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: March 31, 1999
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 March 31, 1999, 12,349,503 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
March 31, 1999 (unaudited) 3
Consolidated Statements of Income for the three
and nine months ended March 31, 1999
and 1998 (both unaudited) 4
Consolidated Statements of Stockholders' Equity
for the nine months ended March 31,
1999 and 1998 (both unaudited) 5
Consolidated Statements of Cash Flows for the nine
months ended March 31, 1999 and 1998
(both unaudited) 6
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II Other Information
Item 6 Exhibits and Reports on Form 8-K 13
(a) Exhibits
(b) Reports on Form 8-K
Signatures 14
</TABLE>
<PAGE>
Part 1 Financial Information
Item 1 Financial Statements
HYPERDYNAMICS CORPORATION
Balance Sheet
March 31, 1999
<TABLE>
<S> <C>
Assets
Current Assets
Cash 7,643
Accounts receivable - Trade 120,738
Accounts receivable - Other 1,243
Inventory 81,884
Prepaid expenses 20,361
Revenue interest current portion 35,970
--------------------
Total Current Assets 267,839
Property and Equipment 108,309
Other Assets
Revenue Interest net of current portion 73,402
Intangible assets - net 43,350
Deposits and other 11,287
--------------------
Total other assets 128,039
--------------------
Total Assets 504,187
====================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable - Trade 185,847
Accrued expenses 21,320
Accrue taxes 1,142
--------------------
Total Current Liabilities 208,309
--------------------
Other Liabilities
Due to KPW 12,499
--------------------
Total Liabilities 220,808
Stockholders' Equity
Common stock, par value $0.001; 50,000,000 shares 12,349
authorized; 12,349,503 shares issued and outstanding.
Additional paid-in capital 1,679,985
Retained (deficit) (1,408,955)
--------------------
Total Stockholder's equity 283,379
--------------------
Total Liabilities and Stockholder's Equity 504,187
========================================================= ====================
See notes to financial statements
</TABLE>
<PAGE>
HYPERDYNAMICS CORPORATION
Consolidated Income Statements
3 Months and 9 Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
3 Months Ended March 31 9 Months Ended March 31
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues $ 331,071 $ 174,397 931,746 $ 640,621
Cost of Revenues 148,993 115,505 555,786 560,604
------------------ ------------------- -------------------- ------------------
Gross Margin 182,078 58,892 375,960 80,017
Operating Expenses
Selling 10,989 24,461 26,665 44,483
General and Administrative 163,047 177,541 522,361 448,662
Interest 3,373
Depreciation 5,477 4,481 23,962 12,235
------------------ ------------------- -------------------- ------------------
Total Operating Expenses 179,513 206,483 572,988 508,753
------------------ ------------------- -------------------- ------------------
Operating Income (Loss) 2,565 (147,591) (197,028) (428,736)
Other Income (Expense)
Other income (expense) 0 0 (7,460) 0
Gain on sale of securities 0 0 0 0
Loss on disposal of asset 0 0 0 0
Interest income 0 0 1,426 0
Interest expense 0 0 (4,702)
------------------ ------------------- -------------------- ------------------
Net Income (Loss) BIT 2,565 (147,591) (207,764) (428,736)
------------------ ------------------- -------------------- ------------------
Income Tax (Benefit) 0 0 0 0
------------------ ------------------- -------------------- ------------------
Net Income (Loss $2,565 $(147,591 ) $(207,764) $(428,736)
================== =================== ==================== ==================
Income (Loss) per Common Share
Net Income (Loss) per C/S Share $0.00 $(0.02) $(0.02) $(0.07)
------------------ ------------------- -------------------- ------------------
Weighted average share outstanding 12,256,534 6,566,056 12,224,158 6,566,056
See notes to financial statements
</TABLE>
<PAGE>
HYPERDYNAMICS CORPORATION
Consolidated Statements of Stockholders' Equity
9 Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock
Shares Amount Paid in Retained (Deficit) Totals
Capital
<S> <C> <C> <C> <C> <C>
Balances - June 30, 1997 5,596,989 $5,597 $696,111 $(642,867) $58,841
Options exercised 64,000 64 39,936 40,000
Conversion of debt 5,833,333 5,833 344,167 350,000
Shares issued for cash 5,000 5 4,995 5,000
Net (loss) (428,736) (428,736)
--------- ---------
Balances - March 31, 1998 11,499,322 $11,499 $1,085,209 $(1,071,603) $25,105
---------- ------- ---------- ------------ -------
Balances - June 30, 1998 12,208,321 $12,208 $1,567,500 $(1,201,191) $ 378,517
Adjustment for options paid 37,625 37,626
Options exercised 18,182 18 24,982 25,000
Shares issued for cash 123,000 123 49,877 50,000
Net Income (Loss) (207,764) (207,764)
Balances - March 31, 1999 12,349,503 $12,349 $1,679,984 $(1,408,955) $283,379
---------- ------- ---------- ------------ --------
See notes to financial statements
</TABLE>
<PAGE>
HYPERDYNAMICS CORPORATION
Consolidated Statements of Cash Flows
9 Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Cash flows from operating activities
Net Income (loss) $ (207,764) $(428,736)
Adjustments to reconcile net income to cash provided from
operating activities
Depreciation and amortization 23,962 12,235
Common stock issued for services 0 0
Changes in:
Restricted certificate of deposit 94,000 70,000
Accounts receivable - Trade 27,281 (7,412)
- Other 30,000 0
Due from officers 0 4,166
Inventory (16,376) (4,166)
Other assets 19,639 (76,325)
Collection of revenue interest 31,056 29,441
Accounts payable (84,437) 122,371
Accrued expenses 9,584 (7,102)
Other 0
----------------- ----------------------
Net cash used for operating activities (73,055) (285,528)
Cash flows from investing activities
Increase in other assets (6,939)
Purchase of fixed assets (41,468) (52,515)
----------------- ----------------------
Net cash used for investing activities (48,407) (52,515)
Cash flows from financing activities
Sale of common stock 112,626 395,000
Net increase (decrease) under line of credit 0 (70,000)
Due from Affiliates (928) 0
Short Term - convertible notes payable 12,499
----------------- ----------------------
Net cash provided from financing activities 124,197 325,000
Net increase (decrease) in cash 2,735 (13,043)
Cash at beginning of period 4,908 30,068
================= ======================
Cash at end of period $7,643 $17,025
================= ======================
Supplemental Information
Interest paid $4,702 $279
See notes to financial statements
</TABLE>
<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 third
quarter of fiscal year 1999. It is convertible at the option of Kent Watts
at a price of $2.50 per share.
3. During the quarter 18,182 options were exercised by individual consultants
for a total of $25,000. Additionally, the President negotiated with a
single accredited investor to provide $50,000 of additional working capital
for the company during the quarter. The Company issued 123,000 shares of
section 144 restricted common stock for this working capital. The Company
has not granted any stock options during the first, second, or third
quarters of fiscal year 1999.
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Discussion
Hyperdynamics Corporation (HYPD : OTC BB) is a Internet Technology Service
Provider developing e-Commerce based software applications and turn-key Internet
based Information Technology (IT) hosting services. With the exploding demand
for Internet integrated Information Technology Services, and the accompanying
shortage of capable IT Professionals, Hyperdynamics has positioned itself to
become knowns as an information technology services company that maximizes it's
customers return on their technology investment. The Company's strategies to
increase Internet related service revenues and market 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 Internet related hosting
services and is continuing to invest more heavily in sales and marketing of the
Great Plains Software Internet Commerce development platform. 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.. The Company's sales forecast is
expected to continue to grow with enterprise level technical products and
announcements are soon expected regarding upcoming projects for web-based
software application development, database driven web-site development, and
increased service contracts.
Results of Operations
The Company's revenues increased in the quarter over the same quarter in 1998
from $174,397 to $331,071. The 90 % increase was primarily due to an increased
IT service business as well as specialized wireless equipment sales over the
same quarter in 1998.
Cost of Revenues increased correspondingly to the sales increase, to $ 148,993.
However the cost of sales increased only 30% indicating the continuing effect of
the Company's strategy in increasing its gross contribution margins. Gross
margin percentage increased to 55% compared to 34% for the same quarter in 1998.
Selling, General and Administrative expenses decreased to $ 174,036 in the
quarter, as compared to $202,002 for the same period in 1998. The decrease was
primarily due to policies established to change some of the fixed payroll
overhead to be variable based on Gross Profit production.
Net Income. The net income of the Company was $2,565 for the three months ended
March 31, 1999, or a break-even $0.002 per share as compared to Loss of
$(147,591) or $(.02) for the same period in 1998. The turn-around is due to the
success of the strategies to control overhead, increase higher contribution
margin IT service and specialized wireless equipment revenues.
Liquidity and Capital Resources
At March 31, 1999 the Company's current ratio of current assets to current
liabilities was 1.29. The Company is working diligently to improve its liquidity
through positive results of operations. The Company does not have any long-term
debt and does not plan any particular debt financing in the near future. 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. The Company is working diligently to plan for a secondary offering
of stock to be used to effect viable Internet technology related acquisitions.
This plan includes that the Company become qualified to be listed on the
American or NASDAQ exchange's.
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. The Company is planning to substantially increase its
sales and marketing activities with respect to its core business development in
the 4th quarter. This will help the Company to continue to pick up operational
momentum.
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: May 14, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The financial data schedule contains summary information extracted from Part I
of Form 10-QSB for the quarterly period ended March 31, 1999 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000937136
<NAME> HYPERDYNAMICS CORPORATION
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 7643
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<RECEIVABLES> 121981
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<INVENTORY> 81884
<CURRENT-ASSETS> 267839
<PP&E> 108309
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<TOTAL-ASSETS> 504187
<CURRENT-LIABILITIES> 208309
<BONDS> 0
0
0
<COMMON> 12349
<OTHER-SE> 269030
<TOTAL-LIABILITY-AND-EQUITY> 504187
<SALES> 331071
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</TABLE>
