UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE
SECURITIES EXCHANGE ACT OF 1934
For the month of Sept, 2014
Commission File No. 000-30087
ADIRA ENERGY LTD.
(Translation of registrant's name into English)
120 Adelaide Street West, Suite 800, Toronto, Ontario,
Canada M5H 1T1
(Address of principal executive office)
[Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F]
Form 20-F
[X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1) [ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7) [ ]
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes [ ]
No [X]
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): N/A
SUBMITTED HEREWITH
|
Exhibits |
99.1 |
News Release Adira Energy Closes Private
Placement, dated July 23, 2014 |
99.2 |
Material Change Report, dated July 30, 2014 |
99.3 |
Material Change Report, dated July 30, 2014 |
99.4 |
Q2 2014 Unaudited Interim Consolidated
Financial Statements |
99.5 |
Q2 2014 MD&A |
99.6 |
52-109FV2 Certification of Interim Filings Q2
2014 CFO, dated August 29, 2014 |
99.7 |
52-109FV2 Certification of Interim Filings Q2
2014 CEO, dated August 29, 2014 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
ADIRA ENERGY LTD.
Date: September 2, 2014
/s/ Alan
Friedman |
|
Alan Friedman |
|
Executive Vice President, Corporate Development |
|
|
Suite 800 - 120 Adelaide St. W |
Toronto, Ontario |
M5H 1T1 |
www.adiraenergy.com |
t. 416.361.2211 |
f.416.361.6455 |
TSX.V: ADL |
News Release
ADIRA ENERGY CLOSES PRIVATE PLACEMENT
TORONTO, July 23, 2014 /CNW/ - ADIRA ENERGY LTD. (TSXV: ADL)
(OTCBB: ADENF) (FRANKFURT: 0AM1). Adira Energy Ltd. (Adira or the
Company) is pleased to report that it has closed its previously
announced non-brokered private placement (the Offering) by issuing
1,200,000 common shares at a price of US$0.05 (CAD$0.0536) per common share for
gross proceeds of US$60,000 (CAD$64,320).
The common shares issued at closing are subject to resale
restrictions pursuant to applicable securities laws requirements and notably to
a hold period of four months plus one day from the closing date, expiring on
November 22, 2014. The Offering remains subject to final acceptance by the TSX
Venture Exchange.
The securities offered in connection with the Offering have not
been, nor will they be, registered under the United States Securities Act of
1933, as amended, and may not be offered or sold within the United States or to,
or for the account or benefit of, U.S. persons absent U.S. registration or an
applicable exemption from the U.S. registration requirements. This news release
does not constitute an offer for sale of securities, nor a solicitation for
offers to buy any securities. Any public offering of securities in the United
States must be made by means of a prospectus containing detailed information
about the company and management, as well as financial statements.
About Adira Energy Ltd.
Adira Energy Ltd. is an oil and gas company which is focused in
the Eastern Mediterranean. The Company has two petroleum exploration licenses
offshore Israel; the Yitzhak license, located 17 km offshore between Hadera and
Netanya and the Gabriella license, located 10 km offshore between Netanya and
Ashdod. The Company also has an option on the Yam Hadera License, offshore
Israel, which is located 30 kilometers offshore Israel, between Hadera and Haifa
and North West of Adiras Yitzhak license.
Forward-Looking Statement Disclaimer
This press release includes certain statements that may be
deemed forward-looking statements. All statements in this press release, other
than statements of historical facts, are forward-looking statements. Although
the Company believes the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not
guarantees of future performance, and actual results or developments may differ
materially from those in the forward-looking statements. Forward-looking
statements are based on the Companys internal projections, estimated or
beliefs, concerning, among other things an outlook on the estimated amounts and
timing of exploration work and capital expenditures or other expectation,
beliefs, plans, objectives, assumption, intentions or statements about future
events or performance, which are considered by management to be reasonable at
the time made. Actual events or results may differ materially. Although the
Company believes that the expectations reflected in the statements are
reasonable, it cannot guarantee future results since such results are inherently
subject to significant business, economic, corporate, political and social
uncertainties and contingencies. Many factors cause the Companys actual results
to differ materially from those expressed or implied in any forward looking
statements made by, or on behalf of, the Company and the foregoing stated factors are not exhaustive. The statements contained
herein are made as of the date hereof and the Company disclaims any intent or
obligation to update publicly any forward looking statements, whether as a
result of new information, future events or results or otherwise, except as
required by applicable law. Company shareholders and potential investors should
carefully consider the information contained in the Companys filing with
Canadian securities administrators at www.sedar.com before making investment
decisions with regard to the Company.
1
For more information contact:
Canada |
Israel |
Alan Friedman |
Gadi Levin |
Exec. Vice President |
Chief Financial Officer |
afriedman@adiraenergy.com |
glevin@adiraenergy.com |
+1 416 250 1955 |
+972 3 373 0166 |
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
2
FORM 51-102F3
MATERIAL CHANGE REPORT
ITEM 1 |
Name and Address of
Company |
|
|
|
Adira Energy Ltd. (the
Company) |
|
120 Adelaide Street West |
|
Suite 800 |
|
Toronto, ON |
|
M5H 1T1 |
|
|
ITEM 2 |
Date of Material Change
|
|
|
|
July 14, 2014 |
|
|
ITEM 3 |
News Release |
|
|
|
A news release was disseminated on July 14, 2014 through
CNW Group Ltd. |
|
|
ITEM 4 |
Summary of Material Change |
|
|
|
The Company issued 270,000 common share purchase warrants
(collectively, the Warrants and each, a Warrant). Each
Warrant entitles the holder thereof to acquire one common share of the
Company (a Warrant Share) at a price of $0.10 for a period of 36
months, expiring on July 14, 2017. |
|
|
ITEM 5 |
Full Description of Material Change |
|
|
|
The Company issued the Warrants. Each Warrant entitles
the holder thereof to acquire one Warrant Share at a price of $0.10 for a
period of 36 months, expiring on July 14, 2017. The Warrants are, and the
Warrant Shares issued upon exercise of the Warrants will be, subject to
resale restrictions pursuant to applicable securities law requirements and
notably to a hold period of four months plus one day from the date that
they were issued, expiring on November 15, 2014. |
|
|
ITEM 6 |
Reliance on Section 7.1(2) of National Instrument
51-102 |
|
|
|
N/A |
|
|
ITEM 7 |
Omitted Information |
|
|
|
N/A |
|
|
ITEM 8 |
Executive Officer |
|
|
|
For further information, please contact: |
|
|
|
Alan Friedman, Executive Vice-President Corporate
Development |
|
|
|
(416) 250- 1955 |
|
|
ITEM 9 |
Date of Report |
|
|
|
July 30, 2014 |
FORM 51-102F3
MATERIAL CHANGE REPORT
ITEM 1 |
Name and Address of
Company |
|
|
|
Adira Energy Ltd. (the
Company) |
|
120 Adelaide Street West |
|
Suite 800 |
|
Toronto, ON |
|
M5H 1T1 |
|
|
ITEM 2 |
Date of Material Change
|
|
|
|
July 22, 2014 |
|
|
ITEM 3 |
News Release |
|
|
|
A news release was disseminated
on July 23, 2014 through CNW Group Ltd. |
|
|
ITEM 4 |
Summary of Material Change
|
|
|
|
The Company closed a non-brokered private placement (the
Offering) by issuing 1,200,000 common shares at a price of
US$0.05 per common share for gross proceeds of US$60,000. |
|
|
ITEM 5 |
Full Description of Material
Change |
|
|
|
The Company closed the Offering by issuing 1,200,000
common shares at a price of US$0.05 per common share for gross proceeds of
US$60,000. The common shares issued at closing are subject to resale
restrictions pursuant to applicable securities laws requirements and
notably to a hold period of four months plus one day from the closing
date, expiring on November 22, 2014. The Offering remains subject to final
acceptance by the TSX Venture Exchange. |
|
|
ITEM 6 |
Reliance on Section 7.1(2) of
National Instrument 51-102 |
|
|
|
N/A |
|
|
ITEM 7 |
Omitted Information |
|
|
|
N/A |
|
|
ITEM 8 |
Executive Officer |
|
|
|
For further information, please
contact: |
|
|
|
Alan Friedman, Executive
Vice-President Corporate Development |
|
|
|
(416) 250- 1955 |
|
|
ITEM 9 |
Date of Report |
|
|
|
July 30,
2014 |
ADIRA ENERGY LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENT
AS OF JUNE 30, 2014
UNAUDITED
U.S. DOLLARS IN THOUSANDS
INDEX
- - - - - - - - - - - - - - - -
1
NOTICE TO SHAREHOLDERS
The accompanying unaudited condensed consolidated interim
financial statements of Adira Energy Ltd. for the three month period ended June
30, 2014 have been prepared by management in accordance with International
Financial Reporting Standards applicable to consolidated interim financial
statements (see note 2 to the unaudited condensed consolidated interim financial
statements). Recognizing that the Company is responsible for both the integrity
and objectivity of the unaudited condensed consolidated interim financial
statements, management is satisfied that these unaudited condensed consolidated
interim financial statements have been fairly presented.
Under National Instrument 51-102, part 4, sub-section
4.3(3)(a), if an auditor has not performed a review of the interim financial
statements, they must be accompanied by a notice indicating that the financial
statements have not been reviewed by an auditor.
The Companys independent auditor has not performed a review of
these financial statements in accordance with standards established by the
Canadian Institute of Chartered Accountants for a review of interim financial
statements by an entitys auditor.
2
ADIRA ENERGY LTD. |
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION |
U.S. dollars in thousands |
|
|
June 30, |
|
|
December 31, |
|
|
|
2014 |
|
|
2013 |
|
|
|
Unaudited |
|
|
Audited |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
428 |
|
$ |
617 |
|
Restricted deposits |
|
20 |
|
|
35 |
|
Other receivables and prepaid expenses |
|
72 |
|
|
2,513 |
|
|
|
|
|
|
|
|
Total current assets |
|
520 |
|
|
3,165 |
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS: |
|
|
|
|
|
|
Property and equipment, net |
|
30 |
|
|
61 |
|
|
|
|
|
|
|
|
Total non-current assets |
|
30 |
|
|
61 |
|
|
|
|
|
|
|
|
Total assets |
$ |
550 |
|
$ |
3,226 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
Trade payables |
$ |
186 |
|
$ |
2,817 |
|
Other accounts payable and
accrued liabilities |
|
27 |
|
|
986 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
213 |
|
|
3,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY: |
|
|
|
|
|
|
Share capital |
|
- |
|
|
- |
|
Additional paid-in capital |
|
33,975 |
|
|
34,023 |
|
Accumulated deficit |
|
(33,638 |
) |
|
(34,600 |
) |
|
|
|
|
|
|
|
Total equity (deficit) |
|
337 |
|
|
(577 |
) |
|
|
|
|
|
|
|
Total liabilities and equity |
$ |
550 |
|
$ |
3,226 |
|
The accompanying notes are an integral part of the condensed
consolidated interim financial statements.
3
ADIRA ENERGY LTD. |
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE PROFIT AND LOSS |
U.S. dollars in thousands, except share and per share
data |
|
|
Six months ended |
|
|
Three months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and other income |
$ |
- |
|
$ |
17 |
|
$ |
- |
|
$ |
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Exploration expenses |
|
- |
|
|
1,729 |
|
|
- |
|
|
(164 |
) |
General and administrative
expenses *) |
|
157 |
|
|
1,878 |
|
|
172 |
|
|
406 |
|
Impairment charge (reversal) |
|
(1,126 |
) |
|
2,486 |
|
|
(695 |
) |
|
243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(969 |
) |
|
6,093 |
|
|
(523 |
) |
|
485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss) |
|
969 |
|
|
(6,076 |
) |
|
523 |
|
|
(481 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
- |
|
|
3,021 |
|
|
33 |
|
|
541 |
|
Finance expense |
|
(7 |
) |
|
(41 |
) |
|
- |
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before income tax expense |
|
962 |
|
|
(3,096 |
) |
|
556 |
|
|
32 |
|
Income tax expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net comprehensive profit (loss) |
$ |
962 |
|
$ |
(3,096 |
) |
|
556 |
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net comprehensive profit (loss) attributed to: |
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the parent |
$ |
962 |
|
$ |
(3,096 |
) |
|
556 |
|
|
32 |
|
Non-controlling interests |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
962 |
|
$ |
(3,096 |
) |
|
556 |
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings (loss) per share
attributable to equity holders of the parent |
$ |
0.02 |
|
$ |
(0.05 |
) |
$ |
0.01 |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares used
in
computing basic and diluted net earnings
(loss) per share |
|
60,260,318 |
|
|
60,260,318 |
|
|
60,260,318 |
|
|
60,260,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) Includes share-based compensation |
$ |
(48 |
) |
$ |
181 |
|
$ |
21 |
|
$ |
106 |
|
The accompanying notes are an integral part of the condensed
consolidated interim financial statements.
4
ADIRA ENERGY LTD. |
|
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY |
U.S. dollars in thousands, except share data
|
|
|
|
|
|
Attributable to equity holders of the
parent |
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Non- |
|
|
Total |
|
|
|
Number of |
|
|
Share |
|
|
paid in |
|
|
Accumulated |
|
|
|
|
|
controlling |
|
|
Equity |
|
|
|
shares |
|
|
capital |
|
|
capital |
|
|
deficit |
|
|
Total |
|
|
interests |
|
|
(deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2013 |
|
60,260,363 |
|
$ |
- |
|
$ |
33,966 |
|
$ |
(28,956 |
) |
$ |
5,010 |
|
|
- |
|
$ |
5,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
- |
|
|
- |
|
|
57 |
|
|
- |
|
|
57 |
|
|
- |
|
|
57 |
|
Net loss and comprehensive loss |
|
- |
|
|
- |
|
|
- |
|
|
(5,644 |
) |
|
(5,644 |
) |
|
- |
|
$ |
(5,644 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2013 |
|
60,260,363 |
|
|
- |
|
|
34,023 |
|
|
(34,600 |
) |
|
(577 |
) |
|
- |
|
|
(577 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
- |
|
|
- |
|
|
(48 |
) |
|
- |
|
|
(48 |
) |
|
- |
|
|
(48 |
) |
Net loss and comprehensive
loss |
|
- |
|
|
- |
|
|
- |
|
|
962 |
|
|
962 |
|
|
- |
|
|
962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2014
(unaudited) |
|
60,260,363 |
|
$ |
- |
|
$ |
33,975 |
|
$ |
33,638 |
|
$ |
337 |
|
$ |
- |
|
$ |
337 |
|
|
|
|
|
|
|
|
|
Attributable to equity holders of the
parent |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
Number of |
|
|
Share |
|
|
paid in |
|
|
Accumulated |
|
|
|
|
|
controlling |
|
|
Total |
|
|
|
shares |
|
|
capital |
|
|
capital |
|
|
deficit |
|
|
Total |
|
|
interests |
|
|
equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2013 |
|
60,260,363 |
|
$ |
- |
|
$ |
33,966 |
|
$ |
(28,956 |
) |
$ |
5,010 |
|
|
|
|
$ |
5,010 |
|
Share-based compensation |
|
- |
|
|
- |
|
|
181 |
|
|
- |
|
|
181 |
|
|
- |
|
|
181 |
|
Net loss and comprehensive loss |
|
- |
|
|
- |
|
|
- |
|
|
(3,096 |
) |
|
(3,096 |
) |
|
- |
|
|
(3,096 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2013 (unaudited) |
|
60,260,363 |
|
$ |
- |
|
$ |
34,147 |
|
$ |
(32,052 |
) |
$ |
2,095 |
|
$ |
- |
|
$ |
2,095 |
|
The accompanying notes are an integral part of the condensed
consolidated interim financial statements.
5
ADIRA ENERGY LTD. |
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS |
U.S. dollars in thousands, except share data
|
|
|
Six months ended |
|
|
Three months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
Unaudited |
|
Cash flows from operating
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (loss) |
$ |
962 |
|
$ |
(3,096 |
) |
$ |
556 |
|
$ |
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net profit (loss)
to net
cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to the profit or loss items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on balances of cash
and
cash equivalents |
|
4 |
|
|
10 |
|
|
1 |
|
|
5 |
|
Depreciation |
|
31 |
|
|
94 |
|
|
12 |
|
|
68 |
|
Impairment charge (reversal) from
exploration
and evaluation assets |
|
(1,126 |
) |
|
2,870 |
|
|
(695 |
) |
|
627 |
|
Revaluation of warrants |
|
- |
|
|
(3,013 |
) |
|
- |
|
|
(543 |
) |
Share-based payment |
|
(48 |
) |
|
181 |
|
|
21 |
|
|
106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,139 |
) |
|
142 |
|
|
(661 |
) |
|
263 |
|
Changes in asset and liability items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in accounts receivable, other receivables
and
prepaid expenses |
|
2,441 |
|
|
3,911 |
|
|
306 |
|
|
256 |
|
Increase (decrease) in trade payables |
|
(1,505 |
) |
|
(721 |
) |
|
214 |
|
|
(1,391 |
) |
Increase (decrease) in other accounts payable and
accrued
liabilities |
|
(959 |
) |
|
78 |
|
|
(778 |
) |
|
(85 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23 |
) |
|
3,268 |
|
|
(258 |
) |
|
(1,220 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
(200 |
) |
|
314 |
|
|
(363 |
) |
|
(925 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditure on exploration and evaluation assets |
|
- |
|
|
(2,638 |
) |
|
- |
|
|
(122 |
) |
Proceeds from sale of equipment and other
assets |
|
- |
|
|
1,028 |
|
|
- |
|
|
1,028 |
|
Decrease in restricted deposits |
|
15 |
|
|
1,022 |
|
|
- |
|
|
1,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
15 |
|
|
(588 |
) |
|
- |
|
|
1,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on balances of cash and
cash
equivalents |
|
(4 |
) |
|
(10 |
) |
|
(1 |
) |
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
(189 |
) |
|
(284 |
) |
|
(364 |
) |
|
983 |
|
Cash and cash equivalents at the beginning
of the
period |
|
617 |
|
|
2,394 |
|
|
792 |
|
|
1,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the
period |
$ |
428 |
|
$ |
2,110 |
|
$ |
428 |
|
$ |
2,110 |
|
The accompanying notes are an integral part of the condensed
consolidated interim financial statements.
6
ADIRA ENERGY LTD. |
|
NOTES TO
INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
U.S. dollars in thousands, except share and per share
data |
|
a. |
Nature of operations: |
|
|
|
|
|
Adira Energy Ltd. and its subsidiaries (individually and
collectively, as the context requires, "Adira" or "the Company"), is an
oil and gas early-stage exploration company. Through its subsidiary, Adira
Energy Israel Ltd. (Adira Israel), the Company holds two petroleum
licenses in the State of Israel, being license No. 378 (Gabriella) and
license No. 380 (Yitzhak and together with the Gabriella license, the
Licenses). These financial statements have been prepared in a condensed
format as of June 30, 2014, for the six months then ended ("interim
consolidated financial statements"). These financial statements should be
read in conjunction with the Company's annual financial statements as of
December 31, 2013, and for the year then ended and the accompanying
notes. |
|
|
|
|
b. |
Significant events during the period |
|
|
|
|
|
In 2013, as a result of challenging markets and
difficulty in raising funds to drill multi well program, the Company
significantly reduced its activity, relinquished license No. 388 (
Samuel) to the Ministry of Energy and Water of the State of Israel
(Ministry), and ceased operations on the Gabriella license. Furthermore,
there was nominal exploration activity in the Yitzhak license. During the
first half of 2014 the Company focused on further reducing its liabilities
and seeking additional financing opportunities |
|
|
|
|
|
On February 16, 2014, the Ministry published new
guidelines in respect of security guarantee payments (Security Deposits)
for all offshore petroleum licenses, requiring each license consortium to
deposit $2,500 per offshore license with the Ministry by March 31, 2014.
On June 26, 2014, the Ministry extended the implementation of the
Guidelines to September 15, 2014. As of the date of the approval of these
financial statements, the Company does not have sufficient funds to make
its pro rata share of the Security Deposits. The Company is currently
examining the consequences of the above mentioned guidelines on the
Companys operations. Should the consortium on each of the License fail to
meet these requirements, the Ministry will view such failure as a default
and will have the right to retract the Licenses that are in
default. |
|
|
|
|
c. |
Financial position: |
|
|
|
|
|
As reflected in the consolidated financial statements, as
of June 30, 2014, the Company had an accumulated deficit of $33,638. The
Company is an early-exploration stage company and its operating revenues
are currently insufficient to finance its future operating expenses and
exploration funding commitments. |
|
|
|
|
|
The ability of the Company to continue as a going concern
depends upon the discovery of economically recoverable reserves, the
ability of the Company to obtain financing to complete development, and
upon future profitable operations from the properties or proceeds from
their disposition. There can be no assurance that the Company will be able
to continue to raise funds from the aforementioned sources in which case
the Company may be unable to meet its obligations. These factors raise
substantial doubts about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments to the
carrying amounts and classifications of assets and liabilities that would
result if the Company was unable to continue as a going
concern. |
7
ADIRA ENERGY LTD. |
|
NOTES TO
INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
U.S. dollars in thousands, except share and per share
data |
NOTE 2:- |
SIGNIFICANT ACCOUNTING
POLICIES |
|
|
|
The interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
the preparation of financial statements for interim periods, as prescribed
in IAS 34, "Interim Financial Reporting". |
|
|
|
The significant accounting policies and methods of
computation adopted in the preparation of the interim consolidated
financial statements are consistent with those followed in the preparation
of the annual consolidated financial statements. |
|
|
NOTE 3:- |
EXPLORATION AND EVALUATION ASSETS |
|
|
|
The Company's accounts reflect only its proportionate
interests in its oil and gas activities. The following is a summary of the
Companys exploration and evaluation assets: |
|
|
Oil and Gas |
|
|
|
Licenses |
|
|
|
|
|
Balance as of January 1, 2013 |
$ |
5,887 |
|
Net additions |
|
2,638 |
|
Impairment of exploration and evaluation
assets |
|
(3,190 |
) |
|
|
|
|
Balance as of June 30, 2013 (unaudited) |
$ |
5,335 |
|
|
|
Oil and Gas |
|
|
|
Licenses |
|
|
|
|
|
Balance as of January 1, 2014 |
$ |
- |
|
Net additions |
|
- |
|
Impairment of exploration and evaluation
assets |
|
- |
|
|
|
|
|
Balance as of June 30, 2014 (unaudited) |
$ |
- |
|
|
a. |
Stock Option Plan: |
|
|
|
|
|
The movement in stock options during the six months ended
June 30, 2014, was as follows: |
|
|
|
Number of |
|
|
|
|
|
|
|
options |
|
|
Weighted average |
|
|
|
|
outstanding |
|
|
exercise price |
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2013
(audited) |
|
3,292,665 |
|
|
1.09 |
|
|
Options forfeited |
|
(510,000 |
) |
|
1.23
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2014 (unaudited) |
|
2,782,665 |
|
|
1.08
|
|
8
ADIRA ENERGY LTD. |
|
NOTES TO
INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
U.S. dollars in thousands, except share and per share
data |
The following table summarizes
information about stock options outstanding and exercisable as of June 30, 214
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Number of |
|
|
remaining |
|
|
|
|
|
|
Grant date |
|
|
Exercise |
|
|
options |
|
|
options |
|
|
contractual |
|
Grant date
|
|
Expiry date |
|
|
fair value |
|
|
price *) |
|
|
outstanding |
|
|
exercisable |
|
|
life |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2009 |
|
August 20, 2014
|
|
$ |
0.87 |
|
$ |
0.75 |
|
|
569,332 |
|
|
569,332 |
|
|
0.14 |
|
September 23, 2009 |
|
September 23, 2014 |
|
$ |
0.66 |
|
$ |
0.75 |
|
|
133,332 |
|
|
133,332 |
|
|
0.23 |
|
January 28, 2010 |
|
January 27, 2015
|
|
$ |
1.68 |
|
$ |
1.83 |
|
|
290,000 |
|
|
290,000 |
|
|
0.58 |
|
July 22, 2010 |
|
July 21, 2015 |
|
$ |
0.75 |
|
$ |
1.83 |
|
|
83,333 |
|
|
83,333 |
|
|
1.06 |
|
January 11, 2011 |
|
January 10, 2016
|
|
$ |
1.98 |
|
$ |
2.40 |
|
|
350,000 |
|
|
279,167 |
|
|
1.53 |
|
March 18, 2011 |
|
March 17, 2016 |
|
$ |
1.77 |
|
$ |
2.40 |
|
|
33,333 |
|
|
25,000 |
|
|
1.72 |
|
May 3, 2011 |
|
May 2, 2016 |
|
$ |
1.56 |
|
$ |
1.80 |
|
|
83,333 |
|
|
62,500 |
|
|
1.84 |
|
December 1, 2011 |
|
November 30, 2016 |
|
$ |
0.66 |
|
$ |
1.50 |
|
|
10,000 |
|
|
6,250 |
|
|
2.42 |
|
August 22, 2012 |
|
August 21, 2017
|
|
$ |
0.21 |
|
$ |
0.60 |
|
|
1,230,000 |
|
|
820,000 |
|
|
3.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,782,665 |
|
|
2,268,914 |
|
|
|
|
|
*) |
The exercise price of all options granted from 2011 is
denominated in Canadian Dollars and was translated to USD in the table
above using the exchange rate as of June 30,
2014. |
|
b. |
Share purchase warrants: |
|
|
|
|
|
The following table summarizes information applicable to
warrants and broker warrants entitling the holders to acquire common share
outstanding as of June 30, 2014 (unaudited): |
|
|
|
|
|
|
Grant date |
|
|
Exercise |
|
|
Number of |
|
|
Issue
date |
|
Expiry date |
|
|
fair value |
|
|
price |
|
|
warrants *) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 9, 2012 |
|
August 9, 2015 |
|
$ |
0.07 |
|
$ |
0.20**) |
|
|
79,012,640 |
|
|
August 9, 2012 |
|
August 9, 2014**) |
|
$ |
0.07 |
|
$ |
0.14**) |
|
|
3,353,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,365,640 |
|
|
*) |
Following the share consolidation in 2013, every three
previously issued warrants will be convertible into one Common Share of
the Company (see Note 14b(iii) of the annual financial
statements). |
|
|
|
|
**) |
The exercise price of warrants granted in 2012 is
denominated in Canadian Dollars and was translated to USD in the table
above using the exchange rate as of June 30, 2014. |
The weighted average exercise price of
the outstanding warrants as of June 30, 2014, is $0.19.
9
ADIRA ENERGY LTD. |
|
NOTES TO
INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
U.S. dollars in thousands, except share and per share
data |
NOTE 6:- |
RELATED PARTY TRANSACTIONS |
|
|
|
During the six month period ended June 30, 2014, the
Company incurred $119 in consulting fees and operating expenses to private
companies which are controlled by directors or officers of the Company, as
compared to $172 thousand during the six month period ended June 30, 2013.
|
|
|
|
These transactions are in the ordinary course of business
and are measured at the amount of consideration set and agreed by the
related parties. |
|
|
NOTE 7:- |
SUBSEQUNET EVENTS |
|
|
|
On July 23, 2013, the Company completed a non-brokered
private placement by issuing 1,200,000 common shares at a price of US$0.05
per common share for gross proceeds of $60. |
- - - - - - - - - - -
10
Adira Energy Ltd.
MANAGEMENTS DISCUSSION AND
ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the three and six month periods ended June 30, 2014
The following is a discussion and analysis of the
activities, consolidated results of operations and financial condition of Adira
Energy Ltd. (Adira, we,
our, us, or the
Company) for the three and six month periods ended June
30, 2014, which has been prepared on the basis of information available up until
August 29, 2014. This Managements Discussion and Analysis
(MD&A) should be read in conjunction with the
Companys interim consolidated financial statements for the three and six month
periods ended June 30, 2014, as well as the annual consolidated financial
statements for the year ended December 31, 2013, together with the notes
thereto, available under the Companys profile on the System for Electronic
Document Analysis and Retrieval (SEDAR) website at www.sedar.com.
All monetary amounts are reported in United States dollars
and in accordance with International Financial Reporting Standards
(IFRS) unless otherwise noted. This MD&A is dated August 29, 2014.
Forward-Looking Statements
This MD&A (including, without limitation, the sections
discussing Adiras Financial Conditions and Results of Operations) contains
certain forward-looking statements. All statements other than statements of
historical fact that address activities, events or developments that the Company
believes, expects or anticipates will or may occur in the future are
forward-looking statements. Forward-looking statements are often, but not
always, identified by the use of words such as seek, anticipate,
contemplate, target, believe, plan, estimate, expect and intend
and statements that an event or result may, will, can, should, could
or might occur or be achieved and other similar expressions. These statements
are based upon certain assumptions and analyses made by management in light of
its experience and perception of historical trends, current conditions and
expected future developments, as well as other factors management believes are
appropriate in the circumstances. However, whether actual results and
developments will conform with managements expectations is subject to a number
of risks and uncertainties, including the considerations discussed herein and in
other documents filed from time to time by the Company with Canadian security
regulatory authorities, general economic, market or business conditions, the
opportunities (or lack thereof) that may be presented to and pursued by
management, competitive actions by other companies, changes in laws or
regulations and other factors, many of which are beyond the Companys control.
These factors may cause the actual results of the Company to differ materially
from those discussed in the forward-looking statements and there can be no
assurance that the actual results or developments anticipated by management will
be realized or, even if substantially realized, that they will have the expected
results on Adira. All of the forward-looking statements made herein are
qualified by the foregoing cautionary statements. The Company expressly
disclaims any obligation to update or revise any such forward-looking
statements.
Information on the Company
Adira is an early-stage oil and gas exploration company.
Through its subsidiary, Adira Energy Israel Ltd. (Adira
Israel), the Company holds two petroleum licenses in the State of Israel,
being license No. 378 (the Gabriella License) and license No. 380 (the
Yitzhak License and together with the Gabriella License, the
Licenses).
The Companys current trading symbol on the TSX Venture
Exchange (the Exchange) is ADL. The Company also trades on the OTC
Bulletin Board with the trading symbol ADENF and on the Frankfurt Stock
Exchange with the trading symbol OAM1.
1
Significant Developments
In 2013, as a result of challenging markets and difficulty in
raising funds to drill multi well program, the Company significantly reduced its
activity, relinquished license No. 388 (the Samuel license), and ceased
operation on the Gabriella License. Furthermore, there was nominal exploration
activity completed on the Yitzhak License. During the first and second quarters
of 2014, the Company focused on further reducing its liabilities and seeking
additional financing opportunities. In order to maintain the Licenses, the
Company will be required to expend amounts in respect of exploration
expenditures for certain milestones on each of the Licenses. As of the date
hereof, the Company does not believe that it will be able to meet all of the
milestones as they become due.
On February 16, 2014, the Ministry (as defined below) published
new guidelines (the Guidelines) in respect of security guarantee
payments (the Security Deposits) for all offshore petroleum licenses,
requiring each license consortium to deposit $2.5 million per offshore license
with the Ministry by March 31, 2014. On June 26, 2014, the Ministry extended the
implementation of the Guidelines to September 15, 2014. As of the date hereof,
the Company does not have sufficient funds to make its pro rata share of the
Security Deposits. The Company is currently examining the consequences of the
Guidelines on its operations. Should the consortiums on any of the Licenses fail
to pay the Security Deposits, the Ministry will view such failure as a default
on that license and will have the right to retract the Licenses that are in
default.
On July 23, 2013, the Company completed a non-brokered private
placement (the Private Placement) by issuing 1,200,000 common shares at
a price of US$0.05 per common share for gross proceeds of US$60,000.
Overall Performance
Business Overview
Gabriella License
The Gabriella License covers 97,000 acres (392 square
kilometers) and is approximately 10 kilometers offshore Israel between Netanya
and Ashdod. The Gabriella License was issued to the Company on July 15, 2009 for
an initial three year exploration period, subject to renewal for an additional
period of four years and a second additional period of two years in the case of
a discovery. Thereafter, a 30-50 year lease maybe granted if a discovery (as
defined in the Israeli Petroleum Law 5712 & 1952 and the regulations
promulgated thereunder (Israeli Petroleum Law)) is made. On October 16,
2013, the Ministry of Energy and Water of the State of Israel (the
Ministry) granted an extension of the expiration of the Gabriella
License until September 1, 2014, with a corresponding extension of certain
milestones.
Subject to the terms of the Settlement Agreement (as defined
below), Adira Israel has a 15% working interest in the Gabriella License,
Modiin Energy Limited Partnership (MELP) has a 70% working interests,
and Brownstone Energy Inc. (Brownstone) has a 15% working interest.
The following table sets out the current work program that must
be completed in order to maintain the Gabriella License:
Gabriella Work Program
|
Milestone Dates
|
1. Submit to the Ministry a request for approval of a new
operator |
February 28, 2014 |
2. Execute a contract with a drilling contractor |
April 30, 2014 |
3. Complete an Antisotricpic PSDM and coherent sub surface
model |
July 31, 2014 |
4. Spud the first well |
August 31, 2014
|
2
Adira Israel and the other Gabriella License participants have
missed several of the work program milestones. Until such defaults are
rectified, the consortium is at risk of the Ministry retracting the Gabriella
License.
The relationship of the Gabriella License participants is
governed by a joint operating agreement or JOA (the Gabriella JOA).
Pursuant to the Gabriella JOA, Adira Israel is the operator of the Gabriella
License. However, in connection with the extension of the Gabriella License,
Adira Israel agreed to resign as the operator of the Gabriella License. As
discussed above, the Gabriella License participants had until February 28, 2014,
to name an alternative operator for Ministry approval, but have failed to meet
this deadline.
Between July 2012 and January 2013, Adira Israel, MELP and
Brownstone entered into various agreements for the purpose of drilling an
exploration well on the Gabriella License. The drilling, however, was not
accomplished and Adira Israel and MELP similarly alleged that the other was in
default of various obligations under the Gabriella JOA and other agreements
entered into on behalf of the Gabriella License participants. Accordingly, on
February 11, 2013, Adira Israel, in its capacity as operator under the Gabriella
JOA, suspended operations on the Gabriella License due to lack of funding and
lack of reasonable expectation of funding to meet certain work program
obligations.
Effective July 8, 2013 (the Settlement Agreement Effective
Date), Adira Israel entered into a settlement and release agreement (the
Settlement Agreement) with MELP and Brownstone to resolve the
abovementioned disputes and the related suspension of operations. Pursuant to
the Settlement Agreement, the Gabriella License participants released each other
from any claims and demands that they had against each other with respect to the
Gabriella License. The Settlement Agreement further provides that the Gabriella
License participants will fund their proportionate share of costs incurred in
connection with the attempted drilling of the exploration well. Adira Israels
net share of the costs totals approximately $3.3 million (the Settlement
Costs) and was payable in full within 90 days from the Settlement Agreement
Effective Date. To date, Adira Israel has not paid the Settlement Costs.
Consequently, at MELPs request, Adira Israel may be required to withdraw from
the Gabriella JOA and assign its participating interest in the Gabriella License
to the remaining Gabriella License participants for no consideration. Although
MELP has yet to make the forgoing request, Adira Israel remains at risk of being
required to withdraw from the Gabriella License.
Yitzhak License
The Yitzhak License covers 31,555 acres (127.7 sq. km) and is
located approximately 9 km offshore and is contiguous to the Gabriella License.
The Yitzhak License was issued in October 2009 to Adira Israel for an initial
three year exploration period and may be renewed upon fulfillment of certain
conditions for an additional four year period plus an additional two year
renewal option in the case of a reserve discovery. Thereafter, a 30-50 year
lease may be pursued if a discovery (as defined in the Israeli Petroleum Law)
is made. On October 16, 2013, the Ministry granted an extension of the
expiration of the Yitzhak License until October 15, 2014, with a corresponding
extension of certain milestones.
Adira Israel has a 70% working interest in the Ytizhak License.
Brownstone has a 15% interest, AGR Group ASA (AGR) has a 5% interest
and Ellomay Oil and Gas 2011 LP a 10% interest.
The following table sets out the current work program that must
be completed to maintain the Yitzhak License:
Yitzhak Work Program |
Milestone
Dates |
1. Execute a contract with a drilling contractor |
September 30, 2014
|
3
The relationship of the Yitzhak License participants is
governed by a JOA (the Yitzhak JOA). Pursuant to the Yitzhak JOA, AGR
is designated lead operator in accordance with Israeli regulations definition of
Operator, with the continued involvement of Adira Israel as Co-Operator.
On June 13, 2012, Adira Israel granted to MELP an option
(MELP Yitzhak Option) to purchase from Adira Israel a 15% participating
interest in the Yitzhak License (the MELP Yitzhak Option Interest). The
MELP Yitzhak Option may be exercised until 14 days before signing of the rig
contract for the Yitzhak License.
Yam Hadera Option
Pursuant to the Gabriella 2012 Agreement, Adira Israel has an
option (the Yam Hadera Option) to acquire up to a 15% participating
interest in the Yam Hadera License, located 30 kilometers offshore Israel,
between Hadera and Haifa and North West of Adiras Yitzhak license. The Yam
Hadera Option is exercisable until 14 days prior to the signing of a rig
contract for the Yam Hadera License.
Myra and Sara Option
The Company has an option to acquire up to a 5% participating
interest in two licenses called the Myra License and Sara License (the
M&S Option). The Company obtained the M&S Option from Adira
Barbados prior to its dissolution. The Company currently ascribes no value to
the Myra and Sara Licenses and as such it does not consider it to be material to
its operations.
Capital Expenditures and Divestitures
During the six month period ended June 30, 2014, the Company
incurred no capital expenditures or disposition of property and equipment.
The Company's currently has no planned capital expenditures for
the next twelve months.
Additional Disclosure for Venture Issuers without
Significant Revenues:
|
|
Six Month Period Ended |
|
|
Three Month Period Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
U.S. dollars in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized and expensed Exploration costs |
$ |
- |
|
$ |
4,367 |
|
$ |
- |
|
$ |
1,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
(including share based compensation) |
$ |
157 |
|
$ |
1,878 |
|
$ |
161 |
|
$ |
406 |
|
4
Discussion of Operations
The following is a discussion of the results of operations
which have been derived from the interim consolidated financial statements of
the Company for the six and three month periods ended June 30, 2014:
|
|
Six months ended |
|
|
Three months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and other income |
$ |
- |
|
$ |
17 |
|
$ |
- |
|
$ |
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Exploration expenses |
|
- |
|
|
1,729 |
|
|
- |
|
|
(164 |
) |
General and administrative
expenses *) |
|
157 |
|
|
1,878 |
|
|
172 |
|
|
406 |
|
Impairment charge (reversal) |
|
(1,126 |
) |
|
2,486 |
|
|
(695 |
) |
|
243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(969 |
) |
|
6,093 |
|
|
(523 |
) |
|
485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss) |
|
969 |
|
|
(6,076 |
) |
|
523 |
|
|
(481 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
- |
|
|
3,021 |
|
|
33 |
|
|
541 |
|
Finance expense |
|
(7 |
) |
|
(41 |
) |
|
- |
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before income tax expense |
|
962 |
|
|
(3,096 |
) |
|
556 |
|
|
32 |
|
Income tax expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net comprehensive profit (loss) |
$ |
962 |
|
$ |
(3,096 |
) |
|
556 |
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net comprehensive profit (loss) attributed to: |
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the parent |
$ |
962 |
|
$ |
(3,096 |
) |
|
556 |
|
|
32 |
|
Non-controlling interests |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
962 |
|
$ |
(3,096 |
) |
|
556 |
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings (loss) per share
attributable to equity holders of the parent |
$ |
0.02 |
|
$ |
(0.05 |
) |
$ |
0.01 |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares used in
computing basic and diluted net earnings (loss) per
share |
|
60,260,318 |
|
|
60,260,318 |
|
|
60,260,318 |
|
|
60,260,318 |
|
5
Three month period ended June 30, 2014, compared to
the three month period ended June 30, 2013
Revenues and Other Income
For the three month period ended June 30, 2014, revenues and
other income amounted to nil as compared to $4 thousand for the three month
period ended June 30, 2013. The decrease in revenues in 2014 is due to the fact
that there were no exploration activities on the license during 2014. In early
2013 the Company ceased the planned drilling operations on the Gabriella
License, and there were minimal activities on the Yitzhak License and Samuel
License (which was returned to the Ministry during 2013).
Expenses
Exploration Expenses
For the three month period ended June 30, 2014, exploration
expenses amounted to nil as compared to a recovery of $164 thousand recorded for
the three months ended June 30, 2013. This recovery is in respect of an
adjustment to an accrual for exploration expenses in connection with the
suspension of operations on the Gabriella License, made during the first quarter
of 2013.
General and Administrative Expenses
For the three month period ended June 30, 2014, general and
administrative expenses amounted to $172 thousand as compared to $406 thousand
for the three month period ended June 30, 2013. The decrease in general and
administrative expenses resulted primarily from the decrease of the Companys
exploration activities since its suspended operations on the Gabriella License,
a significant reduction in the number of people that it employed and a reduction
in rental and other related expenses.
Impairment Charge (Reversal)
For the three month period ended June 30, 2014, the Company
recorded an impairment charge reversal of $695 thousand as compared to a charge
of $243 thousand for the three month period ended June 30, 2013. The reversal of
the impairment relates to discounts that the Company negotiated with suppliers,
in respect of outstanding obligations on the Licenses. The expense recorded in
2013 relates primarily to costs that had been capitalized to exploration and
evaluation assets prior to the suspension of operations on the Gabriella
License, and which have subsequently been writtenoff, and the Companys
decision to write off expenses on the Yitzhak License due to the low probability
of realization of the asset from either the successful development or sale of
the Yitzhak License in the near future.
Financing Income/Expense
For the three month period ended June 30, 2014, financing
income amounted to $33 thousand as compared to $541 thousand for the three month
period ended June 30, 2013, and financing expenses of nil for the three month
period ended June 30, 2014, as compared to $28 thousand for the three month
period ended June 30, 2013.
The Company is exposed to financial risk related to the
fluctuation of foreign exchange rates. The Company operates in Israel, most of
its monetary assets are held in U.S. dollars and most of its expenditures are
made in U.S. dollars. However, it also has expenditures in NIS and Canadian
dollars. The Company has not hedged its exposure to currency fluctuations.
6
Net Profit/Loss
The Company reported a net profit and comprehensive profit for
the three month period ended June 30, 2014, of $556 thousand as compared to a
net profit and comprehensive profit of $32 thousand for the three month period
ended June 30, 2013. The primary reason for the profit in 2014 is due to the
reversal of impairment charges made in prior years which are related to
discounts that Adira negotiated with suppliers in respect of outstanding
obligations on the Licenses.
Inflation
During the three month periods ended June 30, 2014, and June
30, 2013, inflation has not had a material impact on the Companys operations.
Six month period ended June 30, 2014, compared to the
Six month period ended June 30, 2013
Revenues and Other Income
For the six month period ended June 30, 2014, revenues and
other income amounted to nil as compared to $17 thousand for the six month
period ended June 30, 2013. The decrease in revenues in 2014 is due to the fact
that there were no exploration activities on the license during 2014. In early
2013 the Company ceased the planned drilling operations on the Gabriella
License, and there were minimal activities on the Yitzhak License and Samuel
License (which was returned to the Ministry during 2013).
Expenses
Exploration Expenses
For the six month period ended June 30, 2014, exploration
expenses amounted to nil as compared to $1.7 million for six month period ended
June 30, 2013. The decrease in exploration expenses is due to the reduced
operations on the Licenses in 2014.
General and Administrative Expenses
For the six month period ended June 30, 2014, general and
administrative expenses amounted to $157 thousand as compared to $1.9 million
for the six month period ended June 30, 2013. The decrease in general and
administrative expenses resulted primarily from the decrease of the Companys
exploration activities since its suspended operations on the Gabriella License,
a significant reduction in the number of people that it employed and a reduction
in rental and other related expenses.
Impairment Charge (Reversal)
For the six month period ended June 30, 2014, the Company
recorded an impairment charge reversal of $1.1 million as compared to a charge
of $2.5 million for the six month period ended June 30, 2013. The reversal of
the impairment relates to discounts that the Adira negotiated with suppliers in
respect of outstanding obligations on the Licenses. The amount in 2013 relates
primarily to costs that had been capitalized to exploration and evaluation
assets prior to the suspension of operations on the Gabriella License, and which
have subsequently been writtenoff, and the Companys decision to write off
expenses on the Yitzhak License due to the low probability of realization of the
asset from either the successful development or sale of the Yitzhak License in
the near future.
Financing Income/Expense
For the six month period ended June 30, 2014, financing income
amounted to nil as compared to $3 million for the six month period ended June
30, 2013, and financing expenses of $7 thousand for the six month period ended
June 30, 2014, as compared to $41 thousand for the six month period ended June
30, 2013.
7
The Company is exposed to financial risk related to the
fluctuation of foreign exchange rates. The Company operates in Israel, most of
its monetary assets are held in U.S. dollars and most of its expenditures are
made in U.S. dollars. However, it also has expenditures in NIS and Canadian
dollars. The Company has not hedged its exposure to currency fluctuations.
Net Profit/Loss
The Company reported a net profit and comprehensive profit for
the six month period ended June 30, 2014, of $962 thousand as compared to a net
loss and comprehensive loss of $3.1 million for the six month period ended June
30, 2013. The primary reason for the profit in 2014 is due to the reversal of
impairment charges made in prior years which are relating to discounts that
Adira negotiated with suppliers in respect of outstanding obligations on the
Licenses.
Inflation
During the six month periods ended June 30, 2014, and June 30,
2013, inflation has not had a material impact on the Companys operations.
Government Regulation
The Licenses have been granted to us, through various
subsidiaries, by the State of Israel under the Israeli Petroleum Law, and our
evaluation and exploration activities in the areas covered by the Licenses must
be undertaken in compliance with work plans approved by the Commissioner.
Summary of Quarterly Results
|
|
Quarter ended |
|
|
|
June 30, 2014 |
|
|
March 31, 2014 |
|
|
December 31, 2013 |
|
|
September 30, 2013 |
|
|
|
U.S dollars in thousands, except per share data |
|
Revenues |
$ |
- |
|
|
- |
|
|
- |
|
|
- |
|
Net Profit (loss) |
$ |
516 |
|
|
446 |
|
|
(70 |
) |
|
(2,478 |
) |
Net Profit (loss) per share* |
$ |
0.01 |
|
|
0.01 |
|
|
(0.01 |
) |
|
(0.04 |
) |
*Attributable to equity holders of the Company, post
Consolidation
|
|
Quarter ended |
|
|
|
June 30, 2013 |
|
|
March 31, 2013 |
|
|
December 31, 2012 |
|
|
September 30, 2012 |
|
|
|
U.S dollars in thousands, except per share data |
|
Revenues |
$ |
4 |
|
|
13 |
|
|
318 |
|
|
422 |
|
Net Profit (loss) |
$ |
32 |
|
|
(3,128 |
) |
|
(7,264 |
) |
|
(1,460 |
) |
Net Profit (loss) per share* |
$ |
0.01 |
|
|
(0.05 |
) |
|
(0.12 |
) |
|
(0.03 |
) |
*Attributable to equity holders of the Company, post
Consolidation
Net profit (loss) per quarter is a function of the exploration
and operational activity during that quarter. There is no seasonal trend. Net
losses in the quarter ended December 31, 2012, were significantly higher than
the preceding periods due to an impairment charge in respect of the Samuel
license. The net loss for the quarter ended March 31, 2013, resulted primarily
from an impairment charge in respect of the Gabriella License and the net profit
for the quarter ended June 30, 2013, is due to reduced general and
administrative expenses and finance income recorded in respect of the
re-measurement of the warrants issued in August 2012. The net loss for the
quarter ended September 30, 2013, resulted primarily from an impairment charge
in respect of the Yitzhak license and the net loss for the quarter ended
December 31, 2013, was significantly reduced in line with the reduced activities
of the Company. The profit during the first and second quarters of 2014 is due
primarily to the reversal of impairment write-offs made in previous years.
8
Liquidity
Liquidity is a measure of a companys ability to meet potential
cash requirements. The Company has historically met its capital requirements
through the issuance of common shares.
The Company has an accumulated deficit of $33.6 million as of
June 30, 2014 ($32 million as of June 30, 2013), and the Company had negative
cash flows from operations of $200 thousand during the six month period ended
June 30, 2014 (positive cash flows of $314 million during the six month period
ended June 30, 2013). The ability of the Company to continue a going concern
depends upon the discovery of economically recoverable reserves, the ability of
the Company to obtain financing to complete development, and upon future
profitable operations from the properties or proceeds from their disposition.
The Company is an exploration stage company and has not earned any revenues from
its oil and gas properties to date.
There can be no assurance that the Company will be able to
continue to raise funds, in which case the Company may be unable to meet its
obligations. The Company is considering various alternatives with respect to
raising additional capital to remedy any future shortfall in capital, but to
date has made no specific plans or arrangements. Because of the early stage of
the Company's operations and the Company's absence of any material oil and
natural gas reserves, there can be no assurance this capital will be available
and if it is not, the Company may be forced to substantially curtail or cease
exploration, appraisal and development expenditures.
In 2013, as a result of challenging markets and difficulty in
raising funds to drill multi well program, the Company significantly reduced its
activity, relinquished the Samuel license, and ceased operations in Gabriella.
Furthermore, there was nominal exploration activity in the Yitzhak License.
During the first quarter of 2014 there was no operational activity on the
Licenses.
Three month period ended June 30, 2014, compared to
the three month period ended June 30, 2013
During the three month period ended June 30, 2014, the
Companys overall position of cash and cash equivalents decreased by $363
thousand. This decrease in cash can be attributed to the following:
The Companys net cash used in operating activities during the
three month period ended June 30, 2014, was $363 thousand as compared to $925
thousand for the three month period ended June 30, 2013. This decrease is due to
the reduced activities during the period.
Cash provided from investing activities during the three month
period ended June 30, 2014, was nil as compared to cash provided from investing
activities of $1.9 million during the three month period ended June 30, 2013.
The generation of cash from investment activities in 2013 relates primarily to
the decrease in restricted cash and sale of equipment.
Cash provided by financing activities for the three month
periods ended June 30, 2014, and June 30, 2013, was nil. There are no
legal restrictions on transferring funds between Canada and Israel.
Six month period ended June 30, 2014, compared to the
Six month period ended June 30, 2013
During the six month period ended June 30, 2014, the Companys
overall position of cash and cash equivalents decreased by $189 thousand. This
increase in cash can be attributed to the following:
The Companys net cash used from operating activities during
the six month period ended June 30, 2014, was $200 thousand as compared to net
cash generated of $314 thousand for the six month period ended June 30, 2013.
This decrease is due to the reduced activities during the period.
Cash generated from investing activities during the six month
period ended June 30, 2014, was $15 thousand as compared to cash used in
investing activities of $588 thousand during the six month period ended June 30,
2013. The generation of cash from investment activities in 2014 relates to the
decreased in restricted cash. In 2013, the case used in operating activities related primarily to
investment in exploration and evaluation activities, offset by the sale of
equipment and the decreased in restricted deposits.
9
Cash provided by financing activities for the six month periods
ended June 30, 2014, and June 30, 2013, was nil. There are no legal
restrictions on transferring funds between Canada and Israel.
Capital Resources
At June 30, 2014, the Companys cash and cash equivalents were
$428 thousand (June 30, 2013 - $2.1 million). The majority of this balance is
being held in US Dollars. Our working capital at June 30, 2014, was $307
thousand as compared to $1.2 million at June 30, 2013.
Commitments
Adira Israel has Ministry mandated commitments to complete work
programs for each of the Licenses. Please see Business Overview above for
information on the Companys commitments on the Licenses.
As discussed above, in order to maintain the Licenses, the
Company will be required to expend amounts in respect of exploration
expenditures for certain milestones on each of the Licenses. As of the date
hereof, the Company does not believe that it will be able to meet all of the
milestones as they become due.
As of June 30, 2014, the Companys share of the remaining
contractual commitments for the Licenses was nil.
As discussed above, on February 16, 2014, the Ministry
published the Guidelines in respect of the Security Deposits for all offshore
petroleum licenses, requiring each license consortium to deposit $2.5 million
per offshore license with the Ministry by March 31, 2014. On June 26, 2014, the
Ministry extended the implementation of the Guidelines to September 15, 2014. As
of the date hereof, the Company does not have sufficient funds to make its pro
rata share of the Security Deposits. The Company is currently examining the
consequences of the Guidelines on its operations. Should the consortiums on any
of the Licenses fail to pay the Security Deposits, the Ministry will view such
failure as a default on that license and will have the right to retract the
Licenses that are in default.
Approved Expenditures Relating to the Gabriella and
Yitzhak
As of June 30, 2014, all budgeted and planned expenses for the
advancement of the drilling programs on the Licenses have been suspended until
the Company receives the extensions for its Licenses.
As discussed above, in order to maintain the Licenses the
Company, through Adira Israel, is required to expend additional amounts in
respect of exploration expenditure for certain milestones on each of the
Licenses. As of the date hereof, the Company does not believe that it can meet
all of its drilling and related expenditures as they become due to maintain its
interests in its oil and gas properties. These oil and gas expenditure
obligations are not fixed and cannot be pre-determined with certainty. Failure
to meet the obligations may result in the loss of Adira Israels participating
interests in the Licenses.
Disclosure of Outstanding Share Data
As of the date hereof, the Company has 61,460,318 common shares
outstanding, 79,012,640 warrants outstanding (each three warrants are
convertible into one common share) and 2,213,332 stock options granted to
directors, officers and employees.
Management of Capital
The Company is an early-stage exploration company and currently
does not generate significant cash flows from operations. The Companys primary
source of funds comes from the issuance of share capital. The Company does not
use other sources of financing that require fixed payments of interest and
principal and is not subject to any externally imposed capital requirements.
The Company defines its capital as share capital plus warrants.
To effectively manage the Companys capital requirements, the Company has a
planning and budgeting process in place to ensure that adequate funds are available to meet its strategic goals. The Company monitors
actual expenses to budget to manage its costs and commitments.
10
The Companys capital management objective is to maximize
investment returns to its equity-linked stakeholders within the context of
relevant opportunities and risks associated with the Companys operations.
Achieving this objective requires management to consider the underlying nature
of exploration activities, the availability of capital, the cost of various
capital alternatives and other factors. Establishing and adjusting capital
requirements is a continuous management process.
Although the Company has been successful at raising funds in
the past through the issuance of share capital, there can be no assurance that
future financings will be successful.
Off-Balance Sheet arrangements
See Commitments above.
Transactions with Related Parties
No director or senior officer of the Company, and no associate
or affiliate of the foregoing persons, and no insider has or has had any
material interest, direct or indirect, in any transactions, or in any proposed
transactions, which in either such case has materially affected or will
materially affect the Company or the Company's predecessors since the beginning
of the Company's last completed fiscal year except as follows:
During the six month period ended June 30, 2014, the Company
incurred $119 thousand in consulting fees and operating expenses to private
companies which are controlled by directors or officers of the Company, as
compared to $172 thousand during the six month period ended June 30, 2013.
These transactions are in the normal course of operations and
are measured at the exchange amount, which is the amount of consideration
established and agreed to by the related parties.
Proposed Transactions
There are currently no proposed transactions that are expected
to affect the financial condition, results of operations and cash flows of the
Company.
Critical Accounting Policies and Estimates
The Companys results of operation and financial condition are
based on its consolidated financial statements, which are presented in
accordance with IFRS. Certain accounting principles require it to make certain
estimates, judgments and assumptions. Management believes that the estimates,
judgments and assumptions upon which it relies are reasonable based upon
information available to it at that time. These estimates, judgments and
assumptions can affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities as of the date of the financial
statements, as well as the reported amounts of revenues and expenses during the
periods presented. To the extent there are material differences between these
estimates, judgments or assumptions and actual results, the Companys financial
statements will be affected. The significant accounting policies and estimates
that Management believes are the most critical to aid in fully understanding and
evaluating the Companys reported financial results include the following:
- Exploration and evaluation assets;
- Share-based payment transactions;
- Joint oil and gas ventures;
- Farm out arrangements in the exploration and evaluation phase;
- Impairment of financial assets; and
- Revenue recognition.
11
The key assumptions made in the financial statements concerning
uncertainties at the end of the reporting period and the critical estimates
computed by the Group that may result in a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
Exploration and evaluation assets
Pre-license costs
Pre-license costs are expensed in the period in which they are
incurred.
Exploration and evaluation costs
Oil and natural gas exploration and development expenditure is
accounted for using the successful efforts method of accounting.
During the geological and geophysical exploration phase, costs
are charged against income as incurred. Costs directly associated with an
exploration well in its drilling phase, for which it has not yet been determined
whether there are proved reserves or it is not commercially viable, are
capitalized as exploration and evaluation intangible assets until the drilling
of the well is complete and the results have been evaluated. These costs include
employee remuneration, materials and fuel used, rig costs and payments made to
contractors. If no reserves are found, the exploration asset is tested for
impairment. If extractable hydrocarbons are found and, subject to further
appraisal activity (e.g., by drilling further wells), are likely to be developed
commercially, the costs continue to be carried as an intangible assets while
sufficient and continued progress is made in assessing the commerciality of the
hydrocarbons. All such costs are subject to technical, commercial and management
review as well as review for impairment at least once a year to confirm the
continued intent to develop or otherwise extract value from the discovery. When
this is no longer the case, the costs are written off. When proved reserves of
oil are determined and development sanctioned, the relevant expenditure is
transferred to oil and gas properties after impairment is assessed and any
resulting impairment loss is recognized.
Share-based payment transactions
The Company's employees and other service providers are
entitled to remuneration in the form of equity-settled share-based payment
transactions.
The cost of equity-settled transactions with employees is
measured at the fair value of the equity instruments granted at grant date. The
fair value is determined using an appropriate pricing model. As for other
service providers, the cost of the transactions is measured at the fair value of
the goods or services received as consideration for equity instruments. In cases
where the fair value of the goods or services received as consideration of
equity instruments cannot be measured, they are measured by reference to the
fair value of the equity instruments granted.
The cost of equity-settled transactions is recognized in profit
or loss, together with a corresponding increase in equity, during the period
which the performance and service conditions are to be satisfied, ending on the
date on which the relevant employees become fully entitled to the award (the
vesting period). The cumulative expense recognized for equity-settled
transactions at the end of each reporting period until the vesting date reflects
the extent to which the vesting period has expired and the Company's best
estimate of the number of equity instruments that will ultimately vest. The
expense or income recognized in profit or loss represents the movement in the
cumulative expense recognized at the end of the reporting period.
If the Company modifies the conditions on which
equity-instruments were granted, an additional expense is recognized for any
modification that increases the total fair value of the share-based payment
arrangement or is otherwise beneficial to the employee/other service provider at
the modification date. If a grant of an equity instrument is cancelled, it is
accounted for as if it had vested on the cancellation date, and any expense not
yet recognized for the grant is recognized immediately. However, if a new grant
replaces the cancelled grant and is identified as a replacement grant on the
grant date, the cancelled and new grants are accounted for as a modification of
the original grant, as described above.
12
Joint oil and gas ventures
The Company, through certain subsidiaries, conducts petroleum
and natural gas exploration activities jointly with other participants who each
have direct interests in the assets and each are directly obligated for the
liabilities of the ventures. Consequently, these financial statements reflect
only the Company's proportionate interest in such activities.
The Company accounts for its share of the joint venture's
assets, liabilities it has incurred, income from the sale or use of its share of
the joint venture's output, together with its share of the expenses incurred by
the joint venture and any expenses it incurs in relation to its interest in the
joint venture.
Farm-out arrangements in the exploration and evaluation
phase
A farm-out is the transfer of an oil and gas interest in
consideration for an agreement by the transferee (the farmee) to meet,
absolutely, certain expenditures which would otherwise have to be undertaken by
the original interest holder (the farmor). Farm-out transactions
generally occur in the exploration or development phase and are characterized by
the transferor (i.e. farmor) giving up future economic benefits, in the form of
reserves, in exchange for a reduction in future funding obligations.
Accordingly, the farmee recognizes its expenditure under the
arrangement in respect of its interest and that retained by the farmor, as and
when the costs are incurred.
The Company, as the farmor, accounts for the farm-out
arrangement as follows:
- the Company does not record any expenditure made by the farmee on its
behalf;
- the Company does not recognize a gain or loss on the farm out arrangement,
but rather designates any costs capitalized in relation to the whole interest
as relating to the partial interest retained; and
- any cash consideration received is credited against costs previously
capitalized in relation to the whole interest with any excess accounted for by
the farmor as a gain on disposal.
Impairment of financial assets
At the end of each reporting period, the Company assesses
whether there is objective evidence of impairment of a financial asset or group
of financial assets carried at amortized cost.
As of the date hereof, there is objective evidence of
impairment of debt instruments and receivables as a result of one or more events
that has occurred after the initial recognition of the asset and that loss event
has an impact on the estimated future cash flows. Evidence of impairment may
include indications that the debtor is experiencing financial difficulties,
including liquidity difficulty and default in interest or principal payments.
The amount of the loss recorded in profit or loss is measured as the difference
between the asset's carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not yet been incurred)
discounted at the financial asset's original effective interest rate (the
effective interest rate computed at initial recognition). If the financial asset
has a variable interest rate, the discount rate is the current effective
interest rate. The carrying amount of the asset is reduced through the use of an
allowance account (see allowance for doubtful accounts above). In a subsequent
period, the amount of the impairment loss is reversed if the recovery of the
asset can be related objectively to an event occurring after the impairment was
recognized. The amount of the reversal, up to the amount of any previous
impairment, is recorded in profit or loss.
13
Revenue recognition
Revenues are recognized in the statement of comprehensive loss
when the revenues can be measured reliably, it is probable that the economic
benefits associated with the transaction will flow to the Company and the costs
incurred or to be incurred in respect of the transaction can be measured
reliably.
The Companys revenues are mainly derived from:
1. Operator fees - The Company acts as
the operator or joint operator on the Licenses and is entitled to operator fees
and revenues are recognized in accordance with the terms of the JOAs, as
exploration expenses are incurred in the UJVs.
2. Consulting fees The Company
provides consulting services in respect of the Licenses on a time and
materials basis. Consulting fees are recognized as revenues as the services are
rendered to the respective UJVs.
Disclosure Controls and Procedures and Internal Controls
over Financial Reporting
There were no changes to the Companys internal controls over
financial reporting in the six month period ended June 30, 2014, which have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.
As of June 30, 2014, the Company evaluated its disclosure
controls and procedures and internal control over financial reporting, as
defined by the Canadian Securities Administrators. These evaluations were
carried out under the supervision of and with the participation of management,
including the Companys chief financial officer. Based on these evaluations, the
chief financial officer concluded that the design of these disclosure controls
and procedures and internal control over financial reporting were effective.
Financial Instruments and Other Instruments
The Companys financial instruments have been designated as
follows:
Cash and cash equivalents |
- Held-for-trading; |
Restricted Cash |
- Held-for-trading; |
Accounts receivable |
- Receivables; |
Accounts payable and accrued liabilities |
- Other financial liabilities;
|
The carrying values of cash and cash equivalents, restricted
cash and accounts receivable and accounts payable approximate their fair values
due to the short-term maturity of these financial instruments.
Risks and Uncertainties
Credit risk
The Company manages credit risk, in respect of cash and cash
equivalents, and restricted cash, by holding them at major Canadian and Israeli
financial institutions in accordance with the Companys investment policy. The
Company places its cash and cash equivalents with high credit quality Israeli
and Canadian financial institutions. Concentration of credit risk exists with
respect to the Companys cash and cash equivalents and accounts receivable. As
at June 30, 2014, the Companys exposure is for cash held in bank accounts,
including restricted deposit, in the amount of $428 thousand and on accounts and
other receivable of $72 thousand. None of the Companys accounts receivable is
overdue as at June 30, 2014.
Liquidity risk
Liquidity risk is the risk that the Company will encounter
difficulty in obtaining funds to meet current obligations and future
commitments. The Company's approach to managing liquidity risk is to forecast
cash requirements to provide reasonable assurance that it will have sufficient funds
to meet its liabilities when due. As at June 30, 2014, the Company had cash and
cash equivalents of $428 thousand, restricted deposits of $20 thousand and
accounts and other receivables of $72 against current trade and other payables
in the amount of $213 thousand.
14
Market risk
Market risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes in market
prices. Market risk is comprised of two types of risk: interest rate risk, and
foreign currency risk.
|
(i) |
Interest rate risk |
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|
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|
The Company is not exposed to significant interest rate
risk due to the short-term maturity of its cash equivalents. |
|
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|
(ii) |
Foreign currency risk |
|
|
|
|
|
The Company is exposed to financial risk related to the
fluctuation of foreign exchange rates. The Company operates in Israel.
Most of the Companys monetary assets are held in US dollars and most of
the Companys expenditures are made in US dollars. However, the Company
also has expenditures in NIS and Canadian dollars. The Company has not
hedged its exposure to currency fluctuations. An increase or decrease of
5% of the NIS or the Canadian Dollar relative to the U.S dollar would not
have a significant effect on the Company. |
Environmental Risk
Environmental regulations affect the cost of exploration and
development, as well as future development operations; however, management does
not believe that any provision against environmental regulations is currently
required.
For a complete discussion on risk factors, please refer to the
Companys Form 20-F dated April 30, 2014, filed on www.sedar.com.
Other Information
Additional information about the Company, the Companys
quarterly and annual consolidated financial statements, annual information form,
technical reports and other disclosure documents, is accessible at the Companys
website www.adiraenergy.com or through the Companys public filings at
www.sedar.com.
# # # #
15
FORM 52-109FV2
CERTIFICATION OF INTERIM FILINGS
VENTURE ISSUER BASIC CERTIFICATE
I, Gadi Levin, Chief Financial Officer of Adira Energy
Ltd., certify the following:
1. |
Review: I have reviewed the interim financial
report and interim MD&A (together, the interim filings) of Adira
Energy Ltd. (the issuer) for the interim period ended June 30,
2014. |
|
|
2. |
No misrepresentations: Based on my knowledge,
having exercised reasonable diligence, the interim filings do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated or that is necessary to make a statement not
misleading in light of the circumstances under which it was made, with
respect to the period covered by the interim filings. |
|
|
3. |
Fair presentation: Based on my knowledge, having
exercised reasonable diligence, the interim financial report together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the
periods presented in the interim filings. |
Date: August 29, 2014
/s/ Gadi Levin
_____________________
Gadi
Levin
Chief Financial Officer
NOTE TO READER |
|
In contrast to the certificate required for non-venture
issuers under National Instrument 52- 109 Certification of Disclosure
in Issuers Annual and Interim Filings (NI 52-109), this
Venture Issuer Basic Certificate does not include representations relating
to the establishment and maintenance of disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as
defined in NI 52-109. In particular, the certifying officers filing this
certificate are not making any representations relating to the
establishment and maintenance of |
|
i) |
controls and other procedures designed to provide
reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or
submitted under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation;
and |
|
|
ii) |
a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuers GAAP.
|
|
The issuers certifying officers are responsible for
ensuring that processes are in place to provide them with sufficient
knowledge to support the representations they are making in this
certificate. Investors should be aware that inherent limitations on the
ability of certifying officers of a venture issuer to design and implement
on a cost effective basis DC&P and ICFR as defined in NI 52-109 may
result in additional risks to the quality, reliability, transparency and
timeliness of interim and annual filings and other reports provided under
securities legislation. |
|
FORM 52-109FV2
CERTIFICATION OF INTERIM FILINGS
VENTURE ISSUER BASIC CERTIFICATE
I, Alan Friedman, Executive Vice President - Corporate
Development of Adira Energy Ltd., certify the following:
1. |
Review: I have reviewed the interim financial
report and interim MD&A (together, the interim filings) of Adira
Energy Ltd. (the issuer) for the interim period ended June 30,
2014. |
|
|
2. |
No misrepresentations: Based on my knowledge,
having exercised reasonable diligence, the interim filings do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated or that is necessary to make a statement not
misleading in light of the circumstances under which it was made, with
respect to the period covered by the interim filings. |
|
|
3. |
Fair presentation: Based on my knowledge, having
exercised reasonable diligence, the interim financial report together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the
periods presented in the interim filings. |
Date: August 29, 2014
/s/ Alan Friedman
____________________
Alan
Friedman
Executive Vice President - Corporate Development
NOTE TO READER |
|
In contrast to the certificate required for non-venture
issuers under National Instrument 52- 109 Certification of Disclosure
in Issuers Annual and Interim Filings (NI 52-109), this
Venture Issuer Basic Certificate does not include representations relating
to the establishment and maintenance of disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as
defined in NI 52-109. In particular, the certifying officers filing this
certificate are not making any representations relating to the
establishment and maintenance of |
|
i) |
controls and other procedures designed to provide
reasonable assurance that information required to be disclosed by the
issuer in its annual filings, interim filings or other reports filed or
submitted under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation;
and |
|
|
ii) |
a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with the issuers GAAP. |
|
The issuers certifying officers are responsible for
ensuring that processes are in place to provide them with sufficient
knowledge to support the representations they are making in this
certificate. Investors should be aware that inherent limitations on the
ability of certifying officers of a venture issuer to design and implement
on a cost effective basis DC&P and ICFR as defined in NI 52-109 may
result in additional risks to the quality, reliability, transparency and
timeliness of interim and annual filings and other reports provided under
securities legislation. |
|
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