Ecoark Announces Plan for a Spin-Off of its Trend Discovery Subsidiary into a New Independent, Publicly Traded Company

Rhea-AI Summary

Ecoark Holdings plans to spin-off its subsidiary, Trend Discovery, into a stand-alone public company, distributing approximately 80% of Trend's common stock to shareholders. The transaction, expected to close in Q4 2021, requires regulatory compliance and has been authorized by Ecoark’s Board. Trend aims to excel in the FinTech market, reporting a 64% revenue increase in Q1 FY2022. The spin-off may unlock value for shareholders, according to CEO Randy May. Trend is also pursuing growth opportunities, including potential acquisitions in the FinTech sector and launching a cryptocurrency mining operation.

Positive

• Trend Discovery's revenue rose 64% in Q1 FY2022 compared to the same period last year.
• The spin-off is anticipated to unlock greater value for Ecoark shareholders.
• Trend is exploring significant growth opportunities, including acquisitions in the FinTech space.

Negative

• Completion of the spin-off is subject to regulatory compliance and customary conditions.
• There are risks related to Trend's potential cryptocurrency mining operation, including competition and equipment procurement challenges.

Ecoark Plans for New Stand-alone Company to Debut on a National Securities Exchange

Trend Discovery to Rebrand into Pure-Play FinTech Company

SAN ANTONIO, Aug. 26, 2021 (GLOBE NEWSWIRE) -- Ecoark Holdings, Inc. (“Ecoark” or the “Company”) (NASDAQ: ZEST), today announced its plan to spin-off its subsidiary, Trend Discovery Holdings LLC, and its subsidiaries (“Trend”) into a new independent publicly traded company through a pro rata distribution of Trend’s common stock to Ecoark’s shareholders.

Ecoark plans to distribute approximately 80% of the common stock of Trend to its shareholders as of a future record date to be determined upon completion of regulatory compliance. The Company, via its holding company model, plans to retain the remaining 20% ownership in Trend on its balance sheet. Ecoark’s Board of Directors unanimously authorized management to proceed with the spin off.  

The Company has retained Nason, Yeager, Gerson, Harris & Fumero, P.A. as legal advisor in connection with the spin-off, and has also retained its external auditor, RBSM LLP, to conduct a stand-alone audit of Trend. Brad Hoagland, CFA, Chief Financial Officer of Ecoark is expected to assume the role of Chief Investment Officer of Trend, while retaining the role of Chief Financial Officer of Ecoark until a long-term successor has been named. The transaction is expected to close in the calendar fourth quarter of 2021, subject to the satisfaction of customary conditions, and the effectiveness of a Form 10 registration statement to be filed with the Securities and Exchange Commission. The exchange listing is subject to meeting applicable listing requirements.

“We are constantly exploring opportunities to generate shareholder value, and firmly believe that this transaction unlocks a greater value of the Trend asset relative to its valuation as part of Ecoark’s current portfolio,” stated Randy May, Chief Executive Officer of Ecoark. “We believe, Trend will be positioned to excel in the FinTech market with the platform and resources of a pure-play, stand-alone publicly traded company.”

Trend’s current asset portfolio includes Trend Discovery Capital Management LLC, an investment management business, and Barrier Crest LLC, a fund administration and consulting business. Trend’s revenue rose 64% for the first quarter of fiscal 2022 ended June 30, 2021, as compared to same period last year, and management expects Trend to build on this strong momentum in the coming quarters. Trend also recently announced the launch of Bitstream Mining LLC, which commenced development of a cryptocurrency mining beta site in Texas with the potential to help alleviate potential future imbalances on the electric grid. The company has already entered into agreements to purchase mining equipment and is on track to meet its previously announced timelines. Today, Trend is disclosing that it is in active discussions to acquire an already producing broker-dealer business and a business holding money transmitter licenses (“MTLs”). Additionally, Trend is exploring opportunities to acquire or merge with potential synergistic private and/or public FinTech businesses, which could occur simultaneous with or prior to the closing of the spin-off transaction.  

“Trend is grateful for the opportunity to have incubated and grown its business under the Ecoark umbrella for the last two years,” stated Brad Hoagland, CFA. “Now is an ideal and strategic time for Trend to expand and pursue growth opportunities as its own independent publicly traded company. We expect to announce a full rebranding of Trend in the coming weeks, including a number of innovative and differentiating business lines.”

About Ecoark Holdings, Inc.

Founded in 2011, Ecoark is a diversified holding company. The company has three wholly owned subsidiaries: Zest Labs, Inc. (“Zest Labs”), Banner Midstream Corp (“Banner Midstream”) and Trend Discovery Holdings Inc. (“Trend Discovery”). 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 30,000 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 services contractors. In addition to leading our new business opportunity, Trend Discovery invests in a select number of early-stage startups each year as part of the fund’s Venture Capital strategy; we are open-minded investors with a founder-first mentality. Trend Discovery manages the fund, Trend Discovery LP, which has an audited track record of uncorrelated outperformance of the S&P 500 since inception.

ZEST FRESH™ and Zest Labs™ are trademarks of Zest Labs, Inc.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to Ecoark’s intent to spin-off Trend, the expected structure and timing of the transaction, the anticipated benefits of the spin-off, Trend’s rebranding and anticipated characteristics as a stand-alone entity, Trend’s expected future performance and growth opportunities, the development of a cryptocurrency mining operation in Texas and the anticipated timing thereof, and other statements that are not statements of historical fact. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements are based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions, and other important factors, such as market and other conditions, many of which are outside management’s control. There is no assurance as to whether the spin-off will be completed on the proposed timetable or at all. Important factors that could cause actual results to differ from those in the forward-looking statements include, without limitation, the uncertainties as to the timing of the proposed spin-off; the possibility that various conditions to the completion of the proposed spin-off may not be satisfied; the potential disruption caused by the transactions contemplated in connection with the spin-off; the risks and uncertainties arising from the adverse impact of the COVID-19 pandemic; the availability and cost of additional capital; changes in applicable laws and regulations; the possibility of adverse economic, business, competitive factors; Trend’s ability to meet the initial listing requirements of a national securities exchange including completion of an equity financing; and the risks and uncertainties related to the proposed digital assets business, including Trend’s ability to execute a binding power contract when expected on acceptable terms, or at all, its ability to procure the necessary high speed computers needed for cryptocurrency mining in a timely manner, including due to the international semiconductor shortage, limited experience in commercial scale cryptocurrency mining, intense competition in the cryptocurrency mining market, potential future legislation or regulatory initiative limiting the use of digital assets as a medium of exchange, significant volatility of the price of digital assets, and their potentially limited liquidity. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Additional factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Contact:

Investor Relations:
Marc Silverberg, ICR
Brian McBride, Ecoark
1-800-762-7293
investorrelations@ecoarkusa.com

FAQ

What is the stock symbol for Ecoark Holdings?

The stock symbol for Ecoark Holdings is ZEST.

When is the expected closure date for the Ecoark spin-off?

The expected closure date for the Ecoark spin-off is in the fourth quarter of 2021.

What percentage of Trend Discovery's stock will Ecoark distribute to its shareholders?

Ecoark plans to distribute approximately 80% of Trend Discovery's stock to its shareholders.

What revenue growth did Trend Discovery report for Q1 FY2022?

Trend Discovery reported a 64% revenue increase for the first quarter of fiscal 2022.

What new initiative is Trend Discovery launching?

Trend Discovery is launching a cryptocurrency mining operation in Texas.