Delaware
|
20-0065053
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o (Do
not check if a smaller reporting company)
|
Smaller
reporting company x
|
Page
|
|
Item
1 - Financial Statements – Unaudited
|
|
Balance
Sheets - June 30, 2009 and December 31, 2008
|
1
|
Statements
of Operations for the three months and six months ended June 30, 2009 and
2008 and the period from April 6, 2000 (inception) to June 30,
2009
|
2
|
Statements
of Changes in Stockholders' Equity for the six months ended June 30, 2009
and the period from April 6, 2000 (inception) to June 30,
2009
|
3
|
Statements
of Cash Flows for the six months ended June 30, 2009 and 2008 and the
period from April 6, 2000 (inception) to June 30, 2009
|
12
|
Notes
to Unaudited Interim Financial Statements
|
14
|
Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
45
|
Item
3 – Quantitative and Qualitative Disclosures about Market
Risk
|
50
|
Item
4(T) - Controls and Procedures
|
51
|
PART
II — OTHER INFORMATION
|
|
Item
1 – Legal Proceedings
|
51
|
Item
2 - Unregistered Sales of Equity Securities and Use of
Proceeds
|
51
|
Item
3 - Defaults upon Senior Securities
|
53
|
Item
4 – Submission of Matters to a Vote of Security Holders
|
53
|
Item
5 - Other Information
|
53
|
Item
6 – Exhibits
|
54
|
SIGNATURES
|
55
|
June
30
|
December
31
|
|||||||
2009
|
2008
|
|||||||
US$
thousands
|
US$
thousands
|
|||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
18,675 | 1,726 | ||||||
Prepaid
expenses and other
|
636 | 523 | ||||||
Prepaid
offering costs
|
- | 14 | ||||||
Refundable
Value-Added Tax
|
1,008 | 26 | ||||||
Total
current assets
|
20,319 | 2,289 | ||||||
Unproved
oil and gas properties, full cost method
|
9,849 | 5,246 | ||||||
Property
and equipment
|
||||||||
Net
of accumulated depreciation of $70,000 and $60,000
|
76 | 83 | ||||||
Other
assets
|
||||||||
Assets
held for severance benefits
|
28 | 58 | ||||||
Total
other assets
|
28 | 58 | ||||||
Total
assets
|
30,272 | 7,676 | ||||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
146 | 117 | ||||||
Accrued
liabilities
|
2,188 | 223 | ||||||
Deferred
officers compensation
|
268 | 1,487 | ||||||
Total
current liabilities
|
2,602 | 1,827 | ||||||
Provision
for severance pay
|
178 | 174 | ||||||
Deferred
officers’ compensation
|
- | 120 | ||||||
Total
liabilities
|
2,780 | 2,121 | ||||||
Commitments
and contingencies (see Note 5)
|
||||||||
Stockholders’
equity
|
||||||||
Common
stock, par value $.01; Authorized: 50,000,000 and
30,000,000 shares at 2009 and 2008, respectively; Issued and
outstanding: 15,056,653 and 10,541,563 shares at 2009 and 2008
respectively
|
151 | 105 | ||||||
Additional
paid-in capital
|
53,994 | 29,855 | ||||||
Deficit
accumulated in development stage
|
(26,653 | ) | (24,405 | ) | ||||
Total
stockholders’ equity
|
27,492 | 5,555 | ||||||
Total
liabilities and stockholders' equity
|
30,272 | 7,676 |
Period
from
|
||||||||||||||||||||
April
6, 2000
|
||||||||||||||||||||
For
the three month period
|
For
the six month period
|
(inception)
to
|
||||||||||||||||||
ended
June 30
|
ended
June 30
|
June
30
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
||||||||||||||||
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||
Revenues
|
- | - | - | - | - | |||||||||||||||
General
and administrative expenses
|
||||||||||||||||||||
Legal
and professional
|
233 | 277 | 467 | 600 | 5,561 | |||||||||||||||
Salaries
|
900 | 489 | 1,400 | 943 | 7,108 | |||||||||||||||
Other
|
214 | 429 | 475 | 722 | 4,129 | |||||||||||||||
Impairment
of unproved oil and gas properties
|
- | - | - | - | 9,494 | |||||||||||||||
Loss
from operations
|
(1,347 | ) | (1,195 | ) | (2,342 | ) | (2,265 | ) | (26,292 | ) | ||||||||||
Other
expense, net
|
||||||||||||||||||||
Termination
of initial public offering
|
- | - | - | - | (527 | ) | ||||||||||||||
Other
income, net
|
- | - | 76 | - | 80 | |||||||||||||||
Interest
income, net
|
15 | 26 | 18 | 57 | 86 | |||||||||||||||
Loss
before income taxes
|
(1,332 | ) | (1,169 | ) | (2,248 | ) | (2,208 | ) | (26,653 | ) | ||||||||||
Income
taxes
|
- | - | - | - | - | |||||||||||||||
Net
loss
|
(1,332 | ) | (1,169 | ) | (2,248 | ) | (2,208 | ) | (26,653 | ) | ||||||||||
Net
loss per share of common stock - basic and diluted (in US$)
(See Note 3D)
|
(0.12 | ) | (0.11 | ) | (0.20 | ) | (0.20 | ) | (4.15 | ) | ||||||||||
Weighted-average
shares outstanding – basic and diluted (in thousands) (See Note
3D)
|
11,224 | 11,022 | 11,199 | 11,022 | 6,424 |
Deficit
|
||||||||||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
paid-in
|
in
development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
stage
|
Total
|
||||||||||||||||||||||
Thousands
|
US$
thousands
|
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||||||||
Balances
April 6, 2000
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Issued
for cash ($0.001 per share)
|
- | - | 2,400 | * - | 2 | - | 2 | |||||||||||||||||||||
Issuance
of shares and warrants in a private offering ($1 per
share)
|
- | - | 100 | * - | 100 | - | 100 | |||||||||||||||||||||
Costs
associated with the issuance of shares
|
- | - | - | - | (24 | ) | - | (24 | ) | |||||||||||||||||||
Waived
interest on conversion of debt
|
- | - | - | - | * - | - | * - | |||||||||||||||||||||
Value
of warrants granted to employees
|
- | - | - | - | 2 | - | 2 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (5 | ) | (5 | ) | |||||||||||||||||||
Balances,
December 31, 2000
|
- | - | 2,500 | * - | 80 | (5 | ) | 75 | ||||||||||||||||||||
Issuance
of shares and warrants in a private offering in January 2001 ($1 per
share)
|
- | - | 135 | * - | 135 | - | 135 | |||||||||||||||||||||
Issuance
of shares and warrants in a private offering
which
closed in September 2001 ($1 per share)
|
- | - | 125 | * - | 125 | - | 125 | |||||||||||||||||||||
Payment
of accounts payable through issuance of shares and
warrants
|
- | - | 40 | * - | 40 | - | 40 | |||||||||||||||||||||
Payment
of note payable through issuance of shares and warrants
|
- | - | 25 | * - | 25 | - | 25 | |||||||||||||||||||||
Issuance
of shares and warrants in a private offering which closed in November 2001
($1 per share)
|
- | - | 175 | * - | 175 | - | 175 | |||||||||||||||||||||
Costs
associated with the issuance of shares
|
- | - | - | - | (85 | ) | - | (85 | ) | |||||||||||||||||||
Waived
interest on conversion of debt
|
- | - | - | - | 1 | - | 1 | |||||||||||||||||||||
Value
of warrants granted to employees
|
- | - | - | - | 37 | - | 37 | |||||||||||||||||||||
Value
of warrants granted to directors and consultants
|
- | - | - | - | 3 | - | 3 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (207 | ) | (207 | ) | |||||||||||||||||||
Balances,
December 31, 2001
|
- | - | 3,000 | * - | 536 | (212 | ) | 324 |
Deficit
|
||||||||||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
paid-in
|
in
development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
stage
|
Total
|
||||||||||||||||||||||
Thousands
|
US$
thousands
|
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||||||||
Change
in par value of common shares from $ 0.0001 per share to $0.01 per
share
|
- | - | - | 30 | (30 | ) | - | - | ||||||||||||||||||||
Issuance
of shares and warrants in a private offering which closed in January 2002
($1 per share)
|
- | - | 20 | * - | 20 | - | 20 | |||||||||||||||||||||
Issuance
of shares and warrants in a private offering which closed in November 2002
($10 per share)
|
25 | * - | 22 | * - | 254 | - | 254 | |||||||||||||||||||||
Payment
of accounts payable through issuance of preferred shares and
warrants
|
13 | * - | - | - | 127 | - | 127 | |||||||||||||||||||||
Payment
of accounts payable through issuance of common shares and
warrants
|
- | - | 111 | 1 | 131 | - | 132 | |||||||||||||||||||||
Payment
of note payable through issuance of shares and warrants
|
5 | * - | - | - | 50 | - | 50 | |||||||||||||||||||||
Payment
of accounts payable to employee through issuance of shares upon exercise
of warrants
|
- | - | 400 | 4 | 76 | - | 80 | |||||||||||||||||||||
Costs
associated with the issuance of shares
|
- | - | - | - | (160 | ) | - | (160 | ) | |||||||||||||||||||
Waived
interest on conversion of debt
|
- | - | - | - | 3 | - | 3 | |||||||||||||||||||||
Deferred
financing costs on debt conversions / modifications
|
- | - | - | - | 21 | - | 21 | |||||||||||||||||||||
Value
of warrants granted to employees
|
- | - | - | - | 1 | - | 1 | |||||||||||||||||||||
Value
of warrants granted to directors and consultants
|
- | - | - | - | 13 | - | 13 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (403 | ) | (403 | ) | |||||||||||||||||||
Balances,
December 31, 2002
|
43 | * - | 3,553 | 35 | 1,042 | (615 | ) | 462 |
Deficit
|
||||||||||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
paid-in
|
in
development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
stage
|
Total
|
||||||||||||||||||||||
Thousands
|
US$
thousands
|
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||||||||
Issuance
of shares in connection with executive employment
|
- | - | 50 | 1 | 49 | - | 50 | |||||||||||||||||||||
Issuance
of share on warrants exercise
|
- | - | 165 | 2 | 31 | - | 33 | |||||||||||||||||||||
Issuance
of dividend shares to record holders as of December 31,
2002
|
4 | * - | - | - | * - | - | - | |||||||||||||||||||||
Issuance
of shares and warrants in a private offering which closed in February 2003
($10 per share):
|
||||||||||||||||||||||||||||
for
cash consideration
|
10 | * - | - | - | 105 | - | 105 | |||||||||||||||||||||
for
reduction of accounts payable
|
5 | * - | - | - | 45 | - | 45 | |||||||||||||||||||||
Issuance
of shares and warrants as compensation for extension of $100,000 line of
credit
|
1 | * - | - | - | 10 | - | 10 | |||||||||||||||||||||
Payment
of account payable through issuance of shares and warrants
|
* - | * - | - | - | 1 | - | 1 | |||||||||||||||||||||
Conversion
of preferred shares to common shares in reincorporation
merger
|
(63 | ) | * | (-) | 763 | 7 | (7 | ) | - | - | ||||||||||||||||||
Issuance
of shares in a private offering which closed in July 2003 ($3 per
share):
|
||||||||||||||||||||||||||||
for
cash consideration
|
- | - | 33 | * - | 99 | - | 99 | |||||||||||||||||||||
for
reduction of accounts payable
|
- | - | 3 | * - | 9 | - | 9 | |||||||||||||||||||||
Issuance
of shares upon exercise of warrants:
|
||||||||||||||||||||||||||||
for
cash consideration
|
- | - | 25 | * - | 25 | - | 25 | |||||||||||||||||||||
for
reduction of accounts payable
|
- | - | 124 | 1 | 142 | - | 143 | |||||||||||||||||||||
Issuance
of shares upon exercise of warrants for cash consideration
|
- | - | 63 | 1 | 82 | - | 83 | |||||||||||||||||||||
Payment
of account payable through issuance of shares
|
- | - | 80 | 1 | 139 | - | 140 | |||||||||||||||||||||
Costs
associated with the issuance of shares
|
- | - | - | - | (58 | ) | - | (58 | ) | |||||||||||||||||||
Value
of warrants granted to employees
|
- | - | - | - | 47 | - | 47 | |||||||||||||||||||||
Deferred
financing costs on debt conversions / modifications
|
- | - | - | - | (10 | ) | - | (10 | ) | |||||||||||||||||||
Net
loss
|
- | - | - | - | - | (873 | ) | (873 | ) | |||||||||||||||||||
Balances
as at December 31, 2003
|
- | - | 4,859 | 48 | 1,751 | (1,488 | ) | 311 |
Deficit
|
||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||
Common
Stock
|
paid-in
|
in
development
|
||||||||||||||||||
Shares
|
Amounts
|
capital
|
stage
|
Total
|
||||||||||||||||
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||
Issuance
of shares on warrants exercise
|
123 | 1 | 183 | - | 184 | |||||||||||||||
Issuance
of shares and warrants in a private offering
|
251 | 3 | 1,002 | - | 1,005 | |||||||||||||||
Payment
of officer salaries through issuance of shares and
warrants
|
46 | 1 | 184 | - | 185 | |||||||||||||||
Payment
of accounts payable to officers and consultants upon exercise of
warrants
|
80 | 1 | 99 | - | 100 | |||||||||||||||
Payment
of director honorariums through issuance of shares and
warrants
|
11 | * - | 45 | - | 45 | |||||||||||||||
Payment
of account payable through issuance of shares and warrants
|
13 | * - | 50 | - | 50 | |||||||||||||||
Payment
of bridge loan through issuance of shares and warrants
|
125 | 1 | 499 | - | 500 | |||||||||||||||
Payment
of bridge loan interest and commitment fee through issuance of shares and
warrants
|
8 | * - | 30 | - | 30 | |||||||||||||||
Payment
of bridge loan finders fee through issuance of shares and
warrants
|
2 | * - | 7 | - | 7 | |||||||||||||||
Payment
of service bonus through issuance of shares and warrants
|
20 | * - | 20 | - | 20 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (59 | ) | - | (59 | ) | |||||||||||||
Value
of warrants granted to employees
|
- | - | 41 | - | 41 | |||||||||||||||
Deferred
financing costs on debt conversions / modifications
|
- | - | 30 | - | 30 | |||||||||||||||
Net
loss
|
- | - | - | (1,737 | ) | (1,737 | ) | |||||||||||||
Balances,
December 31, 2004
|
5,538 | 55 | 3,882 | (3,225 | ) | 712 |
Deficit
|
||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||
Common
Stock
|
paid-in
|
in
development
|
||||||||||||||||||
Shares
|
Amounts
|
capital
|
stage
|
Total
|
||||||||||||||||
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||
Issuance
of shares on warrants exercised:
|
||||||||||||||||||||
For
cash
|
493 | 5 | 872 | - | 877 | |||||||||||||||
For
payment of deferred officer salaries
|
17 | * - | 21 | - | 21 | |||||||||||||||
For
exchange of shares of common stock
|
120 | 1 | (1 | ) | - | - | ||||||||||||||
Issuance
of shares and warrants in a private offering that closed in March
2005:
|
||||||||||||||||||||
For
cash
|
519 | 5 | 2,070 | - | 2,075 | |||||||||||||||
For
payment of deferred officer salaries
|
10 | * - | 40 | - | 40 | |||||||||||||||
For
payment of accounts payable
|
6 | * - | 25 | - | 25 | |||||||||||||||
Issuance
of shares and warrants in a private offering that closed in June
2005:
|
||||||||||||||||||||
For
cash
|
259 | 3 | 1,292 | - | 1,295 | |||||||||||||||
For
payment of directors honoraria
|
14 | * - | 70 | - | 70 | |||||||||||||||
For
payment of accounts payable
|
3 | * - | 15 | - | 15 | |||||||||||||||
Issuance
of shares in a private offering that closed in October
2005:
|
||||||||||||||||||||
For
cash
|
584 | 6 | 2,914 | - | 2,920 | |||||||||||||||
For
payment of deferred officer salaries
|
40 | * - | 200 | - | 200 | |||||||||||||||
For
payment of accounts payable
|
22 | * - | 110 | - | 110 | |||||||||||||||
Issuance
of shares in a private offering that closed in December
2005
|
80 | 1 | 439 | - | 440 | |||||||||||||||
Shares
to be issued for services provided by director
|
- | - | 42 | - | 42 | |||||||||||||||
Value
of warrants and options granted to employees
|
- | - | 216 | - | 216 | |||||||||||||||
Value
of warrants granted to directors and consultants
|
- | - | 16 | - | 16 | |||||||||||||||
Deferred
financing costs on debt conversions /modifications
|
- | - | 44 | - | 44 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (275 | ) | - | (275 | ) | |||||||||||||
Net
loss
|
- | - | - | (1,605 | ) | (1,605 | ) | |||||||||||||
Balances,
December 31, 2005
|
7,705 | 76 | 11,992 | (4,830 | ) | 7,238 |
Deficit
|
||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||
Common
Stock
|
paid-in
|
in
development
|
||||||||||||||||||
Shares
|
Amounts
|
capital
|
stage
|
Total
|
||||||||||||||||
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||
Issuance
of shares on warrants exercised:
|
||||||||||||||||||||
For
cash
|
253 | 3 | 1,151 | - | 1,154 | |||||||||||||||
For
debt
|
60 | 1 | 276 | - | 277 | |||||||||||||||
Issuance
of shares and warrants in private offering closings in first quarter
2006:
|
||||||||||||||||||||
For
cash
|
66 | 1 | 362 | - | 363 | |||||||||||||||
For
payment of accounts
|
||||||||||||||||||||
Payable
|
3 | * - | 14 | - | 14 | |||||||||||||||
Shares
issued for services provided by officer
|
200 | 2 | 248 | - | 250 | |||||||||||||||
Issuance
of shares and warrants in a private offering that closed in September 2006
for cash
|
23 | * - | 126 | - | 126 | |||||||||||||||
Value
of options granted to employees
|
- | - | 162 | - | 162 | |||||||||||||||
Value
of warrants granted to underwriter
|
- | - | 20 | - | 20 | |||||||||||||||
Value
of shares gifted to directors, employees and service
providers
|
- | - | 147 | - | 147 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (681 | ) | - | (681 | ) | |||||||||||||
Funds
received from public offering for subscription shares:
|
||||||||||||||||||||
For
cash
|
410 | 4 | 2,867 | - | 2,871 | |||||||||||||||
For
debt
|
27 | * - | 188 | - | 188 | |||||||||||||||
Net
loss
|
- | - | - | (2,510 | ) | (2,510 | ) | |||||||||||||
Balances
December 31, 2006
|
8,747 | 87 | 16,872 | (7,340 | ) | 9,619 |
Deficit
|
||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||
Common
Stock
|
paid-in
|
in
development
|
||||||||||||||||||
Shares
|
Amounts
|
capital
|
stage
|
Total
|
||||||||||||||||
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||
Funds
received from public offering for subscription shares:
|
||||||||||||||||||||
For
cash
|
1,336 | 14 | 9,338 | - | 9,352 | |||||||||||||||
For
debt
|
33 | * - | 235 | - | 235 | |||||||||||||||
Compensation
in respect of shares previously issued for services provided by
officer
|
- | - | 208 | - | 208 | |||||||||||||||
Value
of options granted to employees
|
- | - | 337 | - | 337 | |||||||||||||||
Value
of warrants granted to underwriter
|
- | - | 79 | - | 79 | |||||||||||||||
Value
of shares granted to employees
|
5 | *- | 25 | - | 25 | |||||||||||||||
Value
of shares gifted to employees
|
- | - | 7 | - | 7 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (1,027 | ) | - | (1,027 | ) | |||||||||||||
Net
loss
|
- | - | - | (13,047 | ) | (13,047 | ) | |||||||||||||
Balances
December 31, 2007
|
10,121 | 101 | 26,074 | (20,387 | ) | 5,788 |
Deficit
|
||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||
Common
Stock
|
paid-in
|
in
development
|
||||||||||||||||||
Shares
|
Amounts
|
capital
|
stage
|
Total
|
||||||||||||||||
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||
Funds
received from Unit Offering
for subscription shares:
|
||||||||||||||||||||
For
cash
|
405 | 4 | 4,040 | - | 4,044 | |||||||||||||||
For
debt
|
12 | *- | 120 | - | 120 | |||||||||||||||
Value
of warrants granted to employees
|
- | - | 266 | - | 266 | |||||||||||||||
Value
of options granted to directors and consultants
|
- | - | 44 | - | 44 | |||||||||||||||
Value
of shares granted to employees
|
4 | *- | 25 | - | 25 | |||||||||||||||
Value
of shares gifted to employees
|
- | - | 101 | - | 101 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (815 | ) | - | (815 | ) | |||||||||||||
Net
loss
|
- | - | - | (4,018 | ) | (4,018 | ) | |||||||||||||
Balances
December 31, 2008
|
10,542 | 105 | 29,855 | (24,405 | ) | 5,555 |
Deficit
|
||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||
Common
Stock
|
paid-in
|
in
development
|
||||||||||||||||||
Shares
|
Amounts
|
capital
|
stage
|
Total
|
||||||||||||||||
Thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||||||||
Funds
received from Unit Offering
for subscription shares:
|
||||||||||||||||||||
For
cash
|
237 | 3 | 2,370 | - | 2,373 | |||||||||||||||
For
debt
|
13 | *- | 126 | - | 126 | |||||||||||||||
Funds
received from Rights Offering
|
4,200 | 42 | 20,958 | - | 21,000 | |||||||||||||||
Funds
received from warrant exercises
|
52 | 1 | 364 | - | 365 | |||||||||||||||
Underwriter
warrants exercised in cashless exercise
|
13 | - | - | - | - | |||||||||||||||
Value
of options granted to employees
|
- | - | 354 | - | 354 | |||||||||||||||
Value
of options granted to directors and consultants
|
- | - | 328 | - | 328 | |||||||||||||||
Value
of shares gifted to employees
|
- | - | 4 | - | 4 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (365 | ) | - | (365 | ) | |||||||||||||
Net
loss
|
- | - | - | (2,248 | ) | (2,248 | ) | |||||||||||||
Balances
June 30, 2009
|
15,057 | 151 | 53,994 | (26,653 | ) | 27,492 |
Period
from
|
||||||||||||
April
6, 2000
|
||||||||||||
For
the six month
|
(inception)
to
|
|||||||||||
period ended
June 30
|
June
30
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
loss
|
(2,248 | ) | (2,208 | ) | (26,653 | ) | ||||||
Adjustments
required to reconcile net loss to net cash
|
||||||||||||
used
in operating activities:
|
||||||||||||
Depreciation
|
10 | 14 | 76 | |||||||||
Officer,
director and other fees, paid via common stock
|
10 | - | 2,275 | |||||||||
Value
of options and warrants issued to employees, directors &
others
|
682 | 216 | 1,966 | |||||||||
Interest
paid through issuance of common stock
|
- | - | 17 | |||||||||
Write-off
of costs associated with public offering
|
- | - | 507 | |||||||||
Loss
on disposal of equipment
|
- | - | 4 | |||||||||
Impairment
of unproved oil and gas properties
|
- | - | 9,494 | |||||||||
Change
in assets and liabilities, net:
|
||||||||||||
Decrease
in inventories
|
- | - | 150 | |||||||||
Prepaid
expenses and other
|
(113 | ) | (171 | ) | (636 | ) | ||||||
(Decrease)Increase
in deferred offering costs
|
14 | (293 | ) | - | ||||||||
Change
in refundable value-added tax
|
(982 | ) | 42 | (1,008 | ) | |||||||
Severance
pay, net
|
34 | 25 | 150 | |||||||||
Accounts
payable
|
29 | 47 | 789 | |||||||||
Accrued
liabilities
|
1,965 | (13 | ) | 2,189 | ||||||||
(Decrease)Increase
in deferred officers' compensation
|
(1,219 | ) | 412 | 508 | ||||||||
Net
cash used in operating activities
|
(1,818 | ) | (1,929 | ) | (10,172 | ) | ||||||
Cash
flows from investing activities
|
||||||||||||
Acquisition
of property and equipment
|
(3 | ) | (39 | ) | (156 | ) | ||||||
Investment
in unproved oil and gas properties
|
(4,603 | ) | (777 | ) | (19,493 | ) | ||||||
Net
cash used in investing activities
|
(4,606 | ) | (816 | ) | (19,649 | ) | ||||||
Cash
flows from financing activities
|
||||||||||||
Deferred
financing costs on debt conversions and modification
|
- | - | 89 | |||||||||
Loan
proceeds – related party
|
- | - | 259 | |||||||||
Loan
principal repayments – related party
|
- | - | (259 | ) | ||||||||
Loan
proceeds – other
|
- | - | 500 | |||||||||
Proceeds
from sale of stock
|
23,738 | - | 51,557 | |||||||||
Costs
associated with the issuance of shares
|
(365 | ) | - | (3,650 | ) | |||||||
Net
cash provided by financing activities
|
23,373 | - | 48,496 | |||||||||
Net
increase (decrease) in cash
|
16,949 | (2,745 | ) | 18,675 | ||||||||
Cash
– beginning of period
|
1,726 | 4,590 | - | |||||||||
Cash
– end of period
|
18,675 | 1,845 | 18,675 |
Period
from
|
||||||||||||
April
6, 2000
|
||||||||||||
For
the six month
|
(inception)
to
|
|||||||||||
period ended
June 30
|
June
30
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||
Supplemental
information
|
||||||||||||
Cash
paid for interest
|
4 | - | 62 | |||||||||
Cash
paid for income taxes
|
- | - | - | |||||||||
Non-cash
investing and financing activities:
|
||||||||||||
Payment
of accounts payable through issuance of preferred and common
stock
|
6 | - | 956 | |||||||||
Payment
of note payable through issuance of common stock
|
- | - | 575 | |||||||||
Payment
of accounts payable through issuance of note payable
|
- | - | 35 | |||||||||
Financing
costs paid through issuance of common stock
|
- | - | 25 | |||||||||
Increase
in accounts payable for financing costs
|
- | - | 382 | |||||||||
Waived
interest on debt conversions
|
- | - | 4 | |||||||||
Shares
issued for debt conversion
|
120 | 216 | 940 | |||||||||
Shares
issued for services provided by officer
|
- | - | 500 | |||||||||
Value
of warrants and options granted to employees
|
354 | - | 1,462 | |||||||||
Value
of warrants granted to directors and consultants
|
328 | - | 405 | |||||||||
Value
of warrants granted to underwriters
|
- | - | 99 | |||||||||
Value
of shares granted to employees
|
- | - | 50 | |||||||||
Value
of shares gifted to directors, employees and service
providers
|
4 | - | 259 | |||||||||
Deferred
financing costs
|
- | - | 85 | |||||||||
Transfer
of inventory to oil and gas properties
|
- | - | 150 |
A.
|
Nature
of Operations
|
June
30
2009
|
December
31
2008
|
|||||||
US$
thousands
|
US$
thousands
|
|||||||
Excluded
from amortization base:
|
||||||||
Drilling
operations, completion costs and other related costs
|
7,761 | 3,641 | ||||||
Capitalized
salary costs
|
806 | 582 | ||||||
Legal
costs and license fees
|
815 | 684 | ||||||
Other
costs
|
467 | 339 | ||||||
$ | 9,849 | $ | 5,246 |
Six Month
Period
ended
June 30
2009
|
Year
ended
December
31 2008
|
Period from
April 6, 2000
(inception)
to June 30,
2009
|
||||||||||
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||
Drilling
operations, completion costs and other related costs
|
- | - | 7,959 | |||||||||
Capitalized
salary costs
|
- | - | 683 | |||||||||
Legal
costs and license fees
|
- | - | 509 | |||||||||
Other
costs
|
- | - | 343 | |||||||||
- | - | 9,494 |
1.
|
SFAS
166 – Accounting for Transfers of Financial Assets – an amendment of FASB
Statement No. 140 (SFAS 166)
|
1.
|
SFAS
166 – Accounting for Transfers of Financial Assets – an amendment of FASB
Statement No. 140 (SFAS 166)
(cont’d)
|
2.
|
SFAS
167 – Amendments to FASB Interpretation No. 46(R) (SFAS
167)
|
3.
|
SFAS 168 - The FASB Accounting Standards
Codification and
the Hierarchy of Generally Accepted Accounting Principles—a replacement of
FASB Statement No. 162 (SFAS
168)
|
3.
|
SFAS 168 - The FASB Accounting Standards
Codification and
the Hierarchy of Generally Accepted Accounting Principles—a replacement of
FASB Statement No. 162 (SFAS 168)
(cont’d)
|
1.
|
SFAS
157 – Fair Value Measurements
(SFAS 157)
|
1.
|
SFAS
157 – Fair Value Measurements (SFAS 157)
(cont’d)
|
2.
|
FSP
FAS 115-2 and FAS 124-2 – Recognition and Presentation of
Other-Than-Temporary Impairments (“FAS 115-2” and “FAS
124-2”)
|
3.
|
FSP
FAS 107-1 and APB 28-1 – Interim Disclosures about Fair Value of Financial
Instruments (“FAS 107-1” and “APB
28-1”)
|
3.
|
FSP
FAS 107-1 and APB 28-1 – Interim Disclosures about Fair Value of Financial
Instruments (“FAS 107-1” and “APB 28-1”)
(cont’d)
|
4.
|
SFAS
162 – The Hierarchy of Generally Accepted Accounting Principles (SFAS
162)
|
5.
|
SFAS
141R - Business Combinations (SFAS
141R)
|
5.
|
SFAS
141R - Business Combinations (SFAS 141R)
(cont’d)
|
6.
|
SFAS
160 – Non-controlling Interest in Consolidated Financial Statements (SFAS
160)
|
7.
|
SFAS
161 – Disclosures about Derivative Instruments and Hedging Activities
(SFAS 161)
|
7.
|
SFAS
161 – Disclosures about Derivative Instruments and Hedging Activities
(SFAS 161) (cont’d)
|
8.
|
SFAS
165 – Subsequent Events (SFAS
165)
|
9.
|
FSP
APB 14-1 – Accounting for Convertible Debt Instruments That May be Settled
in Cash upon Conversion (Including Partial Cash Settlement) (APB
14-1)
|
10.
|
EITF
07-5 – Determining Whether an Instrument (or Embedded Feature) is Indexed
to an Entity’s Own Stock (EITF
07-5)
|
|
E.
|
2005
Stock Option Plan (cont’d)
|
|
F.
|
Fair
Value of Warrants and Options
|
Exercise
|
Number
of
|
Expiration
|
Warrants
or
|
||||||||
price
|
shares
|
Date
|
Options
|
||||||||
To
non-employees
|
|||||||||||
8.25 | 59,000 |
June
16, 2012
|
Options
|
||||||||
To
employees and directors
|
|||||||||||
5.00 | 50,000 |
December
31, 2009
|
Warrants
|
||||||||
5.00 | 50,000 |
December
31, 2009
|
Options
|
||||||||
5.00 | 66,667 |
December
31, 2010
|
Options
|
||||||||
8.25 | 53,000 |
June
16, 2012
|
Options
|
|
F.
|
Fair
Value of Warrants and Options
(cont’d)
|
5.60 | 35,000 |
December
31, 2012
|
Options
|
||||||||
7.97 | 50,000 |
December
31, 2014
|
Options
|
||||||||
0.01 | 123,882 |
December
3, 2017
|
Options
|
||||||||
To
investors
|
|||||||||||
7.00 | 614,204 |
January
31, 2012
|
Warrants
|
||||||||
6.04 | * | 1,101,753 |
Number
of
|
Weighted Average
|
|||||||
shares
|
exercise
price
|
|||||||
US$
|
||||||||
Granted
from April 6, 2000 (inception) to December 31, 2007 to:
|
||||||||
Employees,
officers and directors
|
1,884,818 | 1.76 | ||||||
Underwriters
(in connection with IPO)
|
46,621 | 8.75 | ||||||
Private
placement investors and others
|
1,105,492 | 2.84 | ||||||
Expired/Canceled
|
(641,059 | ) | 2.87 | |||||
Exercised
|
(1,984,077 | ) | 1.59 | |||||
Outstanding,
December 31, 2007
|
411,795 | 4.52 | ||||||
Granted
to:
|
||||||||
Investors
in Follow On Public Offering
|
416,404 | 7.00 | ||||||
Expired/Canceled
|
(64,625 | ) | 5.15 | |||||
Outstanding,
December 31, 2008
|
763,574 | 5.81 | ||||||
Granted
to:
|
||||||||
Employees,
officers, directors and consultants
|
202,000 | 6.55 | ||||||
Investors
in Follow On Public Offering
|
249,939 | 7.00 | ||||||
Expired/Canceled
|
(15,000 | ) | 5.60 | |||||
Exercised
|
(98,760 | ) | 7.83 | |||||
Outstanding,
June 30, 2009
|
1,101,753 | 6.04 | ||||||
Exercisable,
June 30, 2009
|
1,031,753 | 6.06 |
|
F.
|
Fair
Value of Warrants and Options
(cont’d)
|
Shares
underlying outstanding
|
Shares
underlying outstanding
|
|||||||||||||||||||||||||||||
warrants
and options (nonvested)
|
warrants
and options (all fully vested)
|
|||||||||||||||||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||||||||||||||||
average
|
average
|
|||||||||||||||||||||||||||||
remaining
|
Weighted
|
remaining
|
Weighted
|
|||||||||||||||||||||||||||
Range
of
|
Number
|
contractual
|
Average
|
Range
of
|
Number
|
contractual
|
Average
|
|||||||||||||||||||||||
exercise
price
|
outstanding
|
life
(years)
|
Exercise
|
exercise
|
Outstanding
|
Life
(years)
|
exercise
|
|||||||||||||||||||||||
price
|
price
|
price
|
||||||||||||||||||||||||||||
US$
|
US$
|
US$
|
US$
|
|||||||||||||||||||||||||||
0.01 | 20,000 | 8.43 | 0.01 | 0.01 | 103,882 | 8.43 | 0.01 | |||||||||||||||||||||||
- | - | - | - | 5.00 | 100,000 | 0.50 | 5.00 | |||||||||||||||||||||||
- | - | - | - | 5.00 | 66,667 | 1.50 | 5.00 | |||||||||||||||||||||||
- | - | - | - | 5.60 | 35,000 | 3.50 | 5.60 | |||||||||||||||||||||||
7.00 | 614,204 | 2.58 | 7.00 | |||||||||||||||||||||||||||
7.97 | 50,000 | 5.51 | 7.97 | 8.25 | 112,000 | 2.96 | 8.25 | |||||||||||||||||||||||
0.01-7.97 | 70,000 | 5.70 | 0.01-8.25 | 1,031,753 | 6.06 |
For
the six month period
|
Period
from April 6,
|
|||||||||||
ended
June 30,
|
2000
(inception) to
|
|||||||||||
2009
|
2008
|
June
30, 2009
|
||||||||||
US$
|
US$
|
US$
|
||||||||||
Weighted-average
fair value of underlying stock at grant date
|
7.71 | - | 3.00 – 8.23 | |||||||||
Dividend
yields
|
- | - | - | |||||||||
Expected
volatility
|
59.0 - 71.0 | % | - | 28.2% - 71.0 | % | |||||||
Risk-free
interest rates
|
1.79 – 2.47 | % | - | 1.79% - 5.15 | % | |||||||
Expected
lives
|
1.5 – 4.81 | - |
1.5
– 5.31 years
|
|||||||||
Weighted-average
grant date fair market value
|
4.93 | - | 0.76 - 6.43 |
|
F.
|
Fair
Value of Warrants and Options
(cont’d)
|
For
the six month period
|
Period
from April 6,
|
|||||||||||
ended
June 30,
|
2000
(inception) to
|
|||||||||||
2009
|
2008
|
June
30, 2009
|
||||||||||
US$
|
US$
|
US$
|
||||||||||
Weighted-average
fair value of underlying stock at grant date
|
8.23 | - | 1.00 – 8.75 | |||||||||
Dividend
yields
|
- | - | - | |||||||||
Expected
volatility
|
71 | % | - | 32.2% - 99.8 | % | |||||||
Risk-free
interest rates
|
1.79 | % | - | 1.79% - 5.50 | % | |||||||
Contractual
lives
|
3.00 | - |
0.56
– 3.17 years
|
|||||||||
Weighted-average
grant date fair market value
|
3.91 | - | 0.68 – 3.91 |
G.
|
Compensation
Cost for Warrant and Option Issuances to
Employees
|
G.
|
Compensation
Cost for Warrant and Option Issuances to Employees
(cont’d)
|
US$
thousands
|
||||
July
1 - December 31, 2009
|
140 | |||
For
the year ended December 31, 2010
|
69 | |||
For
the year ended December 31, 2011
|
28 | |||
For
the year ended December 31, 2012
|
2 | |||
239 |
|
H.
|
Warrant
Descriptions
|
Period of Grant
|
US$
|
Expiration Date
|
|||||
A
Warrants
|
January
2001 – December 2001
|
1.00 |
January
31, 2005
|
||||
B
Warrants
|
November
2001 – February 2003
|
1.50 |
January
31, 2005
|
||||
C
Warrants
|
July
2003 – March 2004
|
3.00 |
December
31, 2005
|
||||
$3.00
Warrants
|
June
2004 – August 2004
|
3.00 |
December
31, 2006
|
||||
D
Warrants
|
September
2004 – April 2005
|
4.00 |
December
31, 2006
|
||||
E
Warrants
|
September
2004 – June 2005
|
5.00 |
December
31, 2006
|
||||
F
and FF Warrants
|
October
2005
|
5.00 |
*
December 31, 2008
|
||||
G
Warrants
|
December
2005 – January 2006
|
5.50 |
December
31, 2008
|
||||
H
Warrants
|
December
2006 –May 2007
|
8.75 |
September
26, 2009
|
||||
Unit
Warrants
|
October
2008 – December 2008
|
7.00 |
January
31,
2012
|
|
I.
|
Gift
Shares
|
|
I.
|
Gift
Shares (cont’d)
|
|
A.
|
Environmental
Matters
|
|
B.
|
Royalty
Commitments
|
|
B.
|
Royalty
Commitments (cont’d)
|
|
C.
|
Long-term
Incentive Plan
|
|
F.
|
Underwriting
Agreement
|
|
F.
|
Underwriting
Agreement (cont’d)
|
|
G.
|
Lease
Commitments
|
US$
thousands
|
||||
2009
(July – December)
|
45 | |||
2010
|
58 | |||
2011
|
47 | |||
150 |
|
H.
|
Contract
with Geophysical Institute of
Israel
|
|
I.
|
Drilling
Contract
|
|
J.
|
Settlement
Agreement
|
|
J.
|
Settlement
Agreement (cont’d)
|
|
K.
|
Employment
Agreement with Executive
|
|
·
|
exploration,
development, and drilling plans;
|
|
·
|
future
general and administrative
expenses;
|
|
·
|
future
exploration;
|
|
·
|
future
geophysical and geological data;
|
|
·
|
generation
of additional properties, reserves;
|
|
·
|
new
prospects and drilling locations;
|
|
·
|
future
capital expenditures;
|
|
·
|
sufficiency
of working capital;
|
|
·
|
plans
regarding and ability to raise additional
capital;
|
|
·
|
drilling
plans;
|
|
·
|
timing
or results of any wells;
|
|
·
|
interpretation
and results of seismic surveys or seismic
data;
|
|
·
|
permit,
license and lease rights;
|
|
·
|
participation
of operating partners;
|
|
·
|
legislative
and regulatory initiatives, their potential results and effects;
and
|
|
·
|
any
other statements regarding future operations, financial results,
opportunities, growth, business plans, and
strategies.
|
ITEM
3.
|
QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM
4 (T).
|
CONTROLS AND
PROCEDURES
|
In US$
(000)
|
||||
Underwriting
Commissions
|
$ | 321 | ||
Expenses
Paid to Underwriter
|
193 | |||
Other
expenses as follows:
|
||||
Accounting
Fees and Expenses
|
66 | |||
Legal
Fees and Expenses
|
50 | |||
Printing
Fees and Advertising
|
321 | |||
Listing
Fees (including SEC filing fees)
|
63 | |||
Transfer
and Escrow Agent Fees
|
14 | |||
Other
Expenses
|
6 | |||
TOTAL
EXPENSES
|
$ | 1,034 |
In US$
(000)
|
||||||
a.
|
Preparation
for and drilling of Ma'anit-Rehoboth #2 well
|
$ | 3,624 | |||
b.
|
Exploration
costs
|
$ | 78 | |||
c.
|
Deferred
compensation to officers and directors
|
$ | 361 | (1) | ||
d.
|
Regular
compensation to officers
|
$ | 635 | |||
e.
|
Legal,
accounting and professional fees
|
$ | 391 | |||
f.
|
Other
|
$ | 440 | (2) |
(1)
|
Includes
$240,000 of debt conversion by two officers during the unit
offering
|
(2)
|
Includes
$6,000 debt conversion by two vendors in the offering and also includes
refundable VAT (value added tax)
|
In US$
(000)
|
||||
Accounting
Fees and Expenses
|
41 | |||
Legal
Fees and Expenses
|
10 | |||
Printing
Fees and Advertising
|
49 | |||
Listing
Fees (including SEC filing fees)
|
46 | |||
TOTAL
EXPENSES
|
$ | 146 |
In US$
(000)
|
||||||
a.
|
Drilling
of Ma'anit-Rehoboth #2 well
|
$ | 742 | |||
b.
|
Exploration
costs
|
$ | - | |||
c.
|
Deferred
compensation to officers
|
$ | 1,436 | |||
d.
|
Temporary
investments
|
$ | 17,029 | (1) | ||
f.
|
Other
|
$ | - |
(1)
|
Balance
in US money market accounts at June 30,
2009
|
FOR
|
WITHHELD
|
|||
John
M. Brown
|
7,681,858
(96.28%)
|
297,156
|
||
Forrest
A. Garb
|
7,942,044
(99.54%)
|
36,970
|
||
Julian
Taylor
|
7,701,824
(96.53%)
|
277,190
|
FOR
|
AGAINST
|
ABSTAIN
|
BROKER
NON VOTES
|
|||
7,500,151
(94%)
|
396,531
|
82,332
|
3.1.1
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation of Zion
Oil & Gas, Inc. dated June 30, 2008
|
|
3.1.2
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation of Zion
Oil & Gas, Inc. dated June 24, 2009
|
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 under the Exchange Act
|
|
31.2
|
Certification
of the Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification
of the Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (furnished only).
|
|
32.2
|
Certification
of the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (furnished
only).
|
ZION
OIL & GAS, INC.
|
||||
(Registrant)
|
||||
By:
|
/s/
Richard J. Rinberg
|
By:
|
/s/
Sandra F. Green
|
|
Richard
J. Rinberg
Chief
Executive Officer
(Principal
Executive Officer)
|
Sandra
F. Green,
Senior
Vice-President and Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
|||
Date:
|
August
14, 2009
|
Date:
|
August
14, 2009
|