ZION OIL & GAS INC

Previous wording

Zion Oil and Gas, Inc., a Delaware corporation, is an oil and gas exploration company with a history of 24 years of oil and gas exploration in Israel. We were incorporated in Florida on April 6, 2000 and reincorporated in Delaware on July 9, 2003. We completed our initial public offering in January 2007. Our common stock, par value $0.01 per share (the “Common Stock”) currently trades on the OTCQB Market under the symbol “ZNOG” and our Common Stock warrant under the symbol “ZNOGW.”

Current wording

Zion Oil and Gas, Inc., a Delaware corporation, is an oil and gas exploration company with a history of 25 years of oil and gas exploration in Israel. We were incorporated in Florida on April 6, 2000 and reincorporated in Delaware on July 9, 2003. We completed our initial public offering in January 2007. Our common stock, par value $0.01 per share (the “Common Stock”) currently trades on the OTCQB Market under the symbol “ZNOG” and our Common Stock warrant under the symbol “ZNOGW.”

Previous wording

During the year ended December 31, 2023, the Company recorded a non-cash post-impairment charge to its unproved oil and gas properties of $135,000. During the year ended December 31, 2022, the Company did not record any post-impairment charges (see Note 4).

Current wording

During the year ended December 31, 2024, the Company recorded $ nil in non-cash post-impairment charges to its unproved oil and gas properties. During the year ended December 31, 2023, the Company record a non-cash post-impairment charge to its unproved oil and gas properties of $135,000 (see Note 4).

Previous wording

The total net book value of our unproved oil and gas properties under the full cost method is $16,637,000 and $15,889,000 at December 31, 2023 and 2022, respectively.

Current wording

The total net book value of our unproved oil and gas properties under the full cost method was $21,682,000 and $16,637,000 at December 31, 2024 and 2023, respectively.

Previous wording

General and administrative expenses. General and administrative expenses for the year ended December 31, 2023 were $5,193,000 compared to $6,243,000 for the year ended December 31, 2022. This represents a reduction of $1,050,000, or 17%, year over year. A major component of general and administrative expenses is non-cash stock compensation expense in the form of stock options granted to employees, management and directors. As stated in this filing, Zion does not have revenue generating operations. Historically, we have compensated our staff in part by granting stock options in lieu of cash balances. However, though stock option grants are intended to provide a financial incentive, there are no guarantees that stock options will be “in the money” and, in that event, would maintain no value.

Current wording

General and administrative expenses. General and administrative expenses for the year ended December 31, 2024 were $4,645,000 compared to $5,193,000 for the year ended December 31, 2023. This represents a reduction of $548,000, or 11%, year over year. A major component of general and administrative expenses is non-cash stock compensation expense in the form of stock options granted to employees, management and directors. As stated in this filing, Zion does not have revenue generating operations. Historically, we have compensated our staff in part by granting stock options in lieu of cash balances. However, though stock option grants are intended to provide a financial incentive, there are no guarantees that stock options will be “in the money” and, in that event, would maintain no value.

Previous wording

The primary driver of this variance was stock option expense. The number of stock options granted was 9,718,000 lower during 2023, and therefore expenses were significantly lower.

Current wording

The primary driver of this variance was stock option expense. The number of stock options granted was 7,925,000 lower during 2024, and therefore expenses were significantly lower.

Previous wording

*Other expenses.*Other expenses during the year ended December 31, 2023 were $2,627,000 compared to $3,092,000 for the year ended December 31, 2022. This is a variance of $465,000 or 15%. The expenses in this category are comprised of non-compensation and non-professional expenses incurred. Investor relations, corporate insurance, franchise taxes and travel were approximately $250,000 lower in 2023.

Current wording

*Other expenses.*Other expenses during the year ended December 31, 2024 were $2,694,000 compared to $2,627,000 for the year ended December 31, 2023. This is a variance of $67,000 or 3%, which is not a material variance . The expenses in this category are comprised of non-compensation and non-professional expenses incurred.

Previous wording

*Impairment of unproved oil and gas properties.*Impairment of unproved oil and gas properties expenses during the year ended December 31, 2023 was $135,000 compared to $45,615,000 for the year ended December 31, 2022. The expense recorded in 2022 is attributable to the impairment charge of $45,615,000 related to the MJ-2 well.

Current wording

Impairment of unproved oil and gas properties. Impairment of unproved oil and gas properties expenses during the year ended December 31, 2024 was $nil compared to $135,000 for the year ended December 31, 2023. The expense recorded in 2023 is attributable to the impairment charge of $45,615,000 related to the MJ-2 well during 2022.

Previous wording

Other expense, net. Other expense, net for the year ended December 31, 2023 was $2,000 compared to $127,000 for the year ended December 31, 2022. This is a variance of $125,000 or 98%. The decrease in these expenses in 2023 is primarily attributable to exchange rate of the NIS fluctuations to the USD.

Current wording

Other expense, net. Other expense, net for the year ended December 31, 2024 was $4,000 compared to $2,000 for the year ended December 31, 2023. This is a variance of $2,000 or 100%, which is not a material variance.

Previous wording

*Net Loss.*Net loss for the year ended December 31, 2023 was $7,957,000 compared to $55,077,000 for the year ended December 31, 2022. The primary driver of the lower net loss in 2023 is the recognition of an impairment charge of $45,615,000 during Q4 2022.

Current wording

*Net Loss.*Net loss for the year ended December 31, 2024 was $7,343,000 compared to $7,957,000 for the year ended December 31, 2023.

Previous wording

During the past two completed fiscal years, we have financed our operations primarily from the proceeds of sales of our stock under the Dividend Reinvestment and Stock Purchase Plan. For the years ended December 31, 2023 and 2022, we raised approximately $6,949,000 and $19,129,000, respectively, under the Plan. Of the amounts raised, approximately 54% of the amounts raised in 2023 were attributable to one participant and 77% of the amounts raised in 2022 were attributable to two participants. The cessation of funding from these participants may result in adverse consequences to our business, such as a delay in our testing efforts, until we locate alternate sources for this funding.

Current wording

During the past two completed fiscal years, we have financed our operations primarily from the proceeds of sales of our stock under the Dividend Reinvestment and Stock Purchase Plan. For the years ended December 31, 2024 and 2023, we raised approximately $16,257,000 and $6,949,000, respectively, under the Plan. Of the amounts raised, approximately 57% of the amounts raised in 2024 were attributable to one participant and 54% of the amounts raised in 2023 were attributable to one participant. The cessation of funding from these participants may result in adverse consequences to our business, such as a delay in our testing efforts, until we locate alternate sources for this funding.

Previous wording

At December 31, 2023, we had approximately $615,000 in cash and cash equivalents compared to $1,735,000 at December 31, 2022. Our working capital (current assets minus current liabilities) was ($349,000) at December 31, 2023 and $661,000 at December 31, 2022.

Current wording

At December 31, 2024, we had approximately $2,272,000 in cash and cash equivalents compared to $615,000 at December 31, 2023. Our working capital (current assets minus current liabilities) was $1,702,000 at December 31, 2024 and ($349,000) at December 31, 2023.

Previous wording

As of December 31, 2023, and 2022, the Company provided Israeli-required bank guarantees to various governmental bodies (approximately $944,000 and $1,278,000, respectively) and others (approximately $90,000 and $79,000, respectively) with respect to its drilling operation in an aggregate amount of approximately $1,034,000 and $1,357,000, respectively. The cash funds backing these guarantees are held in restricted interest-bearing accounts and are reported on the Company’s balance sheets as fixed short-term bank deposits – restricted.

Current wording

As of December 31, 2024, and 2023, the Company provided Israeli-required bank guarantees to various governmental bodies (approximately $972,000 and $944,000, respectively) and others (approximately $93,000 and $90,000, respectively) with respect to its drilling operation in an aggregate amount of approximately $1,065,000 and $1,034,000, respectively. The cash funds backing these guarantees are held in restricted interest-bearing accounts and are reported on the Company’s balance sheets as cash and cash equivalents – restricted.

Previous wording

During the years ended December 31, 2023 and 2022, cash used in operating activities totaled $5,133,000 and $5,704,000, respectively. Cash provided by financing activities during the years ended December 31, 2023 and 2022 was $6,008,000 and $19,133,000, respectively, and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase Plan (the “DSPP” or “Plan”). Net cash used in investing activities such as drilling costs for our MJ-02 exploratory well, purchase of equipment and spare parts was $2,354,000 and $16,267,000 for the years ended December 31, 2023 and 2022, respectively.

Current wording

During the years ended December 31, 2024 and 2023, cash used in operating activities totaled $6,230,000 and $5,133,000, respectively. Cash provided by financing activities during the years ended December 31, 2024 and 2023 was $13,205,000 and $6,008,000, respectively, and is primarily attributable to proceeds received from the Dividend Reinvestment and Stock Purchase Plan (the “DSPP” or “Plan”). Net cash used in investing activities such as drilling costs for our MJ-02 exploratory well, purchase of equipment and spare parts was $5,274,000 and $2,354,000 for the years ended December 31, 2024 and 2023, respectively.

Previous wording

Accounting standards require management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the filing of the consolidated financial statements. We expect to incur additional significant expenditures to further our exploration and development programs. While we raised approximately $2,052,000 during the period January 1, 2024 through March 20, 2024, we will need to raise additional funds in order to continue our exploration and development activities. Additionally, we estimate that, when we are not actively drilling a well, our expenditures are approximately $600,000 per month excluding exploratory operational activities. However, when we are actively drilling a well, we estimate an additional minimum expenditure of approximately $2,500,000 per month. The above estimates are subject to change. Subject to the qualifications specified below, management believes that our existing cash balance, coupled with anticipated proceeds under the DSPP, will be sufficient to finance our plan of operations through March 2024.

Current wording

Accounting standards require management to evaluate our ability to continue as a going concern for a period of one year subsequent to the date of the filing of the consolidated financial statements. We expect to incur additional significant expenditures to further our exploration and development programs. While we raised approximately $5,315,000, inclusive of $650,000 from the exercise of warrants, during the period January 1, 2025 through March 26, 2025, we will need to raise additional funds in order to continue our exploration and development activities. Additionally, we estimate that, when we are not actively drilling a well, our expenditures are approximately $600,000 per month excluding exploratory operational activities. However, when we are actively drilling a well, we estimate an additional minimum expenditure of approximately $2,500,000 per month. The above estimates are subject to change. Subject to the qualifications specified below, management believes that our existing cash balance, coupled with anticipated proceeds under the DSPP, will be sufficient to finance our plan of operations through October 2025.

Previous wording

Even if we raise the needed funds, there are factors that can nevertheless adversely impact our ability to fund our operating needs, including (without limitation), unexpected or unforeseen cost overruns in drilling and planned non-drilling exploratory work, the costs associated with extended delays in undertaking the required exploratory work, and plugging and abandonment activities which is typical of what we have experienced in the past and extended delays obtaining regulatory approvals since the outset of the Israel-Hamas war.

Current wording

Even if we raise the needed funds, there are factors that can nevertheless adversely impact our ability to fund our operating needs, including (without limitation), the potential impact of the Israel-Hamas war, the Israel-Hezbollah war, the potential actions of other hostile parties in the region, unexpected or unforeseen cost overruns in planned non-drilling exploratory work in existing license areas, the costs associated with extended delays in undertaking the required exploratory work, and plugging and abandonment activities which is typical of what we have experienced in the past.

Previous wording

Under our Plan, the Company under a Request For Waiver Program executed Waiver Term Sheets of a unit option program consisting of a Unit (shares of stock and warrants) of its securities and subsequently an option program consisting of shares of stock to a participant. The participant’s Plan account was credited with the number of shares of the Company’s Common Stock and Warrants that were acquired. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $1.00. The warrant shall have the company notation of “ZNWAM.” The warrants will not be registered for trading on the OTCQB or any other stock market or trading market. The warrants became exercisable on January 15, 2021 and continue to be exercisable through July 15, 2022.

Current wording

Under our Plan, the Company under a Request For Waiver Program executed Waiver Term Sheets of a unit option program consisting of a Unit (shares of stock and warrants) of its securities and subsequently an option program consisting of shares of stock to a participant. The participant’s Plan account was credited with the number of shares of the Company’s Common Stock and Warrants that were acquired. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $1.00. The warrant shall have the company notation of “ZNWAM.” The warrants were not be registered for trading on the OTCQB or any other stock market or trading market. The warrants became exercisable on January 15, 2021 and continue to be exercisable through July 15, 2022.

Previous wording

Under our Plan, the Company under a Request For Waiver Program executed a Waiver Term Sheet for a program consisting of Zion securities to a participant. After conclusion of the program on June 17, 2021, the participant’s Plan account was credited with the number of shares of the Company’s Common Stock that were acquired. Under our Plan, the Company under a Request For Waiver Program executed a Waiver Term Sheet for a unit program consisting of a Unit (shares of stock and warrants) to a participant. After conclusion of the program on May 28, 2021, the participant’s Plan account was credited with the number of shares of the Company’s Common Stock and Warrants that were acquired. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $.25. The warrant has the company notation of “ZNWAP.” The warrants were not registered for trading on the OTCQB or any other stock market or trading market. The warrants were issued and became exercisable on June 2, 2021 and continue to be exercisable through June 2, 2022 at a per share exercise price of $.25.

Current wording

Under our Plan, the Company under a Request For Waiver Program executed a Waiver Term Sheet for a unit program consisting of a Unit (shares of stock and warrants) to a participant. After conclusion of the program on May 28, 2021, the participant’s Plan account was credited with the number of shares of the Company’s Common Stock and Warrants that were acquired. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $.25. The warrant has the company notation of “ZNWAP.” The warrants were not registered for trading on the OTCQB or any other stock market or trading market. The warrants were issued and became exercisable on June 2, 2021 and continued to be exercisable through June 2, 2022 at a per share exercise price of $.25.

Previous wording

Under our Plan, the Company under a Request For Waiver Program executed a Waiver Term Sheet of a unit program consisting of units of shares of stock and warrants to a participant. After conclusion of the program on June 18, 2021, the participant’s Plan account was credited with the number of shares of the Company’s Common Stock and warrants that were acquired. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $.25. The warrant shall have the company notation of “ZNWAQ.” The warrants will not be registered for trading on the OTCQB or any other stock market or trading market. The warrants were issued on May 5, 2022 and were exercisable through July 15, 2023 at a revised per share exercise price of $.05.

Current wording

Under our Plan, the Company under a Request For Waiver Program executed a Waiver Term Sheet of a unit program consisting of units of shares of stock and warrants to a participant. After conclusion of the program on June 18, 2021, the participant’s Plan account was credited with the number of shares of the Company’s Common Stock and warrants that were acquired. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $.25. The warrant has the company notation of “ZNWAQ.” The warrants were not registered for trading on the OTCQB or any other stock market or trading market. The warrants were issued on May 5, 2022 and were exercisable through July 15, 2023 at a revised per share exercise price of $.05.

Previous wording

During 2023, one participant who participated in the “Request for Waiver” aspect of the DSPP contributed approximately 54% of the cash raised through the DSPP. During 2022, two participants in the “Request for Waiver” aspect of the DSPP contributed approximately 77% of the cash raised through the DSPP.

Current wording

During 2023, one participant who participated in the “Request for Waiver” aspect of the DSPP contributed approximately 54% of the cash raised through the DSPP.

Previous wording

Under our Plan, we provided a Unit Option under our Unit Program with this Amendment No. 4. This Unit Option period began on November 6, 2023 and terminated on December 31, 2023.

Current wording

Under our Plan, we provided a Unit Option under our Unit Program with this Amendment No. 4. This Unit Option period began on November 6, 2023 and terminated on December 31, 2023. See Amendment No 5 below for data on an extension.

Previous wording

Our Unit Program consists of the combination of Common Stock and warrants with basic Unit Program features, conditions and terms outlined in the Original Prospectus Supplement and Amendment No. 1. Amendment No. 4 provides the option period, unit price and the determination of the number of shares of Common Stock and warrants per unit. This Unit Option began on November 6, 2023 and is scheduled to terminate on December 31, 2023, unless extended at the sole discretion of Zion Oil & Gas, Inc. The Unit Option consists of Units of our securities where each Unit (priced at $250.00 each) is comprised of (i) a certain number of shares of Common Stock determined by dividing $250.00 (the price of one Unit) by the average of the high and low sale prices of the Company’s publicly traded common stock as reported on the OTCQB on the Unit Purchase Date and (ii) Common Stock purchase warrants to purchase an additional fifty (50) shares of Common Stock at a per share exercise price of $0.25. The participant’s Plan account will be credited with the number of shares of the Company’s Common Stock and Warrants that are acquired under the Units purchased. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $0.25. The warrant shall have the Company notation of “ZNWBA” and will not be registered for trading on the OTCQB or any other stock market or trading market.

Current wording

Our Unit Program consists of the combination of Common Stock and warrants with basic Unit Program features, conditions and terms outlined in the Original Prospectus Supplement and Amendment No. 1. Amendment No. 4 provides the option period, unit price and the determination of the number of shares of Common Stock and warrants per unit. This Unit Option began on November 6, 2023 and was scheduled to terminate on December 31, 2023, unless extended at the sole discretion of Zion Oil & Gas, Inc. The Unit Option consists of Units of our securities where each Unit (priced at $250.00 each) is comprised of (i) a certain number of shares of Common Stock determined by dividing $250.00 (the price of one Unit) by the average of the high and low sale prices of the Company’s publicly traded common stock as reported on the OTCQB on the Unit Purchase Date and (ii) Common Stock purchase warrants to purchase an additional fifty (50) shares of Common Stock at a per share exercise price of $0.25. The participant’s Plan account was credited with the number of shares of the Company’s Common Stock and Warrants that was acquired under the Units purchased. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $0.25. The warrant shall have the Company notation of “ZNWBA” and will not be registered for trading on the OTCQB or any other stock market or trading market.

Previous wording

Plan participants, who enroll into the Unit Program with the purchase of at least one Unit and enroll in the separate Automatic Monthly Investments (“AMI”) program at a minimum of $50.00 per month, received an additional fifty (50) warrants at an exercise price of $0.25 during this Unit Option Program. The fifty (50) additional warrants re for enrolling into the AMI program and shall receive the above warrant with the Company notation of “ZNWBA.” Existing subscribers to the AMI are entitled to the additional fifty (50) warrants, if they purchase at least one (1) Unit during the Unit program.

Current wording

Plan participants, who enroll into the Unit Program with the purchase of at least one Unit and enroll in the separate Automatic Monthly Investments (“AMI”) program at a minimum of $50.00 per month, received an additional fifty (50) warrants at an exercise price of $0.25 during this Unit Option Program. The fifty (50) additional warrants were for enrolling in the AMI program and along with the above warrant with the Company notation of “ZNWBA.” Existing subscribers to the AMI were entitled to the additional fifty (50) warrants, if they purchase at least one (1) Unit during the Unit program.

Previous wording

The ZNWBA warrants will become exercisable on January 15, 2024, unless extended, and continue to be exercisable through January 15, 2025, unless extended, at a per share exercise price of $0.25.

Current wording

The ZNWBA warrants will become exercisable on January 15, 2024, unless extended, and continue to be exercisable through January 15, 2025, unless extended, at a per share exercise price of $0.25. See Amendment No. 5 below for new dates.

Previous wording

The date of this Amendment No. 6 to Prospectus Supplement is January 29, 2024.

Current wording

The date of this Amendment No. 6 to Prospectus Supplement was January 29, 2024.

Previous wording

For the years ended December 31, 2023, and 2022, approximately $6,949,000, and $19,129,000 were raised under the DSPP program, respectively. The $6,949,000 figure was reduced by $1,120,000 in equity issuance costs to an outside party.

Current wording

For the years ended December 31, 2024, and 2023, approximately $16,257,000, and $6,949,000 were raised under the DSPP program, respectively. The $16,257,000 and $6,949,000 figures were reduced by $2,921,000 and $1,120,000, respectively, in equity issuance costs to an outside party resulting in net cash provided of $13,336,000 and $5,829,000, respectively.

Previous wording

The company raised approximately $2,052,000 from the period January 1, 2024 through March 20, 2024, under the DSPP program.

Current wording

The company raised approximately $5,315,000, inclusive of $650,000 from the exercise of warrants, from the period January 1, 2025 through March 26, 2025, under the DSPP program.