Item 1.01 Entry into a Material Definitive
Agreement.
On
August 23, 2022 Enviro Technologies U.S., Inc. (the “Company” or “Enviro”) entered into a Share Exchange Agreement
(the “Agreement”) with Banner Midstream Corp., a Delaware corporation (“Banner Midstream”) and Ecoark Holdings,
Inc., a Nevada corporation (“Ecoark”) and the sole shareholder of Banner Midstream. The Agreement provides that, upon the
terms and subject to the conditions set forth therein, the Company shall acquire all of the capital stock of Banner Midstream owned by
Ecoark, which represents 100% of the issued and outstanding shares of Banner Midstream in exchange for 12,996,958 shares of the Company’s
common stock (the “Exchange”). Upon closing of the Agreement Banner Midstream will continue as a wholly-owned subsidiary
of the Company.
Banner
Midstream, through its wholly owned subsidiary Pinnacle Frac Transport LLC, provides transportation
of frac sand and logistics services to major hydraulic fracturing and drilling operations. Its transportation services entail using third
party drivers who assist in transporting sand and related materials to customers’ locations for the customers’ hydraulic
fracturing, or fracking. The logistics services Pinnacle Frac provides for its customers’ fracking and drilling enterprises, include
the operation of a 24/7 dispatch service center based in Texas through which it dispatches the trucks for hauling frac sand and related
equipment. Pinnacle Frac uses independent third party owner-operators of trucks to service its customers in their fracking operations
by transporting materials, mainly frac sand. Banner Midstream’s transportation and logistics services operations are primarily
centered in the Southern United States, although it also occasionally services fracking operations in the Northeastern United States.
Subject
to the terms of the Agreement the closing (the “Closing”) shall take place on or before September 9, 2022, subject to the
satisfaction or waiver of the conditions to closing of the Agreement (the “Closing Date”). At the Closing, the Board of Directors
of Enviro shall fix the number of directors of Enviro at four and shall appoint two individuals designated by Banner Midstream to serve
on the Board of Directors. As such time as Enviro complies with Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1 thereunder,
the two current Enviro directors shall resign. Immediately prior to the Closing, John A. DiBella, the sole officer of Enviro shall have
tendered his resignation as the sole officer of Enviro, and the Board of Directors of Enviro shall appoint Jim Galla as Enviro’s
Chief Executive Officer and Chief Financial Officer as well as such other officers as Banner Midstream shall designate, effective upon
the Closing. Jim Gallo currently serves as Chief Accounting Officer of Ecoark. Jay Puchir, the Chief Financial Officer of Ecoark, currently
serves as Chief Executive Officer and President of Banner Midstream. Immediately following the
Closing Ecoark will own approximately 70% of the issued and outstanding shares of Enviro common stock.
The
Agreement contains customary representations and warranties, customary covenants and conditions to closing and additional conditions
to closing, including (i) Banner Midstream shall have satisfied all Enviro third party long-term liabilities at or before Closing and
shall have at least $500,000 in cash in its bank accounts at Closing, subject to the exclusive control of Banner Midstream; and (ii)
all intercompany balances owed by Banner Midstream to Ecoark shall have been eliminated. At or prior to the Closing, Banner Midstream
shall have delivered to Enviro its unaudited financial statements for the: (i) year ended December 31, 2021 and 2020 and (ii) three and
six month period ended June 30, 2022 and 2021, which shall have been prepared in compliance with generally accepted accounting principles
in the U.S.
Furthermore,
pursuant to the Agreement (i) on August 23, 2022, Enviro issued John A. DiBella and Raynard Veldman 6% unsecured convertible promissory
notes in the principal amount of $815,565 and $90,000, respectively, convertible at the option of the holder at $0.06 per share, with
a maturity date of 12 months from the Closing Date in satisfaction all of their accrued payroll and Mr. Veldman’s advances to Enviro
(the “Payroll Notes”), and (ii) at the Closing Enviro shall issue John A. DiBella a 6% unsecured promissory note in the principal
amount of $139,000, with a maturity date of three months from the Closing Date in satisfaction of Mr. DiBella’s advances to Enviro.
There
is no assurance the parties will complete the Agreement. Any party terminating the Agreement prior to Closing without the consent of
the other party, in the event the failure to consummate the Exchange is solely due to the action or failure to act of such party seeking
to terminate the Agreement, shall reimburse the other party the sum of $50,000.
The
foregoing description of the Exchange and the Agreement and the related transactions does not purport to be complete and is qualified
in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 2.1 to this report.