ZION OIL & GAS INC

Note1 - Nature of Operations and Going Concern

A. Nature of Operations

Zion Oil & Gas, Inc., a Delaware corporation (“we,” “our,” “Zion” or the “Company”) is an oil and gas exploration company with a history of25 years of oil & gas exploration in Israel. As of* December 31, 2024*, the Company hasno revenues from its oil and gas operations.

Zion maintains its corporate headquarters in Dallas, Texas. The Company also has branch offices in Caesarea, Israel and Geneva, Switzerland. The purpose of the Israel branch is to support the Company’s operations in Israel, and the purpose of the Switzerland branch is to operate a foreign treasury center for the Company.

On* January 24, 2020,Zion incorporated a wholly owned subsidiary, Zion Drilling, Inc., a Delaware corporation, for the purpose of owning a drilling rig, related equipment and spare parts, and on January 31, 2020,Zion incorporated another wholly owned subsidiary, Zion Drilling Services, Inc., a Delaware corporation, to act as the contractor providing such drilling services. When Zion isnot* using the rig for its own exploration activities, Zion Drilling Services* may*contract with other operators in Israel to provide drilling services at market rates then in effect.

Zion has the trademark “ZION DRILLING” filed with the United States Patent and Trademark Office. Zion has the trademark filed with the World Intellectual Property Organization in Geneva, Switzerland, pursuant to the Madrid Agreement and Protocol. In addition, Zion has the trademark filed with the Israeli Trademark Office in Israel.

Exploration Rights/Exploration Activities

New Megiddo Valleys License434 (“NMVL434”)

On* September 14, 2023,the Israel Ministry of Energy approved a new Megiddo Valleys License434* (“NMVL434”), allowing for oil and gas exploration on approximately 75,000 acres or 302 square kilometers. This Exploration License434 is valid forthree years until* September 13, 2026withfour* potential1-year extensions for a total ofseven years until* September 13, 2030.This NMVL434* effectively supersedes our previous NML428.

On* February 21, 2024,*members of the Supervisory Committee visited our rig site. During this visit, they interacted with staff from Zion Oil & Gas, our consultants and potential service providers. Some of these interactions occurred at Kibbutz Sde Eliyahu, while others were conducted through video conferencing with participants from the United States, Europe and the Middle East. Following these discussions, the Committee officially accepted our work plan for the MJ-01 re-completion project. This acceptance allowed us to sign agreements and secure mobilization dates with our service providers to commence and complete the project.

The initial phase of our recompletion project consisted of a categorythree inspection of the drilling rig, rigging down from MJ-02 and moving and rigging up over the MJ-01 well.

Stagetwo of the operation involved drilling out both the steel plugs along with625 meters (about2,050 feet) of cement plugs and re-conditioning the wellbore to allow unhindered access to the selected zones for testing.

Aftersix years of inactivity in a well overthree miles deep, the MJ-01 wellbore presents a challenging environment. The wellbore appears to have experienced elastic and partial collapse of the casing in some areas. This led to the bottom hole assembly (“BHA”) becoming stuck over4,000 meters from surface. Attempts to overpull the BHA were unsuccessful, and the crew completed a backoff operation which left over500 meters of the BHA remaining downhole. This isnot an uncommon occurrence with oil and gas drilling operations and the crew was unsuccessful in retrieving the remaining BHA with the tools that were on location.

Another delay arose out of the logistical challenges we face. The conflict in the region during2024 has impacted shipping routes, the timely arrival of necessary equipment, and created travel difficulties for our rig crews. Our operations require specialized rig crews who arenot available in Israel.

An even further delay has been created by many of our rig crew members reaching the limit of their work visas. This requires us to reset visas, which isnot a simple process, and it adds another layer of delay and complexity. Moreover, the recent changes to visa eligibility have further complicated the process, as Israel, in just the last few months, has changed their90-day visa renewals from resetting at the end of the year to resetting aftersix months after expiration. We are working with the Ministry of Interior on this issue. As a side note, the crew had to enter Israel under90-day visas andnot six month or12-month visas in order to comply with the labor law requirements in place at the time the operation commenced.

In light of the combination of downhole, logistical, and crew challenges, as well as holidays, and theone-year remembrance of* October 7,we temporarily paused active operations duringQ4* 2024. This was a necessary step to ensure the safety of our personnel and to ensure proper engineering and tools are brought to location to avoid lengthy delays waiting for additional tools should any be required once the job resumes. We anticipate that once we have the necessary tools and renewed visas for our crews, we can resume operations inQ1 2025. This is, of course, subject to the realities of the present geopolitical environment. The conflict in Israel, whilenot directly impacting our operations on a daily basis, creates uncertainties that could affect our schedule at any time.

Zion’s rig crew arrived in Israel in* February 2025,and has commenced critical maintenance and preparatory work. The rig, which was safely “warm stacked” in September 2024,is undergoing necessary checks for maintenance, including fluid changes, lubrication and greasing, and mechanical, electrical, and safety audits to ensure peak functionality. Following maintenance, the team will begin drilling out the temporary plug at approximately1,100* meters. This phase is expected to take2-3 weeks, paving the way for the subsequent well completion and testing operations. Once the plug is removed, Zion will proceed with setting a permanent plug at the deeper part of the well, allowing for isolating targeted zones of interest for testing.

Zion has successfully navigated complex logistical challenges to ensure the timely delivery of essential equipment. Resources are currently on route to Israel from across the globe, including India, Romania, Germany, the Netherlands, the UAE, the United States, and Tanzania. This unprecedented international cooperation underscores the dedication and perseverance of Zion’s team and partners. Furthermore, Zion has maintained continuous security at the MJ-01 site, ensuring a stable and secure operational environment. Additionally, commercial air travel into Israel has steadily resumed, further supporting logistical operations.

With all necessary equipment expected to be on-site by mid-* March,Zion anticipates progressing through the well completion and testing operations inQ2* 2025.

During the year ended* December 31, 2024*, the Company recorded $nil in non-cash post-impairment charge to its unproved oil and gas properties. 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 (see Note4).

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Note1 - Nature of Operations and Going Concern(cont’d)

Zion’s Former Asher-Menashe License

Zion plugged the exploratory well on its former Asher-Menashe License area, the reserve pit has been evacuated, and during the year2019, Zion completed the abandonment of this well site in accordance with guidance from the Energy Ministry, Environmental Ministry and local officials (see Note9C).

Zion’s Former Joseph License

Zion has plugged all of its exploratory wells on its former Joseph License area, and the reserve pits have been evacuated, but acknowledges its obligation to complete the abandonment of these well sites in accordance with guidance from the Energy Ministry, Environmental Ministry and local officials (see Note9C).

Uncertainty Due to the Russia–** Ukraine War**

Due to Russia’s invasion of Ukraine, which began in* February 2022,and the resulting sanctions and other actions against Russia and Belarus, there has been uncertainty and disruption in the global economy. Although the Russian war against Ukraine didnot* have a material adverse impact on the Company’s financial results for the year ended* December 31, 2024*, at this time the Company is unable to fully assess the aggregate impact the Russian war against Ukraine will have on its business due to various uncertainties, which include, but arenot limited to, the duration of the war, the war’s effect on the global economy, future energy pricing, its impact to the businesses of the Company’s, and actions that* may*be taken by governmental authorities related to the war.

Israel-Hamas War

The nation of Israel declared war on Hamas following the* October 7, 2023invasion by Hamas into many southern Israeli communities, killing and injuring thousands and taking of over200* Israeli hostages into Gaza. Israel formed a war time emergency government with its primary focus on defending its homeland. As part of the war effort, Israel activated a large number of reservists. Our geologist in Israel, Nadav Navon, was called into service for a month ortwo in late2023. In2024, he was called up again to serve for a period of months. He has since returned back to work. As a result of Nadav’s absence, his workload was handled by our US based geologist Lee Russell. We have been able to keep up with the geological workload without any issues.

Our operations in Israel take place at the wellsite in north central Israel, away from the primary location of the war in southern Israel. Our drilling rig, pad site, employees and service providers were safe throughout2024.

Throughout2024, there were daily battles occurring in the Gaza Strip. Israel was largely successful in winning the battles, including taking operational control of nearly all areas of Gaza and killing many top leaders of Hamas.

On or about* January 19, 2025,*Israel and Hamas agreed to a ceasefire. On that day,three hostages were released to Israel’s care and there is a plan to release more hostages over time.

Israel-Hezbollah War and Wider Hostilities

Throughout thefirst 4-6 months of2024, the IDF and Hezbollah (a terrorist organization based in Lebanon) exchanged near daily missile and rocket fire at Israel’s northern border. DuringQ3 2024, the IDF carried out multiple strikes against the Hezbollah leadership and was very successful.

On* October 1, 2024,*Israel invaded Lebanon to attack Hezbollah directly. Israel and the IDF were successful and killed much of the top leadership of Hezbollah.

On* November 27, 2024,*Israel and Hezbollah signed a ceasefire agreement.

COVID-19 Update

The continuing COVID-19 global pandemic has caused significant disruption to the economy and financial markets globally, and the full extent of the potential impacts of COVID-19 arenot yet fully known. Circumstances caused by the COVID-19 pandemic are complex, and uncertain. The impact of COVID-19 hasnot been significant to the Company’s results of operations, financial condition, and liquidity and capital resources. Althoughno material impairment or other effects have been identified to date, there is substantial uncertainty in the nature and degree of its continued effects over time. That uncertainty affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions as additional events and information become known. The Company will continue to consider the potential impact of the COVID-19 pandemic on its business operations.

B. Going Concern

The Company incurs cash outflows from operations, and all exploration activities and overhead expenses to date have been financed by way of equity or debt financing. The recoverability of the costs incurred to date is uncertain and dependent upon achieving significant commercial production of hydrocarbons.

The Company’s ability to continue as a going concern is dependent upon obtaining the necessary financing to undertake further exploration and development activities and ultimately generating profitable operations from its oil and natural gas interests in the future. The Company’s current operations are dependent upon the adequacy of its current assets to meet its current expenditure requirements and the accuracy of management’s estimates of those requirements. Should those estimates be materially incorrect, the Company’s ability to continue as a going concern* maybe in doubt. The consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and liquidation of liabilities in the ordinary course of business. During the year ended December 31, 2024*, the Company incurred a net loss of approximately $7.3 million and had an accumulated deficit of approximately $293.9 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern forone year from the date the financials were issued.

To carry out planned operations, the Company must raise additional funds through additional equity and/or debt issuances or through profitable operations. There can beno assurance that this capital or positive operational income will be available to the Company, and if it isnot, the Company* maybe forced to curtail or cease exploration and development activities. The consolidated financial statements donot* include any adjustments that might result from the outcome of this uncertainty (see also Note11).

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Note2 - Summary of Significant Accounting Policies

A summary of the significant accounting policies applied in the presentation of the accompanying consolidated financial statements follows:

A. Basis of Presentation and Foreign Currency Matters

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”).

All amounts referred to in the notes to the consolidated financial statements are in United States Dollars ($) unless stated otherwise.

The currency of the primary economic environment in which the operations of the Company are conducted is the United States dollar (“dollar”). Therefore, the dollar has been determined to be the Company’s functional currency. Non-dollar transactions and balances have been translated into dollars in accordance with the principles set forth in Accounting Standards Codification (“ASC”)830 “Foreign Currency Matters.” Transactions in foreign currency (primarily in New Israeli Shekels – “NIS”) are recorded at the exchange rate as of the transaction date. Monetary assets and liabilities denominated in foreign currency are translated on the basis of the representative rate of exchange at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currency are stated at historical exchange rates. All exchange gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations as they arise.

B. Cash and Cash Equivalents

The Company maintains cash balances withseven banks, of whichthree banks are located in the United States,one in the United Kingdom, andthree in Israel. For purposes of the statement of cash flows and balance sheet, the Company considers all highly liquid investments with a maturity ofthree months or less to be cash equivalents. At times, the Company maintains deposits in financial institutions in excess of federally insured limits. The Company hasnot experienced any losses in such accounts and doesnot believe it is exposed to any significant credit risk on cash.

C. Cash and Cash Equivalents - Restricted

Interest bearing deposits for a period which exceedsthree months butnot more than12 months and arenot restricted are classified as cash and cash equivalents – restricted.

D. Oil and Gas Properties and Impairment

The Company follows the full-cost method of accounting for oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized.

All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects arenot amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from continuing operations before income taxes, and the adjusted carrying amount of the proved properties is amortized on the unit-of-production method.

The Company’s oil and gas property represents an investment in unproved properties. These costs are excluded from the amortized cost pool until proved reserves are found or until it is determined that the costs are impaired. All costs excluded are reviewed at least quarterly to determine if impairment has occurred. The amount of any impairment is charged to expense since a reserve base hasnot yet been established. Impairment requiring a charge to expense* may*be indicated through evaluation of drilling results, relinquishing drilling rights or other information.

During the year ended* December 31, 2024*, the Company didnot record any post-impairment charge to its unproved oil and gas properties. 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. (see Note4).

Currently, the Company hasno economically recoverable reserves andno amortization base. The Company’s unproved oil and gas properties consist of capitalized exploration costs of $21,682,000 and $16,637,000 as of* December 31, 2024*, and2023, respectively.

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E. Property and Equipment

Property and equipment other than oil and gas property and equipment is recorded at cost and depreciated by the straight-line method over its estimated useful life of 3 to 14 years. Depreciation charged to expense amounted to $779,000 and $767,000 for the years ended* December 31, 2024*, and2023, respectively. See Footnote2P for a discussion of the purchase of our drilling rig and related equipment.

F. Assets Held for Severance Benefits

Assets held for employee severance benefits represent contributions to severance pay funds and insurance policies that are recorded at their current redemption value.

G. Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of expenses. Such estimates include the valuation of unproved oil and gas properties, deferred tax assets, asset retirement obligations, borrowing rate of interest consideration for leases accounting and legal contingencies. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity, foreign currency, and energy markets have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.

The full extent to which the COVID-19 pandemic* maydirectly or indirectly impact our business, results of operations and financial condition, will depend on future developments that are uncertain, including as a result of new information that mayemerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international markets. We have made estimates of the impact of COVID-19 within our consolidated financial statements, and although there is currentlyno* major impact, there* maybe changes to those estimates in future periods. We have made the same estimates as to the potential impact the Israel-Hamas war mayhave on our operations. Actual results may*differ from these estimates.

H. Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled (see Note7). The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

Based on Accounting Standards Codification (ASC)740-10-25-6 “Income Taxes,” the Company recognizes the effect of income tax positions only if those positions are more likely thannot of being sustained. Recognized income tax positions are measured at the largest amount that is greater than50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company accounts for interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the statements of operations. No liability for unrecognized tax benefits was recognized as of* December 31, 2024*, and2023.

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I. Environmental Costs and Loss Contingencies

Liabilities for loss contingencies, including environmental remediation costsnot within the scope of Financial Accounting Standards Board (FASB) ASC Subtopic410-20, Asset Retirement Obligations and Environmental Obligations – Asset Retirement Obligations, arising from claims, assessments, litigation, fines, and penalties and other sources, are recorded when probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Recoveries of environmental remediation costs fromthird parties that are probable of realization are separately recorded as assets, and arenot offset against the related environmental liability.

Accruals for estimated losses from environmental remediation obligations generally are recognizedno later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of expected future expenditures for environmental remediation obligations arenot discounted to their present value.

J. Asset Retirement Obligation

Obligations for dismantlement, restoration and removal of facilities and tangible equipment at the end of oil and gas property’s useful life are recorded based on the estimate of the fair value of the liabilities in the period in which the obligation is incurred. This requires the use of management’s estimates with respect to future abandonment costs, inflation, market risk premiums, useful life and cost of capital. The estimate of asset retirement obligations doesnot give consideration to the value the related assets could have to other parties. The obligation is recorded if sufficient information about the timing and (or) method of settlement is available to reasonably estimate fair value (see Note9C).

K. Net Loss per Share Data

Basic and diluted net loss per share of common stock, par value $0.01 per share (“Common Stock”) is presented in conformity with ASC260-10 “Earnings Per Share.” Diluted net loss per share is the same as basic net loss per share for2024 as the inclusion of 32,900,882 in stock options and 29,303,152 in warrants would be anti-dilutive.

Diluted net loss per share is the same as basic net loss per share for2023 as the inclusion of 27,086,250 in stock options and 29,697,020 in warrants would be anti-dilutive.

L. Stock Based Compensation

ASC718, “Compensation – Stock Compensation,” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC718. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.

M. Fair Value Measurements

The Company follows Accounting Standards Codification (ASC)820, “Fair Value Measurements and Disclosures,” as amended by Financial Accounting Standards Board (FASB) Financial Staff Position (FSP)No. 157 and related guidance. Those provisions relate to the Company’s financial assets and liabilities carried at fair value and the fair value disclosures related to financial assets and liabilities. ASC820 defines fair value, expands related disclosure requirements, and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset or liability.

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The Company uses athree-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. Thethree tiers are defined as follows:

The Company’s financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, are carried at historical cost. At* December 31, 2024and2023*, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

N. Warrants

In connection with the Dividend Reinvestment and Stock Purchase Plan (“DSPP”) financing arrangements, the Company has issued warrants to purchase shares of its common stock. The outstanding warrants are stand-alone instruments that arenot puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded and accounted as a part of the DSPP investment as additional paid-in capital of the common stock issued. All other warrants are recorded at fair value and expensed over the requisite service period or at the date of issuance, if there isnot a service period. Warrants granted in connection with ongoing arrangements are more fully described in Note6, Stockholders’* Equity*.

O. Related parties

Parties are considered to be related to the Company if the parties, directly or indirectly, throughone or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company* maydeal ifone* party controls or can significantly influence the management or operating policies of the other to an extent thatone of the transacting parties might be prevented from fully pursuing its own separate interests. All transactions with related parties are recorded at fair value of the goods or services exchanged.

Zion didnot have any related party transactions for the fiscal years ending* December**2024* and2023.

P. Depreciation and Accounting for Drilling Rig and Related Equipment

Zion purchased an onshore oil and gas drilling rig, drilling pipe, related equipment and spare parts for a purchase price of $5.6 million in cash, inclusive of approximately $540,000 allocated to spare parts and $48,000 allocated to additional separate assets. The value of the spare parts and separate assets are captured in separate ledger accounts, but reported asone line item with the drilling rig on the balance sheet. Zion determined that the life of the I-35 drilling rig (the rig Zion purchased), is 10 years. Zion is depreciating the rig on a straight-line basis.

Zion uses the First In First Out (“FIFO”) method of accounting for the inventory spare parts, meaning that the earliest items purchased will be thefirst item charged to the well in which the inventory of spare parts gets consumed.

It is also noteworthy that various components and systems on the rig will be subject to certifications by the manufacturer to ensure that the rig is maintained at optimal levels. Per standard practice in upstream oil and gas, each certification performed on our drilling rig increases the useful life of the rig byfive years. The costs of each certification will be added to the drilling rig account, and our straight-line amortization will be adjusted accordingly.

Zion purchased rig spare parts totaling approximately $178,000 andnil during the years ending* December 31,*2024 and2023, respectively, in preparation for its MJ-01 re-entry project.

Zion sold some excess scrap drilling pipe and accessories for approximately $35,000 to a local Israeli party during the year2024. This transaction triggered a reduction in Other Drilling Assets, an accumulated depreciation adjustment and a loss on the disposal.

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I-35 Drilling Rig & Associated Equipment

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Q. Other Comprehensive Income

The Company doesnot have any activity that results in Other Comprehensive Income.

R. Recently Adopted Accounting Pronouncements

In* November 2023,the FASB issued ASUNo.* 2023-07, “Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures*”. The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses among other disclosure requirements. ASU2023-07 is effective for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.Early adoption is permitted. The amendments will be applied retrospectively to all prior periods presented in the financial statements. Zion adopted this ASU effective January 1, 2023.The adoption of this ASU didnot* have any impact on its consolidated financial statements.

Other Recent Accounting Pronouncements

The Company doesnot believe that the adoption of any recently issued accounting pronouncements in2024 had a significant impact on our consolidated financial position, results of operations, or cash flow.

S. Operating Segments

The Company hasone operating segment and its Chief Operating Decision Maker (“CODM”) is its CEO. Consistent with its mission and vision, the Company explores for hydrocarbons in onshore Israel. The CODM manages exploration activities considering the following areas, at a minimum: (1) geological prospects within its license area and related feasibility to produce hydrocarbons, (2) the regulatory, administrative and political climate in Israel, (3) competition is Israel, (4) equipment and labor sourcing and (5) operational financing.

Within unproved oil and gas properties costs, the CODM monitors the costs of permitting and regulatory compliance, logistics and supply chain considerations associated with importation of labor and equipment, including managing the amounts and timing of prepayments to international service providers. The CODM works closely with its vice president of operations and CFO on capital expenditures to ensure adequate capital is available when needed.

Within our Statement of Operations (Profit & Loss), the Company hastwo primary categories of expenses: (1) “General and Administrative” costs, which consists of salaries, payroll taxes, benefits, and costs of stock option grants, and (2) “Other”, which consists of a broad range of non-compensation related expenses, including fees for directors, accounting, legal and information technology services, as well as other professional fees. This category also includes costs for various lines of insurance, investor relations activities, office facilities, depreciation and annual meeting expenses. Zion has had very low employee turnover in recent years and our CODM monitors the salaries paid to its existing workforce. Additionally, the CODM is the decision maker in its annual insurance renewals for directors and officers, cybersecurity, rig andthird-party liability insurance, both in Dallas and in Israel. Furthermore, our CODM, together with its CFO, reviews and approves our credit card spending, which primarily relates to investor relations activities to ensure that Zion is getting value for dollars spent.

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Note3 - Provision for Severance Pay

Israeli law generally requires payment of severance pay upon dismissal of an Israeli employee or upon termination of employment in certain other circumstances. The following plans relate to the employees in Israel:

The deposited funds include profits/loss accumulated up to the balance sheet date. The value of the deposited funds is based on current redemption value of these policies.

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Note4 - Unproved Oil and Gas Properties, Full Cost Method

Unproved oil and gas properties, under the full cost method, are comprised as follows:

Impairment of unproved oil and gas properties comprised as follows:

Changes in Unproved oil and gas properties during the years ended* December 31, 2024*, and2023, are as follows:

Please refer to Footnote1 – Nature of Operations and Going Concern for more information about Zion’s exploration activities.

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Note5 - Accrued Liabilities

Accrued liabilities are comprised as follows:

Note6 - Stockholders’** Equity**

The Company’s shareholders approved the amendment of the Company’s Amended and Restated Certificate of Incorporation to increase the number of shares of common stock, par value $0.01, that the Company is authorized to issue from 800,000,000 shares to 1,200,000,000 shares, effective* June 7, 2023.*

A.2021 Omnibus Incentive Stock Option Plan

Effective* June 9, 2021,*the Company’s shareholders authorized the adoption of the Zion Oil & Gas, Inc.2021 Omnibus Incentive Stock Option Plan (“Omnibus Plan”) for employees, directors and consultants, initially reserving for issuance thereunder 38,000,000 shares of common stock.

The Omnibus Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, bonus stock, awards in lieu of cash obligations, other stock-based awards and performance units. The plan also permits cash payments under certain conditions.

The compensation committee of the Board of Directors (comprised of independent directors) is responsible for determining the type of award, when and to whom awards are granted, the number of shares and the terms of the awards and exercise prices. The options are exercisable for a periodnot to exceedten years from the date of grant.

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During the year ended* December 31, 2024*, the Company granted the following options from the2021 Equity Omnibus Plan for employees, directors and consultants, to purchase shares of common stock as non-cash compensation:

During the year ended* December 31, 2023,the Company granted the following options from the2021* Equity Omnibus Plan for employees, directors and consultants, to purchase shares of common stock as non-cash compensation:

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D. Warrants and Options

The Company has reserved 62,204,034 shares of common stock as of* December 31, 2024*, for the exercise of warrants and options to employees and non-employees, of which 62,204,034 are exercisable. These warrants and options could potentially dilute basic earnings per share in future years. The warrants and options exercise prices and expiration dates are as follows:

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Note6 - Stockholders’ **Equity (cont’d)

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The stock option transactions since* January 1,*2023 are shown in the table below:

The aggregate intrinsic value of options exercised during2024, and2023 was approximately $22,000, and $4,000 respectively.

The aggregate intrinsic value of the outstanding options and warrants as of* December 31, 2024*, totaling 62,204,034 was approximately $2,414,000.

The aggregate intrinsic value of the outstanding options and warrants as of* December 31, 2023*, totaling 63,788,270 was approximately $844,000.

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The following table summarizes information about stock options outstanding as of* December 31, 2024*:

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Granted to employees

The following table sets forth information about the weighted-average fair value of options granted to employees and directors during the year, using the Black Scholes option-pricing model and the weighted-average assumptions used for such grants:

Granted to non-employees

The following table sets forth information about the weighted-average fair value of options granted to non-employees during the year, using the Black Scholes option-pricing model and the weighted-average assumptions used for such grants:

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The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the options.

The expected life represents the weighted average period of time that options granted are expected to be outstanding. The expected life of the options granted to employees and directors is calculated based on the Simplified Method as allowed under Staff Accounting BulletinNo. 110 (“SAB110”), giving consideration to the contractual term of the options and their vesting schedules, as the Company doesnot have sufficient historical exercise data at this time. The expected life of the option granted to non-employees equals their contractual term. In the case of an extension of the option life, the calculation was made on the basis of the extended life.

D. Compensation Cost for Warrant and Option Issuances

The following table sets forth information about the compensation cost of warrant and option issuances recognized for employees and directors:

The following table sets forth information about the compensation cost of warrant and option issuances recognized for non-employees:

The following table sets forth information about the compensation cost of option issuances recognized and capitalized to Unproved Oil & Gas properties:

As of* December 31, 2024*, and2023, there was$nil and $320,000, respectively, of unrecognized compensation cost, related to non-vested stock options granted under the Company’s various stock option plans. The $320,000 was recognized during2024.

F-25

E. Dividend Reinvestment and Stock Purchase Plan (“DSPP”)

On* March 13, 2014Zion filed a registration statement on Form S-3 that was part of a replacement registration statement that was filed with the SEC using a “shelf” registration process. The registration statement was declared effective by the SEC on March 31, 2014.On February 23, 2017,the Company filed a Form S-3 with the SEC (RegistrationNo.* 333-216191) as a replacement for the Form S-3 (RegistrationNo. 333-193336), for which thethree-year period ended* March 31, 2017,along with the base Prospectus and Supplemental Prospectus. The Form S-3, as amended, and the new base Prospectus became effective on March 10, 2017,along with the Prospectus Supplement that was filed and became effective on March 10, 2017.The Prospectus Supplement under RegistrationNo.* 333-216191 describes the terms of the DSPP and replaces the prior Prospectus Supplement, as amended, under the prior RegistrationNo. 333-193336.

On* September 15, 2020,the Company extended the termination date of the ZNWAD Warrant bytwo* (2) years from the expiration date of* May 2, 2021to May 2, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

As of* May 2, 2023,*any outstanding ZNWAD warrants expired.

On* September 15, 2020,the Company extended the termination date of the ZNWAE Warrant bytwo* (2) years from the expiration date of* May 1, 2021to May 1, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

As of* May 1, 2023,*any outstanding ZNWAE warrants expired.

On* September 15, 2020,the Company extended the termination date of the ZNWAF Warrant bytwo* (2) years from the expiration date of* August 14, 2021to August 14, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

As of* August 14, 2023,*any outstanding ZNWAF warrants expired.

On* December 14, 2022,the Company extended the termination date of the ZNWAG warrant byone* (1) year from the expiration date of* January 8, 2023to January 8, 2024.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

As of* January 8, 2024,*any outstanding ZNWAG warrants expired.

F-26

On* September 15, 2020,the Company extended the termination date of the ZNWAH Warrant bytwo* (2) years from the expiration date of* April 2, 2021to April 2, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

As of* April 2, 2023,*any outstanding ZNWAH warrants expired.

On* September 15, 2020,the Company extended the termination date of the ZNWAJ Warrant bytwo* (2) years from the expiration date of* October 29, 2021to October 29, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* October 29, 2023,*any outstanding ZNWAJ warrants expired.

On* September 15, 2020,the Company extended the termination date of the ZNWAK warrant bytwo* (2) years from the expiration date of* February 25, 2021to February 25, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

As of* February 25, 2023,*any outstanding ZNWAK warrants expired.

On* September 15, 2020,the Company extended the termination date of the ZNWAL Warrant bytwo* (2) years from the expiration date of* August 26, 2021to August 26, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

As of* August 26, 2023,*any outstanding ZNWAL warrants expired.

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 afforded the participant the opportunity to purchaseone share of our Common Stock at a warrant exercise price of $1.00. The warrant has the company notation of “ZNWAM.” The warrants werenot registered for trading on the OTCQB or any other stock market or trading market. The warrants became exercisable on* January 15, 2021and continued to be exercisable through July 15, 2022.*

On* March 21, 2022,the Company extended the termination date of the ZNWAM warrant byone* (1) year from the expiration date of* July 15, 2022to July 15, 2023and revised the exercise price to $0.05. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* June 16, 2023,the Company extended the termination date of the ZNWAM warrant from July 15, 2023to September 6, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* August 21, 2023,the Company extended the termination date of the ZNWAM warrant from September 6, 2023to October 31, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* October 19, 2023,the Company extended the termination date of the ZNWAM warrant from October 31, 2023to December 31, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* December 18, 2023,the Company extended the termination date of the ZNWAM warrant from December 31, 2023to March 31, 2024.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* March 28, 2024,the Company extended the termination date of the ZNWAM warrant from March 31, 2024to December 31, 2024.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* January 21, 2025,the Company extended the termination date of the ZNWAM warrant from December 31, 2024to March 31, 2025.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* March 18, 2025,*the entire number of outstanding warrants of 4,376,000 were exercised at $.05 each for total proceeds to Zion of $218,800. As of this report date, there areno ZNWAM warrants outstanding.

The ZNWAN warrants became exercisable on* May 16, 2021and continue to be exercisable through May 16, 2023*at a per share exercise price of $1.00.

As of* May 16, 2023,*any outstanding ZNWAN warrants expired.

F-27

Note6 – Stockholders’** Equity**(cont’d)

The ZNWAO warrants became exercisable on* June 12, 2021and continue to be exercisable through June 12, 2023*at a per share exercise price of$.25.

As of* June 12, 2023,*any outstanding ZNWAO warrants expired.

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 purchaseone share of our Common Stock at a warrant exercise price of$.25. The warrant has the company notation of “ZNWAP.” The warrants willnot* be registered for trading on the OTCQB or any other stock market or trading market. The warrants were issued and became exercisable on* June 2, 2021and continue to be exercisable through June 2, 2022*at a per share exercise price of$.25.

On* March 21, 2022,the Company extended the termination date of the ZNWAP Warrant byone* (1) year from the expiration date of* June 2, 2022to June 2, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

During thesecond quarter of2022, all warrants represented by ZNWAP and ZNWAR were exercised resulting in a net cash inflow of approximately $365,000.

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 purchaseone share of our Common Stock at a warrant exercise price of$.25. The warrant shall have the company notation of “ZNWAQ.” The warrants werenot* registered for trading on the OTCQB or any other stock market or trading market. The warrants were issued on* May 5, 2022and were exercisable through July 15, 2023*at a revised per share exercise price of$.05.

Zion considers this warrant as permanent equity per ASC815-40-35-2. As such, there isno value assigned to this extension.

On* June 16, 2023,the Company extended the termination date of the ZNWAQ warrant from July 15, 2023to September 6, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* August 21, 2023,the Company extended the termination date of the ZNWAQ warrant from September 6, 2023to October 31, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* October 19, 2023,the Company extended the termination date of the ZNWAQ warrant from October 31, 2023to December 31, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

F-28

On* December 18, 2023,the Company extended the termination date of the ZNWAQ warrant from December 31, 2023to March 31, 2024.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* March 28, 2024,the Company extended the termination date of the ZNWAQ warrant from March 31, 2024to December 31, 2024.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* January 21, 2025,the Company extended the termination date of the ZNWAQ warrant from December 31, 2024to March 31, 2025.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

On* March 18, 2025,the warrant holder exercised 5,624,000 of the ZNWAQ warrants at $.05 each for total proceeds to Zion of $218.200. On March 25, 2025,*the warrant holder exercised 3,000,000 of the ZNWAQ warrants at $.05 each for total proceeds to Zion of $150,000.

As of this report date, there are 14,804,348 outstanding ZNWAQ warrants exercisable at $.05 each. The Company doesnot plan to extend the warrant termination date beyond* March 31, 2025.*

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 purchaseone* share of our Common Stock at a warrant exercise price of$.25. The warrant has the company notation of “ZNWAR.” The warrants werenot registered for trading on the OTCQB or any other stock market or trading market. The warrants were issued and became exercisable on* June 22, 2021and continue to be exercisable through June 22, 2022at a per share exercise price of$.25. Additionally, Zion incurred $115,000 during2021* in equity issuance costs to an outside party related to this waiver program.

On* March 21, 2022,the Company extended the termination date of the ZNWAR Warrant byone* (1) year from the expiration date of* June 22, 2022to June 22, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

During thesecond quarter of2022, all warrants represented by ZNWAP and ZNWAR were exercised resulting in a net cash inflow of approximately $365,000.

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* November 15, 2021,the participant’s Plan account was credited with the number of shares of the Company’s Common Stock and warrants that will be acquired. Each warrant affords the participant the opportunity to purchaseone share of our Common Stock at a warrant exercise price of $1.00. The warrant shall have the company notation of “ZNWAS.” The warrants willnot* be registered for trading on the OTCQB or any other stock market or trading market. The warrants will be issued and become exercisable on* November 15, 2025and continue to be exercisable through December 31, 2025*at a revised per share exercise price of$.25.

F-29

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* September 30, 2022,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 purchaseone* share of our Common Stock at a warrant exercise price of$.25. The warrant has the company notation of “ZNWAT.” The warrants willnot be registered for trading on the OTCQB or any other stock market or trading market. The warrants will be issued and become exercisable on* November 15, 2025and continue to be exercisable through December 31, 2025*at a per share exercise price of$.25.

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* December 31, 2022,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 purchaseone share of our Common Stock at a warrant exercise price of$.25. The warrant has the company notation of “ZNWAU.” The warrants willnot* be registered for trading on the OTCQB or any other stock market or trading market. The warrants will be issued and exercisable on* November 15, 2025and continue to be exercisable through December 31, 2025*at a per share exercise price of$.25.

Under our Plan, the Company under a Request For Waiver Program executed a Waiver Term Sheet of a program consisting of shares of stock to a participant. After conclusion of the program on* August 31, 2023,the participant’s Plan account was credited with the number of shares of the Company’s Common Stock that were acquired. Zion incurred $173,000 in equity issuance costs to an outside party related to this waiver program. The Company executedtwo* additional Waiver Term Sheets with the same participant consisting of shares of stock. After conclusion of the program on* December 31, 2023,the participant’s Plan account was credited with the number of shares of the Company’s Common Stock that were acquired. During the year ended December 31, 2023,*Zion incurred $1,120,000 in equity issuance costs.

On* January 1, 2024,the Company executed a Waiver Term Sheet with the same participant consisting of shares of stock. After conclusion of the program on March 31, 2024,*the participant’s Plan account was credited with the number of shares of the Company’s Common Stock that were acquired.

During the year ended* December 31, 2024,*Zion incurred $2,921,000 in equity issuance costs.

On* April 1, 2024,*the Company executed its current Waiver Term Sheet with a participant consisting of shares of stock and warrants.

The program was scheduled to terminate at the earlier of: (a) a maximum purchase of $10,000,000 through the DSPP, (b)* October 1, 2024or (c) the closing price of Zion’s stock is 15 cents per share forfive* (5) consecutive days. Additional terms of the Waiver Term Sheet included the pro-rata issuance of up to 5,000,000 warrants with an exercise price of$.25 per share and an expiration date of* December 31, 2024,in the event the Participant purchases up to $5,000,000 of the Company’s stock by July 1, 2024.*

On or around* August 13, 2024,afirst* amendment to its current Waiver Term Sheet was signed with the participant. The additional terms of the Waiver Term sheet included the pro-rata issuance of up to 10,000,000 warrants with an exercise price of$.25 per share and an expiration date of* December 31, 2024,in the event the Participant purchases up to $10,000,000 of the Company’s stock by October 1, 2024.*

On or around* September 30, 2024,asecond* amendment to its current Waiver Term Sheet was signed with the participant. The additional terms of the Waiver Term sheet included changing the expiration date to* December 31, 2024and the pro-rata issuance of up to 10,000,000 warrants with an exercise price of$.25 per share and an expiration date of April 1, 2025,in the event the Participant purchases up to $10,000,000 of the Company’s stock by December 31, 2024.*

On or around* November 12, 2024,athird* amendment to its current Waiver Term Sheet was signed with the participant. The additional terms of the Waiver Term sheet included changing the provision for the program termination provided that the closing stock price is$.20 cents per share or higher forfive (5) consecutive days.

On or around* January 21, 2025,afourth* amendment to this latest Waiver Term Sheet was signed with the participant. The program terminates at the earlier of: (a) a maximum purchase of $15,000,000 through the DSPP, (b)* December 31, 2024or (c) the closing price of Zion’s stock is 20 cents per share forfive* (5) consecutive days. Additional terms of the Waiver Term Sheet include the pro-rata issuance of up to 15,000,000 warrants with an exercise price of$.25 per share and an expiration date of* December 31, 2025,in the event the Participant purchases up to $15,000,000 of the Company’s stock by June 30, 2025.*

During2024,one participant who participated in the “Request for Waiver” aspect of the DSPP contributed approximately 57% of the cash raised through the DSPP.

During2023,one participant who participated in the “Request for Waiver” aspect of the DSPP contributed approximately 54% of the cash raised through the DSPP.

On* March 13, 2023,Zion filed with the Securities and Exchange Commission an AmendmentNo.* 2 to the Prospectus Supplement dated as of* December 15, 2021and accompanying base prospectus dated December 1, 2021relating to the Company’s Dividend Reinvestment and Direct Stock Purchase Plan. The Prospectus forms a part of the Company’s Registration Statement on Form S-3 (FileNo.* 333-261452), as amended, which was declared effective by the SEC on* December 15, 2021.*

AmendmentNo. 2 – New Unit Option under the Unit Program**

Under our Plan, we provided a Unit Option under AmendmentNo. 2. Our Unit Program consisted of the combination of Common Stock and warrants with basic Unit Program features, conditions and terms outlined in the Original Prospectus Supplement and AmendmentNo. 1. AmendmentNo. 2 provided the option period, unit price and the determination of the number of shares of Common Stock and warrants per unit. This Unit Option had up tothree tranches of investment, in which thesecond andthird tranches were each subject to termination upon a total of $7,500,000 received from participants by the Company during thefirst orsecond tranche. Thefirst tranche period began on* March 13, 2023and terminated on March 26, 2023.Thesecond* tranche began on* March 27, 2023and terminated on April 9, 2023and thethird* tranche began on* April 10, 2023and terminated on April 27, 2023.*

F-30

The Unit Option consisted of Units of our securities where each Unit (priced at $250.00 each) was comprised of (i) a certain number of shares of Common Stock determined by dividing $250.00 (the price ofone 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 additionalfive hundred (500) shares of Common Stock at a per share exercise price of $0.05. The participant’s Plan account was credited with the number of shares of the Company’s Common Stock and Warrants that were acquired under the Units purchased. Each warrant affords the participant the opportunity to purchaseone share of our Common Stock at a warrant exercise price of $0.05. The warrant shall have the Company notation of “ZNWAV” under thefirst tranche, “ZNWAW” under thesecond tranche and “ZNWAX” under thethird tranche.

Plan participants, who enrolled into the Unit Program with the purchase of at leastone Unit and enrolled in the separate Automatic Monthly Investments (“AMI”) program at a minimum of*$50.00* per month, received an additionalfifty (50) warrants at an exercise price of $0.05 during this Unit Option Program. Thefifty (50) additional warrants were for enrolling into the AMI program and shall have the Company notation of “ZNWAY.” Existing subscribers to the AMI were entitled to the additionalfifty (50) warrants, if they purchased at leastone (1) Unit during the Unit program. Plan participants, who enrolled in the AMI at a minimum of*$100* per month, receivedone hundred (100) ZNWAY warrants. Plan participants, who enrolled in the AMI at a minimum of*$250* per month, receivedtwo hundred andfifty (250) ZNWAY warrants. Plan participants, who enrolled in the AMI at a minimum of*$500* per month, receivedfive hundred (500) ZNWAY warrants. The AMI program required90 days of participation to receive the ZNWAY warrants. Existing AMI participants were entitled to participate in this monthly program by increasing their monthly amount above the minimum*$50.00* per month.

The ZNWAV warrants became exercisable on* March 31, 2023and continued to be exercisable through June 28, 2023*at a per share exercise price of $0.05.

As of* June 28, 2023,*any outstanding ZNWAV warrants expired.

The ZNWAW warrants became exercisable on* April 14, 2023and continued to be exercisable through July 13, 2023*at a per share exercise price of $0.05.

As of* July 13, 2023,*any outstanding ZNWAW warrants expired.

The ZNWAX warrants became exercisable on* May 2, 2023and continued to be exercisable through July 31, 2023*at a per share exercise price of $0.05.

On* July 31, 2023,*any outstanding ZNWAX warrants expired.

The ZNWAY warrants became exercisable on* June 12, 2023and continued to be exercisable through September 10, 2023*at a per share exercise price of $0.05.

On* September 10, 2023,*any outstanding ZNWAY warrants expired.

F-31

AmendmentNo. 3 – New Unit Option under the Unit Program**

Under our Plan, we provided a Unit Option under AmendmentNo. 3. This Unit Option period began on* May 15, 2023and terminated on June 15, 2023.*

Our Unit Program consisted of the combination of Common Stock and warrants with basic Unit Program features, conditions and terms outlined in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo.2. AmendmentNo. 3 provided the option period, unit price and the determination of the number of shares of Common Stock and warrants per unit. As mentioned above, this Unit Option began on* May 15, 2023and terminated on June 15, 2023.The Unit Option consisted of Units of our securities where each Unit (priced at $250.00 each) was comprised of (i) a certain number of shares of Common Stock determined by dividing $250.00 (the price ofone* 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 additionaltwo hundred (200) 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 were acquired under the Units purchased. Each warrant affords the participant the opportunity to purchaseone share of our Common Stock at a warrant exercise price of $0.25. The warrant shall have the Company notation of “ZNWAZ” and willnot be registered for trading on the OTCQB or any other stock market or trading market.

Plan participants, who enrolled into the Unit Program with the purchase of at leastone Unit and enrolled in the separate Automatic Monthly Investments (“AMI”) program at a minimum of*$50.00* per month, received an additionalthree hundred (300) warrants at an exercise price of $0.25 during this Unit Option Program. Thethree hundred (300) additional warrants were for enrolling into the AMI program and received the above warrant with the Company notation of “ZNWAZ.” Existing subscribers to the AMI were entitled to the additionalthree hundred (300) warrants, if they purchased at leastone (1) Unit during the Unit program.

The ZNWAZ warrants became exercisable on* July 17, 2023and continued to be exercisable through July 17, 2024*at a per share exercise price of $0.25.

On* July 17, 2024,*any outstanding ZNWAZ warranted expired.

AmendmentNo. 4 – New Unit Option under the Unit Program**

Under our Plan, we provided a Unit Option under our Unit Program with this AmendmentNo. 4. This Unit Option period began on* November 6, 2023and was scheduled to terminate on December 31, 2023.See AmendmentNo* 5 below for data on an extension.

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 AmendmentNo. 1. AmendmentNo. 4 provided 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, 2023and was scheduled to terminate on December 31, 2023,unless extended at the sole discretion of Zion Oil & Gas, Inc. The Unit Option consisted of Units of our securities where each Unit (priced at $250.00 each) was comprised of (i) a certain number of shares of Common Stock determined by dividing $250.00 (the price ofone* 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 additionalfifty (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 afforded the participant the opportunity to purchaseone share of our Common Stock at a warrant exercise price of $0.25. The warrants has the Company notation of “ZNWBA” and willnot be registered for trading on the OTCQB or any other stock market or trading market.

F-32

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

The ZNWBA warrants became exercisable on* January 15, 2024,and continued to be exercisable through January 15, 2025,unless extended, at a per share exercise price of $0.25. See AmendmentNo.* 5 below for new dates.

AmendmentNo. 5 – Extension of Termination Date to January 31, 2024****

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we extended the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023,to terminate on January 31, 2024.*

The ZNWBA warrants now will befirst exercisable on* February 15, 2024,instead of January 15, 2024and continue to be exercisable through February 15, 2025,instead of January 15, 2025,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 5 to Prospectus Supplement was* December 20, 2023.*

AmendmentNo. 6 – Extension of Termination Date to February**29,* 2024***

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we extended the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023,to terminate on February**29,* 2024.

The ZNWBA warrants now will be exercisable on* March 15, 2024,instead of February 15, 2024and continue to be exercisable through March 15, 2025,instead of February 15, 2025,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

F-33

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 6 to Prospectus Supplement was* January 29, 2024.*

AmendmentNo. 7 – Extension of Termination Date to March 31, 2024****

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we are extending the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023,to terminate on March 31, 2024.*

The ZNWBA warrants now will befirst exercisable on* April 15, 2024,instead of March 15, 2024and continue to be exercisable through April 15, 2025,instead of March 15, 2025,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 7 to Prospectus Supplement was* February 26, 2024.*

AmendmentNo. 8 – Extension of Termination Date to April 30, 2024****

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we extended the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023,to terminate on April 30, 2024.*

The ZNWBA warrants now will befirst exercisable on* May 15, 2024,instead of April 15, 2024,and continue to be exercisable through May 15, 2025,instead of April 15, 2025,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 8 to Prospectus Supplement was* March 23, 2024.*

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AmendmentNo. 9 – Extension of Termination Date to May 31, 2024****

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we extended the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023,to terminate on May 31, 2024.*

The ZNWBA warrants now will befirst exercisable on* June 15, 2024,instead of May 15, 2024,and continue to be exercisable through June 15, 2025,instead of May 15, 2025,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 9 to Prospectus Supplement was* April 24, 2024.*

AmendmentNo. 10 – Extension of Termination Date to August 31, 2024****

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we extended the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023,to terminate on August 31, 2024.*

The ZNWBA warrants now will befirst exercisable on* September 15, 2024,instead of June 15, 2024,and continue to be exercisable through September 14, 2025,instead of June 15, 2025,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 10 to Prospectus Supplement was* May 29, 2024.*

F-35

AmendmentNo. 11 – Extension of Termination Date to October 15, 2024****

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we extended the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023,to terminate on October 15, 2024.*

The ZNWBA warrants now will befirst exercisable on* November 15, 2024,instead of September 15, 2024,and continue to be exercisable through November 14, 2025,instead of September 15, 2025,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 11 to Prospectus Supplement was* August 22, 2024.*

AmendmentNo. 12 – Extension of Termination Date to December 31, 2024****

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we extended the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023.Our Unit Program consists of the combination of Common Stock and warrants with an extended time period, but otherwise the same Unit Program features, conditions and terms in the Prospectus Supplement and AmendmentNo.* 4 apply. We extended under our Unit Program that was to terminate* October 15, 2024,but now will terminate December 31, 2024,*and we extended the exercise and termination dates of the related ZNWBA warrants.

For Plan participants who enroll into the Unit Program with the purchase of at leastone Unit and also enroll in the separate Automatic Monthly Investments (“AMI”) program at a minimum of*$50.00* per month or more, will receive an additionalfifty (50) Warrants at an exercise price of $0.25 during this Unit Option Program. Thefifty (50) additional warrants are for enrolling into the AMI program. Existing subscribers to the AMI are entitled to the additionalfifty (50) warrants once, if they purchase at leastone (1) Unit during the Unit program.

The ZNWBA warrants will befirst exercisable on* January 31, 2025,instead of November 15, 2024,and continue to be exercisable through January 31, 2026,instead of November 15, 2025,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 12 to Prospectus Supplement was* October 9, 2024.*

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AmendmentNo. 13 – Extension of Termination Date to February 28, 2025****

Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), we extended the current Unit Option that was filed under AmendmentNo. 4, dated* November 6, 2023,to terminate on February 28, 2025.*

The ZNWBA warrants now will befirst exercisable on* March 31, 2025,instead of January 31, 2025,and continue to be exercisable through March 31, 2026,instead of January 31, 2026,unless extended, at a per share exercise price of $0.25. Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

Accordingly, all references in the Original Prospectus Supplement and AmendmentNo. 1 and AmendmentNo. 4, concerning the Unit Option, continue, except for the substitution of the revised Unit Option dates and features above. All other Plan features, conditions and terms remain unchanged.

The date of this AmendmentNo. 13 to Prospectus Supplement was* December 10, 2024.*

The current Unit Option terminated on* February 28, 2025as described in AmendmentNo.* 13. The ZWNBA warrants, exercisable at $0.25, will be issued prior to* March 31, 2025and will be exercisable through March 31, 2026.These warrants havenot* yet been issued as of the date of this report.

For the years ended* December 31, 2024*, and2023, 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.

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

The warrants represented by the company notation ZNWAA are tradeable on the OTCQB market under the symbol ZNOGW. However, all of the other warrants characterized above, in the table below, and throughout this Form10-K, arenot tradeable and are used internally for classification and accounting purposes only.

F. Subscription Rights Offering

On* April 2, 2018the Company announced an offering (“2018* Subscription Rights Offering”) through American Stock Transfer & Trust Company, LLC (the “Subscription Agent”), atno cost to the shareholders, of non-transferable Subscription Rights (each “Right” and collectively, the “Rights”) to purchase its securities to persons who owned shares of our Common Stock on* April 13, 2018 (“the Record Date”). Pursuant to the2018* Subscription Rights Offering, each holder of shares of common stock on the Record Date received non-transferable Subscription Rights, with each Right comprised ofone share of the Company Common Stock, par value $0.01 per share (the “Common Stock”) andone Common Stock Purchase Warrant to purchase an additionalone share of Common Stock. Each Right could be exercised or subscribed at a per Right subscription price of $5.00. Each Warrant affords the investor the opportunity to purchaseone share of the Company Common Stock at a warrant exercise price of $3.00. The warrant is referred to as “ZNWAI.”

The warrants became exercisable on* June 29, 2018and continued to be exercisable through June 29, 2020at a per share exercise price of $3.00, after the Company, on December 4, 2018,extended the termination date of the Warrant byone* (1) year from the expiration date of* June 29, 2019to June 29, 2020.*

On* May 29, 2019,the Company extended the termination date of the ZNWAI Warrant byone* (1) year from the expiration date of* June 29, 2020to June 29, 2021.*

On* September 15, 2020,the Company extended the termination date of the ZNWAI Warrant bytwo* (2) years from the expiration date of* June 29, 2021to June 29, 2023.Zion considers this warrant as permanent equity per ASC815*-40-35-2. As such, there isno value assigned to this extension.

As of* June 29, 2023,*any outstanding ZNWAI warrants expired.

Each shareholder received.10 (one tenth) of a Subscription Right (i.e.one Subscription Right for each10 shares owned) for each share of the Company’s Common Stock owned on the Record Date.

The2018 Subscription Rights Offering terminated on* May 31, 2018.*The Company raised net proceeds of approximately $3,038,000, from the subscription of Rights, after deducting fees and expenses of $243,000 incurred in connection with the rights offering.

F-37

G. Warrant Tables

The warrant activity and balances for the year2023 are shown in the table below:

The warrant activity and balances for the year2024 are shown in the table below:

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H. Warrant Descriptions of Current Warrants

The price and the expiration dates for the series of warrants to investors are shown in the table below. The listing contains only those warrants with an expiration date beyond the balance sheet date.

F-39

Note7 - Income Taxes

The Company hadno income tax expense due to the operating loss incurred for the years ended* December 31, 2024and2023*.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at* December 31, 2024and2023* are presented below:

In assessing the likelihood of the realization of deferred tax assets, management considers whether it is more likely thannot that some portion or all of the deferred tax assets willnot be realized. The ultimate realization of deferred tax assets, including net operating losses, is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and tax carry forwards are utilizable.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, the Company will need to generate future taxable income of approximately $292,098,070 prior to the expiration of some of the net operating loss carry forwards between2024 and2045. Based upon the level of historical taxable losses since the Company’s inception, management believes that the Company willnot likely realize the benefits of these deductible differences and tax carry forwards and thus, full valuation allowances have been recorded at* December 31, 2024and2023*.

The Company continuously monitors all shareholders that might reach a5% ownership in the common stock for various purposes, in addition to the I.R.C*§382/383* limitation on net operating loss (“NOL”) carry forwards following an ownership change. Sections382/383 limit the use of corporate NOLs following an ownership change. Section382(g) defines an ownership change generally as a greater than50% change in the ownership of stock among certain5% shareholders over athree-year period. For the tax year2019, the Company became aware ofone individual owning greater than5%, as evidenced by the filing of a Section13(G) report with the SEC. However, there have beenno changes in stock ownership to trigger sections382/383.

At* December 31, 2024*, the Company has available federal net operating loss carry forwards of approximately $292,098,070 to reduce future U.S. taxable income.

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**Note7 - Income Taxes(cont’d)

The Tax Cuts and Jobs Act (TCJA) removed the2-year carryback provision, extended the20-year carryforward provision out indefinitely, and limited carryforwards to80% of net income in any future year. Net operating losses originating in tax years beginning prior to* Jan. 1, 2018,are still subject to the former carryover rules of100%* of net income and20 taxable years following the taxable year of loss. I.R.C.§172.

Income earned from activities in Israel is subject to regular Israeli tax rates. For Israeli tax purposes, exploration costs on unproved properties are expensed. Tax losses can be carried forward indefinitely. At* December 31, 2024*, the Company has available net operating loss carry forwards of approximately $198,871,672 to reduce future Israeli taxable income. Based upon the level of historical taxable losses since the Company’s inception, management believes that the Company willnot likely realize the benefits of these deductible differences and tax carry forwards and thus, full valuation allowances have been recorded at* December 31, 2024*.

On* July 11, 2014,Zion Oil & Gas, Inc. registered the Geneva Branch in the Canton of Geneva, Switzerland. The legal Swiss name for the foreign branch is “Zion Oil & Gas, Inc., Wilmington, Branch of Geneva.” The Geneva Branch has its registered office and its business office at6* Avenue Jules Crosnier,1206 Champel, Case Postale295, 1211 Geneva12, Switzerland. The purpose of the branch is to operate a foreign treasury center for the Company. As such, the Geneva branch isnot expected to have taxable income in any future year.

Reconciliation between the theoretical tax benefit on pre-tax reported (loss) and the actual income tax expense:

The Company hasno material unrecognized tax benefit which would favorably affect the effective income tax rate in future periods and doesnot believe there will be any significant increases or decreases within the nexttwelve months.No interest or penalties have been accrued.

The Company hasnot received final tax assessments since incorporation. In accordance with the US tax regulations, the U.S. federal income tax returns remain subject to examination for the years beginning in 2021.

The Israeli branch hasnot received final tax assessments since incorporation. In accordance with the Israeli tax regulations, tax returns submitted up to and including the 2019 tax year can be regarded as final.

F-41

Note8 - Right of use leases assets and leases obligations

The Company is a lessee in several non-cancellable operating leases, primarily for transportation and office space.

The table below presents the operating lease assets and liabilities recognized on the balance sheets as of* December 31, 2024and2023*:

The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term.

The Company’s leases generally donot provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The Company used incremental borrowing rates as of* January 1, 2019*for operating leases that commenced prior to that date.

The Company’s field office in Caesarea, Israel is under lease for 6,566 square feet.

The Company had an option to renew the lease for another five years from* February 1, 2024to January 31, 2029,provided it isnot* in breach of the agreement, where it is required as well to furnish a notice of intent to exercise the optionsix months prior to termination of lease, and it furnishes a bank guarantee and insurance confirmation prior to commencement of the option period. The Company exercised the option to renew the lease for another seven years from* February 1, 2024through January 31, 2031,when rent is to be paid on a monthly basis in the base amount of approximately NIS 46,500 per month (approximately $12,500) at the exchange rate in effect on the date of this report and is linked to an increase (butnot* a decrease) in the CPI.

The Company’s weighted average remaining lease term and weighted average discount rate for operating leases as of* December 31, 2024* are:

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancellable operating leases with terms of more thanone year to the total operating lease liabilities recognized on the balance sheets as of* December 31, 2024*:

Operating lease costs were $313,000 and $293,000 for the years ended* December 31, 2024*, and2023, respectively. Operating lease costs are included within general and administrative expenses on the statements of income.

Cash paid for amounts included in the measurement of operating lease liabilities was $276,000 and $269,000 for the years ended* December 31, 2024*, and2023, respectively, and this amount is included in operating activities in the statements of cash flows.

Right-of-use assets obtained in exchange for new operating lease liabilities were $829,000 and $252,000 for the years ended* December 31, 2024*, and2023, respectively.

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Note9 - Commitments and Contingencies

A. Securities and Exchange Commission (“SEC”) Investigation

As previously disclosed by the Company, on* June 21, 2018,*the Fort Worth Regional Office of the SEC informed Zion that it was conducting a formal, non-public investigation and asked that we provide certain information and documents in connection with its investigation. Since that date, we fully cooperated with the SEC and furnished all requested documentation.

On* April 5, 2023,the Company received from the Fort Worth Regional Office of the SEC written notice to the Company concluding the investigation as to the Company and advising that the SEC does“not* intend to recommend an enforcement action by the Commission against Zion.”

B. Litigation

From time to time, the Company* may*be subject to routine litigation, claims or disputes in the ordinary course of business. The Company defends itself vigorously in all such matters. However, we cannot predict the outcome or effect of any of the potential litigation, claims or disputes.

The Company isnot subject to any litigation at the present time.

C. Asset Retirement

The Company currently estimates that the costs of plugging and decommissioning of the exploratory wells drilled to date in the former Joseph License area and the present New Megiddo Valleys License434 to be approximately $571,000 based on current cost rather than Net Present Value. The Company expects to incur such costs during2025. Liabilities for expenditures are recorded when environmental assessment and/or remediation is probable and the timing and costs can be reasonably estimated.

Changes in Asset Retirement Obligations were as follows:

D. Environmental and Onshore Licensing Regulatory Matters

The Company is engaged in oil and gas exploration and production and* may*become subject to certain liabilities as they relate to environmental clean-up of well sites or other environmental restoration procedures and other obligations as they relate to the drilling of oil and gas wells or the operation thereof. Various guidelines have been published in Israel by the State of Israel’s Petroleum Commissioner and Energy and Environmental Ministries as it pertains to oil and gas activities. Mention of these older guidelines was included in previous Zion filings.

The Company believes that these regulations will result in an increase in the expenditures associated with obtaining new exploration rights and drilling new wells. The Company expects that an additional financial burden could occur as a result of requiring cash reserves that could otherwise be used for operational purposes. In addition, these regulations are likely to continue to increase the time needed to obtain all of the necessary authorizations and approvals to drill and production test exploration wells.

As of* December 31, 2024and2023*, the Company accruednil andnil for license regulatory matters.

E. Charitable Foundations

Two charitable foundations were established,one in Israel andone in Switzerland, for the purpose of supporting charitable projects and other charities in Israel, the United States and internationally. A 3% royalty or equivalent interest in any Israeli oil and gas interests as* maynow be held or, in the future be acquired, by the Company was assigned to each charitable organization (6% interest in the aggregate). At December 31, 2024and2023*, the Company didnot have any outstanding obligation in respect of the charitable foundations, since to this date,no proved reserves have been found.

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**Note9 - Commitments and Contingencies(cont’d)

F. Office and Vehicle Leases

(i) The Company’s corporate office in Dallas, Texas is under lease for 8,774 square feet. On* October 4, 2023,the Company and the Lessor signed a Third Amendment to the Lease Agreement (“Third Amendment”) whereby the Lease extended from June 1, 2023through December 31, 2024,for a total of 19 months. The monthly payments to be paid are as follows: (1) basic rent of $7,677.25, (2) common area maintenance of $2,917.36, (3) taxes and insurance of $1,593.94 and (4) electricity charges of $1,703.62. The corporate office in Dallas is under new ownership as of April 2024.The Company is awaiting a lease amendment beginning January 1, 2025,but in the meantime, new ownership has provided written assurance to the Company that we maycontinue renting space in the office building at the same rates as in2024.*

(ii) On* November 13, 2020,the Company and GM Financial (as Lessor) signed a motor vehicle lease agreement for a2020* Chevy Equinox. Thefirst payment of $447.77 was due on* November 13, 2020and this was paid on or around that date. The lease called for38* additional payments, from* December 2020through January 2024,of $447.77 so that the sum of all39* payments was $17,463.03. At the inception of the lease, and in addition to the sum of the39 payments, lease signing bonuses provided an initial $1,500 reduction of the lease cost on* November 13, 2020.The value at the end of the lease had a residual value of $15,193.60 per the terms of the lease agreement. Additionally, the Company must pay the Lessor$.25 cents per mile for each mile in excess of20,000* annual miles. This lease was treated as an operating lease.

The2020 Chevrolet Equinox was returned to the dealership in* November 2023*and the lease was effectively terminated without any payment for excess mileage.

(iii) On* November 14, 2023,the Company and GM Financial (as Lessor) signed a motor vehicle lease agreement for a2023* Chevy Equinox. Thefirst payment of $499.32 was due on* November 14, 2023and this was paid on or around that date. The lease calls for38* additional payments, from* December 2023through January 2027,of $499.32 so that the sum of all39* payments is $19,473.48. At the inception of the lease, and in addition to the sum of the39 payments, lease signing bonuses provided an initial $1,500 reduction of the lease cost on* November 14, 2023.The value at the end of the lease has a residual value of $14,011.40 per the terms of the lease agreement. Additionally, the Company must pay the Lessor$.25 cents per mile for each mile in excess of20,000* annual miles. This lease is treated as an operating lease.

At* December 31, 2024*, and continuing through the date of this Form10-K report, all payments have been paid on time to the Lessor, and the Company is in good standing with regard to this lease agreement.

(iv) The Company’s field office in Caesarea, Israel is under lease for 6,566 square feet.

The Company had an option to renew the lease for anotherfive years from* February 1, 2024to January 31, 2029,provided it isnot* in breach of the agreement, where it is required as well to furnish a notice of intent to exercise the optionsix months prior to termination of lease, and it furnishes a bank guarantee and insurance confirmation prior to commencement of the option period. The Company exercised its option to renew the lease for another seven years from* February 1, 2024through January 31, 2031,when rent is to be paid on a monthly basis in the base amount of approximately NIS 46,500 per month (approximately $12,800) at the exchange rate in effect on the date of this report and is linked to an increase (butnot* a decrease) in the CPI.

Under the lease agreement, the Company is authorized to further sublease part of the leased premises to athird party that is pre-approved by the sub-lessor. Rent and its related taxes, utilities, insurance and maintenance expenses for2024 and2023 were $397,000 and 400,000 respectively.

F-44

**Note9 - Commitments and Contingencies(cont’d)

The future minimum lease payments as of* December 31, 2024*, are as follows:

G. Insurance Financing

Effective* November 16, 2023,the Company renewed itsthird*-party liability (“TPL”) insurance policy in Israel with total premiums, taxes and fees for approximately $76,000. A cash down payment of approximately $23,000 was paid on* November 16, 2023.Under the terms of the insurance financing, payments of approximately $5,000, which include interest at the rate of 13.99% per annum, are due each month for 10 months commencing on December 16, 2023.The Company has completed its financing commitment pertaining to the TPL insurance as of September 30, 2024.*

Effective* December 28, 2023,the Company renewed its D&O insurance policy with total premiums, taxes and fees for approximately $442,000. A cash down payment of approximately $69,000 was paid on December 13, 2023.Under the terms of the insurance financing, payments of approximately $37,000, which include interest at the rate of 13.4% per annum, are due each month for 10 months commencing on January 28, 2024.As of December 31, 2024,*this was fully paid off.

Effective* March 12, 2024,the Company renewed its rig insurance policy with total premiums, taxes and fees for approximately $95,000. A cash down payment of approximately $38,000 was paid on February 23, 2024.Under the terms of the insurance financing, payments of approximately $9,000, which include interest at the rate of 13.99% per annum, are due each month for 10 months commencing on April 12, 2024.As of December 31, 2024,*the outstanding balance was approximately$9.000.

Effective* November 18, 2024,the Company renewed itsthird* party liability policy in Israel with total premiums, taxes and fees for approximately $76,000. A cash down payment of approximately $20,000 was paid on* November 18, 2024.Under the terms of the insurance financing, payments of approximately $5,000, which include interest at the rate of 12.9% per annum, are due each month for 11 months commencing on December 16, 2024.As of December 31, 2024,*the outstanding balance was approximately$51.000. This policy was capitalized under Unproved Oil and Gas asset.

Effective* December 3, 2024the Company renewed its Control of well (“COW”) insurance policy in Israel with total premiums, taxes and fees for approximately $84,000. A cash payment of approximately $84,000 was paid on December 3, 2024.*This policy was capitalized under Unproved Oil and Gas asset.

Effective* December 28, 2024,the Company renewed its D&O insurance policy with total premiums, taxes and fees for approximately $430,000. A cash down payment of approximately $41,000 was paid on January 2, 2025.Under the terms of the insurance financing, payments of approximately $39,000, which include interest at the rate of 12.9% per annum, are due each month for 10 months commencing on January 28, 2025.As of December 31, 2024,*the outstanding balance was approximately $430.000.

As of* December 31, 2024and2023*, the Company had contractual obligations to pay for various lines of insurance, including directors and officers, rig andthird party liability. The balances for insurance financing were$490,000 and $432,000, respectively.

H. Bank Guarantees

As of* December 31, 2024*, the Company provided Israeli-required bank guarantees to various governmental bodies (approximately $972,000) and others (approximately $93,000) with respect to its drilling operation in an aggregate amount of approximately $1,065,000. 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 equivalent – restricted.

I. Vendor concentration

The Company’s financial instruments that are exposed to a concentration of credit risk are accounts payable. There arethree suppliers in2024 andthree suppliers in2023 that represent 10% or more of the Company’s accounts payable outstanding balance, respectively.

J. Recent Market Conditions–** Coronavirus, Israel-Hamas War, the Israel-Hezbollah War and Russia-Ukraine War**

During* March 2020,*a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The pandemic significantly impacted the economic conditions in the United States and Israel, as federal, state and local governments reacted to the public health crisis, creating significant uncertainties in the United States, Israel and world economies. In the interest of public health and safety, jurisdictions (international, national, state and local) where we have operations, restricted travel and required workforces to work from home. However, as of the date of this report, most of our employees are working at our physical offices, but have the ability to work from home as needed.

On* October 7, 2023,Hamas, a militant terrorist organization in Gaza, infiltrated southern Israel, killing and injuring at leastone thousand* Israeli citizens. Roughly250 Israeli hostages were then taken back to Gaza. This unprovoked attack led the nation of Israel to declare war on Hamas approximatelyone week later. As of the date of this report, Israel and Gaza are in a multi-phase ceasefire involving the cessation of battles in change for release of Israeli hostages and Palestinian prisoners.

Immediately after the* October 7, 2023Hamas attack on Israel, the terrorist organization Hezbollah (in Lebanon) began launching daily rockets into Israel. Over the course of the next several months, both Hezbollah and Israel traded rocket fire into the other country, but without engaging in a full war. DuringQ3* 2024, both sides increased the frequency and number of missiles fired. In* September 2024,Israel began a ground invasion into Lebanon. On or around November 27, 2024,*Israel and Hezbollah signed a ceasefire agreement. As of the date of this report, both sides are holding to its terms.

Due to Russia’s invasion of Ukraine, which began in* February 2022,and the resulting sanctions and other actions against Russia and Belarus, there has been uncertainty and disruption in the global economy. Although the Russian war against Ukraine didnot* have a material adverse impact on the Company’s financial results for the quarter ended* September 30, 2024,at this time the Company is unable to fully assess the aggregate impact the Russian war against Ukraine will have on its business due to various uncertainties, which include, but arenot* limited to, the duration of the war, the war’s effect on the global economy, future energy pricing, its impact on the businesses of the Company and actions that* may*be taken by governmental authorities related to the war.

There is uncertainty as to how long the war inside the Gaza strip will last. While we acknowledge that uncertainty, the Company is moving forward with its planning and logistics activities. We are working with our international service providers on projected availability timelines and other details. All of these key vendors have expressed willingness to assist Zion in its exploration activities. It is important to note that Zion’s license area isnot located near any current combat zones.

F-45

Note10 - Risks and Uncertainties

We are directly influenced by the political, economic and military conditions affecting Israel.

We cannot predict the effect, if any, on our business of renewed hostilities between Israel and its neighbors or any other changes in the political climate in the area. Deterioration of political, economic and security conditions in Israel* may*adversely affect our operations.

We are subject to increasing Israeli governmental regulations and environmental requirements that* may*cause us to incur substantial incremental costs and/or delays in our drilling program.

Newly enacted onshore licensing and environmental and safety related regulations promulgated by the various energy related ministries in Israel during2023-2024 have rendered obtaining and drilling under new exploration licenses more time-consuming and expensive.

The Company believes that these new and/or revised regulations will also significantly increase the time, effort, and expenditures associated with obtaining all of the necessary authorizations and approvals prior to drilling and production testing its current and any subsequent well(s).

Economic risks* may*adversely affect our operations and/or inhibit our ability to raise additional capital.

Economically, our operations in Israel* may*be subject to:

Consequently, our operations* may*be substantially affected by local economic factors beyond our control, any of which could negatively affect our financial performance and prospects.

Legal risks could negatively affect our market value.

Legally, our operations in Israel* may*be subject to:

Our dependence on the limited contractors, equipment and professional services available in Israel* may*result in increased costs and possibly material delays in our work schedule.

F-46

**Note10 - Risks and Uncertainties(cont’d)

The unavailability or high cost of equipment, supplies, other oil field services and personnel could adversely affect our ability to execute our exploration and development plans on a timely basis and within our budget.

Shouldone or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes* may*vary materially from those indicated.

Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes* may*be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. In the normal course of doing business, we are exposed to the risks associated with foreign currency exchange rates and changes in interest rates.

Foreign Currency Exchange Rate Risks. A portion of our expenses, primarily labor expenses and certain supplier contracts, are denominated in New Israeli Shekels (“NIS”). As a result, we have significant exposure to the risk of fluctuating exchange rates with the U.S. Dollar (“USD”), our primary reporting currency. During the period* January 1,2024 through December 31, 2024*, the USD has fluctuated by approximately 0.6% against the NIS (the USD has strengthened relative to the NIS). Also, during the period* January 1,2023 through December 31, 2023*, the USD has fluctuated by approximately 3.1% against the NIS (the USD strengthened relative to the NIS). Continued strengthening of the US dollar against the NIS will result in lower operating costs from NIS denominated expenses. To date, we havenot hedged any of our currency exchange rate risks, but we* may*do so in the future.

Interest Rate Risk. Our exposure to market risk relates to our cash and investments. We maintain an investment portfolio of short-term bank deposits and money market funds. The securities in our investment portfolio arenot leveraged, and are, due to their very short-term nature, subject to minimal interest rate risk. We currently donot hedge interest rate exposure. Because of the short-term maturities of our investments, we donot believe that a change in market interest rates would have a significant negative impact on the value of our investment portfolio except for reduced income in a low interest rate environment. At* December 31, 2024*, we had cash, cash equivalents and short-term and long-term bank deposits of approximately $3,336,000. The weighted average annual interest rate related to our cash and cash equivalents for the year ended* December 31, 2024*, exclusive of funds at US banks that earnno interest, was approximately 2.9%. At* December 31, 2023*, we had cash, cash equivalents and short-term and long-term bank deposits of approximately $1,635,000. The weighted average annual interest rate related to our cash and cash equivalents for the year ended* December 31, 2023*, exclusive of funds at US banks that earnno interest, was approximately 3.7%.

The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, we invest our excess cash in short-term bank deposits and money market funds that* may*invest in high quality debt instruments.

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Note11 - Selected Quarterly Information (Unaudited)

The following represents selected quarterly consolidated financial information for2024 and2023:

Note12 - Subsequent Events

(i) On* January 4, 2025,the Company granted options under the2021* Omnibus Incentive Plan toone senior officer, to purchase 25,000 shares of Common Stock at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through* January 4, 2035.*These options were granted per the provisions of the Israeli Appendix to the Plan. The fair value of the options at the date of grant amounted to approximately $2,000.

(ii) On* January 4, 2025,the Company granted options under the2021* Omnibus Incentive Plan tofive senior officers andtwo staff members to purchase 175,000 shares of Common Stock at an exercise price of $0.10 per share. The options vested upon grant and are exercisable through* January 4, 2035.*The fair value of the options at the date of grant amounted to approximately $15,000.

(iii) Approximately $5,315,000, inclusive of $650,000 from the exercise of warrants, was collected through the Company’s DSPP program during the period* January 1, 2025through March 26, 2025.*

The Company has evaluated subsequent events through* March 12, 2025,*the date the financial statements were available to be issued. Except as disclosed above,no other events have occurred that would require adjustment to or disclosure in these financial statements.