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 - March 31, 2010 and December 31, 2009
|
1
|
Statements
of Operations for the three months ended March 31, 2010 and 2009 and the
period from April 6, 2000 (inception) to March 31, 2010
|
2
|
Statements
of Changes in Stockholders' Equity for the three months ended March 31,
2010 and the period from April 6, 2000 (inception) to March 31,
2010
|
3
|
Statements
of Cash Flows for the three months ended March 31, 2010 and 2009 and the
period from April 6, 2000 (inception) to March 31, 2010
|
13
|
Notes
to Unaudited Interim Financial Statements
|
15
|
Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
34
|
Item
3 – Quantitative and Qualitative Disclosures About Market
Risk
|
40
|
Item
4 - Controls and Procedures
|
41
|
PART
II — OTHER INFORMATION
|
|
Item
1 – Legal Proceedings
|
41
|
Item
A – Risk Factors
|
41
|
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
|
March
31
|
December
31
|
|||||||
2010
|
2009
|
|||||||
US$
thousands
|
US$
thousands
|
|||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
12,349 | 20,734 | ||||||
Prepaid
expenses and other
|
659 | 647 | ||||||
Deferred
offering costs
|
50 | - | ||||||
Tax
refunds receivable
|
1,352 | 961 | ||||||
Total
current assets
|
14,410 | 22,342 | ||||||
Unproved
oil and gas properties, full cost method (see Note 2A and Note
6)
|
30,353 | 23,759 | ||||||
Property
and equipment
|
||||||||
Net
of accumulated depreciation of $88,000 and $82,000, at March 31, 2010 and
December 31, 2009 respectively
|
167 | 78 | ||||||
Other
assets
|
||||||||
Assets
held for severance benefits
|
54 | 46 | ||||||
Total
other assets
|
54 | 46 | ||||||
Total
assets
|
44,984 | 46,225 | ||||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
487 | 159 | ||||||
Asset
retirement obligation
|
50 | 50 | ||||||
Accrued
liabilities
|
1,759 | 1,915 | ||||||
Deferred
officers compensation
|
145 | 477 | ||||||
Total
current liabilities
|
2,441 | 2,601 | ||||||
Provision
for severance pay
|
191 | 185 | ||||||
Total
liabilities
|
2,632 | 2,786 | ||||||
Commitments
and contingencies (see Note 5)
|
||||||||
Stockholders’
equity
|
||||||||
Common
stock, par value $.01; 50,000,000 shares authorized:
|
||||||||
2010
– 18,748,923 shares and 2009 – 18,706,601 shares
|
||||||||
issued
and outstanding
|
187 | 187 | ||||||
Additional
paid-in capital
|
72,354 | 72,081 | ||||||
Deficit
accumulated in development stage
|
(30,189 | ) | (28,829 | ) | ||||
Total
stockholders’ equity
|
42,352 | 43,439 | ||||||
Total
liabilities and stockholders' equity
|
44,984 | 46,225 |
Period
from
|
||||||||||||
April
6, 2000
|
||||||||||||
For
the three month period
|
(inception)
to
|
|||||||||||
ended
March 31
|
March
31
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||
Revenues
|
- | - | - | |||||||||
General
and administrative expenses
|
||||||||||||
Legal
and professional
|
352 | 234 | 6,307 | |||||||||
Salaries
|
686 | 500 | 8,754 | |||||||||
Other
|
319 | 261 | 5,317 | |||||||||
Impairment
of unproved oil and gas properties
|
- | - | 9,494 | |||||||||
Loss
from operations
|
(1,357 | ) | (995 | ) | (29,872 | ) | ||||||
Other
expense, net
|
||||||||||||
Termination
of initial public offering
|
- | - | (527 | ) | ||||||||
Other
income, net
|
- | 76 | 80 | |||||||||
Interest
(expense) income, net
|
(3 | ) | 3 | 130 | ||||||||
Loss
before income taxes
|
(1,360 | ) | (916 | ) | (30,189 | ) | ||||||
Income
taxes
|
- | - | - | |||||||||
Net
loss
|
(1,360 | ) | (916 | ) | (30,189 | ) | ||||||
Net
loss per share of common stock -
basic
and diluted (in US$)
|
||||||||||||
(0.07 | ) | (0.08 | ) | (4.18 | ) | |||||||
Weighted-average
shares outstanding –
basic
and diluted (in thousands)
|
||||||||||||
18,731 | 11,307 | 7,214 |
Deficit
|
||||||||||||||||||||||||||||
Additional
|
accumulated
|
|||||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
paid-in
|
in
development
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
stage
|
Total
|
||||||||||||||||||||||
Thousands
|
US$
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 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 option exercises
|
40 | *- | *- | - | *- | |||||||||||||||
Value
of shares granted to consultants for services
|
2 | *- | 15 | - | 15 | |||||||||||||||
Value
of options or warrants granted to employees
|
- | - | 271 | - | 271 | |||||||||||||||
Costs
associated with the issuance of shares
|
- | - | (13 | ) | - | (13 | ) | |||||||||||||
Net
loss
|
- | - | - | (1,360 | ) | (1,360 | ) | |||||||||||||
Balances
March 31, 2010
|
18,748 | 187 | 72,354 | (30,189 | ) | 42,352 |
Period
from
|
||||||||||||
April
6, 2000
|
||||||||||||
For
the three month
|
(inception)
to
|
|||||||||||
period ended
March 31
|
March
31
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||
Cash
flows from operating activities
|
||||||||||||
Net
loss
|
(1,360 | ) | (916 | ) | (30,189 | ) | ||||||
Adjustments
required to reconcile net loss to net cash
|
||||||||||||
used
in operating activities:
|
||||||||||||
Depreciation
|
6 | 5 | 94 | |||||||||
Officer,
director and other fees, paid via common stock
|
15 | 6 | 2,330 | |||||||||
Cost
of options or warrants issued to employees, directors &
others
|
271 | 156 | 2,377 | |||||||||
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 | |||||||||
Asset
retirement obligation
|
- | - | 50 | |||||||||
Change
in assets and liabilities, net:
|
||||||||||||
Decrease
in inventories
|
- | - | 150 | |||||||||
Prepaid
expenses and other
|
(12 | ) | (116 | ) | (659 | ) | ||||||
Increase
in deferred offering costs
|
(50 | ) | (15 | ) | (50 | ) | ||||||
Tax
refunds receivable
|
(391 | ) | (236 | ) | (1,352 | ) | ||||||
Provision
for severance pay, net
|
(2 | ) | (2 | ) | 137 | |||||||
Accounts
payable
|
328 | 8 | 1,135 | |||||||||
Accrued
liabilities
|
(156 | ) | (26 | ) | 1,759 | |||||||
Increase(decrease)
in deferred officers' compensation
|
(332 | ) | 119 | 385 | ||||||||
Net
cash used in operating activities
|
(1,683 | ) | (1,017 | ) | (13,811 | ) | ||||||
Cash
flows from investing activities
|
||||||||||||
Acquisition
of property and equipment
|
(95 | ) | (1 | ) | (263 | ) | ||||||
Investment
in unproved oil and gas properties
|
(6,594 | ) | (584 | ) | (39,997 | ) | ||||||
Net
cash used in investing activities
|
(6,689 | ) | (585 | ) | (40,260 | ) | ||||||
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
|
- | 2,520 | 69,607 | |||||||||
Costs
associated with the issuance of shares
|
(13 | ) | (219 | ) | (3,776 | ) | ||||||
Net
cash provided by financing activities
|
(13 | ) | - | 66,420 | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
(8,385 | ) | 699 | 12,349 | ||||||||
Cash
and cash equivalents – beginning of period
|
20,734 | 1,726 | - | |||||||||
Cash
and cash equivalents– end of period
|
12,349 | 2,425 | 12,349 |
Period
from
|
||||||||||||
April
6, 2000
|
||||||||||||
For
the three month
|
(inception)
to
|
|||||||||||
period ended
March 31
|
March
31
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
US$
thousands
|
US$
thousands
|
US$
thousands
|
||||||||||
Supplemental
information
|
||||||||||||
Cash
paid for interest
|
14 | 1 | 78 | |||||||||
Cash
paid for income taxes
|
- | - | - | |||||||||
Non-cash
investing and financing activities:
|
||||||||||||
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 | 940 | |||||||||
Value
of warrants granted to underwriters
|
- | - | 99 | |||||||||
Deferred
financing costs
|
- | - | 85 | |||||||||
Transfer
of inventory to oil and gas properties
|
- | - | 150 |
|
A.
|
Nature
of Operations
|
|
A.
|
Nature
of Operations (cont’d)
|
|
A.
|
Nature
of Operations (cont’d)
|
|
B.
|
Basis
of Presentation
|
|
A.
|
Oil
and Gas Properties and Impairment
|
|
A.
|
Oil
and Gas Properties and Impairment
(cont’d)
|
March
31
2010
|
December
31 2009
|
|||||||
US$
thousands
|
US$
thousands
|
|||||||
Excluded
from amortization base:
|
||||||||
Drilling
operations, completion costs and other related costs
|
26,728 | 20,823 | ||||||
Capitalized
salary costs
|
1,015 | 1,003 | ||||||
Legal
costs and license fees
|
944 | 922 | ||||||
Other
costs
|
1,666 | 1,011 | ||||||
$ | 30,353 | $ | 23,759 |
|
A.
|
Oil
and Gas Properties and Impairment
(cont’d)
|
Period
ended March 31 2010
|
Year
ended December 31 2009
|
Period
from April 6, 2000 (inception) to March 31, 2010
|
||||||||||
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 |
|
B.
|
Net
Loss per Share Data
|
|
C.
|
Recently
Adopted Accounting Pronouncements
|
|
1.
|
SEC
Final Rule - Modernization of Oil and Gas Reporting / Accounting Standards
Update (ASU) 2010-03 – Oil and Gas Reserve Estimation and
Disclosures
|
|
In
December 2008, the SEC published authoritative guidance as the Final Rule
“Modernization of Oil and Gas Reporting” and in January 2010, ASU 2010-03
was issued in order to align the oil and gas reserve estimation and
disclosure requirements of Extractive Activities – Oil and Gas (Topic 932)
with the requirements in the SEC’s final rule. The new guidance
permits the use of new technologies to determine proved reserves if those
technologies have been demonstrated to lead to reliable conclusions about
reserves volumes. The new requirements also will allow
companies to disclose their probable and possible reserves to
investors. In addition, the new disclosure requirements require
companies to, among other things: (a) report the independence
and qualifications of its reserves preparer or auditor; (b) file reports
when a third party is relied upon to prepare reserves estimates or
conducts a reserves audit; and (c) report oil and gas reserves using an
average price based upon the prior 12-month period rather than period-end
prices. The use of the new proved reserve definitions and
average prices in developing the Company’s reserve estimates will affect
future impairment and depletion
calculations.
|
|
C.
|
Recently
Adopted Accounting Pronouncements
(cont’d)
|
|
1.
|
SEC
Final Rule - Modernization of Oil and Gas Reporting / Accounting Standards
Update (ASU) 2010-03 – Oil and Gas Reserve Estimation and Disclosures
(cont’d)
|
|
A.
|
Third
Rights Offering
|
|
B.
|
2005
Stock Option Plan
|
|
C.
|
Fair
Value of Warrants and Options
|
Exercise
|
Number
of
|
Expiration
|
Warrants
or
|
||||||||
price
|
shares
|
Date
|
Options
|
||||||||
US$
|
|||||||||||
To
non-employees
|
|||||||||||
8.25 | 59,000 |
June
16, 2012
|
Options
|
||||||||
To
employees and directors
|
|||||||||||
5.00 | 66,667 |
December
31, 2010
|
Options
|
||||||||
8.25 | 53,000 |
June
16, 2012
|
Options
|
||||||||
5.60 | 35,000 |
December
31, 2012
|
Options
|
||||||||
7.97 | 50,000 |
December
31, 2014
|
Options
|
||||||||
7.15 | 37,000 |
December
31, 2014
|
Options
|
||||||||
0.01 | 123,882 |
December
3, 2017
|
Options
|
||||||||
0.01 | 22,020 |
January
31, 2020
|
Options
|
||||||||
To
investors
|
|||||||||||
7.00 | 607,154 |
January
31, 2012
|
Warrants
|
||||||||
6.04* | 1,053,723 |
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/Canceled
|
(705,684 | ) | 2.61 | |||||
Exercised
|
(1,984,077 | ) | 1.59 | |||||
Outstanding,
December 31, 2008
|
763,574 | 4.52 |
|
C.
|
Fair
Value of Warrants and Options
(cont’d)
|
Granted
to:
|
||||||||
Employees,
officers and directors
|
202,000 | 6.55 | ||||||
Investors
in Follow On Public Offering
|
249,939 | 7.00 | ||||||
Expired/Canceled
|
(40,000 | ) | 5.22 | |||||
Exercised
|
(180,810 | ) | 6.62 | |||||
Outstanding,
December 31, 2009
|
994,703 | 6.14 | ||||||
Granted
to:
|
||||||||
Employees,
officers and directors
|
99,020 | 2.68 | ||||||
Exercised
|
(40,000 | ) | 0.01 | |||||
Outstanding,
March 31, 2010
|
1,053,723 | 6.04 | ||||||
Exercisable,
March 31, 2010
|
950,973 | 6.24 |
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
price
|
exercise
price
|
Outstanding
|
Life
(years)
|
exercise
price
|
|||||||||||||||||||||||
US$
|
US$
|
US$
|
US$
|
|||||||||||||||||||||||||||
0.01 | 30,000 | 7.68 | 0.01 | 0.01 | 93,882 | 7.68 | 0.01 | |||||||||||||||||||||||
0.01 | 15,000 | 9.84 | 0.01 | 0.01 | 7,020 | 9.84 | 0.01 | |||||||||||||||||||||||
- | - | - | - | 5.00 | 66,667 | 0.75 | 5.00 | |||||||||||||||||||||||
- | - | - | - | 5.60 | 35,000 | 2.76 | 5.60 | |||||||||||||||||||||||
7.00 | 607,154 | 1.84 | 7.00 | |||||||||||||||||||||||||||
7.15 | 27,750 | 4.76 | 7.15 | 7.15 | 9,250 | 4.76 | 7.15 | |||||||||||||||||||||||
7.97 | 30,000 | 4.76 | 7.97 | 7.97 | 20,000 | 4.76 | 7.97 | |||||||||||||||||||||||
- | - | - | - | 8.25 | 112,000 | 2.21 | 8.25 | |||||||||||||||||||||||
0.01-7.97 | 102,750 | 4.26 | 0.01-8.25 | 950,973 | 6.24 |
|
C.
|
Fair
Value of Warrants and Options
(cont’d)
|
For
the three month period
|
Period
from April 6,
|
|||||||||||
ended
March 31,
|
2000
(inception) to
|
|||||||||||
2010
|
2009
|
March 31, 2010
|
||||||||||
US$
|
US$
|
US$
|
||||||||||
Weighted-average
fair value of underlying stock at grant date
|
6.52 | 7.54 | 3.00 – 7.54 | |||||||||
Dividend
yields
|
- | - | - | |||||||||
Expected
volatility
|
71-79 | % | 59.2 | % | 28.2% - 79 | % | ||||||
Risk-free
interest rates
|
2.38-3.84 | % | 2.13 | % | 2.1% - 5.15 | % | ||||||
Expected
lives
|
2.19-4.88 | 4.23 |
1.74
– 4.88 years
|
|||||||||
Weighted-average
grant date fair
value
|
2.80-6.51 | 5.58 | 0.76 - 6.51 |
For
the three month period
|
Period
from April 6,
|
|||||||||||
ended
March 31,
|
2000
(inception) to
|
|||||||||||
2010
|
2009
|
March 31, 2010
|
||||||||||
US$
|
US$
|
US$
|
||||||||||
Weighted-average
fair value of underlying stock at grant date
|
- | - | 1.00 – 8.75 | |||||||||
Dividend
yields
|
- | - | - | |||||||||
Expected
volatility
|
- | - | 32.2% - 99.8 | % | ||||||||
Risk-free
interest rates
|
- | - | 2.8% - 5.50 | % | ||||||||
Contractual
lives
|
- | - |
0.56
– 3.17 years
|
|||||||||
Weighted-average
grant date fair value
|
- | - | 0.68 – 2.74 |
|
C.
|
Fair
Value of Warrants and Options
(cont’d)
|
|
D.
|
Compensation
Cost for Warrant and Option
Issuances
|
US$
thousands
|
||||
April
1 - December 31, 2010
|
223 | |||
For
the year ended December 31, 2011
|
27 | |||
For
the year ended December 31, 2012
|
2 | |||
252 |
|
E.
|
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
|
|||
$3.00
Warrants
|
June
2004 – August 2004
|
3.00 |
December
31, 2006
|
|||
D
Warrants
|
September
2004 – April 2005
|
4.00 |
December
31, 2006
|
|||
E
Warrants
|
September
2004 – June 2005
|
5.00 |
December
31, 2006
|
|||
F
and FF Warrants
|
October
2005
|
5.00 |
*
December 31, 2008
|
|||
G
Warrants
|
December
2005 – January 2006
|
5.50 |
December
31, 2008
|
|||
H
Warrants
|
December
2006 –May 2007
|
8.75 |
September
26, 2009
|
|||
Unit
Warrants
|
October
2008 – December 2008
|
7.00 |
January
31, 2012
|
|
F.
|
Gift
Shares
|
|
A.
|
Environmental
Matters
|
|
B.
|
Royalty
Commitments
|
|
C.
|
Long-term
Incentive Plan
|
|
D.
|
Charitable
Foundations
|
|
E.
|
Surface
Rights of Drilling Operations
|
|
F.
|
Payments
to executives and deferral of
compensation
|
|
H.
|
Lease
Commitments
|
US$
thousands
|
||||
2010
|
91 | |||
2011
|
68 | |||
159 |
|
I.
|
Contract
with Geophysical Institute of
Israel
|
|
I.
|
Contract
with Geophysical Institute of Israel
(cont’d)
|
|
J.
|
Drilling
Contract
|
|
J.
|
Drilling
Contract (cont’d)
|
|
K.
|
Employment
Agreement with Chairman of the Board and Other
Executives
|
|
K.
|
Employment
Agreement with Chairman of the Board and Other Executives
(cont’d)
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
|
·
|
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;
|
·
|
availability
and costs of drilling rigs;
|
·
|
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
|
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
|
||
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 o4f 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 Officer)
|
|||
Date:
|
May
14, 2010
|
Date:
|
May
14, 2010
|