<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED 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.
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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.
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NESS ENERGY INTERNATIONAL, INC.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
31-Dec-98 30-Mar-99
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 4,352 $ 127,494
Accounts Receivable -- 1,254
Total current assets 4,352 128,748
----------- -----------
Property and Equipment
Oil and gas properties, proved 28,300 28,300
Less accumulated depreciation and depletion (5,608) (7,010)
----------- -----------
$ 22,692 21,290
----------- -----------
TOTAL ASSETS $ 27,044 $ 150,038
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
(DEFICIT)
Liabilities
Accrued expenses $ 1,392,900 --
Accounts payable - related party 102,564 96,742
----------- -----------
Total current liabilities 1,495,464 96,742
----------- -----------
Stockholders' Equity (Deficit)
Preferred stock, $0.10 par value
10,000 shares authorized, none issued
Common stock, no par (200,000,000 shares
authorized, 49,959,356 shares issued and
outstanding on December 31, 1998 and
52,895,190 issued and outstanding on March
31, 1999) 2,658,533 4,201,433
Retained deficit prior to reentering development
stage January 1, 1998 (2,630,233) (2,630,233)
----------- -----------
Deficit accumulated since reentering development
stage January 1, 1998 (1,496,720) (1,517,904)
----------- -----------
Total Stockholders' Equity (Deficiency) (1,468,420) 53,296
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 27,044 $ 150,038
=========== ===========
</TABLE>
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NESS ENERGY INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------------
1999 1998
------------ ------------
<S> <C> <C>
REVENUES
Oil & Gas Revenues $ 5,124 $ 6,317
EXPENSES
Lease operating expenses 1,484 2,072
Production taxes 374 442
Compression expenses 939 859
Depreciation and depletion 1,402 1,402
General and administrative 22,109 35,647
------------ ------------
Total Operating Expenses 26,308 40,422
------------ ------------
Operating Income (Loss) (21,184) (34,105)
============ ============
Interest Income -- --
------------ ------------
Net (loss) before income taxes (21,184) (34,105)
============ ============
Income tax benefit -- --
NET (LOSS) $ (21,184) $ (34,105)
============ ============
Net loss per weighted
Average share $ 0.00 $ 0.00
============ ============
Weighted average shares 50,155,078 49,959,356
============ ============
Outstanding
</TABLE>
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NESS ENERGY INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For Six Months Ended March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C>
NET CASH (USED) BY OPERATING ACTIVITIES $ (26,858) --
CASH FLOWS FROM INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From Issuance of Common Stock 150,000 --
--------- -----
Increase/(decrease) in cash for period 123,142 --
Cash, Beginning of period 4,352 --
--------- -----
Cash, End of period $ 127,494 $ --
========= =====
</TABLE>
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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.
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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:
<TABLE>
<S> <C>
Management including office staff $2,750
Office Rent 350
Telephone equipment and Long Distance 150
Copier 100
</TABLE>
During the quarter, Hesed, Ness of Texas International, Inc. and the Company
announced plans to work together in the acquisition and development of rights
to explore for oil and gas in Israel. All three companies are affiliated
through common ownership. Subsequent to March 31, 1999, those three companies
have engaged in joint activities and anticipate incorporating their rights,
obligations and liabilities with respect to those activities in a joint
agreement to be made effective as of April 1, 1999. The anticipated joint
agreement is expected to continue until an agreement is made to align the
investors in the three companies in a manner that gives due regard to capital
contributed to the Israeli project, risk taken, liquidity for the
investments and other relevant factors. Such alignment may be through a
business combination or by other means. These changes will alter the above
referenced agreements between Hesed and the Company with respect to the
provision of services.
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
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<PAGE> 8
Disclosure Regarding Forward-Looking Statements
This document contains statements which constitute "forward-looking" statements
within the meaning of Section 27A of the Securities Act of 1933 as amended and
Section 21E of the Securities Exchange Act of 1934 as amended. Those statements
included statements regarding the intent, belief, or current expectations of
the Company and its management team. The Company's shareholders and prospective
investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in the
forward-looking statements. Such risks and uncertainties include among other
things, competitive, economic and regulatory factors in the petroleum and
drilling industries, general economic conditions, the ability of the Company
and is affiliated companies to manage their growth and successfully implement
their business strategy, as well as other risks and uncertainties discussed
herein and are as detailed from time to time in the reports filed by the
Company with the Securities and Exchange Commission.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
As of December 30, 1999 there were no lawsuits against
the Company. However, the Company settled two lawsuits filed
against the Company during the last quarter of 1998 and were
settled through the issuance of stock to settle these two
lawsuits. The settlement of the two suits required the
issuance of 2,701,500 shares of the Company's common stock.
The Company issued 2,602,500 shares during the quarter ended
March 31, 1999 and 99,000 shares were issued in the quarter
ended June 30, 1999. For additional disclosure of these
actions is available in the 1998 10-KSB under Item 3 Legal
Proceedings and in Note 7 of the Financial Statements.
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:
On November 5, 1999 the Company held its annual meeting of
stockholders electing directors, Harold (Hayseed) Stephens,
Ivan Webb and Richard Nash and ratifying the selection of
Weaver Tidwell as it independent auditors. No other
business was conducted at this meeting.
Item 5. Other Information:
Not Applicable
Item 6. Exhibits and Reports on Form 8K:
(a) None
(b) None
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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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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 127,494
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 128,748
<PP&E> 28,300
<DEPRECIATION> 7,010
<TOTAL-ASSETS> 150,038
<CURRENT-LIABILITIES> 96,742
<BONDS> 0
0
0
<COMMON> 4,201,433
<OTHER-SE> (4,148,137)
<TOTAL-LIABILITY-AND-EQUITY> 150,038
<SALES> 5,124
<TOTAL-REVENUES> 5,124
<CGS> 26,308
<TOTAL-COSTS> 26,308
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (21,184)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21,184)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,184)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
