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Unit Option under Amendment No. 3. This Unit Option period began on May 15, 2023 and terminated on June 15, 2023. Our Unit Program consisted |
of the combination of Common Stock and warrants with basic Unit Program features, conditions and terms outlined in the Original Prospectus |
Supplement and Amendment No. 1 and Amendment No.2. Amendment No. 3 provided the option period, unit price and the determination of the |
number of shares of Common Stock and warrants per unit. As mentioned above, this Unit Option began on May 15, 2023 and is terminated on |
June 15, 2023. The Unit Option consisted of Units of our securities where each Unit (priced at $ 250.00 each) was comprised of (i) a certain |
number of shares of Common Stock determined by dividing $ 250.00 (the price of one Unit) by the average of the high and low sale prices |
of the Company’s publicly traded common stock as reported on the OTCQX on the Unit Purchase Date and (ii) Common Stock purchase |
warrants to purchase an additional two hundred ( 200 ) shares of Common Stock at a per share exercise price of $ 0.25 . The participant’s |
Plan account was credited with the number of shares of the Company’s Common Stock and Warrants that were acquired under the Units |
purchased. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price |
of $ 0.25 . The warrant shall have the Company notation of “ZNWAZ” and will not be registered for trading on the OTCQX or any |
other stock market or trading market. Plan participants, who enroll |
into the Unit Program with the purchase of at least one Unit and enroll in the separate Automatic Monthly Investments (“AMI”) |
program at a minimum of $ 50.00 per month, will receive an additional three hundred (300) warrants at an exercise price of $ 0.25 during |
this Unit Option Program. The three hundred (300) additional warrants are for enrolling into the AMI program and shall receive the above |
warrant with the Company notation of “ZNWAZ.” Existing subscribers to the AMI were entitled to the additional three hundred |
(300) warrants, if they purchased at least one (1) Unit during the Unit program. The ZNWAZ warrants became exercisable on July 17, 2023 and continue |
to be exercisable through July 17, 2024 at a per share exercise price of $ 0.25 . For |
the three and six months ended June 30, 2023, approximately $ 1,761,000 , and $ 2,553,000 were raised under the DSPP program, respectively. |
The $ 2,553,000 figure is net of $ 173,000 in equity issuance costs to an outside party. For |
the three and six months ended June 30, 2022, approximately $ 1,566,000 , and $ 12,993,000 were raised under the DSPP program, respectively. The company raised approximately $ 921,000 from the period July |
1, 2023 through August 8, 2023, under the DSPP program. The |
warrants represented by the company notation ZNWAA are tradeable on the OTCQX market under the symbol ZNOGW. However, all of the other |
warrants characterized above, in the table below, and throughout this Form 10-Q, are not tradeable and are used internally for classification |
and accounting purposes only. E. |
Warrant Table The |
warrants balances at December 31, 2022 and transactions since January 1, 2023 are shown in the table be Warrants Exercise Price Warrant Termination Date Outstanding Balance, 12/31/2022 Warrants Issued Warrants Exercised Warrants Expired Outstanding Balance, 6/30/2023 ZNWAA $ 2.00 01/31/2024 1,498,804 - - - 1,498,804 ZNWAD $ 1.00 05/02/2023 243,853 - - ( 243,853 ) - ZNWAE $ 1.00 05/01/2023 2,144,099 - - ( 2,144,099 ) - ZNWAF $ 1.00 08/14/2023 359,435 - - - 359,435 ZNWAG $ 1.00 01/08/2024 240,068 - - - 240,068 ZNWAH $ 5.00 04/19/2023 372,400 - - ( 372,400 ) - ZNWAI $ 3.00 06/29/2023 640,710 - ( 100 ) ( 640,610 ) - ZNWAJ $ 1.00 10/29/2023 545,900 - - - 545,900 ZNWAK $ 0.01 02/25/2023 424,225 - ( 9,050 ) ( 415,175 ) - ZNWAL $ 2.00 08/26/2023 517,875 - - - 517,875 ZNWAM $ 0.05 09/06/2023 4,376,000 - - - 4,376,000 ZNWAN $ 1.00 05/16/2023 267,760 - ( 75 ) ( 267,685 ) - ZNWAO $ 0.25 06/12/2023 174,660 - - ( 174,660 ) - ZNWAQ $ 0.05 09/06/2023 23,428,348 - - - 23,428,348 ZNWAV $ 0.05 06/28/2023 - 288,500 ( 167,730 ) ( 120,770 ) - ZNWAW $ 0.05 07/13/2023 - 199,000 ( 124,500 ) - 74,500 ZNWAX $ 0.05 07/31/2023 - 818,500 ( 173,253 ) - 645,247 ZNWAY $ 0.05 09/10/2023 - 17,450 ( 1,650 ) - 15,800 Outstanding warrants 35,234,137 1,323,450 ( 476,358 ) ( 4,379,252 ) 31,701,977 27 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
3 - Stockholders’ Equity (cont’d) F. |
Warrant Descriptions of Current Warrants The |
price and the expiration dates for the series of warrants to investors are shown in the table below. The listing contains only those |
warrants with a future expiration date. Period of Grant US$ Expiration Date ZNWAA Warrants B,C,F March 2013 – December 2014 2.00 January 31, 2024 ZNWAF Warrants A,B,C May 2017 – July 2017 1.00 August 14, 2023 ZNWAG Warrants C,F October 2017 – December 2017 1.00 January 08, 2024 ZNWAJ Warrants B,C August 2018 – September 2018 1.00 October 29, 2023 ZNWAL Warrants C July 2019 – August 2019 2.00 August 26, 2023 ZNWAM Warrants D,G January 2021 – March 2021 0.05 September 6, 2023 ZNWAQ Warrants D,G June 2021 0.05 September 6, 2023 ZNWAS Warrants E August 2021 – March 2022 0.25 December 31, 2025 ZNWAT Warrants E August – September 2022 0.25 December 31, 2025 ZNWAU Warrants E October – November 2022 0.25 December 31, 2025 ZNWAY Warrants H March – April 2023 0.05 Sept 10, 2023 ZNWAZ Warrants I May – June 2023 .25 July 17, 2024 A On December 4, 2018, the Company extended the expiration date of the Warrants by one ( 1 ) year. B On May 29, 2019, the Company extended the expiration date of the Warrants by one ( 1 ) year. C On September 15, 2020, the Company extended the expiration date of the Warrants by two ( 2 ) years. D On March 21, 2022, the Company extended the expiration date of the Warrants by one ( 1 ) year. On June 16, 2023, the Company extended the expiration date of the Warrants to September 6, 2023. E These warrants will be issued and become exercisable beginning on November 15, 2025 and expire on December 31, 2025. F On December 14, 2022, the Company extended the expiration date of the Warrants by one (1) year. G The warrant exercise price was lowered to $ 0.05 on December 28, 2022. H The ZNWAY warrants are associated with Automatic Monthly Investments (“AMI”) connected with participation in the unit offering announced on March 13, 2023. I On May 15, 2023, the Company announced a new Unit Offering and the related ZNWAZ warrant. 28 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
4 - Unproved Oil and Gas Properties, Full Cost Method Unproved |
oil and gas properties, under the full cost method, are comprised as follows: June 30, 2023 December 31, 2022 US$ thousands US$ thousands Excluded from amortization base: Drilling costs, and other operational related costs 2,452 2,362 Capitalized salary costs 2,394 2,342 Capitalized interest costs 1,418 1,418 Legal and seismic costs, license fees and other preparation costs 9,888 9,728 Other costs 39 39 16,191 15,889 Post |
Impairment of unproved oil and gas properties comprised as follows: For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 US$ thousands US$ thousands US$ thousands US$ thousands Excluded from amortization base: Drilling costs, and other operational related costs 44 - 55 - Capitalized salary costs - - - - Capitalized interest costs - - - - Legal costs, license fees and other preparation costs 4 - 38 - Other costs - - - - 48 - 93 - Changes |
in Unproved oil and gas properties during the three and six months ended June 30, 2023 and 2022 are as follows: For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 US$ thousands US$ thousands US$ thousands US$ thousands Excluded from amortization base: Drilling costs, and other operational related costs 82 4,735 145 5,363 Capitalized salary costs 26 69 52 121 Capitalized interest costs - - - - Legal costs, license fees and other preparation costs 74 347 198 816 Other costs - - - - Impairment of unproved oil and gas properties ( 48 ) - ( 93 ) - *134 *5,151 *302 *6,300 * Inclusive of non-cash amounts of approximately $ 709,000 , and $ 571,000 during the three months ended June 30, 2023, and 2022, respectively * Inclusive of non-cash amounts of approximately $ 806,000 , and $ 1,708,000 during the six months ended June 30, 2023, and 2022, respectively Please |
refer to Footnote 1 – Nature of Operations and Going Concern for more information about Zion’s exploration activities. 29 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
5 - Right of use lease assets and lease obligations The |
Company is a lessee in several non-cancellable operating leases for transportation and office space. The |
table below presents the operating lease assets and liabilities recognized on the balance sheet as of June 30, 2023 and December 31, |
2022: June 30, 2023 December 31, 2022 US$ thousands US$ thousands Operating lease assets $ 79 $ 202 Operating lease liabiliti Current operating lease liabilities $ 67 $ 196 Non-current operating lease liabilities $ 12 $ 12 Total operating lease liabilities $ 79 $ 208 The |
depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The |
Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the |
discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate |
the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term |
of a lease within a particular currency environment. The Company used incremental borrowing rates as of January 1, 2019 for operating |
leases that commenced prior to that date. The |
Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2023 June 30, 2023 Weighted average remaining lease term (years) 0.6 Weighted average discount rate 4.9 % 30 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
5 - Right of use lease assets and leases obligations (cont’d) The |
table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancellable |
operating leases with terms of more than one year to the total operating lease liabilities recognized on the condensed balance sheets |
as of June 30, 2023: US$ thousands 2023 68 2024 11 2025 - 2026 - Thereafter - Total undiscounted future minimum lease payments 79 L portion representing imputed interest ( 1 ) Total undiscounted future minimum lease payments 78 Operating |
lease costs were $ 57,000 and $ 126,000 for the three and six months ended June 30, 2023, respectively. Operating |
lease costs were $ 68,000 and $ 137,000 for the three and six months ended June 30, 2022, respectively. Operating lease costs are |
included within general and administrative expenses on the statements of operations. Cash |
paid for amounts included in the measurement of operating lease liabilities was $ 57,000 and $ 127,000 for the three and six |
months ended June 30, 2023, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $ 71,000 and $ 143,000 for the three and six months ended June 30, 2022, respectively These amounts are included in operating activities |
in the statements of cash flows. Right-of-use |
assets obtained in exchange for new operating lease liabilities were $ nil and $ nil for the three and six months ended |
June 30, 2023, respectively. Right-of-use |
assets obtained in exchange for new operating lease liabilities were $ 136,000 and $ 136,000 for the three and six |
months ended June 30, 2022, respectively. 31 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
6 - Commitments and Contingencies A. |
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, which we did. On |
April 5, 2023, the Company received from the Fort Worth Regional Office of the SEC written notice to the Company concluding the investigation |
as to the Company and that the SEC does “not intend to recommend an enforcement action by the Commission against Zion.” B. |
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. C. |
Market Conditions – Coronavirus Pandemic During |
March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain |
of coronavirus (“COVID-19”). The pandemic significantly impacted the economic conditions in the United States and Israel, |
as federal, state and local governments reacted to the public health crisis, creating significant uncertainties in the United States, |
Israel and world economies. In the interest of public health and safety, jurisdictions (international, national, state and local) where |
we have operations, restricted travel and required workforces to work from home. However, as of the date of this report, most of our |
employees are working at our physical offices, but have the ability to work from home as needed. 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. D. |
Environmental and Onshore Licensing Regulatory Matters The |
Company is engaged in oil and gas exploration and production and may become subject to certain liabilities as they relate to environmental |
clean-up of well sites or other environmental restoration procedures and other obligations as they relate to the drilling of oil and |
gas wells or the operation thereof. Various guidelines have been published in Israel by the State of Israel’s Petroleum Commissioner |
and Energy and Environmental Ministries as it pertains to oil and gas activities. Mention of these older guidelines was included in previous |
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