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Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
3 - Stockholders’ Equity (cont’d) Plan |
participants, who enrolled into the Unit Program with the purchase of at least one Unit and enrolled in the separate Automatic Monthly |
Investments (“AMI”) program at a minimum of $ 50.00 per month, received an additional three hundred (300) warrants at an exercise |
price of $ 0.25 during this Unit Option Program. The three hundred (300) additional warrants were for enrolling into the AMI program and |
received the above warrant with the Company notation of “ZNWAZ.” Existing subscribers to the AMI were entitled to the additional |
three hundred (300) warrants, if they purchased at least one (1) Unit during the Unit program. The ZNWAZ warrants became exercisable on July |
17, 2023 and continue to be exercisable through July 17, 2024 at a per share exercise price of $ 0.25 . Amendment No. 4 – New Unit Option under |
the Unit Program Under our Plan, we are providing a Unit Option |
under our Unit Program with this Amendment No. 4. This Unit Option period began on November 6, 2023 and terminates on December 31, 2023. Our Unit Program consists of the combination of |
Common Stock and warrants with basic Unit Program features, conditions and terms outlined in the Original Prospectus Supplement and Amendment |
No. 1. Amendment No. 4 provides the option period, unit price and the determination of the number of shares of Common Stock and warrants |
per unit. This Unit Option began on November 6, 2023 and is scheduled to terminate on December 31, 2023, unless extended at the sole discretion |
of Zion Oil & Gas, Inc. The Unit Option consists of Units of our securities where each Unit (priced at $ 250.00 each) is comprised |
of (i) a certain number of shares of Common Stock determined by dividing $ 250.00 (the price of one Unit) by the average of the high and |
low sale prices of the Company’s publicly traded common stock as reported on the OTCQX on the Unit Purchase Date and (ii) Common |
Stock purchase warrants to purchase an additional fifty ( 50 ) shares of Common Stock at a per share exercise price of $ 0.25 . The participant’s |
Plan account will be credited with the number of shares of the Company’s Common Stock and Warrants that are acquired under the Units |
purchased. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price |
of $ 0.25 . The warrant shall have the Company notation of “ZNWBA” and will not be registered for trading on the OTCQX or any |
other stock market or trading market. Plan participants, who enroll into the Unit Program |
with the purchase of at least one Unit and enroll in the separate Automatic Monthly Investments (“AMI”) program at a minimum |
of $ 50.00 per month, will receive an additional fifty (50) warrants at an exercise price of $ 0.25 during this Unit Option Program. The |
fifty ( 50 ) additional warrants are for enrolling into the AMI program and shall receive the above warrant with the Company notation of |
“ZNWBA.” Existing subscribers to the AMI are entitled to the additional fifty ( 50 ) warrants, if they purchase at least one |
(1) Unit during the Unit program. The ZNWBA warrants will become exercisable on |
January 15, 2024, unless extended, and continue to be exercisable through January 14, 2025, unless extended, at a per share exercise price |
of $ 0.25 . For |
the three and nine months ended September 30, 2023, approximately $ 1,805,000 , and $ 4,358,000 were raised under the DSPP program, |
respectively. The $ 4,358,000 figure is net of $ 610,000 in equity issuance costs to an outside party. For |
the three and nine months ended September 30, 2022, approximately $ 3,477,000 , and $ 16,470,000 were raised under the DSPP program, |
respectively. The company raised approximately $ 391,000 from the period October |
1, 2023 through November 7, 2023, under the DSPP program. The |
warrants represented by the company notation ZNWAA are tradeable on the OTCQX market under the symbol ZNOGW. However, all of the other |
warrants characterized above, in the table below, and throughout this Form 10-Q, are not tradeable and are used internally for classification |
and accounting purposes only. 28 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
3 - Stockholders’ Equity (cont’d) E. |
Warrant Table The |
warrants balances at December 31, 2022 and transactions since January 1, 2023 are shown in the table be Warrants Exercise Price Warrant Termination Date Outstanding Balance, 12/31/2022 Warrants Issued Warrants Exercised Warrants Expired Outstanding Balance, 9/30/2023 ZNWAA $ 2.00 01/31/2024 1,498,804 - - - 1,498,804 ZNWAD $ 1.00 05/02/2023 243,853 - - ( 243,853 ) - ZNWAE $ 1.00 05/01/2023 2,144,099 - - ( 2,144,099 ) - ZNWAF $ 1.00 08/14/2023 359,435 - - ( 359,435 ) - ZNWAG $ 1.00 01/08/2024 240,068 - - - 240,068 ZNWAH $ 5.00 04/19/2023 372,400 - - ( 372,400 ) - ZNWAI $ 3.00 06/29/2023 640,710 - ( 100 ) ( 640,610 ) - ZNWAJ $ 1.00 10/29/2023 545,900 - - - 545,900 ZNWAK $ 0.01 02/25/2023 424,225 - ( 9,050 ) ( 415,175 ) - ZNWAL $ 2.00 08/26/2023 517,875 - - ( 517,875 ) - ZNWAM $ 0.05 12/31/2023 4,376,000 - - - 4,376,000 ZNWAN $ 1.00 05/16/2023 267,760 - ( 75 ) ( 267,685 ) - ZNWAO $ 0.25 06/12/2023 174,660 - - ( 174,660 ) - ZNWAQ $ 0.05 12/31/2023 23,428,348 - - - 23,428,348 ZNWAV $ 0.05 06/28/2023 - 288,500 ( 167,730 ) ( 120,770 ) - ZNWAW $ 0.05 07/13/2023 - 199,000 ( 151,500 ) ( 47,500 ) - ZNWAX $ 0.05 07/31/2023 - 818,500 ( 458,750 ) ( 359,750 ) - ZNWAY $ 0.05 09/10/2023 17,450 ( 3,700 ) ( 13,750 ) - ZNWAZ $ 0.25 07/17/2024 - 153,500 - - 153,500 Outstanding warrants 35,234,137 1,476,950 ( 790,905 ) ( 5,677,562 ) 30,242,620 F. |
Warrant Descriptions of Current Warrants The |
price and the expiration dates for the series of warrants to investors are shown in the table below. The listing contains only those |
warrants with an expiration date beyond the balance sheet date. Period of Grant US$ Expiration Date ZNWAA Warrants A,B,E March 2013 – December 2014 2.00 January 31, 2024 ZNWAG Warrants B,E October 2017 – December 2017 1.00 January 08, 2024 ZNWAJ Warrants A,B August 2018 – September 2018 1.00 October 29, 2023 ZNWAM Warrants C,F January 2021 – March 2021 0.05 December 31, 2023 ZNWAQ Warrants C,F June 2021 0.05 December 31, 2023 ZNWAS Warrants D August 2021 – March 2022 0.25 December 31, 2025 ZNWAT Warrants D August – September 2022 0.25 December 31, 2025 ZNWAU Warrants D October – November 2022 0.25 December 31, 2025 ZNWAZ Warrants G May – June 2023 .25 July 17, 2024 ZNWBA Warrants H November – December 2023 .25 January 15, 2025 A On May 29, 2019, the Company extended the expiration date of the Warrants by one ( 1 ) year. B On September 15, 2020, the Company extended the expiration date of the Warrants by two ( 2 ) years. C On |
March 21, 2022, the Company extended the expiration date of the Warrants by one ( 1 ) year. On June 16, 2023, the Company extended the |
expiration date of the Warrants to September 6, 2023. On August 21, 2023, the Company extended the expiration date of the Warrants |
to October 31, 2023. On October 19, 2023, the Company extended the expiration date of the Warrants to December 31, 2023. D These warrants will be issued and become exercisable beginning on November 15, 2025 and expire on December 31, 2025. E On December 14, 2022, the Company extended the expiration date of the Warrants by one ( 1 ) year. F The warrant exercise price was lowered to $ 0.05 on December 28, 2022. G On May 15, 2023, the Company announced a new Unit Offering and the related ZNWAZ warrant. H On November 6, 2023 the Company announced a new Unit Offering and the |
related ZNWBA warrant. 29 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
4 - Unproved Oil and Gas Properties, Full Cost Method Unproved |
oil and gas properties, under the full cost method, are comprised as follows: September 30, 2023 December 31, 2022 US$ thousands US$ thousands Excluded from amortization base: Drilling costs, and other operational related costs 2,490 2,362 Capitalized salary costs 2,419 2,342 Capitalized interest costs 1,418 1,418 Legal and seismic costs, license fees and other preparation costs 9,976 9,728 Other costs 39 39 16,342 15,889 Post |
Impairment of unproved oil and gas properties are comprised as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 US$ thousands US$ thousands US$ thousands US$ thousands Excluded from amortization base: Drilling costs, and other operational related costs 20 - 76 - Capitalized salary costs - - - - Capitalized interest costs - - - - Legal costs, license fees and other preparation costs 16 - 53 - Other costs - - - - 36 - 129 - Changes |
in Unproved oil and gas properties during the three and nine months ended September 30, 2023 and 2022 are as follows: For the three months ended September 30, For the nine months ended September 30, 2023 2022 2023 2022 US$ thousands US$ thousands US$ thousands US$ thousands Excluded from amortization base: Drilling costs, and other operational related costs 58 5,350 204 10,666 Capitalized salary costs 25 30 77 151 Capitalized interest costs - - - - Legal costs, license fees and other preparation costs 103 586 301 1,402 Other costs - - - - Impairment of unproved oil and gas properties ( 36 ) - ( 129 ) - * 150 * 5,966 *453 *12,219 * Inclusive of non-cash amounts of approximately $ 129,000 , and $ 1,032,000 during the three months ended September 30, 2023, and 2022, respectively * Inclusive of non-cash amounts of approximately $ 677,000 , and $ 2,740,000 during the nine months ended September 30, 2023, and 2022, respectively Please |
refer to Footnote 1 – Nature of Operations and Going Concern for more information about Zion’s exploration activities. 30 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
5 - Right of use lease assets and lease obligations The |
Company is a lessee in several non-cancellable operating leases for transportation and office space. The |
table below presents the operating lease assets and liabilities recognized on the balance sheet as of September 30, 2023 and December |
31, 2022: September 30, 2023 December 31, 2022 US$ thousands US$ thousands Operating lease assets $ 246 $ 202 Operating lease liabiliti Current operating lease liabilities $ 192 $ 196 Non-current operating lease liabilities $ 53 $ 12 Total operating lease liabilities $ 245 $ 208 The |
depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The |
Company’s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the |
discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate |
the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term |
of a lease within a particular currency environment. The Company used incremental borrowing rates as of January 1, 2019 for operating |
leases that commenced prior to that date. The |
Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of September 30, 2023 |
September 30, 2023 Weighted average remaining lease term (years) 1.08 Weighted average discount rate 5.9 % 31 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
5 - Right of use lease assets and leases obligations (cont’d) The |
table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancellable |
operating leases with terms of more than one year to the total operating lease liabilities recognized on the condensed balance sheets |
as of September 30, 2023: US$ thousands 2023 75 2024 178 2025 - 2026 - Thereafter - Total undiscounted future minimum lease payments 253 L portion representing imputed interest ( 8 ) Total undiscounted future minimum lease payments 245 * Less |
than one thousand. Operating |
lease costs were $ 76,000 and $ 203,000 for the three and nine months ended September 30, 2023, respectively. Operating lease costs are |
included within general and administrative expenses on the statements of operations. Operating |
lease costs were $ 69,000 and $ 206,000 for the three and nine months ended September 30, 2022, respectively. Operating lease costs |
are included within general and administrative expenses on the statements of operations. Cash |
paid for amounts included in the measurement of operating lease liabilities was $ 76,000 and $ 203,000 for the three and nine |
months ended September 30, 2023, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $ 71,000 and $ 214,000 for the three and nine months ended September 30, 2022, respectively. These amounts are included in operating activities |
in the statements of cash flows. Right-of-use |
assets obtained in exchange for new operating lease liabilities were $ 252,000 and $ 252,000 for the three and nine |
months ended September 30, 2023, respectively. Right-of-use |
assets obtained in exchange for new operating lease liabilities were $ nil and $ 136,000 for the three and nine months |
ended September 30, 2022, respectively. 32 Zion |
Oil & Gas, Inc. Consolidated |
Condensed Notes to Financial Statements (Unaudited) Note |
6 - Commitments and Contingencies A. |
Securities and Exchange Commission (“SEC”) Investigation As |
previously disclosed by the Company, on June 21, 2018, the Fort Worth Regional Office of the SEC informed Zion that it was conducting |
a formal, non-public investigation and asked that we provide certain information and documents in connection with its investigation, |
which we did. On |
April 5, 2023, the Company received from the Fort Worth Regional Office of the SEC written notice to the Company concluding the investigation |
as to the Company and that the SEC does “not intend to recommend an enforcement action by the Commission against Zion.” B. |
Litigation From |
time to time, the Company may be subject to routine litigation, claims or disputes in the ordinary course of business. The Company defends |
itself vigorously in all such matters. However, we cannot predict the outcome or effect of any of the potential litigation, claims or |