<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
Commission File Number 0-10301
NESS ENERGY INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
FORMERLY KNOWN AS KIT KARSON CORPORATION
NEVADA 91-1067265
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
Registrant's telephone number, including area code: (817) 341-1477
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
------ ------
Indicate the number of shares outstanding of each issuer's classes of common
stock as of the latest practicable date:
As of September 29, 1999 the Registrant had outstanding 53,894,801 shares of its
common stock with no par value.
<PAGE> 2
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements included herein have been prepared by Ness Energy
International, Inc., formerly known as Kit Karson Corporation, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. However, in the opinion of management, all
adjustments (which include only normal recurring accruals) necessary to present
fairly the financial position and results of operations for the periods
presented have been made. The financial statements should be read in conjunction
with the notes thereto included in Kit Karson's SEC Form 10-KSB for the period
ended December 31, 1998.
<PAGE> 3
NESS ENERGY INTERNATIONAL, INC.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
31-Dec-98 30-Jun-99
----------- -----------
ASSETS
<S> <C> <C>
Current Assets
Cash $ 4,352 $ 218,296
Accounts Receivable -- 5,059
----------- -----------
Total current assets 4,352 223,355
Property and Equipment
Oil and gas properties, proved 28,300 28,300
Less accumulated depreciation and depletion 5,608 8,412
----------- -----------
$ 22,692 $ 19,888
----------- -----------
TOTAL ASSETS $ 27,044 $ 243,243
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
(DEFICIT)
Liabilities
Accrued expenses $ 1,392,900 --
Accounts payable - related party 102,564 78,830
----------- -----------
Total current liabilities 1,495,464 78,830
----------- -----------
Stockholders' Equity (Deficit)
Preferred stock, $0.10 par value
10,000 shares authorized, none issued -- --
Common stock, no par (200,000,000 shares
authorized, 49,959,356 shares issued and
outstanding on December 31, 1998 and
53,894,801 issued and outstanding on June
30, 1999) 2,658,533 4,332,683
Retained deficit prior to reentering development
stage January 1, 1998 (2,630,233) (2,630,233)
----------- -----------
Deficit accumulated since reentering development
Stage January 1, 1998 (1,496,720) (1,538,037)
----------- -----------
Total Stockholders' Equity (Deficiency) (1,468,420) 164,413
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 27,044 $ 243,243
=========== ===========
</TABLE>
<PAGE> 4
NESS ENERGY INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Three Months and Six Months Ended June 30, 1998 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Oil & Gas Revenues $ 5,076 $ 5,266 $ 10,200 $ 11,583
EXPENSES
Lease operating expenses 1,159 1,354 2,643 3,426
Production taxes 378 368 752 810
Compression expenses 1,091 682 2,030 1,541
Depreciation and depletion 1,402 1,402 2,804 2,804
General and administrative 22,928 27,773 45,037 63,420
------------ ------------ ------------ ------------
Total Operating Expenses 26,958 31,579 53,266 72,001
------------ ------------ ------------ ------------
Operating Income (Loss) (21,882) (26,313) (43,066) (60,418)
Interest Income 1,749 -- 1,749
------------ ------------ ------------ ------------
Net (loss) before income taxes (20,133) (26,313) (41,317) (60,418)
Income tax benefit -- -- -- --
------------ ------------ ------------ ------------
NET (LOSS) $ (20,133) $ (26,313) $ (41,317) $ (60,418)
============ ============ ============ ============
Net loss per weighted
average share $ 0.00 $ 0.00 $ 0.00 $ 0.00
============ ============ ============ ============
Weighted average shares
Outstanding 52,210,606 49,959,356 53,188,354 49,959,356
============ ============ ============ ============
</TABLE>
<PAGE> 5
NESS ENERGY INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For Six Months Ended June 30, 1998 and 1999
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ----------
<S> <C> <C>
NET CASH (USED) BY OPERATING ACTIVITIES $ (67,306) --
CASH FLOWS FROM INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From Issuance of Common Stock 281,250 --
--------- ----------
Increase/(decrease) in cash for period 213,944 --
Cash, Beginning of period 4,352 --
--------- ----------
Cash, End of period $ 218,296 $ --
========= ==========
</TABLE>
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Liquidity and Capital Resources:
The quarter ended June 30, 1999 was an eventful quarter for the Company in
building a cash balance in the Company. During the first six months the Company
raised, through private placements of its common stock to accredited investors,
$281,250. Cash on hand increased from $4,352 on December 31, 1998 to $218,296 on
June 30, 1999. On March 31, 1999 the Company had $152,494 in cash on hand.
Subsequent to June 30, 1999, the Company sold additional shares to one investor
for $118,000. Total shares subscribed from the investors totaled 887,226
restricted shares of common stock for an investment of $399,250.
More than eighty percent (80%) of the Company's assets is cash on June 30, 1999
compared to less than 25% on December 31, 1998. This improvement in liquidity is
attributable to the sale of shares through a limited number of private
placements mentioned above. Additional funding is planned during the third and
fourth quarters for expansion of the Company's operations.
Subsequent to June 30, 1999 the Company changed its name from Kit Karson
Corporation to Ness Energy International, Inc. The effective date of the name
change was made on July 6, 1999 and the symbol of the stock also changed on this
same day from "KTKC" to "NESS".
Revenues:
The revenues from gas sales have been fairly constant during the past year with
a very nominal decline in sales due mostly to gas prices. Gas revenues for the
three months ended June 30, 1999 were $5,076 compared to $5,124 for the previous
quarter ended March 31, 1999 and $5,266 for the three months ended June 30,
1998. The revenues come from the Company's interest in a group of wells known as
the Greenwood Gas Field in which the Company holds a 25% working interest. The
six months revenues ended June 30, 1999 compared to June 30, 1998 were down
approximately 12% declining from $11,583 to $10,200.
Subsequent to the end of the quarter ended June 30, 1999, the Company, in
conjunction with the other working interest holders, began a stimulation and
re-working program on two of the wells in the Greenwood Field. The results of
these work programs at the time of this report are not known, as the wells are
still in the process of being tested.
Also subsequent to the end of the quarter ended June 30, 1999 gas prices began
to improve due to hot summer months. The projections for gas prices for the
coming winter are significantly higher which will dramatically effect the
Company's revenues. The work programs on the existing wells are designed to
increase and maximize production during the winter months when the gas prices
are projected to be optimum.
<PAGE> 7
Expenses:
The Company entered into four agreements with Hesed Energy International, Inc.
where Hesed would provide certain services on a turnkey flat rate basis. These
agreements were entered into with an effective date of January 1, 1998 for a
two-year period that expires on December 31, 1999. The following is a list of
these services and the amount of monthly consideration for said services:
Management including office staff $2,750
Office Rent 350
Telephone equipment and Long Distance 150
Copier 100
In addition to the general and administrative expenses mentioned above, the
balance of the expenses incurred by the Company is attributable to the cost of
lease operations on the Greenwood Gas Field. These costs generally do not
fluctuate unless additional work is required or repairs are made. Compression
charges are based on the amount of gas produced where production taxes and lease
operating expenses are fairly flat.
Total operating expenses for the three months ended June 30, 1999 were $26,958
compared to $26,308 for the previous quarter ended March 31, 1999 and compared
to operating expenses of $31,579 for the three months ended June 30, 1998. The
decrease of $4,621 in total operating expenses from June 30, 1998 to June 30,
1999 is due to the cost of the shareholder's meeting held in June 1998. The six
months total operating expenses were down approximately $30,000 comparing 1999
to 1998. The costs incurred in reviving the Company during the first and second
quarter were mostly one-time expenses that will not be incurred again.
Results of Operations:
Operating losses incurred for the quarter ended June 30, 1999 was $21,882
compared to $21,184 for the quarter ended March 31, 1999. The operating loss for
the six months ended June 30, 1999 was $43,066 compared to $60,418 for the same
period in 1998.
The interest income was earned on the funds raised from private placements made
during the end of the first and second quarters.
The Company reported a net loss of $20,133 for the quarter ended June 30, 1999
compared to a loss of $26,313 for the previous year. The net loss numbers for
the six months ended June 30, 1999 were $41,317 compared to $60,418 for the six
months ended June 30, 1998.
No share data was reported, as the number of shares divided into the nominal net
loss was less than one cent per share.
<PAGE> 8
Disclosure Regarding Forward-Looking Statements
This document includes "forward-looking" statements within the meaning of
Section 27A of the Securities Act and the Company desires to take advantage of
the "safe harbor" provisions thereof. Therefore, the Company is including this
statement for the express purpose of availing itself of the protections of such
safe harbor provisions with respect to all of such forward-looking statements.
The forward-looking statements in this document reflect the Company's current
views with respect to future events and financial performance. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ from those anticipated. In this document,
the words "anticipates," "believes," "expects." "intends," "future," and similar
expressions identify forward-looking statements. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that may arise after the date hereof. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by this section.
Year 2000
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue. The "Year
2000" problem is the result of computer programs being written using two digits
rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure or
miscalculations. The Company believes that all of its software and equipment are
"Year 2000" compliant and that this problem will have no affect on the Company's
internal operations
<PAGE> 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
Not Applicable
Item 2. Changes in Securities:
Not Applicable
Item 3. Defaults upon Senior Securities:
Not Applicable
Item 4. Submission of Matters to a Vote of Securities Holders:
Not Applicable
Item 5. Other Information:
Not Applicable
Item 6. Exhibits and Reports on Form 8K:
(a) None
(b) None
<PAGE> 10
SIGNATURES
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.
NESS ENERGY INTERNATIONAL, INC.
By: /s/IVAN WEBB
-------------------------------------
Ivan Webb, Principal Accounting
Officer & Principal Financial Officer
Date September 29, 1999
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 218,296
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 223,355
<PP&E> 28,300
<DEPRECIATION> 8,412
<TOTAL-ASSETS> 243,243
<CURRENT-LIABILITIES> 0
<BONDS> 0
4,332,668
0
<COMMON> 0
<OTHER-SE> (4,168,270)
<TOTAL-LIABILITY-AND-EQUITY> 243,234
<SALES> 10,200
<TOTAL-REVENUES> 10,200
<CGS> 53,266
<TOTAL-COSTS> 53,266
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (41,317)
<INCOME-TAX> 0
<INCOME-CONTINUING> (41,317)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,317)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
