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<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Note 1 - Nature of Operations and Basis of Presentation</b></font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 12pt; margin-bottom: 0px; word-spacing: 0px; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 36.79px; font-stretch: normal;"></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 36.79px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>A.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: justify; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Nature of Operations</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 42pt; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b> </b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Zion Oil & Gas, Inc., a Delaware corporation (“we,” “our,” “Zion” or the “Company”) is an oil and gas exploration company with a history of more than 15 years of oil & gas exploration in Israel. 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2015.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On January 21, 2015, the Company formally submitted its Environmental Impact Assessment (“EIA”) document for its upcoming Megiddo-Jezreel #1 well to Israel’s Ministry of National Infrastructures, Energy and Water Resources (“Energy Ministry”) and thereafter, on January 25, 2015, to the Ministry of Environmental Protection (“Environmental Ministry”). 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The MOU contemplates a two-year agreement to drill two wells with an option to drill a third well.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On March 22, 2015, the Company formally submitted its EIA document for our upcoming Megiddo-Jezreel #1 well to the Northern District Committee in Nazareth. This committee will hold a formal meeting at a future date to review, discuss, suggest modifications to, and consider approving the EIA. This step represents another significant milestone required by Israeli law and regulations as a prerequisite to obtaining final authorization to drill the Company’s future well(s).</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">On March 29, 2015, the Company received from the Energy Ministry final approval of its application to merge the southernmost portion of its Jordan Valley License into the MJL, which the Company had filed on April 10, 2014.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Zion’s Former Jordan Valley License</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On April 10, 2014, Zion filed an application to merge the southernmost portion of the Jordan Valley License into the MJL and on March 29, 2015, this application was formally approved. The Jordan Valley License (~ 55,845 acres) expired in April 2014 as Zion did not seek an extension beyond its three-year primary term. On March 29, 2015, the Company received from Israel’s Energy Minister final approval of its application to merge the southernmost portion of our Jordan Valley License into the MJL.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px;
letter-spacing: normal;
word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Zion’s Former Asher-Menashe License and Former Joseph License</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;">The Company has plugged all of its exploratory wells but acknowledges its obligation to complete the abandonment of these well sites in accordance with guidance from the Environmental Ministry and local officials.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; word-spacing: 0px; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 36.79px;"> </td><td style="width: 36.79px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>B.</b></font></td><td><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Basis of Presentation</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The accompanying unaudited interim financial statements of Zion Oil & Gas, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals necessary for a fair statement of financial position, results of operations and cash flows, have been included. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The year-end balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">To date, the Company has not achieved a discovery of either oil or gas in commercial quantities. The Company incurs cash outflows from operations and at this time all exploration activities and overhead expenses are financed by way of equity issuance. The recoverability of the costs incurred to date is uncertain and dependent upon achieving significant commercial production.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">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 generate 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 may be impaired. The 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 three months ended March 31, 2015, the Company incurred a net loss of approximately $2.4 million and had an accumulated deficit of approximately $137.2 million. These matters raise substantial doubt about the Company’s ability to continue as a going concern.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The Company expects to incur additional significant expenditures to further its exploration programs. Management is of the opinion that its currently available cash resources are sufficient to finance its plan of operations through November 2015. To carry out further planned operations beyond that date, the Company must raise additional funds through additional equity issuances. There can be no assurance that this capital will be available and if it is not, the Company may be forced to curtail or cease exploration and development expenditures. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Note 2 - Summary of Significant Accounting Policies</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>A.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1175.19px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Net Loss per Share Data</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">   </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Basic and diluted net loss per share of common stock, par value $0.01 per share, is presented in conformity with ASC 260-10 “Earnings Per Share.” Diluted net loss per share is the same as basic net loss per share as the inclusion of 4,785,118 and 3,406,624 common stock equivalents in the three month period ended March 31, 2015 and 2014 respectively, would be anti-dilutive. </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>B.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1175.19px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Use of Estimates</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The preparation of the accompanying 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 revenues and expenses. Such estimates include the valuation of unproved oil and gas properties, deferred tax assets, asset retirement obligations 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 financial statements in future periods.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times
new roman', times, serif; font-stretch: normal;">  </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>C.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1175.19px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Oil and Gas Properties and Impairment</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The Company follows the full-cost method of accounting for oil and gas properties.  Accordingly, all costs associated with geological and geophysical data acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">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 are not 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 operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">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 has not yet been established. Impairment requiring a charge to expense may be indicated through evaluation of drilling results, relinquishing drilling rights or other information (see Note 4).</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Currently, the Company has no economically recoverable reserves and no amortization base. The Company’s unproved oil and gas properties consist of capitalized exploration costs of $4,056,000 and $3,891,000 as of March 31, 2015 and December 31, 2014, respectively.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>D.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1175.19px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch:
normal;"><b>Recently Adopted Accounting Pronouncements</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">We do not believe that the adoption of any recently issued accounting pronouncements in 2015 had a significant impact on our financial position, results of operations, or cash flow.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>E.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1175.19px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Reclassifications</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Certain reclassifications have been made to conform the prior period’s financial information to the current period’s presentation.</font></p>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Note 3 - Stockholders’ Equity</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 46px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 45px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>A.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1414px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>2005 Stock Option Plan</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">During the three months ended March 31, 2015, the Company granted the following options from the 2005 Stock Option Plan, to purchase:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><table style="width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; font-size: 10pt; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 46px; line-height: 15.33px; font-size: 10pt;"> </td><td style="width: 45px; line-height: 15.33px; font-size: 10pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">i.</font></td><td style="width: 1414px;"><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; font-stretch: normal;">128,500 shares of common stock to senior officers, other staff members, and service providers at an exercise price of $1.38. The options vested upon grant and are exercisable through January 2, 2025. The fair value of the options at the date of grant amounted to $105,752.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; text-indent: 0.5in; font-stretch: normal;"> </p></td></tr><tr style="vertical-align: top;"><td style="text-align: justify; line-height: 15.33px; font-size: 10pt;"> </td><td style="text-align: justify; line-height: 15.33px; font-size: 10pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">ii.</font></td><td style="text-align: justify; line-height: 15.33px; font-size: 10pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">25,000 shares of common stock to a senior officer at an exercise price of $1.38. The options have a par value of $.01. The options shall vest in June 30, 2015 and are exercisable through January 1, 2025. The fair value of the options at the date of grant amounted to $20,529.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 46px; line-height: 15.33px; font-size: 10pt;"> </td><td style="width: 45px; line-height: 15.33px; font-size: 10pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>B.</b></font></td><td style="width: 1414px; line-height: 15.33px; font-size: 10pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>2011 Non-Employee Directors Stock Option Plan</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none;
text-indent: 0px; letter-spacing: normal;
word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">During the three months ended March 31, 2015, the Company granted the following options from the 2011 Non-Employee Directors Stock Option Plan, to purchase:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 0.25in; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">108,000 shares of common stock to non-employee directors at an exercise price of $1.38. The options vested upon grant and are exercisable through January 2, 2021. The fair value of the options at the date of grant amounted to $68,375.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top;"><td style="width: 46px; line-height: 15.33px; font-size: 10pt;"> </td><td style="width: 45px; line-height: 15.33px; font-size: 10pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>C.</b></font></td><td style="width: 1414px; line-height: 15.33px; font-size: 10pt;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Stock Options</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">   </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The stock option transactions since January 1, 2015 are shown in the table below:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td> </td><td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">Weighted average</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Number of shares</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">exercise <br />price</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center;" colspan="2"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1144px; padding-bottom: 1.5pt;">Outstanding, December 31, 2014</td><td style="width: 16px; padding-bottom: 1.5pt;"> </td><td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="width: 135px; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">3,089,693</td><td style="width: 15px; text-align: left; padding-bottom: 1.5pt;"> </td><td style="width: 15px; padding-bottom: 1.5pt;"> </td><td style="width: 15px; text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="width: 135px; text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">1.99</td><td style="width: 15px; text-align: left; padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Changes during 2015
to:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td
style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left;">Granted to employees, officers, directors and others</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">261,500</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.38</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Expired/Cancelled/Forfeited</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">(62,500</td><td style="text-align: left; font-weight: bold;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.39</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-bottom: 1.5pt;">Exercised</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">(67,500</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;">)</td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">0.01</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="padding-bottom: 1.5pt;">Outstanding, March 31, 2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">3,221,193</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">1.98</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-bottom: 1.5pt;">Exercisable, March 31, 2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">3,196,193</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">1.98</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b> </b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The following table summarizes information about stock options outstanding as of March 31, 2015:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="14">Shares underlying outstanding options (non-vested)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="14">Shares underlying outstanding options (fully vested)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Range of exercise price</td><td
style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;
border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Number outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Weighted average remaining contractual life (years)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Weighted Average Exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Range of exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Number Outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Weighted average remaining contractual life (years)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">Weighted Average Exercise price</td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">US$</td><td style="font-weight: bold;"> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">US$</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">US$</td><td style="font-weight: bold;"> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;">US$</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 150px; text-align: right;">1.38</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 150px; text-align: right;">25,000</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 150px; text-align: right;">9.77</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 150px; text-align: right;">1.38</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 135px; text-align: right;">0.01</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 135px; text-align: right;">20,000</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 135px; text-align: right;">9.21</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">47,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">9.00</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">56,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">8.62</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align:
left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align:
right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">8.25</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">20,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">4.84</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.38</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">108,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">5.76</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.38</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.38</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">128,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">9.77</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.38</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.67</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">390,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">5.51</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.67</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.67</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">535,693</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">9.51</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.67</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align:
left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.70</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align:
right;">359,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">7.73</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.70</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.70</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">132,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">3.73</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.70</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.73</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">3.78</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.73</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.82</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.21</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.82</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.86</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">3.68</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.86</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.95</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">5.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.95</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td
style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.96</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">4.43</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.96</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td
style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.28</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">4.28</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">2.28</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.61</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">200,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.68</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">2.61</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.61</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1,006,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">6.68</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">2.61</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">4.45</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.82</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">4.45</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">4.55</td><td
style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">15,000</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">0.84</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: right; border-bottom-color: black;
border-bottom-width: 1.5pt; border-bottom-style: solid;">4.55</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1.38</td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">25,000</td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1.38</td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">0.01—4.55</font></td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">3,196,193</td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1.98</td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Granted to employees</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The following table sets forth information about the weighted-average fair value of options granted to employees and directors during the three months ended March 31, 2015 and 2014, using the Black Scholes option-pricing model and the weighted-average assumptions used for such grants: </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">For the three month ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td
style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1040.67px; text-align: left; text-indent: -10pt; padding-left: 10pt;">Weighted-average fair value of underlying stock at grant date</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 15px; text-align: left; font-weight: bold;">$</td><td nowrap="nowrap" style="width: 180px; text-align: right; font-weight: bold;">1.38</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;">$</td><td
style="width: 180px; text-align: right;">1.91</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Dividend yields</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: right; font-weight: bold;">—</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Expected volatility</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: right; font-weight: bold;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>69%-70%</b></font></td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">78%-82%</font></td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Risk-free interest rates</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: right; font-weight: bold;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>1.07%-1.61%</b></font></td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">1.72%-1.73%</font></td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Expected lives (in years)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td nowrap="nowrap" style="text-align: right; font-weight: bold;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>3.00-5.25</b></font></td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">5.00-5.38</font></td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-bottom: 1.5pt; padding-left: 10pt;">Weighted-average grant date fair value</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td nowrap="nowrap" style="text-align: right; font-weight: bold;">0.73</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left;">$</td><td style="text-align: right;">1.90</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: center; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Granted to non-employees</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The following table sets forth information about the weighted-average fair value of options granted to non-employees during the three months ended March 31, 2015 and 2014, using the Black Scholes option-pricing model and the weighted-average assumptions used for such grants:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times
new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">For the three month ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight:
bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1130.67px; text-align: left; text-indent: -10pt; padding-left: 10pt;">Weighted-average fair value of underlying stock at grant date</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 15px; text-align: left; font-weight: bold;">$</td><td style="width: 135px; text-align: right; font-weight: bold;">1.38</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;">$</td><td style="width: 135px; text-align: right;">—</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Dividend yields</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">—</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Expected volatility</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">73.84</td><td style="text-align: left; font-weight: bold;">%</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Risk-free interest rates</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">2.12</td><td style="text-align: left; font-weight: bold;">%</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Expected lives (in years)</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">10.00</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-bottom: 1.5pt; padding-left: 10pt;">Weighted-average grant date fair value</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;">$</td><td style="text-align: right; font-weight: bold;">1.08</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left;">$</td><td style="text-align: right;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">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.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 46px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td
style="font: 10pt/normal 'times new roman', times, serif; width: 45px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>D.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1414px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Compensation Cost for Option Issuances</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The following table sets forth information about the compensation cost of all option issuances recognized for employees and directors:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">  </font></p><table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">For the three month ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">US$</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">US$</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 722px; text-align: right; font-weight: bold;">174,000</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 707px; text-align: right;">89,000</td><td style="width: 15px; text-align: left;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The following table sets forth information about the compensation cost of all option issuances recognized for non-employees:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none;
text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">For the three month ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; font-weight:
bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">US$</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">US$</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 722px; text-align: right; font-weight: bold;">11,000</td><td style="width: 15px; text-align: left; font-weight: bold;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 707px; text-align: right;">14,000</td><td style="width: 15px; text-align: left;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">As of March 31, 2015, there was approximately $10,000 of unrecognized compensation cost, related to non-vested stock options granted under the Company’s various stock option plans. That cost is expected to be recognized during the remaining period of 2015.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b> </b></font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 46px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 45px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>E.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1414px; text-align: justify; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Prospectus Supplement for the Dividend Reinvestment and Stock Purchase Plan (“DSPP”)</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">On January 13, 2015, Amendment No. 3 to the Prospectus Supplement was filed. Amendment No. 3 to Prospectus Supplement amends the Prospectus Supplement to provide for a new Unit Option. The prior Unit Option ended on December 31, 2014. The Unit Program continues with a different Unit Option comprised of a combination of common stock, warrants, time periods and unit price, but otherwise has the same Unit Program features, conditions and terms as those set out in the original Prospectus Supplement and Amendment No. 2 thereto. The Company’s new Unit Option Program began on February 2, 2015 and was scheduled to terminate May 4, 2015, but was extended for an additional 90-day period through August 3, 2015. This new 90-day Unit Option enables participants to purchase Units of our securities where each Unit (priced at $4.00) is comprised of one share of Common Stock and three Common Stock purchase warrants. Each warrant affords the investor or stockholder the opportunity to purchase one share of the
Company’s Common Stock at a warrant exercise price of $1.00. Each of the three warrants per Unit will have a different expiration date.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">The Company has filed an application with NASDAQ to list the three warrants on the NASDAQ Global Market under the symbols “ZNWAB,” “ZNWAC,” and “ZNWAD;” however, no assurance can be
provided that the warrants will be approved for listing on the NASDAQ Global Market.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Under the current Unit Option program, all of the warrants will first become exercisable and tradable on September 3, 2015, which is the 31st day following the Unit Option Termination Date (i.e., on August 3, 2015) and continue to be exercisable through September 5, 2016 for ZNWAB (1 year), September 4, 2017 for ZNWAC (2 years) and September 4, 2018 for ZNWAD (3 years), respectively, at a per share exercise price of $1.00. The Unit is priced at $4.00 per Unit, and no change will be made to the warrant exercise price of $1.00 per share (see also Note 6).</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">Accordingly, all references in the Original Prospectus Supplement and Amendment Nos. 1 and 3 concerning the Unit Options, are hereby deleted and replaced with the extended Unit Option as described above. Except for the substitution of the extended Unit Option above, all other features, conditions and terms of the Plan remain unchanged.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">The Company and its transfer agent have collected together approximately $428,000 in the three months ended March 31, 2015. As a result, the Company issued 190,347 shares of its common stock during the same period. Additionally, warrants for 133,989 shares of common stock were issued during the quarter (44,663 each of ZNWAB, ZNWAC, and ZNWAD).</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 46px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 45px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>F.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1414px; text-align: justify; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Warrant Descriptions</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The price and the expiration dates for the series of warrants to investors are as follows:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times,
serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><table style="width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Period of Grant</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times,
serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">US$</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td><td style="font: bold 10pt/normal 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-stretch: normal;" colspan="2">Expiration Date</td><td style="font: bold 10pt/normal 'times new roman', times, serif; padding-bottom: 1.5pt; font-stretch: normal;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 301px; text-align: right; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 135px; text-align: right; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td><td style="width: 225px; text-align: right; font-size: 10pt;"> </td><td style="width: 15px; text-align: left; font-size: 10pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; text-indent: -10pt; padding-left: 10pt; font-stretch: normal;">ZNWAA Warrants</td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">March 2013 – December 2014</font></td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: right; font-stretch: normal;">2.00</td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: center; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">January 31, 2020</font></td><td style="font: 10pt/normal 'times new roman', times, serif; text-align: left; font-stretch: normal;"> </td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On February 2, 2015, the ZNWAA listed warrants began trading on the NASDAQ Global Markets but on February 11, 2015, NASDAQ halted trading on the ZNWAA warrants pending the Company’s response to NASDAQ's request for additional information. On April 9, 2015, NASDAQ resumed trading on Zion Oil & Gas, Inc.’s ZNWAA warrants. (see Note 6)</font></p></div>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Note 4 - Unproved Oil and Gas Properties, Full Cost Method</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Unproved oil and gas properties, under the full cost method, are comprised as follows:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">March 31, 2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">December 31, 2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">US$ thousands</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">US$ thousands</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom;"><td>Excluded from amortization base:</td><td> </td><td style="text-align: right;" colspan="2"> </td><td> </td><td> </td><td style="text-align: right;" colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 937.07px; text-align: left; text-indent: -10pt; padding-left: 10pt;">Inventory, and other operational related costs</td><td style="width: 12.8px; font-weight: bold;"> </td><td style="width: 12.8px; text-align: left; font-weight: bold;"> </td><td style="width: 112.8px; text-align: right; font-weight: bold;">895</td><td style="width: 12.8px; text-align: left; font-weight: bold;"> </td><td style="width: 12.8px;"> </td><td style="width: 12px; text-align: left;"> </td><td style="width: 112px; text-align: right;">895</td><td style="width: 12px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Capitalized salary costs</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">970</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">916</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Legal costs, license fees and other preparation costs</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">2,190</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2,079</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-bottom: 1.5pt; padding-left: 10pt;">Other costs</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">1</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">1</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">4,056</td><td style="text-align: left; padding-bottom: 4pt; font-weight: bold;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black;
border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">3,891</td><td style="text-align: left; padding-bottom: 4pt;"> </td></tr></table>
<p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>Note 5 - Commitments and Contingencies</b></font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><td style="width: 48px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></td><td style="width: 47px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>A.</b></font></td><td style="width: 1472px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>Litigation</b></font></td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">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. In the opinion of management, no pending or known threatened claims, actions or proceedings against the Company are expected to have a material adverse effect on its financial position, results of operations or cash flows. However, the Company cannot predict with certainty the outcome or effect of any such litigation or investigatory matters or any other pending litigation or claims. There can be no assurance as to the ultimate outcome of any such lawsuits and investigations.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><td style="width: 48px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></td><td style="width: 47px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>B.</b></font></td><td style="width: 1472px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal;
font-size:
10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>Environmental and Onshore Licensing Regulatory Matters</b></font></td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">The Company is engaged in oil and gas exploration and production and may become subject to certain liabilities as they relate to environmental cleanup 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.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"> </p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;">In July 2013, the Environmental Ministry published: “Environmental Guidelines for the preparation of an environmental document supplementary to a license for searching – experimental drilling and land extraction tests.” This document extensively details the requirements for a supplemental environmental document to an oil and gas exploration plan. On January 21, 2015, the Company formally submitted its Environmental Impact Assessment (“EIA”) document for our upcoming Megiddo-Jezreel #1 well to Israel’s Energy Ministry and thereafter, on January 25, 2015, to the Environmental Ministry. This key milestone is required by the MJL work plan as well as by Israeli law and regulations.</p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"> </p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;">On December 3, 2013, the State of Israel’s Petroleum Commissioner awarded the Company the Megiddo-Jezreel Petroleum Exploration License No. 401. Subsequently, the Company secured a bank guarantee from an Israeli based bank in the amount of $930,000, in accordance with the performance guarantee guidelines. Consequently, Zion believes it has met the requirements of the June 2012 onshore exploratory licensing guidelines and the October 2012 performance guarantee guidelines.</p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"> </p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">On February 6, 2014, the Energy Ministry issued proposed guidelines for bank guarantees and insurance requirements with respect to oil and gas rights. Under these guidelines, applicants for and existing holders of exploration rights will be required to submit certain bank guarantees and insurance policies that were not previously required.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font
style="font-style: normal;
font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">On September 17, 2014, the proposed guidelines became effective and the Energy Ministry issued a guidance document entitled “Instructions for the Giving of Guarantees with respect to Oil Rights.” As it relates to existing onshore license holders like Zion, the Instructions call for the Company to obtain a new Base Bank Guarantee in the amount of $500,000, per each existing license area, split into two deposit dates as follows: (1) $250,000 by November 30, 2014 and (2) $250,000 by March 31, 2015.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">Furthermore, prior to the start of drilling, an additional bank guarantee of $250,000 will be required at least 14 days before the spud date. In summary, this is a potential cumulative total of $750,000 that is separate and apart from the Company’s existing Bank Guarantees discussed below in Section D.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">The Petroleum Commissioner has discretion to raise or lower those amounts or may also forfeit a Company’s existing guarantee and/or cancel a petroleum right under certain circumstances.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">  </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">In addition, new and extended insurance policy guidelines were added. The Petroleum Commissioner may also view non-compliance with the new insurance provisions as breaching the work plan and the rights granted and act accordingly.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"> </p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;">Due to the Petroleum Commissioner’s discretion in the matter, the Company has not provided bank guarantees based on the September 2014 guidelines as it has not had a request from the Commissioner. As of March 31, 2015, the Company
has not received a specific request
seeking payment and therefore, has not provided any of the additional bank guarantees required by in the new guidelines.</p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">The Company believes that these new regulations will significantly increase the expenditures associated with obtaining new exploration rights and drilling new wells, coupled with the heavy financial burden of “locking away” significant amounts of cash that could otherwise be used for operational purposes. Finally, this will also considerably increase the time needed to obtain all of the necessary authorizations and approvals prior to drilling.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">     </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><td style="width: 48px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></td><td style="width: 47px; text-align: justify; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>C.</b></font></td><td style="width: 1472px; text-align: justify; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>Former Drilling Contract with AME/GYP</b></font></td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">On September 12, 2008, the Company entered into a drilling contract with Aladdin Middle East Ltd. (“AME”) pursuant to which AME shipped into Israel its 2,000 horsepower rig for use in the drilling contemplated by the Company’s business plan. The rig arrived in Israel and cleared customs in April 2009 and was used to drill the Ma’anit-Rehoboth #2 well, the Elijah #3 and the Ma’anit-Joseph #3 well. Drilling operations on the Ma’anit-Joseph #3 well were concluded in July 2011, whereupon the Company released the rig.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal;
font-weight: normal; font-stretch: normal;
font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">In May, 2012, the Company and GuyneyYildizi Petrol UretimSondajMut, ve Tic A.S. (“GYP”) agreed that the Company would pay GYP $627,000 in full and final settlement of past bills, and such amount was paid on May 15, 2012. However, the matter related to GYP’s demand for $550,000 for rig demobilization was excluded from the settlement. The drilling contract between the Company and AME, which was allegedly assumed by GYP, provides that all disputes are to be settled by arbitration in London, United Kingdom.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">On March 4, 2014, the Company received from the International Court of Arbitration in Paris, France (“ICA”) a request for arbitration in London filed by GYP.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">On May 1, 2014, prior to Zion’s answer date deadline, Zion filed an answer in which it denied GYP’s claim for payment of the demobilization fee, and in addition it asserted a Counterclaim against GYP.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"> </p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">In the preliminary procedural stage, Zion challenged GYP’s standing to assert its claim on the basis that there was no assignment of the Drilling Contract from AME to GYP pursuant to the provisions of the Drilling Contract. GYP challenged Zion’s right to assert any issue not related to the demobilization fee, including Zion’s counterclaim. On December 19, 2014, the appointed arbitrator communicated to the ICA that she was denying each party’s preliminary challenges, and the arbitration would proceed on the basis of the primary claims and counterclaims raised by the parties.</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify; text-indent: 0.5in;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">On February 9, 2015, Zion and GYP each filed submissions on Stage 1 issues, to which rebuttals were due on March 5, 2015. (see also Note 6)</font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif;
font-size: 10pt; font-style: normal; font-variant: normal;
font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: top; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><td style="width: 48px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></td><td style="width: 47px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>D. </b></font></td><td style="width: 1472px; font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>Bank Guarantees</b></font></td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-indent: 0.5in;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">As of March 31, 2015, the Company provided bank guarantees to various governmental bodies (approximately $1,147,000) and others (approximately $64,000) in respect of its drilling operation in an aggregate amount of approximately $1,211,000. The funds backing these guarantees and additional amounts added to support currency fluctuations as required by the bank are held in interest-bearing accounts and are reported on the Company’s balance sheets as “restricted cash.”</font></p>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Note 6 - Subsequent Events</b></font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On the dates shown below, the Company granted the following options from the 2005 Stock Option Plan, to purchase:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 46px; font-stretch: normal;"></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 45px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">i.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1414px; text-align: justify; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On April 2, 2015, 10,000 options for shares of common stock to one senior officer at an exercise price of $0.01. The options vest in equal quarterly instalments over four consecutive quarters, beginning with the quarter ended June 30, 2015 and are exercisable through April 2, 2025. The fair value of the options at the date of grant amounted to $17,607; and</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 60pt; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 46px; font-stretch: normal;"></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 45px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">ii.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1414px; text-align: justify; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On April 17, 2015, 123,500 shares of common stock to senior officers, directors, other staff members, and service providers at an exercise price of $0.01. The options vested upon grant and are exercisable through April 17, 2025. The fair value of the options at the date of grant amounted to $219,933.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px 0px 0px 60pt; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">On February 2, 2015, the ZNWAA listed warrants began trading on the NASDAQ Global Markets but on February 11, 2015, NASDAQ halted trading on the ZNWAA warrants pending the Company’s response to NASDAQ's request for additional information. On April 9, 2015, NASDAQ resumed trading on Zion Oil & Gas, Inc.’s ZNWAA warrants.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On April 20, 2015, the Company announced:</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 46px;
font-stretch:
normal;"></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 45px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">i.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1414px; text-align: justify; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Amending the Company’s Amended and Restated Bylaws to increase the authorized number of directors from 11 to 13; and</font></td></tr></table><p style="font: 13px/normal 'times new roman', times, serif; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; margin-top: 0px; margin-bottom: 0px; word-spacing: 0px; white-space: normal; -webkit-text-stroke-width: 0px;"> </p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1505px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 46px; font-stretch: normal;"></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 45px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">ii.</font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1414px; text-align: justify; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The appointment of Mr. Dustin L. Guinn to the Board of Directors as an independent director as defined by NASDAQ Rule 5605(a)(2), effective May 1, 2015.</font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">On May 1, 2015, the Company granted, from the 2011 Stock Option Plan, 25,000 options for shares of common stock to one director at an exercise price of $2.03. The options vested upon grant and are exercisable through May 1, 2021.  The fair value of the options at the date of grant amounted to approximately $23,000.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">On May 1, 2015, Amendment No. 4 to the Prospectus Supplement was filed. This Amendment No. 4 to Prospectus Supplement amends the Prospectus Supplement dated March 27, 2014 (“Original Prospectus Supplement”) as supplemented on May 30, 2014 (“Amendment No. 1 to Prospectus Supplement”), as supplemented on July 31, 2014 (“Amendment No. 2 to Prospectus Supplement”) and as supplemented on January 13, 2015 (“Amendment No. 3 to Prospectus Supplement”). This Amendment No. 4 to Prospectus Supplement should be read in conjunction with the Original Prospectus Supplement and the base Prospectus effective March 27, 2014 and Amendment No. 2. This Amendment No. 4 is incorporated by reference into the Original Prospectus Supplement. This Amendment No. 4 is not complete without, and may not be delivered or utilized except in connection with, the Original Prospectus Supplement, including any amendments or supplements thereto.</font></p><p style="font: 10pt/15.33px 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Under our Dividend Reinvestment and Common Stock Purchase Plan (the “Plan”), our Unit Program continues with an extended Unit Option period, but otherwise the same Unit Program features, conditions and terms in the Prospectus Supplement and Amendment No. 2 apply.  We are offering under our Unit Program that began on February 2, 2015 under Amendment No. 3 to the Prospectus an extension of the Unit Option that is being extended from the original termination date of May 4, 2015 to a termination date of August 3, 2015. The Unit Option to purchase Units of our securities where each Unit (priced at $4.00) is comprised of one (1) share of Common Stock and three (3) Common Stock purchase warrants. Each warrant affords the investor or stockholder the opportunity to purchase one share of our Common Stock at a warrant exercise price of $1.00. Each of the three warrants per Unit will have different expiration dates that have been extended.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">All of the warrants will first become
exercisable and tradable on September
3, 2015, which is the 31<sup>st</sup> day following the new Unit Option Termination Date (i.e., on August 3, 2015) and continue to be exercisable through September 5, 2016 for ZNWAB (1 year), September 4, 2017 for ZNWAC (2 years) and September 4, 2018 for ZNWAD (3 years), respectively, at a per share exercise price of $1.00. The Unit is priced at $4.00 and no change will be made to the warrant exercise price of $1.00 per share.</p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"> </p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Accordingly, all references in the Original Prospectus Supplement and Amendment Nos. 1 and 3, concerning the Unit Options are hereby deleted and replaced with the extended Unit Option as described above. Except for the substitution of the extended Unit Option above, all other features, conditions and terms of the Plan remain unchanged.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; font-stretch: normal; -webkit-text-stroke-width: 0px;">With respect to the GYP arbitration, on April 1, 2015, the arbitrator declared the Stage 1 issues closed and submitted her draft Partial Award to the ICC Secretariat. On April 24, 2015, the International Court of Arbitration (“ICA”) extended the time limit for rendering the Final Award until July 31, 2015. On April 29, 2015, the arbitrator issued her Partial Award ordering Zion to pay GYP the sum of $550,000 plus interest in the amount of approximately $237,000, which continues to accrue at the rate of $180.82 per day until paid. However, any Final Award sum is not determinable until the issuance of the Final Award after resolution of Stage 2 of Zion’s fraud and other tort counterclaims against GYP. The Company recorded a provision in the amount of $850,000 to cover the Company's liability.</p></div>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1250.4px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 37.59px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>A.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1175.19px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Net Loss per Share Data</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">   </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Basic and diluted net loss per share of common stock, par value $0.01 per share, is presented in conformity with ASC 260-10 “Earnings Per Share.” Diluted net loss per share is the same as basic net loss per share as the inclusion of 4,785,118 and 3,406,624 common stock equivalents in the three month period ended March 31, 2015 and 2014 respectively, would be anti-dilutive. </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 48px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 47px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>B.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1472px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Use of Estimates</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The preparation of the accompanying 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 revenues and expenses. Such estimates include the valuation of unproved oil and gas properties, deferred tax assets, asset retirement obligations 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 financial statements in future periods.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">  </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 48px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 47px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>C.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1472px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Oil and Gas Properties and Impairment</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">The Company follows the full-cost method of accounting for oil and gas properties.  Accordingly, all costs associated with geological and geophysical data acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">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 are not 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 operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">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 has not yet been established. Impairment requiring a charge to expense may be indicated through evaluation of drilling results, relinquishing drilling rights or other information (see Note 4).</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Currently, the Company has no economically recoverable reserves and no amortization base. The Company’s unproved oil and gas properties consist of capitalized exploration costs of $4,056,000 and $3,891,000 as of March 31, 2015 and December 31, 2014, respectively.</font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 48px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 47px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>D.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1472px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Recently Adopted Accounting Pronouncements</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">We do not believe that the adoption of any recently issued accounting pronouncements in 2015 had a significant impact on our financial position, results of operations, or cash flow.</font></p>
<p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b> </b></font><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="font: 10pt/normal 'times new roman', times, serif; vertical-align: top; font-stretch: normal;"><td style="font: 10pt/normal 'times new roman', times, serif; width: 48px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 47px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>E.</b></font></td><td style="font: 10pt/normal 'times new roman', times, serif; width: 1472px; font-stretch: normal;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"><b>Reclassifications</b></font></td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;"> </font></p><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; text-align: justify; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"><font style="font: 10pt/normal 'times new roman', times, serif; font-stretch: normal;">Certain reclassifications have been made to conform the prior period’s financial information to the current period’s presentation.</font></p>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td> </td><td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: center;" colspan="2">Weighted average</td><td style="font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Number of shares</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">exercise <br />price</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: center;" colspan="2"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1191px; padding-bottom: 1.5pt;">Outstanding, December 31, 2014</td><td style="width: 16px; padding-bottom: 1.5pt;"> </td><td style="width: 16px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; text-align: left;"> </td><td style="width: 142px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; text-align: right;">3,089,693</td><td style="width: 16px; padding-bottom: 1.5pt; text-align: left;"> </td><td style="width: 15px; padding-bottom: 1.5pt;"> </td><td style="width: 15px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; text-align: left;"> </td><td style="width: 141px; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; text-align: right;">1.99</td><td style="width: 15px; padding-bottom: 1.5pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left;">Changes during 2015 to:</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"> </td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left;">Granted to employees, officers, directors and others</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td style="font-weight: bold; text-align: right;">261,500</td><td style="font-weight: bold; text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.38</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td>Expired/Cancelled/Forfeited</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td style="font-weight: bold; text-align: right;">(62,500</td><td style="font-weight: bold; text-align: left;">)</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.39</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-bottom: 1.5pt;">Exercised</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: right;">(67,500</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;">)</td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; text-align: right;">0.01</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="padding-bottom: 1.5pt;">Outstanding, March 31, 2015</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: right;">3,221,193</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; text-align: right;">1.98</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-bottom: 1.5pt;">Exercisable, March 31, 2015</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: left;"> </td><td style="font-weight: bold; text-align: right;">3,196,193</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.98</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr></table>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; -webkit-text-stroke-width: 0px;"></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="14">Shares underlying outstanding options (non-vested)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="14">Shares underlying outstanding options (fully vested)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Range of exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Number outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Weighted average remaining contractual life (years)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Weighted Average Exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Range of exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Number Outstanding</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Weighted average remaining contractual life (years)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">Weighted Average Exercise price</td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">US$</td><td style="font-weight: bold;"> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">US$</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;" colspan="2">US$</td><td style="font-weight: bold;"> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td><td style="text-align: center; font-weight: bold;">US$</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 156px; text-align: right;">1.38</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 156px; text-align: right;">25,000</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 156px; text-align: right;">9.77</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 156px; text-align: right;">1.38</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">0.01</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">20,000</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">9.21</td><td style="width: 15px; text-align: left;"> </td><td style="width: 15px;"> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.01</td><td style="text-align:
left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">47,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">9.00</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">56,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">8.62</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">8.25</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">20,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">4.84</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">0.01</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.38</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">108,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">5.76</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.38</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.38</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">128,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">9.77</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.38</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.67</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">390,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">5.51</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.67</td></tr><tr style="vertical-align: bottom; background-color:
#cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.67</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">535,693</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">9.51</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.67</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.70</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">359,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">7.73</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.70</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.70</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">132,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">3.73</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.70</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.73</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">3.78</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.73</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.82</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.21</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.82</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.86</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">3.68</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.86</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align:
left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.95</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">5.01</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.95</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1.96</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">4.43</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">1.96</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.28</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">4.28</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">2.28</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.61</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">200,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.68</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">2.61</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2.61</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">1,006,500</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">6.68</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">2.61</td></tr><tr style="vertical-align: bottom; background-color: white;"><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">4.45</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">25,000</td><td style="text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">0.82</td><td style="text-align: left;"> </td><td> </td><td style="text-align: right;">4.45</td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td
style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">—</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">4.55</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">15,000</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">0.84</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">4.55</td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1.38</td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">25,000</td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1.38</td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"><font style="font: 10pt/normal 'times new roman', times, serif;">0.01—4.55</font></td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">3,196,193</td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: left; padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">1.98</td></tr></table><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0.5in; letter-spacing: normal; word-spacing: 0px; white-space: normal; -webkit-text-stroke-width: 0px;"></p></div>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">For the three month ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1177.671875px; text-align: left; text-indent: -10pt; padding-left: 10pt;">Weighted-average fair value of underlying stock at grant date</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; font-weight: bold; text-align: left;">$</td><td style="width: 142px; font-weight: bold; text-align: right;">1.38</td><td style="width: 16px; font-weight: bold; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;">$</td><td style="width: 141px; text-align: right;">—</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Dividend yields</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td style="font-weight: bold; text-align: right;">—</td><td style="font-weight: bold; text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Expected volatility</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td style="font-weight: bold; text-align: right;">73.84</td><td style="font-weight: bold; text-align: left;">%</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Risk-free interest rates</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td style="font-weight: bold; text-align: right;">2.12</td><td style="font-weight: bold; text-align: left;">%</td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Expected lives (in years)</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td style="font-weight: bold; text-align: right;">10.00</td><td style="font-weight: bold; text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt;">Weighted-average grant date fair value</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: left;">$</td><td style="font-weight: bold; text-align: right;">1.08</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left;">$</td><td style="text-align: right;">—</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr></table>
<table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">For the three month ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1177.671875px; text-align: left; text-indent: -10pt; padding-left: 10pt;">Weighted-average fair value of underlying stock at grant date</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; font-weight: bold; text-align: left;">$</td><td nowrap="nowrap" style="width: 142px; font-weight: bold; text-align: right;">1.38</td><td style="width: 16px; font-weight: bold; text-align: left;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;">$</td><td style="width: 141px; text-align: right;">1.91</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Dividend yields</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td nowrap="nowrap" style="font-weight: bold; text-align: right;">—</td><td style="font-weight: bold; text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">—</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Expected volatility</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td nowrap="nowrap" style="font-weight: bold; text-align: right;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>69%-70%</b></font></td><td style="font-weight: bold; text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">78%-82%</font></td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Risk-free interest rates</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td nowrap="nowrap" style="font-weight: bold; text-align: right;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>1.07%-1.61%</b></font></td><td style="font-weight: bold; text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">1.72%-1.73%</font></td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Expected lives (in years)</td><td style="font-weight: bold;"> </td><td style="font-weight: bold; text-align: left;"> </td><td nowrap="nowrap" style="font-weight: bold; text-align: right;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"><b>3.00-5.25</b></font></td><td style="font-weight: bold; text-align: left;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">5.00-5.38</font></td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; padding-bottom: 1.5pt; text-indent: -10pt; padding-left: 10pt;">Weighted-average grant date fair value</td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: left;">$</td><td nowrap="nowrap" style="font-weight: bold; text-align: right;">0.73</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left;">$</td><td style="text-align: right;">1.90</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr></table>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 1096px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">For the three month ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: center;">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: center;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt; text-align: center;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: center;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: center;">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 11px; font-weight: bold; text-align: left;"> </td><td style="width: 527px; font-weight: bold; text-align: right;">11,000</td><td style="width: 11px; font-weight: bold; text-align: left;"> </td><td style="width: 11px;"> </td><td style="width: 11px; text-align: left;"> </td><td style="width: 515px; text-align: right;">14,000</td><td style="width: 10px; text-align: left;"> </td></tr></table>
<table align="center" style="font: 10pt/normal 'times new roman', times, serif; width: 1096px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="6">For the three month ended March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: center;">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: left;"> </td><td style="border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid; font-weight: bold; text-align: center;">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 11px; font-weight: bold; text-align: left;"> </td><td style="width: 527px; font-weight: bold; text-align: right;">174,000</td><td style="width: 11px; font-weight: bold; text-align: left;"> </td><td style="width: 11px;"> </td><td style="width: 11px; text-align: left;"> </td><td style="width: 515px; text-align: right;">89,000</td><td style="width: 10px; text-align: left;"> </td></tr></table><p style="color: #000000; font-family: 'times new roman', times, serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-indent: 0px; text-transform: none; white-space: normal; widows: 1; word-spacing: 0px; -webkit-text-stroke-width: 0px; font-stretch: normal; margin: 0px; text-align: justify;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </font></p>
<table style="width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; font-family: 'times new roman', times, serif; word-spacing: 0px; border-collapse: collapse; widows: 1; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td style="font-size: 10pt;"> </td><td style="font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Period of Grant</td><td style="padding-bottom: 1.5pt; font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; padding-bottom: 1.5pt;"> </td><td style="font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">Expiration Date</td><td style="padding-bottom: 1.5pt; font-weight: bold; font-style: normal; font-variant: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt; text-align: left;"> </td><td style="width: 313px; font-size: 10pt; text-align: right;"> </td><td style="width: 15px; font-size: 10pt; text-align: left;"> </td><td style="width: 15px; font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt; text-align: left;"> </td><td style="width: 141px; font-size: 10pt; text-align: right;"> </td><td style="width: 15px; font-size: 10pt; text-align: left;"> </td><td style="width: 15px; font-size: 10pt;"> </td><td style="width: 15px; font-size: 10pt; text-align: left;"> </td><td style="width: 235px; font-size: 10pt; text-align: right;"> </td><td style="width: 15px; font-size: 10pt; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left; text-indent: -10pt; padding-left: 10pt;">ZNWAA Warrants</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">March 2013 – December 2014</font></td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: right;">2.00</td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: center;"><font style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif;">January 31, 2020</font></td><td style="font-style: normal; font-variant: normal; font-weight: normal; font-stretch: normal; font-size: 10pt; line-height: normal; font-family: 'times new roman', times, serif; text-align: left;"> </td></tr></table><div> </div>
<div><p style="font: 10pt/normal 'times new roman', times, serif; margin: 0px; color: #000000; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; white-space: normal; widows: 1; font-stretch: normal; -webkit-text-stroke-width: 0px;"></p><table style="font: 10pt/normal 'times new roman', times, serif; width: 1567px; text-transform: none; text-indent: 0px; letter-spacing: normal; word-spacing: 0px; border-collapse: collapse; widows: 1; font-size-adjust: none; font-stretch: normal; -webkit-text-stroke-width: 0px;" cellspacing="0" cellpadding="0"><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">March 31, 2015</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">December 31, 2014</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">US$ thousands</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: center; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;" colspan="2">US$ thousands</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td></tr><tr style="vertical-align: bottom;"><td> </td><td> </td><td colspan="2"> </td><td> </td><td> </td><td colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom;"><td>Excluded from amortization base:</td><td> </td><td style="text-align: right;" colspan="2"> </td><td> </td><td> </td><td style="text-align: right;" colspan="2"> </td><td> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="width: 1177.67px; text-align: left; text-indent: -10pt; padding-left: 10pt;">Inventory, and other operational related costs</td><td style="width: 16px; font-weight: bold;"> </td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 142px; text-align: right; font-weight: bold;">895</td><td style="width: 16px; text-align: left; font-weight: bold;"> </td><td style="width: 15px;"> </td><td style="width: 15px; text-align: left;"> </td><td style="width: 141px; text-align: right;">895</td><td style="width: 15px; text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Capitalized salary costs</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">970</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">916</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="text-align: left; text-indent: -10pt; padding-left: 10pt;">Legal costs, license fees and other preparation costs</td><td style="font-weight: bold;"> </td><td style="text-align: left; font-weight: bold;"> </td><td style="text-align: right; font-weight: bold;">2,190</td><td style="text-align: left; font-weight: bold;"> </td><td> </td><td style="text-align: left;"> </td><td style="text-align: right;">2,079</td><td style="text-align: left;"> </td></tr><tr style="vertical-align: bottom; background-color: white;"><td style="text-align: left; text-indent: -10pt; padding-bottom: 1.5pt; padding-left: 10pt;">Other costs</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">1</td><td style="text-align: left; padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="padding-bottom: 1.5pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 1.5pt; border-bottom-style: solid;">1</td><td style="text-align: left; padding-bottom: 1.5pt;"> </td></tr><tr style="vertical-align: bottom; background-color: #cceeff;"><td style="padding-bottom: 4pt;"> </td><td style="padding-bottom: 4pt; font-weight: bold;"> </td><td style="text-align: left; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; font-weight: bold; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">4,056</td><td style="text-align: left; padding-bottom: 4pt; font-weight: bold;"> </td><td style="padding-bottom: 4pt;"> </td><td style="text-align: left; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;"> </td><td style="text-align: right; border-bottom-color: black; border-bottom-width: 4pt; border-bottom-style: double;">3,891</td><td style="text-align: left; padding-bottom: 4pt;"> </td></tr></table></div>
55845
99000
P3Y
P3Y
P7Y
P3Y
2014-04-30
3406624
4785118
3891000
4056000
128500
25000
108000
1.38
1.38
1.38
0.01
0.01
2.03
105752
20529
68375
4.00
0.01
2025-01-02
2025-01-01
2021-01-02
10000
1.00
1.00
2.00
Under the current Unit Option program, all of the warrants will first become exercisable and tradable on September 3, 2015, which is the 31st day following the Unit Option Termination Date (i.e., on August 3, 2015) and continue to be exercisable through September 5, 2016 for ZNWAB (1 year), September 4, 2017 for ZNWAC (2 years) and September 4, 2018 for ZNWAD (3 years), respectively, at a per share exercise price of $1.00. The Unit is priced at $4.00 per Unit, and no change will be made to the warrant exercise price of $1.00 per share.
428000
190347
133989
44663
44663
44663
3089693
3221193
261500
62500
3196193
1.99
1.98
1.98
1.38
4.55
0.01
4.45
1.67
0.01
0.01
0.01
0.01
1.67
1.70
1.70
1.73
1.82
1.86
1.95
1.96
2.28
2.61
2.61
1.38
1.38
1.38
1.38
2.39
0.01
1.98
0.01
4.55
1.38
4.55
0.01
4.45
1.67
0.01
0.01
0.01
0.01
1.67
1.70
1.70
1.73
1.82
1.86
1.95
1.96
2.28
2.61
2.61
1.38
1.38
1.38
3196193
25000
15000
20000
25000
535693
47500
56000
2000
20000
390000
359500
132500
25000
25000
25000
25000
25000
25000
200000
1006500
25000
108000
128500
P10M2D
P9Y2M16D
P9M26D
P9Y6M4D
P9Y
P8Y7M13D
P8Y3M
P4Y10M2D
P5Y6M4D
P7Y8M23D
P3Y8M23D
P3Y9M11D
P2Y2M16D
P3Y8M5D
P5Y4D
P4Y5M5D
P4Y3M11D
P2Y8M5D
P6Y8M5D
P9Y9M7D
P5Y9M4D
P9Y9M7D
1.91
1.38
1.38
0.78
0.69
0.82
0.70
0.7384
0.0172
0.0107
0.0173
0.0161
0.0212
P5Y
P5Y4M17D
P3Y
P5Y3M
P10Y
1.90
0.73
1.08
14000
89000
11000
174000
ZNWAA
2013-03-31
2014-12-31
2020-01-31
895000
895000
916000
970000
2079000
2190000
1000
1000
930000
500000
250000
250000
250000
750000
627000
550000
1147000
64000
1211000
10000
123500
25000
17607
219933
23000
13
11
The Unit Option to purchase Units of our securities where each Unit (priced at $4.00) is comprised of one (1) share of Common Stock and three (3) Common Stock purchase warrants.
4
237000
550000
180.82
850000
Less than one thousand