UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 1999
Commission File Number 0-10301
NESS ENERGY INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Formerly known as Kit Karson Corporation
Washington 91-1067265
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
Registrant's telephone number, including area code: (817) 341-1477
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each issuer's classes of common
stock as of the latest practicable date:
As of December 28, 1999 the Registrant had outstanding 55,456,614 shares of its
common stock with no par value.
<PAGE>
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements included herein have been prepared by Ness Energy
International, Inc., formerly known as Kit Karson Corporation, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. However, in the opinion of management, all
adjustments (which include only normal recurring accruals) necessary to present
fairly the financial position and results of operations for the periods
presented have been made. The financial statements should be read in conjunction
with the notes thereto included in Kit Karson's SEC Form 10-KSB for the period
ended December 31, 1998.
<PAGE>
Management's Discussion and Analysis or Plan of Operation.
Liquidity and Capital Resources:
The quarter ended March 31, 1999 was an eventful quarter for the Company in
building a cash balance in the Company. During this quarter the Company raised,
through private placements of its common stock to accredited investors, $150,000
for 333,334 shares of restricted common stock. Cash on hand increased from
$4,352 on December 31, 1998 to $127,494 on March 31, 1999. Subsequent to March
31, 1999, the Company sold an additional 634,892 shares for $406,250 in cash to
accredited investors. In addition to the shares issued for cash subsequent to
the end of this current quarter the Company issued 346,719 restricted common
shares for oil and gas leases, 99,000 shares for settlement of a legal issue and
1,101,229 restricted common shares for services.
During the three months ended March 31, 1999 the Company resolved the
outstanding litigation from a group of shareholders, from the 1980's on a claim
for stock in the Company. The Company resolved this litigation by issuing
2,602,500 shares of the Company's common stock. The Company accounted for this
issuance on an accrual basis and is reported in the 1998 10KSB.
More than eighty percent (80%) of the Company's assets is cash on March 31, 1999
compared to less than 25% on December 31, 1998. This improvement in liquidity is
attributable to the sale of shares through a limited number of private
placements mentioned above. Additional funding is planned during the remainder
of the year to expand the Company's operations.
Subsequent to March 31, 1999 the Company changed its name from Kit Karson
Corporation to Ness Energy International, Inc. The effective date of the name
change was made on July 6, 1999 and the symbol of the stock also changed on this
same day from "KTKC" to "NESS".
Revenues:
The revenues from gas sales have been fairly constant during the past year with
a very nominal decline in sales due mostly to gas prices. Gas revenues for the
three months ended March 31, 1999 were $5,124 compared to $6,317 for the same
period ended March 31, 1998. The decrease in gas sales were caused from lower
gas sales as certain wells were needing reworking. The revenues come from the
Company's interest in a group of wells known as the Greenwood Gas Field in which
the Company holds a 25% working interest.
Subsequent to the end of the quarter ended March 31, 1999, the Company, in
conjunction with the other working interest holders, began a stimulation and
re-working program on two of the wells in the Greenwood Field. The results of
these work programs increased gas production on one of the wells and little to
no effect on another well. The Company will continue to monitor the progress of
these work programs to maximize production during the winter months when the gas
prices are projected to be optimum.
<PAGE>
Expenses:
The Company entered into four agreements with Hesed Energy International, Inc.
where Hesed would provide certain services on a turnkey flat rate basis. These
agreements were entered into with an effective date of January 1, 1998 for a
two-year period that expires on December 31, 1999. The following is a list of
these services and the amount of monthly consideration for said services:
Management including office staff $2,750
Office Rent 350
Telephone equipment and Long Distance 150
Copier 100
Subsequent to the end of this quarter, a new agreement is under consideration to
adjust the above stated flat rate fees. The new agreement will be based on a
revised schedule which is now being evaluated.
In addition to the general and administrative expenses mentioned above, the
balance of the expenses incurred by the Company is attributable to the cost of
lease operations on the Greenwood Gas Field. These costs generally do not
fluctuate unless additional work is required or repairs are made. Compression
charges are based on the amount of gas produced where production taxes and lease
operating expenses are fairly flat.
Total operating expenses for the three months ended March 31, 1999 were $26,308
compared to $40,422 for the same period ended March 31, 1998. The decrease
$14,114 in total operating expenses from March 31, 1998 to March 31, 1999 is due
to a decrease in General and Administrative Expenses, related to personnel costs
for the preparation and mailings necessary for the annual meeting held in June
1998.
Results of Operations:
Operating losses and net losses incurred for the quarter ended March 31, 1999
was $21,184 compared to $34,105 for the quarter ended March 31, 1998.
No share data was reported, as the number of shares divided into the nominal net
loss was less than one cent per share.
Year 2000
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue. The "Year
2000" problem is the result of computer programs being written using two digits
rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure or
miscalculations. The Company believes that all of its software and equipment are
"Year 2000" compliant and that this problem will have no affect on the Company's
internal operations
<PAGE>
Disclosure Regarding Forward-Looking Statements
This document includes "forward-looking" statements within the meaning of
Section 27A of the Securities Act and the Company desires to take advantage of
the "safe harbor" provisions thereof. Therefore, the Company is including this
statement for the express purpose of availing itself of the protections of such
safe harbor provisions with respect to all of such forward-looking statements.
The forward-looking statements in this document reflect the Company's current
views with respect to future events and financial performance. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ from those anticipated. In this document,
the words "anticipates," "believes," "expects." "intends," "future," and similar
expressions identify forward-looking statements. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that may arise after the date hereof. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by this section.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
------------------
Not Applicable
Item 2. Changes in Securities:
----------------------
Not Applicable
Item 3. Defaults upon Senior Securities:
Not Applicable
Item 4. Submission of Matters to a Vote of Securities Holders:
------------------------------------------------------
Not Applicable
Item 5. Other Information:
------------------
Not Applicable
Item 6. Exhibits and Reports on Form 8K:
--------------------------------
(a) None
(b) None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NESS ENERGY INTERNATIONAL, INC.
By: /s/Ivan Webb
-----------------------------------------
Ivan Webb, Principal Accounting
Officer & Principal Financial Officer
Date December 30, 1999
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