----------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                -----------------

                                   FORM 10-KSB
                                -----------------

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934; For the Fiscal Year Ended: June 30, 1997

                                                             OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

Commission File Number: 000-25496

                            HYPERDYNAMICS CORPORATION
             (Exact name of registrant as specified in its charter)

                  Delaware                          82-0400335
         (State or other jurisdiction               (IRS Employer
         of incorporation or organization)          Identification No.)

                         2656 South Loop West, Suite 103
                              Houston, Texas 77054
          (Address of principal executive offices, including zip code)
                         (281) 681-9300 Prior to 10/4/97
                          (713) 839-9300 After 10/4/97
              (Registrant'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:

                               Title of Each Class

                          Common Stock, $.001 par value


           Indicate  by check  mark  whether  the  registrant  (i) has filed all
reports  required to be filed by Section 13 or 15(d) of the  Exchange Act during
the past 12 months (or for such shorter  period that the registrant was required
to file such reports),  and (ii) has been subject to such filing requirements fo
the past 90 days. Yes [x] No [ ]

           Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not 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. [x ]

           Issuer's  revenues for the year ended June 30, 1997 were  $1,520,928.
The aggregate market value of Common Stock held by non-affiliates of the
registrant at September 1, 1997, based upon the last reported sales prices 
on the OTCBB was $ 3,452,489 .   As of September 1, 1997, there were 5,596,989 
Shares of Common Stock outstanding.


-------------------------------------------------------------------------------
<PAGE> 

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                        <C>    

PART I
    Item 1.           Business .............................................3

    Item 2.           Properties ...........................................7

    Item 3.           Legal Proceedings ....................................7

    Item 4.           Submission of Matters to a Vote of Security Holders ..8


PART II

    Item 5.           Market for Registrant's Common Equity and Related
                         Stockholder Matters ...............................8

    Item 6.           Management's Discussion and Analysis of Financial
                         Condition  and Results of Operations ..............9

    Item 7.           Financial Statements ................................11

    Item 8.           Changes in and Disagreements With Accountants
                         on Accounting and Financial Disclosure ...........11


PART III

    Item 9.           Directors, Executive Officers, Promoters and Control
                         Persons; Compliance with Section 16(a) of
                         The Exchange Act .................................12

    Item 10.          Executive Compensation ..............................13

    Item 11.          Security Ownership of Certain Beneficial Owners and
                         Management .......................................14

    Item 12.          Certain Relationships and Related Transactions ......16

    Item 13.          Exhibits and Reports on Form 8-K ....................16


</TABLE>





                                      -2-
<PAGE>



                                     PART I

Item 1.           BUSINESS

         Historical Background of Business

         The Company  changed its name to  HyperDynamics  Corporation in January
1997.  The  Company  was  formerly  known as  RAM-Z  Enterprises,  Inc.  and was
incorporated  under the laws of the State of Utah on July 29, 1983.  The Company
was formed for the purpose of investing in one or more high-technology products,
such as medical devices,  computer  hardware and software or such other products
that the Company deemed advisable. The Company went public on December 19, 1983,
pursuant to a Regulation D offering.  The Company sold 5,000,000 shares at $0.02
cents per share. The aggregate dollar amount raised in the Regulation D offering
was  one  hundred  thousand  dollars  ($100,000).   After  several  unsuccessful
investments  and higher than expected  operating  expenses,  the Company did not
have the funds  necessary to continue its business  operation after 1985. On May
17, 1994 the management formed a Delaware  corporation named RAM-Z  Enterprises,
Inc.,  for the purpose of merging with and changing the domicile of the Company.
The State of Utah  approved  the merger on May 27,  1994.  The merger of the two
companies was on the basis of one share of common stock  exchanged for one share
of common stock in the surviving corporation.

         Pursuant  to an  Agreement  and  Plan of  Reorganization  (the  "Plan")
between RAM-Z Enterprises, Inc. (the "Company"), its principal stockholders (the
"Principal  Stockholders"),   HyperDynamics  Corporation,  a  Texas  corporation
("HyperDynamics"), and certain stockholders of HyperDynamics who owned more than
eighty percent (80%) of the outstanding  voting  securities of HyperDynamics and
who  executed  and joined in the Plan (the  "HyperDynamics  Stockholders"),  the
HyperDynamics Stockholders became the controlling stockholders of the Company in
a business  combination  transaction that was effected in the form of a "reverse
acquisition",  and  completed  on  August  26,  1996.  Immediately  prior to the
completion  of the Plan,  the  Company had no material  assets,  liabilities  or
business operations.  The "reverse  acquisition" by RAM-Z has been accounted for
by the purchase  method of  accounting  in the fiscal year ending June 30, 1997.
Consequently,  all prior financial  statement  history of RAM-Z is eliminated in
the combination.

         HyperDynamics  was formed March 7, 1996, to facilitate the acquisitions
of one or more computer  hardware/services-related  companies, and to facilitate
the merger with RAM-Z, which was a registered 12(g) company under the Securities
Act of 1934, as amended, with no recent ongoing operations to date. Both Houston
Creative  Connections,  Inc. ("HCCI") and MicroData Systems,  Inc. ("MDSI") were
acquired by HyperDynamics  on August 15, 1996, in transactions  accounted for as
poolings of interest.

         At the time of the  adoption of the Plan,  the  Company had  50,000,000
shares of voting  common  stock  issued and  outstanding.  As a condition to the
Plan, which was an exchange  agreement between the Company and the HyperDynamics
Stockholders,  the  stockholders  approved  and  the  Company  effected  a share
consolidation or reverse split in the ratio of one post-consolidation  share for
every  44.428648  preconsolidation  shares  held  by  a  stockholder,  provided,
however,  that no single stockholder's share ownership was reduced to fewer than
100 post-consolidation shares.





                                      -3-
<PAGE>




         The  consideration  used by the  HyperDynamics  Stockholders to acquire
their  respective  interests in the Company was  4,577,000  shares of $0.001 par
value common  voting stock of  HyperDynamics,  amounting to one hundred  percent
(100%) of the  outstanding  voting  securities of  HyperDynamics,  for 4,577,000
post-consolidation shares of $0.001 par value common voting stock of the Company
in addition to issuing an additional 355,000 shares to financial advisors.

         HCCI and MDSI had the  opportunity,  under  certain  circumstances,  to
rescind their portions of the merger transaction on or before June 30, 1997.

         Divestiture  of  Houston  Creative  Connections,  Inc.  ("HCCI")  -- On
February  6,  1997,   the  Company,   through  its   subsidiary,   HyperDynamics
Corporation,  a Texas  corporation  ("HyperDynamics"),  divested its subsidiary,
HCCI.  HyperDynamics  acquired  HCCI in July 1996 and HCCI  operated as a wholly
owned subsidiary of HyperDynamics  pursuant to the terms of a share exchange and
acquisition  agreement  called  the HCCI  Reorganization  Agreement  (the  "HCCI
Reorganization Agreement").  HyperDynamics entered into an Agreement and Plan of
Reorganization  with the Company in August 1996. In February,  1997,  the former
shareholders  of HCCI and the Company (the  "Parties")  agreed that the original
business objectives envisioned at the time of the HCCI Reorganization  Agreement
had not been  achieved,  and that  each of the  Parties  had  unique  management
styles. The Parties agreed that the business objectives and goals of the Company
and HCCI were not  compatible  and that it would be in the best interests of the
Parties to pursue their goals and  objectives  independent  of one another.  The
Parties further agreed that certain other conditions as contemplated by the HCCI
Reorganization Agreement had not been satisfied as of that time. Accordingly, on
February  7,  1997,  the  Parties  entered  into a  Divestiture  Agreement  (the
"Divestiture  Agreement")  pursuant  to which the  former  shareholders  of HCCI
agreed to deliver 2,102,000 shares of the Company's common stock to the Company,
and the  Company  agreed to deliver  1,000  shares of HCCI  common  stock to the
former  shareholders  of HCCI.  This  represented  a complete  unwinding  of the
consideration  of the  Parties  under  the HCCI  Reorganization  Agreement.  The
2,102,000  shares of the  Company's  common stock were  canceled.  A significant
portion of the Company's assets were divested in connection with the Divestiture
Agreement.

         Adjustment and correction of valuation of MDSI -- In January, 1997, the
Board of Directors of the Company  agreed with the former  shareholders  of MDSI
that in the event of a  divestiture  of HCCI that the Company would issue to the
former  shareholders of MDSI 700,000 shares of common stock of the Company.  The
Board agreed to issue the  additional  700,000 shares as recognition of the need
to adjust and correct the valuation received by the former  shareholders of MDSI
in the  Reorganization  Agreement  entered  into between the Company and MDSI in
July, 1996 (the "MDSI Reorganization Agreement"), which formed the basis for the
original  transaction  between the  Company and MDSI and which  resulted in MDSI
becoming a wholly owned  subsidiary  of the Company.  In  consideration  for the
Board of  Directors'  action,  the former  shareholders  of MDSI agreed to waive
certain  rescission  rights  which  were  contained  in the MDSI  Reorganization
Agreement.  Consequently,  as a result of the  divestiture  of HCCI, the Company
issued to the former  shareholders of MDSI 700,000 shares of common stock of the
Company.







                                      -4-
<PAGE>





         Direction of Business Plan

         HyperDynamics   Corporation  is  a  public   acquisition   vehicle  for
technology based companies that maintain  Internet and Intranet related business
experience.  Whereas the local area network of the 1970's and 1980's has evolved
into a full blown  communications  network now being  referred to as a companies
private  Intranet,  and it is fast  becoming a necessity  for  companies to have
secured access to the world via the Internet, the Company has initially acquired
MicroData Systems,  Inc. Through MicroData the Company has acquired  significant
experience in value added resale and systems  integration while obtaining a well
designed  Information Systems  Infrastructure to be able to support the internal
development  and  growth  of the  Company.  Additionally,  the  core  capability
delivered by MicroData  will help the Company build several  profit  centers for
High Performance  Internet Access and Services,  Computer  Hardware and Software
Resale,   Technical  Employee  Out-source  Contracting,   and  complete  Systems
Integration  Projects.  Future  targeted  acquisitions  will soon strengthen the
companies capabilities as a complete Information Systems Services Company.

                                Mission Statement
         To help  our  customers  obtain  and  maintain  the  optimum  level  of
         operating   efficiency  and   productivity   by  providing   integrated
         management  information systems and services that maximizes a companies
         return on investment in IS  (Information  Systems)  infrastructure  and
         minimizes ongoing information system expenses.

                                Vision Statement
         HyperDynamics Corporation is in business to provide completely planned,
         designed,   implemented   and  maintained  IS   (Information   Systems)
         environments  for  business.   With  this  directive  the  Company  has
         developed  and will  develop on a  continuing  basis it's own  "HYPERD"
         integrated IS environment to include ultimately, commercial Real Estate
         integration.   Standards  for  the  critical   components  of  this  IS
         environment have been adopted.  These  standards,  bundling of products
         and services, and economies of scale provide the best cost/benefit to a
         broad base majority of companies for their Information System needs.

                  HyperDynamics    Corporations   definition   of   "Information
                  Systems": 
                  The functions of planning, designing,  implementing,
                  and maintaining:
                      1. Telecommunications including wide area voice,  video,
                              and data  networking
                      2. Server and workstation  computer systems and operating
                              systems  
                      3.  Integrated client-server based software applications,
                  as this  all  relates  to a  companies  decision  support  and
                  transaction processing data.





                                      -5-
<PAGE>

         The  Company  maintains  a strong  strategy  to continue to develop and
leverage it's own Information Systems Infrastructure and will continue to invest
in the automation of the  administratively  based public company  overhead.  The
Company will benefit from an ever increasing  cost/benefit  through economies of
scale as it reaches it's critical mass through  acquisition  as well as building
on it's  initial  infrastructure  obtained  through  MDSI.  This will  allow the
Company to help it's subsidiaries operate more efficiently as well and result in
maximizing profits for it's shareholders.

         Long term the Company will continue to strive for technical  excellence
and always be looking to build it's own  product  offerings  as well as a strong
recurring  contract  service  revenue base. This will continue to strengthen the
companies value and related stock price in years to come.

         The Information Systems Service Industry

         As defined by HYPD information  systems includes all factors associated
with the design implementation, and maintenance of an organizations Intranet and
Internet related communications. Technologies such as ATM (Asynchronous Transfer
Mode) allow simultaneous communication of voice, video, and data across a single
fiber and/or copper cable plant. With this technology a computer workstation can
now be transformed into a complete  communication  device that through standards
based  applications  will allow a single cable connection to seamlessly  support
integrated  applications such as video conferencing,  telephone,  voice mail and
email, and many other integrated database applications.  Additionally,  wireless
communication  technologies and market potentials are being evaluated  seriously
in the areas of wireless  microwave based television and  simultaneous  Internet
data transmission.  The recent technology leaps in these areas are being closely
monitored.

         To be a viable IS services  company it will be imperative to obtain and
maintain expertise in these significant  technical areas of Information Systems.
With a trend in the industry for talented  integration  companies to be acquired
by larger companies, HYPD is sitting in the right place and at the right time to
obtain the required talents.

         HyperDynamics  Corporation  has a plan of  rapid  growth  through  hand
picked timely acquisitions of Technology based companies that maintain expertise
in the various defined areas of Information Systems Integration. 


         Subsidiary - MicroData Systems, Inc. (MDSI)

         MDSI was established in 1988 and evolved from a typical networking 
value-added reseller to a 
<PAGE>
systems  integrator  of  integrated  information  systems.  Since inception the
Company developed reseller relationships with companies such as 3Com 
Corporation,  Digital  Equipment  Corporation,  IBM, Sunsoft,  Microsoft,  Great
Plains Software, and Seattle  Software Labs to name a few. These  relationships 
have helped MDSI exploit its strong network  engineering and systems integration
expertise.  Among MDSI's impressive list of customers are Lockheed Martin Space 
Operations, State of Texas Department of Information Resources, Novo Industries,
and Harris County Hospital District.



         MDSI established an Internet  infrastructure in 1995 with the MicroData
Internet.  The Company  maintains a T-1 high bandwidth  connection for providing
high speed  access  for it's  corporate  customers  and to continually  develop 
Internet related services such as WWW hosting, web-site design,  and electronic 
commerce for selling  some of it's computer  hardware and software  components. 
MDSI has developed the current IS  infrastructure  being utilized and adopted by
HYPD.

         Strategic Adjustments to Business

         As a strategic and organizational decision, in the first quarter of FYE
1998, HYPD will purchase the primary  components of the IS  infrastructure  from
MDSI  including the Internet  related  parts.  MDSI will become a focused profit
center by  rejuvenating  and ramping up revenues  based on hardware and software
sales,  network  design and  implementation,  and complete  systems  integration
projects.  HYPD will use the Internet  infrastructure to implement the "HYD.NET"
access  and  Internet  services  network.  HYPD will also be  re-designing  it's
Internet  web-site  and  providing  hosting  and other  services  already  being
provided  by MDSI.  Be looking for the new site at  "http://www.hyd.net"  in the
October 1997 time frame. By moving the IS Corporate Infrastructure to the parent
level, a standard  role-out for new  subsidiaries  can be developed to allow the
organization   to  quickly  and   efficiently   assimilate  the   administration
requirements for the new acquisitions.

         At the beginning of the calendar  year 1998,  the Company plans to move
it's payroll  operations over completely to be processed at the corporate level.
HYPD currently has a contract with Lockheed  Martin Space  Operations to provide
technical employees on a contract basis. The Company will move to expand this as
a profit center managed by the IS  infrastructure  obtained from MDSI. HYPD will
develop a standard method of allocating  personnel based overhead to the various
underlying  subsidiaries  so that  there  will be no need for  multiple  payroll
departments  within the consolidated  group and the related  subsidiaries can be
operated  as  profit  centers,   focusing  on  revenue  producing  activity.  By
consolidating payroll the Company will be able to minimize costs of benefits for
employees as well as cost of administrative  overhead.  This move to consolidate
payroll will lead the step to standardize  the  organization on the Great Plains
integrated  client/server  based  accounting  platform.  Coupled  with a smartly
designed wide area network,  the complete  organization will be  intra-networked
regardless of geographic location with high speed secured access to the Internet
via HYD.NET.





                                      -6-
<PAGE>
Employees and Independent Contractors

         The  Company  has eight  (8) full  time  employees.  The  Company  uses
independent contractors to minimize fixed overhead. No employees are represented
by a union and the Company believes that its labor relations are good.


Item 2.           PROPERTIES


         The office of the  Company  is  located at 2656 South Loop West,  Suite
103, Houston,  Texas 77054 where the Company leases  approximately 3,000 sq. ft.
of  commercial  office  space on a annual  basis for both  itself and  MicroData
Systems,  Inc. The Company pays $2,573 per month. In the center of the space the
Company has developed it's  communications and computer room which serves as the
network server center,  wide area network hub, and central  telephone  room. The
space is secured by a monitored alarm system.


Item 3.           LEGAL PROCEEDINGS

         In 1984, the Company failed to file financial statements as required by
Utah law within  thirteen  months after its public offering in 1983. On June 17,
1987 the Division of Securities of the Department of Commerce (formerly known as
the Securities  Division of the Department of Business  Regulation) of the State
of Utah (the "Division")  issued an Order (the "Utah Order") by which Utah Order
any offering exemptions which would be otherwise applicable and available to the
Company by reason of Section  61-1- 14 of the Utah Code were revoked by the Utah
Order until such time as the Company filed  financial  statements as required by
Rule  10.2-1(b)(7)  of the  Division.  Therefore,  the  Company  may  not  offer
unregistered  securities  in  Utah,  except  that  under  the  federal  National
Securities  Markets  Improvement  Act of 1996 the  Company  may  offer  for sale
unregistered  securities  in Utah if such  offerings  comply  with  Rule  506 of
Regulation D of the  Securities  Act of 1933 as amended.  Rule 506 offerings are
exempt from state  regulation other than state notice and fee  requirements.  In
the future, the Company may seek to vacate the Utah Order.  However, the Company
has thus far been  unsuccessful  in locating  records  related to the  financial
information  that the Company  failed to file in 1983 and 1984,  and the Company
has been  unsuccessful  in locating the  individuals  who founded the Company in
1983. Thus, the Company's corporate memory on this matter is unavailable at this
time. The Company  believes that earlier  attempts to vacate the Utah Order were
unsuccessful because the Company was a shell company at the time the attempts to
vacate the Utah Order occurred.  The Company  believes that since the Company is
now an  operating  Company with assets and revenues  related to  operations,  as
opposed to assets and revenues related only to fund raising,  the Company may be
in a better position to petition Utah to vacate the Utah Order.

         The Company is not a party to any other material pending litigation.







                                      -7-
<PAGE>



Item 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         During the fourth quarter of 1997, there were no matters submitted to a
vote of the Security Holders, through solicitation of proxies or otherwise.







                                     PART II


Item 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS


                           PRICE RANGE OF COMMON STOCK


         The  Company's  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.


                                        High Bid                     Low Bid
1996
     First Quarter                      $ (*)                          $ (*)
     Second Quarter                     $ (*)                          $ (*)
     Third Quarter                      $ (*)                          $ (*)
     Fourth Quarter                     $ (*)                          $ (*)


1997
     Third Quarter                      $ 3 1/2                        $ 2 3/4
     Fourth Quarter                     $ 3 5/8                        $ 2 1/4
     First Quarter                      $ 3 1/4                        $ 2 7/8
     Second Quarter                     $ 2 13/16                      $ 1


* The Company  believes that there were no bids on the  Company's  common shares
during this period.

         On September 1, 1997,  the last bid for the Common Stock as reported by
the OTCBB was $1.00 per share.  On September 1, 1997,  there were  approximately
139 stockholders of record of the Common.




                                      -8-
<PAGE>



Stock.

         The Company has not paid, and the Company does not currently  intend to
pay cash dividends on its common stock in the  foreseeable  future.  The current
policy of the Company's Board of Directors is to retain all earnings, if any, to
provide  funds for  operation  and  expansion  of the  Company's  business.  The
declaration of dividends, if any, will be subject to the discretion of the Board
of  Directors,  which may  consider  such  factors as the  Company's  results of
operations,  financial condition,  capital needs and acquisition strategy, among
others.



Item 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

         The  following  discussion  should  be read  in  conjunction  with  the
financial  statements and notes thereto for the fiscal years ended June 30, 1996
and 1997.

General
         The company's  original  plans to acquire and merge several  technology
based  companies  early in it's first year of  operations  were delayed when the
financial  condition and results of  operations  were  determined  for the first
quarter of 1997. Additionally,  significant time, money, and energy was expended
on the divestiture of Houston  Creative  Connections  (HCC). The divestiture was
necessary to get the Company  positioned  for it's  original  goals of effecting
viable acquisitions that meet the technology related goals of the business plan.

         Since the  divestiture  of HCC, the Company has struggled to get access
to the planned core capital necessary to achieve it's acquisition business plan.
Based on the problems of initial reverse merger,  and the necessary  divestiture
of one of the  two  initial  acquisitions,  the  Company  has  effectively  been
operating MDSI  (Previously a small private company) as a public company for the
first year of  operations.  Initially,  MDSI was  intended  to be one of several
acquisitions and not it's sole acquisition.

         The primary reason for the delay to effect additional acquisitions thus
far has been the  inability  to obtain  more than a fraction  of the  originally
planned  for  capital.  To make  matters  more  difficult,  fixed  overhead  was
increased to manage organizational  operations that had yet to emerge or evolve.
What  little  capital  obtained  was  used up with  legal  fees  for  attempting
acquisitions and for fixed overhead at the corporate level.

Results of Operations

         Revenues  increased  to $ 1,520,928 for the twelve (12) months end June
30, 1997, from $943,141 for the same  period in FYE 1996.  The 61% increase  was
primarily  due to stronger hardware sales for the first three quarters.

         Cost of Goods Sold increased, correspondingly to the sales increase, to
$1,323,696 in the period, from $742,597 for the same period for FYE 1996.





                                      -9-
<PAGE>



         Selling,  General and  Administrative  expenses  increased to $675,458
in the twelve  (12) month  period, as compared  to $181,131 for the same period 
in 1996.The increase was primarily due to legal and financial  expenses 
associated with the building of corporate infrastructure and the transition to 
a public company.

         Net Loss. The net loss of the Company was $(663,809) for the twelve 
(12) months ended June 30, 1997, or ($0.14) per share. As stated above, this
loss can be primarily attributed to the increase in fixed overhead expenses 
associated with the transition to becoming a public company.

         On April 25, 1997, the Company acquired a contract interest in revenues
from  SierraNet,  Inc., a Nevada  Internet  Service  Provider.  The  third-party
purchaser of SierraNet,  Internet Finance and Equipment, Inc. of Florida, agreed
to this  contract  right in return  for our  participation  in  financing  their
acquisition  of SierraNet  through  issuance of 177,000  shares of the Company's
restricted  stock to the sellers.  This contract right provides the Company with
4% of  monthly  gross  revenue of  SierraNet,  and 19% of sale  proceeds  should
SierraNet be sold.

Liquidity and Capital Resources

         The  Company  had  difficult  cash  problems  in  the  fourth  quarter.
Significant  current  liabilities in the amount of $42,107 were negotiated out 
of, in return for the companies common stock.

         Bridge loan  financing has been obtained as a subsequent  event to June
30,  1997 in the form of  Convertible  debt  disclosed  in an 8-K filing done on
August 5, 1997. As of September 1, 1997 the Company has been in negotiation with
Emerald  Bay  Interests,  LTD to provide  core  private  funding of at least two
acquisitions it has been working on as well as provide necessary funding to ramp
up MDSI.

Prospective Information

         In  addition  to  an  intense  acquisition  strategy,  the  Company  is
committed  to  developing  operations  from the core base  provided by MicroData
Systems,  Inc.  With a change to a basic profit center  strategy,  MDSI has been
off-loaded from overhead and  administrative  burden and is currently ramping up
operations  to  significantly  increase  sales from fiscal year end 1997.  These
increased sales are expected to start to show up in the second quarter of fiscal
year 1998.

         MDSI will focus on value added hardware sales and integration  sales as
before,  but will add it's own line of high performance desk top and server side
computers.  These systems will be optimized for business use with Microsoft's NT
operating  system  environment.  This  strategy  will help the  Company to yield
higher  average  profit  margins,  pick up more volume,  and allow it to provide
completely integrated product offerings.

         In addition to continuing  to develop the corporate IS  infrastructure,
HYPD will focus on enhancing two profit  centers at the  corporate  level during
FYE 1998. The profit center for technical employee  outsourcing will be expanded
and the  Internet  services  profit  center  obtained  from MDSI is planned  for
substantial enhancement.  These profit centers will provide corporate wide human
resources to all subsidiaries and leveraged Internet connectivity as well.






                                      -10-
<PAGE>
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

         Jones, Jensen & Company,  certified public accountants of Utah, audited
the financial  statements  of the Company for the year ended  December 31, 1995.
Jones,  Jensen & Company was  dismissed as of August 26, 1996 at which time Jack
Evans,  CPA,  certified public  accountant of Houston,  Texas was engaged as the
Company's  accountants.  There were no  disagreements  between  the  Company and
Jones,  Jensen &  Company,  CPA,  on any  matter  of  accounting  principles  or
practices, financial statement disclosure or auditing scope or procedure, which,
if not resolved,  would have caused them to make reference to the subject matter
of the disagreement in connection with their report.

        The report of Jones,  Jensen & Company for the year ended  December  31,
1995 did not contain any adverse  opinion or disclaimer of opinion,  excepting a
going  concern   qualification,   and  was  not  qualified  or  modified  as  to
uncertainty, audit scope or accounting principles.

        The decision to change  principal  accountants was approved by the Board
of  Directors  because the offices of Jack Evans,  CPA were located near the new
principal executive offices of the Company.

        Also, during the Company's two most recent fiscal years, and since then,
Jones,  Jensen & Company has not advised the Company  that any of the  following
exist or are applicable:

         (1)      That  the  internal  controls  necessary  for the  Company  to
                  develop  reliable  financial  statements  do not  exist,  that
                  information  has come to their attention that has lead them to
                  no longer be able to rely on management's representations,  or
                  that  has  made  them  unwilling  to be  associated  with  the
                  financial statements prepared by management;

         (2)      That the Company  needs to expand  significantly  the scope of
                  its audit,  or that  information  has come to their  attention
                  that  if  further   investigated  may  materially  impact  the
                  fairness or reliability of a previously issued audit report or
                  the  underlying  financial  statements or any other  financial
                  presentation,  or  cause  him  to  be  unwilling  to  rely  on
                  management's   representations   or  be  associated  with  the
                  Company's  financial  statements for the foregoing  reasons or
                  any other reason; or

         (3)      That they have advised the Company that  information  has come
                  to their attention that they have concluded materially impacts
                  the  fairness or  reliability  of either a  previously  issued
                  audit report or the  underlying  financial  statements for the
                  foregoing reasons or any other reason.





                                      -11-
<PAGE>



         The Company has  provided  Jones,  Jensen & Company  with a copy of the
disclosure provided herein. Jones, Jensen & Company has advised the Company that
it agrees with the  disclosures  made  herein and the Company has been  provided
with a letter to the  Commission  by Jones,  Jensen &  Company  confirming  such
agreement.



                                    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 the
executive officers and directors of the Company.
<TABLE>
<CAPTION>
Name                       Position                                 Age
<S>                           <C>                                   <C>    

Kent Watts                 Director, Chief Executive Officer,       39
                            and Chief Accounting Officer

Robert J. Hill             Director                                 42

</TABLE>

         Directors  are elected  annually  and hold office until the next annual
meeting of the stockholders of the Company or until their successors are elected
and qualified.  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 executive officers of the Company. Board vacancies are filled by a
majority vote of the Board.

         Kent Watts,  age 39, became  Chairman of the Board of Directors and was
named the  companies  President  and  Chief  Executive  Officer  on June 4, 1997
simultaneously  with  the  resignation  of Greg J.  Micek.  He has  served  as a
Director,  Chief Financial Officer, and Chief Information Officer of the Company
since  January 17, 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 subsidiary of the Company, in
1988. He has extensive  experience working with management  information systems.
Mr. Watts has been  involved in the design,  implementation  and  management  of
heterogeneous,  multi-protocol networks. He has substantial technical experience
with a variety of operating  systems,  relational  databases,  and client-server
based software  applications.  He brings to the Company an interesting  blend of
business and technical experience.




                                      -12-
<PAGE>



         Robert J. Hill,  age 42, has served as the Chief  Operating  Officer of
the Company since June 1996 and as Chief Operating Officer and a Director of the
Company since August 26, 1996.  Before joining the Company,  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.

Certain Securities Filings

         The Company  believes that filings  required under Section 16(a) of the
Exchange Act have been made in a timely manner.

Item 10.      EXECUTIVE COMPENSATION

         The following table reflects all forms of compensation  for services to
the  Company  for the fiscal  years  ended  June 30,  1996 and 1997 of the chief
executive  officer of the Company.  No executive  officer  (other than the chief
executive officer) of the Company received  compensation which exceeded $100,000
during 1996.

                           Summary Compensation Table
<TABLE>
<CAPTION>

                               Annual Compensation     Long-Term Compensation   All
                                                        Restricted    Stock     Other
                              FYE                        Stock       Options    Compen-
Name & Principal Position    6/30  Salary  Bonus   Other Awards      (Shares)   sation
<S>                          <C>    <C>     <C>    <C>    <C>         <C>        <C>

Kent Watts (1)               1997 $60,000   -0-    -0-    -0-          -0-       -0-
   Chief Executive Officer   1996 $  -0-    -0-    -0-    -0-          -0-       -0-

Gregory Micek (2)            1997 $22,100   -0-    -0-  420,000        -0-       -0-
    Former Chief Executive   1996 $  -0-    -0-    -0-    -0-          -0-       -0-
       Officer               1995 $  -0-    -0-    -0-    -0-          -0-       -0-

Gregory Aurre                1997 $  -0-    -0-    -0-    -0-          -0-       -0-
     Former Chief Executive  1996 $  -0-    -0-    -0-    -0-          -0-       -0-
       Officer               1995 $  -0-    -0-    -0-    -0-          -0-       -0-
</TABLE>



    (1) Mr. Watts received a $60,000 salary from MicroData  Systems,  Inc, in 
        fiscal year end 6/30/97. He will receive $84,000 annually starting July 
        1, 1997 and will be  increased  to $100,000  per year once the Company  
        realizes it's first quarterly profit.

    (2) Mr.Micek received 420,000  restricted shares of common stock of the 
        Company as payment for his salary through June,  1996. The estimated 
        fair market value of the Common Stock was $0.03 per share.







                                      -13-
<PAGE>





Director Compensation

The Company does not currently  pay any cash  directors'  fees,  but it pays the
expenses of its directors in attending board meetings.

Employee Stock Option Plan

The Company has been successful in attracting and retaining qualified personnel,
the  Company  believes  that  its  future  success  will  depend  in part on its
continued ability to attract and retain highly qualified personnel.  The Company
pays wages and  salaries  which it believes  are  competitive.  The Company also
believes that equity  ownership is an important factor in its ability to attract
and retain  skilled  personnel,  and the Board of  Directors  of the Company has
adopted an employee stock option program.

Options to purchase  1,620,000  shares have been approved  under the Plan.  Such
options  will vest over a five year or other  negotiated  period and will have a
strike at a price set at the time of grant and based on the then current  market
value of the stock.  The  President of the Company has the authority as given by
the Board of Directors  to negotiate  stock  option  agreements  with  corporate
consultants as well. As of September 1, 1997, options to purchase 962,060 shares
have been granted under this plan.

The  purpose of the  executive  stock  option  program  will be to  further  the
interest of the Company,  its  subsidiaries  and its  stockholders  by providing
incentives  in the form of stock  options to key  employees  and  directors  who
contribute  materially  to the success and  profitability  of the  Company.  The
grants  will  recognize  and  reward  outstanding  individual  performances  and
contributions and will give such persons a proprietary  interest in the Company,
thus enhancing their personal  interest in the Company's  continued  success and
progress.  This  program  will also assist the Company and its  subsidiaries  in
attracting and retaining key employees and directors.


Item 11.           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                                       MANAGEMENT

The following  table sets forth certain  information at September 1, 1997,  with
respect to the beneficial ownership of shares of Common Stock by (i) each person
who owns  beneficially  more than 5% of the outstanding  shares of Common Stock,
(ii) each director of the Company,  (iii) each executive  officer of the Company
and (iv) all executive officers and directors of the Company as a group.

<TABLE>
<CAPTION>

                                                           Shares Beneficially Owned
    Name and Address of Beneficial Owner                    Number         Percent
<S>                                                          <C>              <C>  

    Kent Watts
    2656 South Loop West, Suite 103




                                      -14-
<PAGE>



    Houston, Texas 77054 . . . . . . . . . . . . . .      1,180,000         21.10%

    Robert J. Hill
    2656 South Loop West, Suite 103
    Houston, Texas 77054 . . . . . . . . . . . . . .        390,000          6.97%


    Gregory Micek
    5444 Westheimer, Suite 2080
    Houston, Texas 77056 . . . . . . . . . . . . . .        574,500         10.27%

    Other Affiliated Group                                    (1)

    All directors and executive officers as
    a group (2 persons) . . . . . . . . . . . . . . . .   1,570,000         28.07%

</TABLE>


    ---------------
    On  August 15, 1996 the Company went through a reorganization which resulted
        partly  in  the  issuance  of  1,540,000   shares  of  common  stock  to
        shareholders  which  represents  27%  of  total  outstanding  shares  at
        September  1, 1997,  that the Company  believes may be a group acting in
        concert  with  regard to control of the  Company.  The  Company's  stock
        issuance records show the following list:
<TABLE>
<CAPTION>

                      Name                               # of Shares
<S>                  <C>                                     <C>  

                      Peterson                            25,000
                      Thompson                           102,150
                      Klausmeyer                         237,250
                      Strawn                             339,300
                      Cicero Cinzano                      50,000
                      Fairweather Sec                     51,300
                      Glory Place                         10,000
                      HuggerMugger                       102,200
                      McKenna                             26,400
                      Segal/Alex Trust                    45,000
                      FYJIGIM                             45,000
                      Michelsen/cf Chelsey                 5,750
                      Michelsen/cf Allyse                  5,750
                      Nationsbank/Thompson family trust   45,000
                      Flicker                             70,000
                      Q-Marq                             115,000
                      Eurotrade                          160,000
                      Tobem                              100,000
                      Silvey                              10,000
                      Serafino                            20,000
                                                         --------
                                                       1,540,000
</TABLE>





             Due to Registrant's inability to pay certain liabilities as they 
become due, Registrant's Board




                                      -15-
<PAGE>



of  Directors  approved on July 15,  1997 a bridge  financing  arrangement  (the
"Financing")  with Emerald Bay  Interests,  LTD ("EBI").  Under the terms of the
Financing,  Registrant can borrow up to $250,000. Borrowed amounts bear interest
at a rate of 10% per annum and were due and  payable  on or  before  August  31,
1997. The total balance at September 25, 1997 is $195,000.  At the option of EBI
the notes are  convertible  to the  restricted  common stock of the Company at a
rate of three cents ($.03) per share.  The borrowed amounts have not been repaid
as of September 25, 1997. This represents a potential change of control.


Item 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Board of  Directors  of the  Company  has adopted a policy that
Company affairs will be conducted in all respects by standards applicable to
publicly-held  corporations  and that the  Company  will not enter  into any
future  transactions  and/or  loans  between the  Company and its  officers,
directors and 5%  shareholders  unless the terms are no less  favorable than
could be obtained from independent,  third parties and will be approved by a
majority of the independent, disinterested directors of the Company.

     During  the  fourth  quarter  of 1997 it was  determined  that  the
Company had difficult  cash  problems to overcome.  The Company has obtained
financing  from  Emerald Bay  Interests,  LTD as a partial  solution to this
problem. Michael Watts is the brother of Kent Watts, the President and Chief
Executive Officer for the Company.  Michael Watts conducts certain brokerage
business with Emerald Bay Interests, LTD.

     Michael  Watts was  retained by the  Company in April,  1996 with a
consulting  agreement  related to several pending  acquisitions.  Under that
agreement the Company  granted  275,000 S-8 stock options.  On June 15, 1997
the board of directors  extended the consulting  services  agreement through
12/31/97.  This extension came with  additional  compensation of 300,000 S-8
options and additional services in the area of corporate restructuring.  The
board  believes that these  services  will enhance the companies  ability to
effect future acquisitions.

Item 13.          EXHIBITS AND REPORTS ON FORM 8-K

    (a)      Exhibits
<TABLE>
<CAPTION>

    Exhibit No.       Identification of Exhibit
<S>                            <C>    

    10.1              Promissory Notes dated  July 17, 25, August 29, and 
                         September 22, 1997
    21.1              Subsidiaries of Registrant
    27                Financial Data Schedule
</TABLE>


    (b)      Reports on Form 8-K.

             A report on Form 8-K was filed on June 3, 1997 which reported other
events regarding the 

                                      -16-
<PAGE>



resignation of Greg Micek as President and CEO and the election of Kent Watts as
his successor.

             A report on Form 8-K was filed on  August  5, 1997  which  reported
other events regarding bridge loan financing .

<PAGE>
                           HYPERDYNAMICS CORPORATION

                          AUDITED FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS

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

Balance Sheets as of June 30, 1997 and 1996                                F-3

Statements of Income for the
     years ended June 30, 1997 and 1996                                    F-4

Statements of Changes in Stockholders' Equity for
     the years ended June 30, 1997 and 1996                                F-5

Statements of Cash Flows for the years ended
     June 30, 1997 and 1996                                                F-6

Notes to Financial Statements                                              F-7

</TABLE>
                                      F-1
<PAGE>

               Independent Auditors' Report


                                   JACK EVANS
                           CERTIFIED PUBLIC ACCOUNTANT
                            Three Riverway, Suite 120
                            Houston, Texas 77056-1909
                              Voice (713) 623-2898
                                Fax (713)960-8128




September 19, 1997


To the Board of Directors
         HyperDynamics Corporation
         Houston, Texas


         I  have  audited  the  accompanying   consolidated  balance  sheets  of
HyperDynamics Corporation as of June 30, 1997 and June 30, 1996, and the related
consolidated statements of income,  stockholders' equity, and cash flows for the
years then ended.  These financial  statements and financial  statement schedule
are the  responsibility  of the Company's  management.  My  responsibility is to
express an opinion on these financial statements based on my audits.

         I conducted my audits in accordance  with generally  accepted  auditing
standards.  Those standards  require that I plan and perform the audit 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.  I believe  that my  audits  provide  a  reasonable  basis for our
opinion.

In my opinion,  the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of  HyperDynamics
Corporation  as of June 30, 1997 and 1996, and the results of its operations and
its cash flows for the years then ended, in conformity  with generally  accepted
auditing principles.


 JACK EVANS

                                      F-2
<PAGE>

                            HYPERDYNAMICS CORPORATION
                                 Balance Sheets
                             June 30, 1997 and 1996
<TABLE>
<CAPTION>

                                    ASSETS                                          1997               1996
<S>                                                                                  <C>              <C>   
                                                                                -------------      ------------
CURRENT ASSETS
     Cash                                                                         $   30,068          $ 102,907
     Certificate of deposit (restricted)                                              70,000
     Accounts receivable                                                              39,772            239,895
     Due from officers                                                                 4,866
     Revenue interest current portion                                                 35,970
     Other                                                                            42,978             32,082
                                                                                -------------        -----------
                  TOTAL CURRENT ASSETS                                               223,654            374,884
                                                                                -------------        -----------

PROPERTY AND EQUIPMENT                                                                20,933             51,758
REVENUE INTEREST                                                                     141,030
OTHER ASSETS - deposits                                                                3,348             11,271
                                                                                ------------         -----------

                                                                                   $ 388,965          $ 437,913
                                                                                ============         ===========
        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Current maturities of long-term debt                                                           $    14,171
     Bank credit line                                                             $   70,000
     Accounts payable                                                                191,662            288,760
     Accrued expenses                                                                 30,962              2,368
     Notes payable                                                                    37,500
                                                                                 -----------        -----------     
                  TOTAL CURRENT LIABILITIES                                          330,124            305,299

LONG-TERM DEBT                                                                                           33,626
                                                                                ------------        -----------
                  TOTAL LIABILITIES                                                  330,124            338,925
                                                                                ------------        -----------

STOCKHOLDERS' EQUITY
     Common stock, par value $0.001; 50,000,000 shares
         authorized; 5,596,989, and 2,000,000 shares
         issued and outstanding                                                        5,597              2,000
     Additional paid-in capital                                                      696,111            106,046
     Retained (deficit)                                                            ( 642,867)        (    9,058)
                                                                                ------------        -----------
                  TOTAL STOCKHOLDERS' EQUITY                                          58,841             98,988
                                                                                ------------        -----------
                                                                                   $ 388,965          $ 437,913
                                                                                ============        ===========
</TABLE>

See accompanying notes.

                                      F-3

<PAGE>



                            HYPERDYNAMICS CORPORATION
                              Statements of Income
                    For the Year Ended June 30, 1997 and 1996

<TABLE>
<CAPTION>

                                                                                        1997                1996
                                                                                  ----------------      -----------
<S>                                                                                     <C>                 <C>    

REVENUES                                                                           $ 1,520,928       $     943,141

COST OF REVENUES                                                                     1,323,696             742,597
                                                                                 -------------      --------------

         GROSS MARGIN                                                                  197,232             200,544
                                                                                 -------------      --------------

OPERATING EXPENSES
     Selling                                                                            60,602               8,965
     General and administrative                                                        614,856             172,166
     Research & development - internet                                                  53,979
     Write-off of intangibles                                                           11,880
     Depreciation and amortization                                                      26,947              20,779
                                                                                 -------------      --------------

         Total operating expenses                                                      768,264             201,910
                                                                                 -------------      --------------

         OPERATING LOSS                                                         (      571,032)    (         1,366)

OTHER INCOME (EXPENSE)
     Interest                                                                   (        5,588)    (         3,766)
     Loss on disposal of asset                                                  (        3,838)
                                                                               ---------------      --------------

         LOSS FROM CONTINUING OPERATIONS                                        (      580,458)    (         5,132)

LOSS FROM DISCONTINUED OPERATIONS                                               (       53,351)
                                                                                ---------------     --------------

         NET LOSS                                                              $(      633,809)   $(         5,132)
                                                                                ==============     ===============



LOSS PER COMMON SHARE
     Continuing operations                                                             $( 0.13)
     Discontinued operations                                                            ( 0.01)
                                                                                      --------
         NET LOSS PER COMMON SHARE                                                     $( 0.14)        - n/a -
                                                                                       =======

Weighted average shares outstanding                                                  4,495,273         - n/a -

</TABLE>

See accompanying notes.

                                      F-4
<PAGE>







                            HYPERDYNAMICS CORPORATION
                  Statement of Changes in Stockholders' Equity
                        Year Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>

                                                   - -Common Stock - -        Paid-in       Retained
                                                 Shares         Amount        Capital      (Deficit)       Totals
<S>                                                <C>            <C>           <C>           <C>            <C>
Balances - June 30, 1995
     MicroData Systems, Inc.                      75,000    $    7,500    $      546      $(   3,926)   $    4,120

Merger with MicroData
     Systems, Inc.                               529,000    (    6,896)        6,896
                                               -----------   -----------   ------------     ---------    ----------

AS RESTATED
     Balances - June 30, 1995                    604,000           604         7,442    (     3,926)         4,120

Common shares issued for cash                    200,000           200        99,800                       100,000


Net (loss)                                                                              (     5,132)     (   5,132)
                                            --------------   -----------   ------------     ----------   -----------

     Balances - June 30, 1996                    804,000           804       107,242    (     9,058)        98,988

Issuance of stock for merger with:
     Houston Creative
         Connections, Inc.                     2,102,000         2,102       ( 2,102)       216,487        216,487
     RAM-Z Enterprises, Inc.                     480,175           480       (   480)

Common stock issued for cash                     295,000           295       259,705                       260,000

Common shares issued for services              3,140,814         3,141       153,521                       156,662

Divestiture of Houston Creative
      Connections, Inc.                       (2,102,000)       (2,102)        2,102       (216,487)      (216,487)

Issuance of stock to former owners
     of MicroData Systems, Inc.                  700,000           700          (700)

Common shares issued to purchase
     Sierra-Net Revenue Interest                 177,000           177       176,823                       177,000

Net (loss)                                                                                 (633,809)      (633,809)
                                          ---------------    -----------   -----------    -----------     ---------

     Balances - June 30, 1997                  5,596,989    $    5,597      $ 696,111    $( 642,867)      $ 58,841
                                          ===============    ==========     =========    ==========      ==========
</TABLE>

See accompanying notes.

                                      F-5
<PAGE>








                                                HYPERDYNAMICS CORPORATION
                                                Statements of Cash Flows
                                            Year Ended June 30, 1997 and 1996
<TABLE>
<CAPTION>

                                                                                     1997              1996
                                                                                -------------     ------------
<S>                                                                                  <C>               <C>   
CASH FLOWS FROM OPERATING ACTIVITIES
     Net (loss)                                                                    ( 633,809)        (    5,132)
     Adjustments to reconcile net income to cash
        provided from operating activities
         Depreciation and amortization                                                26,948             20,779
         Loss on disposal of auto                                                      3,838
         Stock issued for services                                                   156,662
         Changes in:
              Certificates of deposit                                             (   70,000)
              Accounts receivable                                                    200,123         (  214,964)
              Employee advances                                                   (    4,866)
              Inventory                                                           (   26,737)            37,588
              Prepaid expenses                                                        15,841         (   19,555)
              Deposits                                                                 7,923         (    3,114)
              Accounts payable                                                    (   97,098)           190,220
              Customer deposits                                                                      (   34,450)
              Accrued expenses                                                        28,594         (    1,461)
                                                                                 -----------       -------------
NET CASH PROVIDED FROM OPERATING ACTIVITIES                                        ( 392,581)       (    30,089)
                                                                                  ----------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of equipment                                                        (   15,224)       (    29,969)
                                                                                 -----------       ------------
NET CASH PROVIDED FROM INVESTING ACTIVITIES                                       (   15,224)       (    29,969)
                                                                                 -----------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Increase in banking line of credit                                               70,000
     Increase in short-term convertible notes                                         37,500
     Reduction in notes payable                                                   (   32,534)      (      8,947)
     Sales of common stock                                                           260,000            100,000
                                                                                  ----------        -----------
NET CASH PROVIDED FROM FINANCING ACTIVITIES                                          334,966             91,053
                                                                                  ----------       ------------
                  NET INCREASE (DECREASE) IN CASH                                (    72,839)            30,995

                  CASH AT BEGINNING OF PERIOD                                        102,907             71,912
                                                                                  ----------        -----------
                  CASH AT END OF PERIOD                                           $   30,068          $ 102,907
                                                                                  ==========          =========

SUPPLEMENTAL INFORMATION
     Interest paid                                                               $     4,182          $   3,766
</TABLE>

See accompanying notes.


                                      F-6
<PAGE>







                            HYPERDYNAMICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

Principles of consolidation.  The consolidated  financial statements include the
accounts of MicroData Systems,  Inc., a computer hardware  reseller,  and wholly
owned  subsidiary  of  the  Company.   Significant   intercompany  accounts  and
transactions have been eliminated in consolidation.

Nature of business. HyperDynamics Corporation ("Company") was formed on March 7,
1996 as a Texas  corporation,  and  reorganized,  through a reverse  merger with
Ram-Z  Enterprises,  Inc. as a Delaware  corporation  as of August 26, 1996. The
Company  was formed  primarily  for the  purposes  of  acquiring  privately-held
companies and merging with, Ram-Z Enterprises,  Inc., a registered 12(g) company
under the Securities Act of 1934, as amended,  with no recent ongoing operations
to date.

Cash and cash equivalents. The Company considers cash in operating bank accounts
as cash and cash equivalents.

Revenue and cost  recognition.  Revenues from computer  consulting  and sales of
computer  hardware are recognized when services or installations  are performed.
In  1996,  the  Company's  revenues  were  reported  net  of  an  allowance  for
uncollectibles of $15,000.  In 1997 the Company's  allowance for  uncollectibles
was zero resulting in bad debt recovery of $12,100.

Inventory.  Inventory is stated at the lower of cost or market and consists of 
computer components available for sale.  Inventory cost is determined using the 
cost method.

Property  and  equipment.  The Company  calculates  depreciation  for  financial
reporting using the straight-line  method over the estimated useful lives of the
assets as follows:
<TABLE>
<CAPTION>

                                                                                 1997              1996
                                                                             -------------     ---------
<S>                                                      <C>                      <C>               <C>       
          Computer equipment                            3 years               $   82,340        $   68,916
         Furniture & fixtures                           5 years                    9,590             7,790
         Auto                                           5 years                                     19,101
                                                                             ------------        ----------
         Total cost - property & equipment                                        91,930            95,807
         Less: accumulated depreciation                                        (  70,997)        (  44,049)
                                                                               ----------        ----------
         Net book value                                                       $   20,933        $   51,758
                                                                              ==========        ==========
</TABLE>

Equipment maintenance is charged to administrative overhead as incurred.

Income  taxes.  Income taxes are  provided  for the tax effects of  transactions
reported in the  financial  statements  and consist of taxes  currently due plus
deferred taxes related primarily to depreciation differences.  To date there has
been no taxable income

                                      F-7
<PAGE>


                                             HYPERDYNAMICS CORPORATION
                                           NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

recorded.

Use of estimates.  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and  assumptions   that  affect  certain   reported   amounts  and  disclosures.
Accordingly, actual results could differ from those estimates.

NOTE 2 - OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
                                                                               1997                1996
                                                                          -------------        ----------
<S>                                                                             <C>                <C>   
         Prepaid expenses                                                   $    16,241        $   32,082
         Inventory                                                               26,737
                                                                           ------------        ----------

                                                                            $    42,978        $   32,082
                                                                            ===========        ==========
</TABLE>

NOTE 3 - REVENUE SHARING INTEREST

In May  1997,  the  Company  purchased  a  revenue  interest  in the  Sierra-Net
subsidiary  of Internet  Finance &  Equipment,  Inc.  (IF&E) by issuing  177,000
shares of stock.  SierraNet  is an  internet  service  provider  in Nevada.  The
Company valued this transaction at $177,000. The collections averaged $3,000 per
month for July and August 1997.  This interest  includes 4% of gross revenue and
19% of gross sale proceeds if any significant  assets or stock of Sierra-Net are
sold.

The current portion of this interest  represents  management's  estimate of cash
receipts over the next 12 months.

NOTE 4 - MERGERS AND DIVESTITURE

Prior to August 26, 1996,  the Company was an inactive  public shell named RAM-Z
Enterprises,  Inc.  On  August  26,  1996,  the  Company  completed  a  "reverse
acquisition"  of a  holding  company,  HyperDynamics  Corporation,  and  its two
newly-acquired operating subsidiaries:  Houston Creative Connections, Inc. (HCC)
and MicroData Systems, Inc. (MDS). HCC is an outsourcing agency placing creative
design and  computer  programming  professionals.  MDS is a reseller of computer
networking software and hardware.

This reverse  acquisition  by RAM-Z was accounted for by the purchase  method of
accounting  and  the  prior  acquisitions  of HCC and  MDS by the  Company  were
accounted for using the pooling of interests method.

                                      F-8
<PAGE>


                            HYPERDYNAMICS CORPORATION
                          NOTES TO FINANCIAL STATEMENTS

NOTE 4 - MERGERS AND DIVESTITURE (continued)

On February 6, 1997, the Company agreed with the original shareholders of HCC to
transfer 100% of ownership of this subsidiary back to such original shareholders
in exchange for their entire  holdings of Company stock,  or 2,102,000  shares. 
In connection with this divestiture,  the Company agreed to issue 700,000 shares
to the original shareholders of MDS for cancellation of their recission rights.

The loss on this transaction is reflected as loss from  discontinued  operations
on the consolidated financial statements.

NOTE 5 - BANK CREDIT LINE ARRANGEMENT

The Company has a revolving  line of credit at Frost  National  Bank for $70,000
payable in full on January 23, 1998. Interest accrues at the lenders prime rate,
currently  8.25%.  The line of credit is secured by the $70,000  certificate  of
deposit.

NOTE 6 - NOTES PAYABLE

The Company  borrowed  $37,500 from two  stockholders.  Both of the loans accrue
interest at 9% annually and mature in January 1998, at which time the balance is
due in full or the loans may be converted  into 25,000  common shares at $1, and
5,000 common shares at $2.50.

NOTE 7 - STOCK OPTIONS

The Company has granted  options  pursuant to its stock option plan.  Grants are
made at management's  discretion,  and are generally granted as compensation for
services.  Options granted in 1997 resulted in  compensation  expense of $20,000
based on  management's  estimate  of the  options  fair  value at date of grant.
Options that have been  granted and are  outstanding  generally  expire in 1 - 5
years from date of grant, and are 100% exercisable at date of grant. At June 30,
1997 a total of 1,315,660  options were  outstanding  and  exercisable  with the
following exercise prices:
<TABLE>
<CAPTION>
<S>                                <C>              <C>                   <C>

                               1,172,900             at        $           1.250
                                  17,760             at             0.750 -1.000
                                 125,000             at                    0.001
</TABLE>

Had  compensation  cost for the  Company's  stock-based  compensation  plan been
determined  based on the fair value at the grant dates for awards under the plan
consistent  with  the  Black-Scholes  option-pricing  model  suggested  by  FASB
Statement  123,  the  Company's  net losses  and loss per share  would have been
increased to the pro forma amounts indicated below:

                                      F-9
<PAGE>


                                             HYPERDYNAMICS CORPORATION
                                           NOTES TO FINANCIAL STATEMENTS




NOTE 7 - STOCK OPTIONS (continued)

<TABLE>
<CAPTION>


                                                                          1997                  1996
                                                                    ----------------     -----------
<S>                                                                       <C>                  <C>
            Net loss                 - as reported                   $(  633,809)       $(       5,132)
                                     - pro forma                     $(1,150,609)       $(       5,132)
         Net loss per share          - as reported                   $(     0.14)            - n/a -
                                     - pro forma                     $(     0.26)            - n/a -
</TABLE>

Variables  used  in the  Black-Scholes  option-pricing  model  include  (1) a 6%
risk-free  interest rate, (2) expected option life is the actual  remaining life
of the options as of June 30, 1997,  (3) expected  volatility is one-half of the
actual  calculated  historical  stock  price  fluctuation  volatility,  (4) zero
expected  dividends,  and (5)  one-half of the actual  stock  prices was used to
offset the unusual price  changes from the thin but  developing  actual  trading
volume.

During 1997,  200,000 options were exercised, 100,000 at $1.00 and 100,000 at
$0.75.

NOTE 8 - WRITE-OFF OF INTANGIBLES

Organizational  costs and internal use software totaling $11,880  capitalized in
the prior year were expensed in the current year.

NOTE 9 - MAJOR CUSTOMERS AND VENDORS

Major customers during 1997 and 1997 earned revenues from them were:

         Novo Industries, Inc.     $ 369,038   or 24.3% of total revenues
         Lockheed Space Operations   215,412   or 14.2% of total revenues

Major vendors during 1997 and 1997 purchases from them were:

         Arrow Electronics         $ 313,899  or 23.7% of total costs
         Tech Data                   136,662  or 10.3% of total costs

No other  customers or vendors  accounted for greater than 10% of the respective
totals.



                                      F-10
<PAGE>



NOTE 10 - CONTINGENCIES - GOING CONCERN

As shown in the  accompanying  financial  statements,  the Company  incurred net
operating  losses of $633,809 for the year ended June 30,  1997,  and $5,132 for
the year ended June 30, 1996. As of June 30, 1997,  current  liabilities  exceed
current assets by $106,470.  Those factors,  as well as management's  ability to
increase  acquisitions and long-term financing,  create an uncertainty about the
Company's  ability to continue as a going concern.  The financial  statements do
not include any adjustments  that might be necessary if the Company is unable to
continue as a going concern.

NOTE 11  - SUBSEQUENT EVENTS

Subsequent  to June 30, 1997,  the Company  received  $175,000  from Emerald Bay
Investments,  Ltd. as convertible  debt.  Interest accrues daily at a 10% annual
rate.  The debt  matures  August 31, 1998 and may be  converted  into  5,833,334
shares of common stock at $0.03 per share.  In the event of conversion,  Emerald
Bay Investments,  Ltd. would become the majority shareholder, and obtain control
of the Company.







                                      F-11
<PAGE>

                                   SIGNATURES


             In accordance  with the  requirements of Section 13 of 15(d) of the
    Exchange  Act,  the  Registrant  has caused  this report to be signed on its
    behalf by the  undersigned,  thereunto  duly  authorized,  on the 3rd day of
    October, 1997.

                                   HyperDynamics Corporation


                                   By: /s/ Kent Watts
                                   ------------------------
                                   Kent Watts, Chairman of the
                                   Board, Chief Executive Officer, and
                                   Chief Accounting Officer


    Pursuant  to the  requirements  of the  Exchange  Act,  this report has been
    signed below by the  following  persons in the  capacities  and on the dates
    indicated:

    Signature                   Title                               Date


     /s/ Kent Watts             Chairman of the Board,          October 3, 1997
    ---------------------       Chief Executive Officer
         Kent Watts               and Chief Accounting Officer

     /s/ Robert Hill            Director                        October 3, 1997
    ---------------------
         Robert Hill

<PAGE>
                                 EXHIBITS INDEX

Exhibit
 No.      Identification of Exhibit

10.1      Promissory Notes dated July 17, 25, August 29, and September 22, 1997
21.1      Subsidiaries of the Registrant
27        Financial Data Schedule