arcee-ai/sec-data-full · Datasets at Hugging Face

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operations, restricted travel and required workforces to work from home. As of the date of this report, many of our employees are working
from home. However, while there are various uncertainties to navigate, the Company’s business activities are continuing. The situation
is rapidly changing and additional impacts to the business may arise that we are not aware of currently. We cannot predict whether, when
or the manner in which the conditions surrounding COVID-19 will change including the timing of lifting any restrictions or work from
home arrangements. The
full extent of COVID-19’s impact on our operations and financial performance depends on future developments that are uncertain
and unpredictable, including the duration and spread of the pandemic, its impact on capital and financial markets and any new information
that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, among others. Critical
Accounting Policies Management’s
discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated
financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts
of revenues and expense during the reporting period. We
have identified the accounting principles which we believe are most critical to the reported financial status by considering accounting
policies that involve the most complex of subjective decisions or assessment. 40 Impairment
of Oil and Gas Properties We
follow the full-cost method of accounting for oil and gas properties. Accordingly, all costs associated with acquisition, exploration
and development of oil and gas reserves, including directly related overhead costs, are capitalized. All
capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production
method using estimates of proved reserves. Investments in unproved properties and major development projects are not amortized until
proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that
the properties are impaired, the amount of the impairment is included in income from continuing operations before income taxes, and the
adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Our
oil and gas properties represent an investment in unproved properties. These costs are excluded from the amortized cost pool until proved
reserves are found or until it is determined that the costs are impaired. All costs excluded are reviewed at least quarterly to determine
if impairment has occurred. The amount of any impairment is charged to expense since a reserve base has not yet been established. A further
impairment requiring a charge to expense may be indicated through evaluation of drilling results, relinquishing drilling rights or other
information. Abandonment
of properties is accounted for as adjustments to capitalized costs. The net capitalized costs are subject to a “ceiling test”
which limits such costs to the aggregate of the estimated present value of future net revenues from proved reserves discounted at ten
percent based on current economic and operating conditions, plus the lower of cost or fair market value of unproved properties. The recoverability
of amounts capitalized for oil and gas properties is dependent upon the identification of economically recoverable reserves, together
with obtaining the necessary financing to exploit such reserves and the achievement of profitable operations. During
the three months ended March 31, 2022, and 2021, respectively, the Company did not record any post-impairment charges. The
total net book value of our unproved oil and gas properties under the full cost method is $48,099,000 and $46,950,000 at March 31, 2022
and at December 31, 2021, respectively. Asset
Retirement Obligation We
record a liability for asset retirement obligation at fair value in the period in which it is incurred and a corresponding increase in
the carrying amount of the related long-lived assets. Fair
Value Considerations We
follow ASC 820, “Fair Value Measurements and Disclosures,” as amended by Financial Accounting Standards Board (FASB) Financial
Staff Position (FSP) No. 157 and related guidance. Those provisions relate to the Company’s financial assets and liabilities carried
at fair value and the fair value disclosures related to financial assets and liabilities. ASC 820 defines fair value, expands related
disclosure requirements, and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair
value measures. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most
advantageous market for that asset or liability. There
are three levels of inputs to fair value measurements - Level 1, meaning the use of quoted prices for identical instruments in active
markets; Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar
instruments in markets that are not active or are directly or indirectly observable; and Level 3, meaning the use of unobservable inputs.
We use Level 1 inputs for fair value measurements whenever there is an active market, with actual quotes, market prices, and observable
inputs on the measurement date. We use Level 2 inputs for fair value measurements whenever there are quoted prices for similar securities
in an active market or quoted prices for identical securities in an inactive market. We use observable market data whenever available.
We use Level 3 inputs in the Binomial Model used for the valuation of the derivative liability. 41 RESULTS
OF OPERATIONS For the three months ended March 31, 2022 2021 (US
$ in thousands) Operating
costs and expens General
and administrative expenses 1,435 1,971 Other 711 792 Subtotal
Operating costs and expenses 2,146 2,763 Gain
on derivative liability - (426 ) Other
expense, net 20 223 Net
loss 2,166 2,560 Revenue. We currently have no revenue generating operations. Operating
costs and expenses. Operating costs and expenses for the three months ended March 31, 2022 were $2,146,000 compared to $2,763,000
for the three months ended March 31, 2021. The decrease in operating costs and expenses during the three months ended March 31, 2022
compared to the corresponding period in 2021 is primarily attributable to a decrease in general and administrative expenses driven by
the non-cash expenses associated with stock option grants during the three months ended March 31, 2022 compared to the corresponding
period in 2021. General
and administrative expenses. General and administrative expenses for the three months ended March 31, 2022 were $1,435,000, compared
to $1,971,000 for the three months ended March 31, 2021. The decrease in General and administrative expenses during the three months
ended March 31, 2022 is primarily attributable to lower non-cash expenses recorded in connection with stock option grants during 2022
compared to the corresponding period in 2021. Other
expense. Other expense during the three months ended March 31, 2022 was $711,000 compared to $792,000 for the three months ended
March 31, 2021. Other general and administrative expenses are comprised of non-compensation and non-professional expenses incurred. The
decrease in other expenses during the three months ended March 31, 2022 compared to the corresponding period in 2021 is primarily attributable
to decreased marketing expenses associated with investor relations activities. (Gain)
on derivative liability . (Gain) on derivative liability during the three months ended March 31, 2022 was $nil, compared to a gain
of ($426,000) for the three months ended March 31, 2021. An embedded derivative was contained within the valuation of Zion’s $100
convertible bond offering which closed in March 2016. The bonds were paid in full in May 2021. Other
expense, net. Other expense, net for the three months ended March 31, 2022 was $20,000, compared to $223,000 for the three months
ended March 31, 2021. The decrease in other expense, net during the three months ended March 31, 2022 compared to the corresponding period
in 2021 is primarily attributable to exchange rate differences associated with the fluctuating exchange rates of the New Israeli Shekels
(“NIS”) with the U.S. Dollar (“USD”) and to financial expenses related to the Company’s convertible bonds. Net
Loss. Net loss for the three months ended March 31, 2022 was $2,166,000 compared to $2,560,000 for the three months ended March 31,
2021. The decrease in net loss for 2022 is primarily attributable to general and administrative expenses in the three months ended March
31, 2022 compared to the three months ended March 31, 2021. 42 Liquidity
and Capital Resources Liquidity
is a measure of a company’s ability to meet potential cash requirements. As discussed above, we have historically met our capital
requirements through the issuance of common stock as well as proceeds from the exercise of warrants and options to purchase common shares. Our
ability to continue as a going concern is dependent upon obtaining the necessary financing to complete further exploration and development
activities and generate profitable operations from our oil and natural gas interests in the future. Our current operations are dependent
upon the adequacy of our current assets to meet our current expenditure requirements and the accuracy of management’s estimates
of those requirements. Should those estimates be materially incorrect, our ability to continue as a going concern will be impaired. Our
financial statements for the three months ended March 31, 2022 have been prepared on a going concern basis, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course of business. We have incurred a history of operating
losses and negative cash flows from operations. Therefore, there is substantial doubt about our ability to continue as a going concern. At
March 31, 2022, we had approximately $8,221,000 in cash and cash equivalents compared to $4,683,000 at December 31, 2021, which does
not include any restricted funds. Our working capital (current assets minus current liabilities) was $11,729,000 at March 31, 2022 and
$3,303,000 at December 31, 2021. As
of March 31, 2022, we provided bank guarantees to various governmental bodies (approximately $1,186,000) and others (approximately

operations, restricted travel and required workforces to work from home. As of the date of this report, many of our employees are working

from home. However, while there are various uncertainties to navigate, the Company’s business activities are continuing. The situation

is rapidly changing and additional impacts to the business may arise that we are not aware of currently. We cannot predict whether, when

or the manner in which the conditions surrounding COVID-19 will change including the timing of lifting any restrictions or work from

home arrangements. The

full extent of COVID-19’s impact on our operations and financial performance depends on future developments that are uncertain

and unpredictable, including the duration and spread of the pandemic, its impact on capital and financial markets and any new information

that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, among others. Critical

Accounting Policies Management’s

discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have

been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated

financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts

of revenues and expense during the reporting period. We

have identified the accounting principles which we believe are most critical to the reported financial status by considering accounting

policies that involve the most complex of subjective decisions or assessment. 40 Impairment

of Oil and Gas Properties We

follow the full-cost method of accounting for oil and gas properties. Accordingly, all costs associated with acquisition, exploration

and development of oil and gas reserves, including directly related overhead costs, are capitalized. All

capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production

method using estimates of proved reserves. Investments in unproved properties and major development projects are not amortized until

proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that

the properties are impaired, the amount of the impairment is included in income from continuing operations before income taxes, and the

adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Our

oil and gas properties represent an investment in unproved properties. These costs are excluded from the amortized cost pool until proved

reserves are found or until it is determined that the costs are impaired. All costs excluded are reviewed at least quarterly to determine

if impairment has occurred. The amount of any impairment is charged to expense since a reserve base has not yet been established. A further

impairment requiring a charge to expense may be indicated through evaluation of drilling results, relinquishing drilling rights or other

information. Abandonment

of properties is accounted for as adjustments to capitalized costs. The net capitalized costs are subject to a “ceiling test”

which limits such costs to the aggregate of the estimated present value of future net revenues from proved reserves discounted at ten

percent based on current economic and operating conditions, plus the lower of cost or fair market value of unproved properties. The recoverability

of amounts capitalized for oil and gas properties is dependent upon the identification of economically recoverable reserves, together

with obtaining the necessary financing to exploit such reserves and the achievement of profitable operations. During

the three months ended March 31, 2022, and 2021, respectively, the Company did not record any post-impairment charges. The

total net book value of our unproved oil and gas properties under the full cost method is $48,099,000 and $46,950,000 at March 31, 2022

and at December 31, 2021, respectively. Asset

Retirement Obligation We

record a liability for asset retirement obligation at fair value in the period in which it is incurred and a corresponding increase in

the carrying amount of the related long-lived assets. Fair

Value Considerations We

follow ASC 820, “Fair Value Measurements and Disclosures,” as amended by Financial Accounting Standards Board (FASB) Financial

Staff Position (FSP) No. 157 and related guidance. Those provisions relate to the Company’s financial assets and liabilities carried

at fair value and the fair value disclosures related to financial assets and liabilities. ASC 820 defines fair value, expands related

disclosure requirements, and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair

value measures. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in

an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most

advantageous market for that asset or liability. There

are three levels of inputs to fair value measurements - Level 1, meaning the use of quoted prices for identical instruments in active

markets; Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar

instruments in markets that are not active or are directly or indirectly observable; and Level 3, meaning the use of unobservable inputs.

We use Level 1 inputs for fair value measurements whenever there is an active market, with actual quotes, market prices, and observable

inputs on the measurement date. We use Level 2 inputs for fair value measurements whenever there are quoted prices for similar securities

in an active market or quoted prices for identical securities in an inactive market. We use observable market data whenever available.

We use Level 3 inputs in the Binomial Model used for the valuation of the derivative liability. 41 RESULTS

OF OPERATIONS For the three months ended March 31, 2022 2021 (US

$ in thousands) Operating

costs and expens General

and administrative expenses 1,435 1,971 Other 711 792 Subtotal

Operating costs and expenses 2,146 2,763 Gain

on derivative liability - (426 ) Other

expense, net 20 223 Net

loss 2,166 2,560 Revenue. We currently have no revenue generating operations. Operating

costs and expenses. Operating costs and expenses for the three months ended March 31, 2022 were $2,146,000 compared to $2,763,000

for the three months ended March 31, 2021. The decrease in operating costs and expenses during the three months ended March 31, 2022

compared to the corresponding period in 2021 is primarily attributable to a decrease in general and administrative expenses driven by

the non-cash expenses associated with stock option grants during the three months ended March 31, 2022 compared to the corresponding

period in 2021. General

and administrative expenses. General and administrative expenses for the three months ended March 31, 2022 were $1,435,000, compared

to $1,971,000 for the three months ended March 31, 2021. The decrease in General and administrative expenses during the three months

ended March 31, 2022 is primarily attributable to lower non-cash expenses recorded in connection with stock option grants during 2022

compared to the corresponding period in 2021. Other

expense. Other expense during the three months ended March 31, 2022 was $711,000 compared to $792,000 for the three months ended

March 31, 2021. Other general and administrative expenses are comprised of non-compensation and non-professional expenses incurred. The

decrease in other expenses during the three months ended March 31, 2022 compared to the corresponding period in 2021 is primarily attributable

to decreased marketing expenses associated with investor relations activities. (Gain)

on derivative liability . (Gain) on derivative liability during the three months ended March 31, 2022 was $nil, compared to a gain

of ($426,000) for the three months ended March 31, 2021. An embedded derivative was contained within the valuation of Zion’s $100

convertible bond offering which closed in March 2016. The bonds were paid in full in May 2021. Other

expense, net. Other expense, net for the three months ended March 31, 2022 was $20,000, compared to $223,000 for the three months

ended March 31, 2021. The decrease in other expense, net during the three months ended March 31, 2022 compared to the corresponding period

in 2021 is primarily attributable to exchange rate differences associated with the fluctuating exchange rates of the New Israeli Shekels

(“NIS”) with the U.S. Dollar (“USD”) and to financial expenses related to the Company’s convertible bonds. Net

Loss. Net loss for the three months ended March 31, 2022 was $2,166,000 compared to $2,560,000 for the three months ended March 31,

2021. The decrease in net loss for 2022 is primarily attributable to general and administrative expenses in the three months ended March

31, 2022 compared to the three months ended March 31, 2021. 42 Liquidity

and Capital Resources Liquidity

is a measure of a company’s ability to meet potential cash requirements. As discussed above, we have historically met our capital

requirements through the issuance of common stock as well as proceeds from the exercise of warrants and options to purchase common shares. Our

ability to continue as a going concern is dependent upon obtaining the necessary financing to complete further exploration and development

activities and generate profitable operations from our oil and natural gas interests in the future. Our current operations are dependent

upon the adequacy of our current assets to meet our current expenditure requirements and the accuracy of management’s estimates

of those requirements. Should those estimates be materially incorrect, our ability to continue as a going concern will be impaired. Our

financial statements for the three months ended March 31, 2022 have been prepared on a going concern basis, which contemplates the realization

of assets and the settlement of liabilities and commitments in the normal course of business. We have incurred a history of operating

losses and negative cash flows from operations. Therefore, there is substantial doubt about our ability to continue as a going concern. At

March 31, 2022, we had approximately $8,221,000 in cash and cash equivalents compared to $4,683,000 at December 31, 2021, which does

not include any restricted funds. Our working capital (current assets minus current liabilities) was $11,729,000 at March 31, 2022 and

$3,303,000 at December 31, 2021. As

of March 31, 2022, we provided bank guarantees to various governmental bodies (approximately $1,186,000) and others (approximately