Delaware
|
20-0065053
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification
No.)
|
6510
Abrams Rd., Suite 300
Dallas,
Texas
|
75231
|
(Address of principal executive offices)
|
Zip
Code
|
Large
accelerated filer o
|
Accelerated
filer x
|
Non-accelerated
filer o (Do
not check if a smaller reporting company)
|
Smaller
reporting company o
|
Page
|
||
Item
1 - Financial Statements – Unaudited
|
||
Balance
Sheets - September 30, 2010 and December 31,
2009
|
1
|
|
Statements
of Operations for the three and nine months ended September 30, 2010 and
2009 and the period from April 6, 2000 (inception) to September 30,
2010
|
2
|
|
Statements
of Changes in Stockholders' Equity for the nine months ended September 30,
2010 and the period from April 6, 2000 (inception) to September 30,
2010
|
3
|
|
Statements
of Cash Flows for the nine months ended September 30, 2010 and 2009 and
the period from April 6, 2000 (inception) to September 30,
2010
|
13
|
|
Notes
to Unaudited Interim Financial Statements
|
15
|
|
Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
33
|
|
Item
3 – Quantitative and Qualitative Disclosures About Market
Risk
|
39
|
|
Item
4 - Controls and Procedures
|
40
|
|
PART
II — OTHER INFORMATION
|
||
Item
1 – Legal Proceedings
|
40
|
|
Item
A – Risk Factors
|
40
|
|
Item
2 - Unregistered Sales of Equity Securities and Use of
Proceeds
|
41
|
|
Item
3 - Defaults upon Senior Securities
|
41
|
|
Item
4 – (Removed and Reserved)
|
41
|
|
Item
5 - Other Information
|
41
|
|
Item
6 – Exhibits
|
41
|
|
SIGNATURES
|
42
|
September 30
|
December 31
|
|||||||
2010
|
2009
|
|||||||
US$ thousands
|
US$ thousands
|
|||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
11,682 | 20,734 | ||||||
Prepaid
expenses and other
|
700 | 647 | ||||||
Deferred
offering costs
|
26 | - | ||||||
Tax
refunds receivable
|
537 | 961 | ||||||
Total
current assets
|
12,945 | 22,342 | ||||||
Unproved
oil and gas properties, full cost method (see Note 2A)
|
19,538 | 23,759 | ||||||
Property
and equipment at cost
|
||||||||
Net
of accumulated depreciation of $97,200 and $82,000, at September 30, 2010
and December 31, 2009 respectively
|
159 | 78 | ||||||
Other
assets
|
||||||||
Assets
held for severance benefits
|
68 | 46 | ||||||
Total
assets
|
32,710 | 46,225 | ||||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
1,750 | 159 | ||||||
Asset
retirement obligation
|
50 | 50 | ||||||
Accrued
liabilities
|
678 | 1,915 | ||||||
Deferred
officers compensation
|
94 | 477 | ||||||
Total
current liabilities
|
2,572 | 2,601 | ||||||
Provision
for severance pay
|
304 | 185 | ||||||
Total
liabilities
|
2,876 | 2,786 | ||||||
Commitments
and contingencies (see Note 6)
|
||||||||
Stockholders’
equity
|
||||||||
Common
stock, par value $.01; 50,000,000 shares
authorized: September 30, 2010 – 21,224,397
shares; December 31, 2009 – 18,706,601 shares issued and
outstanding
|
212 | 187 | ||||||
Additional
paid-in capital
|
84,770 | 72,081 | ||||||
Deficit
accumulated in development stage
|
(55,148 | ) | (28,829 | ) | ||||
Total
stockholders’ equity
|
29,834 | 43,439 | ||||||
Total
liabilities and stockholders' equity
|
32,710 | 46,225 |
Period from
|
||||||||||||||||||||
April 6, 2000
|
||||||||||||||||||||
For the three month period
|
For the nine month period
|
(inception) to
|
||||||||||||||||||
ended September 30
|
ended September 30
|
September 30
|
||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
|
||||||||||||||||
US$ thousands
|
US$ thousands
|
US$ thousands
|
US$ thousands
|
US$ thousands
|
||||||||||||||||
Revenues
|
- | - | - | - | - | |||||||||||||||
General
and administrative expenses
|
||||||||||||||||||||
Legal
and professional
|
138 | 156 | 633 | 623 | 6,588 | |||||||||||||||
Salaries
|
651 | 368 | 2,090 | 1,768 | 10,158 | |||||||||||||||
Other
|
746 | 341 | 1,591 | 816 | 6,589 | |||||||||||||||
Impairment
of unproved oil and gas properties
|
- | - | 22,022 | - | 31,516 | |||||||||||||||
Loss
from operations
|
(1,535 | ) | (865 | ) | (26,336 | ) | (3,207 | ) | (54,851 | ) | ||||||||||
Other
expense, net
|
||||||||||||||||||||
Termination
of initial public offering
|
- | - | - | - | (527 | ) | ||||||||||||||
Other
income, net
|
- | - | - | 76 | 80 | |||||||||||||||
Interest
income, net
|
102 | 48 | 17 | 66 | 150 | |||||||||||||||
Loss
before income taxes
|
(1,433 | ) | (817 | ) | (26,319 | ) | (3,065 | ) | (55,148 | ) | ||||||||||
Income
taxes
|
- | - | - | - | - | |||||||||||||||
Net
loss
|
(1,433 | ) | (817 | ) | (26,319 | ) | (3,065 | ) | (55,148 | ) | ||||||||||
Net
loss per share of common stock - basic and diluted (in
US$)
|
(0.07 | ) | *(0.05 | ) | (1.36 | ) | *(0.23 | ) | *(6.34 | ) | ||||||||||
Weighted-average
shares outstanding – basic and diluted (in thousands)
|
20,632 | *15,629 | 19,378 | *13,372 | *8,694 |
Deficit
|
||||||||||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
paid-in
|
in development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
stage
|
Total
|
||||||||||||||||||||||
Thousands
|
US$ 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
as of 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
($1 per share)
|
- | - | 175 | * - | 175 | - | 175 | |||||||||||||||||||||
Costs
associated with the issuance of shares
|
- | - | - | - | (85 | ) | - | (85 | ) | |||||||||||||||||||
Waived
interest on conversion of debt
|
- | - | - | - | 1 | - | 1 | |||||||||||||||||||||
Value
of warrants granted to employees
|
- | - | - | - | 37 | - | 37 | |||||||||||||||||||||
Value
of warrants granted to directors and consultants
|
- | - | - | - | 3 | - | 3 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (207 | ) | (207 | ) | |||||||||||||||||||
Balances
as of December 31, 2001
|
- | - | 3,000 | * - | 536 | (212 | ) | 324 |
Deficit
|
||||||||||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
paid-in
|
in development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
stage
|
Total
|
||||||||||||||||||||||
Thousands
|
US$ 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
($10 per share)
|
25 | * - | 22 | * - | 254 | - | 254 | |||||||||||||||||||||
Payment
of accounts payable through issuance of preferred shares and
warrants
|
13 | * - | - | - | 127 | - | 127 | |||||||||||||||||||||
Payment
of accounts payable through issuance of common shares and
warrants
|
- | - | 111 | 1 | 131 | - | 132 | |||||||||||||||||||||
Payment
of note payable through issuance of shares and warrants
|
5 | * - | - | - | 50 | - | 50 | |||||||||||||||||||||
Payment
of accounts payable to employee through issuance of shares upon exercise
of warrants
|
- | - | 400 | 4 | 76 | - | 80 | |||||||||||||||||||||
Costs
associated with the issuance of shares
|
- | - | - | - | (160 | ) | - | (160 | ) | |||||||||||||||||||
Waived
interest on conversion of debt
|
- | - | - | - | 3 | - | 3 | |||||||||||||||||||||
Deferred
financing costs on debt conversions / modifications
|
- | - | - | - | 21 | - | 21 | |||||||||||||||||||||
Value
of warrants granted to employees
|
- | - | - | - | 1 | - | 1 | |||||||||||||||||||||
Value
of warrants granted to directors and consultants
|
- | - | - | - | 13 | - | 13 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (403 | ) | (403 | ) | |||||||||||||||||||
Balances
as of December 31, 2002
|
43 | * - | 3,553 | 35 | 1,042 | (615 | ) | 462 |
Deficit
|
||||||||||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
paid-in
|
in development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
stage
|
Total
|
||||||||||||||||||||||
Thousands
|
US$ 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 ($3 per
share):
|
||||||||||||||||||||||||||||
for
cash consideration
|
- | - | 33 | * - | 99 | - | 99 | |||||||||||||||||||||
for
reduction of accounts payable
|
- | - | 3 | * - | 9 | - | 9 | |||||||||||||||||||||
Issuance
of shares upon exercise of warrants:
|
||||||||||||||||||||||||||||
for
cash consideration
|
- | - | 25 | * - | 25 | - | 25 | |||||||||||||||||||||
for
reduction of accounts payable
|
- | - | 124 | 1 | 142 | - | 143 | |||||||||||||||||||||
Issuance
of shares upon exercise of warrants for cash consideration
|
- | - | 63 | 1 | 82 | - | 83 | |||||||||||||||||||||
Payment
of account payable through issuance of shares
|
- | - | 80 | 1 | 139 | - | 140 | |||||||||||||||||||||
Costs
associated with the issuance of shares
|
- | - | - | - | (58 | ) | - | (58 | ) | |||||||||||||||||||
Value
of warrants granted to employees
|
- | - | - | - | 47 | - | 47 | |||||||||||||||||||||
Deferred
financing costs on debt conversions / modifications
|
- | - | - | - | (10 | ) | - | (10 | ) | |||||||||||||||||||
Net
loss
|
- | - | - | - | - | (873 | ) | (873 | ) | |||||||||||||||||||
Balances
as of December 31, 2003
|
- | - | 4,859 | 48 | 1,751 | (1,488 | ) | 311 |
Deficit
|
||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||
Common Stock
|
paid-in
|
in development
|
||||||||||||||||||
Shares
|
Amounts
|
capital
|
stage
|
Total
|
||||||||||||||||
Thousands
|
US$ 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
as of 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
as of 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
as of 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
as of 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
as of 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 Second Rights Offering
|
3,600 | 36 | 17,964 | - | 18,000 | |||||||||||||||
Funds
received from warrant exercises
|
59 | 1 | 414 | - | 415 | |||||||||||||||
Underwriter
warrants exercised in cashless exercise
|
13 | - | - | - | - | |||||||||||||||
Director
warrants and options exercised in cashless exercises
|
37 | - | - | - | - | |||||||||||||||
Value
of options granted to employees
|
- | - | 494 | - | 494 | |||||||||||||||
Value
of options granted to directors and consultants
|
- | - | 328 | - | 328 | |||||||||||||||
Value
of shares granted to consultants for services
|
5 | *- | 46 | - | 46 | |||||||||||||||
Value
of shares gifted to employees
|
- | - | 4 | - | 4 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (478 | ) | - | (478 | ) | |||||||||||||
Net
loss
|
- | - | - | (4,424 | ) | (4,424 | ) | |||||||||||||
Balances
as of December 31, 2009
|
18,706 | 187 | 72,081 | (28,829 | ) | 43,439 |
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 warrant exercises
|
*- | *- | 3 | - | 3 | |||||||||||||||
Funds
received from option exercises
|
44 | *- | *- | - | *- | |||||||||||||||
Funds
received from Rights Offering
|
2,471 | 25 | 12,331 | - | 12,356 | |||||||||||||||
Value
of shares granted to consultants for services
|
3 | *- | 15 | - | 15 | |||||||||||||||
Value
of options granted to employees
|
- | - | 553 | - | 553 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (213 | ) | - | (213 | ) | |||||||||||||
Net
loss
|
- | - | - | (26,319 | ) | (26,319 | ) | |||||||||||||
Balances
as of September 30, 2010
|
21,224 | 212 | 84,770 | (55,148 | ) | 29,834 |
Period from
|
||||||||||||
April 6, 2000
|
||||||||||||
For the nine month
|
(inception) to
|
|||||||||||
period ended September 30
|
September 30
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
US$ thousands
|
US$ thousands
|
US$ thousands
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
loss
|
(26,319 | ) | (3,065 | ) | (55,148 | ) | ||||||
Adjustments
required to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Depreciation
|
24 | 12 | 112 | |||||||||
Officer,
director and other fees, paid via common stock
|
15 | 4 | 2,330 | |||||||||
Cost
of options or warrants issued to employees, directors &
others
|
553 | 764 | 2,659 | |||||||||
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
|
22,022 | - | 31,516 | |||||||||
Asset
retirement obligation
|
- | - | 50 | |||||||||
Change
in assets and liabilities, net:
|
||||||||||||
Decrease
in inventories
|
- | - | 150 | |||||||||
Prepaid
expenses and other
|
(53 | ) | 66 | (700 | ) | |||||||
Increase
in deferred offering costs
|
(26 | ) | (22 | ) | (26 | ) | ||||||
Tax
refunds receivable
|
424 | (620 | ) | (537 | ) | |||||||
Provision
for severance pay, net
|
98 | 28 | 237 | |||||||||
Accounts
payable
|
1,591 | (60 | ) | 2,398 | ||||||||
Accrued
liabilities
|
(1,237 | ) | 920 | 678 | ||||||||
Increase
(decrease) in deferred officers' compensation
|
(383 | ) | (1,231 | ) | 334 | |||||||
Net
cash used in operating activities
|
(3,291 | ) | (3,204 | ) | (15,419 | ) | ||||||
Cash
flows from investing activities
|
||||||||||||
Acquisition
of property and equipment
|
(104 | ) | (4 | ) | (272 | ) | ||||||
Investment
in unproved oil and gas properties
|
(17,800 | ) | (10,915 | ) | (51,203 | ) | ||||||
Net
cash used in investing activities
|
(17,904 | ) | (10,919 | ) | (51,475 | ) | ||||||
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
|
12,356 | 23,784 | 81,963 | |||||||||
Costs
associated with the issuance of shares
|
(213 | ) | (365 | ) | (3,976 | ) | ||||||
Net
cash provided by financing activities
|
12,143 | 23,419 | 78,576 | |||||||||
Net
increase (decrease) in cash and cash equivalents
|
(9,052 | ) | 9,296 | 11,682 | ||||||||
Cash
and cash equivalents – beginning of period
|
20,734 | 1,726 | - | |||||||||
Cash
and cash equivalents– end of period
|
11,682 | 11,022 | 11,682 |
Period from
|
||||||||||||
April 6, 2000
|
||||||||||||
For the nine month
|
(inception) to
|
|||||||||||
period ended September 30
|
September 30
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
US$ thousands
|
US$ thousands
|
US$ thousands
|
||||||||||
Supplemental
information
|
||||||||||||
Cash
paid for interest
|
14 | 4 | 78 | |||||||||
Cash
paid for income taxes
|
- | - | - | |||||||||
Non-cash
investing and financing activities:
|
||||||||||||
Payment
of accounts payable through issuance of common
stock
|
- | 6 | 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 | 940 | |||||||||
Value
of warrants and options granted to directors and
consultants
|
328 | 405 | ||||||||||
Value
of warrants and options granted to employees
|
436 | 1,544 | ||||||||||
Value
of warrants granted to underwriters
|
- | - | 99 | |||||||||
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
|
September 30
2010
|
December 31
2009 |
|||||||
US$ thousands
|
US$ thousands
|
|||||||
Excluded
from amortization base:
|
||||||||
Drilling
operations, completion costs and other related costs
|
$ | 15,389 | $ | 20,823 | ||||
Capitalized
salary costs
|
587 | 1,003 | ||||||
Legal
costs, license fees and other preparation costs
|
2,612 | 922 | ||||||
Other
costs
|
950 | 1,011 | ||||||
$ | 19,538 | $ | 23,759 |
For the nine month period ended
|
||||||||||||
September 30
2010 |
September 30
2009 |
Period from April 6,
2000 (inception) to September 30, 2010 |
||||||||||
US$
thousands |
US$
thousands |
US$ thousands
|
||||||||||
Drilling
operations, completion costs and other related costs
|
$ | 20,419 | - | $ | 28,378 | |||||||
Capitalized
salary costs
|
620 | - | 1,303 | |||||||||
Legal
costs and license fees
|
- | - | 509 | |||||||||
Other
costs
|
983 | - | 1,326 | |||||||||
$ | 22,022 | - | $ | 31,516 |
C.
|
Recently
Adopted Accounting Pronouncement
|
|
C.
|
2005
Stock Option Plan
|
|
D.
|
Fair
Value of Warrants and Options
|
|
D.
|
Fair
Value of Warrants and
Options (cont’d)
|
Exercise
|
Number
of
|
Expiration
|
Warrants
or
|
||||||||
price
|
shares
|
Date
|
Options
|
||||||||
US$
|
|||||||||||
To
non-employees
|
|||||||||||
8.25 | 58,000 |
June
16, 2012
|
Options
|
||||||||
To
employees and directors
|
|||||||||||
5.00 | 66,667 |
December
31, 2010
|
Options
|
||||||||
8.25 | 50,000 |
June
16, 2012
|
Options
|
||||||||
7.97 | 50,000 |
December
31, 2014
|
Options
|
||||||||
7.15 | 37,000 |
December
31, 2014
|
Options
|
||||||||
0.01 | 120,000 |
December
3, 2017
|
Options
|
||||||||
0.01 | 26,915 |
January
31, 2020
|
Options
|
||||||||
To
investors
|
|||||||||||
7.00 | 606,679 |
January
31, 2012
|
Warrants
|
||||||||
6.07 | * | 1,015,261 |
Number
of
|
Weighted Average
|
|||||||
shares
|
exercise
price
|
|||||||
US$
|
||||||||
Granted
from April 6, 2000 (inception) to December 31, 2008 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 | ||||||
Investors
in Follow On Public Offering
|
416,404 | 7.00 | ||||||
Expired/Cancelled
|
(705,684 | ) | 2.61 | |||||
Exercised
|
(1,984,077 | ) | 1.59 | |||||
Outstanding,
December 31, 2008
|
763,574 | 4.52 | ||||||
Granted
to:
|
||||||||
Employees,
officers and directors
|
202,000 | 6.55 | ||||||
Investors
in Follow On Public Offering
|
249,939 | 7.00 | ||||||
Expired/Cancelled
|
(40,000 | ) | 5.22 | |||||
Exercised
|
(180,810 | ) | 6.62 | |||||
Outstanding,
December 31, 2009
|
994,703 | 6.14 | ||||||
Granted
to:
|
||||||||
Employees,
officers and directors
|
103,915 | 2.55 | ||||||
Exercised
|
(44,357 | ) | 0.08 | |||||
Expired/Cancelled
|
(39,000 | ) | 5.87 | |||||
Outstanding,
September 30, 2010
|
1,015,261 | 6.04 |
D.
|
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
|
Weighted
|
average
|
Weighted
|
|||||||||||||||||||||||||
remaining
|
Average
|
Range
of
|
remaining
|
Average
|
||||||||||||||||||||||||
Range
of
|
Number
|
contractual
|
Exercise
|
exercise
|
Number
|
contractual
|
exercise
|
|||||||||||||||||||||
exercise
price
|
outstanding
|
life
(years)
|
price
|
price
|
Outstanding
|
Life
(years)
|
price
|
|||||||||||||||||||||
US$
|
US$
|
US$
|
US$
|
|||||||||||||||||||||||||
0.01
|
10,000 | 7.18 | 0.01 | 0.01 | 110,000 | 7.18 | 0.01 | |||||||||||||||||||||
0.01
|
5,000 | 9.34 | 0.01 | 0.01 | 21,915 | 9.34 | 0.01 | |||||||||||||||||||||
-
|
- | - | - | 5.00 | 66,667 | 0.25 | 5.00 | |||||||||||||||||||||
7.00 | 606,679 | 1.34 | 7.00 | |||||||||||||||||||||||||
7.15
|
9,250 | 4.25 | 7.15 | 7.15 | 27,750 | 4.25 | 7.15 | |||||||||||||||||||||
7.97
|
30,000 | 4.25 | 7.97 | 7.97 | 20,000 | 4.25 | 7.97 | |||||||||||||||||||||
-
|
- | - | - | 8.25 | 108,000 | 1.71 | 8.25 | |||||||||||||||||||||
0.01-7.97
|
54,250 | 4.41 | 0.01-8.25 | 961,011 | 6.07 |
For
the nine month period
|
Period
from April 6,
|
|||||||||||
ended
September 30,
|
2000
(inception) to
|
|||||||||||
2010
|
2009
|
September
30, 2010
|
||||||||||
US$
|
US$
|
US$
|
||||||||||
Weighted-average
fair value of underlying stock at grant date
|
6.45 | 7.71 | 3.00 – 7.71 | |||||||||
Dividend
yields
|
- | - | - | |||||||||
Expected
volatility
|
71-79 | % | 59.0 – 71.0 | % | 28.2% - 79 | % | ||||||
Risk-free
interest rates
|
2.38-3.84 | % | 1.79 – 2.47 | % | 1.79% - 5.15 | % | ||||||
Expected
lives
|
2.19-4.88 | 1.5 – 4.81 |
1.74
– 4.88 years
|
|||||||||
Weighted-average
grant date fair
value
|
2.80-6.51 | 4.93 | 0.76 - 6.51 |
D.
|
Fair
Value of Warrants and Options
(cont’d)
|
For
the nine month period
|
Period
from April 6,
|
|||||||||||
ended
September 30,
|
2000
(inception) to
|
|||||||||||
2010
|
2009
|
September
30, 2010
|
||||||||||
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 | % | 2.8% - 5.50 | % | |||||||
Contractual
lives
|
- | 3.00 |
0.56 – 3.17 years
|
|||||||||
Weighted-average
grant date fair value
|
- | 3.91 | 0.68 – 2.74 |
E.
|
Compensation
Cost for Warrant and Option
Issuances
|
US$
thousands
|
||||
October
1 - December 31, 2010
|
48 | |||
For
the year ended December 31, 2011
|
27 | |||
For
the year ended December 31, 2012
|
2 | |||
77 |
|
F.
|
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
|
||||
$3.00
Warrants
|
June
2004 – August 2004
|
3.00 |
December
31, 2006
|
||||
D
Warrants
|
September
2004 – April 2005
|
4.00 |
December
31, 2006
|
||||
E
Warrants
|
September
2004 – June 2005
|
5.00 |
December
31, 2006
|
||||
F
and FF Warrants
|
October
2005
|
5.00 |
*
December 31, 2008
|
||||
G
Warrants
|
December
2005 – January 2006
|
5.50 |
December
31, 2008
|
||||
H
Warrants
|
December
2006 –May 2007
|
8.75 |
September
26, 2009
|
||||
Unit
Warrants
|
October
2008 – December 2008
|
7.00 |
January
31, 2012
|
|
G.
|
Gift
Shares
|
A.
|
Environmental
Matters
|
B.
|
Royalty
Commitments
|
C.
|
Long-term
Incentive Plan
|
D.
|
Charitable
Foundations
|
E.
|
Surface
Rights of Drilling Operations
|
F.
|
Payments
to executives and deferral of
compensation
|
G.
|
Lease
Commitments
|
US$
thousands
|
||||
2010
|
29 | |||
2011
|
57 | |||
86 |
H.
|
Contract
with Geophysical Institute of
Israel
|
|
I.
|
Drilling
Contract and Memorandum of
Understanding
|
|
I.
|
Drilling
Contract and Memorandum of Understanding
(cont’d)
|
|
·
|
exploration,
development, and drilling plans;
|
|
·
|
future
general and administrative
expenses;
|
|
·
|
future
exploration;
|
|
·
|
future
geophysical and geological data;
|
|
·
|
growth
strategies;
|
|
·
|
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;
|
|
·
|
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.
|
CONTROLS AND
PROCEDURES
|
ITEM 1.
|
LEGAL
PROCEEDINGS
|
ITEM 1A.
|
RISK
FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF
SECURITIES AND USE OF
PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR
SECURITIES
|
ITEM 4.
|
(REMOVED
AND RESERVED)
|
ITEM 5.
|
OTHER
INFORMATION
|
ITEM 6.
|
EXHIBITS
|
31.1
|
Certification
of 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 under the Exchange Act
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (furnished only).
|
|
32.2
|
|
Certification
of 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/ Kent S. Siegel
|
|
Richard J. Rinberg
Chief Executive Officer
(Principal Executive Officer)
|
Kent S. Siegel,Senior Vice-President and Chief Financial
Officer
(Principal Financial Officer)
|
|||
Date:
|
November 8, 2010
|
Date:
|
November 8, 2010
|