UNITED STATES 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, 1998
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934: For the transition period from _______ to _______
Commission file number: 000-25496
HYPERDYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 87-0400335
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2656 South Loop West, Suite 103
Houston, Texas 77054
(Address of principal executive offices, including zip code)
RAM-Z ENTERPRISES, INC.
(Registrant's former name)
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 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 CORPORATE ISSUERS
As of February 10, 1999, 12,226,503 shares of common stock, $0.001 par value,
were outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
Table of Contents
Part I Financial Information
<TABLE>
<S> <C>
Item 1 Financial Statements 3
Consolidated Balance Sheet
at December 31, 1998 (unaudited) 3
Consolidated Statements of Income for the three
and six months ended December 31, 1998
and 1997 (both unaudited) 4
Consolidated Statements of Stockholders' Equity
for the six months December 31, 1998
and 1997 (both unaudited) 5
Consolidated Statements of Cash Flows for the six
months ended December 31, 1998
and 1997 (both unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K 10
(a) Exhibits
(b) Reports on Form 8-K
Signatures 10
</TABLE>
<PAGE>
Part 1 Financial Information
Item 1. Financial Statements
HYPERDYNAMICS CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1998
<TABLE>
<S> <C>
Assets
Current Assets
Cash - Operating 56
Other 1,493
Accounts Receivable - trade 84,243
other 1,008
Inventory 99,454
Revenue interest current portion 35,970
Prepaid expenses 4,000
--------------------
Total Current Assets 226,224
Property and Equipment
Computers, communication & IS infrastructure 163,600
Office furniture and equipment 9,590
Leasehold improvements 9,165
--------------------
Total property and equipment 182,355
Accumulated depreciation (98,340)
--------------------
Total net property and equipment 84,015
Other Assets
Investment in revenue sharing - long term 84,421
Investment in affiliates 0
Intangible assets - net (PS customer list) 45,900
Deposits 3,348
Other 1,000
--------------------
Total other assets 134,669
====================
Total Assets 444,908
====================
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<PAGE>
HYPERDYNAMICS CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1998
<TABLE>
<S> <C>
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to bank - w/c 0
Accounts payable - trade 230,593
Accrued interest 0
Accrued payroll and expenses 9,961
Accrued payroll taxes 0
Accrued income taxes 0
Sales taxes payable 6,463
--------------------
Total Current Liabilities 247,017
Other Liabilities and Deferred Income
Due to- from affiliate corporations 0
Due to KPW 29,702
--------------------
Total Liabilities and Deferred Income 276,719
Stockholders' Equity
Common stock, par value $0.001; 50,000,000 shares 12,208
authorized; 12,208,321 shares issued and
outstanding.
Additional paid-in capital 1,567,500
Retained (deficit) (1,411,519)
--------------------
Total Stockholders' Equity 168,189
--------------------
Total Liabilities and Stockholders Equity $444,908
====================
See notes to financial statements.
</TABLE>
<PAGE>
HYPERDYNAMICS CORPORATION
AND SUBSIDIARIES
Consolidated Income Statements
3 Months and 6 Months Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
3 months ended December 31 6 months ended December 31
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues $177,265 $ 310,221 $596,668 $ 466,224
Cost of Revenues 98,022 297,361 395,699 445,099
------------------- ------------------- ------------------ -------------------
Gross Margin 79,243 12,860 200,969 21,125
Operating Expenses
Selling 5,543 19,419 20,220 20,022
General and Administrative 182,703 140,124 361,679 271,121
Interest 4,702 2,033 3,277 3,373
Depreciation 9,840 3,577 18,149 7,754
------------------- ------------------- ------------------ -------------------
Total Operating Expenses 202,788 165,153 403,325 302,270
------------------- ------------------- ------------------ -------------------
Operating Loss (123,545) (152,293) (202,356) (281,145)
Other Income (Expense)
Gain (loss) on securities sale, other 0 0 0 0
Other (7,972) 0 (7,972) 0
------------------- ------------------- ------------------ -------------------
Net Loss Before Income Taxes (131,517) (152,293) (210,328) (281,145)
Income Tax (Benefit)
Net Loss $(131,517) $(152,293) (210,328) $(281,145)
Net Loss per Common Share $(0.01) $(0.03) $(0.02) $(0.05)
Weighted average share outstanding 12,208,321 5,397,861 12,208,321 5,397,861
</TABLE>
See notes to financial statements.
<PAGE>
HYPERDYNAMICS CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
6 Months Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Common Stock
Shares Amount Paid in Capital Retained (Deficit) Totals
<S> <C> <C> <C> <C> <C>
As Restated
Balances - June 30, 1997 5,596,989 $5,597 $696,111 $(642,867) $58,841
Options exercised 64,000 64 39,936 40,000
Net (loss) - 6 months (281,145) (281,145)
------------------------------------------------------------------------------------
Balances - December 31, 1997 5,660,989 $5,661 $736,047 $(924,012) $(182,304)
Balances - June 30, 1998 12,208,321 $12,208 $1,567,500 $(1,201,191) $378,517
Net (loss) - 6 months (210,328) (210,328)
------------------------------------------------------------------------------------
Balances - December 31, 1998 12,208,321 $12,208 $1,567,500 $(1,411,519) $168,189
See notes to financial statements.
</TABLE>
<PAGE>
HYPERDYNAMICS CORPORATION
AND SUBSIDIARIES
Consolidated Statement of Cash Flows
6 Months Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows from operating activities
Net (loss) $(210,328) $(281,145)
Adjustments to reconcile net income to cash provided from
operating activities
Depreciation and amortization 18,149 7,754
Note conversion 7,972 0
Gain on sale of securities 0 0
Common stock issued for services 0 0
Net (increase) decrease receivables and other
Certificate of deposit - restricted 94,000 0
Accounts receivable - trade 64,011 (190,115)
Other 30,000 0
Due from officers 0 (3,257)
Inventory (33,946) (8,798)
Prepaid expenses 36,000 0
Revenue sharing 20,037 0
Deposits and Other assets 0 (23,036)
Net increase (decrease) accruals / payables
Accounts payable - trade (40,619) 136,083
Accrued expenses 9,436 (10,876)
Accrued taxes (5,890) 0
Other (5,950) 0
------------------ -------------------
Net cash (used) by operating activities (17,128) (373,390)
Cash flows from investing activities
Purchase of property and equipment (13,911) 0
Collection of revenue interest 0 13,462
Purchase of vehicles 0 0
Purchase of equipment/leasehold improvements 0 (40,010)
------------------ -------------------
Net cash used for investing activities (13,911) (26,548)
Cash flows from financing activities
Sale of common stock 0 40,000
Net increase under line of credit 0 0
Net increase in long term debt 0 0
Increase in short-term convertible notes 27,680 350,000
Reduction in notes payable 0 0
------------------ -------------------
Net cash provided from financing activities 27,680 390,000
------------------ -------------------
Net decrease in cash (3,359) (9,938)
Cash at beginning of period 4,908 30,068
------------------ -------------------
Cash and cash equivalents at end of period $ 1,549 $20,130
Supplemental Information
Interest paid $279
</TABLE>
See notes to financial statements.
<PAGE>
HYPERDYNAMICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
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
Company. Accordingly, footnote disclosure which would substantially
duplicate the disclosure in those statements has been omitted.
2. Other than a convertible note payable to Kent Watts, President for the
Company, the Company has no long-term debt, contingent liabilities,
obligations, or other financing arrangements as of the end of its second
quarter of fiscal year 1999. The note payable to Kent Watts has an accrued
balance of $29,702 at 12/31/98. It is convertible at the option of Kent
Watts at a price of $2.50 per share and accrues interest at 9% annual
percentage rate.
3. The Company has not issued any shares and has not granted any stock options
during the first or second quarter of fiscal year 1999.
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Discussion
HyperDynamics Corporation is an information technology services company that
maximizes it's customers return on their technology investment. The Company's
strategies to increase service revenues and higher margin based integrated
technology products is resulting in substantially higher gross margins for the
Company.
During the past fiscal year, the Company focused resources available to it on
building up the potential for sales of wireless television equipment. During the
quarter the Company has been working on expanding its IS services and starting
to invest more heavily in sales and marketing of the Great Plains mid-range
accounting system and other enterprise level applications. The Company became
certified through passing required examinations as a Great Plains authorized and
certified Dynamics CS+ SQL reseller. The Company has also obtained certification
with Citrix Systems for sales and support of their add-on products to
Microsoft's NT 4.0 TSE operating system. Additionally, the company became
certified and trained professionally with the "Image Now" document imaging
system developed by Perceptive Vision, Inc. The Company's sales forecast is
expected to continue to grow with enterprise level technical products.
Results of Operations
Wired & Wireless experienced no revenues during the quarter but anticipate
several orders this quarter. MicroData Systems, Inc. continued on an increasing
trend higher margin service revenues. The net resulted in total revenue for the
quarter decreasing to $177,265 for the three months ended December 31, 1998,
from $310,221 for the same period in 1997.
Cost of Revenues decreased, correspondingly to the sales decrease, to $98,022 in
the period from $297,361 for the same period in 1997.
Gross margin increased to 44.70% in the period from 4.1% for the same period in
1997.
Selling, General and Administrative expenses increased to $188,246 in the three
month period, as compared to $159,543 for the same period in 1997. The increase
was primarily due to the addition of the administrative overhead of Wired &
Wireless Corporation which accounted for $50,586 of the quarter ending December
31, 1998 amount.
Net Loss. The net loss of the Company was $(131,517) for the three months ended
December 31, 1998, or ($.01) per share as compared to $(152,293) or $(.02) for
the same period in 1997. The reduced loss even with a Wireless downturn in
revenues shows marked improvements and development of the higher margin based IT
service business and integrated technology products. These changes in strategy
along with plans for substantially increased sales and marketing and acquisition
activity are expected to significantly improve the results of operations in
future quarters.
Liquidity and Capital Resources
At December 31, 1998 the Company's current ratio of current assets to current
liabilities was .92. The Company is working diligently to improve its liquidity
through positive results of operations. The Company does not have any long-term
debt or other financing arrangements. The goal of management is to continue to
improve its results of operations and obtain additional equity funding to
increase working capital, help close viable and profitable technology based
acquisitions, and provide fuel for its expected rapid growth.
In addition to the above, the Company is in a position to obtain additional
capital upon the exercise of previously-issued warrants and outstanding options
for common stock.
Prospective Information
The Company is working diligently to start realizing increased sales and a
steady growth in profits. The closing of targeted acquisitions coupled with
improved sales and marketing strategies for increased IT service revenues and
enterprise level software application sales, operations are expected to produce
profits in the future.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
The Company is including the following cautionary statement to make applicable
and take advantage of the safe harbor provision of the Private Securities
Litigation Reform Act of 1995 for any forward-looking statements made by, or on
behalf of, the Company. This Annual Report on Form 10-KSB contains
forward-looking statements. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, expectations, future events or
performance and underlying assumptions and other statements which are other than
statements of historical facts. Certain statements contained herein are
forward-looking statements and, accordingly, involve risks and uncertainties
which could cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements. The Company's expectations, beliefs
and projections are expressed in good faith and are believed by the Company to
have a reasonable basis, including without limitations, management's examination
of historical operating trends, data contained in the Company's records and
other data available from third parties, but there can be no assurance that
management's expectations, beliefs or projections will result or be achieved or
accomplished. In addition to other factors and matters discussed elsewhere
herein, the following are important factors that, in the view of the Company,
could cause actual results to differ materially from those discussed in the
forward-looking statements: the ability of the Company to respond to changes in
the information system environment, competition, the availability of financing,
and, if available, on terms and conditions acceptable to the Company, and the
availability of personnel in the future.
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed with this Quarterly Report or are
incorporated herein by reference:
Exhibit Number Description
27 Financial Data Schedule
(b) Reports on Form 8-K
On January 28, 1998, the Company filed a current report on Form
8-K regarding a change in control of the Company.
Signature
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
HyperDynamics Corporation
(Registrant)
By: /s/ Kent Watts
--------------------
Kent Watts, Chairman of the Board,
Chief Executive Officer, and Chief Accounting
Officer
Dated: February 10, 1999
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<ARTICLE> 5
<LEGEND>
The financial data schedule contains summary information extracted from Part I
of Form 10-QSB for the quarterly period ended December 31, 1998 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000937136
<NAME> Hyperdynamics Corporation
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