Note 6 - Stockholders’ Equity

A. 2011 Equity Incentive Stock Option Plan

In June 2011, the Company’s shareholders authorized the adoption of the Zion Oil & Gas, Inc. 2011 Equity Incentive Plan for employees and consultants (the “2011 Plan”), initially reserving for issuance thereunder 2,000,000 shares of Common Stock.

The 2011 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, bonus stock, awards in lieu of cash obligations, other stock-based awards and performance units. The 2011 plan also permits cash payments under certain conditions.

The compensation committee of the Board of Directors is responsible for determining the type of award, when and to whom awards are granted, the number of shares and the terms of the awards and exercise prices. The options are exercisable for a period not to exceed 10 years from the date of grant.

In June 2015, the Company’s stockholders approved an increase in the number of shares of Common Stock available under the 2011 Equity Incentive Plan for employees and consultants reserving for issuance thereunder an additional four million shares of Common Stock for a total of six million shares of Common Stock available thereunder.

In June 2017, the Company’s stockholders approved an increase in the number of shares of Common Stock available under the 2011 Plan for employees and consultants reserving for issuance thereunder an additional 10 million shares of Common Stock for a total of 16 million shares of Common Stock available thereunder.

During the year ended December 31, 2018, the Company granted the following non-qualified options from the 2011 Plan for employees, directors and consultants, to purchase as non-cash compensation (taxable on the date of exercise):

	i.	Options to purchase 330,000 shares of Common Stock to 23 senior officers, staff members and consultants at an exercise price of $.01 per share. The options have vesting schedules of 165,000 shares on June 30, 2018 and 165,000 shares on December 31, 2018. The options are exercisable through January 1, 2028. The fair value of the options at the date of grant amounted to approximately $759,000.

	ii.	Options to purchase 110,000 shares of Common Stock to five senior officers at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through January 4, 2028. The fair value of the options at the date of grant amounted to approximately $250,000.

	iii.	Options to purchase 55,000 shares of Common Stock to three consultants at an exercise price of $0.01 per share. The options are exercisable through March 1, 2028. However, the vesting and exercisability of these options is subject to the following schedule: (a) 27,500 options vest on June 30, 2018 and (b) the remaining 27,500 options vest on June 30, 2019. The fair value of the options at the date of grant amounted to $222,000.

	iv.	Options to purchase 14,000 shares of Common Stock to seven staff members at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through April 5, 2028. The fair value of the options at the date of grant amounted to approximately $62,000.

	v.	Options to purchase 10,000 shares of Common Stock to one staff member at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through September 1, 2028. The fair value of the options at the date of grant amounted to approximately $18,000.

During the year ended December 31, 2017, the Company granted the following non-qualified options from the 2011 Equity Incentive Plan for employees, directors and consultants, to purchase as non-cash compensation (taxable on the date of exercise):

	i.	Options to purchase 25,000 shares of Common Stock to a senior officer at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through December 31, 2026. The fair value of the options at the date of grant amounted to approximately $34,000.

	ii.	Options to purchase 1,555,000 shares of Common Stock to 23 senior officers, staff members and consultants at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through January 1, 2027. The fair value of the options at the date of grant amounted to approximately $2,116,000.

	iii.	Options to purchase 35,000 shares of Common Stock to two senior officers at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through January 4, 2027. The fair value of the options at the date of grant amounted to approximately $48,000.

	iv.	Options to purchase 20,000 shares of Common Stock to a consultant at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through January 11, 2027. The fair value of the options at the date of grant amounted to approximately $27,000.

	v.	Options to purchase 90,000 shares of Common Stock to five staff members at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through April 17, 2027. The fair value of the options at the date of grant amounted to approximately $104,000.

	vi.	Options to purchase 10,000 shares of Common Stock to one staff member at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through September 1, 2027. The fair value of the options at the date of grant amounted to approximately $35,000.

	vii.	Options to purchase 30,000 shares of Common Stock to one senior officer at an exercise price of $0.01 per share. The options have vesting schedules of 10,000 shares on each of December 31, 2017, June 30, 2018 and June 30, 2019, respectively and are exercisable through October 2, 2027. The fair value of the options at the date of grant amounted to approximately $101,000. The cost recognized during 2017 amounted to approximately $50,000. The balance of $51,000 is expected to be recognized in 2018 and 2019.

	viii.	Options to purchase 10,000 shares of Common Stock to one consultant at an exercise price of $0.01 per share. The options vested upon grant and are exercisable through October 2, 2027. The fair value of the options at the date of grant amounted to approximately $34,000.

	ix.	Options to purchase 12,500 shares of Common Stock to one consultant at an exercise price of $0.01 per share. The options vested on December 31, 2017 and are exercisable through December 31, 2027. The fair value of the options at the date of grant amounted to approximately $31,000.

B. 2011 Non-Employee Directors Stock Option Plan

In June 2011, the Company’s shareholders authorized the adoption of the Zion Oil & Gas, Inc. 2011 Non-Employee Directors Stock Option Plan for non-employee directors (the “2011 Directors’ Plan”), initially reserving for issuance thereunder 1,000,000 shares of common stock. Under the 2011 Directors’ Plan, only non-qualified options may be issued, and they will be exercisable for a period of six years from the date of grant.

The Compensation Committee of the Board of Directors is responsible for determining the type of award, when to grant awards, to whom awards are granted, the number of shares and the terms of the awards and exercise prices. The options are exercisable for a period not to exceed six years from the date of grant.

In June 2015, the Company’s stockholders approved an increase in the number of shares of Common Stock available under the 2011 Directors Plan, reserving for issuance thereunder an additional two million shares of Common Stock for a total of three million shares of Common Stock available thereunder.

In June 2017, the Company’s stockholders approved an increase in the number of shares of Common Stock available under the 2011 Directors Plan, reserving for issuance thereunder an additional four million shares of Common Stock for a total of seven million shares of Common Stock available thereunder.

During the year ended December 31, 2018, the Company granted the following qualified (market value) options from the 2011 Non-Employee Directors Stock Option Plan for directors to purchase as non-cash compensation:

	i.	Options to purchase 400,000 shares of Common Stock to eight board members at an exercise price of $2.31 per share. The options vested upon grant and are exercisable through January 1, 2024. The fair value of the options at the date of grant amounted to approximately $428,000.

	ii.	Options to purchase 25,000 shares of Common Stock to one board member at an exercise price of $4.15 per share. The options vested upon grant and are exercisable through July 2, 2024. The fair value of the options at the date of grant amounted to approximately $55,000.

	iii.	Options to purchase 25,000 shares of Common Stock to one board member at an exercise price of $1.78 per share. The options vested upon grant and are exercisable through September 4, 2024. The fair value of the options at the date of grant amounted to approximately $25,000.

During the year ended December 31, 2017, the Company granted the following options from the 2011 Directors Plan, to purchase as non-cash compensation (taxable on the date of exercise):

	i.	Options to purchase 25,000 shares of Common Stock to one new board member at an exercise price of $1.33 per share. The options vested upon grant and are exercisable through May 1, 2023. The fair value of the options at the date of grant amounted to approximately $10,000.

	ii.	Options to purchase 400,000 shares of Common Stock to eight board members at an exercise price of $1.75 per share. The options vested upon grant and are exercisable through June 6, 2023. The fair value of the options at the date of grant amounted to approximately $235,000.

C. 2005 Stock Option Plan

In 2005, a stock option plan (the “2005 Plan”) was adopted by the Company, pursuant to which 1,000,000 shares of Common Stock are reserved for issuance to officers, directors, employees and consultants. The 2005 Plan is administered by the Board of Directors or one or more committees appointed by the board (the “2005 Plan Administrator”).

The 2005 Plan contemplates the issuance of stock options by the Company both as a private company and as a publicly traded company and is available to residents of the United States, the State of Israel and other jurisdictions as determined by the 2005 Plan Administrator. Awards of stock options under the 2005 Plan are made pursuant to an agreement between the Company and each grantee. The agreement will, among other provisions, specify the number of shares subject to the option, intended tax qualifications, the exercise price, applicable vesting provisions and the term of the stock option grant, all of which are determined on behalf of the Company by the 2005 Plan Administrator. The 2005 Plan remains in effect for a term of ten years unless terminated or extended according to its provisions.

There were no stock issuances from the 2005 Plan during the calendar years 2018, 2017 and 2016.

D. Warrants and Options

The Company has reserved 10,835,333 shares of common stock as of December 31, 2018, for the exercise of warrants and options to employees and non-employees, of which 10,825,333 are exercisable. These warrants and options could potentially dilute basic earnings per share in future years. The warrants and options exercise prices and expiration dates are as follows:

	Exercise Price			Number of Shares		Expiration Date	Warrants or Options
	US$
To non-employees

		0.01			10,000	October 01, 2027	Options
		0.01			45,000	February 28, 2028	Options
		0.01			30,000	January 01, 2028	Options
		1.67			105,000	October 01, 2024	Options
		1.70			115,000	December 20, 2022	Options
		2.61			77,000	December 04, 2021	Options
To employees and directors

		0.01			15,000	November 11, 2023	Options
		0.01			15,000	March 31, 2024	Options
		0.01			5,000	June 11, 2024	Options
		0.01			10,000	September 30, 2025	Options
		0.01			25,000	December 31, 2025	Options
		0.01			305,000	June 05, 2026	Options
		0.01			25,000	December 31, 2026	Options
		0.01			500,000	January 01, 2027	Options
		0.01			10,000	January 04, 2027	Options
		0.01			60,000	April 17, 2027	Options
		0.01			30,000	October 01, 2027	Options
		0.01			202,500	January 01, 2028	Options
		0.01			110,000	January 04, 2028	Options
		0.01			6,000	April 06, 2028	Options
		1.33			25,000	May 01, 2023	Options
		1.38			108,000	January 02, 2021	Options
		1.38			123,057	January 02, 2025	Options
		1.55			400,000	June 05, 2022	Options
		1.67			340,000	October 01, 2020	Options
		1.67			343,886	October 01, 2024	Options
		1.70			168,500	December 20, 2022	Options
		1.73			25,000	January 09, 2019	Options
		1.75			400,000	June 07, 2023	Options
		1.78			25,000	September 04, 2024	Options
		1.87			25,000	January 31, 2022	Options
		1.95			25,000	April 02, 2020	Options
		1.96			25,000	September 3, 2019	Options
		2.03			25,000	May 01, 2021	Options
		2.31			400,000	January 01, 2024	Options
		2.61			604,500	December 04, 2021	Options
		4.15			25,000	July 02, 2024	Options
To investors
		1.00			243,853	May 02, 2020	Warrants
		1.00			546,050	October 29, 2020	Warrants
		1.00			2,144,510	March 03, 2020	Warrants
		1.00			359,610	August 14, 2020	Warrants
		1.00			240,578	January 08, 2021	Warrants
		2.00			1,498,804	January 31, 2020	Warrants
		3.00			640,735	June 29, 2020	Warrants
		5.00			372,400	April 19, 2020	Warrants
Total outstanding		1.56	*		10,834,983

* Weighted Average

The stock option transactions since January 1, 2016 are shown in the table below:

	Number of shares			Weighted Average exercise price
				US$
Outstanding, December 31, 2015		3,629,693			1.76

Changes during 2016 to:
Granted to employees, officers, directors and others		2,265,000			0.27
Expired/Cancelled/Forfeited		(172,250	)		2.76
Exercised		(1,555,500	)		0.01
Outstanding, December 31, 2016		4,166,943			1.58

Changes during 2017 to:
Granted to employees, officers, directors and others		2,212,500			0.34
Expired/Cancelled/Forfeited		(360,000	)		2.32
Exercised		(1,680,000	)		0.33
Outstanding, December 31, 2017		4,339,443			1.37

Changes during 2018 to:
Granted to employees, officers, directors and others*		969,000			1.11
Expired/Cancelled/Forfeited		(237,500	)		1.75
Exercised		(282,500	)		0.07
Outstanding, December 31, 2018		4,788,443			1.37
Exercisable, December 31, 2018		4,778,443			1.38

The receipt of a stock option grant by the grantee recipient is a non-taxable event according to the Internal Revenue Service. The grantee who later chooses to exercise penny stock options must recognize the market value in income in the year of exercise.

The aggregate intrinsic value of options exercised during 2018, 2017 and 2016 was approximately $692,000, $2,438,000 and $2,400,000 respectively.

The aggregate intrinsic value of the outstanding options and warrants as of December 31, 2018, totaling 10,835,333 was approximately $561,000.

The following table summarizes information about stock options outstanding as of December 31, 2018:

Shares underlying outstanding options (non-vested)								Shares underlying outstanding options (fully vested)
Range of exercise price		Number outstanding		Weighted average remaining contractual life (years)		Weighted Average Exercise price		Range of exercise price		Number Outstanding		Weighted average remaining contractual life (years)		Weighted Average Exercise price
US$						US$		US$						US$
	—		—		—		—		0.01		15,000		4.87		0.01
	—		—		—		—		0.01		15,000		5.25		0.01
	—		—		—		—		0.01		5,000		5.45		0.01
	—		—		—		—		0.01		10,000		6.75		0.01
	—		—		—		—		0.01		25,000		7.00		0.01
	—		—		—		—		0.01		305,000		7.42		0.01
	—		—		—		—		0.01		525,000		8.00		0.01
	—		—		—		—		0.01		10,000		8.01		0.01
	—		—		—		—		0.01		60,000		8.29		0.01
	0.01		10,000		8.75		0.01		0.01		30,000		8.75		0.01
	—		—		—		—		0.01		232,500		9.00		0.01
	—		—		—		—		0.01		110,000		9.01		0.01
	—		—		—		—		0.01		45,000		9.16		0.01
	—		—		—		—		0.01		6,000		9.26		0.01
	—		—		—		—		1.33		25,000		4.32		1.38
	—		—		—		—		1.38		108,000		2.01		1.38
	—		—		—		—		1.38		123,057		6.01		1.38
	—		—		—		—		1.55		400,000		3.43		1.38
	—		—		—		—		1.67		340,000		1.75		1.67
	—		—		—		—		1.67		448,886		5.76		1.67
	—		—		—		—		1.70		298,500		3.97		1.70
	—		—		—		—		1.73		25,000		0.02		1.73
	—		—		—		—		1.75		400,000		4.52		1.70
	—		—		—		—		1.87		25,000		3.09		1.87
	—		—		—		—		1.95		25,000		1.25		1.95
	—		—		—		—		1.96		25,000		0.67		1.96
	—		—		—		—		2.03		25,000		2.33		2.03
	—		—		—		—		2.31		400,000		5.01		2.31
									2.61		681,500		2.93		2.61
	—		—		—		—		4.15		25,000		5.51		4.15
	0.01		10,000				0.01		0.01-4.15		4,778,443				1.38

Granted to employees

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

	For the year ended December 31,
	2018			2017			2016
Weighted-average fair value of underlying stock at grant date	$	2.38		$	1.48		$	1.56
Dividend yields		—			—			—
Expected volatility		68%-87	%		45%-69	%		57%-69%
Risk-free interest rates		2.01%-2.74	%		1.45%-1.94	%		0.94%-1.93%
Expected lives (in years)		3.00-5.50			3.00-5.87			3.00-5.50
Weighted-average grant date fair value	$	1.72		$	1.23		$	1.35

Granted to non-employees

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

	For the year ended December 31,
	2018		2017		2016
Weighted-average fair value of underlying stock at grant date	$	3.37	$	1.56	$	1.51
Dividend yields		—		—		—
Expected volatility		73%-76%		68%-72%		69%-70%
Risk-free interest rates		2.46%-2.81%		2.36%-2.44%		1.73%-1.83%
Expected lives (in years)		10.00		10.00		10.00
Weighted-average grant date fair value	$	3.36	$	1.55	$	1.50

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

The expected life represents the weighted average period of time that options granted are expected to be outstanding. The expected life of the options granted to employees and directors is calculated based on the Simplified Method as allowed under Staff Accounting Bulletin No. 110 (“SAB 110”), giving consideration to the contractual term of the options and their vesting schedules, as the Company does not have sufficient historical exercise data at this time. The expected life of the option granted to non-employees equals their contractual term. In the case of an extension of the option life, the calculation was made on the basis of the extended life.

E. Compensation Cost for Warrant and Option Issuances

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

For the year ended December 31,
2018		2017		2016
US$		US$		US$
	1,553,000		2,448,000		2,726,000

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

For the year ended December 31,
2018		2017		2016
US$		US$		US$
	302,000		276,000		360,000

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

For the year ended December 31,
2018		2017		2016
US$		US$		US$
	348,000		256,000		213,000

As of December 31, 2018, there was approximately $10,000 of unrecognized compensation cost, related to non-vested stock options granted under the Company’s various stock option plans. The cost is expected to be recognized during the year 2019.

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

On March 27, 2014, the Company launched its Dividend Reinvestment and Stock Purchase Plan (the “DSPP”) pursuant to which stockholders and interested investors can purchase shares of the Company’s Common Stock as well as units of the Company’s securities. The terms of the DSPP are described in the Prospectus Supplement originally filed on March 31, 2014 (the “Original Prospectus Supplement”) with the Securities and Exchange Commission (“SEC”) under the Company’s effective registration Statement on Form S-3, as thereafter amended.

On January 13, 2015, the Company amended the Original Prospectus Supplement (“Amendment No. 3”) to provide for a unit option (the “Unit Option”) under the DSPP comprised of one share of Common Stock and three Common Stock purchase warrants with each unit priced at $4.00. Each warrant afforded the participant the opportunity to purchase the Company’s Common Stock at a warrant exercise price of $1.00. Each of the three warrants series has different expiration dates that have been extended.

The warrants became first exercisable on May 2, 2016 and, in the case of ZNWAB continued to be exercisable through May 2, 2017 (1 year), May 2, 2018 for ZNWAC (2 years) and May 2, 2019 for ZNWAD (3 years), respectively, at a per share exercise price of $1.00.

As of May 2, 2017, any outstanding ZNWAB warrants expired.

As of May 2, 2018, any outstanding ZNWAC warrants expired.

On December 4, 2018, the Company extended the termination date of the ZNWAD Warrant by one (1) year from the expiration date of May 2, 2019 to May 2, 2020.

On November 1, 2016, the Company launched a unit offering (the “Unit Program”) under the Company’s DSPP pursuant to which participants could purchase units comprised of seven shares of Common Stock and seven Common Stock purchase warrants, at a per unit purchase price of $10. The warrant is referred to as “ZNWAE.”

The ZNWAE warrants became exercisable on May 1, 2017 and continue to be exercisable through May 1, 2020 at a per share exercise price of $1.00. The warrant terms provide that if the Company’s Common Stock trades above $5.00 per share at the closing price for 15 consecutive trading days at any time prior to the expiration date of the warrant, the Company may, in its sole discretion, accelerate the termination of the warrant upon providing 60 days advanced notice to the warrant holders.

On February 23, 2017, the Company filed a Form S-3 with the SEC (Registration No. 333-216191) as a replacement for the Form S-3 (Registration No. 333-193336), for which the three year period ended March 31, 2017, along with the base Prospectus and Supplemental Prospectus. The Form S-3, as amended, and the new base Prospectus became effective on March 10, 2017, along with the Prospectus Supplement that was filed and became effective on March 10, 2017. The Prospectus Supplement under Registration No. 333-216191 describes the terms of the DSPP and replaces the prior Prospectus Supplement, as amended, under the prior Registration No. 333-193336.

On May 22, 2017, the Company launched a new unit offering (the “New Unit Program”). The New Unit Program consisted of a new combination of common stock and warrants, a new time period in which to purchase under the program, and a new unit price, but otherwise the same unit program features, conditions and terms in the Prospectus Supplement applied. The New Unit Program terminated on July 12, 2017. This New Unit Program enabled participants to purchase Units of the Company’s securities where each Unit (priced at $250.00 each) was comprised of (i) the number of shares of Common Stock determined by dividing $250.00 (the price of one Unit) by the average of the high and low sale prices of the Company’s Common Stock as reported on the NASDAQ on the unit purchase date and (ii) Common Stock purchase warrants to purchase an additional 25 shares of Common Stock at a warrant exercise price of $1.00 per share. The warrant is referred to as “ZNWAF.”

All ZNWAF warrants became exercisable on August 14, 2017 and continue to be exercisable through August 14, 2020 at a per share exercise price of $1.00. The warrant terms provide that if the Company’s Common Stock trades above $5.00 per share as the closing price for 15 consecutive trading days at any time prior to the expiration date of the warrant, the Company has the sole discretion to accelerate the termination date of the warrant upon providing 60 days advanced notice to the warrant holders.

On October 16, 2017, the Company initiated another Unit Option Program which terminated on December 6, 2017. This Unit Option Program enabled participants to purchase Units of the Company’s securities where each Unit (priced at $250.00 each) was comprised of (i) a certain number of shares of Common Stock determined by dividing $250.00 (the price of one Unit) by the average of the high and low sale prices of the Company’s Common Stock as reported on the NASDAQ on the unit purchase date and (ii) Common Stock purchase warrants to purchase an additional 15 shares of Common Stock at a warrant exercise price of $1.00 per share. The warrant is referred to as “ZNWAG.”

The warrants became exercisable on January 8, 2018 and continue to be exercisable through January 8, 2021 at a per share exercise price of $1.00. The warrant terms provide that if the Company’s Common Stock trades above $5.00 per share as the closing price for 15 consecutive trading days at any time prior to the expiration date of the warrant, the Company has the sole discretion to accelerate the termination date of the warrant upon providing 60 days advanced notice to the warrant holders.

On February 1, 2018, the Company initiated another Unit Option Program which terminated on February 28, 2018. The Unit Option consisted of Units of our securities where each Unit (priced at $250.00 each) was comprised of (i) 50 shares of Common Stock and (ii) Common Stock purchase warrants to purchase an additional 50 shares of Common Stock. The investor’s Plan account was credited with the number of shares of the Company’s Common Stock acquired under the Units purchased. Each warrant affords the investor the opportunity to purchase one share of Company Common Stock at a warrant exercise price of $5.00. The warrant is referred to as “ZNWAH.”

The warrants became exercisable on April 2, 2018 and continue to be exercisable through April 2, 2020 at a per share exercise price of $5.00, after the Company, on December 4, 2018, extended the termination date of the Warrant by one (1) year from the expiration date of April 19, 2019 to April 19, 2020.

On August 21, 2018, the Company initiated another Unit Option and it and terminated on September 26, 2018. The Unit Option consisted of Units of the Company’s securities where each Unit (priced at $250.00 each) was comprised of (i) a certain number of shares of Common Stock determined by dividing $250.00 (the price of one Unit) by the average of the high and low sale prices of the Company’s publicly traded common stock as reported on the NASDAQ on the Unit Purchase Date and (ii) Common Stock purchase warrants to purchase an additional twenty-five (25) shares of Common Stock. The investor’s Plan account was credited with the number of shares of the Company’s Common Stock acquired under the Units purchased. Each warrant affords the investor the opportunity to purchase one share of Company Common Stock at a warrant exercise price of $1.00. The warrant is referred to as “ZNWAJ.”

The warrants became exercisable on October 29, 2018 and continue to be exercisable through October 29, 2020 at a per share exercise price of $1.00, after the Company, on December 4, 2018, extended the termination date of the Warrant by one (1) year from the expiration date of April 19, 2019 to April 19, 2020.

On December 10, 2018, the Company’s most recent Unit Option began and it terminated on January 23, 2019. The Unit Option consisted of Units of the Company’s securities where each Unit (priced at $250.00 each) is comprised of (i) two hundred and fifty (250) shares of Common Stock and (ii) Common Stock purchase warrants to purchase an additional two hundred and fifty (250) shares of Common Stock at a per share exercise price of $0.01. The investor’s Plan account will be credited with the number of shares of the Company’s Common Stock and Warrants that are acquired under the Units purchased. Each warrant affords the participant the opportunity to purchase one share of our Common Stock at a warrant exercise price of $0.01. The warrant is referred to as “ZNWAK.”

The warrants became exercisable on February 25, 2019 and continue to be exercisable through February 25, 2020 at a per share exercise price of $0.01.

For the years ended December 31, 2018, 2017 and 2016, approximately $13,781,000, $22,994,000 and $4,338,000 was raised under the DSPP program, respectively.

The warrants represented by the ticker ZNWAA are tradable on the NASDAQ market. However, all of the other warrants characterized above, in the table below, and throughout this Form 10-K, are not tradeable and are used internally for classification and accounting purposes only.

G. Subscription Rights Offering

On April 2, 2018 the Company announced an offering (“2018 Subscription Rights Offering”) through American Stock Transfer & Trust Company, LLC (the “Subscription Agent”), at no cost to the shareholders, of non-transferable Subscription Rights to purchase Rights (each “Right” and collectively, the “Rights”) of its securities to persons who owned shares of our Common Stock on April 13, 2018 (“the Record Date”). Pursuant to the 2018 Subscription Rights Offering, each holder of shares of common stock on the Record Date received non-transferable rights to subscribe for Rights, with each Right comprised of one share of the Company Common Stock, par value $0.01 per share (the “Common Stock”) and one Common Stock Purchase Warrant to purchase an additional one share of Common Stock. Each Right may be purchased at a per Right subscription price of $5.00. Each Warrant affords the investor the opportunity to purchase one share of the Company Common Stock at a warrant exercise price of $3.00. The warrant is referred to as “ZNWAI.”

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

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

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

H. Warrants Extended

On December 4, 2018, the Company executed an Amendment to certain Warrant Agent Agreements (the “Agreements”) between the Company and American Stock Transfer & Trust Company (“AST”). The Company has implemented Agreements with AST as the Company’s Warrant Agent (the “Warrant Agent”), under a Warrant Agent Agreement dated February 2, 2015 for the Warrant ZNWAD, under a Warrant Agent Agreement dated February 1, 2018 for the Warrant ZNWAH, under a Warrant Agent Agreement dated April 2, 2018 for the Warrant ZNWAI and under a Warrant Agent Agreement dated August 21, 2018 for the Warrant ZNWAJ.

The Warrant ZNWAD had an expiration date of May 2, 2019, the Warrant ZNWAH had an expiration date of April 19, 2019, the Warrant ZNWAI had an expiration date of June 29, 2019 and the Warrant ZNWAJ had an expiration date of October 29, 2019.

Pursuant to Section 3.2 of the Warrant Agent Agreements, the Company in its sole discretion extended the termination date of the above Warrants by delaying the Expiration Dates and such extension shall be identical in duration among all of the Warrants. The Company extended the duration of the Warrant ZNWAD by one (1) year from the expiration date of May 2, 2019 to May 2, 2020. The Company extended the duration of the Warrant ZNWAH by one (1) year from the expiration date of April 19, 2019 to April 19, 2020. The Company extended the duration of the Warrant ZNWAI by one (1) year from the expiration date of June 29, 2019 to June 29, 2020. The Company extended the duration of the Warrant ZNWAJ by one (1) year from the expiration date of October 29, 2019 to October 29, 2020.

I. Warrant Table

The Warrants transactions since January 1, 2016 are shown in the table below:

Change during 2016 to:

	ZNWAA		ZNWAB			ZNWAC			ZNWAD			ZNWAE		ZNWAF		ZNWAG		ZNWAH		ZNWAI		ZNWAJ		Total
Outstanding warrants, December 31, 2015		1,567,155		287,072			287,072			287,072			-		-		-		-		-		-		2,428,371
Exercise Price	$	2.00	$	1.00		$	1.00		$	1.00		$	1.00	$	1.00	$	1.00	$	5.00	$	3.00	$	1.00
Warrant Termination Date		1/31/2020		5/2/2017			5/2/2018			5/2/2020			5/2/2020		8/14/2020		1/8/2021		4/19/2020		6/29/2020		10/29/2020

Change during 2016 to:

Issued		-		95,180			95,180			95,180			803,376		-		-		-		-		-		1,088,916
Exercised		-		(68,698	)		(37,524	)		(34,412	)		-		-		-		-		-		-		(140,634	)
Expired		-		-			-			-			-		-		-		-		-		-		-
Outstanding and exercisable warrants, December 31, 2016		1,567,155		313,554			344,728			347,840			803,376		-		-		-		-		-		3,376,653

Change during 2017 to:

	ZNWAA		ZNWAB		ZNWAC		ZNWAD		ZNWAE		ZNWAF		ZNWAG	ZNWAH	ZNWAI	ZNWAJ	Total
Issued	-		-		-		-		3,262,742		683,865		414,300	-	-	-	4,360,907
Exercised	(42,538	)	(206,737	)	(69,576	)	(53,506	)	(1,037,999	)	(223,634	)	-	-	-	-	(1,633,990	)
Expired	-		(106,817	)	-		-		-		-		-	-	-	-	(106,817	)
Outstanding and exercisable warrants, December 31, 2017	1,524,617		-		275,152		294,334		3,028,119		460,231		414,300	-	-	-	5,996,753

Change during 2018 to:

	ZNWAA			ZNWAB		ZNWAC			ZNWAD			ZNWAE			ZNWAF			ZNWAG			ZNWAH			ZNWAI			ZNWAJ			Total
Issued		-			-		-			-			10,493			100			6,030			373,900			656,274			550,900			1,597,697
Exercised		(25,813	)		-		(196,913	)		(50,481	)		(894,102	)		(100,721	)		(179,752	)		(1,500	)		(15,539	)		(4,850	)		(1,469,671	)
Expired		-			-		(78,239	)		-			-			-			-			-			-			-			(78,239	)
Outstanding and exercisable warrants, December 31, 2018		1,498,804			-		-			243,853			2,144,510			359,610			240,578			372,400			640,735			546,050			6,046,540

J. Rights Offering Senior Convertible Bonds Rights Offering (October 21, 2015 – March 31, 2016)

On October 21, 2015, the Company filed with the SEC a prospectus supplement for a rights offering. Under the rights offering, the Company distributed at no cost, 360,000 non-transferable subscription rights to subscribe for, on a per right basis, two 10% Convertible Senior Bonds par $100 due May 2, 2021 (the “Notes due May 2021”), to persons who owned shares of the Company’s Common Stock on October 15, 2015, the record date for the offering. Each whole subscription right entitled the participant to purchase two convertible bonds at a purchase price of $100 per bond. Effective October 21, 2015, the Company executed a Supplemental Indenture, as issuer, with the American Stock Transfer & Trust Company, LLC, a New York limited liability trust company (“AST”), as trustee for the Notes (the “Indenture”).

The offering was scheduled to terminate on January 15, 2016 but was extended to March 31, 2016. On March 31, 2016, the rights offering terminated.

On May 2, 2016, the Company issued approximately $3,470,000 aggregate principal amount of Notes due May 2021 in connection with the rights offering. The Company received net proceeds of approximately $3,334,000, from the sale of the Notes, after deducting fees and expenses of $136,000 incurred in connection with the rights offering. These costs have been discounted as deferred offering costs (see also Note 7).

K. Warrant Descriptions

The price and the expiration dates for the series of warrants to investors are as follows * :

	Period of Grant	US$		Expiration Date

ZNWAA Warrants	March 2013 – December 2014		2.00	January 31, 2020
ZNWAD Warrants**	January 2015 – March 2016		1.00	May 02, 2020
ZNWAE Warrants	November 2016 – March 2017		1.00	May 01, 2020
ZNWAF Warrants**	May 2017 – July 2017		1.00	August 14, 2020
ZNWAG Warrants	October 2017 – December 2017		1.00	January 08, 2021
ZNWAH Warrants**	February 2018		5.00	April 2, 2020
ZNWAI Warrants**	April 2018 – May 2018		3.00	June 29, 2020
ZNWAJ Warrants	August 2018 – September 2018		1.00	October 29, 2020
ZNWAK Warrants	December 2018 – January 2019		0.01	February 25, 2020

*	Zion’s ZNWAB Warrants expired on May 2, 2017 and its ZNWAC Warrants expired on May 2, 2018
**	On December 4, 2018, the Company extended the termination date of the Warrants by one (1) year.