UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB

[X]       Annual Report under Section 13 or 15(D) Of The Securities Exchange Act
          Of  1934;  For  The  Fiscal  Year  Ended:  June  30,  2004

                                       Or

[_]       Transition  Report  Under  Section  13 or 15(D) Of The Exchange Act Of
          1934


                        Commission File Number: 000-25496
                            HYPERDYNAMICS CORPORATION
                 (Name of small business issuer in its charter)

               Delaware                                    87-0400335
    (State or other jurisdiction                         (IRS Employer
   of incorporation or organization)                   Identification No.)

                           9700 Bissonnet, Suite 1700
                              Houston, Texas 77036
          (Address of principal executive offices, including zip code)

                                 (713) 353-9400
                (Issuer's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:
                                                        Name of Each Exchange
    Title of Each Class                                  on which Registered
    -------------------                                  -------------------
           N/A                                                   N/A

Securities registered pursuant to 12(g) of the Exchange Act:

                          Common Stock, $.001 par value
                                (Title of class)

Check  whether  the issuer (1) 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 [ ]

Check  if  there  is  no disclosure of delinquent filers pursuant to Item 405 of
Regulation  S-B  is  not  contained  in  this  form,  and  no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [ ]

Issuer's  revenues  for the year ended June 30, 2004 were $38,344. The aggregate
market  value  of  Common  Stock  held  by  non-affiliates  of the registrant at
September  9,  2004  based  upon  the last reported sales prices on the OTCBB of
$2.48  was $88,705,550. As of September 9, 2004, there were 41,206,953 Shares of
Common  Stock  outstanding.


                                        1
<PAGE>
<TABLE>
<CAPTION>
TABLE  OF  CONTENTS

PART I
<S>        <C>                                                                       <C>
   Item 1  Description of Business                                                    3

   Item 2  Description of Property                                                    8

   Item 3  Legal Proceedings                                                          9

   Item 4  Submission of Matters to a Vote of Security Holders                       10

PART II

   Item 5  Market for Common Equity and Related Stockholder Matters                  11

   Item 6  Management's Discussion and Analysis or Plan of Operation                 12

   Item 7  Financial Statements                                                      16

   Item 8  Changes In and Disagreements With Accountants on Accounting and
           Financial Disclosure
                                                                                     16

Item 8(A)  Controls and Procedures                                                   16

Item 8(B)  Other Information                                                         17

PART III

  Item 9   Directors, Executive Officers, Promoters and Control Persons; Compliance
           with Section 16(a) of The Exchange Act                                    17

  Item 10  Executive Compensation                                                    20

  Item 11  Security Ownership of Certain Beneficial Owners and Management and
           Related Stockholder Matters                                               22

  Item 12  Certain Relationships and Related Transactions                            24

  Item 13  Exhibits                                                                  25

  Item 14  Principal Accountant Fees and Services                                    25
</TABLE>


                                        2
<PAGE>
PART I

ITEM 1 DESCRIPTION OF BUSINESS

History

Hyperdynamics Corporation ("Hyperdynamics") is a Delaware corporation founded in
1996.  At  inception  we  were  a  value-added reseller of computer hardware and
software.  Our  business plan was to develop into a complete service provider of
integrated  information  technology  services. During the fiscal year ended June
30,  2001,  we  began to offer our Integrated Technology Service Provider (ITSP)
product,  a  bundled  service offering for clients who wished to outsource their
information  technology department in addition to receiving internet service. We
discontinued this integrated service beginning in fiscal year 2002, about a year
after  acquiring  our subsidiary, SCS Corporation ("SCS"). When we acquired SCS,
we  decided  to  implement  a  dramatic change in our business plan. SCS quickly
became  our  only  operating subsidiary. In the summer of 2001, months after the
SCS  acquisition, we shifted instead to providing products and services targeted
specifically  to  the  oil  and  gas  industry  such  as seismic data management
services,  customized  geological workstations, and data transcription services.
Additionally,  SCS'  management  had years of experience which included both oil
and gas exploration and the provision of seismic data management services to the
oil  and  gas  industry.

In  early  2002,  SCS  management,  in  association  with  US Oil Corporation of
Houston,  Texas  ("US  Oil") began to evaluate the viability of US Oil's oil and
gas  concession off the coast of The Republic of Guinea, West Africa ("Guinea").
After  SCS'  geo-experts  review  of  older  seismic  data  collected  from that
concession, we decided that the concession provided a good business opportunity.
Thus, we negotiated an agreement with US Oil to revitalize the then-dormant 1995
Production and Sharing Agreement that US Oil still had in effect with Guinea. We
proposed  to  perform  a regional seismic data acquisition across the concession
using  modern  digital  technology.  US  Oil  agreed  to  the  proposal  and the
Government  of  Guinea  was  amenable  to  our  proposal and issued permits. SCS
proceeded in 2002 to acquire one thousand kilometers of regional two-dimensional
("2D") seismic lines. In December of 2002 US Oil negotiated a new Production and
Sharing  Agreement ("2002 PSA") with Guinea. US Oil farmed out this agreement to
SCS.  This  2002  PSA  gives  rights  for  exploration and production across the
concession.  In  November of 2003, SCS acquired another four thousand kilometers
of  2D  seismic.  During  fiscal  2004 we completed our shift to a new corporate
mission  as  specified below. We are an oil and gas exploration company with the
potential  to  evolve  into  a  full  fledged  exploration  and production firm.
Although this represents a significant change from our former business lines, we
do utilize all of our integrated technology capabilities developed in years past
to  support  our  oil  and  gas  industry  activities.

We  are  performing  our  exploration  work in Africa under Guinea's Hydrocarbon
Development  Program,  which  was instituted by President Lansana Conte.  During
the  year we accomplished critical exploration work: a 4000 kilometer 2D seismic
data  shoot,  the processing of the seismic data acquired, and the evaluation of
that  data  and  data  that  had  been  acquired  in the past. Our top corporate
priority  remains  the  exploration  and  development  of  offshore  Guinea.

In addition, in the last few months we have begun the process of adding services
and products that will generate revenue more quickly than our Guinea project. In
April  2004,  we initiated a new company, HYD Resources Corporation ("HYD"). HYD
performs  oil field services for our clients, buys and sells used equipment, and
will  drill  oil  wells  in  proven areas within the United States, beginning in
Louisiana.  Our  primary  goal  for  HYD  is to cost-effectively obtain domestic
production  and oil field service revenues and we are making strategic alliances
and developing key relationships that we will be able to use to maximize profits
for  our  shareholders  going  forward.

Finally,  we  continue  to  develop  our  seismic  data management or NuData(SM)
services  and  are now again actively pursuing service contracts. Our NuData(SM)
services  also  meet  our  internal  requirements


                                        3
<PAGE>
to manage our own seismic data. This facilitates the further analysis and use of
the  data  acquired  pursuant  to the needs of our exploration work programs. We
believe  that the process of perfecting NuData(SM) services for our internal use
benefits  us  in two ways: it helps us to efficiently manage our own data and it
will  result in enhancements that render the NuData(SM) services more attractive
to  other  exploration  and  production  companies.

Current Focus and Direction of Business Plan

     Mission  Statement

     TO  EXPLORE,  DISCOVER  AND  OBTAIN  FINANCIAL  INTERESTS  IN  WORLDWIDE
     HYDROCARBON  RESERVES,  WHILE  SIMULTANEOUSLY  DEVELOPING  PROFITABLE  OIL
     INDUSTRY  SERVICES  AND  RELATIONSHIPS


Offshore  Oil  and  Gas  Exploration  and  Exploitation;  Production and Sharing
Agreement  for  Exploration  Territory  Offshore  The  Republic  of  Guinea

In December 2002, we executed a contract with US Oil, who farmed out 100% of the
rights  and  obligations associated with the 2002 PSA. Immediately upon signing,
our top priority became the performance of the requirements of this 2002 PSA. We
began the process necessary to begin pinpointing drilling prospects on this huge
concession  of  approximately  sixteen  million  (16,000,000) acres. In the near
future  we plan to design and implement a drilling program or multiple programs,
as  the  case  may  be.

This  year  we  have  continued  to  take  substantial  financial  risk  on  the
performance  of  our  exploration  work. We are happy to report positive results
thereon.  Until  we  began  our  exploration program, the geological information
relating  to  offshore  Guinea  was scant. The first exploration activity in our
concession  area  occurred  in  the  1970's.  The  technology available for data
acquisition  and  processing  at that time did not reveal geological information
with  great  precision. The area was not considered as attractive as other areas
which  more  clearly  evidenced  hydrocarbon  systems  using  contemporaneous
technology  and  which  were  easier  to  explore and develop. Accordingly, very
little additional exploration work occurred on the concession until we began our
work  in  2002.

The  general  economic  environment  has  changed dramatically since the 1970's.
Today,  oil is more scarce and the price of oil is much higher than ever before.
Because  of  this  economic  fact,  exploration  and development is occurring in
certain  areas  around  the  world that were previously not explored because the
cost  was  perceived  to exceed the potential benefits. As we now know, offshore
Guinea  was  viewed as an area such as this for many years and this tainted view
persisted  until,  in  the  last two years, we have gradually uncovered the true
characterization  of the geology of this viable offshore territory. We conducted
our surveys using modern technology which more accurately depicts the geological
character  of  the  area.  Our  work has dramatically changed this wrong view as
geo-scientists  are  agreeing  on  the  increasing  possibilities for commercial
hydrocarbon  viability  offshore  Guinea. As a result, our work carried out over
the  last  two years, supports a plan for more intense exploration activity than
ever  before.  Every  new  bit of information obtained from our exploration work
expands  our  options  on  how to proceed towards drilling the first exploration
well.  At  this  time we are considering two basic approaches to accomplish this
goal.  The  first  is  to partner with oil companies on a working interest basis
whereby  such  partner  would  be  responsible  to drill. The second is to raise
additional  funds  and  to  contract directly with a drilling company ourselves.

The  regional 2D seismic acquired in 2002 included about 1,000 kilometers of new
data,  which  we  re-evaluated  during this fiscal year. We used the information
garnered from this regional data shoot to design a more intense 2D coverage of a
4,000  kilometer  grid.  This new data was acquired in November 2003. During the
second,  third,  and  fourth  quarters  we  completed  the  processing  and
interpretation  of  this  additional  4,000  kilometers  of  seismic  data. This
fulfilled  our  work  obligation


                                        4
<PAGE>
under  the  initial  exploration  phase  of  the  2002  Production  and  Sharing
Agreement.  Based on the relative risk factors, this was a major accomplishment.

The  additional  interpretation of this 2003 data in early 2004 not only kept us
in full compliance with our required work under the 2002 PSA, but also began our
strategy  to  far  exceed minimum requirements in support of our commitment to a
discovery  sooner  rather than later. This work is continually providing us with
growing  evidence  in  the  form of documented direct hydrocarbon indicators. We
believe  our  decision to put this enhanced work program into effect merits even
more  intense  and  continued  study towards the hopes for drilling programs and
operations to emerge as early as the first half of 2005. After completion of the
initial  processing  and re-processing of our newly acquired 4,000 kilometers of
digital  2D  data,  we were able to determine, through intense detailed analysis
and  mapping  procedures,  the  existence  of  direct  hydrocarbon  indicators,
including  many  noted  gas  seeps sourcing from the ocean floor in our coverage
area. Based on this and the other geological and geophysical analysis, Mr. Harry
Briers,  Executive Vice President, Dr. Tai Lin Hong, our Chief Geophysicist, Mr.
Neil  Moore, President for SCS, and Robert Bearnth, Executive Vice President and
Chief  Geologist for SCS, contracted TDI-Brooks International ("TDI") to perform
an  extensive  geochemical  analysis. In early August 2004, we obtained a permit
from  the  government  of Guinea and the geochemical work program began offshore
Guinea  on  August  17,  2004.  A  total  of  fifty seven (57) core samples were
acquired  and  delivered  back to TDI's laboratory at College Station, Texas for
complete  analysis  on  August 30, 2004. We expect to receive the results of the
geo-chemical  analysis  in  the  weeks  to  come.

In addition to the geo-chemical analysis, last year we had originally planned to
implement  a  three-dimensional ("3D") survey in early 2004. We decided to defer
the  3D survey. We wished to take the extra time to further analyze our data and
to  design  a  more efficient program which would concentrate our efforts on the
most  prospective  areas  in the concession. We had discussions and negotiations
with various seismic data acquisition companies, and we determined that having a
multi-national firm independently interpret and report on our data would provide
extra  assurance  and  added  credibility  to  confidently  design  our  3D data
acquisition  program. After several months of meetings and proposals, on July 6,
2004, we contracted with internationally known Petroleum Geo-Services ("PGS") to
perform  a  third  party  based  detailed  and  comprehensive  analysis  and
interpretation  of  all  our  seismic data. PGS's team of professionals began an
estimated  12  week  process  on July 13, 2004. They presented their preliminary
report  to  us on August 19, 2004. Their preliminary report revealed significant
corroborating  evidence but most importantly it clearly expressed agreement with
our view that there is indeed a well defined working petroleum system across the
concession.  Shortly  after  presenting  this  preliminary  report,  PGS's staff
returned  to  their  London  office  to  complete their independent analysis and
report.  They are expected to incorporate their findings with the results of the
geo-chemical  program  and  provide  their  completed  report to us also, in the
coming  weeks.


Seismic Data Management Services

In  2002,  SCS  closed its first major tape transcription contract to transcribe
seismic  data  located in Houston, Texas for the country of Trinidad and Tobago.
Operations  began in April 2002 and we increased production on this contract and
other smaller jobs every month through the month of December 2002. Shortly after
that  time,  our focus and resources turned to the Guinea concession. We did not
actively  pursue  the  tape  business;  instead,  we  continued  to  develop our
long-term, turnkey service known as NuData(TM) services. During the year we have
used  the  NuData(TM)  services  to  facilitate  our own oil and gas exploration
activities.  In  April  2004,  we  decided  to begin revitalizing this potential
revenue  source  by seeking contracts to provide NuData(TM) services to external
oil company customers. Thus, since April, we have hired three key people devoted
to  this  service  business.  As of September 1, 2004, we are building a growing
sales  projection  for  seismic  data  management  services.


                                        5
<PAGE>
On  August  27,  2004  we entered into a contract with Texas Geophysical Company
("TGC") relating to their data from Northern Alaska covering an offshore area of
the  Alaska  National  Wildlife Refuge ("ANWR"). Under this contract, SCS became
the  sales  agent  and seismic data management provider for TGC's ANWR data. The
State  of  Alaska  recently opened this area for block bids for offshore oil and
gas  exploration  and exploitation and TGC has the rights to the only 2D seismic
data  known to cover this area. Should oil companies license this data, SCS will
earn  associated  service  revenues  and  a  percentage  of  the  license  fees.


Development of SCS NuData(TM) Management System

On  September  13, 2002, we acquired the copyrights and all rights to the source
code  of  the ONYX and ONYXII related conversion and transcription software. The
software  is  instrumental  in  providing  the  technical capabilities to handle
virtually  any  type of tape transcription and data conversion service. The ONYX
software establishes a major competitive advantage for us as a primary component
for  our  SCS NuData(TM) Management System. The ONYX software has been developed
over  the  last  five  years  and we are in the process of completing its latest
version  of  the software to take full advantage of Microsoft's 32 bit Operating
Systems  such as Windows 2000, Windows XP and future 64 bit operating systems as
technology advances. As the primary cornerstone of our NuData Management System,
ONYX  facilitates  over 120 different tape formats including such common formats
like  SEG A,B,C, or D, Western Code 4.2 and 1, Geocore 4, and Tempest, to name a
few.  These  formats  are  converted  to the more standard SEG-Y format and then
consolidated  to DVD. Features of the NuData(TM)Management System in addition to
the  ONYX  based  conversion  capabilities  include:

          -    A  custom  and unique tape tracking system tightly monitoring and
               managing  the  transcription process and database to organize and
               keep  track  of all the data associated with a particular line or
               area  of  seismic  data.

          -    Bundled  services  to  scan  well  logs,  maps  and other related
               information  to  PDF  format and consolidate such related data on
               the  same  disk  or  DVD  as  the  converted  seismic  data.

          -    Strong  quality assurance procedures. Data sets are catalogued in
               the  NuData(TM)  database  and then compared to client's database
               and  reconciled  to  NuData(TM)  database.

          -    Once  consolidated  on  DVD,  there  are  many  different  data
               management  and  backup  solutions available, for example, online
               virtual  private network (VPN) access established privately for a
               client  or  high  speed  transmission  from  Hyperdynamics
               transcription  facility  to  the  customer  across high bandwidth
               capacity  connection.

We  plan  to  continue  to  develop  new  features  to maximize the value of our
NuData(TM)  Management  System.  When  coupled  with  our  extensive  industry
experience,  the  NuData(TM)  Management  System  allows  us  to consolidate and
organize  our  client's seismic data in ways to save them substantial amounts in
future  data  maintenance  expenses.  We can dramatically enhance our customer's
accessibility  and utility of their seismic data thereby enhancing their ability
to  find  new  oil  and gas reserves faster and at a lower cost. In summary, the
NuData(TM)  Management  System  makes  our  client's  data  much  more  secure,
accessible,  manageable, and portable all while saving them significant time and
money.

Domestic  Oil  Field  Service  and  Production

On  April  23,  2004,  we  acquired  our  new  subsidiary,  HYD.  HYD is a Texas
Corporation and it is our second operating subsidiary. HYD has corporate offices
located  at  our home office in Houston and one field office located in La Salle
parish  in  Louisiana.


                                        6
<PAGE>
HYD's  business  is  to  provide  oil  field  services,  including well workover
maintenance,  re-drilling,  and  new  drilling  projects. When acquired, HYD had
approximately  $375,000  worth  of  assets,  the  bulk  of  which  was oil field
equipment.  HYD's  president, Mr. Sam Spears, a long time oil industry operator,
made some strategic purchases of additional equipment, including a workover rig,
and  renovated  the  existing  and  purchased  equipment.

HYD's competitive advantage is Mr. Spears' ability to acquire and repair key oil
field  equipment at low costs. We can use this equipment to generate our own oil
and  gas  production  as well as to generate high margin profits on drilling and
workover  services. We intend to acquire oil leases in known producing areas and
drill  these leases to secure our own production. HYD's specialty for production
is  shallow,  low  volume wells in areas known to contain commercial recoverable
oil  and  gas  reserves. We can acquire onshore producing leases with a very low
risk  and  cost-effectively  enhance  the  production  of  wells  acquired  by
maintaining them. Additionally, we can drill new wells in known producing zones.
Management  expects  our onshore operations to result in current income to cover
its  corporate  overhead and that they will also begin generating a shorter-term
return  for  our  shareholders.

Beginning  in June 2004, we deployed our workover rig for well maintenance jobs.
We  bill  by the hour for the use of the rig and other equipment required at the
wellsite. Additionally, Mr. Spears has led the renovation of a drilling rig into
excellent  working  order. We have hired a crew for the drilling rig and we have
procured  our first contract drilling job as of September 7, 2004. Additionally,
HYD  has  obtained  ownership of a shallow oil well in Louisiana from one of its
workover  customers. Since September 8, 2004, HYD worked over this first company
owned well and perforated it in multiple zones to increase production to as much
as  20 barrels a day. We believe we can build our own oil lease ownership, drill
many  shallow  wells  with similar production levels, and gradually increase our
production  revenues  to  profitable  levels  in  the  coming  months.

Revenues earned from June until the date of this filing for workover maintenance
and  drilling  exceed  $40,000.  During  this time frame, the HYD personnel have
renovated  and  completely  repaired a workover rig and a drilling rig. With the
price  of  oil holding at high levels, the company is continuing to see contract
service work. Current projections for HYD revenues for the next three months are
as much as $100,000 for services and as much as another $100,000 for production.
The  primary plan is for HYD to build ongoing revenue flows through drilling and
completing  our  own  wells  for  perpetual production. Management believes that
developing  our own production takes priority above generating service revenues.


Employees and Independent Contractors

We  have  27  full  time  employees and three part time employees. Five of these
employees  are a strict part of corporate overhead. Nine are directly associated
with  SCS  and  thus attributable to the exploration and seismic data management
effort.  Another  17  are  focused  on  the  growing oil field production of HYD
Resources,  including  two  management  and ten hourly employees working on well
work-over,  drilling, and strategic equipment renovation projects. Additionally,
we  use  independent  contractors  to  minimize fixed overhead. No employees are
represented  by  a  union  and the Company believes that its labor relations are
good.

Alliance Partnerships, Key Vendors and Technical Certifications

Hyperdynamics  maintains  certifications  with Microsoft as a Microsoft Solution
Provider  and  Great  Plains  Software  as  eEnterprise  reseller. Our technical
capabilities are more focused on vertical software development, for example, our
new  version  of  ONYX  software  that  is  the  cornerstone  of  our NuData(SM)
end-to-end  seismic  data  services.


                                        7
<PAGE>
Oil  industry  related  alliance  partners  and vendors that we established this
fiscal  year  include  the  following:

Spectrum  Geophysical Processing Company ("Spectrum") provided professional data
processing  services  for  us.  Spectrum is a member of a UK registered group of
companies  providing  seismic  data  processing,  non-exclusive  surveys  and
electronic  data  management  services to a wide range of international clients.
Spectrum  has  its  headquarters in Woking, England, with operational centres in
Houston  and  Cairo.  There  are active joint ventures in Buenos Aires, Tripoli,
Tehran  and  New  Delhi.  SEISMIC  DATA  PROCESSING  operates a major processing
computer  hub  in  its  Houston  office  using  the  successful  combination  of
interactive  SeisUp(TM)  running  on  multi CPU Hewlett Packard Exemplar systems
with  the  addition  of  a  large  PC  cluster  to  run pre-stack time and depth
migration  and  other CPU intensive processes. Both Spectrum's geophysicists and
Spectrum's  clients  can  interactively  utilize  this  capacity  via Tarantella
servers  and  the  internet.  As  pioneers of seismic trace scanning and digital
reconstruction, Spectrum continues to improve its Geoscan(R) service and product
with  more  sophisticated reconstruction algorithms and an upgraded, interactive
operating  environment.  Spectrum  also  provide  tape  transcription  and
remedial/recovery  services,  and  have  successfully  completed  many  projects
involving  the copying of thousands of old tapes to new high density cartridges.
NON-EXCLUSIVE  SURVEYS  are  an  important  part  of the group's activities. The
international  portfolio  has  recently increased with the completion of surveys
offshore  Oman  and  New  Zealand.

We  contracted  with  PGS to establish a strategic alignment for further seismic
acquisition  and  independent  data  interpretation  services.  PGS  is  a
technologically  focused  oilfield  service  company  principally  involved  in
geophysical  and  floating  production  services.  PGS provides a broad range of
seismic  and  reservoir  services,  including  data  acquisition,  processing,
interpretation,  and  field evaluation. PGS also owns and operates four floating
production,  storage  and  offloading units (FPSOs). PGS operates on a worldwide
basis  with  headquarters  in  Oslo, Norway. For more information on PGS, please
visit  www.pgs.com
       -----------

We  engaged  TDI  to perform geochemical core analysis of our concession. TDI is
the  recognized leader in offshore surface geochemical exploration and heat flow
measurement.  Since  1996, TDI has collected nearly 7,000 deep water piston core
sediment  samples  and  heat flow stations for every major oil company, in areas
such as the Caribbean, the Gulf of Mexico, the Mediterranean, the North Atlantic
and  offshore  West  Africa. For more information on TDI, visit their website at
http://www.tdi-bi.com
---------------------

ITEM 2 Description of Property

In  2000  we signed a 10-year lease with AGB Westwood, LTD to lease our facility
at the Westwood Technology Center, a 540,000 square foot development in Houston,
Texas. Under the lease we leased approximately 17,807 square feet of space to be
used  initially  for  corporate  offices,  data  center  and  integration center
operations  as well as marketing and sales for the NuData(TM) Management System.
In  addition  to  this  space we also have a right of first offer on an adjacent
15,000  sq.  ft  area.

Our  lease  payments are $20,774 per month or $14 per square foot. Should we not
elect  to  cancel  the  lease,  as is our right, beginning the 55th month of the
lease  the  rate  will change to $24,114 per month or $16.25 per square foot. We
believe  this  space  is  adequate  for  our  business  needs.


                                        8
<PAGE>
Item 3 LEGAL PROCEEDINGS

A) Dixon Financial Services

In  2001,  we  were  named  as  a  defendant in a lawsuit styled Dixon Financial
Services,  Ltd.  v.  Fidelity Transfer Company, Erin Oil Exploration, Inc., Bill
Knollenberg,  Ron  Bearden,  R.F. Bearden Associates, Inc., James Chang, Nick H.
Johnson,  Riley  L.  Burnett,  Jr., Johnson, Burnett & Chang, L.L.P., Greenberg,
Peden,  Siegmyer  & Oshman, P.C., George Siegmyer and Hyperdynamics Corporation;
Cause  No.  2001-06263;  In  the 215th Judicial District Court of Harris County,
Texas.

This suit alleges breach of contract by failure to deliver share certificates in
the  name of Dixon Financial Services ("Investor"). Investor's and the Company's
claims  against  third parties have been denied by summary judgment on claims of
attorney  privilege arising from the underlying litigation leaving Hyperdynamics
and Fidelity Transfer as defendants. Both defendants rely on Fidelity Transfer's
refusal  to deliver certificates when a court injunction remained outstanding in
the  underlying  litigation.  The  Investor seeks substantial damages. The Court
considered  various  motions  of  the parties on the remaining claims and denied
each of them. Trial will be to a jury and in all likelihood the Investor and the
Company will appeal all prior rulings of the Court against the third parties and
will  appeal  the  final  judgment. We have and intend to continue to vigorously
defend  ourselves  and  to  deny  liability.

B) Wellington

On  April  9, 2001, we were named as a defendant in a lawsuit styled Wellington,
LLC  vs.  Hyperdynamics  Corporation et al. Civil Action# 18811-NC, The Court of
Chancery  of  Delaware.

The  Plaintiff claims that we did not carry out conversion of series A preferred
stock  to  common  stock.  On  August  9,  2002  Plaintiff, Defendant, and their
respective  counsels  executed  an "Agreement for Transfer of Claims in Delaware
Action  to  Georgia". Subsequently, the lawsuit was moved in its entirety to the
Atlanta,  Georgia  to  be litigated under the lawsuit discussed BELOW. Under the
agreement,  the  Plaintiff in the Delaware action, Wellington, LLC. would become
the  Defendant in Atlanta. During the fiscal year ended June 30, 2004, the Court
of  Chancery  of  Delaware  dismissed  the  Delaware  case.

On  November  5,  2001,  we  filed  a  lawsuit styled Hyperdynamics Corporation,
Plaintiff,  v.  J.P.  Carey  Securities,  Inc., J.P. Carey Asset Management LLC,
Joseph  C.  Canouse,  John  C.  Canouse,  James  P.  Canouse,  Jeffrey  Canouse,
Southridge  Capital  Management  LLC,  Stephen  Hicks a/k/a Steve Hicks, Thomson
Kernaghan  &  Co.,  Limited,  Mark Valentine, Talya Davies, Cache Capital (USA),
L.P.,  Carpe  Diem,  Carpe  Diem LTD., Wellington, LLC, Minglewood Capital, LLC,
Falcon  Securities,  LTD,  Navigator  Management  LTD.,  David  Sims,  and Citco
Trustees  (Cayman)  Limited,  Defendants;  and  Wellington  LLC,
Counterclaim/Third-Party  Plaintiff,  v.  Hyperdynamics  Corporation, a Delaware
corporation, Kent Watts, Michael Watts, Robert Hill, Harry J. Briers, DJX, Ltd.,
a  Belize corporation, and Does 1-10, Counterclaim/Third-Party Defendants, Civil
Action  File  No.  2001CV44988, In The Superior Court of Fulton County, State of
Georgia.

We filed our First Amended Complaint against Defendants on September 12, 2002 in
which  we  presented  thirteen  counts  for  Causes of Action against defendants
including  "Violations of Georgia Racketeer Influenced and Corrupt Organizations
(RICO)  Act  (O.C.G.A.  SS  16-14-1,  ET  SEO).

We  believe  that  more than one of the Defendants worked together to create the
appearance  of providing initial long-term financing ($3,000,000) and additional
financing commitments (up to additional $5,000,000), all from reputable sources,
while  the  Defendants'  real  plan  was  to  manipulate  our  stock  through
contractually  prohibited  short  selling  and  multiple  breaches  of  the
contractually  agreed  to  selling  covenants.


                                        9
<PAGE>
We are subject to counterclaims in this Georgia litigation. The counterclaimants
allege  that  Hyperdynamics  and  its  officers  and  directors  breached  their
fiduciary duties to shareholders and committed other tortuous acts. We intend to
continue  to  vigorously pursue damages and defend all counterclaims. During the
fiscal  year,  we  have  received default judgments from some of the defendants.
Discovery  is  being  primarily  focused  on jurisdictional issues at this time.
Additionally,  we  have  made  numerous  claims  of discovery abuse resulting in
certain  defendants  and  defense  attorney's  involved  being sanctioned by the
court.


C) AT & T

On  August  21,  2003,  AT  &  T  Corporation  filed  suit  against  us alleging
non-payment of bills and seeking damages of $387,289.98, plus interest, costs of
court,  and  attorney's  fees  in  a  suit  styled  AT & T Corporation, Teleport
Communications  Group,  Inc.  and  Teleport  Communications  Houston, Inc., Both
Wholly  Owned  Subsidiaries  of AT & T Corporation v. Hyperdynamics Corporation;
Civil Action No. H-03-3369; In the United States District Court for the Southern
District  of Texas, Houston Division. On October 14, 2003, we filed an answer in
the  lawsuit,  denying  AT&T's claims, and filed counterclaims against AT& T. On
January 30, 2004, AT& T amended its suit, claiming that it was owed $451,862.83.

In  fiscal  2004, we decided to attempt to settle the litigation with AT & T and
attended  non-binding  mediation.  At  the mediation, we arrived at a negotiated
settlement  acceptable  to  both parties. The agreement was executed during June
2004  and  the  case  was  dismissed  on  July  29,  2004.


ITEM 4 Submission of Matters to a Vote of Security Holders

On  December  8,  2003,  the  company  held  its  annual  shareholder meeting as
disclosed in its proxy statement filed October 29, 2003. The shareholder meeting
was  for  shareholders  of  record  at  October  17,  2003.  Both  common  stock
shareholders  and  Preferred  Stock  Series  B  shareholders  voting  rights.

The  election  judges  reported at the meeting that there were 27,723,305 common
stock  shares  outstanding  on  that date carrying one vote per share plus 2,725
shares  of  Series  B Preferred Stock carrying 20,186,800 votes. The total votes
outstanding  on  October  17,  2003  and eligible to be cast at the meeting were
47,910,105.  The  total  voting shares present either by proxy or in person were
23,947,314 common shares and 2,725 Series B Preferred shares. This yielded a sum
total  of  44,134,114  votes available to be counted. Of these votes, 43,785,778
votes  were cast representing 91% of total outstanding votes eligible to vote at
the  meeting.

The results of the voting by Item are as follows:

ITEM 1:
With respect to election of Directors of the Company

<TABLE>
<CAPTION>
                # of shares FOR  # of shares AGAINST  # of shares   ABSTAIN
<S>             <C>              <C>                  <C>
Kent Watts           43,767,478           0                          18,300
Robert J. Hill       43,767,478           0                          18,300
Harry Briers         42,263,562           0                          18,300
</TABLE>


ITEM 2:
With respect to Ratification of Malone & Bailey, PLLC as the Company's
Independent Auditors


# of shares FOR  # of shares AGAINST  # of shares ABSTAIN
42,760,578            1,013,500             11,700


                                       10
<PAGE>
ITEM 3:

With respect to approval of an amendment to the Certificate of Incorporation to
authorize a total 250,000,000 shares of common stock.

<TABLE>
<CAPTION>
# of shares FOR  # of shares AGAINST  # of shares ABSTAIN
<S>              <C>                  <C>
40,954,282            2,818,196               13,300
</TABLE>


ITEM 4

With respect to approval of an Amendment to the Certificate of Incorporation to
vest authority to amend, alter, or repeal Bylaws upon the Directors.

<TABLE>
<CAPTION>
# of shares FOR  # of shares AGAINST  # of shares ABSTAIN
<S>              <C>                  <C>
32,697,477             412,495               144,955
</TABLE>

ITEM 5
Other Business - None Discussed

<TABLE>
<CAPTION>
# of shares FOR  # of shares AGAINST  # of shares ABSTAIN
<S>              <C>                  <C>
42,444,353              89,800              1,251,525
</TABLE>


PART II

ITEM 5 Market for Common Equity and Related Stockholder Matters


Price Range Of Common Stock

Our  Common  Stock is traded on the OTCBB under the symbol "HYPD". The following
table  sets forth the quarterly high and low bid prices per share for the Common
Stock, as reported by the OTCBB. The bid prices reflect inter-dealer quotations,
do  not  include  retail  markup, markdown, or commission and do not necessarily
reflect  actual  transactions.

<TABLE>
<CAPTION>
                                    High Bid   Low Bid
<S>                                 <C>        <C>
FISCAL 2003
  First Quarter                     $  0.3800  $ 0.2300
  Second Quarter                       0.4500    0.1800
  Third Quarter                        0.3700    0.2200
  Fourth Quarter                       0.8900    0.2600

FISCAL 2004
  First Quarter                     $  2.1400  $ 0.7300
  Second Quarter                       2.2500    1.4100
  Third Quarter                        3.7200    1.5100
  Fourth Quarter                       3.0200    2.2700
</TABLE>

On  September 9, 2004 the last bid for the Common Stock as reported by the OTCBB
was  $2.48  per  share.  On  September  17, 2004, there were approximately 4,600
stockholders  of  record  of  the  Common  Stock.


                                       11
<PAGE>
We  have  not  paid,  and  we  do not currently intend to pay in the foreseeable
future,  cash  dividends on our common stock. The current policy of our Board of
Directors  is to retain all earnings, if any, to provide funds for operation and
expansion of our business. The declaration of dividends, if any, will be subject
to  the discretion of the Board of Directors, which may consider such factors as
our  results  of  operations, financial condition, capital needs and acquisition
strategy,  among  others.

Recent  Sales  of  Unregistered  Securities

We  effected  the  following  transactions  in  reliance  upon  exemptions  from
registration under the Securities Act of 1933 as amended (the "Act") as provided
in  Section  4(2)  thereof.  Each certificate issued for unregistered securities
contained  a  legend  stating that the securities have not been registered under
the  Act  and setting forth the restrictions on the transferability and the sale
of  the  securities.  No  underwriter  participated  in,  nor  did  we  pay  any
commissions  or  fees  to  any  underwriter  in  connection  with  any  of these
transactions.  None  of  the transactions involved a public offering. We believe
that each person had knowledge and experience in financial and business matters,
which  allowed  them  to  evaluate  the  merits  and  risk of the receipt of our
securities.  We  believe that each person was knowledgeable about our operations
and  financial  condition.

In January 2004, Hyperdynamics delivered 367,809 shares to one of Hyperdynamics'
officer/directors  pursuant to the terms and conditions of the conversion option
of  one  of  the  Convertible  Notes  Payable, due December 31, 2007. This was a
private  placement  made  in  reliance  of  Section  4(2)  of  the  Act.

During  the  quarter  ended  March  31, 2004, a consultant received 125,000 (not
212,500,  as  previously  reported in our 10-QSB dated March 31, 2004) shares of
common  stock  for  geological  services  valued at $212,500. This was a private
placement  made  in  reliance  of  Section  4(2)  of  the  Act.

During the quarter ended March 31, 2004, Hyperdynamics issued 2,000,000 warrants
to  purchase  Hyperdynamics  stock at a price of $.50 per share to 4 consultants
for  Investor  Relations/Public Relations services. This was a private placement
made  in  reliance  of  Section  4(2)  of  the  Act.

In April 2004, Hyperdynamics issued 2,976,263 shares of common stock to three of
our officer/directors pursuant to the cashless exercise of 3,233,333 outstanding
warrants.  257,070 shares were withheld to pay the $.23 per share exercise price
and  tax  withholdings of $24,972. This was a private placement made in reliance
of  Section  4(2)  of  the  Act.

During  the  quarter  ended  June  30,  2004,  two  individuals exercised 55,000
warrants  for  common  stock  for  $15,000. This was a private placement made in
reliance  of  Section  4(2)  of  the  Act.

During  the  quarter  ended June 2004, Hyperdynamics issued 32,328 shares to two
individuals in payment of the first $93,750 installment of the purchase price of
HYD  Resources  Corporation.  This  was  a private placement made in reliance of
Section  4(2)  of  the  Act.


ITEM  6  Management's  Discussion  and  Analysis  or  Plan  of  Operation

              CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

We  are 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 us, or on our
behalf.  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


                                       12
<PAGE>
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.  Our  expectations,  beliefs  and  projections are expressed in good
faith  and  we  believe  them  to  have  a  reasonable  basis, including without
limitations,  management's  examination  of  historical  operating  trends, data
contained  in our 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 our
view,  could  cause  actual results to differ materially from those discussed in
the  forward-looking  statements:  our  ability  of to respond to changes in the
information system environment, competition, the availability of financing, and,
if  available, on terms and conditions acceptable to us, and the availability of
personnel  in  the  future.  We  have  no  obligations to update or revise these
forward-looking  statements  to  reflect  future  events.

The  following  discussion  should  be  read  in  conjunction with the financial
statements  and notes thereto for the fiscal years ended June 30, 2004 and 2003.

Results  of  Operations

Revenues  decreased  to  $38,444 for the year ended 2004 from $468,022 for 2003.
The  92%  decrease  occurred  because  we  experienced a significant decrease in
seismic  data  transcription  revenue. Instead of actively pursuing this line of
business, we allocated our resources to increasing the value of our unproved oil
and gas properties instead of generating revenues. Thus, during this last fiscal
year  we have purposely focused primarily on performing work associated with the
Guinea  concession.  Management  believes  this  decision  will  yield  the most
profound positive result for our shareholders in the coming years. As we look to
the  future,  we  expect  revenues to increase in the short term because we have
obtained  additional resources and have decided to begin building our production
and  service  revenues  through our new subsidiary, HYD. HYD was responsible for
approximately  $10,000  of  our  revenues  during  the year ended June 30, 2004.

Cost of revenues decreased to $207,200 (500% of revenue) for the year ended 2004
from  $469,158  (100%  of  revenue)  for 2003. Cost of revenues in 2004 includes
$67,412  from  our  new  subsidiary, HYD. Cost of revenues after deducting HYD's
costs  of revenues were $139,788, which represents a 70% decrease from 2003. The
decrease  in  cost  of revenues as a percentage of revenues is due to decline in
the  high contribution margin transcription work and the necessity to maintain a
minimal  level  of  operational  personnel.

HYD's  gross  margin  for  its  first  two months of operation was $(57,438), or
(576%)  of  revenues.  Cost of revenues included a significant amount of repairs
and  maintenance  on the equipment we acquired and costs associated with setting
up  our  field  operation.  Since we intend to use this repaired equipment to be
used  to  drill  our  own  production  wells, we expensed the repairs instead of
capitalizing  them. If the equipment were sold, we believe we would get at least
what  we  expended  plus the cost already in inventory. We expect these costs to
level  out  over  the  next  quarter,  although as we have more opportunities to
repair  high  demand oil field equipment we may very well continue to do this as
this  ability  gives us a low cost of operation and competitive advantage in the
long  run.

Selling,  General and Administrative expenses increased to $2,794,988 (7,270% of
revenue)  for  the  year ended 2004, as compared to $1,527,134 (326% of revenue)
for  2003.  This is an 83% increase from the year ended June 30, 2003. Effective
October  1, 2003, Hyperdynamics adopted the fair value recognition provisions of
FASB  statement  123,  Accounting  for Stock-Based Compensation, for stock-based
compensation.  We  adopted  FASB Statement 123 using the retroactive restatement
method  as  described  in  SFAS  148,  Accounting for Stock-Based Compensation -
Transition  and  Disclosure.  In  accordance  with  that  statement,  we  have
retroactively  restated  all  periods  presented so that stock option expense is
reflected  in  accordance with SFAS 123. Consequently, amounts previously marked
to  market  of $2,147,000 during the year ended June 30, 2003 in accordance with


                                       13
<PAGE>
APB  25  and  related  interpretations  have  been restated, and these financial
statements  reflect instead the fair value of the employee options earned during
that  year,  $415,412.

The  major factor involved in the change in Selling, General, and Administrative
expenses  was  approximately $1,500,000 of consulting cost incurred in 2004 when
800,000  warrants  issued to consultants for Investor Relations/Public Relations
services vested. The cost of warrants issued to consultants in 2003 was $85,000.
An  additional  200,000  warrants vest at the end of each quarter until December
2005.  At  each  vesting  date,  Hyperdynamics will estimate and record the fair
value  of  the  warrants  that vest using the Black-Sholes option pricing model;
thus this cost will continue through December 2005. Our other consulting, legal,
and  professional  costs  decreased  $189,818,  or 53%, from $357,220 in 2003 to
$167,402  in  2004.  Our expense associated with warrants issued to our officers
decreased  $147,046,  or  36%,  from  $412,766  in 2003 to 265,720 in 2004. This
occurred  because  warrants  were  forfeited  when  one of our officers resigned
during  fiscal  2003. A one-time debt renegotiation cost of $100,000 is included
in  2003 results and a gain on a settlement with a vendor of $92,066 is included
in  2004  results.

Selling  expenses  increased  25%,  from $38,745 in 2003 to $48,567 in 2003. The
balance  of  the  change  in  Selling,  General,  and Administrative expenses is
attributable to increases in travel of about $55,000, mostly associated with our
Guinea concession and increased general office costs of about $100,000, which is
attributable  to  increased  utility costs, the cost of holding of a shareholder
meeting  in  2004,  and  increased  property  taxes.

In  addition  to  the increased Selling, General, and Administrative expense, we
experienced  impairment losses of $350,000 on goodwill and $354,061 on leasehold
improvements  during 2003; there was no impairment in 2004. Due to the decreased
cost  basis  of  our  assets  as of July 1, 2004 because of that impairment, our
depreciation  expense  decreased significantly, from $176,938 in 2003 to $61,004
in  2004.

Interest  expense increased 757% from $55,203 in the year ended June 30, 2003 to
$474,643  in  the  year  ended June 30, 2004. The interest expense during fiscal
2004  consists  of approximately $240,000 attributable to the Notes Payable, due
December  31,  2007,  which were converted during the quarter ended December 31,
2003,  and  approximately  $230,000 attributable to accretion of interest on the
mandatorily  redeemable  preferred  stock.

Net  Loss.  Our  net loss chargeable to common shareholders was $(3,677,822), or
($.12)  per  share  in  2004  as opposed to $(2,645,317), or $(.12) per share in
2003.  The  net  loss chargeable to common shareholders includes a deduction for
preferred  stock dividends accrued but not paid of $186,779 in 2004 and $186,779
in  2003.  The  negative  results  are  due  to  the  factors  discussed  above.

Critical Accounting Policies


Property  and  Equipment  and  Unproved  Oil  and  Gas  Properties:

We  have invested approximately $3,200,000 in unproved oil and gas properties as
of June 30, 2004. The $3,200,000 in unproved properties is subject to impairment
review  as of June 30, 2004. The Unproved Oil and Gas Properties were determined
to  be  unimpaired  because  we  expect  various  strategies  to raise funds, as
discussed  in  the  liquidity and capital resources section, to raise sufficient
funds  to  satisfy  our  obligations  with  regard  to  the  Guinea  project.

Off-Balance  Sheet  Arrangements

Under  our  agreement  with US Oil, we will pay US Oil $1,600,000 if SCS obtains
third  party  financing  for the Guinea development project, and a 3% royalty if
oil  and gas is produced on our Guinea project. This contingent payable will, if
paid,  increase  the  cost of the Unproved Oil and Gas properties at the time of
payment.  As  such,  it  will  increase  the  cost of sales over the oil and gas


                                       14
<PAGE>
production period as part of the periodic amortization of the Proved Properties,
or,  if  the  development  of  the  properties does not culminate in oil and gas
production,  the  cost  will  be  charged  to  expense  as  an  impairment.

We  have  an  operating  lease  with our landlord as disclosed in Note 13 of our
financial  statements.

We also have a contingent $350,000 note payable that is only payable with 25% of
the  profits of SCS Corporation. We have the right to pay this note using common
stock  or  cash.

Additionally,  in conjunction with our purchase of HYD Resources Corporation, we
entered into three notes payable to two individuals totaling $856,000. The notes
are  to be paid quarterly over the five years ended June 30, 2009. Payments will
be  due  only  if  HYD  Resources  Corporation  has  a  net  income according to
accounting  principles  generally  accepted  in  the  United  States of America.
Payment  amount will be 25% of the net income for the period, unless there was a
net  loss  in  previous period(s). If there is a net loss, subsequent net income
must  completely offset the losses before any amounts are due. After the loss is
offset,  payment  of  25%  of  the  remaining  net  income  will  be  due.


Liquidity and Capital Resources

At  June 30, 2004 our current ratio of current assets to current liabilities was
1.86  to  1. This compares to .18 to 1 for 2003. Our current ratio is completely
turned  around  because  we  successfully  raised  capital  to  fund  the Guinea
investment.  A  deeper  analysis  of  the  current ratio reveals several current
obligations  that reduce the current ratio but for which there is no requirement
to  use  cash  to  satisfy them or the payment is deferred until we receive cash
inflows  sufficient  to pay them. These items include Deposits, Accounts payable
Seismic  Data,  Note Payable - purchase of HYD, Dividends Payable, and Dividends
payable  to  related  party.

We are unlikely to maintain our current ratio without raising additional capital
or  beginning  to  generate  revenues  and  positive  cashflow  from operations.
Although  we  plan  to  continue  to  improve  on  our  current ratio, we have a
contractual  requirement  during  the  second  exploration  period in the Guinea
concession  to  invest  an  estimated  $10,000,000  in  drilling  at  least  one
exploratory well offshore Guinea. The second exploration period expires sometime
during  the later part of this decade depending on initial periods and extension
provisions.  Although  we  have  several years to complete this work, we wish to
initiate a drilling program as soon as possible. Thus, we are considering all of
our  options  or  any combination of these options to; a) increase revenues from
operations; b) raise additional capital to support at least the minimum required
drilling  program;  c)  negotiate one  or  more  transactions  with  oil company
partners who share in  the required work  and  financing  risk; and d) negotiate
work program related deals with oil industry vendors such as seismic acquisition
companies. We believe that our ability to manage and effect one or more of these
options  will  determine our significant current ratio and financial position in
the  future.

Our  cash  from  operations  was  a  deficit  this  last year based on our asset
appreciation  based plan. We have taken overhead reduction steps to minimize non
productive expenditures. We are spending the bulk of the capital raised directly
or  indirectly  on  enhancing  the value of our offshore oil and gas concession.
These  expenditures, however, do not improve cash flow from operations. In order
to  improve our operating cash flow situation for future periods, management has
budgeted  certain  amounts  of  capital  and has started to build up our service
revenues.  As  mentioned  in  the  business section of this annual report we are
pursuing  domestic production to give us income enough to first pay our overhead
as  we  move  forward  and  then  second to enhance the returns available to our
shareholders  as  we  move  forward  into  future  drilling  programs.

Thus,  we expect to improve our cash flow from operations on a steady basis from
quarter  to quarter during the current fiscal year. We expect to see significant
improvement  reflected  in the future by management's policies to go after these
new  revenues  while  continuing  to build our potential income sources from our
largest  oil  and  gas assets. Our clear goal is to make significant progress in
reducing  and  ultimately  eradicating  our  negative  cash flow from operations
sooner  rather than later. We are doing everything we can to accomplish this and
we  are  not  just  waiting  around  to  hit  the  big  one,  so  to  speak.

As  a  public company, the health of our market is paramount to be able to raise
critical  capital.  During  continued  tough  times  such as this year, our best
source  for  obtaining  the  critical  core  capital  we successfully raised was
through  our ability to place private investments with accredited investors  for
restricted  stock.  This  fiscal  year we raised $5,937,063 as net proceeds from
sale  of restricted common stock. Without these funds paid in, we would have not
been  able  to  reasonably  achieve  the  positive  results  of meeting our work
obligations  and  would  be  struggling  financially.


                                       15
<PAGE>
Because  SCS  has  significant  work  requirements  to  accomplish  a 3D seismic
acquisition  program, processing, and analysis thereof, and to drill exploration
wells,  we  are  beginning  to  look at more than one option to raise additional
funds.  Management is confident in its ability to raise additional capital under
more  conventional  financing  structures  such  as  an  underwritten  secondary
financing,  but  also  believes  we  will  be able to secure oil and gas working
interest  partners  to  fund  and  carry  significant  portions  of  the capital
investment  burden.

We  have been successful in raising our necessary capital and management is very
confident  in  our ability to continue to raise capital. Based on our relatively
low overhead in comparison to the rather large task at hand, the lion's share of
all  capital  raised  is  going  to  improve  our  drilling  prospects.

Thus,  management  believes  that  additional  capital funds raised has and will
continue to substantially enhance our asset value in our oil and gas concession.
This  will  yield  us  greatly  enhanced  shareholder value, and make additional
capital  easier  and  easier  to  come  by  at  ever  increasing  stock  prices.

We  could  obtain additional capital also upon the exercise of previously issued
in  the  money  outstanding  warrants  and  options  for  common  stock.

We  have  a  capital  lease  obligation  of $28,191 financing certain electrical
equipment  in  our  data center. We also have a contingent $350,000 note payable
that  is  only  payable  with 25% of the profits of SCS Corporation. We have the
right  to  pay  this  note  off  using  common  stock.  We  do not plan on using
significant  debt  financing  except  for  the  possibility  of  financing
income-producing  assets  in  the  future.

Finally,  we  originally purchased a CD in the amount of $436,300, which secured
the lease at Westwood with a Letter of Credit arrangement. This CD and letter of
credit  is  now  $195,195.  $129,750  is  due  to  be released to the Company on
November  1,  2004.  $65,445  will  be  released  on  November  1,  2005.

Management  has  put  investments  and  strategies in motion to begin increasing
profitable  revenues  to  help  the company operate on a profitable basis in the
near  future.  If  successful,  these  strategies,  as discussed in the business
section herein, in addition to the much larger potential sources of revenue from
our  offshore  operations,  should  help us build positive cash flow and build a
stronger  financial  position  as  we  move  forward.

ITEM 7  Financial  Statements

The  information  required  hereunder is included in this report as set forth in
the  "Index  to  Financial  Statements  on  page  F-1.

ITEM 8 Changes In and Disagreements with Accountants on Accounting and Financial
     Disclosure

     None

ITEM 8(A)  Controls  and  Procedures

Kent  Watts,  our  Chief  Executive Officer and our Chief Financial Officer, has
concluded  that  that our disclosure controls and procedures are appropriate and
effective.  Mr.  Watts has evaluated these controls and procedures as of the end
of  the  period covered by this report on Form 10-KSB. There were no significant
changes  in  the  our  internal  controls  or  in  other  factors  that  could
significantly  affect these controls subsequent to the date of their evaluation,
including  any  corrective  actions  with regard to significant deficiencies and
material  weaknesses.


                                       16
<PAGE>
There  have  been  no  changes  in our internal control over financial reporting
identified  in connection with the evaluation required by Rule 13a-14(b) or Rule
15d-14(b)  that  occurred  during  our  last  fiscal quarter that has materially
affected,  or  is  reasonably  likely to materially affect, our internal control
over  financial  reporting.

ITEM 8(B) Other Information

On  June  2, 2004, Harold A. Poling was elected to the Board of Directors. There
are  no  arrangements  pursuant  to  which  he  was elected. We have no standing
committees;  therefore he does not serve on any committee. However, in the event
that  we  create  an  Audit  Committee  we  expect  to  appoint him to the Audit
Committee.  There  are  no  related  party  transactions  between Mr. Poling and
Hyperdynamics  that  would  be  required  to  be disclosed under Item 404 (a) of
Regulation  S-B.

PART  III

ITEM 9  Directors, Executive Officers, Promoters and Control Persons; Compliance
        with  Section  16(A)  of  the  Exchange  Act

Executive Officers and Directors

The  following table sets forth the names and positions of each of our executive
officers  and  directors.

<TABLE>
<CAPTION>
Name               Position                            Age
----------------------------------------------------------
<S>               <C>                                  <C>
Kent Watts        Director, Chief Executive Officer,    46
                  and Chief Financial Officer

Robert J. Hill    Director                              50

Harry J. Briers   Director, Vice President-Operations   41
                  Chief Operating Officer

Harold A. Poling  Director                              79

Lewis Ball        Secretary                             73
</TABLE>

Directors  are elected annually and hold office until the next annual meeting of
our stockholders or until their successors are elected and qualified. We have no
standing committees of the Board of Directors. Officers are elected annually and
serve  at  the  discretion  of  the  Board  of  Directors.  There  is  no family
relationship  between  or among any of the directors and our executive officers.
Board  vacancies  are  filled  by  a  majority  vote  of  the  Board.

Kent  Watts, age 46, became Chairman of the Board of Directors and was named the
Company's  President  and  Chief  Executive  Officer  (CEO)  and Chief Financial
Officer  (CFO) on June 4, 1997. Mr. Watts has been a certified public accountant
in  Texas since 1985 and a licensed real estate broker since 1979. He received a
Bachelor  of  Business  Administration  Degree from the University of Houston in
1983.  Mr.  Watts  founded  MicroData  Systems, Inc., a former subsidiary of the
Company,  in  1988  and  was MicroData's CEO until he became President and Chief
Executive  Officer  of  HyperDynamics  Corporation.  He has extensive experience
designing  and  working  with  integrated  communications  network  systems  and
management  information  systems;  additionally  he designed the Company's first
Integrated  Technology  Center. He continues to fulfill the dual role as CEO and
CFO.  As  the  Company's  CEO  and  Chairman  of the Board, he remains primarily


                                       17
<PAGE>
responsible  for  managing  the  Company's  strategic direction and focus on the
vertical  oil  and  gas  industry.  As  CFO he manages the capital structure and
financing  requirements  for  the  company,  while  overseeing  and insuring the
Company's  compliance  with all government reporting requirements as well as any
legal  issues  involving  the  Company.  He  holds  no  other  directorships.

Robert  J. Hill, age 50, served as our Chief Operating Officer between June 1996
and  June  1997.  In  July,  1997,  Mr. Hill was appointed vice-president of the
Company  and  he  resigned  that  position  in  October  2002.  Before  joining
Hyperdynamics, Mr. Hill served for two years as vice president of Hudson Trinity
Incorporated, a privately held Internet Service Provider and network engineering
company  that  also  contracted senior network engineers to Loral Space Systems,
Inc.,  the  principal  civilian  contractor  for  the  design,  development  and
installation  of  NASA's new manned space flight control center. Previously, Mr.
Hill served for three years as Acquisition Manager for Loral Space Systems, Inc.
Mr. Hill has earned an MBA degree from South Eastern Institute of Technology and
a BA degree from the State University of New York at Potsdam. Mr. Hill currently
serves  the  Company  as  a  Director.  He  currently  works  as a major account
executive  at  XO  Communications  and  he  holds  no  other  directorships.

Harry  James  Briers, age 41, has been a Director since March 2, 2000. He served
as  the Director of Integrated Information Systems when he joined the company in
May  1998.  Mr.  Briers  was  also  elected  as Vice President of Operations for
HyperDynamics  Corporation  and named the Chief Operating Officer. He became the
Company's  Executive  Vice  President in October 2002. From 1988 until May 1998,
Mr.  Briers  owned and operated Perfect Solutions, a software consulting firm in
Houston,  Texas.  He  has extensive experience in the sale and implementation of
mission  critical  software  applications.  Prior  work  experience  included
consulting for Ernst & Young in their Entrepreneurial Services Group. Mr. Briers
has a BS in Accounting and an MBA from the University of Houston-Clear Lake. Mr.
Briers  continues  to operate substantially in a dual service mode. As Executive
Vice  President  he  is  responsible  for  managing  the  daily  operations  for
production  of  integrated  seismic  services  and he is heavily involved in the
marketing  and  sales of the Company's services including the performance of the
responsibilities  regarding  the  Company's  oil  and  gas farmout of the Guinea
concession. Mr. Briers also continues to serve as a director for the Company. He
holds  no  other  directorships.

Mr.  Harold  A.  Poling, age 79, was elected as the Company's fourth director on
June  2,  2004. He is a former chairman of the board and chief executive officer
(CEO)  of  Ford  Motor  Co. After finishing his MBA in accounting, he took a job
with Ford in 1951. As head of Ford of Europe, he guided the subsidiary to record
earnings.  He  moved  to  Ford's  North American Operations prior to being named
president  and  chief  operating officer, then vice chairman and chief operating
officer, and then chairman and CEO of Ford Motor Co., the world's second-largest
auto  maker.  He  served  as  a member of their board of directors from May 1979
until  January  1994, and was elected chairman in March 1990. He became a member
of  the  Office of the Chief Executive in November 1984. He retired from Ford in
January  1994.  Currently,  Poling  serves as the chairman of The PGA Tournament
Players  Club of Michigan and is also the chairman for Eclipse Aviation Corp. He
is  a  director  of Flint Ink Corp., Monmouth (Ill.) College Senate, and William
Beaumont Hospital where he is also a trustee. He is additionally a member of the
board  of trustees of Spring Arbor University. Mr. Poling has also served on the
boards  of  ArvinMeritor,  Royal Dutch Shell, Kellogg, and is a past director of
the  Professional  Golf  Association's  (PGA)  Tour  Policy  Board.

Lewis E. Ball, age 74, has served as the secretary of the Company since 1997 and
as the Chief Financial Officer from June 1996 to January 1997. Mr. Ball has been
a  financial consultant to a number of companies since 1993. Mr. Ball has served
as a director of JVWeb, Inc. since 1997 and as secretary and treasurer of JVWeb,
Inc.  since  1998.  Mr.  Ball  has  many years of industry experience as a Chief
Financial  Officer  with  Stevenson Services, Inc. and Richmond Tank Car Company
(from  1983  to 1993). Mr. Ball is a Certified Public Accountant and a Certified
Management  Accountant.  Mr. Ball has a B.B.A. in Finance from the University of
Texas, and he did post-graduate work in accounting at the University of Houston.
He  holds  no  other  directorships.


                                       18
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance

We  have  reviewed the Forms 3 and 4 submitted to us relating to fiscal 2004. We
have  found  that Harry Briers, Robert J. Hill, Harold Poling, DJX Ltd, and Kent
Watts have filed all required Form 3's and 4's during fiscal 2004. However, some
of  the required forms were not timely filed. The following table summarizes the
results  of  our  review.

<TABLE>
<CAPTION>
Name            Form type  Number of         Number of transactions
                           Forms filed late      reported late
<S>             <C>        <C>               <C>
Harry Briers    4          5                 42
Robert J. Hill  4          4                 12
Harold Poling   3          1                 N/A
DJX Ltd         3          1                 N/A
DJX Ltd         4          2                 2
Kent Watts      4          3                 11
</TABLE>

Code of Ethics

We have adopted a Code of Ethics for our senior executive and financial officers
the  form  of  which  is  attached  hereto  as  Exhibit  14.1.


                                       19
<PAGE>
ITEM 10 Executive Compensation

SUMMARY COMPENSATION TABLE

The  following  table  reflects  all  forms of compensation for the fiscal years
ended June 30, 2002, 2003, and 2004 for services provided by our named executive
officers.

<TABLE>
<CAPTION>
                 ANNUAL COMPENSATION                            LONG TERM COMPENSATION
                                                               AWARDS             PAYOUTS
                                             OTHER                   SECURITIES                 ALL
                                             ANNUAL    RESTRICTED    UNDERLYING                OTHER
NAME AND                                      COMP-       STOCK     OPTIONS SARS     LTIP      COMP-
PRINCIPAL             SALARY      BONUS     ENSATION     AWARDS                    PAYOUTS   ENSATION
POSITION       YEAR     $           $           $           $             #           $          $
<S>            <C>   <C>       <C>          <C>        <C>          <C>            <C>       <C>
Kent Watts     2004  $100,000  $171,062(4)  $     -0-  $       -0-          -0-             $     -0-
(1)
Chief          2003   100,000   147,314(3)        -0-          -0-  1,100,000(3)  $    -0-        -0-
Executive
Officer and    2002   100,000   114,123(2)        -0-          -0-    400,000(2)       -0-        -0-
Chief
Financial
Officer

Harry          2004  $ 95,000  $132,861(4)  $     -0-  $       -0-          -0-   $    -0-  $     -0-
Briers
Chief          2003    87,100   147,314(3)        -0-          -0-  1,100,000(3)       -0-        -0-
Operating
Officer and    2002    79,200   114,123(2)        -0-          -0-    400,000(2)       -0-        -0-
Vice
President of
Operations
</TABLE>

(1)  On July 21, 1999, our Board of Directors unanimously agreed to the terms of
an  "Executive  Employment  Agreement"  for  Kent  Watts. The Agreement was duly
executed  on  July  21, 1999 which establishes Mr. Watts as our President, Chief
Executive  Officer (CEO), and Chief Financial Officer (CFO). In the agreement we
note  that  we  intend  to  hire  a new CFO at the time the board deems it to be
beneficial.  At  that  time,  Mr.  Watts  will  continue his responsibilities as
President  and  CEO and he will relinquish his duty as CFO. As of June 30, 2004,
Mr.  Watts  is still acting as our CFO. The contract allows for a base salary of
$100,000  annually  with  a  performance  based  incentive salary based on 5% of
adjusted  net income, up to an additional $100,000 in salary. Therefore, maximum
salary under the Agreement is $200,000 annually. This agreement has been renewed
on  a  year-by-year  basis  under  the  same  terms.

(2)  On  July  25,  2001  we  approved  a warrant package for our officers. Each
officer  obtained  1,500,000  3-year warrants for restricted common stock with a
strike  price  of  $0.40,  of which 400,000 warrants were earned in fiscal 2002.

(3)  On  August 26, 2002, the strike price of the warrants described in Note (2)
was reduced to $0.23. The repricing of the warrants was valued as a new grant in
fiscal  2003.  This  table  reflects  the


                                       20
<PAGE>
$122,857  original  fair  value  of  the 400,000 warrants earned during 2003 and
$24,457  fair  value  attributable  to the repricing of 1,100,000 warrants for a
total  of  $147,314.

(4)  For  the  year  ended  June  30,  2004, an additional 400,000 warrants were
earned.  The  original  fair  value  of  these  warrants,  $129,686,  and $3,175
attributable  to  the  repricing  of  these  warrants  is included in 2004 bonus
income.

Option/SAR  Grants  Table

We  did not grant any options or SARS to any of our directors or officers during
the  year  ended  June  30,  2004.

<TABLE>
<CAPTION>
                AGGREGATE OPTIONS EXERCISED IN LAST FISCAL YEAR
                        AND FISCAL YEAR END OPTION VALUES

                                          NUMBER OF
                                         UNEXERCISED
                                         SECURITIES
                SHARES                   UNDERLYING         VALUE OF UNEXERCISED
               ACQUIRED                OPTIONS AT FYE     IN THE MONEY OPTIONS AT
                  ON        VALUE     EXERCISABLE/UNEXE       FISCAL YEAR END
NAME           EXERCISE    REALIZED       RCISABLE       EXERCISABLE/UNEXERCISABLE
<S>            <C>        <C>         <C>                <C>
Kent P. Watts
CEO and
Chief
Financial      1,012,805  $2,795,342          0/400,000  $             0/$1,008,000
Officer

Harry Briers
COO and
Vice
President of   1,012,785  $2,795,287          0/400,000  $             0/$1,008,000
Operations
</TABLE>

Mr.  Watts  and  Mr.  Briers  each  exercised  1,100,000  warrants in a cashless
exercise.  Shares  sufficient  to  pay  the  exercise  price  and  payroll  tax
withholding  at  the  fair  value  of  Hyperdynamics common stock on the date of
exercise,  $2.99,  were  withheld  from  the  shares  issued,  resulting  in net
issuances  of 1,012,805 and 1,012,785 shares, respectively. All of the remaining
warrants  were  in  the  money at fiscal year end 2004. Mr. Watts and Mr. Briers
hold  400,000  warrants for restricted common stock of which none were vested as
of  June  30,  2004.  Another  400,000  vested  in  July  2004.

Long-term  Incentive  Plan  Awards  Table

There  were no long-term incentive plan awards to any of our officers during the
year  ended  June  30,  2004.

Director  Compensation

There  were  no  options or other compensation granted by the board for services
rendered  during the fiscal year ended 2004. There have been no director meeting
expense  reimbursements  for  2004  and  2003.


                                       21
<PAGE>
Employment  contracts  and  termination  of  employment  and  change-in-control
arrangements

Other  than  Kent  Watts'  employment  contract,  as  disclosed in Note 1 to the
Summary  Compensation  Table,  there  are  no employment contracts nor are there
termination of employment and change-in-control agreements between Hyperdynamics
and  its  executive  officers.


ITEM 11  Security  Ownership  of  Certain  Beneficial  Owners and Management and
         Related  Stockholder  Matters


Securities authorized for issuance under equity compensation plans.

The following table reflects all equity compensation plans to date that have not
been approved specifically by security holders. We have a Stock and Stock Option
Plan  and  several Individual Compensation Arrangements established by the Board
of  Directors.

<TABLE>
<CAPTION>
                              EQUITY COMPENSATION PLAN INFORMATION
                                                                       NUMBER OF SECURITIES
                                                                       REMAINING AVAILABLE
                                                                       FOR FUTURE ISSUANCE
                       NUMBER OF SECURITIES                                UNDER EQUITY
                         TO BE ISSUED UPON       WEIGHTED-AVERAGE       COMPENSATION PLANS
                            EXERCISE OF         EXERCISE PRICE OF     (EXCLUDING SECURITIES
                       OUTSTANDING OPTIONS,    OUTSTANDING OPTIONS,    REFLECTED IN COLUMN
                        WARRANTS AND RIGHTS    WARRANTS AND RIGHTS             (a))

PLAN CATEGORY                   (a)                    (b)                     (c)
---------------------  ---------------------  ----------------------  ----------------------
<S>                    <C>                    <C>                     <C>
Equity compensation
plans approved by
security holders                           0                     N/A                       0

Equity compensation
plans not approved by
security holders                   2,951,000  $                 0.43                  44,453

     TOTAL                         2,951,000  $                 0.43                  44,453
</TABLE>

The  Stock  and  Stock  Option Plan of Hyperdynamics was adopted May 7, 1997 and
amended  on  December  3,  2001. We have 44,453 shares available to be issued or
granted  pursuant  to  the  Plan.

Under  the  Stock  and  Stock Option plan, options will vest over a five-year or
other  negotiated  period  and will have a strike price set at the time of grant
and  based  on the then current market value of the stock. Our President has the
authority  as  given  by  the  Board  of  Directors  to  negotiate  stock option
agreements  with  corporate  consultants  as  well.

We  presently  have  warrants  to purchase 2,951,000 shares of common stock at a
weighted  average  price  of $0.43 per share which are currently outstanding and
were  issued  pursuant  to individual compensation plans to officers, employees,
and  consultants.

The purpose of the stock option program will be to further our interest, and the
interest of our subsidiaries and our stockholders by providing incentives in the
form  of stock or stock options to key employees, consultants, and directors who
contribute  materially  to  our  success  and profitability. We believe that our
future  success  will  depend  in  part  on our continued ability to attract and
retain


                                       22
<PAGE>
highly qualified personnel as employees, independent consultants, and attorneys.
The  issuance  of  stock  and  grants of options and warrants will recognize and
reward  outstanding individual performances and contributions and will give such
persons  a proprietary interest in us, thus enhancing their personal interest in
our continued success and progress. We pay wages, salaries, and consulting rates
that  we  believe  are  competitive. We use the Stock Option Plan and Individual
Compensation  Arrangements  to  augment  our  available  compensation  packages.


Security Ownership of Certain Beneficial Owners

The  following  table  sets forth certain information at September 9, 2004, with
respect to the beneficial ownership of shares of Common Stock by (1) each person
who  owns  beneficially  more than 5% of the outstanding shares of Common Stock,
(2)  each  of  our directors, (3) each of our executive officers, and (4) all of
our  executive  officers  and  directors  as  a  group.

<TABLE>
<CAPTION>
Name and Address of Beneficial               Shares Beneficially Owned
Owner                                         Number          Percent
<S>                                   <C>            <C>
Kent Watts                            23,016,546(1)            36.9%
9700 Bissonnet
Suite 1700
Houston, Texas 77036

Robert J. Hill                        1,220,482 (2)             2.0%
9700 Bissonnet,
Suite 1700
Houston, Texas 77036

Harry James Briers                    1,978,743 (3)             3.1%
9700 Bissonnet,
Suite 1700
Houston, Texas 77036

Harold A. Poling                        325,000 (4)             0.5%
Fairlane Plaza North
290 Town Center Drive, Ste 322
Dearborn Mi  48126

Lewis E. Ball                                 8,000             0.0%
9700 Bissonnet
Suite 1700
Houston, Texas  77036

DJX Ltd.                              20,185,185(5)            32.4%
4438 West 10th Avenue
Vancouver, BC V6R4R8

All directors and executive              26,548,771             42.6%
officers as a group
</TABLE>

(1)  This  amount  includes  2,431,361  shares  of  common  stock;  currently
exerciseable warrants to purchase 400,000 shares at $0.23; and 20,185,185 shares
deemed  as  indirectly owned by Kent P. Watts based on his relationship with DJX
Ltd.,  whose  shares  he  presently  has the authority to vote and which is half
owned  by  his  minor  children  (See  Note  5).


                                       23
<PAGE>
(2) This amount consists entirely of common stock.

(3)  This  amount  includes  1,578,743  shares  of  common  stock  and currently
exerciseable  warrants  to  purchase  400,000  shares  at  $0.23.

(4)  This  amount  includes  200,000  shares  of  common  stock  and  currently
exerciseable  warrants  to  purchase  125,000  shares  at  $0.25.

(5) On May 31, 2001 a stock exchange agreement was completed to acquire SCS as a
wholly  owned  subsidiary. We issued 2,725 shares of Series B Preferred Stock to
pay for the acquisition. Each share of Series B Preferred Stock carries a $1,000
per  share face value and is convertible by written request into common stock at
the lesser of $0.135 per share or 50% of the closing bid price on conversion. On
June  30,  2004  the closing bid price was $2.52 per share. Thus if 100% of this
series  B  Preferred  was  converted  at the lesser $0.135 amount per share, the
shares  common  stock  shares  issued  would be 20,185,185. This presentation is
prepared  as  if full conversion has occurred. DJX Ltd. is a foreign corporation
whose shareholders are the grand children of Ernest M. Watts, the father of Kent
P.  Watts,  our  Chairman,  CEO,  and  President. Kent Watts currently exercises
voting  rights  of  DJX  shares.

ITEM 12 Certain Relationships and Related Transactions

On  November 14, 2003, a Master Public Relations Consulting Agreement was signed
with  Michael  E.  Watts,  the  brother of Kent Watts, the Chairman and CEO. The
Agreement  affirmed and established Michael Watts as the primary consultant with
the  responsibility  to  help  manage  the  public  relations,  general investor
relations,  and shareholder communications, in agreement with management. In the
Agreement  Michael  Watts  was  authorized  and required to communicate publicly
known  information to shareholders and potential shareholders and to help in all
reasonable  ways  to convey the history and story of Hyperdynamics with the goal
to increase the interest of all investors in investing in Hyperdynamics publicly
traded stock. The agreement additionally authorized Michael Watts to subcontract
public  relations  services  to other firms and consultants. It was contemplated
that these sub-contracts would include but not necessarily be limited to setting
up  public  relations  agents  in  different  parts  of  the  country. The total
compensation  for  this  Master  Public  Relations  Consulting Agreement and all
underlying sub-contracts as described hereunder is a total of 2,000,000 warrants
with  a  strike  price  of $0.50 for each share of restricted, 144 common stock.
During  January  and April 2004, Hyperdynamics granted an aggregate of 1,200,000
of  the  warrants  (of  which 480,000 were vested as of June 30, 2004) under the
Master Public Relations Consulting Agreement to a company of which Michael Watts
is president and we granted 800,000 (of which 320,000 were vested as of June 30,
2004)  of the warrants under the Master Public Relations Consulting Agreement to
unrelated  third  parties.

This  compensation  was  designed  to  encourage the long-term commitment to the
market  developing  work  being performed in the maintenance of our informed and
orderly  market.  As such, it is believed that significant incentive is in place
for all public relations consultants, agents, and sub-contractors to continually
work  in  communicating  the Hyperdynamics story and opportunity. This agreement
with Michael Watts may be canceled by the company at any time by giving a 30 day
written  notice.

During  the year ended June 30, 2004, Michael Watts received payment of $699,951
cash  to  pay for offering costs on private subscription agreements and warrants
exercised.  Additional  offering  costs  will also be paid on 3,732,403 warrants
purchased by private investors should they be exercised in the future. If all of
these warrants were exercised, Mr. Watts would receive approximately $712,000 to
pay  these  additional  costs.


                                       24
<PAGE>
ITEM 13  Exhibits

     Exhibit  14.1  -  Code  of  Ethics

     Exhibit  31.1  -  Certification of Chief Executive Officer of HyperDynamics
Corporation  required  by  Rule  13a-14(1)  or  Rule 15d-14(a) of the Securities
Exchange  Act  of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act  of  2002.

     Exhibit  31.2  -  Certification of Chief Financial Officer of HyperDynamics
Corporation  required  by  Rule  13a-14(1)  or  Rule 15d-14(a) of the Securities
Exchange  Act  of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act  of  2002.

     Exhibit  32.1  -  Certification of Chief Executive Officer of HyperDynamics
Corporation  pursuant  to  Section  906  of  the  Sarbanes-Oxley Act of 2002 and
Section  1350  of  18  U.S.C.  63.

     Exhibit  32.2  -  Certification of Chief Financial Officer of HyperDynamics
Corporation  pursuant  to  Section  906  of  the  Sarbanes-Oxley Act of 2002 and
Section  1350  of  18  U.S.C.  63.


ITEM 14  Principal  Accountant  Fees  and  Services


AUDIT FEES

Malone and Bailey, PLLC billed us in the aggregate amount of $34,510 and $28,250
for  professional  services  rendered  for  their  audit of our annual financial
statements  and  their reviews of the financial statements included in our Forms
10-KSB  for  the  years  ended  June  30,  2004 and June 30, 2003, respectively.

AUDIT-RELATED FEES

Malone  and  Bailey, PLLC did not bill us for, nor perform professional services
rendered  for assurance and related services that were reasonably related to the
performance  of  audit  or  review of the Company's financial statements for the
years  ended  June  30,  2004  and  June  30,  2003.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

For  the  fiscal years ended June 30, 2004 and June 30, 2003, Malone and Bailey,
PLLC  did not bill us for, nor perform, any financial information systems design
or  implementation.  For the fiscal years ended June 30, 2004 and June 30, 2003,
we  were not billed for professional services from any other accounting firm for
information  systems  design  or  implementation.

TAX FEES

Malone  and  Bailey, PLLC billed us in the aggregate amount of $3,740 and $0 for
professional services rendered for tax related services for the years ended June
30,  2004  and  June  30,  2003,  respectively.

ALL OTHER FEES

We were not billed for any other professional services for the fiscal year ended
June  30,  2004.

AUDITOR  INDEPENDENCE


                                       25
<PAGE>
Our  Board  of  Directors  considers that the work done for us in the year ended
June  30,  2004 by Malone and Bailey, PLLC is compatible with maintaining Malone
and  Bailey,  PLLC.'s  independence.

AUDITOR'S  TIME  ON  TASK

All  of  the work expended by Malone and Bailey, PLLC on our June 30, 2004 audit
was  attributed  to  work  performed  by  Malone  and  Bailey, PLLC's full-time,
permanent  employees.


Signatures

In  accordance with the requirements of Section 13 or 15(d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto  duly  authorized,

                                                       HyperDynamics Corporation

                                                              By: /s/ Kent Watts
                                                              ------------------
                                              Kent Watts, Chairman of the Board,
                            Chief Executive Officer, and Chief Financial Officer
                                                        Date: September 28, 2004

In  accordance  with  the Exchange Act, this report has been signed below by the
following  persons  on behalf of the registrant and in the capacities and on the
dates  indicated:

Signature                         Title                    Date

/s/ Kent Watts         Chairman of the Board,       September 28, 2004
--------------------   Chief Executive Officer and
Kent Watts             Chief Fin1ancial Officer

/s/ Robert Hill        Director                     September 28, 2004
---------------------
Robert Hill

/s/Harold A. Poling    Director                     September 28, 2004
---------------------
Harold A. Poling

/s/ Harry J. Briers   Director                     September 28, 2004
---------------------
Harry J. Briers



                                       26
<PAGE>
<TABLE>
<CAPTION>
                            HYPERDYNAMICS CORPORATION
                          Audited Financial Statements
                          Index To Financial Statements

                                                            Page
<S>                                                         <C>
Independent Auditor's Report                                F-2

Consolidated Balance Sheet as of June 30, 2004              F-3

Consolidated Statements of Operations for the years ended
  June 30, 2004 and 2003                                    F-4

Consolidated Statements of Changes in Stockholders' Equity
                                                            F-5
  for the years ended June 30, 2004 and 2003

Consolidated Statements of Cash Flows for the years ended
  June 30, 2004 and 2003                                    F-7

Notes to Financial Statements                               F-9
</TABLE>


<PAGE>
                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
  HyperDynamics  Corporation
  Houston,  Texas

We  have  audited  the  accompanying consolidated balance sheet of HyperDynamics
Corporation  and  subsidiaries as of June 30, 2004, and the related consolidated
statements  of  operations,  changes in stockholders' equity, and cash flows for
each  of  the  two  years  then  ended.  These  financial  statements  are  the
responsibility of HyperDynamics' management. Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

We  conducted  our  audits  in  accordance  with  standards  of  Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits  to  obtain  reasonable  assurance  about  whether the
financial  statements  are  free  from  material misstatement. An audit includes
examining,  on  a test basis, 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. We believe that our
audits  provide  a  reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position of HyperDynamics
Corporation  as of June 30, 2004, and the results of its operations and its cash
flows  for  each  of  the  two  years  then ended, in conformity with accounting
principles  generally  accepted  in  the  United  States  of  America.


MALONE  AND  BAILEY,  PLLC
www.malone-bailey.com
Houston,  Texas

September 16, 2004


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                            HYPERDYNAMICS CORPORATION
                           CONSOLIDATED BALANCE SHEET
                                  June 30, 2004

                                     ASSETS
<S>                                                                       <C>
Current Assets
  Cash                                                                    $  3,149,441
  Restricted certificate of deposit                                            129,750
  Accounts receivable, net of allowance for doubtful accounts of $16,451        28,244
  Inventory                                                                     83,730
  Other current assets                                                         130,551
                                                                          -------------
    Total Current Assets                                                     3,521,716

Property and equipment, net of accumulated
  depreciation of $207,667                                                     406,821
Other Assets
  Unproved Oil and Gas Properties, using Full Cost Method of Accounting      3,191,565
  Restricted certificate of deposit                                             65,445
  Deposits                                                                      21,632
  Customer list, net of accumulated amortization of $4,441                      75,483
                                                                          -------------
Total other assets                                                           3,354,125
                                                                          -------------
     TOTAL ASSETS                                                         $  7,282,662
                                                                          =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Current portion of installment notes payable                            $    126,670
  Accounts payable and accrued expenses                                        319,231
  Accounts payable seismic data                                                650,000
  Customer deposits                                                              3,264
  Note payable                                                                 281,250
  Dividends payable                                                            352,953
  Dividends payable to related party                                           163,500
                                                                          -------------
    Total Current Liabilities                                                1,896,868

Long-term portion of installment notes payable                                  43,372
Deferred rent                                                                  141,482
Mandatorily redeemable preferred stock, net of $25,750
   unamortized offering costs and $206,000 unamortized discount                540,750
                                                                          -------------
     TOTAL LIABILITIES                                                       2,622,472
                                                                          -------------

Commitments and Contingencies

Stockholders' Equity
  Convertible preferred stock, par value $.001;
    stated value $1,000; 20,000,000 authorized;
    Series A - 1,945 shares issued and outstanding                                   2
    Series B - 2,725 shares issued and outstanding                                   3
  Common Stock, par value $.001; 50,000,000 shares
    authorized; 41,206,953 shares issued and outstanding                        41,207
  Additional paid in capital                                                19,086,822
  Accumulated deficit                                                      (14,467,844)
                                                                          -------------
Total Stockholders' Equity                                                   4,660,190
                                                                          -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $  7,282,662
                                                                          =============

<FN>
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                            HYPERDYNAMICS CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  Years Ended June 30, 2004 and 2003 (Restated)

                                                                 2003
                                                   2004       (Restated)
                                               ------------  -------------
<S>                                            <C>           <C>
Revenues                                       $    38,344   $    468,022

Operating Expenses
  Cost of revenues                                 207,200        469,158
  Selling                                           48,568         38,745
  General and administration                     2,746,420      1,493,820
  Impairment                                                      704,061
  Depreciation and amortization                     61,004        176,938
  (Gain) loss on retirement and sale of assets                     (5,431)
                                               ------------  -------------
    Total Operating Expenses                     3,063,192      2,877,291
                                               ------------  -------------
      LOSS FROM OPERATIONS                      (3,024,848)    (2,409,269)
                                               ------------  -------------

Other Income (Expense)
  Interest expense                              (  474,463)    (   55,407)
  Interest income                                    8,268          6,139
                                               ------------  -------------

    Total Other Income (Expense)                (  466,195)    (   49,268)
                                               ------------  -------------

      NET LOSS                                  (3,491,043)    (2,458,537)

      Preferred dividend requirement            (  186,779)    (  186,779)
                                               ------------  -------------

NET LOSS CHARGEABLE TO COMMON SHAREHOLDERS     $(3,677,822)  $ (2,645,316)
                                               ============  =============


Basic and diluted loss per common share        $      (.12)  $       (.12)
Weighted average shares outstanding             31,938,926     22,580,526

<FN>
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                            HYPERDYNAMICS CORPORATION
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  Years Ended June 30, 2004 and 2003 (Restated)

                                             Preferred             Common
                                         Shares    Amount     Shares    Amount
                                        ---------  -------  ----------  -------
<S>                                     <C>        <C>      <C>         <C>
Balances, June 30, 2002                     4,670  $     5  21,033,791  $21,034

Common stock issued for:
  - cash                                                     4,371,811    4,372
  - exercise of options                                        573,821      574
  - services                                                   405,526      405
  - accounts payable                                           383,643      384

Issuance of stock options
  and warrants

Preferred stock dividends

Funds raised from sale of warrants
  to purchase Hyperdynamics
  Corporation stock in association
  with SCS Corp. units

Beneficial conversion feature
  associated with convertible
  notes payable to officers

Payment of preferred stock
  dividends in common shares                                   862,915      863

Net loss
                                        ---------  -------  ----------  -------

Balances, June 30, 2003 (restated)          4,670        5  27,631,507   27,632

Common stock issued for:
  - cash, net                                                8,575,543    8,576
  - exercise of options for cash, net                          179,000      179
  - cashless exercise of options, net
     of 257,070 shares returned                              2,976,263    2,976
  - services                                                   181,250      181
  - accounts payable                                            35,489       35
  - conversion of notes payable                              1,595,573    1,596
  - acquisition of HYD Resources                                32,328       32

Issuance of stock options
  and warrants

Preferred stock dividends

Funds raised from sale of warrants
  to purchase Hyperdynamics
  Corporation stock in association
  with SCS Corp. units

Net loss
                                        ---------  -------  ----------  -------
Balances, June 30, 2004                     4,670  $     5  41,206,953  $41,207
                                        =========  =======  ==========  =======

<FN>
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                            HYPERDYNAMICS CORPORATION
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  Years Ended June 30, 2004 and 2003 (Restated)
                                   (Continued)

                                         Additional
                                           Paid in      Accumulated
                                           Capital        Deficit        Totals
                                        -------------  -------------  ------------
<S>                                     <C>            <C>            <C>
Balances, June 30, 2002                 $  8,491,055   $( 8,144,706)  $   367,388

Common stock issued for:
  - cash                                     668,628                      673,000
  - exercise of options                      116,065                      116,639
  - services                                 112,216                      112,621
  - accounts payable                         105,336                      105,720

Issuance of stock options
  and warrants                               500,427                      500,427

Preferred stock dividends                               (   186,779)   (  186,779)

Funds raised from sale of warrants
  to purchase Hyperdynamics
  Corporation stock in association
  with SCS Corp. units                        35,903                       35,903

Beneficial conversion feature
  associated with convertible
  notes payable to officers                  243,934                      243,934

Payment of preferred stock
  dividends in common shares                 171,720                      172,583

Net loss                                                ( 2,458,537)   (2,458,537)
                                        -------------  -------------  ------------
Balances, June 30, 2003 (Restated)        10,445,284    (10,790,022)   (  317,101)

Common stock issued for:
  - cash, net                              5,870,237                    5,878,813
  - exercise of options for cash, net         67,071                       67,250
  - cashless exercise of options, net
     of 257,070 shares returned           (   27,948)                  (   24,972)
  - services                                 393,557                      393,738
  - accounts payable                          76,204                       76,239
  - conversion of notes payable              266,460                      268,056
  - acquisition of HYD Resources              93,718                       93,750

Issuance of stock options
  and warrants                             1,783,642                    1,783,642

Preferred stock dividends                               (   186,779)   (  186,779)

Funds raised from sale of warrants
  to purchase Hyperdynamics
  Corporation stock in association
  with SCS Corp. units                       118,597                      118,597

Net loss                                                ( 3,491,043)   (3,491,043)
                                        -------------  -------------  ------------
Balances, June 30, 2004                 $ 19,086,822   $(14,467,844)  $ 4,660,190
                                        =============  =============  ============

<FN>
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-6
<PAGE>
<TABLE>
<CAPTION>
                            HYPERDYNAMICS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years Ended June 30, 2004 and 2003 (Restated)

                                                                     2003
                                                      2004        (Restated)
                                                  -------------  ------------
<S>                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                        $ (3,491,043)  $(2,458,537)
Adjustments to reconcile net loss to cash
  used in operating activities:
    Depreciation and amortization                       61,004       176,938
    Stock issued for services                                        112,621
    Options and warrants issued                      1,783,642       500,427
    Beneficial conversion feature associated
      with convertible notes payable to officers       249,066        18,990
    (Gain)/loss on disposition of assets                          (    5,431)
    Impairment                                                       704,061
    Bad debt expense                                (      216)       11,671
    Accretion of interest and amortization of
     offering costs of mandatorily redeemable
     preferred stock                                   231,750
   Shares withheld from cashless exercise of
     Options                                        (   24,972)
Changes in assets and liabilities
    Accounts receivable                             (   20,853)        8,765
    Inventory                                       (   28,261)        1,034
    Other current assets                                   234         5,324
    Accounts payable and accrued expenses           (   98,358)      345,050
    Accrued officer salaries                                         110,330
    Customer deposits                                             (   36,878)
    Change in deferred rent                              9,577         9,576
                                                  -------------  ------------
NET CASH USED IN OPERATING ACTIVITIES              ( 1,328,430)   (  496,059)
                                                  -------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment               (  129,112)    (  35,932)
  Decrease in restricted cash                           86,391        82,724
  Proceeds from sale of assets                                        39,356
  Investment in unproved property                   (1,900,990)    ( 321,233)
  Return of deposit                                      1,800
                                                  -------------  ------------
NET CASH USED IN INVESTING ACTIVITIES              ( 1,941,911)   ( 2354,085)
                                                  -------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from sale of common stock, net            5,878,813       673,000
  Proceeds from exercise of options, net                67,250       116,639
  Proceeds from sale of units consisting of
   warrants in Hyperdynamics and preferred
   stock in subsidiary, net of $39,500
   offering cost                                       355,500       108,000
  Payments on installment debt                      (   57,798)   (   19,493)
                                                  -------------  ------------

NET CASH PROVIDED BY FINANCING ACTIVITIES            6,243,765       878,146
                                                  -------------  ------------

<FN>
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-7
<PAGE>
<TABLE>
<CAPTION>
                            HYPERDYNAMICS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years Ended June 30, 2004 and 2003 (Restated)
                                   (Continued)

                                                                       2003
                                                           2004     (Restated)
                                                        ----------  -----------
<S>                                                     <C>         <C>
Net Change In Cash                                       2,973,424      147,002
    CASH AT BEGINNING OF PERIOD                            176,017       29,015
                                                        ----------  -----------
    CASH AT END OF PERIOD                               $3,149,441  $   176,017
                                                        ==========  ===========

SUPPLEMENTAL DISCLOSURES
  Interest paid in cash                                 $   10,100  $    21,107
  Income taxes paid in cash                                      -            -

NON-CASH TRANSACTIONS
  Issuance of common stock for accounts payable         $   76,239  $   105,720
  Payment of preferred stock dividends in
    common shares                                                       172,583
  Conversion of accrued officer salary to
    convertible notes payable to officers net of
    amortized discount                                                  224,944
  Conversion of notes payable to common stock              268,056
  Issuance of stock for oil and gas properties             393,738
  Purchase of HYD Resources for stock and note payable     375,000


<FN>
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-8
<PAGE>
                            HYPERDYNAMICS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Nature  of  business.  HyperDynamics  Corporation  (Hyperdynamics) is a Delaware
corporation  formed  in  March  1996.  HyperDynamics  utilizes  its  integrated
technology  infrastructure  to provide support to its wholly-owned subsidiaries,
SCS  Corporation  (SCS)  and  HYD  Resources  Corporation  (HYD).  Through  SCS,
HyperDynamics  focuses  on  oil  and  gas company services, such as seismic data
management,  and derives a portion of its revenue from the conversion of seismic
data from tape media to modern media, such as DVD computer technology.  SCS also
began  operations  in  oil  and  gas  exploration,  seismic  data  acquisition,
processing,  and  interpretation  in  late  fiscal  2002.  In  April  2004,
Hyperdynamics acquired HYD, which performs oil field services work in Louisiana.

The  fiscal  year-end  is  June  30.

Basis  of  presentation.  The  consolidated  financial  statements  include  the
accounts  of  HyperDynamics  and  its  wholly-owned  subsidiaries,  SCS  and HYD
Resources.  Significant  inter-company  accounts  and  transactions  have  been
eliminated.

Reclassifications.  Certain amounts in the fiscal 2003 financial statements have
been  reclassified  to  conform  with  the  fiscal  2004  financial  statement
presentation.

Estimates  and  assumptions.  Preparing  financial statements in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets, liabilities, revenue and expenses at the balance sheet date
and  for  the  period  then  ended.  Actual  results  could  differ  from  these
estimates.

Cash  and  cash equivalents include all highly liquid investments purchased with
original  maturities  of  three  months  or  less.

Restricted  cash  is  a  certificate  of deposit at a bank that collateralizes a
letter  of credit supporting HyperDynamics' lease commitment.  The CD matures on
May 9, 2005 and accrues interest at .75% annually.  HyperDynamics plans to renew
it  next  year  and the amount will be reduced to coincide with reduction in the
Letter of Credit in favor of HyperDynamics' Landlord.  The restriction on the CD
will be lifted according to the following schedule: $129,750 on November 1, 2004
and  $65,445  on  November  1,  2005.

Revenue  recognition.  Revenue  from tape conversions, consulting, and oil field
services  is  recognized when services are rendered.  While contracts to perform
such  services  might last multiple years, provisions allow for periodic billing
based  on  what  services  have been performed during each period.  Revenue from
hardware,  software,  and  equipment sales is recognized when goods are shipped.


                                      F-9
<PAGE>
Accounts receivable are written down to reflect management's best estimate based
upon  known  specific  analysis,  historical  experience,  and  other  currently
available  evidence  of  the  net  collectible  amount.

Inventory  consists of oil field equipment and is stated at the lower of cost or
market  using  the  first-in  first-out  basis  (FIFO).

Other  current  assets consist of interest income receivable of $167 and prepaid
insurance  of  $130,384.

Long-lived Assets.  Property and equipment are stated on the basis of historical
cost  less  accumulated  depreciation.  Depreciation  is  provided  using  the
straight-line  method  over  the  estimated  useful lives of the assets of 3 - 5
years.

Customer  list  is  the  customer  base of the former owners of HYD. It is being
amortized  straightline  over  36  months.

The  Company  follows  Statement  of  Financial  Accounting  Standards  No. 144,
Accounting  for  the  Impairment  or Disposal of Long-Lived Assets, by reviewing
such  assets for impairment whenever events or changes in circumstances indicate
that  the  carrying  amount of an asset may not be recoverable.  Impairment loss
recognized  is  the  excess  of  the  carrying amount over the fair value of the
asset.  Hyperdynamics  has  no  impairment  in  the  year  ended  June 30, 2004.

Accounts  payable  and  accrued  expenses  consist  of  the  following:

<TABLE>
<CAPTION>
<S>                               <C>
Accounts payable                  $252,601
Accrued payroll                     17,378
Taxes payable                       29,945
Accrued warranty                     1,831
Current portion of deferred rent    17,476
                                  --------
                                  $319,231
                                  ========
</TABLE>

Deferred  rent  represents  the difference between the rent expense per month as
calculated  based  on  the total contractual payments specified over the 10-year
period  of  the  lease  and  the actual monthly rent paid. It arises because the
initial  6  months of the lease were free and because the rent payment increases
after  the  60th  month of the lease. The deferral will reverse beginning in the
year  ending  June  30,  2005.

Income  taxes are computed using the tax liability method of accounting, whereby
deferred  income  taxes  are  determined  based on differences between financial
reporting  and  tax  bases  of assets and liabilities and are measured using the
enacted  tax  rates  that  will  be  in  effect  when  the  differences reverse.

HyperDynamics  accounts  for  stock  options  issued  to  employees  under  the
recognition and measurement principles of FASB Statement No. 123, Accounting for
Stock-Based  Compensation,  to  stock-based  employee  compensation.


                                      F-10
<PAGE>
The  basic  net  loss  per  common  share  is  computed by dividing the net loss
chargeable  to  common  stockholders  by  the  weighted average number of common
shares  outstanding.

Diluted  net  loss  per  common  share  is  computed  by  dividing  the net loss
applicable  to  common  stockholders, adjusted on an "as if converted" basis, by
the weighted average number of common shares outstanding plus potential dilutive
securities.  For  the  years  ended  June  30, 2004 and 2003, potential dilutive
securities  had an anti-dilutive effect and were not included in the calculation
of  diluted  net  loss  per  common  share.

Recently  issued  accounting  pronouncements.  HyperDynamics does not expect the
adoption  of  recently  issued  accounting  pronouncements to have a significant
impact on HyperDynamics' results of operations, financial position or cash flow.


NOTE  2  -  ACQUISITION  OF  HYD  RESOURCES  CORPORATION

In  April 2004, Hyperdynamics purchased 100% of the stock of HYD for $375,000 to
be  paid in Hyperdynamics common stock in four quarterly installments to be paid
between  April  2004  and  January  2005. At each payment date, $93,750 worth of
stock  is  to  be issued; however, in the event that HYD experiences losses, the
payment  is  deferred  until  it the losses have been recovered. The preliminary
purchase  price  allocation  is  as  follows:

<TABLE>
<CAPTION>
<S>              <C>
Inventory        $  49,476
Field equipment    245,600
Customer list       82,924
                  --------
Total assets     $ 375,000
Liabilities              0
                  --------
Net Assets       $ 375,000
                  ========
</TABLE>


HYD  operates  as a dealer of used equipment and it provides oil field services,
such  as  well  workovers,  drilling  services,  and  the  repair and leasing of
equipment  to  oil  field  operators.  In  conjunction with the purchase of HYD,
Hyperdynamics  entered  into two employment agreements under which Hyperdynamics
will  pay  two  employees  $3,500  per  month.  Hyperdynamics  may terminate the
employment agreements for cause, or if HYD experiences a cumulative net loss any
time  after  the  first  nine  months  of  operation.

Additionally,  the  employment agreements stipulate that bonuses, in the form of
three  contingent notes payable, of up to $856,000 will be paid based upon HYD's
net income over the next five years.  The payments will be 25% of the net income
for  the  quarter,  if  there  is  net  income  after offsetting any losses from
previous  quarters.  As  of  June  30, 2004, HYD had a net loss of approximately
$90,000.


                                      F-11
<PAGE>
NOTE  3  -  PROPERTY  AND  EQUIPMENT

A  summary  of  property  and  equipment  is  as  follows:

<TABLE>
<CAPTION>
<S>                                               <C>       <C>
Computer equipment and software                    3 years   $193,400
Office equipment and furniture                     5 years     13,892
Other equipment                                    5 years    407,196
                                                            ---------
      Total cost                                              614,488
Less:  accumulated depreciation and amortization            (207,667)
                                                            ---------

      Net carrying value                                     $406,821
                                                             ========
</TABLE>

Hyperdynamics  reviews  assets  for  impairment  whenever  events  or changes in
circumstances  indicate  that  the  carrying  amount  of  an  asset  may  not be
recoverable.  During  the  year  ended June 30, 2004, there was no impairment of
Hyperdynamics'  assets. During the year ended June 30, 2003, Hyperdynamics had a
goodwill  impairment  of  $380,000  and  an  asset  impairment  of  $354,061.


NOTE  4  -  UNPROVED  OIL  AND  GAS  PROPERTIES

On  November  8,  2002,  SCS,  HyperDynamics' wholly-owned subsidiary, agreed to
modify their previous joint venture arrangement with US Oil Corporation (US Oil)
in  Guinea  Hydrocarbon  Resource  Corporation  (GHRC).

In  the  new arrangement, SCS purchased US Oil's interest in GHRC and all of its
claims  to  a 65,000 square kilometer offshore oil and gas lease on the coast of
the  Republic  of  Guinea  (Guinea) in Africa for $40,000.  SCS assumed US Oil's
obligations  to  Guinea  as  described in the Production Sharing Agreement (PSA)
signed  with  Guinea  and  effective  December  2,  2002.

Under this PSA, SCS has the following financial obligations:

a.   SCS  must  pay  Guinea  $250,000  by  March 2, 2003, and additional royalty
     payments  are  due  if  oil  and  gas is found. The required payment to the
     Government  of  Guinea  was  made  during  June  2003.

b.   SCS  must  perform  3-D  or  2-D  seismic  work  for 4,000 kilometers at an
     estimated  cost  of  $6  million  during the First Exploration Period which
     ended  in  December 2003. If SCS timely produces this data, it will fulfill
     its  initial  exploration phase obligation. SCS has contracted with a third
     party  to  perform 2-D seismic work, and this work was completed during 2nd
     quarter  2004  for  a  cost  of  approximately  $1,600,000.

c.   During the second exploration period, SCS is required to drill at least one
     exploratory  well  at  an estimated cost of $10 million. The time frame SCS
     has  to  complete  this  is  at  least  four  years.


                                      F-12
<PAGE>
SCS  must  also pay US Oil up to $1,600,000 if SCS obtains third party financing
for this Guinea development project from an oil company partner participating in
a  working  interest purchase or a 3rd party financing company, and a 3% royalty
of  oil  and  gas  is  produced.

To date, $3,191,565 of capital costs has been incurred on this project.


NOTE 5 - OIL AND GAS ACCOUNTING POLICIES

Property  and  equipment.  Hyperdynamics follows the full cost accounting method
to  account  for the costs incurred in the acquisition, exploration, development
and  production of oil and gas reserves.  Under this method, all costs including
internal  costs  that  are  directly  related  to  acquisition, exploration, and
development  activities  are  capitalizable  as  oil  and  gas  property  costs.

Amortization of unproved property costs begins when the properties become proved
or  their  values  become impaired.  Hyperdynamics assesses the realizability of
unproved  properties  on  at  least  an  annual  basis or when there has been an
indication  that  an  impairment  in  value  may  have  occurred.  Impairment of
unproved  properties  is assessed based on management's intention with regard to
future  exploration  and  development of individually significant properties and
the  ability  of  Hyperdynamics  to obtain funds to finance such exploration and
development.  If  the  results of an assessment indicate that the properties are
impaired,  the  amount of the impairment is added to the capitalized costs to be
amortized.

Under  full  cost  accounting  rules  for each cost center, capitalized costs of
proved  properties,  less  accumulated  amortization and related deferred income
taxes,  shall  not exceed an amount (the "cost ceiling") equal to the sum of (a)
the  present  value of future net cash flows from estimated production of proved
oil  and  gas  reserves,  based  on  current  economic and operating conditions,
discounted  at  10 percent, plus (b) the cost of properties not being amortized,
plus  (c)  the  lower of cost or estimated fair value of any unproved properties
included  in  the costs being amortized, less (d) any income tax effects related
to  differences  between  the  book an tax basis of the properties involved.  If
capitalized  costs  exceed  this  limit,  the excess is charged as an impairment
expense.

Capitalized  costs incurred in property acquisition, exploration and development
activities  as  of  June  30,  2004  were  as  follows:

<TABLE>
<CAPTION>
                                      2004
                                   ----------
<S>                                <C>
2-D Seismic work                   $2,145,971
Payments to US Oil made under the
  farmout agreement                    40,000
Geological work                       491,110
Permit fee paid to Guinea             250,452
Seismic data processing               264,032
                                   ----------
                                   $3,191,565
                                   ==========
</TABLE>

NOTE  6  -  ACCOUNTS  PAYABLE  SEISMIC  DATA

In  February  2003, SCS agreed to pay $650,000 to Offshore Seismic Surveys, Inc.
(OSS),  an  offshore  seismic company, for OSS agreeing to release GHRC from the
$550,000  due  to  OSS  for the Guinea seismic data. The additional $100,000 was
charged to expense in the quarter ending March 31, 2003. OSS maintains a lien on
the  ownership  and  sale of the seismic data for the $650,000 less any payments
made  on  this  amount.


                                      F-13
<PAGE>
Any  user  license  sales  proceeds generated from user licenses of the acquired
data  shall first go to payoff the $650,000 liability at a rate of 90 percent of
gross  user  license  sales  proceeds  for  OSS and 10 percent for SCS until the
$650,000  is  paid in full. Any funding arrangement SCS enters into with respect
to  the  Guinea  PSA,  whereby  all  rights  and  obligations  under the PSA are
transferred, shall cause the $650,000 to become immediately due upon signing and
funding  of  such  agreement.

NOTE  7  -  INSTALLMENT NOTES PAYABLE

     Lease payable in 18 equal remaining monthly installments
     of $1,693 including interest at 10% APR, and secured
     by electrical equipment                                    $  28,191

     Vendor settlement payable in 21 equal monthly installments
     of $1,000 plus a balloon payment of $24,500 due May 1,
     2006, no interest and no collateral                           45,500

     Insurance premium notes payable in 8 variable monthly
     installments beginning at about $12,000 and declining
     per month, including interest at 7.8% APR                     96,351
                                                                ----------
                                                                  170,072
     Less:  current portion                                      (126,670)
                                                                ----------
                                                                $  43,372
                                                                ==========

The  long-term portion is due $21,872 in fiscal 2006 and $21,500 in fiscal 2007.


NOTE  8  -  LETTER  OF  CREDIT

HyperDynamics  renewed its letter of credit for $196,335 with Frost Bank, and it
now  expires  on  October  31,  2004.  The purpose of the letter of credit is to
guarantee  the  lease  payments  on  HyperDynamics'  office space. The letter of
credit  is  guaranteed  by  a security interest in a certificate of deposit with
Frost  Bank  that  may not be redeemed until the letter of credit expires. There
were  no  draws  against  this  letter  of credit as of June 30, 2004, nor as of
September 16, 2004. The letter will be renewed and reduced to $65,445 in October
2004  in  accordance  with  Hyperdynamics' lease.


                                      F-14
<PAGE>
NOTE  9  -  CONVERTIBLE  NOTES  PAYABLE  TO  OFFICERS

As  of  June  30,  2003,  Hyperdynamics  had  settled $243,934 of accrued salary
payable to officers by entering into convertible notes payable, due December 31,
2007,  with  those  officers. The $243,934 accrued interest at 12% per annum and
the  principal  and interest were convertible in blocks of $10,000 at the option
of  the  holder  at a price of 60% of the lowest closing market price in the six
months  predating the conversion date at any time prior to December 1, 2007. The
discount at the option of the holder created a beneficial conversion feature for
each  note,  which  was  discounted in the year ended June 30, 2003 for $243,934
with  the  offset  to  additional paid in capital. The discount will be accreted
over  the  term of the notes until maturity, payoff or conversion and charged to
interest  expense.

During  the  quarter  ended December 31, 2003, Hyperdynamics' officers converted
their  convertible  notes  payable,  which  at  that  time  totaled  $268,056 in
principal  and  interest.  The  conversion price was $.168. This resulted in the
issuance  of  1,595,573  shares. Hyperdynamics delivered 1,227,764 shares issued
pursuant  to  the  notes  payable  on  December 31, 2003 and 367,809 shares, the
balance of the shares issued pursuant to the notes payable, on January 14, 2004.


NOTE  10  -  MANDATORILY  REDEEMABLE  PREFERRED  STOCK

As  of  June  30,  2004,  5.15  units  consisting of 5.15 shares of SCS Series A
Preferred  Stock and warrants to purchase 257,500 shares of Hyperdynamics common
stock  at  $.25  per  share  had been sold. The portion of the proceeds of these
units that is allocable to the SCS preferred stock is $360,500 less $51,500 paid
as a cost of offering leaving $309,000. The $51,500 will be amortized until July
1,  2005, the date on which the stock is redeemable at the stockholders' option.
As  of  June  30,  2004,  amortized  offering  costs  were  25,750.

The  proceeds  were  allocated  $360,500  to  the  warrants  and $154,500 to the
Preferred  Stock based on their relative fair market values.  The warrants' fair
market  value  was  estimated  using  the  Black-Scholes  option  pricing model.
Variables  used  in  the  Black-Scholes  option  pricing  model include (1) 3.0%
risk-free  interest  rate,  (2)  expected warrant life is five years, the actual
remaining  life of the warrant, (3) expected volatility is the actual historical
stock  price  fluctuation  volatility and (4) zero expected dividends.  The fair
market  value  of  the  preferred  stock was estimated as the discounted present
value,  using  a discount rate of 30%, of the amount redeemable at the option of
the  holder,  $150,000,  on  July  1,  2005,  which  is  the first date that the
preferred  stock  is  redeemable  at  the  holder's  option.  Hyperdynamics will
periodically  increase  the carrying amount of the preferred stock such that the
carrying  value  on  June  30,  2005  will  equal  $150,000  per  unit.

The  preferred stock is redeemable at SCS's option in the amount of $125,000 per
share  between  July 1, 2004 and June 30, 2005.  Additionally, in the event that
SCS  issues  common  stock  that is traded on a public market and the SCS common
stock  trades  at  a  price of at least $2 per share for ten consecutive trading
days  on  such  market,  each share of preferred stock will be automatically and
mandatorily  converted  to  100,000  shares  of  SCS  common  stock.


NOTE  11  -  INCOME  TAXES

Income  taxes  are  not  due since HyperDynamics has had losses since inception.
HyperDynamics has deductible net operating losses of approximately $1,660,000 in
fiscal  2004  and  approximately  $1,850,000  in  fiscal 2003, which each can be
carried  forward  for  20  years.


                                      F-15
<PAGE>
<TABLE>
<CAPTION>
<S>                        <C>
Deferred tax assets        $ 2,255,000
Less: valuation allowance   (2,255,000)
                           ------------
Net deferred taxes         $         0
                           ============
</TABLE>

Internal  Revenue  Section  382 restricts the ability to use these carryforwards
whenever  an ownership change as defined occurs.  HyperDynamics incurred such an
ownership  change on January 14, 1998 and again on June 30, 2001, As a result of
the  first  ownership  change,  HyperDynamics' use of net operating losses as of
January  14,  1998  of  $949,000  are  restricted  to  $151,000  per  year.  The
availability  of losses from that date through June 30, 2001 of $3,313,000 since
that  date  is restricted to $784,000 per year.  Losses in fiscal 2002, 2003 and
beyond  are  not  restricted.


                                      F-16
<PAGE>
NOTE 12 - PREFERRED STOCK

Series A Convertible Preferred Stock was issued in January 2000 for net proceeds
of $2,604,190.  The stated value is $1,000 per share and par value is $.001.  It
is  convertible  into HyperDynamics' common stock at a price of the lower of the
trading  price  when  purchased  at  $5.25  or  80% of the current 5-day trading
average.  All  or  any of the stock may be converted at any time at the holder's
option,  and  all  shares  outstanding  as  of  January  30,  2002  were  to  be
automatically  converted.  This  series  is non-voting and pays dividends of 4%,
payable  at  conversion  in  either  cash  or  shares  of  common  stock,  at
HyperDynamics'  option.  1,055 shares were converted to common in 2000 and 2001.
HyperDynamics  has  not  converted  any of the Series A shares since fiscal 2001
because  of  claims  filed  in  November  2001  in our lawsuit with the Series A
shareholders.  Since  the  outcome  is  not  known  and  no  conversion has been
effected,  HyperDynamics  is  continuing  to  accrue  the  dividend.

As  of  June  30,  2003,  $275,174 in dividends were accrued.  2004 dividends of
$77,779  have  been  accrued,  resulting  in total accrued Series A dividends of
$352,953  as  of  June  30,  2004.

2,725  shares  of  Series  B  Convertible  Preferred  Stock  were issued for the
acquisition  of  SCS Corporation on May 31, 2001. The stated value is $1,000 per
share  and  the  par  value  is $.001. Each Series B share may vote 7,408 common
shares  for  a  total  of 20,186,800 votes. The shares are convertible to common
stock  at the lesser of $.135 or 50% of the current 5-day average trading price.
Series  B  stockholders  are  entitled to a 4% cumulative dividend on the stated
value,  which  is payable only upon conversion of the preferred stock. Dividends
may  be paid in stock or cash at HyperDynamics' option. Dividends accrued on the
Series  B  as  of June 30, 2003 were $54,500. In 2004 dividends of $109,000 were
accrued, resulting in accrued dividends as of June 30, 2004 of $163,500. Accrued
dividends  on  Series A and Series B stock as of June 30, 2004 totaled $516,453.

If all Preferred Series A and B shares were converted as of June 30, 2004, total
common  shares  outstanding  would  be  approximately  65,260,000  shares.


NOTE  13  -  COMMON  STOCK

During  the  year  ended  June  30,  2004, Hyperdynamics issued 35,489 shares of
common  stock  for accounts payable of $76,239.  Between November 2003 and March
2004, private investors purchased 8,575,543 shares of common stock and 3,534,903
warrants  with  an exercise price of $2.00 per share, expiring in second quarter
2006,  for  $6,532,014.  Offering costs were $653,201, resulting in net proceeds
of  $5,878,813.

Additionally,  during the year ended June 30, 2004, Hyperdynamics issued 181,250
shares for services valued at $393,738.  Hyperdynamics' officers converted their
convertible  notes  payable  during  the  quarter


                                      F-17
<PAGE>
ended  December  31,  2003, which at that time totaled $268,056 in principal and
interest,  at  a  price  of  $.168.  This  resulted in the issuance of 1,595,573
shares.  Hyperdynamics  delivered  1,227,764 shares issued pursuant to the notes
payable  on  December  31,  2003  and  367,809 shares, the balance of the shares
issued  pursuant  to  the  notes  payable, on January 14, 2004.  During the year
ended  June  30,  2004,  179,000  warrants  were exercised for gross proceeds of
$74,500;  after  offering  costs  of  $7,250,  net  proceeds  were  $67,250.

Three Hyperdynamics officers exercised 3,233,333 warrants with an exercise price
of  $.23  per  share in a cashless exercise when Hyperdynamics stock fair market
value  was $2.99.  257,070 shares were deducted from the shares issued for taxes
withheld  of  $24,976  and the exercise price of $743,667; thus the net exercise
was  2,976,263  shares.  Finally,  during  the  quarter  ended  June  30,  2004,
Hyperdynamics  issued  32,328 shares to pay the first $75,000 installment on the
purchase  of  HYD  Resources  Corporation  (see  Note  2).


NOTE  14  -  STOCK  OPTIONS  AND  WARRANTS  /  2003  RESTATEMENT

HyperDynamics' Stock Option Plan provides for the grant of non-qualified options
to  directors,  employees  and  consultants,  and  opportunities  for directors,
officers, employees and consultants to make purchases of stock in HyperDynamics.
In addition, HyperDynamics issues stock warrants from time to time to employees,
consultants, stockholders and creditors as additional financial incentives.  The
plans and warrant issuances are administered by the Board of Directors, who have
substantial  discretion  to  determine  which  persons,  amounts,  time,  price,
exercise  terms, and restrictions, if any.  Options differ from warrants in that
the options awards are immediately exercisable and are assignable.  In contrast,
warrants  have  employment  termination  restrictions,  vesting  periods and are
non-transferable.

Prior  to the quarter ended December 31, 2003, Hyperdynamics accounted for stock
options  issued to employees under the recognition and measurement principles of
APB  Opinion  No.  25,  Accounting  for  Stock  Issued to Employees, and related
Interpretations.  Hyperdynamics  recorded  $2,147,000  of  stock-based  employee
compensation  costs in previously reported results because certain warrants were
accounted  for  as variable awards beginning in the first quarter of fiscal year
ended  June  30,  2002  as  required  by  FIN  44.  Effective  October  1, 2003,
Hyperdynamics  adopted  the  fair value recognition provisions of FASB statement
123,  Accounting for Stock-Based Compensation.  All prior periods presented have
been  restated  to reflect the compensation cost that would have been recognized
had  the  provisions  of  Statement  123  been  applied to all awards granted to
employees  after  January  1, 1995.  Thus, the financial statements for the year
ended  June  30, 2003 do not reflect the $2,147,000 that was previously recorded
under  APB  25;  and  $415,412, the fair value of options and warrants issued to
employees,  has  been  recorded  instead.

During  2004  and 2003, respectively, HyperDynamics issued 2,360,000 and 150,000
warrants  to  consultants.  The  compensation cost recognized for these warrants
was  $1,517,921  and  $85,014  for  the  years  ended  June  30,  2004 and 2003,
respectively,  based  on  the  Black-Scholes  option  pricing  model.


                                      F-18
<PAGE>
During  2004  and 2003, respectively, HyperDynamics issued 2,360,000 and 150,000
warrants  to  consultants.  The  compensation cost recognized for these warrants
was  $1,517,921  and  $85,014  for  the  years  ended  June  30,  2004 and 2003,
respectively,  based  on  the  Black-Scholes  option  pricing  model.

During  2004  and 2003, respectively, HyperDynamics issued 333,333 and 4,510,000
warrants  to  employees.  800,000  warrants were forfeited during the year ended
June  30,  2003  due  to  termination  of  employment.  The  compensation  cost
recognized for these warrants was $265,721 and $415,412 for the years ended June
30,  2004  and  2003,  respectively,  based  on the Black-Scholes option pricing
model.  In  addition  to  shares  issued to consultants and employees, investors
purchased  3,732,403  warrants  in  conjunction  with purchases of SCS preferred
stock  and  Hyperdynamics  common  stock.

The  weighted  average  fair  value of the stock options granted during 2004 and
2003  was  $1.31  and  $.32,  respectively.  Variables used in the Black-Scholes
option-pricing  model  include (1) risk-free interest rates ranging from 1.5% to
5%,  depending  on  the  grant  dates and the expected lives of the options, (2)
expected option life is the actual remaining life of the options as of the grant
date,  (3)  expected volatility is the actual historical stock price fluctuation
volatility  and  (4)  zero  expected  dividends.

Summary information regarding options and warrants is as follows:

<TABLE>
<CAPTION>
                                         Weighted                Weighted
                                          Average                 Average
                               Options     Share                   Share
                                           Price     Warrants      Price
                             ----------  ---------  -----------  ---------
<S>                           <C>        <C>        <C>          <C>
Year ended June 30, 2003:
  Outstanding, June 30, 2002   164,636   $    1.15   6,272,500   $    1.16

  Granted                                            5,906,463         .24
  Exercised                                         (  573,821)        .20
  Expired                     (164,636)       1.15  (  525,000)       1.21
  Cancelled due to repricing                        (5,585,142)        .48
  Forfeited                                         (  870,000)        .28
                             ----------  ---------  -----------  ---------

Outstanding, year ended
  June 30, 2003                      0   N/A         4,625,000        1.16

Year ended June 30, 2004:
  Granted                                            6,425,736        1.31
  Exercised                                         (3,412,333)        .28
  Expired unused                                    (  355,000)        .83
                             ----------  ---------  -----------  ---------

Outstanding, year ended
  June 30, 2004                      0   N/A         7,283,403   $    1.69
                             ==========  =========  ===========  =========
</TABLE>


                                      F-19
<PAGE>
<TABLE>
<CAPTION>
     Warrants outstanding and exercisable as of June 30, 2004:

                 - - Outstanding - -   Exercisable
                   No. of    Remaining   Number of
Exercise Price     Shares      life       Shares
                 ----------  ---------  -----------
<S>              <C>         <C>        <C>
$ .23               800,000    3 years
  .25               197,500    4 years      197,500
  .28                10,000    2 years       10,000
  .50               141,000    1 years      141,000
  .50             2,000,000    3 years      873,000
 2.00             3,534,903    3 years    3,534,903
 5.91               300,000    1 years      300,000
 7.09               300,000    1 years      300,000
                 ----------  ---------  -----------
                  7,283,403               5,356,403
                 ==========               =========
</TABLE>


                                      F-20
<PAGE>
NOTE  15  -  COMMITMENTS  AND  CONTINGENCIES

HyperDynamics  and its subsidiaries are involved in a number of routine business
disputes  that have arisen in the ordinary course of business.  HyperDynamics is
unable  to  predict  the outcome of these matters, but does not believe that the
ultimate  resolution of these matters will have a material adverse effect on the
financial  statements  of  HyperDynamics.  The  amounts  in  dispute  total
approximately  $30,000,  which  is  not  accrued.

HyperDynamics  leases  its  office  space  from AGP Westwood, LTD over a 10-year
period. The base monthly rent is $0 for months 1-6, $20,774 for months 7-54, and
$24,114  for  months  55-120, beginning November 1, 2000. Additional common area
maintenance  charges will be assessed. At June 30, 2004, future minimum payments
are $252,328 in year 2005, $289,364 per year in years 2006-2010, and $120,568 in
2011.  Rent  expense for the years ended June 30, 2004 and 2003 totaled $274,214
and  $268,040,  respectively. HyperDynamics has a termination option that may be
exercised  after 60 months of the lease. If the termination option is exercised,
HyperDynamics  will  be  released  from  the  lease  after  69  months.

In  addition,  HyperDynamics  is  involved  in  a  dispute  with  its  preferred
shareholders over conversion rights to common stock and whether monetary damages
are  due  for  various  claims against the preferred shareholders.  The economic
effects  of  and  the  probable  outcome  of  this  contingency  are  not known.

Hyperdynamics'  subsidiary,  SCS,  has  $350,000  remaining of a contingent note
payable  due  to  Seacon  Computer  Systems  Inc.,  the  former  owners  of  SCS
Corporation's  assets.

Hyperdynamics'  subsidiary, SCS, will owe USOil $1,600,000 if SCS procures third
party  funding  for  the  Guinea  project  (see  Note  4).

Hyperdynamics'  subsidiary,  SCS,  has  arrangements with one individual and one
corporation  to  provide  geological  and  geophysical  services in exchange for
Hyperdynamics  common  stock.  Hyperdynamics is obligated under these agreements
to  issue  41,250  -  46,250  shares  per  quarter,  depending upon the price of
Hyperdynamics  common  stock.

In  June  2004,  SCS  entered  into  a contract with an unrelated third party to
acquire  and  analyze approximately fifty cores from its Guinea concession for a
total cost of $225,000 paid as follows: $25,000 prepayment, $150,000 thirty days
from  core  acquisition,  and  $50,000  thirty  days from completion of the core
analysis.  SCS  made  the  $25,000


                                      F-21
<PAGE>
NOTE  16  -  RELATED  PARTY  TRANSACTIONS

Related party transactions include payments to the CEO's brother, Michael Watts,
as  follows:  during  the  year  ended  June  30, 2004, Michael Watts, the CEO's
brother,  received payment of $699,951 cash to pay for offering costs on private
subscription  agreements and warrants exercised.  Additional offering costs will
also be paid on 3,732,403 warrants purchased by private investors should they be
exercised  in  the  future.  If  all of these warrants were exercised, Mr. Watts
would  receive  approximately  $712,000  to  pay  these  additional  costs.

Additionally,  1,200,000  warrants with an exercise price of $.50 per share were
issued  to  a  company  of  which  Michael  Watts  is  president  for  public
relations/investor relations services.  The warrants vest quarterly from January
2004 through June 2005 and expire July 18, 2007. As of June 30, 2004, 480,000 of
these  warrants  have  vested.  The value of the 1,200,000 warrants, as computed
using  the  Black-Sholes model, was $2,587,907, of which $959,895 was recognized
in  the  current  year.  The balance will be recognized in the fiscal year ended
June  30,  2005,  when  they  vest.


NOTE  17  -  SUBSEQUENT  EVENTS

During  July  2004,  Hyperdynamics' subsidiary, SCS Corporation, entered into an
agreement  with  an  unrelated third party to provide sub-surface interpretation
services  for  the  Guinea  concession for $150,000. required prepayment in July
2004  and the acquisition of the cores occurred in August 2004; $150,000 will be
due  September  26,  2004.


                                      F-22
<PAGE>