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

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disclosure requirements, and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair
value measures. Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most
advantageous market for that asset or liability. There are three levels of
inputs to fair value measurements – Level 1, meaning the use of quoted prices for identical instruments in active markets; Level
2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in
markets that are not active or are directly or indirectly observable; and Level 3, meaning the use of unobservable inputs. We use Level
1 inputs for fair value measurements whenever there is an active market, with actual quotes, market prices, and observable inputs on the
measurement date. We use Level 2 inputs for fair value measurements whenever there are quoted prices for similar securities in an active
market or quoted prices for identical securities in an inactive market. We use observable market data whenever available. 39 RESULTS
OF OPERATIONS For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 (US $ in thousands) (US $ in thousands) Operating costs and expens General and administrative expenses 1,271 1,550 2,774 2,985 Other 1,016 946 1,599 1,657 Impairment of unproved oil and gas properties 48 - 93 - Subtotal Operating costs and expenses 2,335 2,496 4,466 4,642 Other expense (income), net (1 ) 101 7 121 Net loss 2,334 2,597 4,473 4,763 Revenue. We currently have no revenue generating operations. Operating
costs and expenses. Operating costs and expenses for the three and six months ended June 30, 2023 were $2,335,000 and $4,466,000,
respectively, compared to $2,496,000 and $4,642,000, respectively, for the three and six months ended June 30, 2022. General
and administrative expenses. General and administrative expenses (“G&A expenses”) for the three and six months ended
June 30, 2023 were $1,271,000 and $2,774,000, respectively, compared to $1,550,000 and $2,985,000, respectively, for the three and six
months ended June 30, 2022. This expense grouping includes salaries, benefits, stock option expenses and professional fees. G&A expenses
decreased $279,000, or 18%, during the most recent quarter versus the prior year primarily due to lower salaries expenses, legal fees
and expenses associated with stock option grants. G&A expenses decreased $211,000, or 7%, during the first six months of 2023 as
compared to the six months of 2022, primarily due to lower salaries expenses and expenses associated with stock option grants. Other
expense. Other expenses during the three and six months ended June 30, 2023 were $1,016,000 and $1,599,000, respectively, compared
to $946,000 and $1,657,000, respectively, for the three and six months ended June 30, 2022. Other general and administrative expenses
are comprised of non-compensation and non-professional expenses incurred. Other expenses increased $70,000, or about 7%, for the three
months ended June 30, 2023 as a result of higher annual meeting expenses in 2023 with a partial offset of lower travel expenses. Other
expenses for the six months ended June 30, 2023 were lower by $58,000, or about 3.5%, and this variance is fairly minimal. Impairment
of unproved oil and gas properties. Impairment of unproved oil and gas properties expenses during the three and six months ended
June 30, 2023 were $48,000 and $93,000 compared to nil and nil for the three and six months ended June 30, 2022. The expenses recorded
in 2023 are post impairment charges to the impairment recorded during 2022 related to the MJ-2 well. Other
expense (income), net. Other expenses (income) during the three and six months ended June 30, 2023 were ($1,000) and $7,000, respectively,
compared to $101,000 and $121,000, respectively, for the three and six months ended June 30, 2022. The expenses in this category are
comprised of foreign currency exchange costs, primarily the New Israeli Shekel (NIS) to the US dollar, and the financial expenses/income.
Overall, for the six months ended June 30, 2022, total expenses in this category are $114,000 lower due to the relative strengthening
of the USD to the NIS during 2023. Net
Loss. Net loss for the three and six months ended June 30, 2023 were $2,334,000 and $4,473,000 compared to $2,597,000 and $4,763,000
for the three and six months ended June 30, 2022. Liquidity
and Capital Resources Liquidity
is a measure of a company’s ability to meet potential cash requirements. As discussed above, we have historically met our capital
requirements through the issuance of common stock as well as proceeds from the exercise of warrants and options to purchase common shares. Our ability to continue as
a going concern is dependent upon obtaining the necessary financing to complete further exploration and development activities and generate
profitable operations from our oil and natural gas interests in the future. Our current operations are dependent upon the adequacy of
our current assets to meet our current expenditure requirements and the accuracy of management’s estimates of those requirements. Should
those estimates be materially incorrect, our ability to continue as a going concern will be impaired. Our financial statements for
the six months ended June 30, 2023 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. We have incurred a history of operating losses and negative cash
flows from operations. Therefore, there is substantial doubt about our ability to continue as a going concern for one year from the
date the financials were issued. 40 At
June 30, 2023, we had approximately $518,000 in cash and cash equivalents compared to $1,735,000 at December 31, 2022, which does not
include any restricted funds. Our working capital (current assets minus current liabilities) was ($362,000) at June 30, 2023 and $661,000
at December 31, 2022. As
of June 30, 2023, we provided bank guarantees to various governmental bodies (approximately $930,000) and others (approximately $88,000)
in respect of our drilling operation in the aggregate amount of approximately $1,018,000. The (cash) funds backing these guarantees are
held in restricted interest-bearing accounts in Israel and are reported on the Company’s balance sheets as fixed short-term bank
deposits restricted. During
the six months ended June 30, 2023, cash used in operating activities totaled $2,392,000. Cash provided by financing activities during
the six months ended June 30, 2023 was $2,565,000 and is primarily attributable to proceeds received from the Dividend Reinvestment and
Stock Purchase Plan (the “DSPP” or the “Plan”). Net cash used in investing activities such as unproved oil and
gas properties, equipment and spare parts was $1,729,000 for the six months ended June 30, 2023. During
the six months ended June 30, 2022, cash used in operating activities totaled $3,424,000. Cash provided by financing activities during
the six months ended June 30, 2022 was $12,994,000 and is primarily attributable to proceeds received from the Dividend Reinvestment
and Stock Purchase Plan (the “DSPP” or the “Plan”). Net cash used in investing activities such as unproved oil
and gas properties, equipment and spare parts was $8,448,000 for the six months ended June 30, 2022. Accounting standards require management to evaluate our ability to
continue as a going concern for a period of one year subsequent to the date of the filing of this Form 10-Q. We expect to incur additional
significant expenditures to further our exploration and development programs. While we raised approximately $921,000 during the period
July 1, 2023 through August 8, 2023, we will need to raise additional funds in order to continue our exploration and development activities
in our license area. Additionally, we estimate that, when we are not actively drilling a well, our expenditures are approximately $600,000 per
month excluding exploratory operational activities. However, when we are actively drilling a well, we estimate an additional minimum expenditure
of approximately $2,500,000 per month. The above estimates are subject to change. Subject to the qualifications specified below, management
believes that our existing cash balance, excluding anticipated proceeds under the DSPP, will be sufficient to finance our plan of operations
through August 2023. The outbreak of the coronavirus has to date significantly disrupted
business operations, including our operations, and resulted in significantly increased unemployment in the general economy. The extent
to which the coronavirus impacts our operations, specifically our capital raising efforts, as well as our ability to continue our exploratory
efforts, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration
of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus
or treat its impact, among others. No
assurance can be provided that we will be able to raise the needed operating capital. Even
if we raise the needed funds, there are factors that can nevertheless adversely impact our ability to fund our operating needs, including
(without limitation), unexpected or unforeseen cost overruns in planned non-drilling exploratory work in existing license areas, the
costs associated with extended delays in undertaking the required exploratory work, and plugging and abandonment activities which is
typical of what we have experienced in the past. The financial information
contained in these consolidated financial statements has been prepared on a basis that assumes that we will continue as a going concern
for one year from the date the financials were issued, which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. This financial information and these condensed consolidated financial statements do
not include any adjustments that may result from the outcome of this uncertainty. Off-Balance
Sheet Arrangements We
do not currently use any off-balance sheet arrangements to enhance our liquidity or capital resource position, or for any other purpose. Recently
Issued Accounting Pronouncements The
Company does not believe that the adoption of any recently issued accounting pronouncements in 2023 had a significant impact on our financial
position, results of operations, or cash flow. 41 ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market
risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes
may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. In the
normal course of doing business, we are exposed to the risks associated with foreign currency exchange rates and changes in interest
rates. Foreign
Currency Exchange Rate Risks. A portion of our expenses, primarily labor expenses and certain supplier contracts, are denominated
in New Israeli Shekels (“NIS”). As a result, we have significant exposure to the risk of fluctuating exchange rates with
the U.S. Dollar (“USD”), our primary reporting currency. During the period January 1, 2023 through June 30, 2023, the USD
has fluctuated by approximately 5.1% against the NIS (the USD strengthened relative to the NIS). Also, during the period January 1, 2022
through December 31, 2022, the USD fluctuated by approximately 13.2% against the NIS (the USD strengthened relative to the NIS). Continued
strengthening of the US dollar against the NIS will result in lower operating costs from NIS denominated expenses. To date, we have not
hedged any of our currency exchange rate risks, but we may do so in the future. Interest Rate Risk. Our exposure to market risk relates to our cash
and investments. We maintain an investment portfolio of short-term bank deposits and money market funds. The securities in our investment

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

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

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

advantageous market for that asset or liability. There are three levels of

inputs to fair value measurements – Level 1, meaning the use of quoted prices for identical instruments in active markets; Level

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

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

1 inputs for fair value measurements whenever there is an active market, with actual quotes, market prices, and observable inputs on the

measurement date. We use Level 2 inputs for fair value measurements whenever there are quoted prices for similar securities in an active

market or quoted prices for identical securities in an inactive market. We use observable market data whenever available. 39 RESULTS

OF OPERATIONS For the three months ended June 30, For the six months ended June 30, 2023 2022 2023 2022 (US $ in thousands) (US $ in thousands) Operating costs and expens General and administrative expenses 1,271 1,550 2,774 2,985 Other 1,016 946 1,599 1,657 Impairment of unproved oil and gas properties 48 - 93 - Subtotal Operating costs and expenses 2,335 2,496 4,466 4,642 Other expense (income), net (1 ) 101 7 121 Net loss 2,334 2,597 4,473 4,763 Revenue. We currently have no revenue generating operations. Operating

costs and expenses. Operating costs and expenses for the three and six months ended June 30, 2023 were $2,335,000 and $4,466,000,

respectively, compared to $2,496,000 and $4,642,000, respectively, for the three and six months ended June 30, 2022. General

and administrative expenses. General and administrative expenses (“G&A expenses”) for the three and six months ended

June 30, 2023 were $1,271,000 and $2,774,000, respectively, compared to $1,550,000 and $2,985,000, respectively, for the three and six

months ended June 30, 2022. This expense grouping includes salaries, benefits, stock option expenses and professional fees. G&A expenses

decreased $279,000, or 18%, during the most recent quarter versus the prior year primarily due to lower salaries expenses, legal fees

and expenses associated with stock option grants. G&A expenses decreased $211,000, or 7%, during the first six months of 2023 as

compared to the six months of 2022, primarily due to lower salaries expenses and expenses associated with stock option grants. Other

expense. Other expenses during the three and six months ended June 30, 2023 were $1,016,000 and $1,599,000, respectively, compared

to $946,000 and $1,657,000, respectively, for the three and six months ended June 30, 2022. Other general and administrative expenses

are comprised of non-compensation and non-professional expenses incurred. Other expenses increased $70,000, or about 7%, for the three

months ended June 30, 2023 as a result of higher annual meeting expenses in 2023 with a partial offset of lower travel expenses. Other

expenses for the six months ended June 30, 2023 were lower by $58,000, or about 3.5%, and this variance is fairly minimal. Impairment

of unproved oil and gas properties. Impairment of unproved oil and gas properties expenses during the three and six months ended

June 30, 2023 were $48,000 and $93,000 compared to nil and nil for the three and six months ended June 30, 2022. The expenses recorded

in 2023 are post impairment charges to the impairment recorded during 2022 related to the MJ-2 well. Other

expense (income), net. Other expenses (income) during the three and six months ended June 30, 2023 were ($1,000) and $7,000, respectively,

compared to $101,000 and $121,000, respectively, for the three and six months ended June 30, 2022. The expenses in this category are

comprised of foreign currency exchange costs, primarily the New Israeli Shekel (NIS) to the US dollar, and the financial expenses/income.

Overall, for the six months ended June 30, 2022, total expenses in this category are $114,000 lower due to the relative strengthening

of the USD to the NIS during 2023. Net

Loss. Net loss for the three and six months ended June 30, 2023 were $2,334,000 and $4,473,000 compared to $2,597,000 and $4,763,000

for the three and six months ended June 30, 2022. Liquidity

and Capital Resources Liquidity

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

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

a going concern is dependent upon obtaining the necessary financing to complete further exploration and development activities and generate

profitable operations from our oil and natural gas interests in the future. Our current operations are dependent upon the adequacy of

our current assets to meet our current expenditure requirements and the accuracy of management’s estimates of those requirements. Should

those estimates be materially incorrect, our ability to continue as a going concern will be impaired. Our financial statements for

the six months ended June 30, 2023 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement

of liabilities and commitments in the normal course of business. We have incurred a history of operating losses and negative cash

flows from operations. Therefore, there is substantial doubt about our ability to continue as a going concern for one year from the

date the financials were issued. 40 At

June 30, 2023, we had approximately $518,000 in cash and cash equivalents compared to $1,735,000 at December 31, 2022, which does not

include any restricted funds. Our working capital (current assets minus current liabilities) was ($362,000) at June 30, 2023 and $661,000

at December 31, 2022. As

of June 30, 2023, we provided bank guarantees to various governmental bodies (approximately $930,000) and others (approximately $88,000)

in respect of our drilling operation in the aggregate amount of approximately $1,018,000. The (cash) funds backing these guarantees are

held in restricted interest-bearing accounts in Israel and are reported on the Company’s balance sheets as fixed short-term bank

deposits restricted. During

the six months ended June 30, 2023, cash used in operating activities totaled $2,392,000. Cash provided by financing activities during

the six months ended June 30, 2023 was $2,565,000 and is primarily attributable to proceeds received from the Dividend Reinvestment and

Stock Purchase Plan (the “DSPP” or the “Plan”). Net cash used in investing activities such as unproved oil and

gas properties, equipment and spare parts was $1,729,000 for the six months ended June 30, 2023. During

the six months ended June 30, 2022, cash used in operating activities totaled $3,424,000. Cash provided by financing activities during

the six months ended June 30, 2022 was $12,994,000 and is primarily attributable to proceeds received from the Dividend Reinvestment

and Stock Purchase Plan (the “DSPP” or the “Plan”). Net cash used in investing activities such as unproved oil

and gas properties, equipment and spare parts was $8,448,000 for the six months ended June 30, 2022. Accounting standards require management to evaluate our ability to

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

significant expenditures to further our exploration and development programs. While we raised approximately $921,000 during the period

July 1, 2023 through August 8, 2023, we will need to raise additional funds in order to continue our exploration and development activities

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

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

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

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

through August 2023. The outbreak of the coronavirus has to date significantly disrupted

business operations, including our operations, and resulted in significantly increased unemployment in the general economy. The extent

to which the coronavirus impacts our operations, specifically our capital raising efforts, as well as our ability to continue our exploratory

efforts, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration

of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus

or treat its impact, among others. No

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

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

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

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

typical of what we have experienced in the past. The financial information

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

for one year from the date the financials were issued, which contemplates the realization of assets and the satisfaction of liabilities

and commitments in the normal course of business. This financial information and these condensed consolidated financial statements do

not include any adjustments that may result from the outcome of this uncertainty. Off-Balance

Sheet Arrangements We

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

Issued Accounting Pronouncements The

Company does not believe that the adoption of any recently issued accounting pronouncements in 2023 had a significant impact on our financial

position, results of operations, or cash flow. 41 ITEM

3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market

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

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

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

rates. Foreign

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

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

the U.S. Dollar (“USD”), our primary reporting currency. During the period January 1, 2023 through June 30, 2023, the USD

has fluctuated by approximately 5.1% against the NIS (the USD strengthened relative to the NIS). Also, during the period January 1, 2022

through December 31, 2022, the USD fluctuated by approximately 13.2% against the NIS (the USD strengthened relative to the NIS). Continued

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

hedged any of our currency exchange rate risks, but we may do so in the future. Interest Rate Risk. Our exposure to market risk relates to our cash

and investments. We maintain an investment portfolio of short-term bank deposits and money market funds. The securities in our investment