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: September 30, 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 November 8, 1999, 12,429,503 shares of common stock, $0.001 par value,
were outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
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TABLE OF CONTENTS
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PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements 3
Balance Sheet at September 30,1999 (unaudited) 3
Consolidated Statements of Income for the three
months ended September 30,1999
and 1998 (both unaudited) 4
Consolidated Statements of Stockholders' Equity
for the three months September 30,1999
and 1998 (both unaudited) 5
Consolidated Statements of Cash Flows for the three
months ended September 30,1999
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 7
PART II OTHER INFORMATION
ITEM 6 Exhibits and Reports on Form 8-K 9
(a) Exhibits
(b) Reports on Form 8-K
SIGNATURES 9
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2
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PART 1 FINANCIAL INFORMATION
ITEM 1. Financial Statements
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HYPERDYNAMICS CORPORATION
(Formerly RAM-Z Enterprises, Inc.)
Balance Sheet
September 30, 1999
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ASSETS
Current Assets
Cash $ 4,409
Accounts Receivable- trade 102,862
Accounts Receivable- other 3,001
Inventory 81,660
Revenue interest current portion 85,970
Other 44,362
------------
TOTAL CURRENT ASSETS 322,264
Property and Equipment 79,944
Revenue Interest - long term 107,395
Other Assets 90,351
------------
$ 599,954
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 105,752
Accrued expenses 17,155
------------
TOTAL CURRENT LIABILITIES 122,907
------------
Stockholders' Equity
Preferred Stock, 20,000,000 shares authorized, 0
0 shares issued or outstanding
Common stock, par value $0.001; 50,000,000 12,429
shares authorized; 12,429,503 shares issued
and outstanding
Additional paid-in capital 1,719,905
Retained (deficit) (1,255,287)
------------
TOTAL STOCKHOLDERS' EQUITY 477,047
------------
$ 599,954
============
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See notes to financial statements.
3
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HYPERDYNAMICS CORPORATION
(Formerly RAM-Z Enterprises, Inc.)
Consolidated Income Statements
3 Months Ended September 30, 1999 and 1998
1999 1998
<S> <C> <C>
Revenues $ 243,389 $ 156,903
Cost of Revenues 98,253 110,177
------------ ------------
GROSS MARGIN 145,136 46,726
------------ ------------
Operating Expenses
Selling 4,314 5,671
General and Administrative 131,186 113,828
Depreciation 6,250 6,809
------------ ------------
TOTAL OPERATING EXPENSES 141,750 126,308
------------ ------------
OPERATING INCOME/(LOSS) 3,386 (79,582)
Other Income (Expense)
Interest income 0 1,425
------------ ------------
INCOME/(LOSS) FROM CONTINUING 3,386 (78,157)
OPERATIONS
Gain on Sale of Discontinued Operations 127,633 0
Loss From Discontinued Operations (568) (654)
------------ ------------
Income/(Loss) Before Income Taxes 130,450 (78,811)
Income Tax (Benefit) 0 0
------------ ------------
NET INCOME/(LOSS) $ 130,450 $ (78,811)
============ ============
NET INCOME /(LOSS) PER COMMON SHARE $ 0.01 $ (0.01)
Weighted average share outstanding 12,411,676 12,208,321
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See notes to financial statements.
4
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HYPERDYNAMICS CORPORATION
(Formerly RAM-Z Enterprises, Inc.)
Consolidated Statements of Stockholders' Equity
3 Months Ended September 30, 1999 and 1998
COMMON STOCK
SHARES AMOUNT PAID IN CAPITAL RETAINED TOTALS
(DEFICIT)
AS RESTATED
<S> <C> <C> <C> <C> <C>
Balances - June 30, 1998 12,208,321 $12,208 $ 1,567,500 $(1,201,191) $ 378,517
Net (loss) for quarter- (78,811) (78,811)
Balances - September 30, 1998 12,208,321 $12,208 $ 1,567,500 $(1,280,002) $(299,706)
Balances - June 30, 1999 12,409,503 $12,409 $ 1,709,924 $(1,385,737) $ 336,596
Common Stock issued for cash 20,000 20 9,980 10,000
Net Income for quarter 130,451 130,451
Balances - September 30, 1999 12,429,503 $12,429 $ 1,719,904 $(1,255,286) $ 477,047
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See notes to financial statements.
5
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HYPERDYNAMICS CORPORATION
(Formerly RAM-Z Enterprises, Inc.)
Consolidated Statement of Cash Flows
3 Months Ended September 30, 1999 and 1998
1999 1998
<S> <C> <C>
Cash flows from operating activities
Net Income / (loss) $ 3,386 $(78,811)
Adjustments to reconcile net income to cash provided from
operating activities
Depreciation and amortization 6,250 8,309
Common stock issued for services
Changes in:
Certificate of deposit - restricted 94,000
Accounts receivable (16,476) (80,475)
Accounts receivable- other 2,000 30,000
Due from officers
Inventory 15,300 (5,492)
Other assets (168,810) 46,301
Accounts payable (65,285) (16,235)
Accrued expenses 1,256 (525)
Accrued taxes 1,871
---------- ---------
NET CASH USED FOR OPERATING ACTIVITIES (222,379) (1,057)
---------- ---------
Cash flows from investing activities
Net change of Property, Plant & Equipment 22,240 (3,851)
---------- ---------
NET CASH PROVIDED (USED) FOR INVESTING ACTIVITIES 22,240 (3,851)
---------- ---------
Cash flows from financing activities
Sale of common stock 10,000
Sale of Discontinued Operations 127,633
Loss from Discontinued Operations (568)
Net increase in long term debt
Increase in short-term convertible notes
---------- ---------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 137,065 0
---------- ---------
Net increase / decrease in cash (63,074) (4,908)
CASH AT BEGINNING OF PERIOD 67,483 4,908
---------- ---------
CASH AT END OF PERIOD $ 4,409 $ 0
Supplemental Information
Interest paid $ 0 $ 0
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See notes to financial statements.
6
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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 disclosures which would substantially
duplicate the disclosure in those statements has been omitted.
Certain reclassifications were made to financials as of September 30, 1998
in order to conform to the current presentation.
2. The Company has no long-term debt, contingent liabilities, obligations, or
other financing arrangements as of the end of the first quarter.
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
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.
General Discussion
HyperDynamics Corporation is an information technology service provider (ITSP)
that maximizes its clients return on their technology investment. The Company's
business plan includes an initial roll up strategy to acquire information
technology service companies. While the Company had started to shift its focus
last year towards developing its IT services business plan it maintained a
strategy with Wired & Wireless Corporation (Its' then wholly owned subsidiary -
WWC) for volume sales of wireless television equipment. During the last year,
management determined that the business plan for WWC was not in line with the
objectives of its IT services business plan. As of September 30, 1999, the
Company sold its WWC subsidiary.
7
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Results of Operations
Sales increased 55% to $243,389 for the three months ended September 30, 1999,
from $156,903 for the same period in 1998. The change was do to an increase over
the prior year in the Company's efforts being focused on information technology
service including IT hosting and eBusiness projects.
Cost of Revenues decreased to $98,253 compared to $110,177 for the same period
in 1998. The change was a result primarily of increasing margins for
professional information technology services including IT hosting and eBusiness
projects.
Gross margin increased to 59.6% in the period from 29.7% as restated for the
same period in 1998.
Selling, General and Administrative expenses increased to $135,500 in the three
month period, as compared to $119,499 for the same period in 1998. The increase
was primarily due to the addition of the administrative overhead to hire a new
financial controller.
Income from continuing operations was $3,386 for the period ending September 30,
1999 compared to a loss of $(79,582) for the same period in 1998. This is the
third quarter in a row that the Company has reported positive results of
operations. As stated above this can be attributed to the re-focus of the
Company to its information technology service business plan preparing for its
initial roll up strategy.
The Gain on Sale of Discontinued Operations was $127,633 based on the write-off
of a retained negative investment of $(27,633) booked on the equity method of
accounting at September 30, 1999 and a $100,000 reasonable valuation of the
Revenue Sharing Agreement received from Wired and Wireless Corporation. This
"Revenue Sharing Agreement" provides for 7% of gross sales received to be paid
up to $50,000; 5% of gross sales received for the next $50,000 up to $100,000
total; and 3% of gross sales received thereafter until the company is sold. Upon
any sale of Wired and Wireless, the Company will also receive 10% of the gross
proceeds of any such sale. The Company has received approximately $9,000 so far
under this agreement for sales through October 31, 1999.
Net income for the period ended September 30, 1999 was $130,450 or $0.01 per
share compared to a loss of $(78,811) or $(0.01) per share for the same period
in 1998.
Results are expected to continue to improve based on increased sales and
marketing efforts for information technology services including IT hosting and
eBusiness projects, as well as leveraging its growth through planned
acquisitions of profitable information technology service companies.
Liquidity and Capital Resources
At September 30, 1999 the Company's current ratio of current assets to current
liabilities was 2.62 with a quick ratio excluding inventory and pre-paid
expenses of 1.59. The Company is continuing to work diligently to improve its
liquidity through positive results of operations. The Company does not have any
long-term debt or other financing arrangements.
In addition to the goal of management to continue to improve its results of
operations, the Company is preparing a private placement memorandum to raise
$3,000,000 of equity. The capital will be used to increase working capital for
itself and as well as planned acquisitions; to invest in increasing its
technical staff; and to provide investment capital for its IT hosting
infrastructure. The Company expects to grow substantially in annual revenues and
profits. The Company's goal is to qualify for small-cap NASDAQ as result of
positive effect expected from this timely capital.
8
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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 expects to continue to improve its results of operations in the
second quarter. Through October 31, 1999 revenues already booked for the second
quarter exceed $200,000. These growing core operations coupled with improved
sales and marketing strategies for increased IT service revenues including IT
hosting and eBusiness projects provide the foundation of the business plan.
Management plans to continue to control overhead and to leverage existing
overhead with new business and acquisitions. By the success of obtaining the
capital to enhance its IT hosting infrastructure and being in a position to
start to close its information technology based acquisitions, the Company's
operations are expected to expand rapidly and show positive results in future
periods.
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
3.1 Amendment to Articles of Incorporation to authorize
20,000,000 preferred stock shares
27 Financial Data Schedule
(b) Reports on Form 8-K
On October 14, 1999 the Company filed form 8-K regarding the
resignation of Ted W. Tarver as a Director of the Company and
disclosing the sale of Wired and Wireless Corporation.
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: November 8, 1999
9
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 09/20/1999
991395456 - 2402791
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
HYPERDYNAMICS CORPORATION
Hyperdynamics Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation by the unanimous
written consent of its members, filed with the minutes of the Board, adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Hyperdynamics
Corporation be amended by adding the following to the Fourth Article thereof:
Article IV of the Company's Articles of Incorporation is amended to add new
sections (b) and (c) as follows:
ARTICLE IV
"(b) The aggregate number of shares of preferred stock which the
corporation shall have authority to issue is twenty million (20,000,000) shares
of preferred stock, par value of $0.001. No share of preferred stock shall be
issued until it has been paid for and it shall thereafter be non-assessable
(c) The Preferred Stock may be divided into and issued in one or more
series. The preferences, limitations, and relative rights of the Preferred
Stock may vary between series in any and all respects, but shall not vary within
a series. The Board of Directors may establish one or more series of unissued
shares of the Preferred Stock and fix and determine the preferences,
limitations, and relative rights of any series to the fullest extent set forth
herein and permitted by Delaware law, as now or hereafter in force. The Board
of Directors may increase or decrease the number of shares within each such
series; provided, however, that the Board of Directors may not decrease the
number of shares within a series below the number of shares within such series
that is then issued. The preferences, limitations, and relative rights of any
Preferred Stock to be issued shall be fixed by the Board of Directors adopting a
resolution or resolutions to such effect and filing a statement with respect
thereto as required by Delaware law."
SECOND: That at a meeting and vote of stockholders on August 26, 1999,
these amendments were duly adopted in accordance with S222 and S242 of the
General Corporation Law of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said Hyperdynamics Corporation has caused this
certificate to be signed by Kent Watts, its President and attested by Ted
Tarver, its Assistant Secretary, this 20th day of September 1999.
Hyperdynamics Corporation
By: /s/ Kent Watts
----------------
Kent Watts, President
ATTEST:
By: /s/ Ted Tarver
----------------
Ted Tarver, Assistant Secretary
THE STATE OF TEXAS |
COUNTY OF HARRIS |
BEFORE ME, the undersigned authority, on this day personally appeared Kent
Watts, known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that the executed the same for the purposes
and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL of office this 2nd day of Sept. 1999.
/s/ Esther Ruiz
-----------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
[STAMP OF ESTHER RUIZ NOTARY PUBLIC SATE OF TEXAS]
THE STATE OF TEXAS |
COUNTY OF HARRIS |
BEFORE ME, the undersigned authority, on this day personally appeared Ted
Tarver, known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that the executed the same for the purposes
and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL of office this 2nd day of Sept. 1999.
/s/ Esther Ruiz
-----------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
[STAMP OF ESTHER RUIZ NOTARY PUBLIC SATE OF TEXAS]
<PAGE>
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