UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
  FORM 20-F
  o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 OR
  x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2014
  OR
  o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    
 o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  Commission file number 000-30087
  ADIRA ENERGY LTD.
 (Exact name of Registrant specified in its charter)
  CANADA
 (Jurisdiction of incorporation or organization)
  120 Adelaide Street West, Suite 800
 Toronto, Ontario
 Canada M5H 1T1
 (Address of principal executive offices)
  Contact Person: Gadi Levin
 Address: 120 Adelaide Street West, Suite 800
 Toronto, Ontario  M5H 1T1
 Email: glevin@adiraenergy.com
 Telephone: (416) 250-1955, Facsimile: (416) 250-6330
  (Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
  Securities registered or to be registered pursuant to Section 12(b) of the Act:
  Title of Each Class
Name of each exchange on which registeredNone
Not applicable
   Securities registered or to be registered pursuant to Section 12(g) of the Act:
  COMMON SHARES
 (Title of Class)
  Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:  None
   i
  The number of outstanding shares of the Company’s only class of capital or common stock as at December 31, 2014 was 60,260,318 common shares.
  Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
  Yes     o                    No   x
  If this is an annual report or a transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
  Yes   o                      No   x
  Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
  Yes   x                     No  o
  Indicate by check mark whether Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
  Yes     o                    No   o
  Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (check one):
  Large accelerated filer        o                                                 Accelerated filer             o                      Non-accelerated filer   x
  Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:
 U.S. GAAP  o

International Financial Reporting Standards as issued by the International Accounting Standards Board    x
Other
o
  If “other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow:
  Item 17    o                                    Item 18  o
  If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
  Yes   o                      No   x
  (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
  Indicate by checkmark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
  YES    o                                        NO        o
      ii
 TABLE OF CONTENTS


GENERAL

- 1 -PART I

- 2 -ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
- 2 -ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE
- 2 -ITEM 3 - KEY INFORMATION
- 2 -A.
Selected Financial Data
- 2 -B.
Capitalization and Indebtedness
- 5 -C.
Reasons for the Offer and Use of Proceeds
- 5 -D.
Risk Factors
- 5 -ITEM 4
INFORMATION ON THE COMPANY
- 18 -A.
History and Development of the Company
- 18 -B.
Business Overview
- 20 -C.
Organizational Structure
- 24 -D.
Property, Plant and Equipment
- 25 -ITEM 5
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
- 26 -A.
Operating Results
- 26 -B.
Liquidity and Capital Resources
- 29 -C.
Research and Development, Patents and Licences
- 34 -D.
Trend Information
- 34 -E.
Off-Balance Sheet Arrangements
- 34 -F.
Tabular Disclosure of Contractual Obligations
- 34 -G.
Safe Harbor
- 34 -ITEM 6
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
- 34 -A.
Directors and Senior Management
- 34 -B.
Compensation
- 38C.
Board Practices
- 42 -D.
Employees
- 43 -E.
Share Ownership
- 44 -ITEM 7
Major Shareholder and Related Party Transactions
- 48 -A.
Major Shareholders
- 48 -B.
Related Party Transactions
- 49 -C.
Interests of Experts and Counsel
- 50 -ITEM 8
FINANCIAL INFORMATION
- 50 -A.
Consolidated Statements and Other Financial Information
- 50 -B.
Significant Changes
- 50 -ITEM 9
THE OFFER AND LISTING
- 50 -A.
Offer and Listing Details – Price History
- 51 -As at December 31, 2013, none of our securities were subject to escrow.
- 52 -B.
Plan of Distribution
- 52 -C.
Markets
- 52 -D.
Selling Shareholders
- 52 -E.
Dilution
- 53 -F.
Expenses of the Issue
- 53 -ITEM 10
additional information
- 53 -A.
Share Capital
- 53 -B.
Memorandum and Articles of Incorporation
- 53 -C.
Material Contracts
- 53 -D.
Exchange Controls
- 54 -E.
Taxation
- 54 -F.
Dividends and Paying Agents
- 61 -G.
Statement by Experts
- 61 -H.
Documents on Display
- 61 -I.
Subsidiary Information
- 61 -




iii




ITEM 11
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- 61 -A.
Transaction Risk and Currency Risk Management
- 61 -B.
Interest Rate Risk and Equity Price Risk
- 61 -C.
Exchange Rate Sensitivity
- 61D.
Commodity Price Risk
- 62 -ITEM 12
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
- 62 -Part II

- 62 -ITEM 13
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
- 62 -ITEM 14
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
- 62 -ITEM 15
CONTROLS AND PROCEDURES
- 62 -ITEM 16A
AUDIT COMMITTEE FINANCIAL EXPERTS
- 63 -ITEM 16B
CODE OF ETHICS
- 63 -ITEM 16C
PRINCIPAL ACCOUNTANT FEES AND SERVICES
- 63 -ITEM 16D
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
- 64 -ITEM 16E
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
- 64 -ITEM 16F
CHANGES TO REGISTRANT’S CERTIFYING ACCOUNTANT
- 64 -ITEM 16G
CORPORATE GOVERNANCE
- 64 -ITEM 16H
MINE SAFETY DISCLOSURE
- 65 -PART III

- 65 -ITEM 17
FINANCIAL STATEMENTS
- 65 -ITEM 18
FINANCIAL STATEMENTS
- 65 -ITEM 19
EXHIBITS
- 65 -














iv








GENERAL
  This Form 20-F is being filed as an annual report under the Exchange Act.
  In this Form 20-F, references to:
  “Adira” means Adira Energy Ltd., a Canadian federal corporation (formerly AMG Oil Ltd.);
  “Adira Barbados” means Adira Energy Investments (Barbados) Ltd., a Barbados corporation that was dissolved on December 31, 2013;
  “Adira Energy” means Adira Energy Holding Corp., an Ontario corporation (formerly Adira Energy Corp.);
  “Adira Geo” means Adira Geo Global Ltd., an Israeli corporation;
  “Adira Group” means Adira together with: (a) its wholly-owned subsidiary, Adira Energy; (b) its wholly-owned indirect (through Adira Energy) subsidiaries, Adira Israel, Adira Services, Adira Oil Technologies Ltd., Adira Energy CBM Ltd., and Adira Energy Holdings (Barbados) Ltd. (which wholly owned Adira Barbados until Adira Barbados was dissolved on December 31, 2013); and (c) Adira’s 60% indirect (through Adira Energy) subsidiary, Adira Geo;
  “Adira Israel” means Adira Energy Israel Ltd., an Israeli corporation;
  “Adira Services” means Adira Energy Israel Services Ltd., an Israeli corporation;
  “Adira Technologies” means Adira Oil Technologies Ltd., an Israeli corporation;
  “We”, “us”, “our”, and the “Company” mean collectively and individually, the companies that form the Adira Group; and
  “AMG” refers to AMG Oil Ltd. which was the name of Adira prior to its change of name to Adira Energy Ltd. on December 17, 2009.
  Adira and Adira Energy have historically used U.S. dollar as their reporting currency. All references in this document to “dollars” or “$” are to United States dollars and all references to “CDN$” are to Canadian dollars, unless otherwise indicated.
  Unless otherwise provided, all references in this annual report to numbers of Adira’s common shares reflect the 1-for-3 reverse stock split which took place on August 9, 2013.
  Except as noted, the information set forth in this Form 20-F is as of December 31, 2014 and all information included in this document should only be considered correct as of such date.
  1
  NOTE REGARDING FORWARD LOOKING STATEMENTS
  Much of the information included in this Form 20-F includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. These statements relate to future events or our future financial performance.  Generally, any statements contained herein that are not statements of historical facts may be forward–looking statements.  In some cases you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue or the negative of those terms or other comparable terminology. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.  Such estimates, projections or other forward looking statements involve various risks and uncertainties and other factors, including the risks in the section titled “Risk Factors”, below, that may cause our actual results, levels of activities, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform those statements to actual results.
  In particular, without limiting the generality of the foregoing disclosure, the statements contained in Item 4.B. – “Business Overview”, Item 5 – “Operating and Financial Review and Prospects” and Item 11 – “Quantitative and Qualitative Disclosures About Market Risk” are inherently subject to a variety of risks and uncertainties that could cause actual results, performance or achievements to differ significantly.
  PART I
  ITEM 1 - IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  Not applicable.
  ITEM 2 - OFFER STATISTICS AND EXPECTED TIMETABLE
  Not applicable.
  ITEM 3 - KEY INFORMATION
   A.           Selected Financial Data
   Adira Energy
   We are an oil and gas exploration company focused on early-stage exploration in the State of Israel.  We, acting through our subsidiary Adira Israel, have an option (the "Yam Hadera Option") to acquire up to a 15% participating interest in the Yam Hadera License No 383, offshore (the "Yam Hadera License"), located 30 kilometers offshore Israel, between Hadera and Haifa and North West of Adira’s former Yitzhak license.  The Yam Hadera Option is exercisable until 14 days prior to the signing of a rig contract for the Yam Hadera License.
  On September 22, 2014, the Petroleum Commissioner advised the operator that the Yam Hadera License had expired and would not be renewed, due to the milestones in their work program not being achieved.  On October 22, 2014, the operator sent a letter of appeal to the decision with the Minister of Energy and Water Resources of the State of Israel; however, as of this date, no reply has been received.
 
 
 
 2
 
 We also have an option to acquire up to a 5% participating interest in two licenses called the Myra License and Sara License.  We obtained this from our wholly-owned indirect subsidiary Adira Barbados prior to its dissolution on December 31, 2013. We currently ascribe no value to the Myra and Sara Licenses and as such we do not consider our options to be material to our operations.
   On August 9, 2013, we completed a reverse stock split (the “Consolidation”) of our common shares on the basis of one new common share for every three old common shares. The Consolidation was effective for trading purposes on August 13, 2013.
  Effective September 29, 2014, we completed a second reverse stock split (the “Second Consolidation”) of our common shares on the basis of one new common share for every five old common shares.
  The selected historical information presented in the table below for the years ended December 31, 2014, 2013, 2012, 2011 and 2010 are derived from the audited consolidated financial statements of Adira for such period, and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).  The selected financial information presented below should be read in conjunction with the audited consolidated financial statements and the notes thereto of Adira Group, and with the information appearing under each of Item 4 – “Information on the Company” and Item 5 – “Operating and Financial Review and Prospects” of this Form 20-F. All financial data presented in this Form 20-F are qualified in their entirety by reference to the consolidated financial statements and their notes.
 
     
 3
 U.S. dollars in thousands, except share and per share data
 
 Year Ended December 31,2014


2013


2012


2011


2010($ thousands)Balance Sheet DataCash and cash equivalents


334



617



2,394



8,094



8,686Total Assets


409



3,226



15,340



10,247



18,610Total Liabilities


223



3,803



10,330



1,421



7,373Total Shareholders’ Equity (deficit)


186



(577
)


5,010



8,826



11,237
 
 Year ended December 312014


2013


2012


2011


2010$



$



$



$



$Operating DataRevenues and other income


-



17



1,889



1,323



1,707Expenses:Exploration expenses


-



677



1,026



5,018



1,624General and administrative expenses


602



2,813



5,304



5,031



3,067Gain on settlement of accounts payable and others payables


(1,374
)


-



-



-



-Impairment charge


-



5,168



7,810



1,226



-Total expenses


(772
)


8,658



14,140



11,275



4,691Operating profit (loss)


772



(8,641
)


(12,251
)


(9,952
)


(2,984
)Financing income


-



3,027



2,480



43



-Loss on foreign exchange


(37
)


(30
)


(745
)


(109
)


(5
)Issuance expenses






-



-



-



-Profit (loss) before income taxes


735



(5,644
)


(10,516
)


(10,018
)


(2,989
)Income taxes


-



-



(41
)


(33
)


(15
)Net profit (loss) and comprehensive profit (loss)


735



(5,644
)


(10,557
)


(10,051
)


(3,004
)Basic and diluted net loss per share attributable to equity holders of the parent


0.06



(0.47
)


(1.19
)


(1.51
)


(0.69
)Weighted average number of common shares used in computing basic and diluted net loss per share


12,158,302



12,052,073



8,862,724



6,654,222



4,376,913
 Adira has never declared or paid any cash or other dividends.
  4
 B.           Capitalization and Indebtedness
  Not applicable.
  C.           Reasons for the Offer and Use of Proceeds
  Not applicable.
  D.           Risk Factors
  An investment in our securities is highly speculative and involves a high degree of risk.  Our Company may face a variety of risks that may affect our operations or financial results and many of those risks are driven by factors that we cannot control or predict.Before investing in our company’s securities, investors should carefully consider the following risks. The risks and uncertainties described below are not the only risks and uncertainties that we face or that an investment in our securities entails. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. Any of the following risks could materially and adversely affect our business, financial condition, prospects and results of operations. In that case, investors may lose all or a part of their investment. The risks discussed below also include forward-looking statements and the out actual results may differ substantially from those discussed in these forward-looking statements. See ‘‘Note Regarding Forward Looking Statements” and “Operating and Financial Review and Prospects”.
  Risks Associated with the Company
  Our independent auditors have referred to circumstances which might result in doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
  Although we realized a net profit of $735,000 for the year ended December 31, 2014, this was an exceptional result that we do not believe is sustainable at this time.  At December 31, 2014, we had an accumulated deficit of $33.9 million.  These circumstances raise doubt about our ability to continue as a going concern, as described in the Note 1 to our consolidated financial statements for the period ended December 31, 2014, which are included herein.  Although our consolidated financial statements refer to circumstances which might raise doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business.
  We are an early-stage oil and gas exploration company without significant revenues.  Our only material prospect at this time is an option to acquire a working interest in a license that has not been renewed by the Petroleum Commission, but is subject to a pending appeal.  If the appeal is declined, we may have to suspend operations.
  We are an oil and gas exploration company without any significant revenues, and there can be no assurance of our ability to develop and operate our projects profitably.  Currently, our only material oil and gas related prospect is the Yam Hadera Option which entitles us to acquire a 15% participating interest in the Yam Hadera License, located offshore Israel. However, the Petroleum Commissioner has advised the operator that the Yam Hadera License has expired and will not be renewed.  The operator has appealed the Petroleum Commissioner’s decision to the Minister of Energy and Water Resources, and the outcome remains uncertain.  If the appeal is declined we may have to suspend our operations unless we are able to identify other suitable prospects, which cannot be assured.
  Our ability to continue in business depends upon our continued ability to obtain significant financing from external sources and the success of our exploration efforts and any production efforts resulting therefrom, none of which can be assured.
  We have historically depended entirely upon capital infusion from the issuance of equity securities to provide the cash needed to fund our operations, but we cannot assure you that we will be able to continue to do so.  Our ability to continue in business depends upon our continued ability to obtain significant financing from external sources and the success of our exploration efforts and any production efforts resulting therefrom.  Any impediment to our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and could have a significant negative effect on our business plans and operations, including our ability to continue our current exploration activities and maintain ownership of our current licenses.
  5
 There is no assurance that our Company will be successful in generating positive cash flow, or if successful, that any such funds will be available for distribution to shareholders or to fund further exploration and development programs.
  We have had negative cash flows from operations, and there is no assurance that our current liquidity or capital resources will be sufficient to fund our operations on an ongoing basis. Our business operations may fail if our actual cash requirements exceed our estimates and we are not able to obtain further financing.
  We will require significant capital to continue our exploration activities, and to build the necessary infrastructure to commence operations if our exploration activities result in the discovery of sufficient oil and gas reserves to justify their exploitation and development.
  Since inception, we have not earned any significant revenues from operations, and due to the length of time between the discovery of oil and gas reserves, if any, and their exploitation and development, we do not anticipate earning significant revenues from operation in the near future.  We have incurred and will continue to incur significant expenses.  At December 31, 2014, we had cash and equivalents on hand of $334,000.  We will have to seek additional financing in any of the following scenarios: (a) if the appeal of the Petroleum Commissioner’s decision to allow the Yam Hadera License to expire is not successful, we may require additional financing to fund a focused and accelerated search for other suitable oil and gas prospects to replace our Yam Hadera Option; (b) if the Minister of Energy and Water Resources allows the operator’s appeal and the Yam Hadera License is renewed, we will require additional financing if we determine it is appropriate for us to exercise the Yam Hadera Option and meet our funding obligations as the holder of a 15% participating interest; and (c) we will require additional financing to fund the advanced exploration on the Yam Hadera License and any other properties that we may acquire interests in, if warranted.
  Further, we cannot assure you that our actual cash requirements will not exceed our estimates, and in any case we will require additional financing to bring our interests into commercial operation, finance working capital, meet our contractual minimum expenditures and pay for operating expenses and capital requirements until we achieve a positive cash flow.  Additional capital also may be required in the event we incur any significant unanticipated expenses.
  In light of our operating history, and under the current capital and credit market conditions, and given the current downward pressure on oil and gas prices, we may not be able to obtain additional equity or debt financing on acceptable terms if and when needed.   Even if financing is available, it may not be available on terms that are favorable to us or in sufficient amounts to satisfy our requirements.
  If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies, respond to changing business or economic conditions, withstand adverse operating results, and compete effectively.  More importantly, if we are unable to raise further financing when required, our planned exploration activities may have to be scaled down or even ceased, and our ability to generate revenues in the future would be negatively affected.
  As a holding company, our ability to make payments will eventually depend on the cash flows of our subsidiaries.
  We are a holding company and plan to conduct substantially all of our operations through our subsidiaries incorporated outside North America.  We have no direct operations and, other than remaining cash or cash equivalents and the shares of our subsidiaries, no significant assets.  Assuming our holding company structure remains, we will be dependent on the cash flows from our subsidiaries to meet our obligations, including payment of principal and interest on any debt we incur.  The ability of certain of our subsidiaries to provide us with payments may be constrained by the following factors:
  6
 ·
the cash flows, if any, generated by operations, investment activities and financing activities; and
  ·
the level of taxation, particularly corporate profits and withholding taxes.
 In addition, we cannot guarantee that the current fiscal regime that allows for repatriation of funds in each of the countries where we do business will remain in effect, nor can we guarantee that arbitrary changes in exchange controls in each of the countries where we do business will not take place, which may adversely impact on the ability of investors to recover their investment.
  All of our assets are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or some of our directors or officers.
  All of our assets are located outside the United States.  In addition, some of our directors and/or officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States.
  As a result, it may be difficult for investors to enforce within the United States any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.  Consequently, investors may be effectively prevented from pursuing remedies under United States federal securities laws against them.
  We may be adversely affected by current global financial conditions.
  Current global financial conditions have been characterized by increased volatility and several financial institutions have either gone into bankruptcy or have had to be rescued by governmental authorities.  Access to public financing and bank credit has been negatively impacted by both the rapid decline in value of sub-prime mortgages and the liquidity crisis affecting the asset-backed commercial paper market.  These and other factors may affect our ability to obtain equity or debt financing in the future on favorable terms.  Additionally, these factors, as well as other related factors, may cause decreases in our asset values that may be other than temporary, which may result in impairment losses.  If such increased levels of volatility and market turmoil continue, or if more extensive disruptions of the global financial markets occur, our operations could be adversely impacted and the market value of our common shares may be adversely affected.
  Conditions in Israel may affect our operations.
  Our subsidiaries conduct their principal operations in Israel, and therefore are directly affected by the political, economic, and military conditions affecting Israel and the Middle East. Armed conflicts between Israel and its neighboring countries and territories occur periodically and a protracted state of hostility, varying in degree and intensity over time, has in the past led to security and economic difficulties for Israel. These hostilities, any escalation thereof or any future armed conflict or violence in the region, could adversely affect our subsidiaries’ operations. In addition, we could be adversely affected by other events or factors affecting Israel such as the interruption or curtailment of trade between Israel and its present trading partners, a significant downturn in the economic or financial condition of Israel, a significant downgrading of Israel’s international credit rating, labor disputes and strike actions and political instability.
  Our financial reporting may be subject to weaknesses in internal controls.
  Internal controls over financial reporting are procedures designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported.  A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation.
  7
 We cannot be certain that current expected expenditures and completion/testing programs will be realized.
  We believe that the costs used to prepare internal budgets are reasonable, however, there are assumptions, uncertainties, and risk that may cause our allocated funds on a per well basis to change as a result of having to alter certain activities from those originally proposed or programmed to reduce and mitigate uncertainties and risks.  These assumptions, uncertainties, and risks are inherent in the completion and testing of wells and can include but are not limited to: pipe failure, casing collapse, unusual or unexpected formation pressure, environmental hazards, and other operating or production risk intrinsic in oil and/or gas activities.  Any of the above may cause a delay in our completion program and its ability to determine reserve potential.
  Our lack of diversification increases the risk of an investment, and our financial condition and results of operations may deteriorate if we fail to diversify.
  Our business focus is on oil and gas exploration on three properties in Israel within close proximity.  As a result, we lack diversification, in terms of both the nature and geographic scope of our business.  We will likely be impacted more acutely by factors affecting our industry or the regions in which we operate than we would if our business were more diversified.  If we cannot diversify our operations, our financial condition and results of operations could deteriorate.
  We may not effectively manage the growth necessary to execute our business plan.
  Our business plan anticipates a significant increase in the number of our contractors, strategic partners and equipment suppliers.  Such growth, if any, will place significant strain on our current personnel, systems and resources.  We expect that we will be required to hire qualified consultants and employees to help manage our growth effectively.  We believe that we will also be required to improve our management, technical, information and accounting systems, controls and procedures.  We may not be able to maintain the quality of our operations, control our costs, continue complying with all applicable regulations and expand our internal management, technical information and accounting systems to support our desired growth.  If we fail to manage our anticipated growth effectively, our business could be adversely affected.
  We have agreed to indemnify our directors against liabilities incurred by them as directors.
  We have agreed to indemnify our directors from and against all costs, charges and expenses reasonably incurred by them in respect of any civil, criminal or administrative action or proceeding to which they are made a party or with which they are threatened by reason of being or having been a director of Adira, provided that (a) they have acted honestly and in good faith with a view to the best interests of Adira; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, they had reasonable grounds for believing that their conduct was lawful.  This indemnity may reduce the likelihood of derivative litigation against our directors and may discourage or deter our shareholders from suing the directors.
  Risks Associated with Our Business
  We have not discovered any oil and gas reserves, and we cannot assure you that we or our venture ever will.
  We are in the business of exploring for oil and natural gas, and the development and exploitation of any significant reserves that are found.  Oil and gas exploration involves a high degree of risk that the exploration will not yield positive results.  These risks are more acute in the early stages of exploration.  We have not discovered any reserves, and we cannot guarantee you that we ever will.  Even if we succeed in discovering oil or gas reserves, these reserves may not be in commercially viable quantities or locations.  Until we discover such reserves, we will not be able to generate any revenues from their exploitation and development.  If we are unable to generate revenues from the development and exploitation of oil and gas reserves, we will be forced to change our business or cease operations.
  8
 Our business will suffer if we cannot obtain or maintain necessary licenses.
  Our operations require licenses, permits and in some cases renewals of licenses and permits from various governmental authorities.  Specifically, the licenses awarded to us by the Government of Israel have terms of three years and must be renewed in order to extend the license beyond this initial term.  As noted above, our only material oil and gas related prospect is the Yam Hadera Option which entitles us to acquire a 15% participating interest in the Yam Hadera License, located offshore Israel.  However, the Petroleum Commissioner has advised the operator that the Yam Hadera License has expired and will not be renewed.  The operator has appealed the Petroleum Commissioner’s decision to the Minister of Energy and Water Resources.  Although certain licenses have received extensions, there can be no assurance that the Minister will allow the operator’s appeal.  If the Yam Hadera License is renewed, it will require the licensee to meet certain minimum commitments with respect to the operator’s activities on the license.
  Among other factors, a licensee’s ability to obtain, sustain or renew such licenses and permits on acceptable terms is subject to change in regulations and policies and to the discretion of the applicable governments.  The inability of the licensee to obtain, maintain or acquire extensions for these licenses or permits could hamper our ability, as the holder of a participating interest in the license, to produce revenues from operations.
  Other oil and gas companies may seek to acquire property leases and licenses that we will need to operate our business.  This competition may prevent us from obtaining licenses we deem necessary for our business, or it may substantially increase the cost of obtaining these licenses.
  Our assets and operations are subject to government regulation in Israel.
  Our interests and operations in Israel may be affected in varying degrees by government regulations relating to the oil and gas industry.  Any changes in regulations or shifts in political conditions are beyond our control and may adversely affect our business.  Our operations may be affected in varying degrees by new government regulations and changes to existing regulations, including those with respect to restrictions on exploration and production, price controls, export controls, income taxes, employment, land use, water use, environmental legislation and safety regulations.  On April 10, 2011, the Petroleum Profits Taxation Law, 5771-2011 (the “Petroleum Taxation Law”) was published based largely on the conclusions and recommendations of the Sheshinski Committee, a government appointed committee in Israel which was tasked with examining the fiscal system prevailing in Israel in respect of petroleum and gas resources and proposing an updated fiscal policy. The Petroleum Taxation Law imposes a progressive levy (the “Levy”) on profits derived from petroleum reserve, in addition to the 12.5% royalty payable under the old tax regime which remains unchanged.  The Levy is designed to capitalize on the economic benefits from each individual reservoir and is imposed only after the investment in exploration, development and construction are fully returned, plus a yield that reflects, among other things, the developer’s risk and required financial expenses.  As a result of the Levy, the aggregate government take from oil and gas revenue is expected to increase from approximately 33% to about 52% to 62%.  The implementation of the Petroleum Taxation Law may have an adverse effect on our business, financial conditions and results as our business matures.
  Our future success depends upon our ability to find, develop and acquire additional oil and natural gas reserves that are economically recoverable.
  In the event that we are able to find and develop oil and natural gas reserves which are economically recoverable, the rate of production from those reservoirs will decline as reserves are depleted.  As a result, we must locate and develop or acquire new oil and natural gas reserves to replace those being depleted by production.  We must do this even during periods of low oil and natural gas prices when it is difficult to raise the capital necessary to finance activities.  Without successful exploration or acquisition activities, our reserves and revenues will decline.  We may not be able to find and develop or acquire additional reserves at an acceptable cost or have necessary financing for these activities.
  9
 Oil and natural gas drilling is a high-risk activity.
  Our future success will depend on the success of our exploration and drilling programs.  In addition to the numerous operating risks described in more detail below, these activities involve the risk that no commercially productive oil or natural gas reservoirs will be discovered.  In addition, we are uncertain as to the future cost or timing of drilling, completing and producing wells.  Furthermore, our drilling operations may be curtailed, delayed or cancelled as a result of a variety of factors, including, but not limited to, the following: unexpected drilling conditions; pressure or irregularities in formations; equipment failures or accidents; adverse weather conditions; inability to comply with governmental requirements; and shortages or delays in the availability of drilling rigs and the delivery of equipment. If we experience any of these problems, our ability to conduct operations could be adversely affected.
  Our success depends on our ability to attract and retain qualified personnel.
  Recruiting and retaining qualified personnel is critical to our success.  The number of persons skilled in the acquisition, exploration and development of oil and gas properties is limited and competition for such persons is intense.  As our business activity grows, it will require additional key financial, administrative and qualified technical personnel as well as additional operations staff.  Although we believe that we will be successful in attracting, training and retaining qualified personnel, there can be no assurance of such success.  If we are not successful in attracting and training qualified personnel, the efficiency of our operations could be affected, which could have an adverse impact on our future cash flows, earnings, results of operations and financial condition. Our development now and in the future will also depend on the efforts of key management figures.  The loss of any of these key people could have a material adverse effect on our business.  We do not currently maintain key-man life insurance on any of our key employees.
  We face strong competition from other energy companies that may negatively affect our ability to carry on operations.
  We operate in the highly competitive area of oil and natural gas exploration, development and production. Factors which affect our ability to successfully compete in the marketplace include, but are not limited to, the following: the availability of funds and information relating to a property; the standards established by us for the minimum projected return on investment; the availability of alternate fuel sources; and the transportation of gas.
  Our competitors include major integrated oil companies, substantial independent energy companies, affiliates of major pipeline companies, and national and local natural gas gatherers.  Many of these competitors possess greater financial and other resources than we do.
  We might not be able to determine reserve potential, identify liabilities associated with the properties or obtain protection from sellers against them, which could cause us to incur losses.
  Although we strive to review and evaluate our oil and gas prospects in Israel in a manner consistent with industry practices, such review and evaluation might not necessarily reveal all existing or potential problems.  This is also true for any future acquisitions made by us. Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken.  Even when problems are identified, a seller may be unwilling or unable to provide effective contractual protection against all or part of those problems, and we often assume environmental and other risks and liabilities in connection with the acquired properties.
  Penalties we may incur could impair our business.
  Failure to comply with government regulations could subject us to civil and criminal penalties, could require us or our venture to forfeit property rights or licenses, and may affect the value of our assets.  We may also be required to take corrective actions, such as installing additional equipment, which could require substantial capital expenditures.  We could also be required to indemnify our employees in connection with any expenses or liabilities that they may incur individually in connection with regulatory action against them.  As a result, our future business prospects could deteriorate due to regulatory constraints, and our profitability could be impaired by our obligation to provide such indemnification to our employees.
  10
 Strategic relationships upon which we may rely are subject to change, which may diminish our ability to conduct our operations.
  Our ability to successfully acquire additional licenses, to discover reserves, to participate in drilling opportunities and to identify and enter into commercial arrangements depends on developing and maintaining close working relationships with industry participants and government officials and on our ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment.  We may not be able to establish these strategic relationships, or if established, we may not be able to maintain them.  In addition, the dynamics of our relationships with strategic partners may require us to incur expenses or undertake activities we would not otherwise be inclined to undertake in order to fulfill our obligations to these partners or maintain our relationships.  If our strategic relationships are not established or maintained, our business prospects may be limited, which could diminish our ability to conduct our operations.
  Political instability or fundamental changes in the leadership or in the structure of the governments in the jurisdictions in which we operate could have a material negative impact on us.
  Our interests may be affected by political and economic upheavals.  Although we currently operate in jurisdictions that welcome foreign investment and are generally stable, there is no assurance that the current economic and political situation in these jurisdictions will not change drastically in coming years. Local, regional and world events could cause the jurisdictions in which we operate to change the applicable resource laws, tax laws, foreign investment laws, or to revise their policies in a manner that renders our current and future projects non-economic.
  Even if we discover and then develop oil and gas reserves, we may have difficulty distributing our production.
  If our exploration activities result in the discovery of oil and gas reserves, and if we are able to successfully develop and exploit such reserves, we will have to make arrangements for storage and distribution of oil and gas.  We would have to rely on local infrastructure and the availability of transportation for storage and shipment of oil and gas products, but any readily available infrastructure and storage and transportation facilities may be insufficient or not available at commercially acceptable terms.  The marketability of our production, if any, will depend in part upon the availability, proximity, and capacity of oil and natural gas pipelines, crude oil trucking, natural gas gathering systems and processing facilities.  This could be particularly problematic to the extent that operations are conducted in remote areas that are difficult to access, such as areas that are distant from shipping or pipeline facilities.  Furthermore, weather conditions or natural disasters, actions by companies doing business in one or more of the areas in which we or our venture will operate, or labor disputes may impair the distribution of oil and gas. In addition, Israel has little or no storage capacity and the currently available distribution infrastructure is limited. These factors may affect the ability to explore and develop properties and to store and transport oil and gas and may increase our expenses to a degree that has a material adverse effect on operations.
  Our inability to obtain necessary facilities could hamper our operations.
  Oil and gas exploration activities depend on the availability of equipment, transportation, power and technical support in the particular areas where these activities will be conducted, and our access to these facilities may be limited.  Demand for such limited equipment and other facilities or access restrictions may affect the availability of such equipment to us and may delay exploration and development activities.  The quality and reliability of necessary facilities may also be unpredictable and we may be required to make efforts to standardize our facilities, which may entail unanticipated costs and delays.  Shortages or the unavailability of necessary equipment or other facilities will impair our activities, either by delaying our activities, increasing our costs or otherwise.
  Factors beyond our control affect our ability to market oil and gas.
  Our ability to market oil and natural gas from any wells that we may develop or otherwise acquire in the future, in the event we discover and exploit oil and natural gas, depends upon numerous factors beyond our control. These factors include, but are not limited to, the following: the level of domestic production and imports of oil and gas; the volatility of both oil and natural gas pricing; the proximity of natural gas production to natural gas facilities, pipelines and other means of transportation; the availability of pipeline capacity or other means of transportation; the demand for oil and natural gas by utilities and other end users; the availability of alternate fuel sources; the effect of inclement weather; and government regulation of oil and natural gas marketing.
   11
 If these factors were to change dramatically, our ability to market oil and natural gas or obtain favourable prices for our oil and natural gas could be adversely affected.
  Prices and markets for oil are unpredictable and tend to fluctuate significantly, which could reduce profitability, growth and the value of our business if we or our ventures ever begin exploitation of reserves.
  Our future financial condition, results of operations and the carrying value of our oil and natural gas properties depend primarily upon the prices we receive for our oil and natural gas production, if any.  Oil and natural gas prices historically have been volatile and likely will continue to be volatile in the future, especially given current world economic conditions.  Significant changes in long-term price outlooks for crude oil could by the time that we start exploiting oil and gas reserves, if we ever discover and exploit such reserves, have a material adverse effect on revenues as well as the value of licenses or other assets.
  Future cash flow from operations, if any, will be highly dependent on the prices that we receive for oil and natural gas.  This price volatility also affects the amount of our cash flow available for capital expenditures and our ability to borrow money or raise additional capital.  The prices for oil and natural gas are subject to a variety of additional factors that are beyond our control.  These factors include: the level of consumer demand for oil and natural gas; the domestic and foreign supply of oil and natural gas; the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; the price of foreign oil and natural gas; the price and availability of alternative fuel sources; governmental regulations; weather conditions; market uncertainty; political conditions in oil and natural gas producing regions, including Israel and the Middle East; war, or the threat of war, in oil producing regions; and worldwide economic conditions.
  These factors and the volatility of the energy markets generally make it extremely difficult to predict future oil and natural gas price movements with any certainty.  Also, oil and natural gas prices do not necessarily move in tandem.  Declines in oil and natural gas prices would not only reduce revenue, but could reduce the amount of oil and natural gas that we can produce economically and, as a result, could have a material adverse effect upon our financial condition, cash flows, results of operations, oil and natural gas reserves, the carrying values of our oil and natural gas properties and the amounts we can borrow under any bank credit facilities we may obtain in the future.
  Operating hazards may adversely affect our ability to conduct business.
  Our future operations, if any, will be subject to risks inherent in the oil and natural gas industry, including, but not limited to, the following: blowouts; cratering; explosions; uncontrollable flows of oil, natural gas or well fluids; fires; pollution; and other environmental risks.
  These risks could result in substantial losses to us from injury and loss of life, damage to and destruction of property and equipment, pollution and other environmental damage and suspension of operations.  Governmental regulations may impose liability for pollution damage or result in the interruption or termination of operations.
  We may enter into hedging agreements but may not be able to hedge against all such risks.
  If we are able to discover commercially exploitable quantities of oil or gas and is able to enter into commercial production, from time to time we may enter into agreements to receive fixed or a range of prices on its oil and natural gas production to offset the risk of revenue losses if commodity prices decline; however, if commodity prices increase beyond the levels set in such agreements, we will not benefit from such increases.  Similarly, from time to time we may enter into agreements to fix the exchange rate of certain currencies to US dollars in order to offset the risk of revenue losses if the other currencies increase in value compared to the US dollar; however, if other currencies decline in value compared to the US dollar, we will not benefit from the fluctuating exchange rate.  In addition to the potential of experiencing an opportunity cost, other potential costs or losses associated with hedging include the risk that the other party to a hedge transaction does not perform its obligations under a hedge agreement, the hedge is imperfect or our hedging policies and procedures are not followed.
  12
 Our Company is organized under the laws of Canada.
  Our Company is a Canadian corporation governed by the Canada Business Corporations Actand as such, its corporate structure, the rights and obligations of shareholders and its corporate bodies may be different from those of the home countries of international investors.  Furthermore, non-Canadian residents may find it more difficult and costly to exercise shareholder rights.  International investors may also find it costly and difficult to effect service of process and enforce their civil liabilities against us or some of our directors, controlling persons and officers.
  To the extent that we establish natural gas and oil reserves, we will be required to replace, maintain or expand these natural gas and oil reserves in order to prevent reserves and production from declining, which could adversely affect cash flows and income.
  In general, production from natural gas and oil properties declines over time as reserves are depleted, with the rate of decline depending on reservoir characteristics.  If we establish reserves, of which there is no assurance, and are not successful in its subsequent exploration and development activities or in subsequently acquiring properties containing proved reserves, our proved reserves will decline as reserves are produced. Our future natural gas and oil production is highly dependent upon its ability to economically find, develop or acquire reserves in commercial quantities.
  To the extent cash flow from operations, if any, is reduced, either by a decrease in prevailing production volume prices for natural gas and oil or an increase in finding and development costs, and external sources of capital become limited or unavailable, our ability to make the necessary capital investment to maintain or expand its asset base of natural gas and oil reserves would be impaired.  Even with sufficient available capital, our future exploration and development activities may not result in additional proved reserves, and we might not be able to drill productive wells at acceptable costs.
  We may be treated as a U.S. corporation and taxed by the U.S. on our worldwide income.
  We continued from Nevada to Canada in 2008.  Such continuance is for corporate purposes a migration of us from Nevada to Canada.  Transactions whereby a U.S. corporation migrates to a foreign jurisdiction are considered by the U.S. Congress to be a potential abuse of the U.S. tax rules because thereafter the foreign entity is not subject to U.S. tax on its worldwide income.  As a result, Section 7874(b) of the Internal Revenue Code of 1986, as amended, was enacted to address this potential abuse.  Section 7874(b) provides generally that a corporation that migrates from the U.S. will nonetheless remain subject to U.S. tax on its worldwide income unless the migrating entity has substantial business activities in the foreign country in which it is migrating when compared to its total business activities.
  If Section 7874(b) were to apply to our migration from Nevada to Canada, it would cause us to be subject to U.S. federal income taxation on our worldwide income.  Section 7874(b) of the Code will apply to our migration unless we had substantial business activities in Canada when compared to our total business activities at the time of our migration.
  Based on the fact that substantially all of our activities were taking place in Canada and all of our assets were located in Canada at the time of our migration, we have taken the position that we had substantial business activity in Canada in relation to our worldwide activities at the time of the migration and that Section 7874(b) did not apply to cause us, after the migration, to be subject to U.S. federal income tax on our worldwide income.There is limited guidance as to what “substantial business activity” is “when compared to our worldwide activities.”  Accordingly, the position adopted by us may be challenged by the U.S. tax authorities with the result that we may be subject to U.S. federal income taxes on our worldwide activities.  In addition to U.S. federal income taxes, were Section 7874(b) to apply to us, we could be subject to penalties for failure to file U.S. federal income tax returns, late fees and interest on past due taxes.  Furthermore, if Section 7874(b) were to apply to us, our non-U.S. shareholders may be subject to adverse U.S. federal income tax consequences such as the assessment of U.S. federal income withholding taxes on dividends paid by us.  Each shareholder should consult its own tax advisor regarding the foregoing rules.
  13
 Risks Associated with our Common Shares
  The market price of the common shares of our corporation may be volatile
  The market price of our common shares may experience significant volatility. Numerous factors, including many over which we have no control, may have a significant impact on the market price of our common shares including, among other things: regulatory developments in target markets affecting us, our customers or our competitors; actual or anticipated fluctuations in our quarterly operating results; changes in financial estimates or other material comments by securities analysts relating to us, our competitors or the industry in general; announcements by other companies in the industry relating to their operations, strategic initiatives, financial condition or financial performance or to the industry in general; announcements of acquisitions or consolidations involving industry competitors or industry suppliers; addition or departure of our executive officers; and sales or perceived sales of additional common shares of Adira. In addition, the stock market in recent years has experienced extreme price and trading volume fluctuations that often have been unrelated or disproportionate to the operating performance of individual companies. These broad market fluctuations may adversely affect the price of the common shares of Adira regardless of our operating performance.  There can be no assurance that an active market for the Common Shares will be established or persist and the share price may decline.
  The value of securities issued by us might be affected by matters not related to our operating performance.
  The value of securities issued by us may be affected by matters not related to our operating performance or underlying value for reasons that include the following: general economic conditions in Canada, the US, Israel and globally; industry conditions, including fluctuations in the price of oil and natural gas; governmental regulation of the oil and gas industry, including environmental regulation; fluctuation in foreign exchange or interest rates; liabilities inherent in oil and natural gas operations; geological, technical, drilling and processing problems; assuming we achieve production, unanticipated operating events which can reduce production or cause production to be shut-in or delayed; failure to obtain industry partner and other third party consents and approvals, when required; stock market volatility and market valuations; competition for, among other things, capital, acquisition of reserves, undeveloped land and skilled personnel; the need to obtain required approvals from regulatory authorities; worldwide supplies and prices of and demand for natural gas and oil; political conditions and developments in Israel, Canada, the US, and globally; political conditions in natural gas and oil producing regions; revenue and operating results failing to meet expectations in any particular period; investor perception of the oil and gas industry; limited trading volume of our common shares; change in environmental and other governmental regulations; announcements relating to our business or the business of our competitors; our liquidity; and our ability to raise additional funds.
  In the past, companies that have experienced volatility in their value have been the subject of securities class action litigation.  We might become involved in securities class action litigation in the future.  Such litigation often results in substantial costs and diversion of management’s attention and resources and could have a material adverse effect on our business, financial condition and results of operation.
  An investment in our Company will likely be diluted.
  We may issue a substantial number of our common shares without investor approval to raise additional financing and we may consolidate the current outstanding common shares.  Any such issuance or consolidation of our securities in the future could reduce an investor’s ownership percentage and voting rights in us and further dilute the value of your investment.
  If we are a “passive foreign investment company” at any time that a U.S. shareholder holds our common shares, such U.S. shareholder may be subject to adverse U.S. federal income tax consequences
   14
 Acquiring, holding or disposing of our common shares may have tax consequences under the laws of Canada and the United States that are not disclosed in this Form 20-F.  In particular, potential investors that are U.S. taxpayers should be aware that we may be considered a “passive foreign investment company” (a “PFIC”) under Section 1297(a) of the U.S. Internal Revenue Code (the “Code”) with respect to U.S. shareholders. A non-U.S. corporation is classified as a PFIC under the Code for each tax year in which (i) 75% or more of its gross income is passive income (as defined for U.S. federal income tax purposes) or (ii) on average for such tax year, 50% or more (by value) of its assets either produces or is held for the production of passive income. The tax rules applicable to PFICs are very complex and, in some cases, uncertain. Each U.S. investor should consult its own tax advisor with respect to such rules. If our Company is a PFIC for any year during a U.S. taxpayer’s holding period, then such taxpayer may be required to treat any gain recognized by such person upon a sale or disposition of our common shares as ordinary (rather than capital) income, and any resulting U.S. federal income tax may be increased by an interest charge. Rules similar to those applicable to dispositions will generally apply to certain amounts treated as “excess distributions” in respect of the common shares.
  We do not expect to pay dividends for the foreseeable future.
  We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business.  Therefore, investors will not receive any funds unless they sell their Common Shares, and shareholders may be unable to sell their shares on favorable terms or at all.  We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our Common Shares.  Prospective investors seeking or needing dividend income or liquidity should not purchase our
  ITEM 4                      INFORMATION ON THE COMPANY
  We are a Canadian corporation existing under the Canada Business Corporations Act (the “CBCA”) which conducts business as an oil and gas exploration company with operations in the State of Israel.  We have been granted certain petroleum licenses from the State of Israel, as more particularly described below in Item 4B – “Business Overview”.
  We presently do not have any oil and gas reserves, do not produce any oil or gas and do not earn any significant revenues.
  A.           History and Development of the Company
  Name
  Our legal and commercial name is Adira Energy Ltd.
  Principal Office
  Our principal office is located at 120 Adelaide Street West, Suite 800, Toronto, Ontario, Canada, M5H 1T1.  Our telephone number is (416) 250-6500.
  Incorporation and Continuation
  We are a Canadian corporation existing under the CBCA.
  We were incorporated on February 20, 1997 under the name “Trans New Zealand Oil Company” by filing our Articles of Incorporation with the Secretary of State of Nevada.  We changed our name to “AMG Oil Ltd.” on July 27, 1998.  On December 17, 2009, we changed our name to “Adira Energy Ltd.”  Our fiscal year end is December 31.
  On November 25, 2008, our shareholders approved the change of our jurisdiction of incorporation from the State of Nevada to the Canadian federal jurisdiction under the CBCA by way of continuation.  We completed the filing of our Articles of Conversion with the Nevada Secretary of State on November 25, 2008, and our Articles of Continuance were accepted for filing by Industry Canada effective November 27, 2008. The effect of these filings was to transfer our jurisdiction of incorporation from the State of Nevada to the Canadian federal jurisdiction under the CBCA.  Copies of the Articles of Conversion, Articles of Continuance, Certificate of Continuance and By-Laws, are incorporated by reference into this Form 20-F as exhibits.
  15
 Our common shares are registered under Section 12(g) of the Exchange Act.  Our current trading symbol on the OTC Bulletin Board (the “OTCBB”) is “ADENF” and our current trading symbol on the TSX Venture Exchange (the “TSXV”) is “ADL”.
  Acquisition of Adira Energy
  We completed the acquisition of Adira Energy, a company incorporated in the Province of Ontario, on August 31, 2009.  As a result, we are now the owner of all the issued and outstanding shares of Adira Energy and we ceased to be a “shell company”, as defined in Rule 12b-2 of the Exchange Act.  The acquisition was completed pursuant to a securities exchange agreement dated August 4, 2009 among Adira, Adira Energy and Dennis Bennie, Ilan Diamond and Alan Friedman, as principal shareholders, and concurrent securities exchange agreements among Adira and each of the minority shareholders of Adira Energy.  We issued an aggregate of 39,040,001 pre-Consolidation common shares to the shareholders of Adira Energy as consideration for the acquisition of Adira Energy.
  On December 2, 2010, our common shares commenced trading on the TSXV following approval of its listing in November 2010.
  Reporting Issuer Status under Canadian Securities Laws
  On February 1, 2006, the British Columbia Securities Commission granted our application to be designated as a reporting issuer under the Securities Act (British Columbia).  Accordingly, we and our insiders became subject to the continuous disclosure requirements under the securities laws of the Province of British Columbia, Canada.  We received final approval for listing on the TSXV on December 1, 2010, and on December 2, 2010, our common shares commenced trading on the TSXV.  We are also a reporting issuer under the securities legislation of the provinces of Alberta and Ontario.
  Capital Expenditures and Divestitures
  During the year ended December 31, 2014, we did not incurred any capital expenditures and we disposed of property and equipment in the net amount of approximately $14,000 which relates primarily to office furniture and computer equipment.
  Takeover Offers
  We are not aware of any indication of any public takeover offers by third parties in respect of our common shares during our last and current financial years.
  B.           Business Overview
  We are an oil and gas exploration company focused on early-stage exploration in the State of Israel.  As disclosed above, we, through our subsidiary, Adira Israel, hold the Yam Hadera Option which entitles us to acquire up to a 15% participating interest in the Yam Hadera License, located 30 kilometers offshore Israel, between Hadera and Haifa and North West of Adira’s former Yitzhak license.  The Yam Hadera Option is exercisable until 14 days prior to the signing of a rig contract for the Yam Hadera License.
  On September 22, 2014, the Petroleum Commissioner advised the operator that the Yam Hadera License had expired and would not be renewed, due to the milestones in their work program not being achieved.  On October 22, 2014, the operator sent a letter of appeal to the decision with the Minister of Energy and Water Resources of the State of Israel; however, as of this date, no reply has been received.
  16
 We also hold an option (the “Myra and Sara Option”) to acquire up to a 5% participating interest in two licenses called the Myra License and Sara License.  We obtained the Myra and Sara Option from our wholly-owned indirect subsidiary Adira Barbados prior to its dissolution on December 31, 2013. We currently ascribe no value to the Myra and Sara Licenses and as such we do not consider our options to be material to our operations.
  We formerly held working interests in two Israeli offshore petroleum licenses: the Gabriella License No. 378, and the Yitzhak License No. 380 (sometimes collectively referred to in this annual report as the “Offshore Licenses”).  We were the operator of the Gabriella License and the co-operator of the Yitzhak License.  The Gabriella License expired on September 1, 2014, and the Yitzhak License expired on October 14, 2014.
 
 Drilling Activity
  As of the date of this Form 20-F, no drilling activity is being carried out. During the past three fiscal years, we have had no productive wells.
  Effects of Government Regulations
  See Item 3D - “Risk Factors”.
  C.           Organizational Structure
  The following sets out the current organizational structure of Adira and its significant subsidiaries:
  
  Notes:

(1)Adira Energy Ltd. is a holding corporation and is the registered and beneficial owner of 100% of Adira Energy Holding Corp. Adira Energy Ltd. currently holds the Myra and Sara Option.

(2)Adira Energy Holding Corp. is a holding corporation and is the registered and beneficial owner of Adira’s foreign subsidiaries, including its only significant subsidiary, Adira Energy Israel Ltd.

(3)Adira Energy Israel Ltd. is a holding corporation created to hold oil and gas licenses. It currently holds the Yam Hadera Option.
  
 17
 
 D. Property, Plant and Equipment
  (a) Corporate Office
  Our executive offices are comprised of approximately540 square feet at 120 Adelaide Street West, Suite 800, Toronto, Ontario, Canada, M4V 3A1 for which the lease cost is CDN$2,313.90 per month.
 (b)           Special Skill and Knowledge
  Alan Friedman, our Executive Vice President – Corporate Development, and Moshe Politi, Chief Geologist of Adira Israel, have significant experience evaluating oil and gas exploration properties.  Our ability to complete exploration and drilling work, as and when required, will be dependent on our ability to contract well-trained, experienced crews to undertake such work.
  (c)           Foreign Operations
  During the fiscal years ended December 31, 2014, 2013 and 2012, all of our oil and gas exploration activities were in the State of Israel.
  (d)           Competitive Conditions
  The oil and gas industry in the State of Israel is, and will continue to be, competitive.  Most contracts are awarded on the basis of competitive bids.  We believe that our early entry into oil and gas exploration in Israel will provide us with a competitive advantage in the exploration and evaluation of our licenses.
  (e)           Dependence on Customers and Suppliers
  We are not dependent upon a concentration of customers or suppliers for revenues, or our operations.
  (f)           Environmental Protection and Policies
  We are subject to various state and district environmental laws and regulations enacted in Israel, which primarily govern the manufacture, processing, importation, transportation, handlings and disposal of certain materials used in operations, as well as limits on emissions into the air and discharges into surface and sub-surface waters.  We adhere to all such laws and regulations. We may be required to increase operating expenses or capital expenditures in order to comply with any new restrictions or regulations.
  We do not expect that environmental protection requirements will have a significant financial or operational effect on our capital expenditures, earnings or competitive position.  Environmental requirements have not had a significant effect on such matters in the fiscal year ended 2014 nor are they currently anticipated in the future.
  To date, all of our operations have been in compliance in all material respects with applicable corporate standards and environmental regulations and there were no material notices of violations, fines or convictions relating to environmental matters at any of our operations.
  We believe that we are in substantial compliance with all material current government controls and regulations for each of our licenses.
  See also Item 3D - “Risk Factors”.
  ITEM 5                      OPERATING AND FINANCIAL REVIEW AND PROSPECTS
  The following is a discussion and analysis of our activities, consolidated results of operations and financial condition as of and for the year ended December 31, 2014  It should be read in conjunction with our audited consolidated financial statements and related notes for the year ended December 31, 2014.  Our financial statements have been prepared in accordance with IFRS as issued by the IASB.
  18
 A.           Operating Results
  Results of Operations
  Consolidated results of operations for the year ended December 31, 2014 compared to the year ended December 31, 2013.
  Revenues and Other Income
  Year ended

December 31,2014



2013Consulting

$
-


$
7Operator fees


-



5Other Income


-



5$
-


$
17
  We did not earn any Revenues or Income in 2014
  Consulting fees relate to consulting services in respect of the Offshore Licenses and the Samuel License on a “time and materials” basis. For the year ended December 31, 2013, we earned consulting fees of $7,000 from operations prior to the time that we ceased the drilling program on Gabriella.
  Operator fees relate to fees we received as the operator on the Offshore Licenses and the Samuel License, at a fixed rate of the total exploration costs incurred by the respective unincorporated joint ventures. For the year ended December 31, 2013, we earned operator fees of $5,000.
  Expenses
  Exploration Expenses
  For the year ended December 31, 2014, exploration expenses amounted to nil as compared to $677 thousand for year ended December 31, 2013. The decrease in exploration expenses in 2014 reflects our decision to suspend operations on all of our licenses in early 2013.
  General and Administrative Expenses
  For the year ended December 31, 2014, general and administrative expenses amounted to $602,000 as compared to $2.8 million for year ended December 31, 2013. The decrease in general and administrative expenses in 2014 resulted primarily from the decrease of our exploration activities since the suspension of operations on all of our licenses. We have taken active steps to reduce all general and administrative expenses, including salaries, rent and other office expenses.
  Gain on settlement of accounts payable and others payables
 
 For the year ended December 31, 2014 the Adira Israel recorded a gain on settlement of $1.4 million arising from settlement agreements reached with suppliers which were lower than the obligations recorded as of December 31, 2013.
 
 19
 Impairment Charge
  For the year ended December 31, 2014, the impairment charge amounted to nil as compared to $5.2 million for the year ended December 31, 2013. During 2014 there was no exploration activity, and therefore no impairment charge.  The impairment in 2013 relates primarily to costs that had been capitalized to exploration and evaluation assets prior to the suspension of operations on the Gabriella License, and which have subsequently been written–off, and our decision to write off expenses on the Yitzhak License due to then low probability of realization of the asset from either the successful development or sale of the Yitzhak License in the near future.
  Financing Income/Expense and Loss on Foreign Exchange
 For the year ended December 31, 2014, financing income amounted to nil as compared to $3 million for the year ended December 31, 2013, gain on foreign exchange of $37,000 for the year ended December 31, 2014 as compared to $30,000 for the year ended December 31, 2013.
 Financing Income results from the warrants issued in the August Offering (as defined below) that are denominated in Canadian dollars, while our functional currency is US dollars; therefore the fair value of the warrants are classified as a financial liability which is adjusted to reflect fair value at the end of each period.  The changes in fair value are included in financing income/expenses. For the year ended December 31, 2014, the amount is income of nil as compared to $3.0 million for the year ended December 31, 2013.
 Net Profit
  We reported a net profit and comprehensive profit for the year ended December 31, 2014 of $735,000 as compared to a net loss and comprehensive loss of $5.6 million for year ended December 31, 2013. The primary reason for profit is as a result of our ability to significantly reduce general and administration expenses, and to obtain significant discounts from settlement agreements reached with suppliers which were lower than the obligations recorded as of December 31, 2013.
  Consolidated results of operations for the year ended December 31, 2013 compared to the year ended December 31, 2012.
  Revenues and Other Income
  Year ended

December 31,2013


2012U.S. dollars in thousandsConsulting

$
7


$
455Operator fees


5



544Income from farm-out


-



890Other Income


5



-$
17


$
1,889
  Consulting fees relates to consulting services in respect of the Offshore Licenses and the Samuel License on a “time and materials” basis. For the year ended December 31, 2013, we earned consulting fees of $7,000, as compared to $455,000 for the year ended December 31, 2012.  In early 2013 we ceased the planned drilling operations on the Gabriella License, and there were minimal activities on the Yitzhak License and Samuel License as compared to 2012.
  20
 Operator fees relate to fees we received as the operator on the Offshore Licenses and the Samuel License, at a fixed rate of the total exploration costs incurred by the respective unincorporated joint ventures. For the year ended December 31, 2013, we earned operator fees of $5,000, as compared to $554,000 for the year ended December 31, 2012.  The decrease during the period is primarily due to the suspension of operations on the Gabriella License in February 2013, and as explained before, since Adira Israel did not pay the Settlement Costs, Adira Israel relinquished its management fee and operator fee.  There was also a significant decrease in activities on the Yitzhak License and Samuel License as compared to 2012.
  Expenses
  Exploration Expenses
  For the year ended December 31, 2013, exploration expenses amounted to $677,000 as compared to $1.0 million for year ended December 31, 2012. The decrease in exploration expenses in 2013 is due to the reduced operations on the Offshore Licenses and the Samuel License compared to 2012.
  General and Administrative Expenses
  For the year ended December 31, 2013, general and administrative expenses amounted to $2.8 million as compared to $5.3 million for year ended December 31, 2012. The decrease in general and administrative expenses resulted primarily from the decrease of our exploration activities since we suspended operations on the Gabriella License and includes a reduction in the number of people that we employed, a reduction in share based compensation, a reduction in professional fees, and a reduction in rental and other related expenses.
  Impairment Charge
  For the year ended December 31, 2013, the impairment charge amounted to $5.2 million as compared to $7.8 million for the year ended December 31, 2012. The impairment in 2013 relates primarily to costs that had been capitalized to exploration and evaluation assets prior to the suspension of operations on the Gabriella License, and which have subsequently been written–off, and our decision to write off expenses on the Yitzhak License due to the low probability of realization of the asset from either the successful development or sale of the Yitzhak License in the near future.
  Financing Income/Expense
  For the year ended December 31, 2013, financing income amounted to $3 million as compared to $2.5 million for the year ended December 31, 2012, and financing expenses of $30,000 for the year ended December 31, 2013 as compared to $745,000 for the year ended December 31, 2012.
  Financing Income results from the warrants issued in the August Offering (as defined below) that are denominated in Canadian dollars, while our functional currency is US dollars; therefore the fair value of the warrants are classified as a financial liability which is remeasured to fair value at the end of each period.  The changes in fair value are included in financing income/expenses. For the year ended December 31, 2013, the amount is income of $3.0 million (2012 - $2.5 million).
  The primary reason for the decrease in financing expenses is the inclusion of offering expenses in the amount of $726,000 in financing expenses in 2012.  This amount represents offering costs incurred in the prospectus financing that closed in August 2012 (the “August Offering”), relating to the portion of the offering that was classified as financial liability.
  Net Loss
  We reported a net loss and comprehensive loss for the year ended December 31, 2013 of $5.6 million as compared to a net loss and comprehensive loss of $10.6 million for year ended December 31, 2012. The primary reason for decrease in the loss in 2012 is as a result of our decreased operations in 2013.
  21
 Inflation
  During the years ended December 31, 2014, 2013 and 2012, inflation has not had a material impact on our operations.
  Foreign Exchange Risk
  We are exposed to financial risk related to the fluctuation of foreign exchange rates. We operate in Israel, most of our monetary assets are held in U.S. dollars and most of our expenditures are made in U.S. dollars. However, we also have expenditures in NIS and Canadian dollars. We have not hedged our exposure to currency fluctuations.
  Government Regulation
  The Offshore Licenses have been granted to us by the State of Israel under the Israeli Petroleum Law, and our evaluation and exploration activities in the areas covered by the Offshore Licenses must be undertaken in compliance with work plans approved by the Commissioner.
  B.           Liquidity and Capital Resources
  Liquidity
  Liquidity is a measure of a company’s ability to meet potential cash requirements. We have historically met our capital requirements through the issuance of common shares.
 
 We have an accumulated deficit of $33.9 million as of December 31, 2014, and had negative cash flows from operations of $380,000 for the year ended December 31, 2013 ($2 million for the year ended December 31, 2013). Our ability to continue as a going concern depends upon the discovery of economically recoverable reserves, our ability to obtain financing to complete development, and upon future profitable operations from the properties or proceeds from their disposition. We are an exploration stage company and have not earned any revenues from its oil and gas properties to date.
 In 2013, as a result of challenging markets and difficulty in raising funds to drill multi well program, we significantly reduced our activity and returned the Samuel license to the Ministry, ceased operation in Gabriella due lack of funding from the partners of the license, and there was no exploration activity in the Yitzhak License. In 2014 both the Gabriella and Yitzhak licenses expired.
  There can be no assurance that we will be able to continue to raise funds in which case we may be unable to meet its obligations.  We are considering various alternatives with respect to raising additional capital to remedy any future shortfall in capital, but to date has made no specific plans or arrangements. Because of the early stage of our operations and our absence of any material oil and natural gas reserves, there can be no assurance this capital will be available and if it is not, we may be forced to substantially curtail or cease exploration, appraisal and development expenditures.
  Year ended December 31, 2014 compared to year ended December 31, 2013
  During the year ended December 31, 2014, our overall position of cash and cash equivalents decreased by $283 thousand. This decrease in cash can be attributed to the following activities:
 
 Our net cash used in operating activities during the year ended December 31, 2014 was $380 thousand as compared to $2.0 million for the year ended December 31, 2013. This decrease is due to the significantly reduced activities during 2014 as compared to 2013.
 Cash generated from investing activities during the year ended December 31, 2014 was $37,000 as compared to cash used in investing activities of $234,000 during the year ended December 31, 2013. The generation of cash from investment activities in 2014 relates to the release of restricted deposits and in 2013 to the sale of equipment and other assets.
  22
 Cash provided by financing activities for the year ended December 31, 2014 was $60,000 as compared to nil during the year ended December 31, 2013.The cash provided in 2014 is as a result of the completion of a private placement of shares.
  There are no legal restrictions on transferring funds between Canada and Israel.
  Year ended December 31, 2013 compared to year ended December 31, 2012
  During the year ended December 31, 2013, our overall position of cash and cash equivalents decreased by $1.8 million. This decrease in cash can be attributed to the following activities:
  Our net cash used in operating activities during the year ended December 31, 2013 was $2.0 million as compared to $4.0 million for the year ended December 31, 2012. This decrease is due to the fact that most of our exploration activities are capitalized to Exploration and Evaluation Assets and are therefore included in investment activities.
  Cash generated from investing activities during the year ended December 31, 2013 was $234,000 as compared to cash used in investing activities of $12.0 million during the year ended December 31, 2012. The generation of cash from investment activities in 2013 relates primarily from the sales of property and equipment and the decrease in restricted cash, offset to some extent by the capitalization of drilling costs in respect of the Offshore Licences and the Samuel License.
  Cash provided by financing activities for the year ended December 31, 2013 was Nil as compared to $10.4 million during the year ended December 31, 2012.The cash provided in 2012 is primarily as a result of the completion of a public offering of shares and warrants for the net proceeds of $9.8 million.
  Year ended December 31, 2012 compared to year ended December 31, 2011
  During the year ended December 31, 2012, our overall position of cash and cash equivalents decreased by $5,700,000. This decrease in cash can be attributed to the following activities:
  Our net cash used in operating activities during the year ended December 31, 2012 was $3,980,000 as compared to $6,414,000 for the year ended December 31, 2011. This decrease is due to the fact that most of our exploration activities were capitalized to Exploration and Evaluation Assets and were therefore included in investment activities.
  Cash used in investing activities during the year ended December 31, 2012 was $12,003,000 as compared to cash used in investing activities of $657,000 during the year ended December 31, 2011. The investment in 2012 relates primarily to the capitalization of drilling costs in respect of the Offshore Licences and the Samuel License.
  Cash provided by financing activities for the year ended December 31, 2012 was $10,351,000 as compared to $6,617,000 during the year ended December 31, 2011.The cash provided in 2012 was primarily a result of the completion of a public offering of shares and warrants for the net proceeds of $9,801,000. Cash provided in 2011 was a result of a private placement for net proceeds of $6,152,000, and the exercise of warrants and employee stock options during that period.
  Capital Resources
 
 At December 31, 2014, our cash and cash equivalents were $334,000 (December 31, 2013 - $617,000). The majority of this balance is being held in US Dollars. Our working capital at December 31, 2014 was negative $184,000 as compared to negative working capital of $638,000 at December 31, 2013. We increased our working capital by negotiating discounts on amounts owed to suppliers at December 31, 2013.
 23
 Commitments
  We have no commitments to the Ministry of Energy and Water Resources of the State of Israel or any other government authority, and no outstanding contractual commitments, in respect of our oil and gas options described in this annual report.
  Critical Accounting Policies and Estimates
  Ourresultsof operation and financial condition are based on our consolidated financial statements, which are presented in accordance with IFRS. Certain accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at that time. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financialstatementswill be affected. The significant accounting policies and estimates that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:
  ·
Exploration and evaluation assets;
  ·
Share-based payment transactions;
  ·
Joint oil and gas ventures;
  ·
Farm out arrangements in the exploration and evaluation phase;
  ·
Impairment of financial assets; and
  ·
Revenue recognition.
  Exploration and evaluation assets
 
 Pre-license costs
 
 Pre-license costs are expensed in the period in which they are incurred.
 
 24
 Exploration and evaluation costs
  Oil and natural gas exploration and development expenditure is accounted for using the successful efforts method of accounting.
  During the geological and geophysical exploration phase, costs are charged against income as incurred. Costs directly associated with an exploration well in its drilling phase, for which it has not yet been determined whether there are proved reserves or it is not commercially viable, are capitalized as exploration and evaluation intangible assets until the drilling of the well is complete and the results have been evaluated. These costs include employee remuneration, materials and fuel used, rig costs and payments made to contractors. If no reserves are found, the exploration asset is tested for impairment. If extractable hydrocarbons are found and, subject to further appraisal activity (e.g., by drilling further wells), are likely to be developed commercially, the costs continue to be carried as an intangible assets while sufficient and continued progress is made in assessing the commerciality of the hydrocarbons. All such costs are subject to technical, commercial and management review as well as review for impairment at least once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer the case, the costs are written off. When proved reserves of oil are determined and development sanctioned, the relevant expenditure is transferred to oil and gas properties after impairment is assessed and any resulting impairment loss is recognized.
  Share-based payment transactions
  Our employees and other service providers are entitled to remuneration in the form of equity-settled share-based payment transactions.
  The cost of equity-settled transactions with employees is measured at the fair value of the equity instruments granted at grant date. The fair value is determined using an appropriate pricing model. As for other service providers, the cost of the transactions is measured at the fair value of the goods or services received as consideration for equity instruments. In cases where the fair value of the goods or services received as consideration of equity instruments cannot be measured, they are measured by reference to the fair value of the equity instruments granted.
  The cost of equity-settled transactions is recognized in profit or loss, together with a corresponding increase in equity, during the period which the performance and service conditions are to be satisfied, ending on the date on which the relevant employees become fully entitled to the award (the “vesting period”). The cumulative expense recognized for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and our best estimate of the number of equity instruments that will ultimately vest. The expense or income recognized in profit or loss represents the movement in the cumulative expense recognized at the end of the reporting period. No expense is recognized for awards that do not ultimately vest.
  If we modify the conditions on which equity-instruments were granted, an additional expense is recognized for any modification that increases the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee/other service provider at the modification date. If a grant of an equity instrument is cancelled, it is accounted for as if it had vested on the cancellation date, and any expense not yet recognized for the grant is recognized immediately. However, if a new grant replaces the cancelled grant and is identified as a replacement grant on the grant date, the cancelled and new grants are accounted for as a modification of the original grant, as described above.
  Unincorporated joint oil and gas ventures
 
 The Company conducts petroleum and natural gas exploration activities jointly with other partners who each have direct ownership in the assets and each are directly obligated for the liabilities of the ventures. Consequently, these consolidated financial statements reflect only the Company's proportionate interest in such activities.
 25
 Farm-out arrangements in the exploration and evaluation phase
 
 A farm-out is the transfer of part of an oil and gas interest in consideration for an agreement by the transferee ("farmee") to meet, absolutely, certain expenditures which would otherwise have to be undertaken by the owner ("farmor"). Farm-out transactions generally occur in the exploration or development phase and are characterized by the transferor (i.e. farmor) giving up future economic benefits, in the form of reserves, in exchange for a reduction in future funding obligations.
 
 Accordingly, the farmee recognizes its expenditure under the arrangement in respect of its interest and that retained by the farmor, as and when the costs are incurred.
 
 The Company (farmor) accounts for the farm-out arrangement as follows:
  ·
The farmor does not record any expenditure made by the farmee on its behalf;
  ·
The farmor does not recognize a gain or loss on the farm-out arrangement, but rather redesignates any costs previously capitalized in relation to the whole interest as relating to the partial interest retained; and
  ·
Any cash consideration received is credited against costs previously capitalized in relation to the whole interest with any excess accounted for by the farmor as a gain on disposal. As of December 31, 2014, the Company had no outstanding farm-out arrangements.
 Impairment of financial assets
  At the end of each reporting period, we assess whether there is objective evidence of impairment of a financial asset or group of financial assets carried at amortized cost.
  Objective evidence of impairment of debt instruments and receivables exists as a result of one or more events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows. Evidence of impairment may include indications that the debtor is experiencing financial difficulties, including liquidity difficulty and default in interest or principal payments. The amount of the loss recorded in profit or loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred) discounted at the financial asset's original effective interest rate (the effective interest rate computed at initial recognition). If the financial asset has a variable interest rate, the discount rate is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account (see allowance for doubtful accounts above). In a subsequent period, the amount of the impairment loss is reversed if the recovery of the asset can be related objectively to an event occurring after the impairment was recognized. The amount of the reversal, up to the amount of any previous impairment, is recorded in profit or loss.
  Revenue recognition
 
 Revenues are recognized in the statement of comprehensive loss when the revenues can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
 
 The Company's revenues are derived from:
 Operator fees - the Company acted as the operator on the Offshore Licenses and was entitled to operator fees at a fixed rate of 7.5% of the total exploration costs incurred by the respective unincorporated joint venture’s (“UJV's”) or at a rate ranging from 1.2%-4.8% of the total exploration costs incurred by the respective UJV's depending on the annual expenditures in the UJV. Revenues from operator fees were recognized in accordance with the terms of the Joint Operating Agreements, as exploration costs are incurred in the UJV's.
 
 Consulting fees - The Company provided consulting services in respect of the Offshore Licenses on a "time and materials" basis. Consulting fees were recognized as revenues as the services were rendered to the respective UJV's.
 26
 The Gabreilla License expired on September 1, 2014, and the Yitzhak License expired on October 14, 2014.
  C.           Research and Development, Patents and Licences
  Not applicable.
  D.           Trend Information
  We are not aware of any trends that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
  E.           Off-Balance Sheet Arrangements
  Except for the Yam Hadera Option and the Myra and Sara Option, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
  F.           Tabular Disclosure of Contractual Obligations
  The following sets forth our contractual obligations as of December 31, 2014:
  Payments due by period (U.S. dollars in thousands)Contractual Obligations
Total
Less than 1 year
1-3 years
3-5 years
More than 5 yearsOperating Lease Obligations
26
26
0
0
0Total
26
26
0
0
0
  G.           Safe Harbor
  Not applicable.
  ITEM 6                                DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
  A.           Directors and Senior Management
  The size of Adira’s Board of Directors (the “Board”) is currently set at four.  All of Adira’s directors are elected annually by the shareholders and hold office until the next annual general meeting or until their successors are duly elected and qualified, unless their office is earlier vacated in accordance with the CBCA and Adira’s articles of incorporation.
  The following table sets forth information relating to the directors and senior management of Adira as at the date of this Form 20-F:
  Name(1)
PositionDennis Bennie(2)(3)
Director and ChairmanColin Kinley
DirectorAlan Friedman(2)
Director and Executive Vice-President, Corporate DevelopmentAlan Rootenberg(2)(3)
DirectorGadi Levin
Chief Financial Officer

Secretary

Acting Principal Executive Officer from February 24 to February 27, 2012Notes:

(1)Neither age nor date of birth of directors or senior managers is required to be reported in our home country (Canada) nor otherwise publicly disclosed.

(2)Member of Audit Committee.

(3)“Independent” for purposes of National Instrument 52-110– Audit Committees (“NI 52-110”).
  27
 Directors and Senior Management of the Subsidiaries
  The following table sets out the directors and senior management of Adira’s significant subsidiaries as of the date of this Form 20-F, provides the person’s name, location of residence, position(s) held with the entity, principal occupation during the last five years and if a director, the date on which the person became a director.  None of the directors and senior management listed below beneficially own, control or direct, directly or indirectly, any common shares of any subsidiary listed below.
  Adira Energy Holding Corp. (Ontario)
  Name and Residence
Position
Date First Elected/

appointed
Principal Occupation During Last 5 YearsGadi Levin

Lev Hasharon, Israel
Chief Financial Officer
January 11, 2011
VP and Chief Financial Officer for two Israeli investment houses in the fields of private equity, hedge funds and real estate.Alan Friedman

Toronto, Canada
President, Secretary and Director
April 4, 2008
Founder, President and Chief Executive Officer of Rivonia Capital Inc., South African lawyerDennis Bennie

Toronto, Canada
Director
April 4, 2008
Founder, XDL Venture Capital Fund and XDL Capital Invest
 
 Adira Energy Israel Ltd. (Israel)
 Name and Residence
Position
Date First Elected
Principal Occupation During Last 5 YearsGadi Levin

Lev Hasharon, Israel
Chief Executive Officer and Chief Financial Officer
January 11, 2011
VP and Chief Financial Officer for two Israeli investment houses in the fields of private equity, hedge funds and real estate.
  28
 The following is biographical information on our directors and offers who are acting in the capacity of director or officer as of the date hereof:
  Mr. Dennis Bennie. Mr. Bennie became Chairman and a director of Adira on August 31, 2009. Prior to that, Mr. Bennie was a founding member of Adira Holding Co., now a wholly-owned subsidiary of Adira, and its Chairman since inception in April 2009. Over the past 25 years, Mr. Bennie has founded and managed several successful companies. In 1996, he founded the XDL Venture Capital Fund. One of its most noteworthy investments was a 1997 start-up, Delano Technology Corporation (NASD:DTEC). XDL Intervest, a $150 million fund was started in 1999 and is now fully invested. From 1988 to 1996, Mr. Bennie was Chairman and Chief Executive Officer of Delrina Corporation, which was listed on both the Toronto Stock Exchange and NASDAQ. Mr. Bennie serves on several boards and also regularly serves on various charitable boards.
  Mr. Colin Kinley. Mr. Kinley became a director of Adira on August 31, 2009 and was a Senior Advisor from August 23, 2010 to December 15, 2011. He also served as President and Chief Operating Officer of Adira from July 22, 2010 to June 27, 2011.  Mr. Kinley is Chief Executive Officer of Kinley Exploration LLC, a specialized exploration company providing integrated program exploration and development management for both new and established oil and gas plays. Mr. Kinley has over 30 years of international experience in the exploration of frontier resource plays, 26 years as a senior executive for Layne Christensen and its predecessor companies. During his tenure at Layne Christensen he had executive oversight of multiple service companies and exploration and production operations, both domestically and internationally.During the past 7 years, Mr. Kinley and his team have developed an E&P advisory firm consulting on the development of frontier oil and gas plays from concept development through to exploration. He is experienced and practiced in both public and private company disciplines.
  Mr. Alan Friedman. Mr. Friedman became Executive Vice-President and a director of Adira on August 31, 2009. Prior to joining Adira, Mr. Friedman was a founding member of Adira Holding Co. and had been its President since its inception in April 2009. Mr. Friedman is a South African qualified attorney and has played an integral role in the acquisition of various mining and oil and gas assets, financings and go-public transactions for many resource companies over the past 13 years. Mr. Friedman is also the co-founder and Director of Eco (Atlantic) Oil & Gas Ltd., a TSXV listed oil and gas exploration company, developing various oil assets offshore and onshore Namibia. He was also a director and co‐founder of Auryx Gold Corp., a TSX listed Namibian gold exploration company having been sold to B2 Gold for more than $150 million. Mr. Friedman is the President and Chief Executive Officer of Rivonia Capital Inc. and a director of the Canada-South Africa Chamber of Business.
  Mr. Alan Rootenberg. Mr. Rootenberg is a chartered accountant with experience in the oil and gas, mineral exploration and technology industries. He has served as a senior executive for number of publicly traded companies. Alan has also served as President and Chief Executive Officer of a TSXV listed technology company.  Alan has a Bachelor of Commerce degree from the University of the Witwatersrand in Johannesburg, South Africa and holds a CPA designation.
  Mr. Gadi Levin. Mr. Levin became Chief Financial Officer of Adira’s subsidiaries in July 2010, Secretary of Adira in August 2010, and was appointed as Adira’s Chief Financial Officer in January 2011. He served as the Acting Principal Executive Officer of Adira during the interim period from the effective date of the termination of February 24, 2012, to February 27, 2012. Mr. Levin previously served as the Vice President of Finance and Chief Financial Officer for two Israeli investment houses in the fields of private equity, hedge funds and real estate (July 2008 to December 2009 and January 2010 to June 2010, respectively). For the five years prior to that he worked as a financial consultant. Mr. Levin began his career at the accounting firm, Arthur Andersen, where he worked in the Cape Town, London and Tel Aviv offices for nine years. He has a Bachelor of Commerce degree in Accounting and Information Systems from the University of the Cape Town, South Africa, and a post graduate diploma in Accounting from the University of South Africa. He received his Chartered Accountant designation in South Africa and has an MBA from Bar Ilan University in Israel.
  Alan Friedman's wife is the niece of Dennis Bennie. Other than that relationship, no director or any member of senior management has any family relationships with any other director or manager.
  Cease trade orders, bankruptcies, penalties or sanctions
  For the purposes of this section, “order” means a cease trade order; an order similar to a cease trade order; or an order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days.
  To the best of our knowledge, other than as disclosed below, no director or executive officer of Adira is, as at the date hereof, or has been, within the 10 years before the date hereof, a director, chief executive officer or chief financial officer of any corporation (including Adira ) that:
  (a)
was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or
  (b)
was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer., other than in the case of Alan Rootenberg wherein April 2008, he resigned as interim Chief Financial Officer of Talware Networx Inc., a TSXV listed company. 13 months later, in May 2009, the common shares of Talware Networx Inc. were the subject of a cease trade order and the company was delisted from the TSXV.
 29
 To the best of our knowledge, no director or executive officer of Adira or a shareholder holding a sufficient number of securities of Adira to affect materially the control of Adira:
  (a)
is, as at the date hereof, or has been within the 10 years before the date hereof, a director or executive officer of any corporation (including Adira) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
  (b)
as, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any  proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or  trustee appointed to hold the assets of the director, executive officer or shareholder.
  To the best of our knowledge, no director or executive officer of Adira, or a shareholder holding a sufficient number of Adira’s securities to affect materially the control Adira, has been subject to:
  (a)
any penalties or sanctions imposed by a court relating to securities legislation or by a securities  regulatory authority or has entered into a settlement agreement with a securities regulatory  authority; or
  (b)
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.
  Conflicts of Interest
  Some of our officers and directors are directors or officers of other oil and gas exploration companies. Consequently, potential conflicts of interest may arise in the event that these companies compete in respect of the sale or option of oil and gas properties in which we are or may be interested.
  Our directors and officers are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest and we will rely upon such laws in respect of any directors and officers conflicts of interest or in respect of any breaches of duty by any of its directors or officers. All such conflicts will be disclosed by such directors or officers in accordance with the CBCA and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.
  Promoters
  Alan Friedman, Ilan Diamond (formerly the Chief Executive Officer and a director of the Company,) and Dennis Bennie took the initiative in organizing the Company and may be considered to have been promoters of the Company. See Item 6E - Share Ownership for details of the shareholdings of such individuals.
  B.           Compensation
 
 During the year ended December 31, 2014, we paid aggregate remuneration to our directors and officers as a group who served in the capacity of director or executive officer during such year of approximately $272,000 of which $212,000 relates to salaries to executive officers and $60,000 relates to share based compensation to executive officer and directors.
  30
   Executive Compensation
  Compensation Discussion and Analysis
  In assessing the compensation of our Company’s executive officers, we do not have in place any formal objectives, criteria or analysis; instead, we rely mainly on Board discussion. Currently, any material commitments, inclusive of remuneration, are required to be pre-approved by the Board.
  Our executive compensation program has three principal components: base salary, incentive bonus plan and stock options. Base salaries for all our employees are established for each position through comparative salary surveys of similar type and size companies. Both individual and corporate performances are also taken into account. Incentive bonuses, in the form of cash payments, are designed to add a variable component of compensation based on corporate and individual performances for executive officers and employees. No bonuses were paid to executive officers or employees during the most recently completed financial year.
  We have no other forms of compensation, although payments may be made from time to time to individuals or companies they control for the provision of consulting services. Such consulting services are paid for at competitive industry rates for work of a similar nature by reputable arm’s length services providers.
  We have no compensatory plan, contract or arrangement where an executive officer is entitled to receive more than $100,000 to compensate such executive officers in the event of resignation, retirement or other termination, a change of control of Adira or a change in responsibilities following a change in control, other than as described in this Form 20-F.
  Summary Compensation Table
  The following table provides a summary of compensation that we paid to our senior management during the fiscal year then ended December 31, 2014 (in thousands of US Dollars):
 31
  Names and Principal Position
Salary

($)
Share-Based Awards

($)
Option-Based Awards

($)
Non-Equity Incentive Plan Compensation

($)
Pension Value

($)
All Other Compensation

($)
Total Compensation

($)Annual incentive plans
Long-term incentive plansGadi Levin, Chief Financial Officer
109
13
-
-
-
-
-
122Alan Friedman, Executive Vice President, Corporate Development
103
9
-
-
-
-
-
112
  Option Based Awards
  Stock options are granted to provide an incentive to our directors, officers, employees and consultants to achieve our longer-term objectives; to give suitable recognition to the ability and industry of such persons who contribute materially to our success; and to attract and retain persons of experience and ability, by providing them with the opportunity to acquire an increased proprietary interest in Adira. We awards stock options to our executive officers based upon the recommendation of the Board, which recommendation is based upon the Compensation Committee’s review of a proposal from the President and CEO. Previous grants of incentive stock options are taken into account when considering new grants.
  We has a stock option plan for the granting of incentive stock options to the officers, employees, consultants and directors. See Item 6E - “Share Ownership – Equity Compensation Plans” for more information.
  Director Compensation
  We have no arrangements, standard or otherwise, pursuant to which Directors are compensated by for their services in their capacity as Directors, or for committee participation, involvement in special assignments or for services as consultant or expert during the most recently completed financial year or subsequently, up to and including the date of this Form 20-F, except for the consulting fees described in Item 7.B – “Related Party Transactions” of this Form 20-F.
  Long-Term Incentive Plan Awards
  We did not make any long-term incentive plan awards during the years ended December 31, 2014 and 2013.
  Pension, Retirement or Similar Benefits
  We have amounts set aside to provide for pension, retirement or similar benefits.
  32
 Employment Agreements
  We have entered into employment agreements with certain of our officers. The agreements contain, among other things, confidentiality, non-solicitation and non-competition covenants that will apply during the term of each officer’s employment and for a specific period of time after termination of their employment.
  As of the date of this Annual Report, we have employment agreements with the following officers of Adira:
  Mr. Dennis Bennie – Co-Chairman
  Effective August 31, 2009, Adira entered into an agreement with Mr. Bennie pursuant to which Mr. Bennie agreed to provide his services to us in the capacity of Co-Chairman of the Board for a term to continue until terminated (the “Bennie Agreement”). Under the Bennie Agreement, Mr. Bennie is paid an annual salary of CDN$60,000.
  The Bennie Agreement contains certain representations, warranties and covenants, including, among other things, standard confidentiality, non-competition and non-solicitation covenants. Pursuant to the Bennie Agreement, each party thereto is entitled to terminate the Bennie Agreement at any time by providing sixty days’ written notice. In addition, Adira is entitled to terminate the Bennie Agreement immediately without notice and/or payment in lieu thereof for cause (as defined in the Bennie Agreement).
  Furthermore, if the Bennie Agreement is terminated by Adira without cause (as defined in the Bennie Agreement), by Mr. Bennie for good reason (as defined in the Bennie Agreement) or due to a change of control in Adira (as defined in the Bennie Agreement), Mr. Bennie is entitled to a payment equal to twenty four months’ salary and 100% of the stock options granted to Mr. Bennie will vest immediately.
  Notwithstanding the forgoing, effective March 1, 2013, 50% of Mr. Bennie’s salary shall accrue and become payable upon the happening of certain prescribed events, including a change of control transaction or a substantial financing.
  Mr. Alan Friedman – Executive Vice President, Corporate Development
  Effective May 1, 2011, Adira entered into a consulting agreement,as amended and restated on December 19, 2012 and as amended further on March 22, 2013, with Rivonia Capital Inc. (the “Friedman Service Company”), a company wholly owned by Mr. Friedman, pursuant to which Mr. Friedman agreed to provide his services to us in the capacity of Executive Vice President of Corporate Development for a term to continue until terminated (the “Friedman Agreement”). Mr. Friedman reports to Adira’s CEO. Under the Friedman Agreement, Mr. Friedman is paid a monthly salary of CDN$12,000 (excluding HST).
  The Friedman Agreement contains certain representations, warranties and covenants, including, among other things, standard confidentiality, non-competition and non-solicitation covenants. Pursuant to the Friedman Agreement, each party thereto is entitled to terminate the Friedman Agreement at any time by providing sixty days’ written notice. In addition, Adira is entitled to terminate the Friedman Agreement immediately without notice and/or payment in lieu thereof for cause (as defined in the Friedman Agreement).
  Furthermore, if the Friedman Agreement is terminated by Adira without cause (as defined in the Friedman Agreement), by the Friedman Service Company or Mr. Friedman for good reason (as defined in the Friedman Agreement ) or due to a change of control in Adira (as defined in the Friedman Agreement), the Friedman Service Company is entitled to a payment equal to twenty four months’ salary and 100% of the stock options granted to Mr. Friedman will vest immediately.
  Notwithstanding the forgoing, 50% of Mr. Friedman’s salary shall accrue and become payable on the happening of certain prescribed events, including but not limited to a change of control transaction or a substantial financing.
  33
 Effective August 2014, Mr. Friedman’s salary was reduced to CDN$5,500, of which CDN$3,000 is paid monthly, and CDN$2,500 shall accrue and become payable on the happening of certain prescribed events, including but not limited to a change of control transaction or a substantial financing.
  Mr. Gadi Levin – Chief Financial Officer
 
 Effective July 21, 2010, Adira Israel entered into an employment agreement with Mr. Levin,as amended on September 13, 2012, and March 13, 2013,  pursuant to which Mr. Levin agreed to provide his services to us in the capacity of Chief Financial Officer for a term to continue until terminated (the “ Levin Agreement”). Mr. Levin reports to the Adira’s CEO. Under the Levin Agreement, Mr. Levin is paid a monthly salary of NIS 51,000 ($13,123,based on an exchange rate of one U.S. dollar into New Israeli Shekel of $1.00 per NIS 3.88, on April 29, 2015, as published by International Monetary Fund) and is entitled to, among other things, a vehicle allowance (through to September 2014)
  The Levin Employment Agreement contains certain representations, warranties and covenants, including, among other things, standard confidentiality, non-competition and non-solicitation covenants. Pursuant to the Levin Agreement, each party thereto is entitled to terminate the Levin Agreement at any time by providing two months’ written notice. In addition, Adira is entitled to terminate the Levin Agreement immediately without notice and/or payment in lieu thereof for cause (as defined in the Levin Agreement).
  If the Levin Employment Agreement is terminated due to a change of control (as defined in the Levin Employment Agreement), by Adira Israel without cause (as defined in the Levin Agreement) or by Mr. Levin for good reason (as defined in the Levin Agreements), Mr. Levin is entitled to a payment equal (i)  twelve months salary and 50% of the unvested stock options granted to Mr. Levin will be accelerated and be vested if the Levin Employment Agreement is terminated between 13 and 36 months of its effective date, or (ii) twenty four months salary and 100% of the unvested stock options granted to Mr. Levin will be accelerated and be vested if the Levin Employment Agreement is terminated at least 37 months of its effective date.
 
 Effective, November 1, 2013, the scope of Mr. Levin’s employment became part-time and his salary was reduced to  NIS 17,000 ($4,375, based on an exchange rate of one U.S. dollar into New Israeli Shekel of $1.00 per NIS 3.88, on April 29, 2014, as published by International Monetary Fund).
  Effective August 2014, Mr. Levin’s salary was reduced to $5,500, of which $3,000 is paid monthly, and $2,500 shall accrue and become payable on the happening of certain prescribed events, including but not limited to a change of control transaction or a substantial financing.
  C.           Board Practices
  Our Directors have served in their respective capacities since their election or appointment and will serve until our next annual general meeting or until a successor is duly elected and qualified, unless their office is earlier vacated in accordance with the CBCA and our articles of incorporation. Our officers serve at the discretion of the Board.
  The Board is responsible for, among other things, identifying suitable candidates to be recommended for election to the Board by shareholders or appointment by the Directors, subject to the limits in Adira’s articles and the CBCA. One of the objectives of the Board with respect to the nomination is to maintain the composition of the Directors in a way that provides the best mix of skills and experience to guide our long-term strategy and ongoing business operations.
  The Board conducts an annual review and assessment of the performance of the Chairman and Chief Executive Officer and our other senior executive officers.
  The Board also reviews and monitors our executive development programs and the long-range plans and personnel policies for recruiting, developing and motivating our executives. The Board has reviewed and approved the qualifications of each of the Board nominees standing for election.
  The Board’s review of the performance of our company and the Chief Executive Officer as measured against objectives established in the prior year by the Board and the CEO. The evaluation is to be used by the Board in its deliberations concerning the CEO’s annual compensation. The evaluation of performance against objectives forms part of the determination of the entire compensation of senior employees. The Board is also responsible for reviewing the compensation of the Directors on an annual basis, taking into account such matters as time commitment, responsibility and compensation provided by comparable organizations. The compensation committee will make an annual review of such matters and make a recommendation to the Board.
 34
 The Board is responsible for making an annual assessment of the overall performance of the Directors as a group and to reporting its findings to the full Board. The assessment examines the effectiveness of the Directors as a whole and specifically reviews areas that the Directors and/or management believe could be improved to ensure the continued effectiveness of the Directors in the execution of their responsibilities
  Term of Office
  All directors have a term of office expiring at our next annual general meeting, unless a director’s office is earlier vacated in accordance with our Articles or the provisions of the CBCA.  All officers serve at the discretion of the Board.
  Audit, Compensation and Disclosure Committees
  Audit Committee
  We have a standing Audit Committee that assists the directors of Adira in overseeing all material aspects of reporting, control and audit functions, except those specifically related to the responsibilities of another standing committee of the Board.  The role of the Audit Committee includes a particular focus on the qualitative aspects of financial reporting to shareholders and on our processes for the management of business/financial risk and for compliance with significant applicable legal, ethical, and regulatory requirements. The Audit Committee is responsible for, among other things, the making recommendations to our Board with respect to the appointment and remuneration of our independent accountant.  A copy of our Audit Committee Charter was filed as an exhibit to our Form 10-KSB filed for our 2003 fiscal year.
  As of the date hereof, our Audit Committee is comprised of Dennis Bennie, Alan Rootenberg and Alan Friedman.
  We have procedures for the review and pre-approval of any services performed by our auditors. The procedures require that all proposed engagements of the auditors for audit and non-audit services be submitted to the Audit Committee for approval prior to the beginning of any such services. The Audit Committee considers such requests, and, if acceptable to a majority of the Audit Committee members, pre-approves such audit and non-audit services by a resolution authorizing management to engage the auditors for such audit and non-audit services. During such deliberations, the Audit Committee assesses, among other factors, whether the services requested would be considered "prohibited services" as contemplated by the regulations of the SEC, and whether the services requested and the fees related to such services could impair the independence of the auditors.
  Pursuant to section 6.1 of NI 52-110, as adopted by the Canadian Securities Administrators (the "CSA"), Adira is exempt from the requirements of Parts 3 and 5 of NI 52-110 for the year ended December 31, 2013, by virtue of Adira being a "venture issuer" (as defined in NI 52-110).
  Part 3 of NI 52-110 prescribes certain requirements for the composition of audit committees of non-exempt companies that are reporting issuers under Canadian provincial securities legislation. Part 3 of NI 52-110 requires, among other things that an audit committee be comprised of at three directors, each of whom, is, subject to certain exceptions, independent and financially literate in accordance with the standards set forth in NI 52-110.
  Part 5 of NI 52-110 requires an annual information form that is filed by a non-exempt reporting issuer under National Instrument 51-102 – Continuous Disclosure Obligations, as adopted the CSA, to include certain disclosure about the issuer's audit committee, including, among other things: the text of the audit committee's charter; the name of each audit committee member and whether or not the member is independent and financially literate; whether a recommendation of the audit committee to nominate or compensate an external auditor was not adopted by the issuer's board of directors, and the reasons for the board's decision; a description of any policies and procedures adopted by the audit committee for the engagement of non-audit services; and disclosure of the fees billed by the issuer's external auditor in each of the last two fiscal years for audit, tax and other services.
 35
 Compensation Committee
  Adira has a Compensation Committee comprised of Dennis Bennie, Alan Rootenberg and Colin Kinley. Currently, any material commitments, inclusive of remuneration, are required to be pre-approved by the Board, following recommendation of the Compensation Committee
  Disclosure Committee
  Adira has a Disclosure Committee comprised of Dennis Bennie and Alan Friedman. The purpose of the Disclosure Committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us, and the accuracy, completeness and timeliness of our financial reports.
  D.           Employees
 
 As of December 31, 2014, we employed a total of 5 employees, out of which 2 are employed in Israel and 4 in North America. 2 employees perform management and professional functions and 3 employees provide administrative services.
  None of our employees are part of a collective bargaining unit. Management believes that its relations with its employees are good.
  E.           Share Ownership
  Shares
  The shareholdings of our officers and directors are set forth below as of the date hereof.
 
 Holder name
No. of Shares held
Percentage of holding
Percentage of holding on a fully diluted basis(1)% in capital
% in voting
% in capital
% in votingDennis Bennie(2)
886,929
7.22%
7.22%
8.21%
8.21%Alan Friedman(3)
330,273
2.69%
2.69%
2.67%
2.67%Colin Kinley(4)
3,333
0.03%
0.03%
0.41%
0.41%Gadi Levin(5)
-

0.00%
0.52%
0.52%Alan Rootenberg(6)
3,333
0.03%
0.03%
0.03%
0.03%Notes:



(1)”Fully diluted basis” means with the exercise of all warrants and options.



(2)Mr. Dennis Bennie is an interested party in Adira by virtue of his share holdings and by virtue of him serving as the chairman of the Board. Mr. Bennie indirectly holds all of the shares through companies controlled by himself and through his spouse.



(3)Mr. Alan Friedman is an interested party in Adira by virtue of his share holdings and by virtue of him serving as a director and as Adira’s chief business development officer.



(4)Mr. Colin Kinley is an interested party in Adira by virtue of his share holdings and by virtue of him serving as a director in Adira.



(5)Mr. Levin is an interested party in Adira by virtue of him serving as an officer in Adira.



(6)Mr. Rootenberg is an interested party in Adira by virtue of his share holdings and by virtue of him serving as a director in Adira.
 
 36
 Options
 The stock options, exercisable into common shares of Adira, held by our officers and directors are set forth below as of the date hereof.
  Name
Position
Allotment Date
Expiration Date
Exercise Price (US Dollar)(1)
Vesting Details
Total(2)Dennis Bennie
Chairman
Jan. 11, 2011
Jan. 10,2016
$3.46
I(4)
6,667Aug. 22, 2012
Aug. 21, 2017
$0.86
R(6)
101,333Alan Friedman
Executive Vice President,Corporate Development and Director
Jan. 11, 2011
Jan. 10, 2017
$3.46
I(4)
10,000Aug. 22, 2012
Aug. 21, 2017
$0.86
R(6)
70,667Colin Kinley
Director
Jan. 18, 2011
Jan. 17, 2017
$3.46
I(4)
53,333Mar. 18, 2011
Mar. 17, 2017
$3.10
J(5)
6,667Aug. 22, 2012
Aug. 21, 2017
$1.26
R(6)
10,000Gadi Levin
Chief Financial Officer
Jul. 22, 2010
Jul. 21, 2015
$1.70
H(3)
16,667May. 3, 2011
May. 2, 2016
$2.58
L(7)
16,667Aug. 22, 2012
Aug. 21, 2017
$0.86
R(6)
60,667Notes



(1)The exercise prices of employee stock options in 2010 were set in US Dollars and as of 2011, in Canadian Dollars.  The tables show all amounts in US Dollars.



(2)Each stock option may be exercised to purchase one of our common shares at the exercise price.



(3)Type H stock options vest 12.5% each quarter over two years with the initial amount vesting on the grant date.



(4)Type I stock options vest 12.5% every six months over four years with the initial amount vesting on the date three months after the grant date;



(5)Type J stock options vest 12.5% every six months over four years with the initial amount vested on September 18, 2011;



(6)Type L stock options vest 12.5% every six months over four years with the initial amount vested on September 3, 2011;



(7)Type R stock options vest 33.33% every twelve months over two years with the initial vesting on August 22, 2012.
  37
 Warrants
 
 Warrants, exercisable into common shares of Adira, held by our officers and directors are set forth below as of the date hereof.
 
 Name
Position
Allotment date
Expiration date
Exercise price
Total(1)Dennis Bennie
Co-Chairman of the Board
August 9, 2012
August 9, 2015
0.20
7,142,860Alan Friedman
Executive Vice President, Corporate Development and Director
August 9, 2012
August 9, 2015
0.20
1,000,000Notes:



(1)As a result of the Consolidation and the Second Consolidation, each warrant will evidence the right of the holder thereof to acquire 1/15 of a common share at the exercise price.
 
 Equity Compensation Plans
  The following table summarizes our compensation plans under which equity securities are authorized for issuance as at December 31, 2014.
  Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
Weighted-average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance under equity compensation plans(1) (excluding securities reflected in the second column)Equity compensation plans approved by securityholders
5,683,509
0.60
813,202Equity compensation plans not approved by securityholders
N/A
N/A
N/ATotal:
5,683,509
0.60
813,202Notes:



(1)The number of securities remaining available for future issuance under our 10% rolling stock option plan as at the end of our most recently completed financial year is calculated on the basis of 10% of our issued and outstanding common shares as at such date (being 10% of 12,292, 022 - 416,000 = 813,202).
  On August 31, 2009, the Board adopted a new 10% rolling stock option plan (the “Stock Option Plan”) to replace the existing plan. The Stock Option Plan was ratified by the shareholders of Adira on December 17, 2009, and has since been approved by the shareholders of Adira on an annual basis.
  The purpose of the Stock Option Plan continues to be to allow us grant options to our directors, officers, employees and consultants, as additional compensation, and as an opportunity to participate in our success.  The granting of such options is intended to align the interests of such persons with that of the shareholders.  Options will be exercisable over periods of up to ten years as determined by the Board and are required to have an exercise price no less than the fair market value of Adira’s common shares, at the time of grant.  Pursuant to the Stock Option Plan, the Board may, from time to time, authorize the issue of stock options to our directors, officers, employees and consultants or employees of companies providing management or consulting services to us.
  The maximum number of common shares which may be issued pursuant to options previously granted and those granted under the Stock Option Plan will be a maximum of 10% of the issued and outstanding common shares at the time of the grant.  In addition, the number of shares which may be reserved for issuance to any one individual may not exceed 5% of the issued shares on a yearly basis or 2% if the optionee is engaged in investor relations activities or is a consultant.  The Stock Option Plan contains no vesting requirements, but permits the Board to specify a vesting schedule in its discretion.
  On January 11, 2011, the Board adopted an annex to the Stock Option Plan applicable to optionees who are residents of the State of Israel at the date of grant or those who are deemed to be residents of the state of Israel for the payment of tax at the date of grant. The provisions specified therein form an integral part of the Stock Option Plan and is to be read as a continuation of the Stock Option Plan and only modifies options granted to Israeli optionees so that they comply with the requirements set by the Israeli law in general, and in particular with the provisions of Section 102 of the Israeli Income Tax Ordinance, as may be amended or replaced from time to time. In connection with options granted to Israeli optionees under the Stock Option Plan, the Board selected the capital gains tax track pursuant to the Israeli tax legislation which came into effect on January 1, 2003.
   38
 ITEM 7       MAJOR SHAREHOLDER AND RELATED PARTY TRANSACTIONS
  A.           Major Shareholders
  Major Shareholders
  We are a publicly-held corporation, with our shares held by residents of the United States, Canada and other countries.  To the best of our knowledge, as at December 31, 2014, no person, corporation or other entity beneficially owns, directly or indirectly, or controls more than 5% of our common shares, except as follows:
  Name
Number of Common Shares Owned(1)(2)
Percentage(3)Dennis Bennie
886,929(4)
7.22%Goodman Investment Counsel Inc.
1,055,180(5)
8.6%Notes:



(1)Under Rule 13d–3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.  Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).  In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.  In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.  As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of common shares actually outstanding on the date hereof.



(2)Each of our common shares entitles the holder thereof to one vote.



(3)Based on 12,292,022 common shares of Adira issued and outstanding as of the date of this filing.



(4)Includes shares held by spouse.



(5)Includes shares held by Goodman Investment Counsel Inc. and associated companies that are controlled by Mr. Nathan Goodman.
 
 Geographic Breakdown of Shareholders
  As of December 31, 2014, our shareholder register indicates that our common shares are held as follows:
 
 Location
Number of Shares
Percentage of Total Shares
Number of Registered Shareholders of RecordUnited States
108,095
0.88
58Canada
11,690,811
95.11
38Other
1,874,929
4.01
19Total
12,292,022
100
115
  39
 Shares registered in intermediaries were assumed to be held by residents of the same country in which the clearing house was located.
  Transfer Agent
  Our securities are recorded in registered form on the books of our transfer agent, Computershare Trust Company of Canada, located at 3rd Floor, 510 Burrard Street, Vancouver, BC V6C 3B9. However, the majority of such shares are registered in the name of intermediaries such as brokerage houses and clearing houses (on behalf of their respective brokerage clients). We do not have knowledge or access to the identities of the beneficial owners of such shares registered through intermediaries.
  Control
  To the best of our knowledge, we are not directly or indirectly owned or controlled by any other corporation, by any foreign government or by any other natural or legal person, severally or jointly.
  Insider Reports under the British Columbia Securities Act
  Since the Company is a reporting issuer under the Securities Acts of British Columbia, Alberta and Ontario, certain "insiders" of the Company (including its directors, certain executive officers, and persons who directly or indirectly beneficially own, control or direct more than 10% of its common shares) are generally required to file insider reports of changes in their ownership of Adira’s common shares five days following the trade under National Instrument 55-104 – Insider Reporting Requirements and Exemptions, as adopted by the Canadian Securities Administrators.  All insider reports must be filed electronically five days following the date of the trade at www.sedi.ca. The public is able to access these reports at www.sedi.ca.
  B.           Related Party Transactions
  None of our directors or senior officers, no associate or affiliate of the foregoing persons, and no insider has or had any material interest, direct or indirect, in any transactions, or in any proposed transaction, which in either such case has materially affected or will materially affect us or our predecessors during the year ended December 31, 2014 except as follows:
  (a)  During the year ended December 31, 2014, we incurred $233,000 in consulting fees and operating expenses to private companies which are controlled by some of our directors or officers (year ended December 31, 2013 - $386,000).
  These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
  (b)  Compensation of key management personnel:
  For the purpose of related party disclosure in accordance with IASB 24, directors, the CEO, CFO, COO and executive vice president are considered key management personnel.
 40
 Year ended

December 31,2014


2013

2012U.S. dollars in thousandsShort-term employee benefits

$
212


$
1,133


$
1,071Share based compensation


22



16



613$
234


$
1,149


$
1,684
  Benefits in respect of key management persons (including directors) who are not employed by us:
  Year ended

December 31,2014


2013

2012U.S. dollars in thousandsShare based compensation

$
38


$
32


$
298
  C.           Interests of Experts and Counsel
  Not applicable.
  ITEM 8                      FINANCIAL INFORMATION
  A.           Consolidated Statements and Other Financial Information
  Financial Statements
  The financial statements required as part of this Annual Report on Form 20-F are filed under Item 18 of this Annual Report.
  Legal Proceedings
  Adira is not involved in any legal, arbitration or governmental proceedings and, to Adira's knowledge, no material legal, arbitration or governmental proceedings involving Adira are pending or contemplated against Adira.
  Dividends
  We have not paid any dividends on our common shares since incorporation.  Our management anticipates that we will retain all future earnings and other cash resources for the future operation and development of our business.  We do not intend to declare or pay any cash dividends in the foreseeable future.  Payment of any future dividends will be at the Board’s discretion, subject to applicable law, after taking into account many factors including our operating results, financial condition and current and anticipated cash needs.
  B.           Significant Changes
  We have not experienced any significant changes since the date of the financial statements included with this Form 20-F except as disclosed in this Form 20-F.
  41
 ITEM 9                      THE OFFER AND LISTING
  Common Shares
  Our authorized capital consists of an unlimited number of common shares without par value, of which 12,292,022 common shares were issued and outstanding as of December 31, 2013, 12,052,022. All shares are initially issued in registered form.  There are no restrictions on the transferability of our common shares imposed by our constituting documents.
 The common shares entitle their holders to: (i) vote at all meetings of our shareholders except meetings at which only holders of specified classes of shares are entitled to vote, having one vote per common share, (ii) receive dividends at the discretion of the Board; and (iii) receive our remaining property on liquidation, dissolution or winding up.
  A.           Offer and Listing Details – Price History
  Trading Markets
  Our current trading symbol on the TSXV is “ADL”. We also trade on the OTCBB with the trading symbol “ADENF” and on the Frankfurt Stock Exchange with the trading symbol “0AM1”.
  As disclosed elsewhere in this annual report, we completed the Consolidation of our common shares on August 9, 2013, on the basis of one new common share for every three old common shares. The Consolidation was effective for trading purposes on August 13, 2013; for a period of approximately two weeks thereafter, our common shares traded on the OTCBB under the symbol “ADEND”.
  The following table shows the progression in the high and low closing trading prices of our common shares on the OCTBB, on a post-Consolidation basis, for the periods listed.
  High ($)
Low ($)Annual (fiscal year)2014
0.20
0.012013
1.78
0.062012
5.10
1.372011
13.47
3.322010
13.04
3.83QuarterlyFiscal 2014Fourth Quarter
0.10
0.03Third Quarter
0.19
0.02Second Quarter
0.20
0.04First Quarter
0.10
0.01Fiscal 2013Fourth Quarter
0.25
0.06Third Quarter
0.74
0.10Second Quarter
0.45
0.08First Quarter
1.78
0.07MonthlyApril 1, 2015 to April 29, 2015
0.07
0.05March 2015
0.05
0.03February 2015
0.05
0.04January 2015
0.05
0.04December 2014
0.05
0.03November 2014
0.07
0.05
  42
 The following table shows the progression in the high and low closing trading prices of our common shares on the TSXV,on post-Consolidation bases, for the periods listed.
  High ($)
Low ($)Annual (fiscal year)2014
0.20
0.032013
1.73
0.052012
5.10
1.352011
13.50
3.00QuarterlyFiscal 2014Fourth Quarter
0.11
0.05Third Quarter
0.05
0.05Second Quarter
0.20
0.05First Quarter
0.10
0.03Fiscal 2013Fourth Quarter
0.20
0.05Third Quarter
0.45
0.10Second Quarter
0.45
0.08First Quarter
1.73
0.15MonthlyApril 1, 2015 to April 29, 2015
0.07
0.05March 2015
0.08
0.04February 2015
0.06
0.05January 2015
0.09
0.05December 2014
0.06
0.05November 2014
0.09
0.06
  Escrowed Securities
  As at December 31, 2014, none of our securities were subject to escrow.
  B.           Plan of Distribution
  Not applicable.
  C.           Markets
  Our common shares are traded on the TSXV under the symbol “ADL”, in the United States on the OTC Bulletin Board under the symbol “ADENF” and on the Frankfurt Stock Exchange under the symbol “0AM1”.
  43
 D.           Selling Shareholders
  Not applicable.
  E.           Dilution
  Not applicable.
  F.           Expenses of the Issue
  Not applicable.
  ITEM 10                      ADDITIONAL INFORMATION
  A.           Share Capital
  Not applicable.
  B.           Memorandum and Articles of Incorporation
  We were incorporated on February 20, 1997 as “Trans New Zealand Oil Company” under the laws of the State of Nevada, U.S.A.  We changed our name to “AMG Oil Ltd.” on July 27, 1998.
  On November 27, 2008, we changed our jurisdiction of incorporation from Nevada to the Canadian federal jurisdiction under the Canada Business Corporation Act (the “CBCA”) through a process known as a conversion under Nevada corporate law, and known as a continuation under Canadian corporate law.  A continuance or continuation is a process by which a corporation which is not incorporated under the laws of Canada may change its jurisdiction of incorporation to Canada. Under the CBCA, if the laws of its home jurisdiction allow for it, a company may be “continued” as a Canadian corporation by filing Articles of Continuance with the Director under the CBCA. In order to give effect to the continuation, the Board adopted a plan of conversion under Chapter 92A of the Nevada Revised Statutes which was subsequently approved and adopted by our shareholders. After the completion of the continuation, we became a Canadian corporation governed by the CBCA.
  With effect from our continuation under the CBCA, our corporate constituting documents are comprised of our Articles of Continuance (“Articles”) and our By-Laws (“By-Laws”). Information regarding our Articles and By-laws is incorporated by reference from Amendment No. 3 to our registration statement on Form S-4, which was filed with the SEC on October 10, 2010.  The forms of our Articles and By-Laws were included as Appendices C and D, respectively, to the proxy statement/prospectus included in the registration statement, and the proxy statement/prospectus contained a summary, under the heading “Comparative Rights of Stockholders,” of the more significant differences between the Nevada Revised Statutes and the CBCA which resulted in various changes in the rights of our shareholders as a result of our continuance.
  We changed our name to “Adira Energy Ltd.” pursuant to Articles of Amendment dated December 17, 2009, and filed with the Director under the CBCA.  Such amendment to our Articles was certified by a Certificate of Amendment dated December 17, 2009.  The Certificate and Articles of Amendment were filed as Exhibit 1.4 to our annual report on Form 20-F for the year ended September 30, 2009, filed with the SEC on January 1, 2010.
 44
 C.           Material Contracts
 
 We were party to certain joint operating agreements and farmout agreements with respect to the Offshore Licenses. We are of the view that the Offshore Licenses, joint operating agreements and farmout agreements were  obtained or entered into in the ordinary course of our business.  The Gabreilla License expired on September 1, 2014, and the Yitzhak License expired on October 14, 2014.
  We are party to executive employment agreements with certain of our officers, which are disclosed under Item 6.B – “Directors, Senior Management and Employees- Compensation”.
  D.           Exchange Controls
  There are no governmental laws, decrees or regulations in Canada relating to restrictions on the export or import of capital, or affecting remittance of interest, dividends or other payments to non-resident holders of our common shares.
 
 Except as provided in theInvestment Canada Act (Canada), which has rules regarding certain acquisitions of shares by non-residents, there is no limitation imposed by Canadian law or by our charter or other constituent documents on the right of a non-resident to hold or vote our common shares.  The Investment Canada Act is a Canadian federal statute of broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals, governments or agencies thereof, corporations, partnerships, trusts or joint ventures, Investments by non-Canadians to acquire control over existing Canadian businesses or to establish new ones are either reviewable or notifiable under the Investment Canada Act. If an investment by a non-Canadian to acquire control over an existing Canadian business is reviewable under the Investment Canada Act, the Investment Canada Act generally prohibits implementation of the investment unless, after review, the Minister of Industry (or the Minister of Canadian Heritage and Official Languages for investments in a Canadian business engaged in any of the activities of a “cultural business”), is satisfied that the investment is likely to be of net benefit to Canada.
  E.           Taxation
  Material Canadian Federal Income Tax Consequences for United States Residents
  The following summarizes the material Canadian federal income tax considerations generally applicable to the holding and disposition of our shares by a holder (in this summary, a “U.S. Holder”) who, (a) for the purposes of the Income Tax Act(Canada) (the “Tax Act”) and at all relevant times, (i) is not resident in Canada, (ii) deals at arm’s length with, and is not affiliated with, us, (iii) holds our shares as capital property and does not use or hold, and is not deemed to use or hold, our shares in the course of carrying on, or otherwise in connection with, a business in Canada, and (b) for the purposes of the Canada-United States Income Tax Convention (1980) (the “Treaty”) and at all relevant times, is a resident solely of the United States, has never been a resident of Canada, is a “qualifying person” who is fully entitled to the benefit of the Treaty and has not held or used (and does not hold or use) our shares in connection with a permanent establishment or fixed base in Canada. This summary does not apply to traders or dealers in securities, limited liability companies, tax-exempt entities, insurers, authorized foreign bank, financial institutions (including those to which the mark-to-market provisions of the Tax Act apply), special financial institutions, or any other holder to which special circumstances may apply.
  This summary is based on the current provisions of the Tax Act, all regulations thereunder, the Treaty, all proposed amendments to the Tax Act, the regulations and the Treaty publicly announced by the Government of Canada prior to the date hereof, and our understanding of the current published administrative practices of the Canada Revenue Agency. It has been assumed that all currently proposed amendments will be enacted as proposed and that there will be no other relevant change in any governing law or administrative practice, although no assurances can be given in this respect.
  The summary does not take into account Canadian provincial, U.S. federal (which follows further below), state or other foreign income tax law or practice. The tax consequences to any particular U.S. Holder will vary according to the status of that holder as an individual, trust, corporation, partnership or other entity, the jurisdictions in which that holder is subject to taxation, and generally according to that holder’s particular circumstances. Accordingly, this summary is not, and is not to be construed as, Canadian tax advice to any particular U.S. Holder. All U.S. Holders are advised to consult with their own tax advisors regarding their particular circumstances. The discussion below is qualified accordingly.
 45
 Dividends
  Dividends paid or credited or deemed to be paid or credited to a U.S. Holder by us will be subject to Canadian withholding tax. The Tax Act requires a 25% withholding unless reduced under an applicable tax treaty. Under the Treaty, provided that a holder can demonstrate that it is a qualifying U.S. Holder, the rate of withholding tax on dividends paid to a U.S. Holder is generally limited to 15% of the gross amount of the dividend (or 5% if the U.S. Holder is a qualified company and beneficially owns at least 10% of our voting shares). We will be required to withhold the applicable withholding tax from any dividend and remit it to the Canadian government for the U.S. Holder’s account.
  Disposition
  For purposes of the following discussion, we have assumed that our shares will remain listed on the TSXV. A U.S. Holder is not subject to tax under the Tax Act in respect of a capital gain realized on the disposition of our shares in the open market unless the shares are “taxable Canadian property” to the holder thereof and the U.S. Holder is not entitled to relief under the Treaty. Our shares will be taxable Canadian property to a U.S. Holder (a) if, at any time during the 60-month period preceding the disposition: (i) the U.S. Holder, alone or together with persons with whom the U.S. Holder did not deal at arm’s length, owned 25% or more of our issued shares of any class or series, and (ii) more than 50% of the fair market value of the shares was derived, directly or indirectly, from one or any combination of real property situated in Canada, timber resource properties, Canadian resource properties, or an option in respect of, or an interest in, or for civil law a right in, any of the foregoing, or (b) in other specific circumstances, including where shares were acquired for other securities in a tax-deferred transaction for Canadian tax purposes. If our shares constitute taxable Canadian property to the holder, the holder will (unless relieved under the Treaty) be subject to Canadian income tax on any gain. The taxpayer’s capital gain or loss from a disposition of the share is the amount, if any, by which the proceeds of disposition exceed (or are exceeded by) the aggregate of the adjusted cost base of the share and reasonable expenses of disposition. One-half of a capital gain (“taxable capital gain”) from the disposition of taxable Canadian property (other than treaty protected properties) is included in computing the income of a U.S. Holder and one-half of a capital loss (“allowable capital loss”) is deductible from taxable capital gains from dispositions of taxable Canadian property realized in the same year. Unused allowable capital losses from previous taxation years generally may be carried back three taxation years or forward indefinitely and applied to reduce net taxable capital gains realized in those years by a U.S. Holder from the disposition of a taxable Canadian property.
  A U.S. Holder whose shares constitute taxable Canadian property should consult with the holder’s own tax advisors regarding any possible relief (if any) from Canadian tax under the Treaty based on applicable circumstances at the relevant time.
  United States Tax Consequences
  United States Federal Income Tax Consequences
  The following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of our common shares.
  This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of our common shares.  In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including without limitation specific tax consequences to a U.S. Holder under an applicable tax treaty.  Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder.  This summary does not address the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition of our common shares.  Except as specifically set forth below, this summary does not discuss applicable tax reporting requirements.  Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences relating to the acquisition, ownership, and disposition of our common shares.
  46
 No legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of our common shares.  This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary.  In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the conclusions described in this summary.
  Scope of this Summary
  Authorities
  This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this document.  Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary.  This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.
  U.S. Holders
  For purposes of this summary, the term "U.S. Holder" means a beneficial owner of our common shares that is for U.S. federal income tax purposes:
 ·
an individual who is a citizen or resident of the U.S.;
  ·
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof or the District of Columbia;
  ·
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
  ·
a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
 Non-U.S. Holders
  For purposes of this summary, a “non-U.S. Holder” is a beneficial owner of our common shares that is not a U.S. Holder.  This summary does not address the U.S. federal income tax consequences to non-U.S. Holders arising from and relating to the acquisition, ownership, and disposition of our common shares.  Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any income tax treaties) relating to the acquisition, ownership, and disposition of our common shares.
  U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
  This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following:  (a) U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) U.S. Holders that are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market accounting method; (d) U.S. Holders that have a “functional currency” other than the U.S. dollar; (e) U.S. Holders that own our common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquired our common shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold our common shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); or (h) U.S. Holders that own or have owned  (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of the Company.  This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are:  (a) U.S. expatriates or former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes of the Tax Act; (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold our common shares in connection with carrying on a business in Canada; (d) persons whose our common shares constitute “taxable Canadian property” under the Tax Act; or (e) persons that have a permanent establishment in Canada for the purposes of the Canada-U.S. Tax Convention.  U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences relating to the acquisition, ownership and disposition of our common shares.
  47
 If an entity or arrangement that is classified as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds our common shares, the U.S. federal income tax consequences to such entity and the partners (or other owners) of such entity generally will depend on the activities of the entity and the status of such partners (or owners).  This summary does not address the tax consequences to any such owner.  Partners (or other owners) of entities or arrangements that are classified as partnerships or as “pass-through” entities for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of our common shares.
  Ownership and Disposition of our common shares
  The following discussion is subject to the rules described below under the heading “Passive Foreign Investment Company Rules.”
  Taxation of Distributions
  A U.S. Holder that receives a distribution, including a constructive distribution, with respect to our common share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any foreign income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of we, as computed for U.S. federal income tax purposes.  To the extent that a distribution exceeds the current and accumulated “earnings and profits” of we, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder's tax basis in the our common shares and thereafter as gain from the sale or exchange of such our common shares (see “Sale or Other Taxable Disposition of Common Shares” below).  However, we may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume that any distribution by us with respect to the our common shares will constitute ordinary dividend income.  Dividends received on our common shares generally will not constitute qualified dividend income eligible for the “dividends received deduction”. Subject to applicable limitations and provided that we are eligible for the benefits of the Canada-U.S. Tax Convention, dividends paid by us to non-corporate U.S. Holders, including individuals, generally will be eligible for the preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions are satisfied, including that we are not classified as a PFIC (as defined below) in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.
  48
 Sale or Other Taxable Disposition of Common Shares
  A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of our common shares in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in such our common shares sold or otherwise disposed of.  Any such gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if, at the time of the sale or other disposition, such our common shares are held for more than one year.
  Preferential tax rates apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust.  There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is a corporation.  Deductions for capital losses are subject to significant limitations under the Code.
  Passive Foreign Investment Company Rules
    In addition, in any year in which we are classified as a PFIC, such holder may be required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidance may require.  In addition to penalties, a failure to satisfy such reporting requirements may result in an extension of the time period during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing such information returns under these rules, including the requirement to file a revised IRS Form 8621.
  We generally will be a PFIC under Section 1297 of the Code if, for a tax year, (a) 75% or more of our gross income for such tax year is passive income (the “income test”) or (b) 50% or more of the value of our assets either produce passive income or are held for the production of passive income (the “asset test”), based on the quarterly average of the fair market value of such assets.  “Gross income” generally includes all sales revenues less the cost of goods sold, plus income from investments and from incidental or outside operations or sources, and “passive income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.  Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all (85% or more) of a foreign corporation’s commodities are stock in trade or inventory, depreciable property used in a trade or business or supplies regularly used or consumed in a trade or business and certain other requirements are satisfied.
  In addition, for purposes of the PFIC income test and asset test described above, if we own, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, we will be treated as if we (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation.  In addition, for purposes of the PFIC income test and asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that are received or accrued by us from a “related person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.
  Under certain attribution rules, if we are a PFIC, U.S. Holders will be deemed to own their proportionate share of any subsidiary of ours which is also a PFIC (a ‘‘Subsidiary PFIC’’), and will be subject to U.S. federal income tax on (i) a distribution on the shares of a Subsidiary PFIC or (ii) a disposition of shares of a Subsidiary PFIC, both as if the holder directly held the shares of such Subsidiary PFIC.
  49
 If we are a PFIC in any tax year in which a U.S. Holder held our common shares, such holder generally would be subject to special rules with respect to “excess distributions” made by us on the our common shares and with respect to gain from the disposition of our common shares. An “excess distribution” generally is defined as the excess of distributions with respect to the our common shares received by a U.S Holder in any tax year over 125% of the average annual distributions such U.S. Holder has received from us during the shorter of the three preceding tax years, or such U.S. Holder’s holding period for the our common shares. Generally, a U.S. Holder would be required to allocate any excess distribution or gain from the disposition of our common shares ratably over its holding period for the our common shares. Such amounts allocated to the year of the disposition or excess distribution would be taxed as ordinary income, and amounts allocated to prior tax years would be taxed as ordinary income at the highest tax rate in effect for each such year and an interest charge at a rate applicable to underpayments of tax would apply.
  While there are U.S. federal income tax elections that sometimes can be made to mitigate these adverse tax consequences (including, without limitation, the “QEF Election” under Section 1295 of the Code and the “Mark-to-Market Election” under Section 1296 of the Code), such elections are available in limited circumstances and must be made in a timely manner.
  U.S. Holders should be aware that, for each tax year, if any, that we are a PFIC, we can provide no assurances that we will satisfy the record keeping requirements of a PFIC, or that we will make available to U.S. Holders the information such U.S. Holders require to make a QEF Election with respect to us or any Subsidiary PFIC.  U.S. Holders are urged to consult their own tax advisors regarding the potential application of the PFIC rules to the ownership and disposition of our common shares, and the availability of certain U.S. tax elections under the PFIC rules.
  Additional Considerations
  Additional Tax on Passive Income
  Individuals, estates and certain trusts whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surtax on “net investment income” including, among other things, dividends and net gain from disposition of property (other than property held in certain trades or businesses).  U.S. Holders should consult with their own tax advisors regarding the effect, if any, of this tax on their ownership and disposition of our common shares.
  Receipt of Foreign Currency
  The amount of any distribution paid to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of our common shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time).  A U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Any U.S. Holder who converts or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes.  Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.
  Foreign Tax Credit
  Subject to the PFIC rules discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on our common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax.  Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax.  This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.
  Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income.  In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.”  Generally, dividends paid by a foreign corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code.  However, the amount of a distribution with respect to the our common shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder.  In addition, this limitation is calculated separately with respect to specific categories of income.  The foreign tax credit rules are complex, and each U.S. Holder should consult its own U.S. tax advisor regarding the foreign tax credit rules.
 50
 Backup Withholding and Information Reporting
  Under U.S. federal income tax law and Treasury Regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation.  For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess certain threshold amounts.  The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity.  U. S. Holders may be subject to these reporting requirements unless our common shares are held in an account at certain financial institutions.  Penalties for failure to file certain of these information returns are substantial.  U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns, including the requirement to file an IRS Form 8938.
  Payments made within the U.S. or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, our common shares will generally be subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax.  However, certain exempt persons generally are excluded from these information reporting and backup withholding rules.  Backup withholding is not an additional tax.  Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.  Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.
  F.           Dividends and Paying Agents
  Not applicable.
  G.           Statement by Experts
  Not applicable.
  H.           Documents on Display
  Exhibits attached to this Form 20-F are also available for viewing at our offices, 120 Adelaide Street West, Suite 1204, Toronto, Ontario, Canada, M5H 1T1; or you may request them by calling our office at (416) 250-6500. Copies of our financial statements and other continuous disclosure documents required under securities rules are available for viewing on the internet at www.sedar.com.
  51
 I.           Subsidiary Information
  See Item 4.C – “Organizational Structure” of this Annual Report on Form 20-F.
  ITEM 11                      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  We are not subject to any material market risks.
  A.           Transaction Risk and Currency Risk Management
  Our operations do not employ complex financial instruments or derivatives, and given that we keep our excess funds in high-grade short-term instruments, we do not have significant or unusual financial market risks.  In the event we experience substantial growth in the future, our business and results of operations may be materially affected by changes in interest rates on new debt financings, the granting of credit options to our customers, and certain other credit risks associated with our operations.
  B.           Interest Rate Risk and Equity Price Risk
  We are equity financed and do not have any debt which could be subject to significant interest rate change risks.  We have raised equity funding through the sale of securities denominated in Canadian dollars, and will likely raise additional equity funding denominated in Canadian dollars in the future.
  C.           Exchange Rate Sensitivity
  We are exposed to financial risk related to the fluctuation of foreign exchange rates. Our oil and gas operations are in Israel. Most of our monetary assets are held in US dollars and most of our expenditures are made in US dollars. However, we also have expenditures in NIS and Canadian dollars. A significant change in the currency rates between the NIS and the Canadian dollars relative to the US dollar could have an effect on our future results of operations, financial position or cash flows, depending on our currency management techniques. We have not hedged our exposure to currency fluctuations. An increase or decrease of 5% of the NIS and Canadian dollars relative to the U.S dollar would not have a significant effect on.
  D.           Commodity Price Risk
  While the value of our exploration properties can always be said to relate to the price of the commodity and the outlook for same, we do not have any operating mines nor economic ore and therefore do not have any hedging arrangements.
  ITEM 12                      DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  Not applicable.
  PART II
  ITEM 13                      DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  None.
  ITEM 14
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
  None.
 52
 ITEM 15                      CONTROLS AND PROCEDURES
  Disclosure Controls and Procedures
  Disclosure controls and procedures are defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”) to mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and includes, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
  As required under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures as of the end of the period covered by this annual report on Form 20-F, being December 31, 2014. This evaluation was carried out by our Chief Financial Officer (being our principal financial officer). Based upon that evaluation, our executives concluded that our disclosure controls and procedures were effective as at December 31, 2014.
  Management’s Annual Report on Internal Control Over Financial Reporting
  Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Exchange Act in Rule 13a-15(f ) and 15d-15(f ) defines this as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
 
 -  pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
  -  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
  -  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that may have a material effect on the financial statements.
  Under the supervision and with the participation of our Chief Financial Officer, our management assessed the effectiveness of our internal control over financial reporting as at December 31, 2014. In making this assessment, our management used the criteria, established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon this assessment, our management concluded that our internal control over financial reporting was effective as at December 31, 2014.
  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
  This Annual Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.  Management's report is not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Annual Report.
  53
 Changes in Internal Control over Financial Reporting
  During the period ended December 31, 2014, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
  ITEM 16A                      AUDIT COMMITTEE FINANCIAL EXPERTS
  As disclosed above, as of the date hereof, our Audit Committee is comprised of Dennis Bennie, Alan Rootenberg and Alan Friedman.
 
 The Board has determined that each of Messrs. Bennie and Rootenberg (i) qualifies as an audit committee financial expert pursuant to Items 16A(b) and (c) of Form 20-F and (ii) is independent as defined in section 803 of the NYSE MKT Company Guide and Rule 10A-3 of the Exchange Act.  In addition, all members of the audit committee are considered financially literate under applicable Canadian laws.
 ITEM 16B                      CODE OF ETHICS
  We have adopted a Code of Business Conduct that applies to all of our employees and officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Business Conduct meets the requirements for a “code of ethics” within the meaning of that term in Item 16B of Form 20-F. The text of our Code of Business Conduct is also posted on our website at www.adiraenergy.com, under the “Company” tab. In addition, a copy of our Code of Business Conduct will be provided to any person without charge, upon request.  All requests for a copy of our code of ethics should be directed in writing to the attention of Gadi Levin, c/o Adira Energy Ltd., 120 Adelaide Street West, Suite 800, Toronto, Ontario, Canada M5H 1T1, or by email at: glevin@adiraenergy.com.
  During the most recently completed fiscal year, the Company has neither: (a) amended its Code of Ethics; nor (b) granted any waiver (including any implicit waiver) form any provision of its Code of Ethics.
  ITEM 16C                      PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 The following table sets forth information regarding the amount billed to us by our principal independent auditors, MNP LLP for the fiscal year ended December 31, 2014 and Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, for the fiscal year ended December 31, 2013:
 
 Period Ended December 312014
2013Audit Fees:
$25,000(1)
$90,000Audit Related Fees:
-
-Tax Fees:
$23,000(2)
$80,000Total:
$48,000
$170,000
  (1)
of which $3,300 relates to Kost Forer Gabbay & Kasierer
  (2)
of which $11,500 relates to Kost Forer Gabbay & Kasierer
  54
 Audit Fees
  This category includes the aggregate fees billed by our independent auditor for the audit of our consolidated annual financial statements, reviews of interim financial statements and attestation services that are provided in connection with statutory and regulatory filings or engagements.
  Audit Related Fees
  This category includes the aggregate fees billed in each of the last two fiscal years for assurance and related services by the independent auditors that are reasonably related to the performance of the audits or reviews of the financial statements and are not reported above under "Audit Fees," and generally consist of fees for other engagements under professional auditing standards, accounting and reporting consultations,
  Tax Fees
  This category includes the aggregate fees billed in each of the last two fiscal years for professional services rendered by the independent auditors for tax compliance, tax planning and tax advice.
  Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors
  The policy of our Audit Committee is to pre-approve all audit and permissible non-audit services to be performed by our independent auditors during the fiscal year.
  ITEM 16D              EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  Not applicable.
  ITEM 16E
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  In the year ended December 31, 2014, the Company did not purchase any of its issued and outstanding common shares pursuant to any repurchase program or otherwise.
  ITEM 16F             CHANGES TO REGISTRANT’S CERTIFYING ACCOUNTANT
 
 From March 17, 2011 until April 13, 2015, Kost Forer Gabbay and Kasierer, a member firm of Ernst & Young Global acted as our independent auditors. On January 29, 2015, we appointed MNP LLP, as our new auditors.  Such change of auditors was approved by our Board of Directors on the recommendation of the Audit Committee.
  Kost Forer Gabbay and Kasierer’s reports on our financial statements for our past two fiscal years did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except to indicate doubt as to our ability to continue as a going concern.
  During our past two fiscal years there were no disagreements between us and our independent auditors on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
  ITEM 16G                      CORPORATE GOVERNANCE
  Not applicable.
  ITEM 16H                      MINE SAFETY DISCLOSURE
  Not applicable.
 55
 PART III
 
  ITEM 17                      FINANCIAL STATEMENTS
  Not applicable.
  ITEM 18                      FINANCIAL STATEMENTS
  Financial Statements Filed as Part of this Annual Report:
  ·
Report of Independent Registered Public Accounting Firm dated April 29, 2015;
  ·
Consolidated statement of financial position for the fiscal years ended December 31, 2014 and 2013;
  ·
Consolidated statements of comprehensive income for the fiscal years ended December 31, 2014 and 2013;
  ·
Consolidated statements of changes in shareholder’s equity for the fiscal years ended December 31, 2014 and 2013;
  ·
Consolidated statements of cash flows for the fiscal years ended December 31, 2014 and 2013; and
  ·
Notes to consolidated financial statements
 ITEM 19                      EXHIBITS
  The following exhibits are included in this Form 20-F:
  Exhibit Number
Description1.1
Articles of Conversion (1)1.2
Articles of Continuance (1)1.3
By-Laws (1)1.4
Certificate and Articles of Amendment (3)1.5
Certificate and Articles of Amendment (5)4.1
2009 Stock Option Plan (2)4.2
Nominee Agreement with BRM Group Ltd (4)8.1
List of Subsidiaries (5)12.1
Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (5)12.2
Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (5)13.1
Certificate of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (5)13.2
Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (5)
  (1)
Incorporated by reference from our current report on Form 8-K filed with the SEC on December 2, 2008.
 (2)
Incorporated by reference from our Form 20-F shell company report filed with the SEC on September 4, 2009.
 (3)
Incorporated by reference from our Form 20-F report filed with the SEC on January 22, 2010.
 (4)
Incorporated by reference from our Form 20-F report filed with the SEC on February 3, 2011.
 (5)
Filed as an exhibit hereto.
 
 
 56
 SIGNATURES
  The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Form 20-F on its behalf.
  ADIRA ENERGY LTD.
   Per:
/s/Gadi LevinName:
Gadi LevinTitle:
Chief Financial Officer