Actually Lewis, the agreement refers to a sharing of Revenues not Earnings, as defined below:
"The Revenue Sharing Agreement specifies that the Company will receive 7% of the gross revenues for the first $714,286 in revenue from the effective date; 5% for the next $1,000,000 in revenue; and 3% thereafter. The revenue sharing agreement also specifies that the Company will receive 10% of any sales proceeds in the case that Wired and Wireless is sold."
In addition, the 10K noted: "Hyperdynamics had a loss of $184,546 for fiscal year end June 30, 1999. Fifteen percent (15%) or $27,625 of this loss was attributed to Wired and Wireless Corporation."
I think we can assume that those losses will go away. Tweeking Ben Franklin's old saying,"2,762,500 pennies not spent are 2,762,500 pennies earned."
They also note in the 10K that a one time gain will be realized on the next 10Q as a result of disposing of Wired and Wireless:
"It has been determined that this transaction would result in immediate improvement of its working capital and result in an extra-ordinary gain for the Company."
If you need to cut costs and increase earnings then disposing of assets that don't fit well into your business plan is certainly prudent.
This IS a turn around situation for HYPD overall. While reviewing the K, I specifically focused on the auditors' removal of the note regarding the "Going Concern Qualification". If the auditors feel comfortable removing that qualification, so do I.
Of course, it really doesn't matter whether or not I am right here, since most people misread the 10K, interpreted it as a complete give away, and sold on the news.
And so it goes.
TG
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