NESS ENERGY INTERNATIONAL INC /NV/, SB-2, 2000-07-18

NESS ENERGY INTERNATIONAL INC /NV/
SB-2, 2000-07-18
CRUDE PETROLEUM & NATURAL GAS

Previous: SELIGMAN J & W & CO INC /NY/, SC 13G/A, 2000-07-18

Next: NESS ENERGY INTERNATIONAL INC /NV/, SB-2, EX-2.1, 2000-07-18

<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE , 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------------

FORM SB-2

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
--------------------------

NESS ENERGY INTERNATIONAL, INC.

(Name of Small Business Issuer in its Charter)

<TABLE>
<S> <C> <C>
WASHINGTON 5812 91-1067265
(State or other jurisdictio (Primary standard (I.R.S Employer
of incorporation) industrial Identification no.)
classification code number)
</TABLE>

4201 EAST INTERSTATE 20
WILLOW PARK, TEXAS 76087
(817) 341-1477

(Address and Telephone Number of Principal Executive Offices)

HAROLD "HAYSEED" STEPHENS, CHIEF EXECUTIVE OFFICER
NESS ENERGY INTERNATIONAL, INC.
4201 EAST INTERNATATE 20, WILLOW PARK, TEXAS 76087
(817) 341-1477

(Name, Address, and Telephone Number of Agent For Service)
--------------------------

COPIES TO:

RICHARD E. DANIELS, ESQ.
Daniels McGowan & Assoc.
1201 Allen Market Lane, Suite 200
St. Louis, Mo. 63104

(314) 621 2728

FAX (314) 621 3381
--------------------------

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
--------------------------

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF PROPOSED AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED(1) PER UNIT OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Units consisting of 2 Shares Common Stock,
no par value, and Warrant to Purchase one
share of Common Stock...................... 20,440,624(2) $2.00 $40,881,248 $10,793
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.

(2) Pursuant to Rule 415 under the Securities Act of 1933, as amended, this
registration statement also covers such additional securities as may become
issuable upon exercise of warrants issued to purchasers of the securities
being offered for sale under the within registration statement.
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 404

<TABLE>
<CAPTION>
ITEM NUMBER IN FORM SB-2 AND TITLE OF ITEM LOCATION IN PROSPECTUS
------------------------------------------ ----------------------
<S> <C> <C>
PROSPECTUS

Item 1. Front of Registration Statement and
Outside Front Cover of Prospectus....... Cover Page

Item 2. Inside Front and Outside Cover Pages of
Prospectus.............................. Inside Front and Outside Cover Pages of
Prospectus

Item 3. Summary Information and Risk Factors.... Prospectus Summary; The Company;
Risk Factors

Item 4. Use of Proceeds......................... Use of Proceeds

Item 5. Determination of Offering Price......... Outside Front Cover Page; Price Range of
Common Stock

Item 6. Dilution................................ Dilution

Item 7. Selling Security Holders................ Not Applicable

Item 8. Plan of Distribution.................... Plan of Distribution

Item 9. Legal Proceedings....................... Legal Proceedings

Item 10. Directors, Executive Officers, Promoters
and Control Persons..................... Management

Item 11. Security Ownership of Certain Beneficial
Owners and Management................... Principal Shareholders

Item 12. Description of Securities............... Description of Securities

Item 13. Interest of Named Experts and Counsel... Legal Matters; Experts

Item 14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Management

Item 15. Organization Within Last Five Years..... Certain Transactions

Item 16. Description of Business................. Business

Item 17. Management's Discussion and Analysis or
Plan of Operation....................... Plan of Operation

Item 18. Description of Property................. Description of Property

Item 19. Certain Relationships and Related
Transactions............................ Business, Certain Relationships and
Related Transactions

Item 20. Market for Common Equity and Related
Stockholder Matters..................... Outside Front Cover Page of Prospectus;
Risk Factors

Item 21. Executive Compensation.................. Management

Item 22. Financial Statements.................... Financial Statements

Item 23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure.............................. Not Applicable
</TABLE>
<PAGE>
SUBJECT TO COMPLETION DATED , 2000
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS

NESS ENERGY INTERNATIONAL, INC.

$37,000,000 SUBSCRIPTION AMOUNT

CONSISTING OF 37,000,000 SHARES OF COMMON STOCK AND

18,500,000 WARRANTS TO PURCHASE 18,500,000 COMMON SHARES

This is an offering of 18,500,000 Units, each unit consisting of two shares
of Common Stock of Ness Energy International, Inc. and one 18 month Warrant to
purchase one share of Common Stock of Ness Energy International, Inc. at a price
of $2.50. The Units are being sold by the Company directly and through brokers,
but not through an underwriter. Proceeds received from the sale of these Units
will he available to the Company as soon as a minimum of 4,000,000 units are
sold.

In addition, 1,940,624 Units are being registered to be used for the
acquisition of two affiliated companies, Hesed Energy International, Inc., and
Ness of Texas, Inc. (See discussion under "Certain Relationships and Related
Transactions".)

In addition, 9,272,000 unregistered shares will be issued to Hayseed
Stephens in exchange for his shares in Hesed Energy International, Inc., and
Ness of Texas, Inc. (See discussion under "Certain Relationships and Related
Transactions".)

INVESTING IN OUR COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS.

<TABLE>
<CAPTION>
PER UNIT TOTAL
<S> <C> <C>
Public Offering Price..................................... $2.00 $37,000,000
Commission................................................ $.02 $370,000
Legal, Accounting, Printing Costs......................... $.005 $200,000
Proceeds to Ness Energy International, Inc................ $.975 $36,430,000
</TABLE>

The Company's Common Stock is quoted on the OTC Bulletin Board under the
symbol NESS. The closing bid price for the Common Stock on July 14, 2000 as
reported by the OTC Bulletin Board was $ 0.90 per share on volume of
108,700 shares. See "Price Range of Common Stock." There are 1791 individuals
shareholders of record, in addition to those held by brokers in street name.

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
ANDEXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE
ARE SPECULATIVE SECURITIES.
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes no exercise of the Warrants referred to herein.
Investors should carefully consider the information set forth under the caption
"Risk Factors."

THE COMPANY

Ness Energy International, Inc. (the "Company") a publicly traded company,
formerly known as Kit Karson Corporation, with offices at 4201 1-20 East Service
Road, Willow Park, Texas 76087, (817) 341-1477, was formed as a Washington
Corporation on March 1, 1979. The original purpose was to engage in a
diversified energy business and in 1997, under the direction of new management,
sought to expand the initial operational plan to include production of oil and
gas on both a domestic and international level. The Company's focus is now to
fund the drilling to total depth of a deep test well at the southwest end of the
Dead Sea on an oil and gas license known as Hesed, which covers approximately
55.3 square miles.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered for sale by the
Company............................................ Shares 37,000,000 with Warrants

Common Stock Registered for acquisition of shares of
affiliated companies............................... Shares 3,881,248 with Warrants

Unregistered shares to be issued to Hayseed Stephens
for acquisition of his shares in affiliated
companies.......................................... Shares 9,272,000 with Warrants

Common Stock to be outstanding after the Offering and
after the Tender Offer for the affiliated
companies' shares.................................. Shares 106,808,476

OTC Bulletin Board Symbol............................ NESS

Use of Proceeds...................................... Drill to total depth a well in Israel located
at the southwest end of the Dead Sea
</TABLE>

The number of shares of Common Stock outstanding after this Offering is
based on the assumption that all of the shares offered by the Company are sold.

3
<PAGE>
SUMMARY FINANCIAL INFORMATION

<TABLE>
<CAPTION>
FIRST QTR.
ENDED 3/31
FISCAL YEARS ENDED DECEMBER 31 UNAUDITED
----------------------------------------------------- -----------
1996(1) 1997 1998 1999 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net revenues.................. $ $ 1,934 $ 22,301 $ 21,208 $ 4,382
Operating expense............. -- 4,899 1,519,021 1,912,954 249,036
Other expense................. -- 1,416 -- (6,304) (117)
----------- ----------- ----------- ----------- -----------
Loss before inc. taxes........ $ -- $ (1,549) $(1,496,720) $(1,885,442) $ (244,537)
Income taxes.................. -- -- -- -- --
Net Loss...................... $ -- $ -- $(1,496,720) $(1,885,442) $ (244,537)
Per Share Data Net loss....... $ (0.00) $ (0.00) $ (0.03) $ (0.04) $ (0.01)
Weighted average shares
outstanding................. 35,809,356 35,809,356 49,959,356 52,916,747 54,758,096
=========== =========== =========== =========== ===========
</TABLE>

BALANCE SHEET DATA:

<TABLE>
<CAPTION>
MARCH 31, 2000 (UNAUDITED)
-----------------------------
ACTUAL AS ADJUSTED(1)
------------ --------------
<S> <C> <C>
Working Capital............................................. $ 272,016 $37,612,202
Total Assets................................................ 2,426,190 40,585,929
Long-term debt..............................................
Shareholders' equity........................................ 459,817 38,429,300
</TABLE>

------------------------

(1) Reflects the consummation of the offering as if the offering had occurred at
March 31, 2000.

4
<PAGE>
RISK FACTORS

THE PURCHASE OF THE UNITS OFFERED HEREBY IS SUBJECT TO A HIGH DEGREE OF
RISK. PROSPECTIVE PURCHASERS OF UNITS SHOULD CONSIDER THE FOLLOWING FACTORS,
AMONG OTHERS, BEFORE SUBSCRIBING. PROSPECTIVE INVESTORS ARE URGED TO CONSULT
THEIR OWN FINANCIAL COUNSEL IN CONNECTION WITH THE POSSIBLE PURCHASE OF UNITS.

MARKET AND PRICING

There can be no assurance that a market for any oil or gas produced from
wells, in which the Company has an interest, will be available or that the
prices obtained will be adequate to return the costs of drilling and completing
any well. Especially in the case of natural gas, a market may not be immediately
available because of the distance from the well to a gas pipeline. Such
logistical problems could result in natural gas remaining unsold for an
indefinite period of time. Moreover, the price of natural gas and oil is subject
to market demands that may cause the price to fall and rise without notice.
There also can be no assurance that the prices obtained for such oil and/or gas
will not be reduced through governmental control and regulation.

GOVERNMENTAL ACTIONS

Governmental authorities, may in the future, impose obstacles to the
production and sale of oil and gas through laws or regulations. Recent tax and
energy legislation has been enacted, the total effect of which is not yet known.
Various types of mineral properties have come under attack in certain areas
because of their potential impact upon the surrounding environment. Therefore,
leases or production in which the Company may have an interest, could be
adversely affected by either governmental regulations or private litigation
involving such environmental concerns. The Company is not able to predict the
outcome of such controls, regulations or laws on its operations.

HIGH DEGREE OF BUSINESS RISK

Exploration for oil and gas is extremely hazardous and involves a high
degree of risk of loss of all, or a portion, of the investment. Historically,
the industry ratio of Producing Wells has been low when compared to the total
number of wells drilled. In addition, completion of a Producing Well does not
assure the recovery of costs expended thereon.

NATURAL HAZARDS AND RISKS

Natural hazards and risks involved in the drilling of oil and gas wells are
great and include unusual or unexpected formations, pressures, and other
conditions which are not anticipated.

The Company may be subject to liability for pollution and other similar
damages or may lose portions of its property due to hazards against which the
Company cannot insure or against which it may elect not to insure, due to the
premium costs involved or for other reasons. Uninsured liabilities to third
parties could reduce the funds available for development by the Company, or
result in the loss of property owned by the Company.

OPERATIONAL RISKS

The drilling, completion and operation of oil and gas wells involves a high
degree of risk of operations failures, such as blowouts, loss of circulation,
collapsed casing, loss of drill bits and drilling pipe, and numerous other
mechanical and technical problems which may be encountered. No assurance can be
given that, in the event of such problems, the Company will have sufficient
funds to find solutions to such problems.

5
<PAGE>
DEPENDENCE UPON MANAGEMENT

The operations and financial success of the Company are significantly
dependent on the managerial personnel of the Company, especially the president,
Hayseed Stephens. In the event that the management of the Company becomes unable
or unwilling to continue to direct its operations, the Company could be
adversely affected.

OFFERING PRICE

The offering price for the Units was arbitrarily fixed by the Company based
upon the Company's current price range. No investment banker or other appraiser
was consulted regarding such price and terms. The offering price bears no
relationship to the possible future earnings of the Company. The price range of
the stock is described in more detail on page 13 under "Price Range of the
Shares".

COMPENSATION

As compensation for services to be rendered to the Company, the Company will
receive reimbursement of Legal, Accounting & Printing Costs and Organization
Costs ($200,000) whether or not a profit is made by the Company. The enumerated
compensation will be paid to the Company without regard to the success of the
offering. This offering of common stock, through this Prospectus, will be
offered exclusively by the Company and no commissions will be paid to its
officers and directors.

INTERNATIONAL OPERATIONS

It is the intention of the Company to engage operations in Israel. Although
the Company has no history of international expertise, the management of the
Company has been active in Israel since 1982.

USE OF PROCEEDS

The Company will receive net proceeds of approximately $36,430,000 if all
the Units sold at the price listed. There is no assurance that the Company will
sell any Common Stock or receive any proceeds. The Common Stock is being sold on
a minimum basis of 4,000,000 Units, $8,000,000. After the minimum number of
Units has been sold, the Company will use the proceeds as they are received.
There is no assurance that the Company will raise enough money from the sale of
shares to drill to total depth the proposed Well.

Depending upon the the number of Units sold, the Company may not receive
sufficient funds to achieve all of its business objectives. If the net proceeds
of the Offering are insufficient to fund the above purposes, the Company will be
required to seek additional financing from third parties. Such additional
financing would be more costly to the Company than through the sale of shares
offered pursuant to this prospectus. There is no assurance that such additional
financing will be available as needed.

If only the minimum of 4,000,000 Units ($8,000,000) is sold, the Company
will use a portion of the proceeds to complete the purchase and refurbishing of
the rig and to move it to Israel. Management feels

6
<PAGE>
that once this is accomplished the Company will be granted an extension of time
to drill and complete the well.

<TABLE>
<CAPTION>
IF MAXIMUM SOLD IF MINIMUM SOLD
------------------------ -----------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Purchase of Units............................... $37,000,000 100% $8,000,000 100%
----------- ------ ---------- ------
Purchase and refurbishing of Rig, and relocation
to Israel..................................... 4,705,000 12.72 4,705,000 58.81
Estimated Drilling Cost of Elohim Perazim #1
Well........................................ $30,392,949 82.14
Contingency................................... 1,332,051 3.60 3,015,000 37.69
Cost of the Offering:
Legal, Accounting, Printing................... 200,000 00.54 200,000 02.50
Commissions................................... 370,000 1.00 80,000 1.00
----------- ------ ---------- ------
Total....................................... $37,000,000 100.00 $8,000,000 100.00
</TABLE>

DILUTION

As of March 31, 2000, the Company has a net tangible book value per share of
$0.0084. Net tangible book value per share represents the total tangible assets
of the Company, less all liabilities, divided by the number of shares of Common
Stock outstanding. Without taking into account any changes in such net tangible
book value after March 31, 2000, other than to give effect to the sale by the
Company of 37,000,000 shares of Common Stock offered hereby and 3,881,248
registered shares to be issued to shareholders of affiliated companies and
9,272,000 unregistered shares to be issued to Hayseed Stephens for his shares in
the affiliated companies, the pro forma net tangible book value per share at
March 31, 2000, would have been $0.3598. This amount represents an immediate
increase in net tangible book value of $0.3514 per share to the current
shareholders of the Company and an immediate dilution in net tangible book value
of $0.6402 per share to new investors purchasing shares in this offering, as
illustrated in the following table:

<TABLE>
<S> <C>
Offering price per share.................................... $ 1.00
Net tangible book value per share before the offering....... $0.0084
Increase in net tangible book value per share attributable
to new investors(1)....................................... $0.3514
Pro form net tangible book value per share after the
offering.................................................. $0.3598
Dilution per share to new investors(2)...................... $0.6402
=======
</TABLE>

------------------------

(1) After deduction of the estimated commissions and the other offering expenses
to be paid by the Company.

(2) Determined by subtracting the adjusted net tangible book value per share
after the offering from the amount of cash paid by a new investor for a
share of Common Stock.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company intends to make an offer to purchase the shares of two privately
held "affiliated" companies, Ness of Texas International, Inc. ("Ness of Texas")
and Hesed Energy International, Inc. ("Hesed").

Ness of Texas International, Inc. was organized on December 31, 1997. The
Company was formed for the purpose of acquiring and developing oil and gas
properties both in the United States and Israel. In January of 1998, the company
sold 600,000 shares of stock at a price of $1.00 per share and in so doing

7
<PAGE>
relied on certain exemptions from registration under the Securities Act. This
coupled with the initial issuance of shares to Hayseed Stephens, the President
and CEO of the company, brought the total shares issued and outstanding to
888,000. The Board of Directors subsequently authorized and issued additional
2,952,000 shares to Mr. Stephens and therefore the total number of issued and
outstanding shares is 3,840,000. The total number of authorized shares is
200,000,000. Ness of Texas International, Inc. made a deposit of $200,000 (US)
to Israel for the purpose of initiating the process of acquiring a lease in the
Dead Sea.

Hesed Energy International, Inc. ("Hesed") is also an affiliate of Ness
Energy International, Inc. formerly Kit Karson Corporation. The Company was
organized in October of 1993. On August 15, 1997, Hesed sold 696,000 shares of
common stock for $1.00 per share. On April 30, 1998, Hesed offered certain
"units" of common stock and warrants which, in the aggregate, consisted of
2,168,000 common shares and 720,000 warrants with each unit consisting of 27,100
shares valued at $1.85 per share and 9,000 warrants exercisable at $2.50 per
share within 18 months. Hesed Energy International, Inc., ("Hesed"), was
originally named Ness Energy International, Inc., but that name was changed to
Hesed Energy International, Inc. by Articles of Amendments, which was filed on
August 10, 1999. Those Articles also show that as of August 6, 1999, Hesed had
7,550,794 shares of common stock outstanding and has some 72 shareholders. On
February 9, 1999, Hesed announced that it had acquired the "Hesed License"
covering 55.3 square miles in an area at the Southwest end of the Dead Sea. It
also announced that the Elohim Perazim well had been staked. This license is
subject to a 1/8th royalty interest to the government of Israel. In addition, a
1/8th carried W.I. after payout, to I.O.C. (lessee) I.O.C. has an option to
increase their W.I. another 20%. This 20% W.I. shall be subject to the
Authorization for Expenditures 30 days prior to the commencement of operations.
The financial statements of Hesed indicate an investment in the lease of $65,000
and a receivable from Kit Karson Corporation (now Ness Energy
International, Inc.) of $716,272 at March 31, 2000.

Under the terms of the Tender Offer (See Exhibit 2.1) Ness Energy
International will offer to the shareholders of Ness of Texas units consisting
of two shares of common stock and one warrant to purchase an additional share of
common stock. The share price under the terms of the warrant is $2.50 and the
warrant is exercisable for a period of 18 months. There are 3,840,000 common
shares of Ness of Texas outstanding of which 3,072,000 are owned by Hayseed
Stephens. Any shares received by Mr. Stephens under the terms of the Tender
Offer will be restricted shares as that term is defined under Rule 144.

Under the terms of the Tender Offer (See Exhibit 2.1) Ness Energy
International will offer to the shareholders of Hesed Energy International inc.
Units consisting of two shares of common stock and one warrant to purchase an
additional share of common stock. The share price under the terms of the warrant
is $2.50 and the warrant is exercisable for a period of 18 months. There are
currently 8,440,031 common shares of Hesed Energy International Inc. outstanding
of which 6,200,000 are owned by Hayseed Stephens. Any shares received in
exchange by Mr. Stephens under the terms of the Tender Offer will be restricted
shares as that term defined under Rule 144.

Rule 144 provides, in general, that any person (or any persons whose shares
are aggregated) including persons deemed to be affiliates, whose undrestricted
securities have been fully paid for and held for at least one year from the
later of the date of issuance by the Company or acquisition from an affiliate,
may sell such securities in broker's trnasactions or directly to market makers,
provided that the number of shares sold in any three month period may not exceed
the greater of 1% of the then-outstanding shares of Common Stock or the average
weekly trading volume of the shares of Common Stock in the over-the-counter
market during the four calendar weeks preceding the sale.

8
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 2000 (Unaudited), as further adjusted to give effect to the sale of
the Common Stock offered hereby and the Tender Offer. See the Financial
Statements.

<TABLE>
<CAPTION>
MARCH 31, 2000
--------------
<S> <C>
Shareholders' equity:
Common Stock, no par value, 200,000,000 shares authorized,
55,650,228 shares issued and outstanding................ $ 7,121,344
Common stock to be sold, net of expenses.................. 36,430,000
Retained deficit.......................................... (6,256,931)
Deferred Consulting....................................... (279,596)
Accum. other comprehensive income......................... (125,000)
Total Ness shareholders' equity........................... $36,889,817
-----------
Hessed Shareholder's equity............................... 899,931
Ness of Texas Shareholder's equity........................ 639,552
-----------
Pro-forma Shareholder's equity.............................. $38,429,300
===========
</TABLE>

9
<PAGE>
SELECTED FINANCIAL DATA

The statement of income date set forth below with respect to the year ended
December 31, 1998 and 1999, and the balance sheet data at December 31, 1998 and
1999, are derived from, and are qualified by reference to, the audited financial
statements included elsewhere in this prospectus. The data presented below are
qualified by reference to the audited Financial Statement included elsewhere in
this prospectus and should be read in conjunction with such financial statements
and related notes thereto.

<TABLE>
<CAPTION>
FIRST QTR. FIRST QTR.
ENDED 3/31 ENDED 3/31
FISCAL YEARS ENDED DECEMBER 31 UNAUDITED UNAUDITED
----------------------------------------------------- ----------- -----------
1996(1) 1997 1998 1999 1999 2000
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Net revenues............ -- $ 1,934 $ 22,301 $ 21,208 $ 5,124 $ 4,382
Operating expense....... -- 4,899 1,519,021 1,912,954 26,308 249,036
Other expense........... -- 1,416 -- (6,304) -- (117)
----------- ----------- ----------- ----------- ----------- -----------
Loss before inc.
taxes................. $ -- $ (1,549) $(1,496,720) $(1,885,442) $ (21,184) (244,537)
Income taxes............ -- -- -- -- -- --
Net Loss................ $ -- $ -- $(1,496,720) $(1,885,442) $ 21.184) $ (244,537)
Per Share Data Net
loss.................. $ (0.00) $ (0.00) $ (0.03) $ (0.04) $ (0.00) $ (0.01)
Weighted average shares
outstanding........... 35,809,356 35,809,356 49,959,356 52,916,747 50,155,078 54,758,096
=========== =========== =========== =========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
FIRST QTR.
FISCAL YEARS ENDED DECEMBER 31 ENDED 3/31
------------------------------------------------- ----------
1996(1) 1997 1998 1999 2000
---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working Capital............................. $ -- $(1,491,112) $ (438,117) $ 272,016
Total Assets................................ -- -- 27,044 1,831,384 2,426,190
Long-term debt.............................. -- -- -- -- --
Shareholders' equity........................ -- -- (1,468,420) (250,425) 459,817
</TABLE>

------------------------

(1) The Company was inactive during 1996.

The Company's revenues for 1999 were derived solely from the gas wells on
the Greenwood Gas Field in which the Company holds a 25% working interest. Gross
revenues from this interest for 1998 were $22,301 and $ 21,208 for 1999.
The Company's gross revenues for the previous two years were solely derived from
one gas well located in Beaver County, Oklahoma in which the Company owns a
4.6125% working interest. The Company's interest in this well generated $1,934
in 1997 and $1,671 in 1996.

In May 1999 the Company acquired a 4% working interest in the Cross "L" and
Susan Peak Leases in Schleicher and Sutton counties Texas. These leases have
multi-pay potential. In June 1999 the Company acquired approximately 2,081 acres
adjoining the proven Greenwood Gas Field in Parker County, Texas. In
September 1999 the Company acquired the Metzada License from the State of
Israel. The Company has 87.5% interest and the State has 12.5% interest. This
License is contiguous to the northern border of the Hesed License, extends
northward along the Dead Sea and contains 91,125 acres. This license contains
various requirements beginning with the presentation of Geophysical Maps by
August 15, 2000 continuing to a well spud date by October 1, 2001. Hesed has an
agreement with the Company whereby the Company will have the opportunity to
acquire 45% of Heseds' interest in the Hesed License.

10
<PAGE>
of normal recurring accruals) which are necessary to properly reflect the
financial position of the Company as of March 31, 2000 and the results of
operations for the three months periods ended March 31, 1999 and March 31, 2000.

Operating revenues for the three month period ended March 31, 2000 were
$4,382, a 14% decrease from 1999, with an operating loss of $244,654. The 14%
decrease in revenues over 1999 is attributed to a slight reduction in gas
production. Costs and expenses for the three month period ended March 31, 2000
increased by $2,328 or 55% to $6,527 as compared to $4,199 for the corresponding
period ended March 31, 1999. This was primarily due to increased lease operating
costs and higher equipment depreciation expense. General and Administrative
Costs in 2000 increased by 1007% to $242,509 as compared to $22,109 for the same
three month period in 1999 due primarily to costs associated with the Israeli
project. The Company had a net loss for the three month period ended March 31,
2000 of $244,537 compared to net loss of $21,184 for the same period in 1999,
representing ($.01) and ($.00) per share, respectively.

BUSINESS

During the period from March 1, 1979 to March 31, 1981, the Company
conducted no substantial business, received no material income and had no
material assets or liabilities. On March 31, 1981, a new management group took
control and moved the office from Spokane, Washington to Wichita, Kansas. This
new management group conducted the Company's operations in two primary segments:
oil and gas and real estate. The Company's activities from March 31, 1981,
through December 31, 1984, were limited due to availability of funds. However,
the Company did enter into a purchase agreement for an office building in
Wichita, Kansas and several oil and gas projects, plus made a few stock
acquisitions during this period of time. Unfortunately, the investments did not
sustain the Company and the solicitation of additional working capital became
more difficult, causing the Company to become inactive.

The principle business of the company is the exploration for and development
of oil and natural gas and in particular the exploration for oil on the Hesed
license area and the drilling of the Elohim Perazim #1 deep test well. During
the years 1985-1987, the Company was seeking working capital to continue its
operations but because of a downturn in the oil and gas industry in the period
from 1986-1987, project funding became more and more difficult. The lack of
working capital let the Company become dormant. During the years, several
opportunities were presented to revive the Company but were perceived by
management as not favorable to the Company's interest or did not close due to an
inability of the interested parties to do so.

On December 22, 1997, a change of control occurred and new officers and
directors were appointed. Since that time, the Company President, Hayseed
Stephens, has principally conducted the business of the Company.

The Company has not been involved in any bankruptcy, receivership, or
similar proceeding and underwent no material reclassification, merger, or
consolidation during the dormant years from January 1, 1985, through
September 30, 1997. However, on October 8, 1997, an agreement was made to revive
the Company by issuing 14,150,000 shares of stock to Harold (Hayseed) Stephens
for certain oil and gas properties located in Parker County, Texas. On
December 22, 1997, Mr. Stephens became President of the Company and the oil and
gas interests were assigned by the former board of directors to the Company for
14,150,000 restricted common shares.

DESCRIPTION OF PROPERTY

On December 31, 1996 the Company owned a 4.6125% working interest in a gas
well in Beaver County, Oklahoma. Redstone Oil & Gas Company of Dallas, Texas
operate the well, Benjegerdes #1. Revenues from this working interest for 1995
were $1,418 less operating expenses of $574 for a net income of $844 before
taxes. In 1996 the revenues were $1,696 with operating expenses of $600, leaving
a net

11
<PAGE>
income of $1,096 before taxes and in 1997 the revenues were $1,934 with
operating expenses of $609, leaving a net income of $1,325 before taxes.

Change of control of the Company from Art Sykes to Hayseed Stephens was on
December 22, 1997. At the time of change of control it was mutually agreed
between these two parties that Art Sykes would receive the above mentioned asset
as compensation for taking care of the Company during the dormant years and that
Hayseed Stephens would vend in an oil and gas asset for 14,150,000 shares of
stock. The following is a description of the oil and gas asset (Greenwood Gas
Field) located in Parker County, Texas.

The Company acquired a 25% working interest on December 22, 1997 (effective
date of January 1, 1998) in the Greenwood Gas Field located in Parker County,
Texas. The Greenwood Gas Field is a developmental, multipay, Strawn Sand Field,
located about 35 miles due west of Fort Worth. This 1100 acre field in the Fort
Worth basin is in its early state of development, although there has been
prolific production on it, and around it, since the 1960's. These particular
leases were drilled initially to find production in the conglomerates. This
proved unsuccessful, but a 2,800 foot Strawn Sand was discovered to be very
successful in two wells on Greenwood leases. One well produced 310,000 MCFG,
while the other one produced 244,000 MCFG in six years and in 1972 they were
both plugged while still producing, due to low gas prices.

The Greenwood Field was reactivated in 1984 to produce the left over gas
from the 2,800-foot sand while gas prices were high. Then it was discovered that
other shallower Strawn Sands also were very commercially productive. These wells
are drilled on 40 to 80 acre spacing and each producing well, in this field,
averages between 300,000 MCFG to 1BCF, only drilling to a depth of 3,000 feet.
The known productive zones are located at 2,800 feet, 2,100 feet and 1,850 feet
on the leases within the Greenwood Gas Field. Other potentially productive zones
are also known in the area ranging from 500 feet to 1,600 feet.

There are currently 5 gas wells on the leases in which the Company owns a
25% working interest. Gas sales from these wells for the Company's working
interest was $21,208 for 1999. Lease operating expenses, production taxes and
compression expenses totaled $13,533 leaving a profit from this lease of $7,675.

A reserve report and equipment evaluation was prepared on the Greenwood
leases as of December 31, 1999. The reserve report reflects a fair market value
of $29,643, a present value of $61,378 and the equipment is valued at $22,058
for the 25% working interest owned by the Company as of December 31, 1999.

In the Spring of 1998, Hesed Energy International, Inc. ("Hesed") an
affiliate of the Company, which at that time was known as Ness Energy
International, Inc., entered into a contract with the Israel Oil Company.
Pursuant to this, Hesed was entitled to acquire, subject to regulatory approvals
in Israel, drilling rights in part of the Dead Sea area in Israel. This was,
subsequently, designated as the "Hesed License." In early fall, 1998, the
necessary regulatory approvals in Israel were granted. While the Hesed License
itself was granted to I.O.C., the Petroleum Commissioner specifically approved
I.O.C.'s assignment of the rights in over 95% of the license area to Hesed.
Pursuant to its agreement with Hesed, I.O.C. retained a 12 1/2%
back-in-after-pay-out working interest in the first well to be drilled by Hesed
in the area of the Hesed License. The Israeli regulatory authority set an
April 1, 2000 deadline for "spudding-in" a well within the Hesed License area.
That date has since been extended to September 10, 2000 so additional funding
arrangements can be put in place to allow the Company to acquire 45% of the
working interest in the Hesed License and pay for the Company's pro rata share
of drilling the Elohim Perazim #1 deep test. The estimated total cost of the
Israel project, including the drilling rig, is approximately $35,000,000.

12
<PAGE>
$500,000 were made in October and November, respectively, but the balance due
has not been paid. In addition, two $42,000 payments were made to extend the
time available to enter into the purchase contract.

In addition, the Company entered into a contract on September 23, 1999, that
provided for the refurbishment and mobilization of the above rig for $2,200,000.
The funds were to be put into escrow upon the purchase of the rig. Escrow is to
be distributed as work is completed on the refurbishment and mobilization. As of
December 31, 1999, the Company had paid $405,000 toward the refurbishment.

Management is currently negotiating the completion of the contract and
believes that the purchase will be completed. Accordingly, the amounts paid on
the contract have been included as deposits on equipment in the accompanying
financial statements. The Company has received a notice of default from the
seller of the rig. The Company has rejected this notice since: (1) the terms of
the purchase were changed by the parties at the time of the initial payment
under the rig purchase agreement; (2) there is no provision for default in the
agreement; and (3) any disputes arising under the contract are to be settled by
arbitration and no request for arbitration has been requested by either party.
Nevertheless, in addition to including the deposits on the financial statements,
the Company has reflected an accrued contingency in the accompanying financial
statements due to the uncertainty surrounding the purchase of the rig. The
corresponding expense is reflected in the expenses related to the Israeli
project.

PLAN OF OPERATION

Since 1982, Stephens, an oil man that preaches & pastors The Living Way
Church at Willow Park, Texas has, through a combination of traditional geology
and biblical prophecy, reached the conclusion that a major deposit of oil and
gas lies at the southwest corner of the Dead Sea in Israel. The Company has an
agreement to fund the necessary funds for the drilling and completion of a deep
test on the Hesed License issued to Hesed Energy International, Inc.

The Hesed License covers approximately 55.3 square miles at the southwest
end of the Dead Sea. A well, Elohim Perazim #1, is planned to be drilled past
20,000 feet deep. The estimated total cost of drilling this well is $30,392,949.

The Hesed License, also known as the Company's Israel Project, is located at
the southwest end of the Dead Sea. The Dead Sea has generated hydrocarbons and
contains trapping mechanisms to rank the potential fields discovered as
super-giants, based on current and available literature. Even though Israel
contains much of the same type of hydrocarbon formations as the remainder of the
productive Middle Eastern countries, geo-politics has played a major role in the
non-development of oil resources in Israel. Since 1953, the exploration program
has been in four erratic phases. To date, only twenty-two wells have been
drilled in this region. Of these twenty-two wells, only seven are considered to
be geologically viable and of the seven, only two are considered to be
significant, valid tests of geological premise. In the last ten years, more
seismic, magnetic and gravity surveys have been run. This new data has added
significantly to the knowledge base. We, Ness, have total access to all the
information, along with the Company's own geology and geophysical work. The
results of these data indicate that this rift basin is similar to the North Sea
and, therefore, should be drilled in a similar fashion. In the North Sea
experience, no significant hydrocarbons were detected until wells were drilled
sub-salt in the rift. In comparison with the North Sea, the peripheral shows,
and satellite wells of the Dead Sea graben, have been located. Next to be
discovered is the super giants that feed them.

Oil from seeps, collected asphalt on land, and shows in various well bores,
were tested geochemically during the 1980's. The results of this testing
demonstrated that all the oils were from one source. The source was traced back
to the Senonian Formation (Cretaceous). In the region of the deep graben, the
source beds are estimated to be in excess of 150 meters thick. According to the
Israelis, this source bed is some 30 times richer than a comparable source bed
of the North Sea. Given these data, the entire Dead Sea region would have the
potential to generate from 1.7 billion barrels of oil to a maximum of
43.0 billion barrels. The minimum number represents a hypothetical yield from a
low-grade source rock from the

13
<PAGE>
North Sea and the maximum number represents the Israeli number. For the record,
the Israelis lowered this maximum to 18 billion barrels in their reports.

The shallow gas fields, rimming the Dead Sea graben, show that hydrocarbons
are generated and trapped in the sediments of the deep graben. Analysis of the
produced gas suggests that the 90.5 billion cubic feet of gas is generated by
the thermal cracking of crude oil. As in the case of the North Sea, wells
drilled sub-salt in the Dead Sea Rift Valley will be the wells that discover the
giant and super-giant fields of this region.

Hayseed believes that, supernaturally, God spoke to him in 1982 and He said,
"The Greatest Oil Field in the World is located at the Southwest End of the Dead
Sea". Now, 17 years later through the Bible and historical accounts by Deidor,
Strabo, Josepheus and geological works by Israel and Ness, the spoken words were
confirmed. Around 2,000 years ago, in the time of Deidor, Strabo & Josepheus,
the Dead Sea was still producing natural gas, to the extent that, at times, the
entire Dead Sea (12 miles wide by 40 miles long of the heaviest water on earth)
would become convex and take on the appearance of a large hill. Immediately
afterwards, large quantities of oil were released from the deep, beneath the
deepest deep and, as it reached the surface of the Dead Sea, it had coagulated
into a solid mass. From the shore, it appeared to be giant islands in the middle
of the Sea (see picture shown on next page). Then, the local residents would
harvest this oil and continue to profit greatly, as they traded and bartered at
the nearby town of Jericho. Hayseed believes this first well, Elohim Perazim #1,
will deliver, or certainly birth the deliverance of, Israel from economic
bondage. All this, with much more, Hayseed believes has been revealed to him and
now confirmed by Bible historians and all forms of geology.

LEGAL PROCEEDINGS

During 1999, the Company settled two lawsuits filed in 1998 through the
issuance of unrestricted stock. In January 2000, the Company was served with a
lawsuit demanding that the Company pay to the Plaintiff 500,000 shares of the
companys common stock. The suit is filed in the United States District Court for
the District of Kansas, bearing civil action number 00-1018-JTM. The Plaintiff
was not a shareholder at the time present management took control of Ness Energy
International, Inc. (then Kit Karson Corporation) on December 22, 1997, and had
not been a stockholder since November of 1985. Management believes that the
Plaintiff has no standing to bring this legal action and that the demand is
totally without merit.

14
<PAGE>
PRICE RANGE OF THE SHARES

The shares are traded in the Over-the-Counter market and quoted in the
NASDAQ system under the symbol "NESS" on the Electronic Bulletin Board. The
range of high and low bid quotations for each quarter during the current fiscal
year, as quoted in the NASDAQ System, is set out in the table that follows.
These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission, and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 HIGH LOW
---------------------------- -------- --------
<S> <C> <C>
First Quarter............................................... $0.63 $0.04
Second Quarter.............................................. $0.68 $0.17
Third Quarter............................................... $0.52 $0.25
Fourth Quarter.............................................. $0.36 $0.20
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, 1999 HIGH LOW
----------------------------- -------- --------
<S> <C> <C>
First Quarter............................................... $0.52 $0.20
Second Quarter.............................................. $0.51 $0.36
Third Quarter............................................... $4.87 $0.42
Fourth Quarter.............................................. $2.13 $1.01
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, 2000 HIGH LOW
----------------------------- -------- --------
<S> <C> <C>
First Quarter............................................... $1.63 $1.03
Second Quarter.............................................. $1.13 $0.63
</TABLE>

The closing price of the shares on June 30, 2000, as quoted in the NASDAQ
System for the Electronic Bulletin Board, was $0.8125 per share with a volume of
60,100 shares traded.

15
<PAGE>
MANAGEMENT

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION IN OFFICE SINCE
---- -------- ------------------------- ---------------
<S> <C> <C> <C>
Harold "Hayseed" Stephens(1) 61 President, CEO & Director 1997
Mary Gene Stephens(1) 60 Secretary & Treasurer 1997
Mark Bassham 39 Director 2000
Richard Nash 55 Director 1999
Bob Lee 58 Chief Financial Officer 1999
</TABLE>

------------------------

(1) Harold "Hayseed" Stephens and Mary Gene Stephens are husband and wife. There
are no other family relationships between the directors and officers.

HAROLD "HAYSEED" STEPHENS, President & Director, graduated from Hardin
Simmons University in 1961 with a BS degree. Mr. Stephens founded Hayseed
Stephens Oil & Gas Inc. in 1983 for domestic oil and gas operations primarily in
Texas and Oklahoma. He also founded Ness Energy International for international
operations focusing on Israel for oil and gas concessions. In 1984 - 1985
Stephens partnered with three Israeli companies in a 50 million dollar drilling
consortium that leased 400,000 acres.

MARY GENE STEPHENS, Secretary & Treasurer, has been involved in office
administration and day to day bookkeeping and correspondence for Hayseed
Stephens Oil & Gas Inc. and Ness International Energy Inc. for the past
15 years. Mrs. Stephens has also been involved in preparing drilling proposals
and joint interest billing and income distribution.

RICHARD W. NASH, Director, received his B. S. degree in 1970 from East Texas
State University. He received his Masters of Education degree from East Texas
State University in 1971. In 1980, he received his Doctor of Education degree
from Texas A&M (Commerce, Texas branch). Dr. Nash has pastored Victory Temple
Church in Enloe, Texas since 1988. Victory Temple is associated with The Living
Way Ministries, Willow Park, Texas. During the past five years, Dr. Nash, who is
retired, has assisted Mr. Hayseed Stephens in his ministry in South Africa, as
well as in Israel. He has made one trip to South Africa and four trips to
Israel. The first of which was in 1990 when he accompanied Mr. Stephens and
three other oilmen to meet with the Israeli government. From 1980 to 1994,
Dr. Nash was Assistant Superintendent of Prairiland ISD until he retired.

MARK L. BASSHAM, Director, is a veteran Texas Peace Officer of eighteen
years and a minister of the gospel. He holds the distinction of being the
youngest person ever to be elected to the position of County Sheriff, where he
served until 1990, before being commissioned by the Texas Department of Public
Safety as a Special Texas Ranger. Bassham joined the Texas and Southwestern
Cattle Raisers' Association as an Investigator. Assigned to a twelve county
District in Northeast Texas, he investigates all types of agricultural crimes.
As Associate Pastor at Victory Temple Church in Enloe, Texas he heads the
Church's cattle project with Canaan Land Restoration of Israel, Inc. The project
will aid the State of Israel in establishing a beef cattle industry in the Holy
Land.

BOB LEE, Chief Financial Officer, received his Bachelor of Science Degree in
Accounting from Northwestern Louisiana State University in 1965. Mr. Lee has
thirty-five years experience in various segments of the oil industry. He began
his career at Tenneco, Inc., later joining Amerada Hess Corporation. He served
as accounting manager and controller for the past eighteen years with Pride
Companies in Abilene, Texas.

EXECUTIVE COMPENSATION

No compensation was paid during the year ended December 31, 1996. No
compensation was paid in 1997 other than the assignment of the working interest
in the gas well in Beaver County, Oklahoma and

16
<PAGE>
87,400 shares of Black Giant Oil Company to Arthur Sykes, Jr. for maintaining
the Company during the dormant years. The amount of this compensation is
calculated to be $4,622.

The following table shows the annual compensation paid to the officers of
Ness Energy International, Inc. in 1999.

<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION SALARY
--------------------------- --------
<S> <C>
Hayseed Stephens, President & CEO........................... $62,500
Mary Gene Stephens, Secretary/Treasurer..................... 18,000
Bob Lee, CFO and Controller................................. 7,900
</TABLE>

All compensation and other arrangements between the Company and its officers
and directors are to be approved by a Compensation Committee of the Board of
Directors, a majority of whom are to have no affiliation or relationship with
the Company other than as directors.

Compensation of Directors: Directors are not compensated for attendance at
meetings of the Board, although certain travel expenses relating to attending
meetings are reimbursed.

BOARD OF DIRECTORS

Each of the Company's directors has been elected to serve until the next
annual meeting of shareholders. The Company's executive officers are appointed
annually by the Company's directors. Each of the Company's directors continues
to serve until his or her successor has been designated and qualified. Directors
currently receive no fees.

PERSONAL LIABILITY AND INDEMNIFICATION OF DIRECTORS

The Company's By-laws contain provisions which reduce the potential personal
liability of directors for certain monetary damages and provide for indemnity of
directors and other persons. The Company is unaware of any pending or threatened
litigation against the Company or its directors that would result in any
liability for which such director would seek indemnification or similar
protection.

The provisions regarding indemnification provide, in essence, that the
Company will indemnify directors against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with any action, suit, or proceeding arising out of the director's
status as a director of the Company, including actions brought by or on behalf
of the Company (stockholder derivative actions). The provisions do not provide
indemnification for liability in proceedings arising out of personal benefit
improperly received or where a person is found liable to the Company.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors and officers of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been advised that such
indemnification, in the opinion of the Securities and Exchange Commission, is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

17
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 31, 2000, by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company, and (iv) by all executive officers and
directors of the Company as a group. See "Description of Securities". Unless
otherwise indicated, each of the following persons has sole voting and
investment power with respect to the shares of Common Stock set forth opposite
their respective names.

<TABLE>
<CAPTION>
BEFORE THE OFFERING AFTER THE OFFERING
----------------------- -----------------------
NAME AND ADDRESS NUMBER OF PERCENT NUMBER OF PERCENT
OF BENEFICIAL OWNER SHARES OWNED OF CLASS SHARES OWNED OF CLASS
------------------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Hayseed Stephens ................................. 27,235,780 48.1% 36,507,780 34.2%
4201 East I-20 Service Rd.
Willow Park, TX 76087

Cede & Co. ....................................... 16,956,533 29.9% 16,956,533 15.9%
55 Water Street, 50(th) Floor
New York, NY 10041

All directors and officers as a group (4 27,240,780 48.1% 36,592,780 34.3%
persons)........................................
</TABLE>

Of the outstanding shares, 33,618,025 are Restricted, and 23,037,203 are
free-trading shares.

DESCRIPTION OF SECURITIES

CAPITAL STOCK

The Company's authorized capital stock consists of 10,000,000 shares of
Preferred Stock, par value $0.10 per share, none of which is issued and
outstanding, and 200,000,000 shares of Common Stock, no par value. As of
March 31, 2000, 55,650,228 shares of Common Stock are outstanding.

PREFERRED STOCK

The Board of Directors of the Company is authorized to issue, without
further stockholder approval, up to 10,000,000 shares of Preferred Stock from
time to time and to fix such designations, powers, preferences and relative
voting, distribution, dividend, liquidation, transfer, redemption, conversion
and other rights, preferences, qualifications, limitations or restrictions
thereon..

COMMON STOCK

There are no preemptive, subscription, conversion or redemption rights
pertaining to the Common Stock. The absence of preemptive rights could result in
a dilution of the interest of existing shareholders should additional shares of
Common Stock be issued. Holders of the Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of assets legally
available therefor, and to share ratably in the assets of the Company available
upon liquidation.

Each share of Common Stock is entitled to one vote for all purposes and
cumulative voting is not permitted in the election of directors. Accordingly,
the holders of more than 50% of all of the outstanding shares of Common Stock
can elect all of the directors. Significant corporate transactions such as
amendments to the articles of incorporation, mergers, sales of assets and
dissolution or liquidation require approval by the affirmative vote of the
majority of the outstanding shares of Common Stock. Other matters to be voted
upon by the holders of Common Stock normally require the affirmative vote of a
majority of the shares present at the particular shareholders' meeting. The
Company's directors and officers as a group beneficially own approximately 48.1%
of the outstanding Common Stock of the Company. Shareholders." Accordingly, such
persons will continue to be able to substantially control the Company's affairs,
including,

18
<PAGE>
without limitation, the sale of equity or debt securities of the Company, the
appointment of officers, the determination of officers' compensation and the
determination whether to cause a registration statement to be filed.

The rights of holders of the shares of Common Stock may become subject in
the future to prior and superior rights and preferences in the event the Board
of Directors establishes one or more additional classes of Common Stock, or one
or more additional series of Preferred Stock.

WARRANTS

For each Unit purchased through this Offering, the investor will receive two
shares of common stock and one Warrant to purchase one share of common stock.
The warrant will be subject to a Warrant Agreement between the Company and
Fidelity Transfer Company, Inc., the Warrant Agent.

Each Warrant shall, when countersigned by the Warrant Agent, entitle the
bearer thereof, subject to the provisions thereof and of the Warrant Agreement,
to purchase from the Company the number of shares of Common Stock stated
therein, at the price of $2.50 per share, subject to the adjustments provided in
Article III thereof. The term Warrant Price as used in the Agreement refers to
the price per share at which Common Stock may be purchased at the time a Warrant
is exercised.

Warrants may be exercised only on or before a date, which is eighteen
(18) months after the date of the Warrants (the expiration date). Each Warrant
not exercised on or before the expiration date shall become void, and all rights
thereunder and all rights in respect thereof under the Warrant Agreement shall
cease at the close of business on the expiration date.

A Warrant, when countersigned by the Warrant Agent, may be exercised by
surrendering it, at the corporate trust office of the Warrant Agent, or at the
office of its successor as Warrant Agent, in Salt Lake City, in the State of
Utah, with the subscription form set forth in the Warrant duly executed, and by
paying in full, in lawful money of the United States, the Warrant Price for each
full share of Common Stock as to which the Warrant is exercised and any
applicable taxes.

As soon as practicable after the exercise of any Warrant, the Company shall
issue to or upon the order of the bearer of such Warrant a certificate or
certificates for the number of full shares of Common Stock to which he is
entitled, registered in such name or names as may be directed by him, and if
such Warrant shall not have been exercised in full (except with respect to a
remaining fraction of a share), a new countersigned Warrant for the number of
shares (including fractional shares) as to which such Warrant shall not have
been exercised.

The Warrant Agreement provides for adjustment of the exercise price and the
number of shares of Common Stock purchasable upon exercise of the Warrants to
protect Warrant holders against dilution in certain events, including stock
dividends, stock splits, reclassification, and any combination of Common Stock,
or the merger, consolidation, or disposition of substantially all the assets of
the Company.

The Company has agreed to "piggy-back" registration rights for the
securities underlying the Warrants at the Company's expense during the eighteen
months following the issuance of the Warrants. In addition, at any time
commencing 90 days after the issuance of the warrants, the Company has agreed to
register the securities underlying the Warrants at the Company's expense upon
notice from the holders.

PLAN OF DISTRIBUTION

This Offering is a "best efforts" offering, and will not be underwritten nor
will any underwriter be engaged for the marketing, distribution or sale of any
shares registered in this prospectus. Sales may be made to purchasers directly
by the Company or, alternatively, the Company may offer the shares through
dealers, broker, finders or agents, who may receive compensation in the form of
commissions. Any dealers, brokers, finders or agents that participate in the
distribution of shares may be deemed to be underwriters

19
<PAGE>
and any profits on the sale of the shares by them and any discounts or
commissions received by such dealers, brokers, finders or agents may be deemed
to be underwriting discounts and commissions under the Act.

To the extent required at the time a particular offer of the shares is made,
a supplement to this Prospectus will be distributed which will set forth the
number of shares being offered and the terms of the offering, including the name
or names of the any underwriters, or dealers, the purchase price paid by any
underwriter for the shares purchased, and any discounts, commissions or
concessions allowed or re allowed to dealers including the proposed selling
price to the public.

To comply with the securities laws of certain jurisdictions, as applicable,
the Common Stock may be offered and sold only through registered or licensed
brokers or dealers. In addition, the Common Stock may not be offered or sold in
certain jurisdictions unless they are registered or otherwise comply with the
applicable securities laws of such jurisdictions by exemption, qualification or
other wise.

TRANSFER AGENT AND REGISTRAR

Fidelity Transfer Co., 1800 S. West Temple, #301, Box 53, Salt Lake City,
Utah 84115 is the transfer agent and registrar for the Common Stock of the
Company.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for the
Company by Daniels, McGowan & Associates, St. Louis, Missouri.

EXPERTS

The financial statements for the periods ended December 31, 1998 and 1999
included herein have been audited by Weaver and Tidwell, L.L.P., Certified
Public Accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said report.

ADDITIONAL INFORMATION

The Company is a reporting company under the Securities Exchange Act of
1934, as amended. The Company has filed with the Washington, D.C. Office of the
Securities and Exchange Commission (the Commission") a Registration Statement on
Form SB-2 under the Act with respect to the Common Stock offered hereby. This
Prospectus filed as a part of the Registration Statement does not contain all of
the information contained in the Registration Statement and the exhibits
thereto, certain portions of which have been omitted in accordance with the
rules and regulations of the Commission. For further information with respect to
the Company and the securities offered hereby, reference is made to such
Registration Statement including the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract, agreement or
other documents are not necessarily complete, and in each instance, reference is
made to such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement and exhibits may be inspected without
charge and copied at the Washington office of the Commission, 450 Fifth Street,
N.W., Washington, DC 20549, and copies of such material may be obtained at
prescribed rates from the Commission's Public Reference Room at the same
address. You may obtain information on the operations of the of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Further, the SEC maintains
an Internet Site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC. The
address of that site is http://www.sec.gov.

20
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
NESS ENERGY INTERNATIONAL, INC. AUDITED FINANCIAL STATEMENTS

Report of Weaver and Tidwell, L.L.P., Independent Certified
Public Accountants........................................ F-2

Balance Sheets as of December 31, 1999, and 1998............ F-3

Statements of Operations for the years ended December 31,
1999, and 1998............................................ F-5

Statement of Changes in Stockholders' Equity for the years
ended December 31, 1999, and
1998...................................................... F-6

Statements of Cash Flows for the years ended December 31,
1999, and 1998............................................ F-7

Notes to consolidated Financial Statements.................. F-9

INTERIM FINANCIAL REPORTING

Balance Sheets, March 31, 1999 (Unaudited) and December 31,
1998...................................................... F-17

Statements of Operations and Comprehensive
Income(Unaudited), For the Three Months Ended March 31,
1999 and 1998............................................. F-18

Statements of Cash Flows (Unaudited), For the Three Months
Ended March 31, 1999 and 1998............................. F-19

Notes to Financial Statements (Unaudited)................... F-20
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Shareholders
Ness Energy International, Inc. (formerly Kit Karson Corporation)
Willow Park, Texas

We have audited the accompanying balance sheets of Ness Energy
International, Inc. (formerly Kit Karson Corporation) (a development stage
company) (the Company) as of December 31, 1999 and 1998, and the related
statements of operations, changes in stockholders' equity and cash flows for the
years then ended and cumulative amounts since reentering development stage on
January 1, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ness Energy
International, Inc. (formerly Kit Karson Corporation) (a development stage
company) at December 31, 1999 and 1998, and the results of its operations and
its cash flows for the years then ended and cumulative amounts since reentering
development stage on January 1, 1998, in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is in its development stage and has
insignificant operating revenue. In addition, the Company has limited capital
resources and has initiated a new phase of activity, all of which raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

WEAVER AND TIDWELL, L.L.P.

Fort Worth, Texas
March 23, 2000, except as to Note 5 for which
the date is May 11, 2000

F-2
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(FORMERLY KIT KARSON CORPORATION)
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
---------- --------
<S> <C> <C>
ASSETS

CURRENT ASSETS
Cash...................................................... $ 414,692 $ 4,352
---------- -------
Total current assets.................................... 414,692 4,352

OIL AND GAS PROPERTIES
Oil and gas properties, unproved.......................... 114,386 --
Oil and gas properties, proved............................ 28,300 28,300
---------- -------
142,686 28,300
Less accumulated depreciation and depletion............... 10,911 5,608
---------- -------
Total oil and gas properties............................ 131,775 22,692

OTHER ASSETS
Automotive equipment, net of accumulated depreciation of
$5,083.................................................. 55,917 --
Deposits on equipment..................................... 1,229,000 --
---------- -------
1,284,917 --
---------- -------
TOTAL ASSETS................................................ $1,831,384 $27,044
========== =======
</TABLE>

F-3
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(FORMERLY KIT KARSON CORPORATION)
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES
Accounts payable and accrued expenses..................... $ 123,171 $ 1,392,900
----------- -----------
Accounts payable--related party........................... 729,638 102,564
----------- -----------
Total current liabilities............................... 852,809 1,495,464

ACCRUED CONTINGENCY....................................... 1,229,000 --

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.10 par value 10,000,000 shares
authorized, none issued................................. -- --
Common stock, no par value, 200,000,000 shares authorized,
shares issued and outstanding 1999 54,634,740; 1998
49,959,356.............................................. 5,790,720 2,658,533
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......................................... (3,382,162) (1,496,720)
Deferred consulting....................................... (28,750) --
----------- -----------
Total stockholders' equity (deficit).................... (250,425) (1,468,420)
----------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)........ $ 1,831,384 $ 27,044
=========== ===========
</TABLE>

F-4
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(FORMERLY KIT KARSON CORPORATION)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS SINCE
REENTERING
DEVELOPMENT STAGE
1999 1998 JANUARY 1, 1998
----------- ----------- -----------------
<S> <C> <C> <C>
REVENUES
Oil and gas revenues.............................. $ 21,208 $ 22,301 $ 43,509

EXPENSES
Lease operating expenses.......................... 8,177 5,585 13,762
Production taxes.................................. 1,584 1,594 3,178
Compression expenses.............................. 3,772 3,281 7,053
Depreciation, depletion and amortization.......... 10,386 5,608 15,994
Litigation settlement............................. -- 1,392,900 1,392,900
General and administrative expenses............... 322,331 110,053 432,384
Expenses related to Israeli project............... 1,566,704 -- 1,566,704
----------- ----------- -----------
Total operating expenses........................ 1,912,954 1,519,021 3,431,975
----------- ----------- -----------
Operating loss.................................. (1,891,746) (1,496,720) (3,388,466)

OTHER INCOME
Interest income................................... 6,304 -- 6,304
----------- ----------- -----------
Loss before income taxes........................ (1,885,442) (1,496,720) (3,382,162)

INCOME TAXES........................................ -- -- --
----------- ----------- -----------
NET LOSS............................................ $(1,885,442) $(1,496,720) $(3,382,162)
=========== =========== ===========
Net loss per weighted average share................. $ (0.04) $ (0.03) $ (0.07)
=========== =========== ===========
Weighted average shares outstanding................. 52,916,747 49,959,356 50,967,453
=========== =========== ===========
</TABLE>

F-5
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(FORMERLY KIT KARSON CORPORATION)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
DEFICIT DEFICIT
PRIOR TO SINCE
REENTERING REENTERING
DEVELOPMENT DEVELOPMENT
COMMON STOCK STAGE STAGE
------------------------ JANUARY 1, JANUARY 1, DEFERRED
SHARES AMOUNT 1998 1998 CONSULTING
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE,
January 1, 1997............. 35,809,356 $2,630,233 $(2,628,684) $ -- $ --
Net loss.................. -- -- (1,549) -- --
---------- ---------- ----------- ----------- --------
BALANCE,
December 31, 1997........... 35,809,356 2,630,233 (2,630,233) -- --
Issuance of common stock
for oil and gas
property................ 14,150,000 28,300 -- -- --
Net loss.................. -- -- -- (1,496,720) --
---------- ---------- ----------- ----------- --------
BALANCE,
December 31, 1998........... 49,959,356 2,658,533 (2,630,233) (1,496,720) --
Issuance of common common
stock for:
Future services......... 15,000 30,000 -- -- (30,000)
Cash.................... 1,427,026 1,401,250 -- -- --
Settlement of lawsuit... 2,701,500 1,392,900 -- -- --
Oil and gas property.... 346,719 114,386 -- -- --
Equipment............... 30,500 61,000 -- -- --
Services................ 154,639 132,651 -- -- --
Recognition of services
performed for common
stock................... -- -- -- -- 1,250
Net loss.................. -- -- -- (1,885,442) --
---------- ---------- ----------- ----------- --------
BALANCE,
December 31, 1999........... 54,634,740 $5,790,720 $(2,630,233) $(3,382,162) $(28,750)
========== ========== =========== =========== ========
</TABLE>

F-6
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(FORMERLY KIT KARSON CORPORATION)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
CUMULATIVE
AMOUNTS SINCE
REENTERING
DEVELOPMENT STAGE
1999 1998 JANUARY 1, 1998
----------- ----------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.......................................... $(1,885,442) $(1,496,720) $(3,382,162)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation, depletion, and amortization....... 10,386 5,608 15,994
Recognition of services performed for stock..... 1,250 -- 1,250
Stock issued for services....................... 132,651 -- 132,651
Change in operating assets and liabilities:
Accrued expenses.............................. 1,352,171 1,392,900 2,745,071
Accounts payable--related party............... 627,074 102,564 729,638
----------- ----------- -----------
Net cash provided by operating activities..... 238,090 4,352 242,442

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for deposits on equipment............... (1,229,000) -- (1,229,000)
----------- ----------- -----------
Net cash used in investing activities......... (1,229,000) -- (1,229,000)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from sale of common stock............. 1,401,250 -- 1,401,250
----------- ----------- -----------
Net cash provided by financing activities..... 1,401,250 -- 1,401,250
Net increase in cash.......................... 410,340 4,352 414,692
----------- ----------- -----------
CASH, beginning of period........................... 4,352 -- --
----------- ----------- -----------
CASH, end of period................................. $ 414,692 $ 4,352 $ 414,692
=========== =========== ===========
</TABLE>

F-7
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(FORMERLY KIT KARSON CORPORATION)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
---------- --------
<S> <C> <C>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Acquisition of oil and gas property for 14,150,000 shares
of common stock......................................... $ -- $28,300
========== =======
Acquisition of unproved oil and gas property for 346,719
shares of common stock.................................. $ 114,386 $ --
========== =======
Acquisition of other fixed assets for 30,500 shares of
common stock............................................ $ 61,000 $ --
========== =======
Settlement of lawsuits through issuance of 2,701,500
shares of common stock.................................. $1,392,900 $ --
========== =======
Issuance of 15,000 shares of common stock for consulting
services to be performed................................ $ 30,000 $ --
========== =======
Issuance of 154,639 shares of common stock for services
performed on behalf of the Company...................... $ 132,651 $ --
========== =======
</TABLE>

F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. NATURE OF BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION

Ness Energy International, Inc. (formerly Kit Karson Corporation) (the
Company), a Washington corporation, has been involved in the exploration and
development of oil and gas reserves. The Company's main businesses of energy and
real estate were essentially abandoned by late 1985 due to insufficient
operations and capital to support ongoing cash requirements. Between 1985 and
1996 there were no filings with the SEC. An agreement was reached in late 1997
for a change in management control of the Company (Note 9) and the required
filings were filed to allow the stock to resume trading. Effective July 6, 1999,
the Company changed its name to Ness Energy International, Inc.

The Company is reentering the exploration and development of oil and gas
reserves under the new management. However, due to the exhaustion of all assets
prior to the change in management, the Company is deemed to have reentered the
development stage as of January 1, 1998.

The financial statements have been prepared on a going concern basis, which
contemplates realization of assets and liquidation of liabilities in the
ordinary course of business. Since the Company is in the development stage, it
has limited capital resources, insignificant revenue and a loss from operations.
The appropriateness of using the going concern basis is dependent upon the
Company's ability to obtain additional financing or equity capital and,
ultimately, to achieve profitable operations. The uncertainty of these
conditions raises substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Management plans to raise capital through the private placement of company
stock and, eventually, through public offerings. Management intends to use the
proceeds from any equity sales to further develop oil and gas reserves in the
United States and in selected foreign countries. The Company believes that these
actions will enable the Company to carry out its business plan and ultimately to
achieve profitable operations.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OIL AND GAS PROPERTY AND EQUIPMENT

The Company uses the full cost method of accounting for its' oil and gas
producing activities, which are located in North Central Texas. Accordingly, all
costs associated with acquisition, exploration and development of oil and gas
reserves, including directly related overhead costs, are capitalized.

All capitalized costs of oil and gas properties, including the estimated
future costs to develop proved reserves, are amortized on the unit-of-production
method using estimates of proved reserves. Investments in unproved properties
and major development projects are not amortized until proved reserves
associated with the projects can be determined or until impairment occurs. If
the results of an assessment indicate that the properties are impaired, the
amount of the impairment is added to the capitalized costs to be amortized.

In addition, the capitalized costs are subject to a "ceiling test," which
basically limits such costs to the aggregate of the "estimated present value,"
discounted at a 10 percent interest rate of future net revenues from proved
reserves, based on current economic and operating conditions, plus the lower of
cost or fair market value of unproved properties.

Sales of proved and unproved properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case the gain or loss is recognized in income.

F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Abandonments of properties are accounted for as adjustments of capitalized
costs with no loss recognized.

Prior to 1998, it was determined that the remaining single oil and gas
interest was not significant enough to require the disclosures of oil and gas
activities required by SFAS No. 69, "Disclosures about Oil and Gas Producing
Activities". This lease was transferred to the Company's former president as
part of the agreement regarding change in control of the Company.

OTHER FIXED ASSETS

Other fixed assets include an automobile being depreciated over a life of
5 years on the straight-line basis.

ACCOUNTS RECEIVABLE

The Company has not provided an allowance for doubtful accounts. The
Company's receivables are from related parties and have been netted against the
accounts payable--related party (see Note 4). All receivables considered
doubtful have been charged to current operations and it is management's opinion
that no additional material amounts are doubtful of collection.

INCOME TAXES

Deferred taxes are recognized for differences between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.

STATEMENT OF CASH FLOWS

For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.

LOSS PER COMMON SHARE

The loss per common share has been computed by dividing the net loss by the
weighted average number of shares of common stock outstanding throughout the
year. The Company has no potential common stock.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Depletion was calculated based on engineers' estimates of reserves and the
unproved property was evaluated based on the future potential. It is reasonably
possible that these estimates may change materially in the near term.

F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS

Financial instruments consist principally of cash, accounts
receivable--related parties, accounts payable and accounts payable--related
party. Recorded values approximate fair values due to the short maturities of
these instruments.

CONCENTRATIONS OF CREDIT RISK

The Company regularly maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Company has not experienced any
losses in such accounts and believes it is not exposed to any significant credit
risk on cash.

RECLASSIFICATION

Certain reclassifications have been made to the 1998 financial statements to
conform with the 1999 financial statement presentation. Such reclassifications
had no effect on income.

NOTE 3. INVESTMENTS IN MARKETABLE SECURITIES

The Company owned interests in three entities, which were publicly traded at
the time of acquisition. As part of the agreement regarding the change in
control of the Company, these interests were transferred to the company's former
president (Note 10).

NOTE 4. RELATED PARTY TRANSACTIONS

In June 1998, the Company entered into a series of agreements with a company
related through common ownership whereby the related party will provide the
majority of the Company's management, general and administrative services and
facilities. The agreements were effective January 1, 1998 and provide for
monthly payments of $3,350 through December 31, 1999.

The related party also collects the net oil and gas revenues from the
Company's properties and remits the funds to the Company. At December 31, 1999
and 1998, the Company was owed $3,655 and $7,347, respectively and are included
in accounts payable--related party.

Also included in accounts payable--related party are advances and payments
made on behalf of the Company by the related party. This related party owns
licenses that provide for the right to drill for oil and gas in the Dead Sea
area of Israel. While the Company does not own the rights in Israel, it is
intended that the Company will benefit from the well to be drilled either
through a business combination or some other arrangement. Discussions have been
held on the method under which the Company will be involved with the project in
Israel and all expenses incurred by the Company related to the Israeli project
have been disclosed as a separate item on the accompanying statement of
operations.

NOTE 5. DEPOSITS ON EQUIPMENT

On October 14, 1999, the Company entered into a contract to purchase a
drilling rig to be used in the drilling project in Israel. The contract called
for a total purchase price of $2,450,000 with payments of $500,000 to be made on
each of November 18, 1999 and December 3, 1999, and the balance due January 15,
2000. Title of the rig is to pass upon completion of the contract. Payments of
$240,000 and $500,000 were made in October and November, respectively, but the
balance due has not been paid. In addition, two $42,000 payments were made to
extend the time available to enter into the purchase contract.

F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. DEPOSITS ON EQUIPMENT (CONTINUED)
In addition, the Company entered into a contract on September 23, 1999, that
provided for the refurbishment and mobilization of the above rig for $2,200,000.
The funds were to be put into escrow upon the purchase of the rig. Escrow is to
be distributed as work is completed on the refurbishment and mobilization. As of
December 31, 1999, the Company had paid $405,000 toward the refurbishment.

Management is currently negotiating the completion of the contract and
believes that the purchase will be completed. Accordingly, the amounts paid on
the contract have been included as deposits on equipment in the accompanying
financial statements. The Company has received a notice of default from the
seller of the right. The Company has rejected this notice since: (1) the terms
of the purchase were changed by the parties at the time of the initial payment
under the rig purchase agreement; (2) there is no provision for default in the
agreement; and (3) any disputes arising under the contract are to be settled by
arbitration and no request for arbitration has been requested by either party.
Nevertheless, in addition to including the deposits on the financial statements,
the Company has reflected an accrued contingency in the accompanying financial
statements due to the uncertainty surrounding the purchase of the rig. The
corresponding expense is reflected in the expenses related to the Israeli
project.

NOTE 6. INCOME TAXES

Prior to 1998, the Company's last income tax return was filed for 1984 and
it showed total operating loss carryforwards at that time of $645,484. It is
believed that the Company generated additional operating loss carryforwards as
the Company's business wound down in 1985 and 1986. However, no income tax
returns have been filed during the period from 1985 through 1993. Due to the
changes in control discussed in Note 9, it is believed that the benefits from
utilization of any of these carryforwards would be extremely limited. Management
has decided that the cost of researching the timing of transaction and preparing
income tax returns to document the loss carryforwards for the unfiled years
would not be a cost effective use of resources available to the Company. In view
of this decision, these potential loss carryforwards have been discounted and
are considered to be of no value. The disclosures presented below include the
activities of the Company since 1994.

A reconciliation of statutory tax rates to the Company's effective tax rates
follows:

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Benefit at statutory rates.................................. (34)% (34)%
Losses not providing benefits............................... 34 34
--- ---
Effective rate.............................................. 0% 0%
=== ===
</TABLE>

The deferred tax assets are comprised primarily of the Company's net
operating loss carryforwards and litigation settlement:

<TABLE>
<CAPTION>
1999 1998
----------- ---------
<S> <C> <C>
Litigation settlement................................ $ -- $ 473,586
Contingency.......................................... 417,860 --
Other................................................ 19,762 --
Net operating loss carry forward..................... 713,044 36,158
Less valuation allowance............................. (1,150,666) (509,744)
----------- ---------
Net deferred tax asset............................... $ -- $ --
=========== =========
</TABLE>

F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. INCOME TAXES (CONTINUED)
The Company's net operating loss carryforwards may be applied against future
taxable income. The net operating loss carryforwards expire as follows:

<TABLE>
<CAPTION>
YEAR EXPIRING
-------------
<S> <C>
2011........................................................ $ 977
2012........................................................ 1,549
2018........................................................ 103,820
2019........................................................ 1,990,843
----------
$2,097,189
==========
</TABLE>

The net changes in the valuation allowance during 1999 and 1998 are as
follows:

<TABLE>
<CAPTION>
1999 1998
----------- ---------
<S> <C> <C>
Balance at beginning of year......................... $ (509,744) $ (379)
Balance at end of year............................... (1,150,666) (509,744)
----------- ---------
Net change........................................... $ (640,922) $(509,365)
=========== =========
</TABLE>

NOTE 7. STOCKHOLDERS' EQUITY

On March 6, 1998, the Company's Certificate of Incorporation was amended to
authorize the issuance of 10,000,000 shares of preferred stock and to increase
the number of shares of the Company's Common Stock authorized for issuance by
150,000,000 shares to a total of 200,000,000.

NOTE 8. COMMITMENTS AND CONTINGENCIES

At December 31, 1999, the Company was party to one lawsuit filed by
shareholders who claimed that they were due shares from transactions that they
had conducted with the Company in the past. Plaintiffs seek the issuance of
500,000 common shares, compensatory damages in excess of $1,000,000, punitive
damages and interest. Management intends to actively assert its legal defenses
and believes Plaintiffs are not entitled to any remedy from the Company.

NOTE 9. MAJOR CUSTOMERS

The Company sells gas and natural gas liquids to one purchaser. However,
management believes the competitive nature of the field and available marketing
alternatives do not make the Company dependent on any single purchaser.

NOTE 10. CHANGE IN CONTROL

During the last quarter of 1997, an agreement was reached and consummated
between the Company and Hayseed Stephens, which effectively transferred
operating control of the Company to him. All remaining assets of the Company
were transferred to its former president.

The Company filed the require documents with the Securities and Exchange
Commission to allow its stock to resume trading on the NASD Bulletin Board in
February 1998.

F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. CHANGE IN CONTROL (CONTINUED)
This section provides information required by Statement of Financial
Accounting Standards No. 69, DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES.

The SEC defines proved oil and gas reserves as those estimated quantities of
crude oil, natural gas, and natural gas liquids which geological and engineering
data demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating conditions. Proved
oil and gas reserves are reserves that can be expected to be recovered through
existing wells with existing equipment and operating methods.

Estimates of petroleum reserves have been made by independent engineers. The
valuation of proved reserves may be revised in the future on the basis of new
information as it becomes available. Estimates of proved reserves are inherently
imprecise.

Estimated quantities of proved oil and gas reserves of the Company (all of
which are located in the United States) are as follows:

<TABLE>
<CAPTION>
PETROLEUM NATURAL
LIQUIDS GAS
(BBLS) (MCF)
--------- --------
<S> <C> <C>
December 31, 1999--proved developed reserves................ -- 100,984
December 31, 1999--proved reserves.......................... -- 242,250

December 31, 1998--proved developed reserves................ -- 110,834
December 31, 1998--proved reserves.......................... -- 252,100
</TABLE>

The Company did not have any proved reserves prior to 1998.

<TABLE>
<CAPTION>
PETROLEUM NATURAL
LIQUIDS GAS
(BBLS) (MCF)
--------- --------
<S> <C> <C>
Reserves at December 31, 1997............................. -- --

PURCHASES OF RESERVES-IN-PLACE.............................. 264,481
Production.............................................. -- (12,381)
--------- -------
Reserves at December 31, 1998............................. -- 252,100
Production.............................................. -- (11,653)
Revision of estimates................................... -- 1,803
--------- -------
Reserves at December 31, 1999............................. -- 242,250
========= =======
</TABLE>

F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. CHANGE IN CONTROL (CONTINUED)
The standardized measure of discounted estimated future net cash flows and
changes therein related to proved oil and gas reserves for the years ended
December 31 is as follows:

<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Future cash inflows................................... $ 432,805 $ 403,363
Future development and production costs............... (270,016) (283,549)
Future income tax expense............................. -- --
--------- ---------
Future net cash flows................................. 162,789 119,814
10% annual discount................................... 57,334 49,258
--------- ---------
Standardized measure of discounted future cash
flows............................................... $ 105,455 $ 70,556
========= =========
</TABLE>

Primary changes in standardized measure of discounted future net cash flow
for the years ended December 31 are as follows:

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Change in sales price and production costs............... $35,518 $ --
Purchases of reserves in place........................... -- 82,397
Sales of oil and gas, net of production costs............ (7,675) (11,841)
Accretion of discount.................................... 7,056 --
------- --------
$34,899 $ 70,556
======= ========
</TABLE>

Estimated future cash inflows are computed by applying year end prices of
oil and gas to year end quantities of proved developed reserves. Estimated
future development and production costs are determined by estimating the
expenditures to be incurred in developing and producing the proved oil and gas
reserves in future years, based on year end costs and assuming continuation of
existing economic conditions.

These estimates are furnished and calculated in accordance with requirements
of the Financial Accounting Standards Board and the SEC. Because of
unpredictable variances in expenses and capital forecasts, crude oil and natural
gas price changes, and the fact that the bases for such estimates vary
significantly, management believes the usefulness of these projections is
limited. Estimates of future net cash flows do not necessarily represent
management's assessment of future profitability or future cash flow to the
Company.

The aggregate amounts of capitalized costs relating to oil and gas producing
activities and the related accumulated depletion and depreciation as of
December 31, are as follows:

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Proved properties........................................ $ 28,300 $28,300
Accumulated depletion and depreciation................... (10,911) (5,608)
-------- -------
Net capitalized costs................................ $ 17,389 $22,692
======== =======
</TABLE>

F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. CHANGE IN CONTROL (CONTINUED)
The costs, both capitalized and expensed, incurred in oil and gas producing
activities during the years ended December 31 are as follows:

<TABLE>
<CAPTION>
1999 1998
---------- --------
<S> <C> <C>
Property acquisition costs.................................. $ -- $28,300
Exploration and development costs........................... -- --
---------- -------
Total................................................... $ -- $28,300
========== =======
</TABLE>

Results of oil and gas operations in the aggregate for the years ended
December 31 are as follows:

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Revenues.................................................. $21,208 $22,301
Compression expense....................................... (3,772) (3,281)
Production costs.......................................... (9,761) (7,179)
Exploration expense....................................... -- --
Depreciation and depletion................................ (5,303) (5,608)
Income taxes.............................................. -- --
------- -------
Net oil and gas income.................................. $ 2,372 $ 6,233
======= =======
</TABLE>

Ness Energy International Inc.'s SEC Form 10-KSB for the period ended
December 31, 1999.

F-16
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS
(UNAUDITED)

<TABLE>
<CAPTION>
3/31/00 12/31/99
----------- -----------
<S> <C> <C>
ASSETS

CURRENT ASSETS
Cash...................................................... $ 134,389 $ 414,692
Investments--available for sale........................... 875,000 --
----------- -----------
Total current assets.................................. 1,009,389 414,692

PROPERTY AND EQUIPMENT
Oil and gas properties, unproved.......................... 114,386 114,386
Oil and gas properties, proved............................ 28,300 28,300
Less accumulated depreciation and depletion............... 12,236 10,911
----------- -----------
Total oil and gas properties............................ 130,450 131,775
----------- -----------
OTHER ASSETS
Fixed assets, net of accumulated depreciation of $8,133
and $5,083 at March 31, 2000 and December 31, 1999,
respectively............................................ 53,017 55,917
Deposits on equipment..................................... 1,229,000 1,229,000
Prepaid Expenses.......................................... 4,334 --
----------- -----------
1,286,351 1,284,917
----------- -----------
TOTAL ASSETS................................................ $ 2,426,190 $ 1,831,384
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES
Accounts payable and accrued expenses..................... $ 25,358 $ 123,171
Accounts payable--related party........................... 712,015 729,638
----------- -----------
Total current liabilities............................. 737,373 852,809
ACCRUED CONTINGENCY....................................... 1,229,000 1,229,000

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.10 par value 10,000 shares authorized,
none issued............................................. -- --
Common stock, no par; 200,000,000 shares authorized;
54,634,740 shares issued and outstanding 12/31/99
55,650,228 shares issued and outstandIng 3/31/00........ 7,121,344 5,790,720
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...................... (3,626,698) (3,382,162)
Deferred consulting....................................... (279,596) (28,750)
Accumulated other comprehensive income.................... (125,000) --
----------- -----------
Total stockholders' equity (deficit).................. 459,817 (250,425)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)........ $ 2,426,190 $ 1,831,384
=========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-17
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
REVENUES
Oil and gas revenues...................................... $ 4,382 $ 5,124

EXPENSES
Lease operating expenses.................................. 1,174 1,484
Production taxes.......................................... 335 374
Compression expenses...................................... 642 939
Depreciation and depletion................................ 4,376 1,402
General and administrative................................ 242,509 22,109
----------- -----------
Total operating expenses................................ 249,036 26,308
----------- -----------
Operating income (loss)..................................... (244,654) (21,184)
Other Income................................................ 117 --
----------- -----------
Net gain (loss) before income taxes..................... (244,537) (21,184)
Income tax benefit...................................... -- --
----------- -----------
NET LOSS.................................................... $ (244,537) $ (21,184)
Other comprehinsive income, net of tax
Unrealized losses on investments.......................... $ (125,000) $ --
----------- -----------
Comprehensive loss.......................................... $ (369,537) $ (21,184)
=========== ===========
Net loss per weighted average share......................... $ (0.01) $ 0.00
=========== ===========
Weighted average shares outstanding......................... 54,758,096 50,155,078
=========== ===========
</TABLE>

See accompanying notes to these condensed financial statements.

F-18
<PAGE>
NESS ENERGY INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
2000 1999
--------- --------
<S> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES....................... $(280,303) $(26,858)

CASH FLOWS FROM INVESTING ACTIVITIES........................ -- --

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock.................... -- 150,000
--------- --------
Increase in cash for period............................... (280,303) 123,142

CASH, BEGINNING OF PERIOD................................... 414,692 4,352
--------- --------
CASH, END OF PERIOD......................................... $ 134,389 $127,494
========= ========
</TABLE>

See accompanying notes to these condensed financial statements.

F-19
<PAGE>
NOTES TO FINANCIAL STATEMENTS

NOTE 1. UNAUDITED INFORMATION

The balance sheet as of March 31, 1999 and the statements of operations for
the three month periods ended March 31, 1999 and March 31, 2000 were taken from
the Company's books and records without audit. However, in the opinion of
management, such information includes all adjustments (consisting only of normal
recurring accruals) which are necessary to properly reflect the financial
position of the Company as of March 31, 2000 and the results of operations for
the three months periods ended March 31, 1999 and March 31, 2000.

NOTE 2. BASIS OF PRESENTATION

The condensed financial statements of Ness Energy International, Inc. (the
"Company") as of March 31, 1999 and March 31, 2000 have been prepared by the
Company, pursuant to the rules and regulations of the Securities and Exchange
Commission. The Company is a developmental stage company who's primary focus is
the development of an oil and gas project in Israel.

The information furnished herein reflects all adjustments (consisting of
normal recurring accruals and adjustments), which are, in the opinion of
management, necessary to fairly state the operating results for the respective
periods. However, these operating results are not necessarily indicative of the
results expected for the full fiscal year. Certain information and footnote
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principals have been omitted
pursuant to such rules and regulations. The notes to the condensed financial
statements should be read in conjunction with the notes to the financial
statements contained in the Form 10-KSB filed on May 19, 2000. Company
management believes that the disclosures are sufficient for interim financial
reporting purposes.

NOTE 3. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (EPS) is calculated by dividing the net
income or loss by the weighted average number of common shares outstanding
during the period. Diluted EPS reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock. Potential dilution is not assumed to occur when the
effect would be anti-dilutive (e.g., reduced loss per share).

F-20
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 6
Dilution.............................. 7
Certain Relationships and Related
Transactions........................ 7
Capitalization........................ 9
Selected Financial Data............... 10
Business.............................. 11
Description of Properties............. 11
Plan of Operation..................... 13
Legal Proceedings..................... 14
Price Range of Common Stock........... 15
Management............................ 16
Principal Shareholders................ 18
Description of Securities............. 18
Plan of Distribution.................. 19
Transfer Agent and Registrar.......... 20
Legal Matters......................... 20
Experts............................... 20
Additional Information................ 20
Index to Financial Statements......... F-1

</TABLE>

NESS ENERGY
INTERNATIONAL, INC.

20,440,624 UNITS
---------------------

PROSPECTUS

---------------------

,2000

Until ,2000 all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

See "Management--Personal Liability and Indemnification of Directors."

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with the distribution of the shares
registered hereby, are set forth in the following table:

<TABLE>
<S> <C>
SEC registration fee........................................ $ 10,793

Legal and Accounting fees and expenses and Printing Costs... 189,207

Total..................................................... $200,000
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

In June, 1999, the Company raised $399,250 through the issuance of 887,226
shares of its Common Stock. The offering was exempt from registration pursuant
to Regulation D, Section 404. All of the shares were sold directly by the
Company.

In October 1999, the Company raised $1,002,000 through the issuance of
539,800 shares of its Common Stock. The offering was exempt from registration
pursuant to Regulation D Section 504. All of the shares were sold directly by
the Company.

ITEM 27. EXHIBITS.

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ------------------------------------------------------------ --------
<C> <S> <C>
2.1 Form of Tender Offer
3.1 Articles of Incorporation
3.2 By-laws
4.1 Form of Warrant Agreement
4.2 Stock Purchase Warrant
5.1 Opinion of Daniels McGowan & Associates
23.1 Consent of Weaver & Tidwell, L.L.P.
23.2 Consent of Daniels McGowan & Associates (included in Exhibit
5)
</TABLE>

ITEM 28. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the small
business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

II-1
<PAGE>
The undersigned small business issuer hereby undertakes that it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to (i) include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii)reflect in
the prospectus any facts or events which, individually or together, represent a
fundamental change in the information in the registration statement; and
(iii) include any additional or changed material information on the plan of
distribution.

(2) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1) or (4) or
Rule 497(h) under the Securities Act as part of this registration statement as
of the time the Commission declared it effective.

(3) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.

II-2
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Willow Park, State of Texas, on July , 2000.

<TABLE>
<S> <C> <C>
NESS ENERGY INTERNATIONAL, INC.

By /s/ HAROLD "HAYSEED" STEPHENS
------------------------------------------
Harold "Hayseed" Stephens
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
</TABLE>

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ HAROLD "HAYSEED" STEPHENS
------------------------------------------- Chairman of the Board, July , 2000
Harold "Hayseed" Stephens Chief Executive Officer

/s/ BOB LEE
------------------------------------------- Chief Financial Officer July , 2000
Bob Lee

/s/ MARY GENE STEPHENS
------------------------------------------- Secretary-Treasurer July , 2000
Mary Gene Stephens

/s/ RICHARD W. NASH
------------------------------------------- Director July , 2000
Richard W. Nash

/s/ MARK L. BASSHAM
------------------------------------------- Director July , 2000
Mark L. Bassham
</TABLE>

II-3