Unassociated Document

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Item 1 - Financial Statements – Unaudited

Balance Sheets - September 30, 2010 and December 31, 2009		1

Statements of Operations for the three and nine months ended September 30, 2010 and 2009 and the period from April 6, 2000 (inception) to September 30, 2010		2

Statements of Changes in Stockholders' Equity for the nine months ended September 30, 2010 and the period from April 6, 2000 (inception) to September 30, 2010		3

Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 and the period from April 6, 2000 (inception) to September 30, 2010		13

Notes to Unaudited Interim Financial Statements		15

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations		33

Item 3 – Quantitative and Qualitative Disclosures About Market Risk		39

Item 4 - Controls and Procedures		40

PART II — OTHER INFORMATION

Item 1 – Legal Proceedings		40

Item A – Risk Factors		40

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		41

Item 3 - Defaults upon Senior Securities		41

Item 4 – (Removed and Reserved)		41

Item 5 - Other Information		41

Item 6 – Exhibits		41

SIGNATURES		42

	September 30			December 31
	2010			2009
	US$ thousands			US$ thousands
Current assets
Cash and cash equivalents		11,682			20,734
Prepaid expenses and other		700			647
Deferred offering costs		26			-
Tax refunds receivable		537			961
Total current assets		12,945			22,342

Unproved oil and gas properties, full cost method (see Note 2A)		19,538			23,759

Property and equipment at cost
Net of accumulated depreciation of $97,200 and $82,000, at September 30, 2010 and December 31, 2009 respectively		159			78

Other assets
Assets held for severance benefits		68			46

Total assets		32,710			46,225

Liabilities and Stockholders’ Equity

Current liabilities
Accounts payable		1,750			159
Asset retirement obligation		50			50
Accrued liabilities		678			1,915
Deferred officers compensation		94			477
Total current liabilities		2,572			2,601

Provision for severance pay		304			185

Total liabilities		2,876			2,786

Commitments and contingencies (see Note 6)

Stockholders’ equity
Common stock, par value $.01; 50,000,000 shares authorized: September 30, 2010 – 21,224,397 shares; December 31, 2009 – 18,706,601 shares issued and outstanding		212			187
Additional paid-in capital		84,770			72,081
Deficit accumulated in development stage		(55,148	)		(28,829	)
Total stockholders’ equity		29,834			43,439

Total liabilities and stockholders' equity		32,710			46,225

													Period from
													April 6, 2000
	For the three month period						For the nine month period						(inception) to
	ended September 30						ended September 30						September 30
	2010			2009			2010			2009			2010
	US$ thousands			US$ thousands			US$ thousands			US$ thousands			US$ thousands

Revenues		-			-			-			-			-

General and administrative expenses
Legal and professional		138			156			633			623			6,588
Salaries		651			368			2,090			1,768			10,158
Other		746			341			1,591			816			6,589
Impairment of unproved oil and gas properties		-			-			22,022			-			31,516
Loss from operations		(1,535	)		(865	)		(26,336	)		(3,207	)		(54,851	)

Other expense, net
Termination of initial public offering		-			-			-			-			(527	)
Other income, net		-			-			-			76			80
Interest income, net		102			48			17			66			150

Loss before income taxes		(1,433	)		(817	)		(26,319	)		(3,065	)		(55,148	)
Income taxes		-			-			-			-			-

Net loss		(1,433	)		(817	)		(26,319	)		(3,065	)		(55,148	)

Net loss per share of common stock - basic and diluted (in US$)		(0.07	)		*(0.05	)		(1.36	)		*(0.23	)		*(6.34	)

Weighted-average shares outstanding – basic and diluted (in thousands)		20,632			*15,629			19,378			*13,372			*8,694

												Deficit
									Additional			accumulated
	Preferred Stock				Common Stock				paid-in			in development
	Shares		Amount		Shares		Amount		capital			stage			Total
	Thousands		US$ thousands		Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands

Balances April 6, 2000		-		-		-		-		-			-			-

Issued for cash ($0.001 per share)		-		-		2,400		* -		2			-			2

Issuance of shares and warrants in a private offering ($1 per share)		-		-		100		* -		100			-			100

Costs associated with the issuance of shares		-		-		-		-		(24	)		-			(24	)

Waived interest on conversion of debt		-		-		-		-		* -			-			* -

Value of warrants granted to employees		-		-		-		-		2			-			2
Net loss		-		-		-		-		-			(5	)		(5	)
Balances as of December 31, 2000		-		-		2,500		* -		80			(5	)		75

Issuance of shares and warrants in a private offering in January 2001 ($1 per share)		-		-		135		* -		135			-			135

Issuance of shares and warrants in a private offering which closed in September 2001 ($1 per share)		-		-		125		* -		125			-			125

Payment of accounts payable through issuance of shares and warrants		-		-		40		* -		40			-			40

Payment of note payable through issuance of shares and warrants		-		-		25		* -		25			-			25

Issuance of shares and warrants in a private offering which closed in November 2001 ($1 per share)		-		-		175		* -		175			-			175

Costs associated with the issuance of shares		-		-		-		-		(85	)		-			(85	)
Waived interest on conversion of debt		-		-		-		-		1			-			1
Value of warrants granted to employees		-		-		-		-		37			-			37
Value of warrants granted to directors and consultants		-		-		-		-		3			-			3
Net loss		-		-		-		-		-			(207	)		(207	)
Balances as of December 31, 2001		-		-		3,000		* -		536			(212	)		324

												Deficit
									Additional			accumulated
	Preferred Stock				Common Stock				paid-in			in development
	Shares		Amount		Shares		Amount		capital			stage			Total
	Thousands		US$ thousands		Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Change in par value of common shares from $ 0.0001 per share to $0.01 per share		-		-		-		30		(30	)		-			-

Issuance of shares and warrants in a private offering which closed in January 2002 ($1 per share)		-		-		20		* -		20			-			20

Issuance of shares and warrants in a private offering which closed in November 2002 ($10 per share)		25		* -		22		* -		254			-			254

Payment of accounts payable through issuance of preferred shares and warrants		13		* -		-		-		127			-			127

Payment of accounts payable through issuance of common shares and warrants		-		-		111		1		131			-			132

Payment of note payable through issuance of shares and warrants		5		* -		-		-		50			-			50

Payment of accounts payable to employee through issuance of shares upon exercise of warrants		-		-		400		4		76			-			80

Costs associated with the issuance of shares		-		-		-		-		(160	)		-			(160	)

Waived interest on conversion of debt		-		-		-		-		3			-			3

Deferred financing costs on debt conversions / modifications		-		-		-		-		21			-			21

Value of warrants granted to employees		-		-		-		-		1			-			1

Value of warrants granted to directors and consultants		-		-		-		-		13			-			13

Net loss		-		-		-		-		-			(403	)		(403	)

Balances as of December 31, 2002		43		* -		3,553		35		1,042			(615	)		462

													Deficit
										Additional			accumulated
	Preferred Stock					Common Stock				paid-in			in development
	Shares			Amount		Shares		Amount		capital			stage			Total
	Thousands			US$ thousands		Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Issuance of shares in connection with executive employment		-			-		50		1		49			-			50

Issuance of share on warrants exercise		-			-		165		2		31			-			33

Issuance of dividend shares to record holders as of December 31, 2002		4			* -		-		-		* -			-			-

Issuance of shares and warrants in a private offering which closed in February 2003 ($10 per share):
for cash consideration		10			* -		-		-		105			-			105
for reduction of accounts payable		5			* -		-		-		45			-			45

Issuance of shares and warrants as compensation for extension of $100,000 line of credit		1			* -		-		-		10			-			10

Payment of account payable through issuance of shares and warrants		* -			* -		-		-		1			-			1

Conversion of preferred shares to common shares in reincorporation merger		(63	)		* -		763		7		(7	)		-			-

Issuance of shares in a private offering which closed in July 2003 ($3 per share):
for cash consideration		-			-		33		* -		99			-			99
for reduction of accounts payable		-			-		3		* -		9			-			9

Issuance of shares upon exercise of warrants:
for cash consideration		-			-		25		* -		25			-			25
for reduction of accounts payable		-			-		124		1		142			-			143

Issuance of shares upon exercise of warrants for cash consideration		-			-		63		1		82			-			83

Payment of account payable through issuance of shares		-			-		80		1		139			-			140

Costs associated with the issuance of shares		-			-		-		-		(58	)		-			(58	)

Value of warrants granted to employees		-			-		-		-		47			-			47

Deferred financing costs on debt conversions / modifications		-			-		-		-		(10	)		-			(10	)

Net loss		-			-		-		-		-			(873	)		(873	)
Balances as of December 31, 2003		-			-		4,859		48		1,751			(1,488	)		311

								Deficit
					Additional			accumulated
	Common Stock				paid-in			in development
	Shares		Amounts		capital			stage			Total
	Thousands		US$ thousands		US$ thousands			US$ thousands			US$ thousands
Issuance of shares on warrants exercise		123		1		183			-			184

Issuance of shares and warrants in a private offering		251		3		1,002			-			1,005

Payment of officer salaries through issuance of shares and warrants		46		1		184			-			185

Payment of accounts payable to officers and consultants upon exercise of warrants		80		1		99			-			100

Payment of director honorariums through issuance of shares and warrants		11		* -		45			-			45

Payment of account payable through issuance of shares and warrants		13		* -		50			-			50

Payment of bridge loan through issuance of shares and warrants		125		1		499			-			500

Payment of bridge loan interest and commitment fee through issuance of shares and warrants		8		* -		30			-			30

Payment of bridge loan finders fee through issuance of shares and warrants		2		* -		7			-			7

Payment of service bonus through issuance of shares and warrants		20		* -		20			-			20

Costs associated with the issuance of shares		-		-		(59	)		-			(59	)

Value of warrants granted to employees		-		-		41			-			41

Deferred financing costs on debt conversions / modifications		-		-		30			-			30

Net loss		-		-		-			(1,737	)		(1,737	)

Balances as of December 31, 2004		5,538		55		3,882			(3,225	)		712

								Deficit
					Additional			accumulated
	Common Stock				paid-in			in development
	Shares		Amounts		capital			stage		Total
	Thousands		US$ thousands		US$ thousands			US$ thousands		US$ thousands
Issuance of shares on warrants exercised:
For cash		493		5		872			-		877
For payment of deferred officer salaries		17		* -		21			-		21
For exchange of shares of common stock		120		1		(1	)		-		-

Issuance of shares and warrants in a private offering that closed in March 2005:
For cash		519		5		2,070			-		2,075
For payment of deferred officer salaries		10		* -		40			-		40
For payment of accounts payable		6		* -		25			-		25

Issuance of shares and warrants in a private offering that closed in June 2005:
For cash		259		3		1,292			-		1,295
For payment of directors honoraria		14		* -		70			-		70
For payment of accounts payable		3		* -		15			-		15

Issuance of shares in a private offering that closed in October 2005:
For cash		584		6		2,914			-		2,920
For payment of deferred officer salaries		40		* -		200			-		200
For payment of accounts payable		22		* -		110			-		110

Issuance of shares in a private offering that closed in December 2005		80		1		439			-		440

Shares to be issued for services provided by director		-		-		42			-		42

Value of warrants and options granted to employees		-		-		216			-		216

Value of warrants granted to directors and consultants		-		-		16			-		16

Deferred financing costs on debt conversions /modifications		-		-		44			-		44

Costs associated with the issuance of shares

Delaware	20-0065053
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6510 Abrams Rd., Suite 300 Dallas, Texas	75231
(Address of principal executive offices)	Zip Code

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o