<PAGE> 1
______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSB
----------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934; For the Quarterly Period Ended: December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 000-25496
HYPERDYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 82-0400335
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
</TABLE>
5444 Westheimer, Suite 2080
Houston, Texas 77056
(Address of principal executive offices, including zip code)
(713) 622-1893
(Registrant's telephone number, including area code)
RAM-Z Enterprises, Inc.
(Registrant's former name)
----------------------
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [x] No []
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
At February 12, 1997, 5,310,775 shares of common stock, $.001 par
value, were outstanding.
Transitional Small Business Disclosure Format (check one);
Yes [ ] No [x]
<PAGE> 2
HYPERDYNAMICS CORPORATION
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of December 31, 1996 (unaudited)
Consolidated Statements of Operations for the three months and
six months ended December 31, 1996 and 1995 (both unaudited)
Consolidated Statements of Cash Flows for the six months ended
December 31, 1996 and 1995 (both unaudited)
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
2
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HYPERDYNAMICS CORPORATION
(formerly RAM-Z ENTERPRISES, INC.)
Interim Financial Statements
December 31, 1996
3
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HyperDynamics Corporation
(formerly RAM-Z Enterprises, Inc.)
Balance Sheet
December 31, 1996
<TABLE>
<S> <C>
CURRENT ASSETS
Cash $ 128,021
Accounts receivable 561,046
Other 28,142
----------
TOTAL CURRENT ASSETS 717,209
----------
EQUIPMENT
Computer equipment 352,228
Furniture and fixtures 69,289
Vehicles 126,266
Leasehold improvements 12,872
----------
560,655
Less accumulated depreciation (313,731)
----------
246,924
OTHER ASSETS, net of amortization OF $5,825 70,857
----------
TOTAL ASSETS $1,034,990
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of notes payable $ 20,335
Bank credit line 168,000
Accounts payable 261,622
Accrued expenses 148,379
Deferred revenue 21,272
----------
TOTAL CURRENT LIABILITIES 619,608
----------
LONG TERM DEBT 132,039
STOCKHOLDERS' EQUITY
Common stock, par value $.001, authorized 50,000,000 shares,
issued and outstanding 6,625,558 shares 6,625
Paid-in capital 247,799
Retained earnings 28,919
----------
TOTAL STOCKHOLDERS' EQUITY 283,343
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,034,990
==========
</TABLE>
4
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HyperDynamics Corporation
(formerly RAM-Z Enterprises, Inc.)
Consolidated Income Statements
<TABLE>
<CAPTION>
3 months ended Dec. 31, 6 months ended Dec. 31,
1996 1995 1995 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES $ 566,062 $ 46,735 $ 996,940 $ 416,813
COST OF REVENUES 493,015 43,828 866,978 335,810
--------- --------- ---------- ---------
GROSS MARGIN 73,047 2,907 129,962 81,003
--------- --------- ---------- ---------
OPERATING EXPENSES
Selling 6,610 (792) 14,802 3,277
General and administrative 173,412 12,220 289,382 34,282
Interest 213 683 1,212 2,141
Depreciation and amortization 11,325 6,529 26,529 10,390
--------- --------- ---------- ---------
Total Operating Expenses 191,560 18,640 331,925 50,090
--------- --------- ---------- ---------
Net income (loss) from
continuing operations (118,513) (15,733) (201,963) 30,913
Income (loss) from
discontinued operations (50,982) 110,157 (53,351) 32,169
--------- --------- ---------- ---------
Net income (loss) before taxes (169,495) 94,424 (255,314) 63,082
INCOME TAX BENEFIT 50,616 70,607
--------- --------- ---------- ---------
NET INCOME (LOSS) $(118,879) $ 94,424 $ (184,707) $ 63,082
========= ========= ========== =========
(LOSS) PER COMMON SHARE
Continuing operations $ (0.01) -n/a- $ (0.02) --n/a--
Discontinued operations (0.01) (0.00)
--------- ----------
NET LOSS PER COMMON SHARE $ (0.02) $ (O.03)
--------- ----------
Weighted average shares
outstanding 6,504,279 6,504,519
========= ==========
</TABLE>
5
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HyperDynamics Corporation
(formerly RAM-Z Enterprises, Inc.)
Consolidated Statements of Stockholders' Equity
6 Months Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
- - Common Stock - - Paid-in Retained
Shares Amount Capital (Deficit) Totals
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
1996
AS RESTATED
Balances, June 30, 1996 680,000 $ 680 $ 92,923 $ 0 $ 93,603
Issuance of stock for merger with:
Houston Creative Connections, Inc. 2,102,000 2,102 0 216,487 218,589
MicroData Systems, Inc. 604,000 604 7,442 (2,861) 5,185
Common stock issued for cash 151,175 151 103,531 103,682
Common stock issued for services 3,088,383 3,088 43,903 46,991
Net (loss) (184,707) 184,707
--------- -------- -------- ---------- --------
Balances, December 31, 1996 6,625,558 $ 6,625 $247,799 $ 28,919 $283,343
========= ======== ======== ========== ========
1995
AS RESTATED
Balances, June 30, 1995 9,500 $ 9,500 $ 546 $ 225,948 $235,994
Net income 63,082 63,082
--------- -------- -------- ---------- --------
Balances, December 31, 1995 9,500 $ 9,500 $ 546 $ 289,030 $299,076
========= ======== ======== ========== ========
</TABLE>
6
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HyperDynamics Corporation
(formerly RAM-Z Enterprises, Inc.)
Consolidated Statement of Cash Flows
6 Months Ended December 31, 1996 and 1995
<TABLE>
<CAPTION> 1996 1995
------------ -----------
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (184,707) $ 63,082
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 62,410 30,544
Issuance of stock for services 16,891
Changes in:
Accounts receivable 181,819 (128,525)
Other current assets 3,940 7,206
Accounts payable (92,982) 2,343
Accrued expenses 59,110 (1,346)
Deferred revenue 21,272 (34,450)
Deferred income tax (70,607)
----------- ----------
Cash Used for Operating Activities (2,854) (61,146)
----------- ----------
Cash Flows From Investing Activities
Purchase of computer equipment (52,553) (28,927)
Purchase of furniture and fixtures (1,800)
Purchase of vehicles (84,173)
Increase in other assets (32,053)
----------- ----------
Cash Used for Investing Activities (170,579) (28,927)
----------- ----------
Cash Flows From Financing Activities
Sale of common stock 103,682
Proceeds from bank credit line 23,000 40,000
Proceeds from new installment debt 52,319
Payments on installment debt (31,009) (8,592)
----------- ----------
Cash Flows from Financing Activities 147,992 31,408
----------- ----------
Net Increase (Decrease) in Cash (25,441) (58,665)
Cash at Beginning of Period 153,462 75,160
----------- ----------
Cash at end of period $ 128,021 $ 16,495
=========== ==========
EXPENSES PAID IN CASH
Interest $ 1,212 $ 2,141
</TABLE>
7
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HYPERDYNAMICS CORPORATION
(formerly RAM-Z ENTERPRISES, INC.)
Notes to Financial Statements
6 Months Ended December 31, 1996
1. The unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. The financial statements contained
herein should be read in conjunction with the audited financial
statements of the 3 acquired subsidiaries and the audited pro forma
consolidated balance sheet and income statement filed with the Company's
Form 8-K Amendment in early November, 1996 as an amendment to an 8-K
filed August 26, 1996. Accordingly, footnote disclosure which would
substantially duplicate the disclosure in the audited consolidated
financial statements has been omitted.
2. During 1996, the Company granted 300,000 warrants to purchase common
stock as finder's fee compensation for assisting with the acquisitions
which occurred August 26, 1996, at prices ranging from $.75 to $1.25
per share. Also during this period, warrants for 34,000 shares were
exercised, netting the Company $25,500. As of January 31, 1997,
warrants for 170,000 have been exercised. Options for 9,600 shares at
$1.25 were issued to an officer of the Company for services rendered
during July and August, 1996.
3. Divestiture. On February 6, 1997, the Company agreed with the original
shareholders of its largest acquisition, Houston Creative Connections,
Inc., to transfer 100% of ownership of this subsidiary back to such
original shareholders in exchange for their entire holdings of Company
stock, or 2,102,000 shares. In connection with this divestiture, the
Company agreed to issue 700,000 shares for cancellation of their
recession rights to the original shareholders of its other significant
acquisition, MicroData Systems, Inc. A summary of changes in
significant shareholders is as follows:
<TABLE>
<CAPTION>
Before Divestiture After Divestiture
Shares % Shares %
---------- ---- --------- ----
<S> <C> <C> <C> <C>
Susanne and David Jackson 1,600,000 23%
Houston Creative Mgmt. Incen. Plan 251,000 4
Arthur F. Click 251,000 4
Kent Watts 480,000 7 1,180,000 21%
Greg J. Micek 590,000 9 590,000 11
Robert Hill 390,000 6 390,000 7
John C. Malone 299,000 4 299,000 6
- others - 3,063,558 48 3,063,558 55
--------- --- --------- ---
Total shares outstanding 6,625,558 100% 5,522,558 100%
========= === ========= ===
</TABLE>
Divestiture of Houston Creative Connections, Inc. reduced total revenues
otherwise reportable in the 6 months ended December 31, 1996 and 1995 by
$2,242,000 (69%) and $1,959,000 (82%), respectively. The income statements
were restated to report this business segment as net discontinued operations.
8
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Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations
General Discussion
HyperDynamics Corporation is a systems integrator and re-seller of
computer-related equipment. In addition, this past quarter it has made a
material investment in, and has successfully established a new media
capability, which includes Internet web-site development, electronic publishing
and electronic commerce support services.
In a subsequent event, the company divested its personnel outsourcing and
advertising subsidiary in February 1997, allowing it to focus more intently on
the core business activities referenced above.
Results of Operations
Revenues increased to $996,940 for the six months ended December 31, 1996, from
$416,813 for the same period in 1995. The 140% increase in sales was
primarily due to strong hardware sales and the completion of the first stage of
a system integration contract for Novo Industries at MicroData Systems.
Cost of Revenues increased, correspondingly to the sales increase, to $866,978
in the period, from $335,810 for the same period in 1995.
Selling, General and Administrative expenses increased to $304,184 in the six
month period, as compared to $37,559 for the same period in 1995. The increase
was due primarily due to legal and financial expenses associated with the
building of corporate infrastructure and the transition to a public company. In
addition, the costs associated with the start up of a new media division were
reflected in the second quarter. Sales for this new division have been initiated
in the third quarter.
Net Loss. The net loss of the Company was $(184,707) for the six months ended
December 31,1996, or ($.03) per share. As stated above, this loss can be
primarily attributed to the increase in expenses associated with the transition
to becoming a public company, as well as the development of the new media
division.
Liquidity and Capital Resources
As a result of successfully absorbing the 140% increase in sales from the first
six months of this year over the first six months of last year, funding
capabilities due to vendor-related credit lines resulted in an expansion of
$200,000 in additional funding
9
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capacity. This expanding of credit capacities is continuing into the third
quarter and is expected to continue as sales increase.
In addition to the above, the Company is continuing to raise small amounts of
capital through the exercise of previously-issued warrants for common stock. In
addition, it is planning to raise substantial additional cash for more
acquisitions and expanding internal capabilities in early 1997.
Prospective Information
The company has mobilized its resources to support the ability to sustain the
anticipated significant revenue growth experienced in the most recent quarters.
In that regard, a consolidation of the operations of the parent company and the
MicroData operating subsidiary is occurring in the third quarter to more
effectively and efficiently respond to the increased level of bid activity.
In January, 1997, the company announced that it had been selected by the
Department of Information Services for the State of Texas to supply hardware
and software to various government entities throughout the state, including the
City of Houston. This contract, along with other increased sales activities, is
anticipated to drive continued growth in revenues.
In general, continued revenue growth from quarter to quarter, combined with
continued expanding credit relationships with vendors, is anticipated to
support our ability to respond to expected increased customer demand.
10
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION SB
(1) Exhibit 3. Amendment to Articles of Incorporation
(2) Exhibit 27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
(1) On February 13, 1997, The Company filed a current report
on Form 8-K regarding (i)Change in Control of the Company (ii) Acquisition or
disposition of Assets, and (iii) Other Events.
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 hereunto duly authorized.
HYPERDYNAMICS CORPORATION
Date: February 13, 1997 By: /s/ Gregory J. Micek
------------------------------------
Gregory J. Micek, President
By: /s/ Kent Watts
------------------------------------
Kent Watts, Chief Financial Officer
11
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INDEX TO EXHIBITS
Exhibit
No. Description
- ------- -----------
3 Amendment to Articles of Incorporation
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 3
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 01/21/1997
971020662 - 2402791
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
RAM-Z ENTERPRISES, INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the board of Directors of RAM-Z
ENTERPRISES, INC. resolutions were duly adopted setting forth a proposed
amendment of the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and calling a meeting of the stockholders of
said corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "Article I" so that, as
amended, said Article shall be and read as follows:
The name of the corporation is HyperDynamics Corporation.
SECOND: that thereafter, pursuant to resolution of its Board of
Directors, a meeting of the stockholders of said corporation was duly called
and held upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said RAM-Z ENTERPRISES, INC. has caused this
certificate to be signed by GREGORY J. MICEK, an authorized Officer, this 18th
day of January, 1997.
By: /s/ GREGORY J. MICEK
------------------------------------
Gregory J. Micek, President
Attested By: /s/ LEWIS E. BALL
---------------------------
Lewis E. Ball, Secretary
<PAGE> 2
ACKNOWLEDGMENT
--------------
THE STATE OF TEXAS Section
Section
COUNTY OF HARRIS Section
BEFORE ME, the undersigned authority, on this day personally appeared
GREGORY J. MICEK, President of RAM-Z ENTERPRISES, INC. known to me to be the
person whose name is prescribed to the foregoing instrument and acknowledged to
me that he executed the same in the capacity and for the purposes and
consideration therein expressed.
Given under my hand and seal of office on this the 18th day of January,
1997.
/s/ JOHN C. GOSS
----------------------------------
Notary Public in and for
the State of TEXAS
My Commission Expires: 09-30-2000
------------
------------------------------------
[NOTARY SEAL] JOHN C. GOSS
Notary Public in and
for the State of Texas
My Commission Expires
September 30, 2000
-------------------------------------
THE STATE OF TEXAS Section
Section
COUNTY OF HARRIS Section
BEFORE ME, the undersigned authority, on this day personally appeared
LEWIS E. BALL, Secretary of RAM-Z ENTERPRISES, INC. known to me to be the
person whose name is subscribed to the foregoing instrument and acknowledged to
me that he executed the same in the capacity and for the purposes and
consideration therein expressed.
Given under my hand and seal of office on this the 18th day of January,
1997.
/s/ JOHN C. GOSS
----------------------------------
Notary Public in and for
the State of TEXAS
My Commission Expires: 09-30-2000
------------------------------------------
[NOTARY SEAL] JOHN C. GOSS
Notary Public in and
for the State of Texas
My Commission Expires
September 30, 2000
-------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM PART I
OF FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 128,021
<SECURITIES> 0
<RECEIVABLES> 561,046
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 717,209
<PP&E> 560,655
<DEPRECIATION> 313,731
<TOTAL-ASSETS> 1,034,990
<CURRENT-LIABILITIES> 619,608
<BONDS> 0
<COMMON> 6,876
0
0
<OTHER-SE> 276,467
<TOTAL-LIABILITY-AND-EQUITY> 1,034,990
<SALES> 566,062
<TOTAL-REVENUES> 566,062
<CGS> 0
<TOTAL-COSTS> 493,015
<OTHER-EXPENSES> 191,347
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 213
<INCOME-PRETAX> (169,495)
<INCOME-TAX> (50,616)
<INCOME-CONTINUING> (67,897)
<DISCONTINUED> (50,982)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (118,879)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
