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

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represent an investment in unproved properties. These costs are excluded from the amortized cost pool until proved reserves are found
or until it is determined that the costs are impaired. All costs excluded are reviewed at least quarterly to determine if impairment has
occurred. The amount of any impairment is charged to expense since a reserve base has not yet been established. A further impairment requiring
a charge to expense may be indicated through evaluation of drilling results, relinquishing drilling rights or other information. Abandonment of properties
is accounted for as adjustments to capitalized costs. The net capitalized costs are subject to a “ceiling test” which limits
such costs to the aggregate of the estimated present value of future net revenues from proved reserves discounted at ten percent based
on current economic and operating conditions, plus the lower of cost or fair market value of unproved properties. The recoverability of
amounts capitalized for oil and gas properties is dependent upon the identification of economically recoverable reserves, together with
obtaining the necessary financing to exploit such reserves and the achievement of profitable operations. During the three and nine
months ended September 30, 2022, and 2021, respectively, the Company did not record any post-impairment charges. The total net book value of
our unproved oil and gas properties under the full cost method is $59,169,000 and $46,950,000 at September 30, 2022 and at December 31,
2021, respectively. Asset Retirement Obligation We record a liability for
asset retirement obligation at fair value in the period in which it is incurred and a corresponding increase in the carrying amount of
the related long-lived assets. Fair Value Considerations We follow ASC 820, “Fair
Value Measurements and Disclosures,” as amended by Financial Accounting Standards Board (FASB) Financial Staff Position (FSP) No.
157 and related guidance. Those provisions relate to the Company’s financial assets and liabilities carried at fair value and the
fair value disclosures related to financial assets and liabilities. ASC 820 defines fair value, expands related disclosure requirements,
and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value
is defined as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset
or liability. There are three levels of
inputs to fair value measurements - Level 1, meaning the use of quoted prices for identical instruments in active markets; Level 2, meaning
the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that
are not active or are directly or indirectly observable; and Level 3, meaning the use of unobservable inputs. We use Level 1 inputs for
fair value measurements whenever there is an active market, with actual quotes, market prices, and observable inputs on the measurement
date. We use Level 2 inputs for fair value measurements whenever there are quoted prices for similar securities in an active market or
quoted prices for identical securities in an inactive market. We use observable market data whenever available. We use Level 3 inputs
in the Binomial Model used for the valuation of the derivative liability. 43 RESULTS OF OPERATIONS For the three months ended September 30, For the nine months ended September 30, 2022 2021 2022 2021 (US $ in thousands) (US $ in thousands) Operating costs and expens General and administrative expenses 1,636 1,601 4,621 6,524 Other 719 697 2,376 2,553 Operating costs and expenses 2,355 2,298 6,997 9,077 (Gain) on derivative liability - - - (431 ) Other (Gains) expenses, net 19 5 140 273 Net loss 2,374 2,303 7,137 8,919 Revenue. We currently
have no revenue generating operations. Operating costs and expenses. Operating costs and expenses for the three and nine months ended September 30, 2022 were $2,355,000 and $6,997,000, respectively,
compared to $2,298,000 and $9,077,000, respectively, for the three and nine months ended September 30, 2021. Expenses were only $57,000
higher (2.5%), for the three months ended September 2022, when compared to the corresponding months in 2021. This is an immaterial variance.
Although the number of stock options granted was 3,905,000 higher during Q3 2022, this was almost completely offset by the low stock price
over the last few months. Expenses were $2,080,000 lower
(22.9%), for the nine months ended September 2022, when compared to the corresponding months in 2021. Although we granted 10,830,000 more
options during 2022, the low stock price in 2022 more than offset the higher number of options granted. General and administrative
expenses. General and administrative expenses for the three and nine months ended September 30, 2022 were $1,636,000 and $4,621,000,
respectively, compared to $1,601,000 and $6,524,000, respectively, for the three and nine months ended September 30, 2021. A major component
of general and administrative expenses is non-cash stock compensation expense in the form of stock options granted to employees, management
and directors. As stated in this filing, Zion does not have revenue generating operations. Historically, we have compensated our staff
in part by granting stock options in lieu of cash bonuses. 44 Zion granted the following
number of stock options during the quarters of 2021 and 2022: ● March
31, 2021: 1,075,000 ● June
30, 2021: 3,625,000 ● September
30, 2021: 2,323,000 ● December
31, 2021: 0 ● March
31, 2022: 4,100,000 ● June
30, 2022: 7,525,000 ● September
30, 2022: 6,228,000 ● YTD
September 30, 2021: 7,023,000 ● YTD
September 30, 2022: 17,853,000 Expenses were only $35,000
higher (2.2%), for the three months ended September 2022, when compared to the corresponding months in 2021. Although the number of stock
options granted was 3,905,000 higher during Q3 2022, this was almost completely offset by the low stock price over the last few months. Expenses were $1,903,000 lower (29.2%), for the nine months ended September
2022, when compared to the corresponding months in 2021. Although we granted 10,830,000 more options during 2022, the low stock price
in 2022 more than offset the higher number of options granted. Other expense. Other
expenses during the three and nine months ended September 30, 2022 were $719,000 and $2,376,000, respectively, compared to $697,000 and
$2,553,000, respectively, for the three and nine months ended September 30, 2021. The expenses in this category are comprised of non-compensation
and non-professional expenses incurred. Expenses were only $22,000
higher (3%), for the three months ended September 2022, when compared to the corresponding months in 2021. This is a very small increase
and no noticeable cause is identified. Expenses were $177,000 lower
(7%), for the nine months ended September 2022, when compared to the corresponding months in 2021. The primary drivers of this decrease
was lower annual meeting expenses and Facebook spending in 2022 with a partial offset by an increase in insurance costs, primarily D&O
insurance premiums. Annual meeting expenses were significantly higher in 2021 due primarily to proxy solicitation costs to secure votes
for two important proposals. (Gain) on derivative liability .
(Gain) on derivative liability during the three and nine months ended September 30, 2022 were nil and nil, respectively, compared to nil
and ($431,000), respectively, for the three and nine months ended September 30, 2021. In May 2021, Zion paid the annual interest and the
maturity of its convertible bond in Zion shares (in kind). At the present time, Zion does not expect to issue another convertible bond. Other expense, net .
Other expense, net for the three and nine months ended September 30, 2022 were ($19,000) and $140,000, respectively, compared to $5,000
and $273,000, respectively, for the three and nine months ended September 30, 2021. The expenses in this category are comprised of foreign
currency exchange costs, primarily the New Israeli Shekel (NIS) to the US dollar, and financial expenses/income. Overall, for the nine
months ended September 30, 2022, total expenses in this category are $159,000 lower due to the relative strengthening of the USD to the
NIS during 2022. Net Loss. Net loss
for the three and nine months ended September 30, 2022 was $2,374,000 and $7,137,000 compared to $2,303,000 and $8,919,000 for the three
and nine months ended September 30, 2021. 45 Liquidity and Capital Resources Liquidity is a measure of
a company’s ability to meet potential cash requirements. As discussed above, we have historically met our capital requirements through
the issuance of common stock as well as proceeds from the exercise of warrants and options to purchase common shares. Our ability to continue as
a going concern is dependent upon obtaining the necessary financing to complete further exploration and development activities and generate
profitable operations from our oil and natural gas interests in the future. Our current operations are dependent upon the adequacy of
our current assets to meet our current expenditure requirements and the accuracy of management’s estimates of those requirements. Should
those estimates be materially incorrect, our ability to continue as a going concern will be impaired. Our financial statements for
the three and nine months ended September 30, 2022 have been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course of business. We have incurred a history of operating
losses and negative cash flows from operations. Therefore, there is substantial doubt about our ability to continue as a going concern. At September 30, 2022, we
had approximately $3,079,000 in cash and cash equivalents compared to $4,683,000 at December 31, 2021, which does not include any restricted
funds. Our working capital (current assets minus current liabilities) was $1,939,000 at September 30, 2022 and $3,303,000 at December
31, 2021. As of September 30, 2022,
we provided bank guarantees to various governmental bodies (approximately $1,218,000) and others (approximately $63,000) in respect of
our drilling operation in the aggregate amount of approximately $1,281,000. 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 nine months ended
September 30, 2022, cash used in operating activities totaled $4,719,000. Cash provided by financing activities during the nine months
ended September 30, 2022 was $16,473,000 and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase
Plan. Net cash used in investing activities such as unproved oil and gas properties, equipment and spare parts was $13,333,000 for the
nine months ended September 30, 2022. During the nine months ended
September 30, 2021, cash used in operating activities totaled $4,888,000. Cash provided by financing activities during the nine months
ended September 30, 2021 was $18,057,000 and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase
Plan. Net cash used in investing activities such as unproved oil and gas properties, equipment and spare parts was $21,998,000 for the
nine months ended September 30, 2021. Accounting standards require
management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the filing of this
Form 10-Q. We expect to incur additional significant expenditures to further our exploration and development programs. While we raised
approximately $2,235,000 during the period October 1, 2022 through November 9, 2022, we will need to raise additional funds in order to continue
our exploration and development activities in our license area. Additionally, we estimate that, when we are not actively drilling a well,

represent an investment in unproved properties. These costs are excluded from the amortized cost pool until proved reserves are found

or until it is determined that the costs are impaired. All costs excluded are reviewed at least quarterly to determine if impairment has

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

a charge to expense may be indicated through evaluation of drilling results, relinquishing drilling rights or other information. Abandonment of properties

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

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

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

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

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

months ended September 30, 2022, and 2021, respectively, the Company did not record any post-impairment charges. The total net book value of

our unproved oil and gas properties under the full cost method is $59,169,000 and $46,950,000 at September 30, 2022 and at December 31,

2021, respectively. Asset Retirement Obligation We record a liability for

asset retirement obligation at fair value in the period in which it is incurred and a corresponding increase in the carrying amount of

the related long-lived assets. Fair Value Considerations We follow ASC 820, “Fair

Value Measurements and Disclosures,” as amended by Financial Accounting Standards Board (FASB) Financial Staff Position (FSP) No.

157 and related guidance. Those provisions relate to the Company’s financial assets and liabilities carried at fair value and the

fair value disclosures related to financial assets and liabilities. ASC 820 defines fair value, expands related disclosure requirements,

and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value

is defined as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset

or liability. There are three levels of

inputs to fair value measurements - Level 1, meaning the use of quoted prices for identical instruments in active markets; Level 2, meaning

the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that

are not active or are directly or indirectly observable; and Level 3, meaning the use of unobservable inputs. We use Level 1 inputs for

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

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

quoted prices for identical securities in an inactive market. We use observable market data whenever available. We use Level 3 inputs

in the Binomial Model used for the valuation of the derivative liability. 43 RESULTS OF OPERATIONS For the three months ended September 30, For the nine months ended September 30, 2022 2021 2022 2021 (US $ in thousands) (US $ in thousands) Operating costs and expens General and administrative expenses 1,636 1,601 4,621 6,524 Other 719 697 2,376 2,553 Operating costs and expenses 2,355 2,298 6,997 9,077 (Gain) on derivative liability - - - (431 ) Other (Gains) expenses, net 19 5 140 273 Net loss 2,374 2,303 7,137 8,919 Revenue. We currently

have no revenue generating operations. Operating costs and expenses. Operating costs and expenses for the three and nine months ended September 30, 2022 were $2,355,000 and $6,997,000, respectively,

compared to $2,298,000 and $9,077,000, respectively, for the three and nine months ended September 30, 2021. Expenses were only $57,000

higher (2.5%), for the three months ended September 2022, when compared to the corresponding months in 2021. This is an immaterial variance.

Although the number of stock options granted was 3,905,000 higher during Q3 2022, this was almost completely offset by the low stock price

over the last few months. Expenses were $2,080,000 lower

(22.9%), for the nine months ended September 2022, when compared to the corresponding months in 2021. Although we granted 10,830,000 more

options during 2022, the low stock price in 2022 more than offset the higher number of options granted. General and administrative

expenses. General and administrative expenses for the three and nine months ended September 30, 2022 were $1,636,000 and $4,621,000,

respectively, compared to $1,601,000 and $6,524,000, respectively, for the three and nine months ended September 30, 2021. A major component

of general and administrative expenses is non-cash stock compensation expense in the form of stock options granted to employees, management

and directors. As stated in this filing, Zion does not have revenue generating operations. Historically, we have compensated our staff

in part by granting stock options in lieu of cash bonuses. 44 Zion granted the following

number of stock options during the quarters of 2021 and 2022: ● March

31, 2021: 1,075,000 ● June

30, 2021: 3,625,000 ● September

30, 2021: 2,323,000 ● December

31, 2021: 0 ● March

31, 2022: 4,100,000 ● June

30, 2022: 7,525,000 ● September

30, 2022: 6,228,000 ● YTD

September 30, 2021: 7,023,000 ● YTD

September 30, 2022: 17,853,000 Expenses were only $35,000

higher (2.2%), for the three months ended September 2022, when compared to the corresponding months in 2021. Although the number of stock

options granted was 3,905,000 higher during Q3 2022, this was almost completely offset by the low stock price over the last few months. Expenses were $1,903,000 lower (29.2%), for the nine months ended September

2022, when compared to the corresponding months in 2021. Although we granted 10,830,000 more options during 2022, the low stock price

in 2022 more than offset the higher number of options granted. Other expense. Other

expenses during the three and nine months ended September 30, 2022 were $719,000 and $2,376,000, respectively, compared to $697,000 and

$2,553,000, respectively, for the three and nine months ended September 30, 2021. The expenses in this category are comprised of non-compensation

and non-professional expenses incurred. Expenses were only $22,000

higher (3%), for the three months ended September 2022, when compared to the corresponding months in 2021. This is a very small increase

and no noticeable cause is identified. Expenses were $177,000 lower

(7%), for the nine months ended September 2022, when compared to the corresponding months in 2021. The primary drivers of this decrease

was lower annual meeting expenses and Facebook spending in 2022 with a partial offset by an increase in insurance costs, primarily D&O

insurance premiums. Annual meeting expenses were significantly higher in 2021 due primarily to proxy solicitation costs to secure votes

for two important proposals. (Gain) on derivative liability .

(Gain) on derivative liability during the three and nine months ended September 30, 2022 were nil and nil, respectively, compared to nil

and ($431,000), respectively, for the three and nine months ended September 30, 2021. In May 2021, Zion paid the annual interest and the

maturity of its convertible bond in Zion shares (in kind). At the present time, Zion does not expect to issue another convertible bond. Other expense, net .

Other expense, net for the three and nine months ended September 30, 2022 were ($19,000) and $140,000, respectively, compared to $5,000

and $273,000, respectively, for the three and nine months ended September 30, 2021. The expenses in this category are comprised of foreign

currency exchange costs, primarily the New Israeli Shekel (NIS) to the US dollar, and financial expenses/income. Overall, for the nine

months ended September 30, 2022, total expenses in this category are $159,000 lower due to the relative strengthening of the USD to the

NIS during 2022. Net Loss. Net loss

for the three and nine months ended September 30, 2022 was $2,374,000 and $7,137,000 compared to $2,303,000 and $8,919,000 for the three

and nine months ended September 30, 2021. 45 Liquidity and Capital Resources Liquidity is a measure of

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

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

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

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

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

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

the three and nine months ended September 30, 2022 have been prepared on a going concern basis, which contemplates the realization of

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

losses and negative cash flows from operations. Therefore, there is substantial doubt about our ability to continue as a going concern. At September 30, 2022, we

had approximately $3,079,000 in cash and cash equivalents compared to $4,683,000 at December 31, 2021, which does not include any restricted

funds. Our working capital (current assets minus current liabilities) was $1,939,000 at September 30, 2022 and $3,303,000 at December

31, 2021. As of September 30, 2022,

we provided bank guarantees to various governmental bodies (approximately $1,218,000) and others (approximately $63,000) in respect of

our drilling operation in the aggregate amount of approximately $1,281,000. 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 nine months ended

September 30, 2022, cash used in operating activities totaled $4,719,000. Cash provided by financing activities during the nine months

ended September 30, 2022 was $16,473,000 and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase

Plan. Net cash used in investing activities such as unproved oil and gas properties, equipment and spare parts was $13,333,000 for the

nine months ended September 30, 2022. During the nine months ended

September 30, 2021, cash used in operating activities totaled $4,888,000. Cash provided by financing activities during the nine months

ended September 30, 2021 was $18,057,000 and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase

Plan. Net cash used in investing activities such as unproved oil and gas properties, equipment and spare parts was $21,998,000 for the

nine months ended September 30, 2021. Accounting standards require

management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the filing of this

Form 10-Q. We expect to incur additional significant expenditures to further our exploration and development programs. While we raised

approximately $2,235,000 during the period October 1, 2022 through November 9, 2022, we will need to raise additional funds in order to continue

our exploration and development activities in our license area. Additionally, we estimate that, when we are not actively drilling a well,