<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT 1
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF EARLIEST REPORTED EVENT August 26, 1996
RAM-Z ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-25496 87-0400335
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification Number)
5444 Westheimer, Suite 2080
Houston, Texas 77056
(Address of Registrant's principal executive offices)
(713) 622-1893
(Registrant's telephone number, including area code)
(713) 840-9034
(Registrant's facsimile number, including area code)
155 East 34th Street, Apt. 10A
New York, New York 10016
(Former Address, if Changed from Last Report)
<PAGE> 2
Item 7. Financial Statements and Exhibits
(a) Financial Statements of businesses required
Attached hereto, and incorporated herein, are the following Financial
Statements of the company and businesses acquired by the company.
(1.) RAM-Z Enterprises, Inc.
(2.) Hyperdynamics Corporation
(3.) Houston Creative Connections, Inc.
(4.) MicroData Systems, Inc.
<PAGE> 3
RAM-Z ENTERPRISES, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 1996
September 30, 1996
<PAGE> 4
[JACK EVANS LETTERHEAD]
September 30, 1996
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders of
RAM-Z Enterprises, Inc.
Houston, Texas
I have examined the pro forma adjustments reflecting the transaction described
in Note 1 and the application of those adjustments to the historical amounts in
the accompanying proforma consolidated condensed balance sheet of RAM-Z
Enterprises, Inc. as of June 30, 1996 and the related pro forma statement of
income for the year then ended. The historical financial statements are
derived from the historical financial statements of HyperDynamics
Corporation("HyperDynamics"), Houston Creative Connections, Inc. ("Houston
Creative") and MicroData Systems, Inc. ("MicroData"), all of which were
audited by me (on which I have issued my report dated September 23, 1996) and
appear elsewhere herein. Such pro forma adjustments are based upon
management's assumptions described in Note 2. My examination was made in
accordance with standards established by the American Institute of Certified
Public Accountants and,accordingly, included such procedures as I considered
necessary in the circumstances.
The objective of this pro forma financial information is to show what the
significant effects on the historical financial information might have been had
the transaction occurred at an earlier date. However, the pro forma condensed
financial statements are not necessarily indicative of the results of
operations or related effects on financial position that would have been
attained had the above-mentioned transaction actually occurred earlier.
In my opinion, management's assumptions provide a reasonable basis for
presenting the significant effects directly attributable to the above-mentioned
transaction described in Note 1, the related pro forma adjustments give
appropriate effect to those assumptions, and the proforma column reflects the
proper application of those adjustments to the historical financial statement
amounts in the related pro forma condensed balance sheet of RAM-Z Enterprises,
Inc. as of June 30, 1996, and the related pro forma condensed statement of
income for the year then ended.
/s/ JACK EVANS
1
<PAGE> 5
RAM-Z ENTERPRISES, INC.
PRO FORMA COMBINED BALANCE SHEET
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
The following pro forma balance sheet has been derived from the balance
sheets of the various companies at June 30, 1996 and adjusts such information
to give effect to the mergers which occurred in August, 1996, as if such
mergers had occurred on June 30, 1996. The pro forma balance sheet is
presented for informational purposes only and does not purport to be indicative
of the financial condition that actually would have resulted if the Mergers had
been consummated at June 30, 1996. The pro forma balance sheet should be read
in conjunction with the notes thereto and the financial statements of the
various companies and related notes thereto contained elsewhere in this Form
8-K.
<TABLE>
<CAPTION>
ASSETS Hyper- Houston
RAM-Z Dynamics MicroData Creative Adjustments Consolidated
---------- --------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Current assets
Cash $ 99,916 $ 2,991 $ 50,555 $ 22,500 (1) $ 175,962
Accounts receivable 239,895 432,363 672,258
Prepaid expenses 32,082 32,082
----------- --------- ---------- ---------- ---------- ----------
Total current assets 99,916 274,968 482,918 22,500 880,302
----------- --------- ---------- ---------- ---------- ----------
Equipment, net 19,101 32,657 113,225 164,983
Other assets 11,271 3,458 14,729
----------- --------- ---------- ---------- ---------- ----------
$ $ 119,017 $ 318,896 $ 599,601 $ 22,500 $1,060,014
=========== ========= ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank credit line $ 145,000 $ 145,000
Current portion of long-term debt $ 3,865 $ 10,306 37,173 51,344
Accounts payable $ 77,741 6,416 282,344 65,844 $ (77,741) (2) 354,604
Accrued expenses 2,368 86,901 89,269
----------- --------- ---------- ---------- ---------- ----------
Total current liabilities 77,741 10,281 295,018 334,918 (77,741) 640,217
----------- --------- ---------- ---------- ---------- ----------
Long-term debt 14,933 18,693 46,094 79,720
Stockholders' equity
Common stock, par value $.001;
authorized 50,000,000 shares;
issued and outstanding 6,265,000 50,000 (43,780) (2)
45 (1) 6,265
Common stock, par value $.01;
authorized 10,000,000 shares;
issued and outstanding 200,000 2,000 (2,000) (2) -
Common stock, par value $.10;
authorized 1,000,000 shares;
issued and outstanding 75,000 7,500 (7,500) (2) -
Common stock, no par value;
authorized 100,000 shares;
issued and outstanding 1,000 2,000 (2,000) (2) -
Paid-in capital 108,503 98,000 546 (28,413) (2) -
(22,455) (1) 156,181
Retained earnings (deficit) (236,244) ( 6,197) (2,861) 216,589 236,244 (2)
(29,900) (3) 177,631
----------- --------- ---------- ---------- ---------- ----------
(77,741) 93,803 5,185 218,589 100,241 340,077
----------- --------- ---------- ---------- ---------- ----------
$ 0 $ 119,017 $ 318,896 $ 599,601 $ 22,500 $1,060,014
=========== ========= ========== ========== ========== ==========
</TABLE>
See notes to pro forma consolidated financial statements.
2
<PAGE> 6
RAM-Z ENTERPRISES, INC.
PRO FORMA COMBINED INCOME STATEMENT
<TABLE>
<CAPTION>
Hyper- Houston
RAM-Z Dynamics MicroData Creative Adjustments Consolidated
---------- ---------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Placements $ 3,472,083 $ 3,472,083
Sales of Hardware / software $ 943,141 943,141
Graphic design and drafting services 428,114 428,114
---------- ----------- -----------
943,141 3,900,197 4,843,338
---------- ----------- -----------
Cost of Revenues
Placements 2,925,685 2,925,685
Sales of Hardware / software 742,597 742,597
Graphic design and drafting services 478,831 478,831
---------- ----------- -----------
742,597 3,404,516 4,147,113
---------- ----------- -----------
GROSS MARGIN 200,544 495,681 696,225
---------- ----------- -----------
Selling 8,965 59,996 68,961
General and administrative 8,582 6,064 166,102 396,034 29,900
(8,582) 598,100
Interest 133 3,633 14,155 17,921
Depreciation 20,779 44,877 65,656
--------- --------- ---------- ----------- --------- -----------
TOTAL EXPENSES 8,582 6,197 199,479 515,062 21,318 750,638
INCOME (LOSS) BEFORE
INCOME TAXES (8,582) (6,197) 1,065 (19,381) (21,318) (54,413)
INCOME TAXES (RECOVERY) (1,287) 1,287
--------- --------- ---------- ----------- --------- -----------
NET INCOME (LOSS) $ (7,295) $ (6,197) $ 1,065 $ (19,381) $ (22,605) $ (54,413)
========= ========= ========== =========== ========= ==========
Pro Forma
Net (loss) per share $ (.01)
===========
Weighted average shares outstanding 6,265,000
===========
</TABLE>
See notes to pro forma consolidated financial statements.
3
<PAGE> 7
RAM-Z ENTERPRISES, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Year Ended June 30, 1996
On August 26, 1996, RAM-Z Enterprises, Inc. ("RAM-Z"), a Delaware corporation,
completed a"reverse acquisition" of a holding company, HyperDynamics
Corporation ("HyperDynamics"),and its 2 newly-acquired wholly-owned operating
subsidiaries: Houston Creative Connections,Inc. ("Houston Creative") and
MicroData Systems, Inc. ("MicroData"). HyperDynamics, Houston Creative, and
MicroData are all Texas corporations. Houston Creative is an outsourcing
agency placing creative design and computer programming professionals.
MicroData is a reseller of computer networking software and hardware.
HyperDynamics was formed March 7, 1996, to facilitate the acquisitions of one
or more computer Internet hardware / services-related companies and the merger
with RAM-Z, which was a registered 12(g) company under the Securities Act of
1934, as amended, with no recent ongoing operations to date. Both the Houston
Creative and MicroData were acquired by HyperDynamics on August 15, 1996, in
transactions accounted for as poolings of interest.
The "reverse acquisition" by RAM-Z will be accounted for by the purchase method
of accounting for the fiscal year ended June 30, 1997. Consequently, all prior
history of RAM-Z is eliminated in the combination. RAM-Z financed the purchase
by (1) reducing its 50,000,000 outstanding shares by a 44.428648-for-one
reverse split, (2) exchanging 4,577,000 newly-issued shares on a 1 for 1 basis
for the same number of shares representing 100% of the outstanding stock of
HyperDynamics as of that date, and (3) issuing an additional 355,000 shares to
financial advisors.
The transaction occurred as follows:
<TABLE>
<CAPTION>
- - - - Shares Outstanding - - - -
RAM-Z HyperDynamics
---------- -------------
<S> <C> <C>
At December 31, 1995 50,000,000 0
Creation of HyperDynamics; Sale of Stock in a
private placement (Reg. D) at $.50 per share 200,000
---------- ---------
Sub-total, at June 30, 1996 50,000,000 200,000
HyperDynamics additional sales of stock, August, 1996 45,000
HyperDynamics acquisitions
Issuance to 4 newly-appointed officers 1,140,000
Purchase of Houston Creative 1,851,000
Establishment of Houston Creative "Management
Incentive Plan" 251,000
Purchase of MicroData 604,000
</TABLE>
(continued next page)
4
<PAGE> 8
RAM-Z ENTERPRISES, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Year Ended June 30, 1996
<TABLE>
<S> <C> <C>
Reorganization of RAM-Z
44.428648 to 1 reverse split (48,874,600)
Issuance of S-8 shares to various advisors 458,600
HyperDynamics payments for merger
Issuance of Reg-D shares to various advisors 486,000
----------- ----------
Sub-total, immediately prior to August 26 merger 1,584,000 4,577,000
Merger 4,577,000 (4,577,000)
Less: Houston Creative "Management Incentive Plan"
not yet issued (251,000)
Add: Additional shares issued to various advisors 355,000
----------- ----------
Ending balances, at August 26, 1996 6,265,000 0
=========== ==========
</TABLE>
Immediately prior to the merger, additional shares were transferred by RAM-Z
original shareholders directly to the promoters. An ownership recap, after all
adjustments and changes as of August 26, 1996, is as follows:
<TABLE>
<CAPTION>
Shares
Outstanding %
RAM-Z Ownership
------------- ---------
<S> <C> <C>
Purchase of new subsidiaries
Houston Creative 2,102,000 29.5%
Less: "Management Incentive Plan" (251,000)
MicroData 604,000 9.6
Original RAM-Z shares retained by original
shareholders 480,000 7.7
For services rendered
4 officers of new operating entity 1,140,000 18.2
promoters 1,345,700 21.5
Attorneys and financial advisors 844,300 13.5
------------ -----
Ending balances, August 26, 1996 6,265,000 100.0%
============ =====
</TABLE>
(continued next page)
5
<PAGE> 9
RAM-Z ENTERPRISES, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Year Ended June 30, 1996
Houston Creative and MicroData have the opportunity, under certain
circumstances, to rescind their portions of the merger transaction on or before
June 30, 1997, if the average stock price of the Company does not stay at $3 or
above, which is the current trading price. As of September 30, 1996,
management believes the possibility of rescission is remote.
A summary of the consolidation elimination entries to the Pro Forma Combined
Balance Sheet is as follows:
(1) Additional $.50 per share stock (45,000 shares) sold by HyperDynamics in
August, 1996, prior to the August 26 merger.
(2) 44.428648 to 1 reverse split, immediately prior to August 26 merger,
followed by exchange of 4,577,000 shares of post-split RAM-Z stock for all
previously issued HyperDynamics stock. This transaction includes issuance
of 355,000 additional shares to advisors to complete the transaction.
(3) A total of 3,330,000 shares were issued to the officers, promotors,
attorneys and financial advisors in connection with all related
transactions, including identification and acquisition of both Houston
Creative and MicroData and the deal structuring. These shares were valued
at the fair value of these services, or $.03 per share. Approximately
$70,000 of these charges were incurred prior to June 30, 1996, and this
amount was accrued on the books of RAM-Z as of that date. The balance, or
$29,900, will be expensed as professional services in the quarter ending
September 30, 1996.
6
<PAGE> 10
HOUSTON CREATIVE CONNECTIONS, INC.
FINANCIAL STATEMENTS
June 30,1996
September 23, 1996
<PAGE> 11
[JACK EVANS LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
September 23, 1996
To the Board of Directors
Houston Creative Connections, Inc.
Houston, Texas
I have audited the accompanying balance sheet of Houston Creative Connections,
Inc. as of June 30, 1996 and the related statements of income, retained
earnings and cash flows for the two years then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining 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. I believe my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Houston Creative Connections,
Inc. as of June 30, 1996, and the results of its operations and its cash flows
for the two years then ended in conformity with generally accepted accounting
principles.
/s/ JACK EVANS
<PAGE> 12
HOUSTON CREATIVE CONNECTIONS, INC.
BALANCE SHEET
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 50,555
Accounts receivable, net of allowance for
doubtful accounts of $20,000 432,363
----------
TOTAL CURRENT ASSETS 482,918
----------
EQUIPMENT
Computer equipment 230,759
Furniture and fixtures 59,699
Other 35,864
----------
326,322
Less accumulated depreciation and amortization (213,097)
----------
113,225
OTHER ASSETS 3,458
----------
$ 599,601
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 37,173
Bank credit line 145,000
Accounts payable 65,844
Accrued expenses 86,901
----------
TOTAL CURRENT LIABILITIES 334,918
----------
LONG-TERM DEBT 46,094
STOCKHOLDER'S EQUITY
Common stock, no par value; 100,000 authorized;
1,000 shares issued and outstanding 2,000
Retained earnings 216,589
----------
TOTAL STOCKHOLDER'S EQUITY 218,589
----------
$ 599,601
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 13
HOUSTON CREATIVE CONNECTIONS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------- ------------
<S> <C> <C>
Revenues
Placements $3,472,083 $3,010,471
Graphics 238,954 295,335
Drafting 189,160 150,691
---------- ----------
Total Revenues 3,900,197 3,456,497
---------- ----------
Cost of revenues
Placements 2,925,685 2,478,786
Graphics 238,208 320,680
Drafting 240,623 132,474
---------- ----------
Total Cost of Revenues 3,404,516 2,931,940
---------- ----------
GROSS MARGIN 495,681 524,557
---------- ----------
Selling 59,996 40,970
General and administrative 396,034 403,764
Interest 14,155 4,841
Depreciation 44,877 31,097
---------- ----------
515,062 480,672
---------- ----------
NET INCOME (LOSS) (19,381) 43,885
RETAINED EARNINGS
Beginning of Year 229,874 185,989
---------- ----------
End of Year $ 226,974 $ 229,874
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 14
HOUSTON CREATIVE CONNECTIONS, INC.
STATEMENTS OF CASH FLOWS
Years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (19,381) $ 43,885
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 44,877 31,097
Changes in:
Accounts receivable (105,358) (83,047)
Other assets 212 1,848
Accounts payable 44,045 21,399
Accrued payroll and related expenses (7,596) 12,040
--------- --------
Net cash provided by (used for) operating activities (43,201) 27,222
--------- --------
Cash flows from investing activities:
Purchase of equipment (65,620) (48,522)
Cash flows from financing activities:
Net increase under line of credit 125,000 20,000
Net proceeds from installment loans 61,260 43,000
Principal payments on long-term debt (30,133) (84,987)
--------- --------
Net cash provided by (used for) financing activities 156,127 (21,987)
--------- --------
Net increase (decrease) in cash 47,306 (43,287)
Cash at beginning of period 3,249 46,536
--------- --------
Cash at end of period $ 50,555 $ 3,249
========= ========
Supplemental information:
Cash paid during the year for interest $ 14,155 $ 4,841
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 15
HOUSTON CREATIVE CONNECTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended June 30, 1996 and 1995
Note 1 - Significant Accounting Policies
ORGANIZATION - Houston Creative Connections, Inc. ("Company") was formed on
November 5, 1985, as a Texas corporation. The Company is primarily an
outsourcing agency placing creative graphic design and computer programming
professionals. The Company also operates a public relations and full-service
advertising division, begun in 1996.
EQUIPMENT - Leasehold improvements and equipment are stated at cost and are
amortized using the straight-line method over a 5-year period which is the
estimated useful life of the assets.
REVENUES - Contract placement revenues are recognized as services are rendered
by contract employees. Drafting and public relations/advertising revenues are
recognized using the percentage of completion method based on the percentage of
work completed as compared to the total project.
INCOME TAXES - Pursuant to an IRS election filed in 1985, the stockholder has
elected to be treated as an S Corporation whereby the net profits and losses
of the Company are reported by the sole stockholder. Hence, no provision for
income taxes is provided for in the financial statements. Beginning August 15,
1996, this election was automatically terminated by the merger with
HyperDynamics Corporation. See Note 5.
CONCENTRATION OF CREDIT RISK - The Company performs credit evaluations of its
customers and maintains reserves for losses. At June 30, 1996, a single
customer accounted for 59% of 1996 revenues and 45% of accounts receivable.
Note 2 - Line of credit
At June 30, 1996, the Company had a financing agreement in place with a bank
under which the Company may borrow up to $150,000. The borrowing bears
interest at the bank's reference rate plus 2%. At June 30, 1996, $145,000 was
outstanding under the line. The line is secured by accounts receivable,
unencumbered assets of the Company, assignment of insurance on the life of the
sole stockholder, and guaranty of the sole stockholder. The line of credit
expires on January 12, 1999.
5
<PAGE> 16
HOUSTON CREATIVE CONNECTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended June 30, 1996 and 1995
Note 3 - Long-term Debt
Long-term debt consists of the following:
<TABLE>
<S> <C>
9 installment loans to a bank and 3 leasing companies, with
interest ranging from 8 1/2 to 11% APR, with monthly
payments totaling $4,439, secured by equipment and
and automobile originally costing $130,127 $ 83,267
Less: current maturities (37,173)
---------
Net long-term debt $ 46,094
=========
</TABLE>
Long-term debt is due $31,940 and $14,154, in 1998 and 1999, respectively.
Note 4 - Commitments
The Company leases its office facilities under a non-cancellable operating
lease agreement which expires in September, 1997. Rent expense charged to
operations was $37,182 and $43,701 in fiscal 1996 and 1995, respectively.
Remaining aggregate minimum annual rents due in 1997 and 1998 are $38,727 and
$9,682, respectively.
Note 5 - Subsequent Events
On August 26, 1996, RAM-Z Enterprises, Inc. ("RAM-Z"), a Delaware corporation,
completed a "reverse acquisition" of a holding company, HyperDynamics
Corporation ("HyperDynamics"), and its 2 newly-acquired wholly-owned operating
subsidiaries: the Company and MicroData Systems, Inc. ("MicroData").
HyperDynamics and MicroData are both Texas corporations. MicroData is a
reseller of computer networking software and hardware.
HyperDynamics was formed March 7, 1996, to facilitate the acquisitions of one
or more computer Internet hardware / services-related companies and the merger
with RAM-Z, which was a registered 12(g) company under the Securities Act of
1934, as amended, with no recent ongoing operations to date. Both the Company
and MicroData were acquired by HyperDynamics on August 15, 1996, in
transactions accounted for as poolings of interest.
6
<PAGE> 17
HOUSTON CREATIVE CONNECTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended June 30, 1996 and 1995
Note 5 - Subsequent Events (continued)
The "reverse acquisition" by RAM-Z will be accounted for by the purchase method
of accounting for the fiscal year ended June 30, 1997. Consequently, all prior
history of RAM-Z is eliminated in the combination. RAM-Z financed the purchase
by (1) reducing its 50,000,000 outstanding shares by a 44.428648-for-one
reverse split, (2) exchanging 4,577,000 newly-issued shares on a 1 for 1 basis
for the same number of shares representing 100% of the outstanding stock of
HyperDynamics as of that date, and (3) issuing an additional 355,000 shares to
financial advisors.
The transaction occurred as follows:
<TABLE>
<CAPTION>
- - - Shares Outstanding - - -
RAM-Z HyperDynamics
---------- --------------
<S> <C> <C>
At December 31, 1995 50,000,000 0
Creation of HyperDynamics; Sale of Stock in a
private placement (Reg. D) at $.50 per share 200,000
----------- ----------
Sub-total, at June 30, 1996 50,000,000 200,000
HyperDynamics additional sales of stock, August, 1996 45,000
HyperDynamics acquisitions
Issuance to 4 newly-appointed officers 1,140,000
Purchase of the Company 1,851,000
Establishment of the Company "Management
Incentive Plan" 251,000
Purchase of MicroData 604,000
Reorganization of RAM-Z
44.428648 to 1 reverse split (48,874,600)
Issuance of S-8 shares to various advisors 458,600
HyperDynamics payments for merger
Issuance of Reg-D shares to various advisors 486,000
----------- ----------
Sub-total, immediately prior to August 26 merger 1,584,000 4,577,000
Merger 4,577,000 (4,577,000)
Less: the Company's "Management Incentive Plan"
not yet issued (251,000)
Add: Additional shares issued to various advisors 355,000
----------- ----------
Ending balances, at August 26, 1996 6,265,000 0
=========== ==========
</TABLE>
7
<PAGE> 18
HOUSTON CREATIVE CONNECTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended June 30, 1996 and 1995
Note 5 - Subsequent Events (continued)
Immediately prior to the merger, additional shares were transferred by RAM-Z
original shareholders directly to the promoters. An ownership recap, after all
adjustments and changes as of August 26, 1996, is as follows:
<TABLE>
<CAPTION>
Shares
Outstanding %
RAM-Z Ownership
----------- ---------
<S> <C> <C>
Purchase of new subsidiaries
the Company 2,102,000 29.5%
Less: "Management Incentive Plan" (251,000)
MicroData 604,000 9.6
Original RAM-Z shares retained by original shareholders 480,000 7.7
For services rendered
4 officers of new operating entity 1,140,000 18.2
Promoters 1,345,700 21.5
Attorneys and financial advisors 844,300 13.5
--------- -----
Ending balances, August 26, 1996 6,265,000 100.0%
========= ======
</TABLE>
The Company and MicroData have the opportunity, under certain circumstances, to
rescind their portions of the merger transaction on or before June 30, 1997, if
the average stock price of the Company does not stay at $3 or above, which is
the current trading price. As of September 23, 1996, management believes the
likelihood of the possibility of rescission is remote.
8
<PAGE> 19
MICRODATA SYSTEMS, INC.
FINANCIAL STATEMENTS
June 30, 1996
September 23, 1996
<PAGE> 20
[JACK EVANS LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
September 23, 1996
To the Board of Directors of
MicroData Systems, Inc.
Houston, Texas
I have audited the accompanying balance sheet of MicroData Systems, Inc. as of
June 30, 1996 and the related statements of income, retained earnings and cash
flows for the two years then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining 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. I believe my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MicroData Systems Inc. as of
June 30, 1996, and the results of its operations and its cash flow for the two
years then ended in conformity with generally accepted accounting principles.
/S/ JACK EVANS
<PAGE> 21
MICRODATA SYSTEMS, INC.
BALANCE SHEET
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 2,991
Account receivable, net of allowances for
doubtful accounts of $15,000 239,895
Prepaid expenses 32,082
----------
TOTAL CURRENT ASSETS 274,968
----------
EQUIPMENT
Computer equipment 68,916
Furniture and fixtures 7,790
----------
76,706
Less accumulated depreciation (44,049)
----------
32,657
OTHER ASSETS 11,271
----------
$ 318,896
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 10,306
Accounts payable 282,344
Other current liabilities 2,368
----------
TOTAL CURRENT LIABILITIES 295,018
----------
LONG-TERM DEBT 18,693
STOCKHOLDERS' EQUITY
Common stock, par value $0.10; 1,000,000 authorized;
75,000 shares issued and outstanding 7,500
Additionally paid-in capital 546
Retained earnings (2,861)
----------
TOTAL STOCKHOLDERS' EQUITY 5,185
----------
$ 318,896
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 22
MICRODATA SYSTEMS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Revenues $ 943,141 $ 646,113
Cost of revenues 742,597 495,501
----------- -----------
GROSS MARGIN 200,544 150,613
----------- -----------
Selling 8,965 5,441
General and administrative expenses 166,102 170,975
Interest 3,633 4,354
Depreciation 20,779 13,863
----------- -----------
199,479 194,633
----------- -----------
NET INCOME (LOSS) 1,065 (44,020)
RETAINED EARNINGS
Beginning of Year (3,926) 40,094
----------- -----------
End of Year $ (2,861) $ (3,926)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 23
MICRODATA SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
Years ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,065 $ (44,020)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 20,779 13,863
Changes in:
Accounts receivable (214,964) 89,061
Inventories 37,588 (6,780)
Prepaid expenses (19,555) 6,680
Accounts payable 183,804 6,733
Accrued payroll and related expenses (1,461) (2,331)
Customer advance payments (34,450) (7,970)
---------- ---------
Net cash provided by operating activities (27,194) 55,236
---------- ---------
Cash flows from investing activities:
Purchase of equipment (29,969) (970)
Increase in other assets (3,114)
---------- ---------
Net cash provided by investing activities (33,083) (970)
Cash flows from financing activities:
Net increase (decrease) in long-term debt (8,644) (6,751)
---------- ---------
Net increase (decrease) in cash during period (68,921) 47,515
Cash at beginning of period 71,912 24,397
---------- ---------
Cash at end of period $ 2,991 $ 71,912
========== =========
Supplemental information:
Cash paid during the year for interest $ 3,633 $ 4,354
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 24
MICRODATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended June 30, 1996 and June 30, 1995
Note 1 - Significant Accounting Policies
ORGANIZATION - MicroData Systems, Inc. ("Company") was formed on November 3,
1985 as a Texas corporation. The Company is primarily a reseller of computer
networking software and hardware.
REVENUES AND COSTS OF REVENUES - Revenues and related costs are recorded when
an order is shipped.
PREPAID EXPENSES represent wide-area network and accounting software purchased
for research for a specific customer contract. These costs will be offset
against related contract revenues to be recognized Fall, 1996.
EQUIPMENT - Equipment is stated at cost and depreciated using the straight-line
method over a 5-year period, which is the estimated useful life of the assets.
INCOME TAXES - Pursuant to an IRS election filed in 1985, the stockholders has
elected to be treated as an S Corporation whereby the net profits and losses of
the Company are reported by the stockholders. Hence, no provision for income
taxes is provided for in the financial statements. Beginning, August 15, 1996
this election was automatically terminated by the merger with HyperDynamics
Corporation. See Note 4.
CONCENTRATION OF CREDIT RISK - The Company performs credit evaluations of its
customers and maintains reserves for losses. During 1996 and 1995, no single
customer accounted for more than 10% of revenues.
Note 2 - Long-term debt
<TABLE>
<S> <C>
Installment note to a bank, with interest at 2% over bank's Index Rate,
with monthly payments of $1,023, and secured by substantially
all assets $ 28,999
Less: current maturities (10,306)
--------
Net long-term debt $ 18,693
========
</TABLE>
Long-term debt is due $12,047 and $6,646, in 1998 and 1999, respectively.
5
<PAGE> 25
MICRODATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended June 30, 1996 and June 30, 1995
Note 3 - Equity and working capital financing
Subsequent to the balance sheet date, subordinated advances from the Company's
new owner (see Note 4) in the amount of $50,000 and advance payment from a
customer of $70,000 were arranged to supplement the Company's financial
resources.
Note 4 - Subsequent Events
On August 26, 1996, RAM-Z Enterprises, Inc. ("RAM-Z"), a Delaware corporation,
completed a "reverse acquisition" of a holding company, HyperDynamics
Corporation ("HyperDynamics"), and its 2 newly-acquired wholly-owned operating
subsidiaries: the Company and Houston Creative Connections, Inc. ("Houston
Creative"). HyperDynamics and Houston Creative are both Texas corporations.
Houston Creative is an outsourcing agency placing creative graphic design and
computer programming professionals, and also is an advertising and public
relations firm.
HyperDynamics was formed March 7, 1996, to facilitate the acquisitions of one
or more computer Internet hardware / services-related companies and the merger
with RAM-Z, which was a registered 12(g) company under the Securities Act of
1934, as amended, with no recent ongoing operations to date. Both the Company
and Houston Creative were acquired by HyperDynamics on August 15, 1996, in
transactions accounted for as poolings of interest.
The "reverse acquisition" by RAM-Z will be accounted for by the purchase method
of accounting for the fiscal year ended June 30, 1997. Consequently, all prior
history of RAM-Z is eliminated in the combination. RAM-Z financed the purchase
by (1) reducing its 50,000,000 outstanding shares by a 44.428648-for-one
reverse split, (2) exchanging 4,577,000 newly-issued shares on a 1 for 1 basis
for the same number of shares representing 100% of the outstanding stock of
HyperDynamics as of that date, and (3) issuing an additional 355,000 shares to
financial advisors.
The transaction occurred as follows:
<TABLE>
<CAPTION>
- - - Shares Outstanding - - -
RAM-Z HyperDynamics
----------- -------------
<S> <C> <C>
At December 31, 1995 50,000,000 0
Creation of HyperDynamics; Sale of Stock in a
private placement (Reg. D) at $.50 per share 200,000
---------- -------
Sub-total, at June 30, 1996 50,000,000 200,000
</TABLE>
6
<PAGE> 26
MICRODATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended June 30, 1996 and June 30, 1995
Note 4 - Subsequent Events (continued)
<TABLE>
<CAPTION>
- - - Shares Outstanding - - -
RAM-Z HyperDynamics
--------------- -------------
<S> <C> <C>
Sub-total, from previous page 50,000,000 200,000
HyperDynamics additional sales of stock, August, 1996 45,000
HyperDynamics acquisitions
Issuance to 4 newly-appointed officers 1,140,000
Purchase of Houston Creative 1,851,000
Establishment of Houston Creative "Management
Incentive Plan" 251,000
Purchase of the Company 604,000
Reorganization of RAM-Z
44.428648 to 1 reverse split (48,874,600)
Issuance of S-8 shares to various advisors 458,600
HyperDynamics payments for merger
Issuance of Reg-D shares to various advisors 486,000
----------- ----------
Sub-total, immediately prior to August 26 merger 1,584,000 4,577,000
Merger 4,577,000 (4,577,000)
Less: Houston Creative "Management Incentive Plan"
not yet issued (251,000)
Add: Additional shares issued to various advisors 355,000
----------- ----------
Ending balances, at August 26, 1996 6,265,000 0
=========== ==========
</TABLE>
7
<PAGE> 27
MICRODATA SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended June 30, 1996 and June 30, 1995
Note 4 - Subsequent Events (continued)
Immediately prior to the merger, additional shares were transferred by RAM-Z
original shareholders directly to the promoters. An ownership recap, after all
adjustments and changes as of August 26, 1996, is as follows:
<TABLE>
<CAPTION>
Shares
Outstanding %
RAM-Z Ownership
----------- ---------
<S> <C> <C>
Purchase of new subsidiaries
Houston Creative 2,102,000 29.5%
Less: "Management Incentive Plan" (251,000)
the Company 604,000 9.6
Original RAM-Z shares retained by original shareholders 480,000 7.7
For services rendered
4 officers of new operating entity 1,140,000 18.2
Promoters 1,345,700 21.5
Attorneys and financial advisors 844,300 13.5
--------- -----
Ending balances, August 26, 1996 6,265,000 100.0%
========= =====
</TABLE>
The Company and Houston Creative have the opportunity, under certain
circumstances, to rescind their portions of the merger transaction on or before
June 30, 1997, if the average stock price of the Company does not stay at $3 or
above, which is the current trading price. As of September 23, 1996,
management believes the possibility of rescission is remote.
8
<PAGE> 28
HYPERDYNAMICS CORPORATION
FINANCIAL STATEMENTS
June 30, 1996
September 23, 1996
<PAGE> 29
[JACK EVANS LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
September 23, 1996
To the Board of Directors of
HyperDynamics Corporation
Houston, Texas
I have audited the accompanying balance sheet of HyperDynamics Corporation as
of June 30, 1996 and the related statements of income, stockholders' equity and
cash flows for the period from March 7, 1996 (date of inception) to June 30,
1996. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining 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. I believe my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HyperDynamics Corporation as
of June 30, 1996, and the results of its operations and its cash flows for the
period from March 7, 1996 (date of inception) to June 30, 1996 in conformity
with generally accepted accounting principles.
/S/ JACK EVANS
<PAGE> 30
HYPERDYNAMICS CORPORATION
BALANCE SHEET
June 30, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 99,916
EQUIPMENT
Automobile 19,101
----------
$ 119,017
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,416
Current maturities of long-term debt 3,865
----------
TOTAL CURRENT LIABILITIES 10,281
----------
LONG-TERM DEBT 14,933
STOCKHOLDERS' EQUITY
Common stock, par value $0.01; 10,000,000 shares authorized;
200,000 shares issued and outstanding 2,000
Additional paid-in capital 98,000
Retained (deficit) (6,197)
----------
TOTAL STOCKHOLDERS' EQUITY 93,803
----------
$ 119,017
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 31
HYPERDYNAMICS CORPORATION
STATEMENT OF INCOME
From March 7, 1996 (date of inception) to June 30, 1996
<TABLE>
<S> <C>
Revenues $ 0
General and administrative expenses 6,064
Interest expense 133
------------
NET (LOSS) $ (6,197)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 32
HYPERDYNAMICS CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
From March 7, 1996 (date of inception) to June 30, 1996
<TABLE>
<CAPTION>
Total
Outstanding Common Paid in Accumulated Stockholders'
Shares Stock Capital (Deficit) Equity
----------- ------ ------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Issuance of 200,000 shares
in exchange for $100,000
cash 200,000 $ 2,000 $ 98,000 $100,000
Net loss for the period $ (6,197) (6,197)
------- -------- -------- -------- --------
Balance, June 30, 1996 200,000 $ 2,000 $ 98,000 $ (6,197) $ 93,803
======= ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 33
HYPERDYNAMICS CORPORATION
STATEMENT OF CASH FLOWS
From March 7, 1996 (date of inception) to June 30, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net (loss) $ (6,197)
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in accounts payable 6,416
----------
Net cash provided by operating activities 219
----------
Cash flows from financing activities:
Sale of common stock 100,000
Payments on installment bank debt (303)
----------
Net cash provided by financing activities 99,697
----------
Net increase in cash during the period $ 99,916
==========
Supplemental information:
Cash paid during the year for interest $ 133
Non-cash transaction:
Purchase of an automobile from an officer for the balance remaining
on the bank installment note payable of $19,101.
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 34
HYPERDYNAMICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
Period from March 7, 1996 (date of inception) to June 30, 1996
Note 1 - Significant Accounting Policies
ORGANIZATION - HyperDynamics Corporation ("Company") was formed on March 7,
1996 as a Texas corporation. The Company was formed primarily for the purposes
of acquiring privately- held companies and merging with a registered 12(g)
company under the Securities Act of 1934, as amended, with no recent ongoing
operations to date.
EQUIPMENT - Equipment is stated at cost and is depreciated using the straight-
line method over the useful life of the asset.
Note 2 - Long-term Debt
The Company acquired an automobile from a current officer of the Company in
exchange for assuming the remaining 52 payments due of $436 per month,
including interest at 8.05% APR. The principal amounts due for the subsequent
fiscal years are as follows:
<TABLE>
<S> <C>
12 months ended June 30, 1998 4,188
1999 4,538
2000 4,917
2001 1,290
-------
$14,933
=======
</TABLE>
Note 3 - Subsequent Events
On August 26, 1996, RAM-Z Enterprises, Inc. ("RAM-Z"), a Delaware corporation,
completed a "reverse acquisition" of the Company and its 2 newly-acquired
wholly-owned operating subsidiaries: Houston Creative Connections, Inc.
("Houston Creative") and MicroData Systems, Inc. ("MicroData"). Houston
Creative and MicroData are both Texas corporations. Houston Creative is an
outsourcing agency placing creative graphic design and computer programming
professionals and MicroData is a reseller of computer networking software and
hardware.
Both Houston Creative and MicroData were acquired by HyperDynamics on August
15, 1996, in transactions accounted for as poolings of interest.
The "reverse acquisition" by RAM-Z will be accounted for by the purchase method
of accounting for the fiscal year ended June 30, 1997. Consequently, all prior
history of RAM-Z is eliminated in the combination. RAM-Z financed the purchase
by (1) reducing its 50,000,000 outstanding shares by a 44.428648-for-one
reverse split, (2) exchanging 4,577,000 newly-issued shares on a 1
6
<PAGE> 35
HYPERDYNAMICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
Period from March 7, 1996 (date of inception) to June 30, 1996
Note 3 - Subsequent Events (continued)
for 1 basis for the same number of shares representing 100% of the outstanding
stock of HyperDynamics as of that date, and (3) issuing an additional 355,000
shares to financial advisors.
The transaction occurred as follows:
<TABLE>
<CAPTION>
- - - Shares Outstanding - - -
RAM-Z Company
---------- ---------
<S> <C> <C>
At December 31, 1995 50,000,000 0
Creation of HyperDynamics; Sale of Stock in a
private placement (Reg. D) at $.50 per share 200,000
----------- ----------
Sub-total, at June 30, 1996 50,000,000 200,000
HyperDynamics additional sales of stock, August, 1996 45,000
HyperDynamics acquisitions
Issuance to 4 newly-appointed officers 1,140,000
Purchase of the Company 1,851,000
Establishment of the Company "Management
Incentive Plan" 251,000
Purchase of MicroData 604,000
Reorganization of RAM-Z
44.428648 to 1 reverse split (48,874,600)
Issuance of S-8 shares to various advisors 458,600
HyperDynamics payments for merger
Issuance of Reg-D shares to various advisors 486,000
----------- ----------
Sub-total, immediately prior to August 26 merger 1,584,000 4,577,000
Merger 4,577,000 (4,577,000)
Less: the Company's "Management Incentive Plan"
not yet issued (251,000)
Add: Additional shares issued to various advisors 355,000
----------- ----------
Ending balances, at August 26, 1996 6,265,000 0
=========== ==========
</TABLE>
7
<PAGE> 36
HYPERDYNAMICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
Period from March 7, 1996 (date of inception) to June 30, 1996
Note 3 - Subsequent Events (continued)
Immediately prior to the merger, additional shares were transferred by RAM-Z
original shareholders directly to the promoters. An ownership recap, after all
adjustments and changes as of August 26, 1996, is as follows:
<TABLE>
<CAPTION>
Shares
Outstanding %
RAM-Z Ownership
------------ ---------
<S> <C> <C>
Purchase of new subsidiaries
the Company 2,102,000 29.5%
Less: "Management Incentive Plan" (251,000)
MicroData 604,000 9.6
Original RAM-Z shares retained by original shareholders 480,000 7.7
For services rendered
4 officers of new operating entity 1,140,000 18.2
Promoters 1,345,700 21.5
Attorneys and financial advisors 844,300 13.5
--------- -----
Ending balances, August 26, 1996 6,265,000 100.0%
========= =====
</TABLE>
Houston Creative and MicroData have the opportunity, under certain
circumstances, to rescind their portions of the merger transaction on or before
June 30, 1997, if the average stock price of the Company does not stay at $3 or
above, which is the current trading price. As of September 23, 1996,
management believes the likelihood of the possibility of rescission is remote.
8
