| Stockholders' Equity | Note 3 - Stockholders’
Equity A.
2011 Equity Incentive Stock Option Plan During the
six months ended June 30, 2019, the Company granted the following options from the 2011 Equity Incentive Plan for employees, directors
and consultants, to purchase as non-cash compensation (the exercise of penny stock options is taxable at full market value on
the date of exercise):
i. Options
to purchase 25,000 shares of Common Stock to one senior officer at an exercise price of $0.01 per share. The options vested
upon grant and are exercisable through January 6, 2029. The fair value of the options at the date of grant amounted to approximately
$10,000.
ii. Options to purchase
100,000 shares of Common Stock were granted to one senior officer at an exercise price of $0.01 per share. The options are
exercisable through May 1, 2029. However, the vesting and exercisability of these options is subject to the following schedule:
(a) 50,000 options vest on September 1, 2019 and (b) the remaining 50,000 options vest on January 1, 2020. The fair value
of the options at the date of grant amounted to $55,000. During the
six months ended June 30, 2018, the Company granted the following options from the 2011 Equity Incentive Plan for employees, directors
and consultants, to purchase as non-cash compensation (the exercise of penny stock options are taxable on the date of exercise):
i. Options to purchase
330,000 shares of Common Stock to 23 senior officers, staff members and consultants at an exercise price of $.01 per share.
The options have vesting schedules of 165,000 shares on June 30, 2018 and 165,000 shares on December 31, 2018. The options
are exercisable through January 1, 2028. The fair value of the options at the date of grant amounted to approximately $759,000.
ii. Options to purchase
110,000 shares of Common Stock to five senior officers at an exercise price of $0.01 per share. The options vested upon grant
and are exercisable through January 4, 2028. The fair value of the options at the date of grant amounted to approximately
$250,000.
iii. Options to purchase
55,000 shares of Common Stock to three consultants an exercise price of $0.01 per share. The options vested upon grant. However,
the exercisability of these options is according to the following schedule: (a) 27,500 options are exercisable on June 30,
2018 and (b) the remaining 27,500 options are exercisable on June 30, 2019. The fair value of the options at the date
of grant amounted to $222,000.
iv. Options to purchase
14,000 shares of Common Stock to seven staff members at an exercise price of $0.01 per share. The options vested upon grant
and are exercisable through April 5, 2028. The fair value of the options at the date of grant amounted to approximately $62,000. B.
2011 Non-Employee Directors Stock Option Plan During the
six months ended June 30, 2019, the Company did not grant any qualified (market value) options from the 2011 Non-Employee Directors
Stock Option Plan to its directors. During the
six months ended June 30, 2018, the Company granted the following qualified (market value) options from the 2011 Non-Employee
Directors Stock Option Plan for directors to purchase as non-cash compensation:
i. Options to purchase
400,000 shares of Common Stock to eight board members at an exercise price of $2.31 per share. The options vested upon grant
and are exercisable through January 1, 2024. The fair value of the options at the date of grant amounted to approximately
$428,000. C. Stock Options The stock option transactions since January
1, 2019 are shown in the table below:
Number of shares Weighted Average exercise price
US$
Outstanding, December 31, 2018 4,788,443 1.37
Changes during 2019 to:
Granted to employees, officers, directors and others * 125,000 0.01
Expired/Cancelled/Forfeited (385,693 ) 2.07
Exercised (52,500 ) 0.01
Outstanding, June 30, 2019 4,475,250 1.29
Exercisable, June 30, 2019 4,375,250 1.32
* The receipt of a
stock option grant by the grantee recipient is a non-taxable event according to the Internal Revenue Service. The grantee
who later chooses to exercise penny stock options must recognize the market value in income in the year of exercise. The following table summarizes information about stock options
outstanding as of June 30, 2019:
Shares underlying outstanding options (non-vested) Shares underlying outstanding options (fully vested)
Range of Number outstanding Weighted average remaining contractual life (years) Weighted Range of exercise Number Weighted average remaining contractual life (years) Weighted
US$ US$ US$ US$
— — — — 0.01 15,000 4.37 0.01
— — — — 0.01 15,000 4.76 0.01
— — — — 0.01 5,000 4.95 0.01
— — — — 0.01 10,000 6.26 0.01
— — — — 0.01 25,000 6.50 0.01
— — — — 0.01 305,000 6.93 0.01
— — — — 0.01 525,000 7.50 0.01
— — — — 0.01 10,000 7.51 0.01
— — — — 0.01 60,000 7.79 0.01
0.01 100,000 9.83 0.01 0.01 40,000 8.25 0.01
— — — — 0.01 180,000 8.50 0.01
— — — — 0.01 85,000 8.51 0.01
— — — — 0.01 45,000 8.66 0.01
— — — — 0.01 6,000 8.77 0.01
— — — — 0.01 25,000 9.52 0.01
— — — — 1.33 25,000 3.83 1.33
— — — — 1.38 108,000 1.51 1.38
— — — — 1.38 105,307 5.52 1.38
— — — — 1.55 400,000 2.93 1.55
— — — — 1.67 340,000 1.26 1.67
— — — — 1.67 405,943 5.26 1.67
— — — — 1.70 218,500 3.48 1.70
— — — — 1.75 400,000 4.02 1.75
— — — — 1.78 25,000 5.19 1.78
— — — — 1.87 25,000 2.59 1.87
— — — — 1.95 25,000 0.76 1.95
— — — — 1.96 25,000 0.18 1.96
— — — — 2.03 25,000 1.84 2.03
— — — — 2.31 400,000 4.51 2.31
2.61 471,500 2.43 2.61
— — — — 4.15 25,000 5.01 4.15
0.01 100,000 0.01 0.01-4.15 4,375,250 1.32 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:
For the six months ended June 30,
2019 2018
Weighted-average fair value
of underlying stock at grant date $ 0.53 $ 2.34
Dividend yields — —
Expected volatility 87%-88 % 68%-75 %
Risk-free interest rates 2.31%-2.53 % 2.01%-2.58 %
Expected lives (in years) 5.00-5.34 3.00-5.50
Weighted-average grant date fair value $ 0.52 $ 1.73 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:
For the six months ended
2019 2018
Weighted-average fair value
of underlying stock at grant date $ — $ 3.37
Dividend yields — —
Expected volatility — 73%-76 %
Risk-free interest rates — 2.46%-2.81 %
Expected lives (in years) — 10.00
Weighted-average grant date fair value $ — $ 3.36 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
Bulletin No. 110 (“SAB 110”), giving consideration to the contractual term of the options and their
vesting schedules, as the Company does not 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:
For
the six months ended June 30,
2019 2018
US$
thousands US$
thousands
40 1,279 The following
table sets forth information about the compensation cost of warrant and option issuances recognized for non-employees:
For
the six months ended June 30,
2019 2018
US$
thousands US$
thousands
— 302 The following
table sets forth information about the compensation cost of option issuances recognized for employees and non-employees and capitalized
to Unproved Oil & Gas properties:
For
the six months ended June 30,
2019 2018
US$
thousands US$
thousands
— 328 As of June
30, 2019, there was approximately $35,000 of unrecognized compensation cost, related to non-vested stock options granted under
the Company’s various stock option plans. The cost is expected to be recognized during the years 2019 and 2020. E.
Dividend Reinvestment and Stock Purchase Plan (“DSPP”) On March
27, 2014, the Company launched its Dividend Reinvestment and Stock Purchase Plan (the “DSPP”) pursuant to which stockholders
and interested investors can purchase shares of the Company’s Common Stock as well as units of the Company’s securities
directly from the Company. The terms of the DSPP are described in the Prospectus Supplement originally filed on March 31, 2014
(the “Original Prospectus Supplement”) with the Securities and Exchange Commission (“SEC”) under the Company’s
effective registration Statement on Form S-3, as thereafter amended. On January
13, 2015, the Company amended the Original Prospectus Supplement (“Amendment No. 3”) to provide for a unit option
(the “Unit Option”) under the DSPP comprised of one share of Common Stock and three Common Stock purchase warrants
with each unit priced at $4.00. Each warrant afforded the participant the opportunity to purchase the Company’s Common Stock
at a warrant exercise price of $1.00. Each of the three warrants series has different expiration dates that have been extended. The warrants
became exercisable on May 2, 2016 and, in the case of ZNWAB continued to be exercisable through May 2, 2017 (1 year) and, in the
case of ZNWAC continued to be exercisable through May 2, 2018 for ZNWAC (2 years) and May 2, 2019 for ZNWAD (3 years), respectively,
at a per share exercise price of $1.00. As of May
2, 2017, any outstanding ZNWAB warrants expired. As of May
2, 2018, any outstanding ZNWAC warrants expired. On December
4, 2018, the Company extended the termination date of the ZNWAD Warrant by one (1) year from the expiration date of May 2, 2019
to May 2, 2020. On May 29,
2019, the Company extended the termination date of the ZNWAD Warrant by one (1) year from the expiration date of May 2, 2020 to
May 2, 2021. On November
1, 2016, the Company launched a unit offering (the “Unit Program”) under the Company’s DSPP pursuant to which
participants could purchase units comprised of seven shares of Common Stock and seven Common Stock purchase warrants, at a per
unit purchase price of $10. The warrant is referred to as “ZNWAE.” The ZNWAE
warrants became exercisable on May 1, 2017 and continue to be exercisable through May 1, 2020 at a per share exercise price of
$1.00. On May 29,
2019, the Company extended the termination date of the ZNWAE Warrant by one (1) year from the expiration date of May 1, 2020 to
May 1, 2021. The warrant
terms provide that if the Company’s Common Stock trades above $5.00 per share at the closing price for 15 consecutive trading
days at any time prior to the expiration date of the warrant, the Company may, in its sole discretion, accelerate the termination
of the warrant upon providing 60 days advanced notice to the warrant holders. On February
23, 2017, the Company filed a Form S-3 with the SEC (Registration No. 333-216191) as a replacement for the Form S-3 (Registration
No. 333-193336), for which the three 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 Registration No. 333-216191 describes the
terms of the DSPP and replaces the prior Prospectus Supplement, as amended, under the prior Registration No. 333-193336. On May 22,
2017, the Company launched a new unit offering (the “New Unit Program”). The New Unit Program consisted of a new combination
of common stock and warrants, a new time period in which to purchase under the program, and a new unit price, but otherwise the
same unit program features, conditions and terms in the Prospectus Supplement applied. The New Unit Program terminated on July
12, 2017. This New Unit Program enabled participants to purchase Units of the Company’s securities where each Unit (priced
at $250.00 each) was comprised of (i) the number of shares of Common Stock determined by dividing $250.00 (the price of one Unit)
by the average of the high and low sale prices of the Company’s Common Stock as reported on the NASDAQ on the unit purchase
date and (ii) Common Stock purchase warrants to purchase an additional 25 shares of Common Stock at a warrant exercise price of
$1.00 per share. The warrant is referred to as “ZNWAF.” All ZNWAF
warrants became exercisable on August 14, 2017 and continue to be exercisable through August 14, 2020 at a per share exercise
price of $1.00. On May 29,
2019, the Company extended the termination date of the ZNWAF Warrant by one (1) year from the expiration date of August 14, 2020
to August 14, 2021. The warrant
terms provide that if the Company’s Common Stock trades above $5.00 per share as the closing price for 15 consecutive trading
days at any time prior to the expiration date of the warrant, the Company has the sole discretion to accelerate the termination
date of the warrant upon providing 60 days advanced notice to the warrant holders. On October
16, 2017, the Company initiated another Unit Option Program which terminated on December 6, 2017. This Unit Option Program enabled
participants to purchase Units of the Company’s 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 of one Unit) by the average of the high and
low sale prices of the Company’s Common Stock as reported on the NASDAQ on the unit purchase date and (ii) Common Stock
purchase warrants to purchase an additional 15 shares of Common Stock at a warrant exercise price of $1.00 per share. The warrant
is referred to as “ZNWAG.” The warrants
became exercisable on January 8, 2018 and continue to be exercisable through January 8, 2021 at a per share exercise price of
$1.00. The warrant terms provide that if the Company’s Common Stock trades above $5.00 per share as the closing price for
15 consecutive trading days at any time prior to the expiration date of the warrant, the Company has the sole discretion to accelerate
the termination date of the warrant upon providing 60 days advanced notice to the warrant holders. On February
1, 2018, the Company initiated another Unit Option Program which terminated on February 28, 2018. The Unit Option consisted of
Units of our securities where each Unit (priced at $250.00 each) was comprised of (i) 50 shares of Common Stock and (ii) Common
Stock purchase warrants to purchase an additional 50 shares of Common Stock. The investor’s Plan account was credited with
the number of shares of the Company’s Common Stock acquired under the Units purchased. Each warrant affords the investor
the opportunity to purchase one share of Company Common Stock at a warrant exercise price of $5.00. The warrant is referred to
as “ZNWAH.” The warrants
became exercisable on April 2, 2018 and continue to be exercisable through April 2, 2020 at a per share exercise price of $5.00,
after the Company, on December 4, 2018, extended the termination date of the Warrant by one (1) year from the expiration date
of April 2, 2019 to April 2, 2020. On May 29,
2019, the Company extended the termination date of the ZNWAH Warrant by one (1) year from the expiration date of April 2, 2020
to April 2, 2021. On August
21, 2018, the Company initiated another Unit Option, and it terminated on September 26, 2018. The Unit Option consisted of Units
of the Company’s 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 of one Unit) by the average of the high and low sale prices of the Company’s
publicly traded common stock as reported on the NASDAQ on the Unit Purchase Date and (ii) Common Stock purchase warrants to purchase
an additional twenty-five (25) shares of Common Stock. The investor’s Plan account was credited with the number of shares
of the Company’s Common Stock acquired under the Units purchased. Each warrant affords the investor the opportunity to purchase
one share of Company Common Stock at a warrant exercise price of $1.00. The warrant is referred to as “ZNWAJ.” The warrants
became exercisable on October 29, 2018 and continue to be exercisable through October 29, 2020 at a per share exercise price of
$1.00, after the Company, on December 4, 2018, extended the termination date of the Warrant by one (1) year from the expiration
date of October 29, 2019 to October 29, 2020. On May 29,
2019, the Company extended the termination date of the ZNWAJ Warrant by one (1) year from the expiration date of October 29, 2020
to October 29, 2021. On December
10, 2018, the Company initiated another Unit Option and it terminated on January 23, 2019. The Unit Option consisted of Units
of the Company’s securities where each Unit (priced at $250.00 each) is comprised of (i) two hundred and fifty (250) shares
of Common Stock and (ii) Common Stock purchase warrants to purchase an additional two hundred and fifty (250) shares of Common
Stock at a per share exercise price of $0.01. The investor’s Plan account was credited with the number of shares of the
Company’s Common Stock and Warrants that are acquired under the Units purchased. Each warrant affords the participant the
opportunity to purchase one share of our Common Stock at a warrant exercise price of $0.01. The warrant is referred to as “ZNWAK.” The warrants
became exercisable on February 25, 2019 and continue to be exercisable through February 25, 2020 at a per share exercise price
of $0.01. On May 29,
2019, the Company extended the termination date of the ZNWAK Warrant by one (1) year from the expiration date of February 25,
2020 to February 25, 2021. On April
24, 2019, the Company’s most recent Unit Option began and it terminated on June 26, 2019, after the Company, on June 5,
2019, extended the termination date of the Unit Option. The Unit
Option consists of Units of the Company’s securities where each Unit (priced at $250.00 each) is comprised of (i) two hundred
and fifty (250) shares of Common Stock and (ii) Common Stock purchase warrants to purchase an additional fifty (50) shares of
Common Stock at a per share exercise price of $2.00. The investor’s Plan account will be credited with the number of shares
of the Company’s Common Stock and Warrants that are acquired under the Units purchased. For Plan participants who enroll
into the Unit Program with the purchase of at least one 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 additional twenty-five (25) warrants at an exercise price of
$2.00 during this Unit Option Program. The twenty-five (25) additional warrants are for enrolling into the AMI program. Existing
subscribers to the AMI are entitled to the additional twenty-five (25) warrants once, if they purchase at least one (1) unit during
the Unit program. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant
exercise price of $2.00. The warrant is referred to as “ZNWAL.” The warrants will become exercisable on August
26, 2019 and continue to be exercisable through August 26, 2021 at a per share exercise price of $2.00. For the three and six months ended June 30,
2019, net proceeds of approximately $3,108,000 and $5,636,000, respectively, were raised under the DSPP program. For the three and six months ended June 30,
2018, net proceeds of approximately $2,118,000 and $5,953,000, respectively, were raised under the DSPP program. The warrants represented by the ticker ZNWAA
are tradable on the NASDAQ market. However, all of the other warrants characterized above, in the table below, and throughout this
Form 10-Q, are not tradeable and are used internally for classification and accounting purposes only. The price and the expiration dates for the series of warrants
to investors are as follows * :
Period of Grant US$ Expiration Date
ZNWAA Warrants B March 2013 – December 2014 2.00 January 31, 2021
ZNWAD Warrants A,B January 2015 – March 2016 1.00 May 02, 2021
ZNWAE Warrants B November 2016 – March 2017 1.00 May 01, 2021
ZNWAF Warrants A,B May 2017 – July 2017 1.00 August 14, 2021
ZNWAG Warrants October 2017 – December 2017 1.00 January 08, 2021
ZNWAH Warrants A,B February 2018 5.00 April 2, 2021
ZNWAI Warrants A,B April 2018 – May 2018 3.00 June 29, 2021
ZNWAJ Warrants B August 2018 – September 2018 1.00 October 29, 2021
ZNWAK Warrants B December 2018 – January 2019 0.01 February 25, 2021
ZNWAL Warrants July 2019 – August 2019 2.00 August 26, 2021
* Zion’s ZNWAB
Warrants expired on May 2, 2017, and the ZNWAC Warrants expired on May 2, 2018
A On December 4, 2018,
the Company extended the termination date of the Warrants by one (1) year.
B On May 29, 2019,
the Company extended the termination date of the Warrants by one (1) year. G. Subscription
Rights Offering On April 2, 2018 the Company announced
an offering (“2018 Subscription Rights Offering”) through American Stock Transfer & Trust Company, LLC (the “Subscription
Agent”), at no cost to the shareholders, of non-transferable Subscription Rights to purchase Rights (each “Right”
and collectively, the “Rights”) of its securities to persons who owned shares of our Common Stock on April 13, 2018
(“the Record Date”). Pursuant to the 2018 Subscription Rights Offering, each holder of shares of common stock on the
Record Date received non-transferable rights to subscribe for Rights, with each Right comprised of one share of the Company
Common Stock, par value $0.01 per share (the “Common Stock”) and one Common Stock Purchase Warrant to purchase
an additional one share of Common Stock. Each Right could be purchased at a per Right subscription price of $5.00. Each Warrant
affords the investor the opportunity to purchase one 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, 2018 and continue to be exercisable through June 29, 2020 at a per share exercise price of $3.00, after the Company, on December
4, 2018, extended the termination date of the Warrant by one (1) year from the expiration date of June 29, 2019 to June 29, 2020. On May 29, 2019, the Company extended
the termination date of the ZNWAI Warrant by one (1) year from the expiration date of June 29, 2020 to June 29, 2021. Each shareholder received .10 (one
tenth) of a subscription right (i.e. one subscription right for each 10 shares owned) for each share of the Company’s Common
Stock owned on the Record Date. The 2018 Subscription Rights Offering
terminated on May 31, 2018. The Company raised net proceeds of approximately $3,038,000, from the Rights Offering, after deducting
related fees and expenses of $243,000. H. Warrant Table The warrant transactions since January
1, 2019 are shown in the table below:
Warrants Exercise Price Warrant Termination Date Outstanding Balance, 12/31/18 Warrants Issued Warrants Exercised Warrants Expired Outstanding Balance, 6/30/19
ZNWAA $ 2.00 1/31/2021 1,498,804 0 0 0 1,498,804
ZNWAD $ 1.00 5/2/2021 243,853 0 0 0 243,853
ZNWAE $ 1.00 5/2/2021 2,144,510 0 (40 ) 0 2,144,470
ZNWAF $ 1.00 8/14/2021 359,610 0 0 0 359,610
ZNWAG $ 1.00 1/8/2021 240,578 0 0 0 240,578
ZNWAH $ 5.00 4/19/2021 372,400 0 0 0 372,400
ZNWAI $ 3.00 6/29/2021 640,735 0 (5 ) 0 640,730
ZNWAJ $ 1.00 10/29/2021 546,050 0 (25 ) 0 546,025
ZNWAK $ 0.01 2/25/2021 0 673,600 (199,500 ) 0 474,100
Outstanding warrants 6,046,540 673,600 (199,570 ) 0 6,520,570 |
