This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (PSLRA). All statements other
than statements of historical fact are "forward-looking statements" for purposes
of federal and state securities laws, including: any projections of earnings,
revenues or other financial items; any statements of the plans, strategies and
objectives of management for future operations; any statements concerning
proposed new products, services or developments; any statements regarding future
economic conditions or performance; any statements of belief; and any statements
of assumptions underlying any of the foregoing. Forward-looking statements may
include the words "may," "will," "estimate," "intend," "continue," "believe,"
"expect," "plan" or "anticipate" and other similar words. Such forward-looking
statements may be contained in the sections "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and "Notes to
Condensed Consolidated Financial Statements (Unaudited)" among other places

in
this Form 10-Q.

Dollar amounts and number of shares below are expressed in thousands, except per share amounts.





OVERVIEW



Ecoark Holdings is a diversified holding company incorporated in the state of
Nevada on November 19, 2007. Ecoark Holdings has four wholly-owned subsidiaries:
Ecoark, Inc. ("Ecoark"), a Delaware corporation which is the parent of Zest
Labs, Inc. ("Zest Labs"), 440IoT Inc., a Nevada corporation ("440IoT"), Banner
Midstream Corp., a Delaware corporation ("Banner Midstream"), and Trend
Discovery Holdings Inc., a Delaware corporation ("Trend Holdings").

Through its subsidiaries, the Company is engaged in three separate and distinct business segments: (i) technology; (ii) commodities; and (iii) financial.





    ?   Zest Labs offers the Zest Fresh solution, a breakthrough approach to
        quality management of fresh food, is specifically designed to help
        substantially reduce the $161 billion amount of food loss the U.S.
        experiences each year.

    ?   Banner Midstream is engaged in oil and gas exploration, production and

drilling operations on over 10,000 cumulative acres of active mineral

leases in Texas, Louisiana, and Mississippi. Banner Midstream also

provides transportation and logistics services and procures and finances

equipment to oilfield transportation service contractors.

? Trend Holding's primary asset is Trend Discovery Capital Management. Trend

Discovery Capital Management provides services and collects fees from
        entities. Trend Holdings invests in a select number of early stage
        startups each year as part of the fund's Venture Capital strategy.

    ?   440IoT is a cloud and mobile software developer based near Boston,

Massachusetts and is a software development and information solutions

provider for cloud, mobile, and IoT (Internet of Things) applications.






On May 31, 2019, the Company a Delaware corporation ("Trend Holdings"), pursuant
to which the Trend Holdings merged with and into the Company (the "Merger"). The
Merger was consummated on the May 31, 2019.



Pursuant to the Merger, the Company acquired Trend Holding's primary asset,
Trend Discovery Capital Management, LLC ("Trend Capital Management").  Trend
Capital Management provides services and collects fees from entities including
Trend Discovery LP ("Trend LP") and Trend Discovery SPV I ("Trend SPV").  Trend
Discovery and Trend SPV invest in securities.  Trend Capital Management does not
invest in securities or have any role in the purchase of securities by Trend LP
and Trend SPV.



                                       37





In the near-term, Trend LP's performance will be driven by its investment in
Volans-i, a fully autonomous vertical takeoff and landing drone delivery
platform ("Volans"). Trend LP currently owns approximately 1% of Volans and has
participation rights to future financings to maintain its ownership at 1%
indefinitely. More information can be found at flyvoly.com.



Our principal executive offices are located at 5899 Preston Road #505, Frisco,
Texas 75034, and our telephone number is (479) 259-2977. Our website address is
http://ecoarkusa.com/. Our website and the information contained on, or that can
be accessed through, our website will not be deemed to be incorporated by
reference in and are not considered part of this report.



On March 27, 2020, the Company and Banner Energy, Inc., a Nevada corporation
("Banner Parent"), entered into a Stock Purchase and Sale Agreement (the "Banner
Purchase Agreement") to acquire Banner Midstream Corp., a Delaware corporation
("Banner Midstream"). Pursuant to the acquisition, Banner Midstream became a
wholly-owned subsidiary of the Company.



Banner Midstream has four operating subsidiaries: Pinnacle Frac Transport LLC
("Pinnacle Frac"), Capstone Equipment Leasing LLC ("Capstone"), White River
Holdings Corp. ("White River"), and Shamrock Upstream Energy LLC ("Shamrock").
Pinnacle Frac provides transportation of frac sand and logistics services to
major hydraulic fracturing and drilling operations. Capstone procures and
finances equipment to oilfield transportation service contractors. These two
operating subsidiaries of Banner Midstream are revenue producing entities.



White River and Shamrock are engaged in oil and gas exploration, production, and
drilling operations on over 10,000 cumulative acres of active mineral leases in
Texas, Louisiana, and Mississippi.

Critical Accounting Policies, Estimates and Assumptions





In reading and understanding the Company's discussion of results of operations,
liquidity and capital resources, one should be aware of key policies, judgments
and assumptions that are important to the portrayal of financial conditions and
results. The Company has recently entered into the commodity business through
its acquisition of Banner Midstream. The Company has included several new
accounting policies related to this segment of this business.



Our revenues from periods prior to fiscal 2020 were generated principally from
the sale of hardware. In the three months ended June 30, 2020, revenues were
principally from professional services from our financing segment as well as oil
and gas services related to our transportation and logistics service business
contained in Banner Midstream.

A significant percentage of our operating expenses results from non-cash share-based compensation, which is typical of technology companies as well as costs related to our exploration and driver costs.





For the share-based compensation, we have granted shares, options and warrants
to employees, consultants and investors as incentives to generate success for
the Company instead of making cash payments. The accounting calculations for
this type of compensation can be complex and are derived from models like the
Black-Scholes option pricing model that requires judgment in making assumptions
and developing estimates.



We have also invested heavily in research and development expenses. Those
investments have required cash payments principally for the development of our
software solutions and the testing of those solutions in our labs and on some
customer projects. We have not capitalized any of that development effort, so
there are no research and development costs to amortize in the future.

We have been conservative in our treatment of income taxes. Our historical losses have resulted in net operating losses for tax purposes. Applying accounting policies, we have recorded a "valuation allowance" against both current and future tax benefits of the losses. We will not recognize any benefits until such time as we are assured that we will generate taxable income.





                                       38





RESULTS OF OPERATIONS



Overview




The discussion below addresses the Company's operations and liquidity which were
impacted by the acquisition of Trend Holdings in May 2019 and Banner Midstream
in March 2020 as described above.

Results of Operations for the Three Months Ended June 30, 2020 and 2019





Revenues



Revenues for the three months ended June 30, 2020 were $2,313 as compared to $35
for the three months ended June 30, 2019. Revenues were comprised of $90 and $25
in the financing segment; $0 and $10 in the technology segment; and $2,223 and
$0 in the commodity segment for the three months ended June 30, 2020 and 2019,
respectively.

Cost of Revenues and Gross Profit





Cost of revenues for the three months ended June 30, 2020 was $1,093 as compared
to $45 for the three months ended June 30, 2019. Cost of Revenues were comprised
of $0 and $0 in the financing segment; $0 and $45 in the technology segment; and
$1,093 and $0 in the commodity segment for the three months ended June 30, 2020
and 2019, respectively. Gross margins increased from (28%) for the three months
ended June 30, 2019 to 52% for the three months ended June 30, 2020 due to lower
costs involved with executing the projects.



Operating Expenses




Operating expenses for the three months ended June 30, 2020 were $3,415 as
compared to $2,524 for the three months ended June 30, 2019. Operating expenses
were comprised of $129 and $139 in the financing segment; $982 and $2,385 in the
technology segment; and $2,304 and $0 in the commodity segment for the three
months ended June 30, 2020 and 2019, respectively. The $891 increase, or
approximately 35%, was due principally to changes in operations for Zest Labs in
their selling expenses, offset by wages and consulting fees for Banner Midstream
as this was acquired in March 2020 and the depreciation, depletion, amortization
and accretion for Banner Midstream in 2020.

Selling, General and Administrative





Selling, general and administrative expenses for the three months ended June 30,
2020 were $2,884 compared with $1,550 for the three months ended June 30, 2019.
Cost reduction initiatives were focused on salary related and professional fees
for the Technology segment offset by the costs incurred for Banner Midstream as
this was acquired in March 2020. In addition, the modification of stock options
contributed to this increase in 2020.

Depreciation, Amortization, Depletion and Accretion


Depreciation, amortization, depletion and accretion expenses for the three
months ended June 30, 2020 were $301 compared to $77 for the three months ended
June 30, 2019. Depreciation, amortization, depletion and accretion expenses were
comprised of $0 and $0 in the financing segment; $63 and $77 in the technology
segment; and $238 and $0 in the commodity segment for the three months ended
June 30, 2020 and 2019, respectively. The $240 increase resulted primarily from
the acquisition of Banner Midstream and the depletion and accretion is the
result of the oil and gas properties maintained by Banner Midstream. The
technology and financing segment do not have depletion or accretion.



                                       39





Research and Development




Research and development expense decreased 74% to $230 in the three months ended
June 30, 2020 compared with $897 in the three months ended June 30, 2019. The
$667 reduction in costs related primarily to the maturing of development of the
Zest Labs freshness solutions.



Other Income and Expense



Change in fair value of derivative liabilities for the three months ended June
30, 2020 was a loss of ($17,393) as compared to a gain of $945 for the three
months ended June 30, 2019. The $18,338 decrease was a result of the volatility
in the stock price in the three months ended June 30, 2020 compared to the three
months ended June 30, 2019. In addition, there was a gain in June 30, 2020 from
the extinguishment of the derivative liabilities that when converted to shares
of common stock of $1,630. In the period ended June 30, 2020, there was a loss
on the conversion of debt and other liabilities to shares of common stock of
$2,194 and a loss on the sale of fixed assets and abandonment of oil and gas
properties of $105 and $83, respectively.



Interest expense, net of interest income, for the three months ended June 30,
2020 was $841 as compared to $59 for the three months ended June 30, 2019. The
increase was the result of the interest incurred on the debt assumed in the
Banner Midstream acquisition as well as the value related to the granting of
warrants for interest of $524 and the amortization of debt discount of $149.



Net Loss



Net loss from continuing operations for the three months ended June 30, 2020 was
$21,181 as compared to $1,648 for the three months ended June 30, 2019. The
$19,533 decrease in net loss was primarily due to the changes in the fair value
of the derivative liability and the losses incurred on the conversion of debt to
equity, offset by the gain on the exchange of warrants for common stock
described herein. The net income (loss) was comprised of ($914) and $32 in the
financing segment; ($5,355) and ($1,680) in the technology segment; and net loss
of ($14,912) and $0 in the commodity segment for the three months ended June 30,
2020 and 2019, respectively.

Liquidity and Capital Resources





Liquidity is the ability of a company to generate funds to support its current
and future operations, satisfy its obligations, and otherwise operate on an
ongoing basis. Significant factors in the management of liquidity are funds
generated by operations, levels of accounts receivable and accounts payable

and
capital expenditures.

To date we have financed our operations through sales of common stock and the issuance of debt.

In addition to these transactions, the Company in the period April 1, 2020 through June 30, 2020, entered into the following transactions:

(a) On April 16, 2020, the Company received $386 in Payroll Protection Program

funding related to Ecoark Holdings, and the Company also received on April

13, 2020, $1,482 in Payroll Protection Program funds for Pinnacle Frac

LLC, a subsidiary of Banner Midstream.

(b) On May 1, 2020, an institutional investor elected to convert its remaining


        shares of Series B Preferred shares into 161 common shares.

(c) On April 1 and May 5, 2020, two institutional investors elected to convert


        their 1 Series C Preferred share into 1,379 common shares.

(d) On May 10, 2020, the Company received approximately $6,294 from accredited

institutional investors holding 1,379 warrants issued on November 13, 2019

with an exercise price of $0.73 and holding 5,882 warrants with an

exercise price of $0.90. The Company agreed to issue to these investors an


        additional number of warrants as a condition of their agreement to
        exercise the November 2019 warrants.




                                       40






The following unaudited pro forma consolidated balance sheet as of June 30, 2020
is presented to reflect certain equity transactions that occurred in July and
August 2020 as if they had occurred as of June 30, 2020:



                                                   June 30, 2020            Pro Forma        June 30, 2020
                                                   (as Reported)           Adjustment        (as Adjusted)
ASSETS:
Current assets:
Cash                                                       $1,793   (1)   $       1,585     $         3,378
Accounts receivable                                           224                                       224
Other current assets                                        2,681                                     2,681
Total current assets                                        4,698                1,585                6,283

Other assets                                               23,130                                    23,130

Total assets                                      $        27,828          $     1,585      $        29,413

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses             $         3,141                           $         3,141
Derivative liabilities                                     19,062   (1)          (3,749 )            15,313
Current portion of long-term debt, notes
payable and lease liabilities                               2,830                                     2,830
Other current liabilities                                   1,478                                     1,478
Total current liabilities                                  26,511          

    (3,749  )            22,762

Non-current liabilities                                     3,993                                     3,993

Total liabilities                                          30,504               (3,749  )            26,755

Stockholders' Equity (Deficit)
Common stock                                                   99   (1)               1                 100
Additional paid-in capital                                148,100   (1)    

      1,584             149,684
Accumulated deficit                                      (149,204 ) (1)           3,749            (145,455 )
Treasury stock                                             (1,671 )                                  (1,671 )

Total stockholders' equity (deficit)                       (2,676 )              5,334                2,658

Total liabilities and stockholders' equity
(deficit)                                         $        27,828          $     1,585      $        29,413

(1) This represents the issuance of 1,441 shares of common stock in the exercise

of warrants at an exercise price of $1.10 per share. These warrants contained

an embedded derivative liability that had a value at June 30, 2020 of $3,749.

This derivative liability would be eliminated upon the exercise of the

warrants and reflected in the statement of operations, and as a result will


    decrease the accumulated deficit.




                                       41





At June 30, 2020 we had cash (including restricted cash) of $1,793, and a
working capital deficit of $21,813 and $16,689 as of June 30, 2020 and March 31,
2020, respectively. The increase in the working capital deficit is the result of
the change in the fair value of the derivative liabilities offset by the
repayment and conversion of debt and liabilities to shares of common stock.
These liabilities were assumed in the Banner Midstream in March 2020. The
Company is dependent upon raising additional capital from future financing
transactions and had raised approximately $1,585 in a warrant exercise in the
second quarter of fiscal 2021. The revenue generating operations of Banner
Midstream will continue to improve the liquidity of the Company moving forward.
The COVID-19 pandemic has had minimal impact on our operations to date, but the
effect of this pandemic on the capital markets may affect some of our
operations.



Net cash used in operating activities was $2,837 for the three months ended June
30, 2020, as compared to net cash used in operating activities of $976 for the
three months ended June 30, 2019. Cash used in operating activities is related
to the Company's net loss partially offset by non-cash expenses, including
share-based compensation and the change in the fair value of the derivative
liability and net losses incurred in the conversion of debt and liabilities to
shares of common stock as well as losses on the sale of fixed assets and
abandonment of oil and gas properties.



Net cash used in investing activities was $209 for the three months ended June
30, 2020, as compared to $8 net cash provided for the three months ended June
30, 2019. Net cash used in investing activities in 2020 related to the
advancement of a note receivable of $200, and the net purchases of fixed assets
and oil and gas properties.



Net cash provided by financing activities for the three months ended June 30,
2020 was $4,433 that included $7,026 (net of fees) raised via issuance of stock
for the exercise of warrants and stock options, offset by proceeds and
repayments of long-term debt and notes payable - related parties of $2,593. This
compared with the three months ended June 30, 2019 amounts of $758 provided by
financing that included $460 provided through the credit facility.



Contractual Obligations



Our contractual obligations are included in our Notes to the Unaudited Condensed
Consolidated Financial Statements. To the extent that funds generated from our
operations, together with our existing capital resources, are insufficient to
meet future requirements, we will be required to obtain additional funds through
equity or debt financings. No assurance can be given that any additional
financing will be made available to us or will be available on acceptable terms
should such a need arise.

Off-Balance Sheet Arrangements

As June 30, 2020 and March 31, 2020, we had no off-balance sheet arrangements.

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