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

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$82,000) in respect of our drilling operation in the aggregate amount of approximately $1,268,000. The (cash) funds backing these
guarantees are held in restricted interest-bearing accounts in Israel and are reported on the Company’s balance sheets as
fixed short-term bank deposits restricted. During
the three months ended March 31, 2022, and 2021, cash used in operating activities totaled $2,091,000, and $2,141,000, respectively.
Cash provided by financing activities during the three months ended March 31, 2022, and 2021, was $9,428,000, and $2,850,000, respectively,
and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase Plan (the “DSPP” or
“Plan”). Net cash used in investing activities such as unproved oil and gas properties, equipment and spare parts was $3,799,000
and $7,124,000 for the three months ended March 31, 2022, and 2021, respectively. Accounting standards require management to evaluate our ability to
continue as a going concern for a period of one year subsequent to the date of the filing of this Form 10-Q. We expect to incur additional
significant expenditures to further our exploration and development programs. While we raised approximately $2,585,000 during the period
April 1, 2022 through May 6, 2022, we will need to raise additional funds in order to continue our exploration and development activities
in our license area. Additionally, we estimate that, when we are not actively drilling a well, our expenditures are approximately $600,000 per
month excluding exploratory operational activities. However, when we are actively drilling a well, we estimate an additional minimum expenditure
of approximately $2,500,000 per month. The above estimates are subject to change. Subject to the qualifications specified below, management
believes that our existing cash balance, coupled with anticipated proceeds under the DSPP, will be sufficient to finance our plan of operations
through January 2023. The
recent outbreak of the coronavirus has to date significantly disrupted business operations and resulted in significantly increased unemployment
in the general economy. The extent to which the coronavirus impacts our operations, specifically our capital raising efforts, as well
as our ability to continue our exploratory efforts, will depend on future developments, which are highly uncertain and cannot be predicted
with confidence, including the duration of the outbreak, new information which may emerge concerning the severity of the coronavirus
and the actions to contain the coronavirus or treat its impact, among others. No
assurance can be provided that we will be able to raise the needed operating capital. 43 Even
if we raise the needed funds, there are factors that can nevertheless adversely impact our ability to fund our operating needs, including
(without limitation), unexpected or unforeseen cost overruns in planned non-drilling exploratory work in existing license areas, the
costs associated with extended delays in undertaking the required exploratory work, and plugging and abandonment activities which is
typical of what we have experienced in the past. The
financial information contained in these consolidated financial statements has been prepared on a basis that assumes that we will continue
as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course
of business. This financial information and these consolidated financial statements do not include any adjustments that may result from
the outcome of this uncertainty. Off-Balance
Sheet Arrangements We
do not currently use any off-balance sheet arrangements to enhance our liquidity or capital resource position, or for any other purpose. Recently
Issued Accounting Pronouncements The
Company does not believe that the adoption of any recently issued accounting pronouncements in 2022 had a significant impact on our financial
position, results of operations, or cash flow. ITEM
3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market
risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes
may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. In the
normal course of doing business, we are exposed to the risks associated with foreign currency exchange rates and changes in interest
rates. Foreign
Currency Exchange Rate Risks. A portion of our expenses, primarily labor expenses and certain supplier contracts, are denominated
in New Israeli Shekels (“NIS”). As a result, we have significant exposure to the risk of fluctuating exchange rates with
the U.S. Dollar (“USD”), our primary reporting currency. During the period January 1, 2022 through March 31, 2022, the USD
has fluctuated by approximately 2.1% against the NIS (the USD strengthened relative to the NIS). By contrast, during the period January
1, 2021 through December 31, 2021, the USD fluctuated by approximately 3.3% against the NIS (the USD weakened relative to the NIS). Continued
strengthening of the US dollar against the NIS will result in lower operating costs from NIS denominated expenses. To date, we have not
hedged any of our currency exchange rate risks, but we may do so in the future. Interest
Rate Risk. Our exposure to market risk relates to our cash and investments. We maintain an investment portfolio of short-term bank
deposits and money market funds. The securities in our investment portfolio are not leveraged, and are, due to their very short-term
nature, subject to minimal interest rate risk. We currently do not hedge interest rate exposure. Because of the short-term maturities
of our investments, we do not believe that a change in market interest rates would have a significant negative impact on the value of
our investment portfolio except for reduced income in a low interest rate environment. At March 31, 2022 we had cash, cash equivalents
and short-term and long-term bank deposits of approximately $9,490,000. The weighted average annual interest rate related to our cash
and cash equivalents for the three months ended March 31, 2022, exclusive of funds at US banks that earn no interest, was approximately.52%. The
primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly
increasing risk. To achieve this objective, we invest our excess cash in short-term bank deposits and money market funds that may invest
in high quality debt instruments. 44 ITEM
4. CONTROLS
AND PROCEDURES We
maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file
or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time period specified
in the SEC’s rules and forms. As of March 31, 2022, our chief executive officer and our chief financial officer conducted an evaluation
of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and our chief financial
officer concluded that our disclosure controls and procedures were effective as of March 31, 2022. Changes
in Internal Control over Financial Reporting There
were no changes in internal controls over financial reporting that occurred during the quarter ended March 31, 2022 that have materially
affected, or are reasonably likely to materially affect, our internal controls over financial reporting. 45 PART
II—OTHER INFORMATION ITEM
1. LEGAL
PROCEEDINGS Securities
and Exchange Commission (“SEC”) Investigation As
previously disclosed by the Company, on June 21, 2018, the Fort Worth Regional Office of the SEC informed Zion that it was conducting
a formal, non-public investigation and asked that we provide certain information and documents in connection with its investigation.
Since that date, we have fully cooperated with the SEC on an on-going basis in connection with its investigation. Investigations of this
nature are inherently uncertain and their results cannot be predicted with certainty. Regardless of the outcome, an SEC investigation
could have an adverse impact on us because of legal costs, diversion of management resources, and other factors. The investigation could
also result in reputational harm to Zion and may have a material adverse effect on Zion’s current and future business and exploratory
activities and its ability to raise capital to continue our oil and gas exploratory activities. Litigation From
time to time, the Company may be subject to routine litigation, claims or disputes in the ordinary course of business. The Company defends
itself vigorously in all such matters. However, we cannot predict the outcome or effect of any of the potential litigation, claims or
disputes. The
Company is not subject to any litigation at the present time. ITEM
1A. RISK
FACTORS During
the quarter ended March 31, 2022, there were no material changes to the risk factors previously reported in our Annual Report on Form
10-K for the year ended December 31, 2021. ITEM
2. UNREGISTERED
SALES OF SECURITIES AND USE OF PROCEEDS None. ITEM
3. DEFAULTS
UPON SENIOR SECURITIES None. ITEM
4. MINE
SAFETY DISCLOSURES None. ITEM
5. OTHER
INFORMATION : None. ITEM
6. EXHIBITS 46 Exhibit
Index : 31.1 Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 under the Exchange Act 31.2 Certification
of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 under the Exchange Act 32.1 Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only) 32.2 Certification

$82,000) in respect of our drilling operation in the aggregate amount of approximately $1,268,000. The (cash) funds backing these

guarantees are held in restricted interest-bearing accounts in Israel and are reported on the Company’s balance sheets as

fixed short-term bank deposits restricted. During

the three months ended March 31, 2022, and 2021, cash used in operating activities totaled $2,091,000, and $2,141,000, respectively.

Cash provided by financing activities during the three months ended March 31, 2022, and 2021, was $9,428,000, and $2,850,000, respectively,

and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase Plan (the “DSPP” or

“Plan”). Net cash used in investing activities such as unproved oil and gas properties, equipment and spare parts was $3,799,000

and $7,124,000 for the three months ended March 31, 2022, and 2021, respectively. Accounting standards require management to evaluate our ability to

continue as a going concern for a period of one year subsequent to the date of the filing of this Form 10-Q. We expect to incur additional

significant expenditures to further our exploration and development programs. While we raised approximately $2,585,000 during the period

April 1, 2022 through May 6, 2022, we will need to raise additional funds in order to continue our exploration and development activities

in our license area. Additionally, we estimate that, when we are not actively drilling a well, our expenditures are approximately $600,000 per

month excluding exploratory operational activities. However, when we are actively drilling a well, we estimate an additional minimum expenditure

of approximately $2,500,000 per month. The above estimates are subject to change. Subject to the qualifications specified below, management

believes that our existing cash balance, coupled with anticipated proceeds under the DSPP, will be sufficient to finance our plan of operations

through January 2023. The

recent outbreak of the coronavirus has to date significantly disrupted business operations and resulted in significantly increased unemployment

in the general economy. The extent to which the coronavirus impacts our operations, specifically our capital raising efforts, as well

as our ability to continue our exploratory efforts, will depend on future developments, which are highly uncertain and cannot be predicted

with confidence, including the duration of the outbreak, new information which may emerge concerning the severity of the coronavirus

and the actions to contain the coronavirus or treat its impact, among others. No

assurance can be provided that we will be able to raise the needed operating capital. 43 Even

if we raise the needed funds, there are factors that can nevertheless adversely impact our ability to fund our operating needs, including

(without limitation), unexpected or unforeseen cost overruns in planned non-drilling exploratory work in existing license areas, the

costs associated with extended delays in undertaking the required exploratory work, and plugging and abandonment activities which is

typical of what we have experienced in the past. The

financial information contained in these consolidated financial statements has been prepared on a basis that assumes that we will continue

as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course

of business. This financial information and these consolidated financial statements do not include any adjustments that may result from

the outcome of this uncertainty. Off-Balance

Sheet Arrangements We

do not currently use any off-balance sheet arrangements to enhance our liquidity or capital resource position, or for any other purpose. Recently

Issued Accounting Pronouncements The

Company does not believe that the adoption of any recently issued accounting pronouncements in 2022 had a significant impact on our financial

position, results of operations, or cash flow. ITEM

3. QUANTITATIVE

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market

risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes

may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. In the

normal course of doing business, we are exposed to the risks associated with foreign currency exchange rates and changes in interest

rates. Foreign

Currency Exchange Rate Risks. A portion of our expenses, primarily labor expenses and certain supplier contracts, are denominated

in New Israeli Shekels (“NIS”). As a result, we have significant exposure to the risk of fluctuating exchange rates with

the U.S. Dollar (“USD”), our primary reporting currency. During the period January 1, 2022 through March 31, 2022, the USD

has fluctuated by approximately 2.1% against the NIS (the USD strengthened relative to the NIS). By contrast, during the period January

1, 2021 through December 31, 2021, the USD fluctuated by approximately 3.3% against the NIS (the USD weakened relative to the NIS). Continued

strengthening of the US dollar against the NIS will result in lower operating costs from NIS denominated expenses. To date, we have not

hedged any of our currency exchange rate risks, but we may do so in the future. Interest

Rate Risk. Our exposure to market risk relates to our cash and investments. We maintain an investment portfolio of short-term bank

deposits and money market funds. The securities in our investment portfolio are not leveraged, and are, due to their very short-term

nature, subject to minimal interest rate risk. We currently do not hedge interest rate exposure. Because of the short-term maturities

of our investments, we do not believe that a change in market interest rates would have a significant negative impact on the value of

our investment portfolio except for reduced income in a low interest rate environment. At March 31, 2022 we had cash, cash equivalents

and short-term and long-term bank deposits of approximately $9,490,000. The weighted average annual interest rate related to our cash

and cash equivalents for the three months ended March 31, 2022, exclusive of funds at US banks that earn no interest, was approximately.52%. The

primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly

increasing risk. To achieve this objective, we invest our excess cash in short-term bank deposits and money market funds that may invest

in high quality debt instruments. 44 ITEM

4. CONTROLS

AND PROCEDURES We

maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file

or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time period specified

in the SEC’s rules and forms. As of March 31, 2022, our chief executive officer and our chief financial officer conducted an evaluation

of the effectiveness of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and our chief financial

officer concluded that our disclosure controls and procedures were effective as of March 31, 2022. Changes

in Internal Control over Financial Reporting There

were no changes in internal controls over financial reporting that occurred during the quarter ended March 31, 2022 that have materially

affected, or are reasonably likely to materially affect, our internal controls over financial reporting. 45 PART

II—OTHER INFORMATION ITEM

1. LEGAL

PROCEEDINGS Securities

and Exchange Commission (“SEC”) Investigation As

previously disclosed by the Company, on June 21, 2018, the Fort Worth Regional Office of the SEC informed Zion that it was conducting

a formal, non-public investigation and asked that we provide certain information and documents in connection with its investigation.

Since that date, we have fully cooperated with the SEC on an on-going basis in connection with its investigation. Investigations of this

nature are inherently uncertain and their results cannot be predicted with certainty. Regardless of the outcome, an SEC investigation

could have an adverse impact on us because of legal costs, diversion of management resources, and other factors. The investigation could

also result in reputational harm to Zion and may have a material adverse effect on Zion’s current and future business and exploratory

activities and its ability to raise capital to continue our oil and gas exploratory activities. Litigation From

time to time, the Company may be subject to routine litigation, claims or disputes in the ordinary course of business. The Company defends

itself vigorously in all such matters. However, we cannot predict the outcome or effect of any of the potential litigation, claims or

disputes. The

Company is not subject to any litigation at the present time. ITEM

1A. RISK

FACTORS During

the quarter ended March 31, 2022, there were no material changes to the risk factors previously reported in our Annual Report on Form

10-K for the year ended December 31, 2021. ITEM

2. UNREGISTERED

SALES OF SECURITIES AND USE OF PROCEEDS None. ITEM

3. DEFAULTS

UPON SENIOR SECURITIES None. ITEM

4. MINE

SAFETY DISCLOSURES None. ITEM

5. OTHER

INFORMATION : None. ITEM

6. EXHIBITS 46 Exhibit

Index : 31.1 Certification

of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 under the Exchange Act 31.2 Certification

of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 under the Exchange Act 32.1 Certification

of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only) 32.2 Certification