets or the strategy for the Company’s overall business, or failure of our oil and gas assets to produce as estimated or anticipated.

Initially, we impaired $5,917,843 of goodwill as of July 25, 2022, and then on March 31, 2023, the Company impaired the remaining $2,100,374 in goodwill based on the fair value of its reporting unit, measured by the discounted cash flow method, which exceeded the carrying value at March 31 2023. In addition, we incurred $5,487,665 and $4,322,968 in impairment of reserves based on ceiling test calculations for the Company’s oil and gas properties for the years ended March 31, 2023 and 2022, respectively, and $141,965 and $28,265 in impairment of reserves based on ceiling test calculations for the Company’s oil and gas properties for the three months ended June 30, 2023 and 2022, respectively.

We may in the future be required to record additional impairment charges of our oil and gas assets of that business on our balance sheet resulting from that acquisition as well as new oil and gas properties we acquire. Further, to the extent we acquire additional businesses or assets in the future, including oil and gas businesses or assets to add to our current operations through White River Holdings, further impairment may be necessary in future periods. Our stock price could be negatively impacted should future impairments of our intangible assets occur.

There is currently a limited trading market for the Company’s common stock and none for the Warrants.

Our common stock is quoted on the OTCQB under the symbol “WTRV.” However, there is currently a limited trading market in our common stock, and we cannot assure you that a consistent, active trading market will develop. Trading on the OTCQB is less liquid than the leading national securities exchanges.

Additionally, there is currently no trading market for our Warrants being offered by the Selling Stockholders hereby. While we have applied for our Warrants to be quoted on the OTCQB under the symbol “WTRVW,” such quotation, if our application is granted, does not guarantee that an active trading market for the Warrants will develop or be maintained.

If an active market for our common stock and Warrants develops, there is no assurance that such market will be maintained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.

Furthermore, there is a significant risk that our common stock and Warrant prices may fluctuate in the future in response to any of the following factors, some of which are beyond our control:

Future sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds in future securities offerings.

Of 10,833,800 shares of common stock outstanding as of the date of this Prospectus, approximately 4,038,811 shares are held by investors who are not our affiliates. These shares are free trading since they have been held more than two years. In addition, the approximately 42,254,521 shares to be issued to Ecoark’s stockholders in the Spin-Off and the 19,733,523 shares offered by the Selling Stockholders under the Registration Statement of which this Prospectus forms a part will be free trading without restrictions. Future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect the then prevailing market price of our common stock and could make it more difficult for us to raise funds in the future through an offering of our securities. Future sales of substantial amounts of our common stock in the public market, or the anticipation of these sales, could materially and adversely affect market prices prevailing from time-to-time, and could impair our ability to raise capital through sales of equity or equity-related securities. In addition, the market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market or the perception that these sales may occur.

Our common stock is a “penny stock” and thereby be subject to additional sale and trading regulations that may depress the price of our common stock.

Our common stock is a “penny stock” if it does not qualify for one of the exemptions from the definition of “penny stock” under Section 3a51-1 of the Exchange Act. Our common stock may be a “penny stock” if it meets one or more of the following conditions: (i) it trades at a price less than $5 per share; (ii) it is not traded on a “recognized” national securities exchange which excludes the OTCQB and OTCQX; or (iii) is issued by a company that has been in business less than three years with net tangible assets less than $5 million. Thus, our common stock is a penny stock.

The principal result or effect of being designated a penny stock is that securities broker-dealers participating in sales of our common stock are discouraged from soliciting purchases of our common stock by the SEC’s rules which generally results in low prices and limited trading volume. For example, SEC Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise. In addition, clearing firms, which hold retail accounts dislike penny stocks and through extra compliance efforts and costs they impose, make it hard to sell penny stocks.

We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off.

We believe that, as an independent publicly-traded company, we will be able to, among other things, better focus our financial and operational resources on our specific business, implement and maintain a capital structure designed to meet our specific needs, design and implement corporate strategies and policies that are targeted to our business, more effectively respond to industry dynamics and create effective incentives for our management and employees that are more closely tied to our business performance. Further, we expect that the Spin-Off will assist us in complying with certain requirements to have our securities listed on a national securities exchange operated by The Nasdaq Stock Market LLC (“Nasdaq”) or the New York Stock Exchange (“NYSE”). However, we may fail to achieve these goals or realize these benefits, and could also face adverse consequences, such as being more susceptible to market fluctuations and have less support from Ecoark who will no longer be a principal stockholder following the Spin-Off. We have been advised that unless we complete a $40 million public offering, we cannot seek to be listed on Nasdaq or the NYSE until following our fiscal year ending March 31, 2024 (“FY 2024”). In addition, we may be unable to uplist our securities in the time we intend, if at all. The completion of the Spin-Off will also require significant amounts of our management’s and other personnel’s time and effort, which may divert their attention away from operating and growing our business.

Until the Spin-Off occurs, the Ecoark Board of Directors has sole discretion to change the terms of the Spin-Off in ways that may be unfavorable to us.

Until the Spin-Off occurs, Ecoark will remain a prospective principal stockholder pending conversion of the Series A, which will occur after the effectiveness date of the Registration Statement of which this Prospectus is a part. Completion of the Spin-Off remains subject to the discretion of Ecoark, including approval by the Ecoark Board of Directors (the “Ecoark Board”). Additionally, Ecoark has the discretion to change the terms of the Spin-Off, including the ratio, which changes could be unfavorable to us or our stockholders, or the security holders of Ecoark. In addition, Ecoark may decide at any time prior to the completion of the Spin-Off not to proceed with the Spin-Off. Our senior management is remaining as Ecoark’s senior management in order to protect the Ecoark stockholders entitled to the stock dividend.

Our Board of Directors may issue and fix the terms of shares of our preferred stock without stockholder approval, which could adversely affect the voting power of holders of our common stock or any change in control of our Company.

Subject to existing and outstanding series of preferred stock, including the Series A and the Series C, our Articles of Incorporation authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock, with $0.0001 par value per share, with such designation rights and preferences as may be determined from time-to-time by the Company’s Board. Subject to the terms of our outstanding securities, our Board is empowered, without stockholder approval, to issue shares of preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our common stock. In the event of such issuances, the preferred stock could be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our Company. For example, the Company has a single authorized share of Series B Preferred Stock (the “Series B”) which, if issued, is entitled to vote with the Company’s common stock as a single class on any matter brought before the stockholders, and the Series B is entitled to a number of votes equal to the greater of (A) 100,000,000 votes, or (B) 50.1% of the Company’s voting power as of the applicable date of determination. The Series B, which will be automatically cancelled upon the Company applying to have its common stock listed on a national securities exchange, was established to ward off any hostile takeover and may be issued by our Board at any time.

The future issuance of equity or of debt securities that are convertible into, or exercisable for common stock and the common stock issuable under the Series C and Warrants, will place selling pressure on the market price for our common stock as well as affecting our ability to raise capital in the future.

From October 2022 through April 2023 we issued the Series C and Warrants in the PIPE Offering. In December 2022 we issued a Senior Secured Convertible Note in another private placement transaction, and pursuant to their terms these securities are convertible or exercisable for shares of our common stock, with conversion or exercise features that are subject to adjustment including based on our stock price and/or new issuances of common stock or common stock equivalents. The December 2022 Note has a principal value of $1,666,667 and is convertible at the lower of (i) $1.00 per share and (ii) the average of the five-closing prices of the common stock immediately prior to the date of conversion. Assuming the $1.00 conversion price applies, the Note is convertible into 1,666,667 shares. In addition, in December 2022 we issued 1,666,667 shares to an affiliate of the lender pursuant to a Consulting Agreement, which is subject to potential increase. Subsequently in August 2023 we borrowed $1,000,000 and issued the August 2023 Note to the same lender as the December 2022 Note but with a principal amount of $1,111,111, convertible into at least 1,111,111 shares, together with certain oil and gas rights to be mutually determined at a later date as well as participation rights in oil and gas drilling ventures, and extended the maturity date of the December 2022 Note from its last amended payoff date of September 16, 2023 to December 16, 2023. See “Management’s Discussion and Analysis-Liquidity and Capitals Resources-Convertible Note Financing” for more information.

Each of the December 2022 issuances as well as the August 2023 Note came with registration rights entitling the recipients to have their shares registered for resale on a Registration Statement. In addition, in connection with the above-described transactions we agreed to certain obligations, including repayment obligations and restrictive covenants, that may hinder our ability to raise capital or execute our business plan and strategic growth initiatives in the future.

In addition to the 2022 and more recent transactions, we may choose to raise additional capital in the future, depending on market conditions, strategic considerations and operational requirements. To the extent that additional capital is raised through the issuance of shares or other securities convertible into, or exercisable for, shares of common stock, our stockholders will be diluted. Future issuances of our common stock or other equity securities, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock and impair our ability to raise capital through future offerings of equity or equity-linked securities. For example, we may grant registration rights similar to those given to the Selling Stockholders resulting to the Company’s filing of the Registration Statement of which this Prospectus is a part to future investors. Accordingly, the adverse market and price pressures resulting from an offering pursuant to a registration statement may continue for an extended period of time and continued negative pressure on the market price of our common stock could have a material adverse effect on our ability to raise additional equity capital.

We have not paid cash dividends in the past and do not expect to pay dividends in the future, so any return on investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our Board may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

Our Articles of Incorporation contain certain provisions which may result in difficulty in bringing stockholder actions against or on behalf of the Company or its affiliates.

Section 7 of our Articles of Incorporation provide that the internal affairs of the Company, including stockholder derivative actions, shall be brought exclusively in state courts located in Nevada. To the extent that any such action asserts a claim under the Exchange Act, that provision must be brought in federal court. Section 7 also provides that the United States federal courts generally shall have exclusive jurisdiction over claims brought under the Securities Act, the effect of which is that an action under the Securities Act with respect to the Company may only be brought in the federal courts, whereas absent such provision the federal and state courts would otherwise have concurrent jurisdiction over such a matter. Any claim seeking relief under the Exchange Act may only be brought in federal court. Further, Section 7 also provides for the United States District Court for the District of Nevada as the exclusive venue for any cause of action under either the Securities Act or the Exchange Act, meaning such federal court is the only court in which such a case may be brought and heard. Similarly, Section 5.7 of the Securities Purchase Agreement governing the Warrants being offered hereby provides that matters arising thereunder shall be brought exclusively in the state and federal courts sitting in Clark County, Nevada. This Section 5.7 does not apply to actions seeking relief under the Securities Act or the Exchange Act. These provisions may have the effect of precluding stockholders from bringing suit in their forum or venue of choice. Further, these provisions may give rise to a potential ambiguity as to which courts – state or federal – should preside over certain cases such as cases with overlapping claims under both state corporate law and the Securities Act and the rules and regulations thereunder. While the Supreme Court of Delaware has upheld a charter provision designating federal courts as the exclusive forum for actions brought under the Securities Act, it is unclear how a court in another jurisdiction, including Nevada, might rule. Therefore, an investor seeking to bring a claim against or on behalf of the Company or its affiliates under Nevada law or the federal securities laws may be forced to litigate their case in a court which poses geographic or other hardships, and could face uncertainty as to which jurisdiction and venue the case will ultimately be heard in, which may delay, prevent or impose additional obstacles on the investor in such litigation. Investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder, and there is uncertainty as to whether a state or federal court would enforce this charter provision.

USE OF PROCEEDS

This Prospectus relates to the Spin-Off Shares that may be distributed to Ecoark’s stockholders, as well as the PIPE Securities that may be offered and sold from time-to-time by the Selling Stockholders. We will not receive any proceeds upon the sale of the Securities by either of Ecoark or the Selling Stockholders in this offering. However, we will receive gross proceeds upon the exercise of the Warrants issued to the Selling Stockholders if exercised for cash. Any proceeds will be used for general corporate purposes including expanding our drilling program and working capital. See “Plan of Distribution” elsewhere in this Prospectus for more information.

DIVIDEND POLICY

We have never declared nor paid any cash dividends on our common stock, and currently intend to retain all our cash and any earnings for use in our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends on our common stock will be at the discretion of the Board and will be dependent upon our consolidated financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.

DETERMINATION OF OFFERING PRICE

Spin-Off

No consideration will be paid by Ecoark’s stockholders for the Spin-Off Shares to be distributed by Ecoark in the Spin-Off. The stockholders will be able to hold the Shares or sell them at prevailing prices or privately negotiated prices.

PIPE Offering

With respect to the PIPE Securities, each Selling Stockholder will determine at what price(s) such Selling Stockholder may sell the PIPE Securities, and such sales may be made at prevailing market prices, or at privately negotiated prices.

CAPITALIZATION

We had 10,333,800 shares of common stock outstanding as of June 30, 2023. The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2023 (i) on an actual basis, and (ii) on a pro forma basis giving effect to the issuance of (a) 42,253,521 shares of common stock upon conversion of the Series A, without giving effect to the approximately 1,000 Fractional Shares; and (b) 6,577,841 shares of common stock upon conversion of the Series C from the sale of 263.1126308 Series C from and the issuance of the Warrants in our PIPE Offering:

The foregoing pro forma information as adjusted is illustrative only, and our capitalization following the completion of the offerings covered by this Prospectus. You should read this table together with our financial statements and the related notes appearing elsewhere in this Prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this Prospectus.

The above discussion and table is based on 10,333,800 shares of common stock outstanding as of June 30, 2023, and excludes 1,375,000 shares of common stock available for future grants under the Company’s 2022 Equity Incentive Plan as well as shares issuable upon conversion of outstanding convertible notes.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Our unaudited pro forma condensed consolidated financial statements consist of an unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended June 30, 2023 and the year ended March 31, 2023, and an unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2023.

The unaudited pro forma condensed consolidated financial statements presented below have been derived from our historical unaudited Condensed Consolidated Statement of Operations for the three months ended June 30, 2023 and the historical Consolidated Statements of Operations for the year ended March 31, 2023 and the historical unaudited Condensed Consolidated Balance Sheet at June 30, 2023. The unaudited pro forma Condensed Consolidated Balance Sheet gives effect to the related transactions described below as if they had occurred on June 30, 2023. The pro forma adjustments to the unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended June 30, 2023 and year ended March 31, 2023 assume that the related transactions occurred as of April 1, 2022. The transaction adjustments identified below have been separately broken out to clearly identify the adjustments and the disclosure includes the basis for the adjustment.

Beginning October 19, 2022 up through June 30, 2023, the Company sold 251.5126308 Units for a total purchase price of $6,287,816. The Company sold another 11.6 Units for $290,000 for checks not deposited. See “The Private Placement.”

The acquisition of White River Holdings was considered a reverse merger. In accordance with ASC 805-40-45-1, the consolidated financial statements prepared following a reverse acquisition are issued under the name of the legal parent (White River Energy Corp) but described in the notes to the financial statements as a continuation of the financial statements of the legal subsidiary (White River Holdings Corp), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree (White River Energy Corp). That adjustment is required to reflect the capital of the legal parent. Comparative information presented in the consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent.

Under ASC 805-40-45-2, the consolidated financial statements represent the continuation of the legal subsidiary except for the capital structure, as follows:

The Company acquired White River Holdings for 1,200 shares of Series A. On an as converted basis, the 1,200 Series A shares convert to 42,253,521 shares of common stock, without giving effect to the 1,000 Fractional Shares. The 1,200 shares of Series A were issued in a share exchange. The Series A shares are reflected in the Company’s historical financial statements in a manner consistent with having applied reverse merger accounting.

On July 25, 2022, the Company completed its acquisition of White River Holdings. As a result of this transaction, which is accounted for as a reverse merger, White River Holdings is a wholly owned subsidiary of the Company (the “Merger”). In accordance with the terms of the Merger, at the effective time of the Merger, each outstanding share of the common stock of White River was exchanged for the 1,200 shares of Series A of the Company. This exchange of shares and the resulting controlling ownership of the Company constitutes a reverse acquisition and purchase accounting being applied to the Company under ASC 805 due to White River Holdings being the accounting acquirer and the Company, being deemed an acquired business. This requires financial reporting from the Merger close date forward to reflect only the historic consolidated results of White River Holdings and to include the consolidated results for the Company and subsidiaries from July 25, 2022 forward.

The primary reasons White River Holdings consummated the Merger with the Company were the opportunity to immediately become a public company without the process of doing its own initial public offering, thereby affording it the opportunity to more quickly raise capital and provide liquidity options to its stockholders, and at the same time acquiring the infrastructure required of a public company run by people experienced in investor relations and the public company regulatory compliance issues and filings required by virtue of appointing certain of Ecoark’s executive officers as executive officers of the Company. The previously existing businesses of the Company at the time of the Merger, consisting of Norr and Elysian, were sold for nominal consideration within 60 days of the Merger taking place.

The unaudited pro forma condensed consolidated financial statements have been prepared to include other transaction adjustments to reflect the financial condition and results of operations as if White River Holdings were operating as a public company for all the periods presented. Our historical financial statements included cost allocations from Ecoark as noted below.

Management does not believe there are any transaction accounting or autonomous entity adjustments necessary to be included in the unaudited pro forma information presented herein as the pro forma adjustments noted herein are due to the effects of the capital changes that have either subsequently occurred or that are expected to occur upon the effective date of the registration statement. We have identified three transaction adjustments as noted below. Management has determined that there are no other material changes to be made to the historical financial statements as a result of the acquisition of White River by White River Holdings, as the historical financial statements represent the continuation of White River Holdings as this is considered a reverse merger and White River Holdings is the accounting acquirer.

White River Holdings has included in their historical columns certain operating expenses and other income (expense) from Ecoark that have been allocated to them in the April 1, 2022 through July 25, 2022. The allocations represented charges incurred by Ecoark for certain corporate, infrastructure and shared services expenses, including legal, human resources, payroll, finance and accounting, employee benefits, insurance, information technology, telecommunications, treasury, and other expenses. Where possible, these charges were allocated based on direct usage, with the remainder allocated on a pro rata basis of headcount, asset, or other allocation methodologies that are considered to be a reasonable reflection of the utilization of services provided or the benefit received by the Company during the periods presented pursuant to SAB Topic 1.B.1. The allocations may not, however, reflect the expense White River Holdings would have incurred as a standalone company for the periods presented. These costs also may not be indicative of the expenses that White River Holdings will incur in the future or would have incurred if White River Holdings had obtained these services from a third party.

The unaudited pro forma condensed financial information is for informational purposes only and does not purport to represent what our financial position and results of operations actually would have been had the reverse merger of White River Holdings not occurred, or to project our financial performance for any future period. Our historical financial statements have been derived from our historical accounting records and reflect certain allocation of expenses as noted above.

The unaudited pro forma condensed financial information reported below should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the historical financial statements and the corresponding notes included elsewhere in this prospectus.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2023

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED MARCH 31, 2023