U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                (Amendment No. 2)

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

|X|   Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
      1934

                  For the fiscal year ended September 30, 2005

|_|   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934



                                ERHC ENERGY INC.
             (Exact name of registrant as specified in its charter)

                        Commission file number: 000-17325

           Colorado                                     88-0218499
           --------                                     ----------
(State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
Incorporation or Organization)

5444 Westheimer Road, Suite 1570, Houston, Texas                        77056
------------------------------------------------                        -----
   (Address of Principal Executive Office)                            (Zip Code)

                                  713-626-4700
                                  ------------
              (Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

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

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 in response to Item 405 of
Regulation S-K 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-K or any
amendment to this Form 10-K. |_|

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No |_|

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant,  based on the last  sales  price of $0.71 per share on the "over the
counter bulletin board" on March 31, 2005 was $237,822,494.

November 30, 2005,  registrant had 710,912,226 shares of common stock, par value
$0.0001 per share, outstanding.

                       DOCUMENT INCORPORATED BY REFERENCE

None

<PAGE>

                                INTRODUCTORY NOTE

Amendment  No. 2 on Form 10-K/A to the Annual Report on Form 10-K for the fiscal
year ended September 30, 2005.

      This  Amendment  No. 2 on Form  10-K/A is being  filed to  revise  certain
disclosure in the Company's  Consolidated  Financial  Statements  for the fiscal
years ended  September 30, 2005,  and 2004,  in connection  with a review of our
financial  statements  and related  disclosures  by the Staff of the Division of
Corporation Finance of the U.S. Securities and Exchange Commission (the "SEC").

      The  disclosures  revisions  relate to the Company's use of the successful
efforts  method  of  accounting  for  oil  and gas  exploration  and  production
activities  and  the  elimination  of  certain  information  regarding  unproven
reserves. The changes do not affect any of the amounts included in the financial
statements previously filed.

      This  amendment  only  reflects  the changes  discussed  above.  All other
information  is unchanged and reflects the  disclosures  made at the time of the
original filing on December 29, 2005 and the amended filing on January 30, 2006,
which included only Part III, items 10, 11, 12, and 13.


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                      PART I                                       PAGE
                                                                                   ----
<S>        <C>                                                                     <C>
Item 1.    Description of Business                                                   1
Item 2.    Description of Property                                                   6
Item 3.    Legal Proceedings                                                         6
Item 4.    Submission of Matters to a Vote of Security Holders                       6

                                     PART II

Item 5.    Market for Registrant's common stock and Related Shareholder Matters      7
Item 6.    Selected Financial Data                                                   8
Item 7.    Management's Discussion and Analysis of Financial Condition and
             Plan of Operations                                                      8
Item 7a.   Quantitative and Qualitative Disclosures about Market Risk               11
Item 8.    Financial Statements and Supplementary Data (See Index Below)            12
Item 9.    Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosures                                              12
Item 9a.   Controls and Procedures                                                  12

                                    PART III

Item 10.   Directors and Executive Officers of the Registrant                       15
Item 11.   Executive Compensation                                                   17
Item 12.   Security Ownership of Certain Beneficial Owners and Management
             and Related Stockholder Matters                                        19
Item 13.   Certain Relationships and Related Transactions                           20
Item 14.   Principal Accounting Fees and Services                                   20

                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K          22
           Signatures                                                               23

            Index to Financial Statements and Schedules

Reports of Independent Registered Public Accounting Firms                    F-2 - F-4
Financial Statements:
   Consolidated Balance Sheets as of September 30, 2005 and 2004                   F-5
   Consolidated Statements of Operations for the Years Ended
     September 30, 2005, 2004 and 2003                                            F-6
   Consolidated Statements of Shareholders' Equity (Deficit)
     for the Years Ended September 30, 2005, 2004 and 2003                         F-7
   Consolidated Statements of Cash Flows for the Years Ended
     September 30, 2005, 2004 and 2003                                             F-8
   Notes to Consolidated Financial Statements                                      F-9
</TABLE>


<PAGE>

This annual report contains forward-looking statements.  These statements relate
to future  events  or ERHC  Energy  Inc.'s  (the  "Company"  or  "ERHC")  future
financial  performance  and involve known and unknown risks,  uncertainties  and
other factors that may cause ERHC or its industry's  actual  results,  levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
the forward-looking statements.

In some cases, you can identify  forward-looking  statements by terminology such
as "may,"  "will,"  "should,"  "expects,"  "plans,"  "anticipates,"  "believes,"
"estimates,"  "predicts,"  "potential,"  or the negative of these terms or other
comparable terminology. These statements are only predictions.  Actual events or
results may differ materially.

Although  the  Company   believes  that  the   expectations   reflected  in  the
forward-looking  statements are reasonable,  there can be no guarantee of future
results, levels of activity, performance, or achievements. Moreover, neither the
Company  nor any  other  person  assumes  responsibility  for the  accuracy  and
completeness of these forward-looking  statements.  The Company is under no duty
to update any of the forward-looking statements after the date of this report to
conform prior statements to actual results.


<PAGE>

                                     PART I

Item 1. Description of Business

Overview

ERHC  Energy  Inc.  ("ERHC"  or the  "Company")  is an  independent  oil and gas
company.  The Company  was formed in 1986,  as a Colorado  corporation,  and was
engaged  in a variety  of  businesses  until  1996,  when it began  its  current
operations  as an  independent  oil and gas company.  The  Company's  goal is to
maximize its value through  exploration and exploitation of oil and gas reserves
in the Gulf of Guinea  offshore of central West Africa.  The  Company's  current
focus is to  exploit  its  assets,  which are  rights to  working  interests  in
exploration acreage in the Joint Development Zone ("JDZ") between the Democratic
Republic of Sao Tome & Principe  ("DRSTP")  and the Federal  Republic of Nigeria
("FRN")  and in the  exclusive  territorial  waters of Sao Tome (the  "Exclusive
Economic Zone" or "EEZ"). The Company has formed relationships with upstream oil
and gas companies to assist the Company in exploiting its assets in the JDZ. The
Company currently has no other operations.

Corporate History; Former Operations

The Company  acquired a lease in oil fields  located in Wichita  County,  Texas,
which was subsequently assigned to a former shareholder.  However, in connection
with the lease in Wichita  County,  the  Company  may remain  liable for certain
plugging and abandonment costs,  estimated to be approximately  $485,000,  which
have been accrued as of September 30, 2005 and 2004.

Current Business Operations

In May 1997, the Company  entered into an exclusive joint venture with the DRSTP
(the "1997  Agreement").  On May 21, 2001,  the 1997 Agreement was replaced by a
Memorandum of Agreement (the "2001 Agreement"),  which was embodied in a Consent
Award  issued by the  arbitrator  as a result  of the  satisfaction  of  several
conditions,  including  the  ratification  of a treaty  between  the FRN and the
DRSTP.  The 2001 Agreement gave the Company rights to participate in exploration
and production  activities in both the exclusive  territorial waters of Sao Tome
referred  to as the EEZ and an area  between  Sao  Tome and the FRN that the two
nations have designated as a JDZ.

In April 2003, the Company and DRSTP entered into an Option Agreement (the "2003
Option Agreement") in which the Company relinquished certain financial interests
in the JDZ in exchange  for  exploration  rights in the JDZ. In April 2003,  the
Company  additionally   entered  into  an  administration   agreement  with  the
Nigeria-Sao  Tome  and  Principe  Joint  Development   Authority  ("JDA").   The
administration  agreement is the formal  agreement by the JDA that it will fully
implement ERHC's  preferential rights to working interests in the JDZ acreage as
set  forth  in the  2003  Option  Agreement  and  describes  certain  procedures
regarding the exercising of these rights.  However, ERHC retained under the 2001
Agreement the following  rights to  participate  in  exploration  and production
activities in the EEZ subject to certain  restrictions:  (a) right to receive up
to two blocks of ERHC's  choice,  and (b) the option to acquire up to a 15% paid
working  interest in up to two blocks of ERHC's  choice in the EEZ.  The Company
will be required to pay its  proportionate  share of the signature bonus and all
other costs related to the  exploration  and  exploitation  of the blocks in the
EEZ.

Under the 2003 Option Agreement, ERHC may exercise options to acquire fractional
working  interests in six (6) of the nine (9) blocks that have been announced by
the JDA and  will be  available  for  bidding  in the  JDZ.  A block  is an area
designated as an individual  unit for exploration or production of crude oil and
natural gas. Additionally, the amount of signature bonus that is payable by ERHC
to acquire these working interests is zero in four (4) blocks. ERHC must pay its
proportionate share of any signature bonuses in two (2) blocks.

On April 13,  2004,  the Company  submitted a letter to the JDA  exercising  its
option rights in the JDZ. The options exercised by the Company were:

<TABLE>
<CAPTION>
 Option Pick-ERHC        Working Interest
      Choice                Percentage           JDZ Block #                   Signature Bonus Payable
--------------------    --------------------    ---------------    -------------------------------------------
<S>     <C>             <C>                     <C>                <C>
         1                      15%                   6                          Signature Bonus Free
         2                      15%                   5            100% of 15% of the total Signature Bonus
         3                      20%                   3                          Signature Bonus Free
         4                      30%                   2                          Signature Bonus Free
         5                      25%                   4                          Signature Bonus Free
         6                      20%                   9            100% of 20% of the total Signature Bonus
</TABLE>


                                       1
<PAGE>

Interpretation  carried out by WesternGeco has enabled the  identification of 56
prospective  structures  with Blocks 1 to 9 in the JDZ, of which 17 were defined
as prospects and 39 as leads.  WesternGeco used reservoir  parameters similar to
those known from nearby fields in Nigeria and  Equatorial  Guinea.  The scope of
the  WesternGeco  report  was to  interpret  and  map  seismic  data,  highlight
prospectivity and calculate volumetrics. It did not include an attempt to comply
with any SEC  definition  reserves.  The SEC permits oil and gas  companies,  in
their filings with the United States Securities and Exchange  Commission ("SEC")
SEC, to disclose only proved reserves that a company has  demonstrated by actual
production  or  conclusive  formation  tests  to  be  economically  and  legally
producible under existing economic conditions and operating conditions.

This  exercise of the Company's  rights was subject to the condition  that if no
license is awarded or a license is awarded and subsequently withdrawn by the JDA
prior to the  commencement  of operations,  ERHC will be entitled to receive its
working interest in that block in a future license awarded for the block.

On April 26, 2004,  the Company  announced  that,  at meetings on April 23rd and
24th,  2004, the Joint  Ministerial  Council ("JMC") of the JDZ acknowledged the
Company's option  selections for award of interests  pursuant to the exercise of
rights under the April 7, 2003 Administration Agreement.

In August 2004, the Company entered into a Participation  Agreement with Pioneer
whereby the companies  will jointly apply for rights in the  production  sharing
contract for Block 2 of the JDZ.

In September 2004, the Company entered into a Participation Agreement with Noble
whereby the companies  will jointly apply for rights in the  production  sharing
contract for Block 4 of the JDZ.

In December  2004,  the Company  entered  into a  Participation  Agreement  with
Pioneer under which the companies  jointly  applied for rights in the production
sharing contract for Block 3 of the JDZ.

In May  2005,  the JDA  announced  the  awards  for the  blocks  in the 2004 JDZ
Licensing Round.  The awards included both the preferential  rights interests in
Blocks plus additional bid interests awarded to bid groups. The awards were:

      o     In Block 2, the Pioneer and ERHC group was awarded 35% interest as a
            result of the joint bid submitted by the companies.  In addition the
            JDA confirmed the award to ERHC of its 30% Option Interest,  free of
            any signature bonus.

      o     In Block 3, the  Pioneer and ERHC group was awarded 5% interest as a
            result of the joint bid submitted by the companies.  In addition the
            JDA confirmed the award to ERHC of its 20% Option Interest,  free of
            any signature bonus.

      o     In Block 4, the Noble and ERHC group was awarded  35%  interest as a
            result of the joint bid submitted by the companies.  In addition the
            JDA confirmed the award to ERHC of its 25% Option Interest,  free of
            any signature  bonus. The Company  originally  formed a relationship
            Noble Energy Resources  ("Noble") to negotiate a production  sharing
            agreement for Block 4.  However,  Noble  subsequently  withdrew from
            negotiations  and the  company has entered  into an  agreement  with
            Addax  Petroleum  ("Addax")  under which Addax will replace Noble in
            the ERHC/Noble  group.  Approval for Addax to participate in Block 4
            has been requested from the JDA.

      o     In Block 5, the JDA  confirmed  the award to ERHC of its 15%  Option
            Interest, with signature bonus payable.

      o     In Block 6, the JDA  confirmed  the award to ERHC of its 15%  Option
            Interest, free of any signature bonus payable.

In June 2005,  ERHC  accepted the awards by the JDA for Blocks 2, 3, 4, 5 and 6,
subject to the execution of a mutually  acceptable  production  sharing contract
and joint  operating  agreement  for each  block.  Since the  acceptance  of the
awards,  the  participants  in each block have been  negotiating  the production
sharing contract and joint operating  agreement.  As of the date of this report,
negotiations were continuing.

The above is only a brief  summary  of the terms of the 2001  Agreement  and the
2003 Option  Agreement and such  summaries do not purport to be complete and are
qualified in their  entirety by reference to the 2001  Agreement and 2003 Option
Agreement,  respectively (any and all related documents). The 2001 Agreement and
2003 Option Agreement have been filed with the SEC and are available on the U.S.
Securities and Exchange Commission's ("SEC") web site at www.sec.gov.


                                       2
<PAGE>

Government Regulation

In the event the  Company  begins  activities  relating to the  exploration  and
exploitation  of  hydrocarbons,  it  will be  required  to  make  the  necessary
expenditures to comply with the applicable health and safety,  environmental and
other regulations.

Employees

The Company currently has three officers and support staff that provide services
to the Company.  The Company  directly employs the President and Chief Executive
Officer and one support staff individual. The remaining two officers and support
staff are provided pursuant to consulting agreements. Through December 31, 2004,
a management services agreement with Chrome Oil Services,  Ltd. ("COS") existed.
Pursuant to that  agreement,  COS  provided  the  Company  with  management  and
business development services.  COS provides these services to the Company for a
management fee of $68,000 per month.  The Chief Financial  Officer and Secretary
were consultants of COS who received salaries and overhead expense reimbursement
from COS,  not from the  Company.  Expenses  not  covered  under the  management
services  agreement  were paid by the Company  and  included  primarily  general
office  supplies.  This  agreement  was cancelled  effective  December 31, 2004.
Beginning  January  1, 2005,  ERHC was  directly  responsible  for all costs and
expenses  of  officers  and  staff,  on the  same or  similar  terms  that  each
individual had with COS.

Risk factors that may affect the results of operations  and financial  condition
of the Company

You should  carefully  consider  the risks  described  below  before  making any
investment  decision  related  to  the  Company's  securities.   The  risks  and
uncertainties  described  below  are not  the  only  ones  facing  the  Company.
Additional  risks and  uncertainties  not  presently  known or that the  Company
currently deems  immaterial also may impair its business  operations.  If any of
the following risks actually occur, the Company's business could be harmed.

The Company has no sources of revenue and a history of losses.

The Company's business is at an early stage of development.  The Company has not
generated  any  revenue  since its entry into the oil and gas  business  and has
incurred  significant  operating losses.  The Company has incurred net losses of
$11,270,478,  $3,593,388,  and  $3,153,882 in fiscal years 2005,  2004 and 2003,
respectively,   and  expects  to  incur  additional  operating  losses  for  the
foreseeable future. The Company may never be profitable.

The Company's  current  liquidity is  insufficient  to fund its  operations  for
fiscal 2006.

To execute its business strategy,  the Company will require more capital than it
currently  has or has  commitments  to receive.  As of September  30, 2005,  the
Company  had cash and other  current  assets  totaling  $1,020,583,  and current
liabilities of $2,779,011, resulting in a working capital deficit of $1,758,428.
The Company has previously  relied on the best-effort  sales of its common stock
and debt securities to provide  working  capital.  The Company  currently has no
firm  commitments  for equity or debt financing nor does it anticipate  entering
into such  arrangements  in the near  future.  The  Company  does not  expect to
generate cash flows from operations for fiscal 2006, and expects to use proceeds
from  future  best-efforts  debt or equity  financing  to fund  working  capital
requirements  for the next  twelve  months.  If the  Company  is unable to raise
sufficient capital from external sources to fund its operations,  it may need to
sell assets to meet working capital needs or curtail operations.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.

As shown in the  financial  statements  and discussed in Note 2, the Company has
incurred  significant  recurring losses from operations  since inception,  has a
negative  working  capital and is dependent on outside  sources of financing for
continuation of its operations.  These factors raise substantial doubt about the
Company's ability to continue as a going concern.

The Company has a limited operating history in the oil and gas business.

The Company's  operations to date have consisted  solely of acquiring  rights to
working  interests in the JDZ and EEZ. The Company's  future  financial  results
depend primarily on (1) its ability to enter into production  sharing contracts;
(2) its ability to obtain sufficient financing to meet its financial commitments
in the  production  sharing  contracts;  (3) its ability to discover  commercial
quantities of oil and gas; and (4) the market price for oil and gas.  Management
cannot  predict that the Company's  future  operations  will be  profitable.  In
addition,  the Company's  operating  results may vary  significantly  during any
financial period.  These variations may be caused by significant periods of time
between discovery and development of oil or gas reserves,  if any, in commercial
quantities.

The Company has not entered into any production sharing contracts.


                                       3
<PAGE>

The  Company's  success  will  depend on its  ability to enter  into  production
sharing  contracts for Blocks 2, 3, 4, 5 and 6 in the JDZ.  Although the Company
is in preliminary  negotiations to enter into productions  sharing  contracts in
these Blocks, it has no executed  contracts.  Because of the relative complexity
of these  types of  contracts,  the large  number of parties  involved  in these
Blocks and the relative  inexperience of the JDA in processing  these contracts,
it is impossible to estimate when, if at all,  these  contracts will be executed
and  become  effective.  There  is no  assurance  the  Company  will  be able to
successfully enter into any production sharing contracts.

The  Company  will  likely  be  required  to raise  money to fund its  financial
commitments pursuant to any production sharing contracts.

When,  and if the Company  enters into a  production-sharing  contract,  it will
likely be required to fund its financial  commitments.  The Company will have to
raise money in an equity or debt  financing to meet its  financial  commitments,
and to date it has no firm  commitments  for such  financing.  If the Company is
unsuccessful  in raising  money in the  financing,  it will be unable to pay its
financial commitment under any  production-sharing  contract that will result in
its default.

The Company may not discover commercially productive reserves in the JDZ or EEZ.

The Company's  future success depends on its ability to economically  locate oil
and gas reserves in  commercial  quantities in the JDZ and EEZ. This is a region
in which no drilling  operations  have been  conducted to date.  There can be no
assurance that the Company's  planned  projects in the JDZ or EEZ will result in
significant,  if any,  reserves or that the Company will have future  success in
drilling productive wells.

The  Company's  non-operator  status  limits  its  control  over its oil and gas
projects in the JDZ or EEZ.

The Company  will focus  primarily  on creating  exploration  opportunities  and
forming  relationships with oil and gas companies to develop those opportunities
in the JDZ or EEZ. As a result,  the Company will have only a limited ability to
exercise  control over a  significant  portion of a project's  operations or the
associated  costs of those operations in the JDZ or EEZ. The success of a future
project is  dependent  upon a number of factors  that are outside the  Company's
areas of control. These factors include:

      o     the availability of future capital  resources to the Company and the
            other participants to be used for drilling wells;

      o     the approval of other  participants for the drilling of wells on the
            projects; and

      o     the  economic  conditions  at the time of  drilling,  including  the
            prevailing and anticipated prices for oil and gas.

The Company's reliance on other project  participants and its limited ability to
directly  control future  project costs could have a material  adverse effect on
its future expected rates of return.

The Company's success depends on its ability to exploit its limited assets.

The Company's only assets are rights to working interest in exploration  acreage
in the JDZ and EEZ  under  agreements  with  the JDA and  DRSTP.  The  Company's
operations  have been limited to sustaining  and managing its rights under these
agreements.  The  Company's  success  depends on its  ability  to exploit  these
assets, of which there is no assurance that it will be successful.

Approximately  85% of The  Company's  total assets are  comprised of  intangible
assets  including  the  DRSTP  concession  fee which is  subject  to review on a
periodic  basis to  determine  whether  impairment  on this  asset is  required.
Impairment would not only greatly diminish the Company's assets,  but would also
require it to record a significant charge against its earnings.

The Company is required under generally accepted accounting principles to review
its  intangible  assets for impairment  when events or changes in  circumstances
indicate the  carrying  value may not be  recoverable.  At the fiscal year ended
September 30, 2005,  management evaluated its investment in its DRSTP concession
fee in light of its 2003 Option Agreement and believed that there were no events
or  circumstances  that would  indicate  that such asset might be  impaired.  If
management later determines that impairment exists, the Company will be required
to record a significant  charge to earnings in its financial  statements  during
the period in which any impairment of the DRSTP concession fee is determined.

The  Company's   competition  includes  oil  and  gas  conglomerates  that  have
significant  advantages over it.


                                       4
<PAGE>

The oil and gas industry is highly  competitive.  Many companies and individuals
are engaged in exploring for crude oil and natural gas and  acquiring  crude oil
and natural  gas  properties,  resulting  in a high  degree of  competition  for
desirable  exploratory  and producing  properties.  The companies with which the
Company competes are much larger and have greater  financial  resources than the
Company.

Various factors beyond The Company's control will affect prices of oil and gas.

The  availability  of a ready  market  for the  Company's  future  crude oil and
natural gas production depends on numerous factors beyond its control, including
the level of consumer demand,  the extent of worldwide crude oil and natural gas
production,  the costs and  availability  of  alternative  fuels,  the costs and
proximity of transportation facilities,  regulation by authorities and the costs
of complying with applicable environmental regulations.

The Company's operations are located outside of the United States which subjects
it to risks associated with international activities.

At September 30, 2005, all of the Company's  operations were located outside the
United States.  The Company's only assets are agreements with DRSTP and the JDA,
which provide ERHC with rights to  participate  in  exploration  and  production
activities  in the Gulf of Guinea off the coast of  central  West  Africa.  This
geographic  area of  interest is  controlled  by foreign  governments  that have
historically  experienced volatility,  which is out of management's control. The
Company's ability to exploit its interests in the agreements in this area may be
impacted by this circumstance.

The  future  success  of the  Company's  international  operations  may  also be
adversely affected by risks associated with international activities,  including
economic   and   labor   conditions,   political   instability,   risk  of  war,
expropriation,  renegotiation  or modification of existing  contracts,  tax laws
(including host-country import-export, excise and income taxes and United States
taxes on  foreign  subsidiaries)  and  changes  in the value of the U.S.  dollar
versus the local currencies in which future oil and gas producing activities may
be  denominated.  As well,  changes in exchange  rates may adversely  affect the
Company's future results of operations and financial condition.

The  Company's  results  of  operations  are  susceptible  to  general  economic
conditions.

The Company's revenues and results of operations will be subject to fluctuations
based  upon the  general  economic  conditions  both in the  United  States  and
internationally.  If there were to be a general economic downturn or a recession
in the oil and gas industry,  the Company's future revenues and the value of its
oil and  natural  gas  exploration  concession  could  be  materially  adversely
affected.  If there were to be a general economic downturn or a recession in the
oil and gas industry, the Company's ability to exploit its assets in the JDZ and
EEZ could be materially adversely affected.

One shareholder controls  approximately 43% of the Company's  outstanding common
stock.

Chrome Oil Services Ltd.  beneficially owns approximately 43% of the outstanding
common stock. As a result,  Chrome has the ability to  substantially  influence,
and may  effectively  control  the outcome of  corporate  actions  that  require
stockholder approval, including the election of directors. This concentration of
ownership  may have the effect of  delaying  or  preventing  a future  change in
control of the Company.

The Company's stock price is highly volatile.

The Company's common stock is currently traded on the Over-the-Counter  Bulletin
Board.   The  market  price  of  the  Company's  common  stock  has  experienced
fluctuations that are unrelated to its operating  performance.  The market price
of the common stock has been highly  volatile over the last several  years.  The
Company can provide no assurance that its current price will be maintained.

The Company  does not  currently  pay  dividends  on its common stock and do not
anticipate doing so in the future.

The  Company has paid no cash  dividends  on its common  stock,  and there is no
assurance  that  the  Company  will  achieve  sufficient  earnings  to pay  cash
dividends on its common stock in the future.  The Company  intends to retain any
earnings to fund its  operations.  Therefore,  the Company  does not  anticipate
paying any cash dividends on the common stock in the foreseeable future.

The Company's stock is considered a "penny stock."

The SEC has adopted  rules that regulate  broker-dealer  practices in connection
with  transactions  i(n  "penny  stocks."  Penny  stocks  generally  are  equity
securities with a share price of less than $5.00.  The penny stock rules require
a  broker-dealer,  prior to a transaction in a penny stock not otherwise  exempt
from the rules, to deliver a standardized  risk disclosure  document prepared by
the SEC that provides information about penny stocks and the nature and level of
risks in the penny stock  market.  These  disclosure  requirements  may have the
effect of reducing the level of trading  activity in any secondary  market for a
stock that becomes subject to the penny stock rules.  The Company's common stock
may be subject to the penny  stock  rules,  and  accordingly,  investors  in the
common stock may find it  difficult  to sell their  shares in the future,  if at
all.


                                       5
<PAGE>

Item 2. Description of Property

The Company's office is located at 5444 Westheimer  Road,  Suite 1570,  Houston,
Texas 77056.  Prior to December 31, 2004,  these premises were leased by COS and
pursuant to a  management  services  agreement,  COS  provided  the space to the
Company.  This lease for approximately  1,900 sq. ft. of office space expires in
February 2006. On December 23, 2004,  the Company and COS  cancelled,  effective
December 31, 2004, the management services  agreement.  On January 1, 2005, ERHC
assumed this lease pursuant to its terms.

Item 3. Legal Proceedings

The Company is not aware of any material legal  proceedings  pending to which it
is a party or its  property  is subject.  From time to time,  the Company may be
subject to  proceedings,  lawsuits and other  claims in the  ordinary  course of
business,  the resolution of which, in the opinion of management should not have
a materially adverse effect on the Company's financial position.

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

Not Applicable.


                                       6
<PAGE>

                                     PART II

Item 5. Market for Registrant's common stock and Related Shareholder Matters

ERHC's  common  stock is currently  traded on the OTC  Bulletin  Board under the
symbol "ERHE." The market for the Company's  common stock is sporadic and highly
volatile.  The  following  table sets forth the closing sales price per share of
the  common  stock  for  the  past  two  fiscal  years.   These  prices  reflect
inter-dealer prices, without retail mark-ups,  markdowns or commissions, and may
not necessarily represent actual transactions.


                                        High               Low
                                   --------------    ---------------
                                              (per share)
                                   ---------------------------------
Fiscal Year 2004
----------------
  First Quarter                        $0.41             $0.28
  Second Quarter                       $0.44             $0.28
  Third Quarter                        $0.94             $0.42
  Fourth Quarter                       $0.70             $0.43

Fiscal Year 2005
----------------
  First Quarter                        $0.55             $0.28
  Second Quarter                       $0.75             $0.42
  Third Quarter                        $0.94             $0.43
  Fourth Quarter                       $0.50             $0.32

On December 20, 2005,  the closing  price of the common stock as reported on the
"OTC  Bulletin  Board"  was  $0.33.   As  of  November  30,  2005,   there  were
approximately  2,460  record  owners of the common  stock.  It is the  Company's
present  policy  not to pay cash  dividends  and to retain  future  earnings  to
support  growth.  Any payment of cash  dividends in the future will be dependent
upon the amount of funds legally available,  the Company's  earnings,  financial
condition,  capital requirements,  and other factors that the board of directors
may deem  relevant.  The Company has not paid any dividends  during the last two
fiscal  years  and  does  not  anticipate  paying  any  cash  dividends  in  the
foreseeable future.

Recent Sales of Unregistered Securities

During the fourth  quarter  ended  September  30,  2005,  the Company  issued no
securities that had not been previously reported.


Equity Compensation Plans

The following table gives  information about the Company's common stock that may
be issued upon the exercise of options under its 2004 Compensatory  Stock Option
Plan, which was approved by the Company's shareholders.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                                                   Number of Securities
                                                     Number of Securities                          Remaining Available
                                                      To be Issued Upon                            for Future Issuance
                                                         Exercise of          Weighted Average      Under Equity Comp-
                                                         Outstanding          Exercise Price of    ensation Plans (Exclu
                                                    Options, Warrants and   Outstanding Options,    ding Securities Ref-
                                                            Rights           Warrants and Rights    elected in Column A)
                   Plan Category                             (A)                   (B)                      (C)
-------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                     <C>                     <C>
Equity Compensation Plans Approved by Security                -                     -                  20,000,000
Holders
-------------------------------------------------------------------------------------------------------------------------

Equity Compensation Plans Not Approved by Security        3,000,000               $0.20                      -
Holders
-------------------------------------------------------------------------------------------------------------------------
         Total                                            3,000,000               $0.20                20,000,000
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       7
<PAGE>

Item 6. Selected Financial Data

The selected financial data of the Company presented below as of and for each of
the five years in the period ended September 30, 2005, has been derived from the
audited financial  statements of the Company. The financial statements as of and
for the year ended September 30, 2005 have been audited by Malone & Bailey,  PC,
and the financial  statements as of and for each of the four years in the period
ended  September  30, 2004 have been  audited by Pannell  Kerr Forster of Texas,
P.C.,  independent  registered  public  accounting  firms,  and  such  financial
information for the three years ended  September 30, 2005 is included  elsewhere
in this Form 10-K. The data set forth below should be read in  conjunction  with
the Company's  financial  statements,  related  notes  thereto and  Management's
Discussion and Analysis of Financial Condition and Plan of Operations, contained
elsewhere herein.

<TABLE>
<CAPTION>
                                                                For the Year Ended September 30,
                                    ---------------------------------------------------------------------------------
Statements of Operations Data            2005             2004            2003              2002             2001
                                    -------------    -------------    -------------    -------------    -------------
<S>                                 <C>              <C>              <C>              <C>              <C>
Revenues                            $          --    $          --    $          --    $          --    $          --

Operating expenses                     (4,652,459)      (2,085,426)      (1,944,655)      (2,883,099)      (4,318,493)

Interest expense                       (1,147,248)      (1,671,759)      (1,209,227)      (1,201,111)        (950,760)

Other Income (expense)                    278,804          163,797               --               --       (1,125,557)

Loss on extinguishment of debt         (5,749,575)              --               --               --               --

Net loss                              (11,270,478)      (3,593,388)      (3,153,882)      (4,084,210)      (6,394,810)

Net loss per share                          (0.02)           (0.01)           (0.01)           (0.01)           (0.01)

Weighted average shares of common
     stock outstanding                671,164,058      592,603,441      567,788,483      542,680,423      516,136,369

<CAPTION>
                                                                  As of September 30,
                                    --------------------------------------------------------------------------------
Balance Sheet Data                       2005           2004             2003             2002              2001
                                    -------------   -------------    -------------    -------------    -------------
<S>                                 <C>              <C>              <C>              <C>              <C>
DRSTP Concession fee                $   5,679,000   $   5,679,000    $   5,679,000    $   5,630,000    $   5,550,000

Total assets                            6,720,210       5,728,556        5,735,744        5,672,064        5,631,952

Total liabilities                       2,779,011      14,757,208       16,283,506       17,739,198       17,436,065

Shareholders' equity (deficit)          3,941,199      (9,028,652)     (10,547,762)     (12,067,134)     (11,804,113)
</TABLE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Plan of
Operations

You must read the  following  discussion  of the results of the  operations  and
financial condition of the Company in conjunction with its financial statements,
including the notes included in this Form 10-K filing. The Company's  historical
results are not necessarily an indication of trends in operating results for any
future period.

Overview

The Company's  current focus is to exploit its only assets,  which are rights to
working interests in exploration acreage in the JDZ and the EEZ. The Company has
entered into agreements with upstream oil and gas companies to jointly  evaluate
and apply for interest in production  sharing contracts in these JDZ Blocks. The
technical and operation expertise in conducting  exploration  operations will be
provided by the Company's co-ventures.

Critical accounting policies

In December 2001, the SEC requested that companies  discuss their most "critical
accounting  policies" in the  Management's  Discussion  and Analysis  section of
their reports. The SEC indicated that a "critical accounting policy" is one that
is important to the portrayal of a company's  financial  condition and operating
results  and  requires  management's  most  difficult,   subjective  or  complex
judgments,  often as a result of the need to make estimates  about the effect of
matters that are inherently uncertain.

The Company  has  identified  the  policies  below as  critical to its  business
operations and the  understanding  of its results of operations.  The impact and
any  associated  risks  related  to these  policies  on the  Company's  business
operations are discussed  throughout this section where such policies affect the
Company's reported and expected financial results.  Management's  preparation of
this Annual  Report on Form 10-K requires it to make  estimates and  assumptions
that affect the reported amount of assets and  liabilities,  and that effect the
disclosure  of contingent  assets and  liabilities.  There is no assurance  that
actual results will not differ from those estimates and assumptions.

Concentration of risks

The Company  primarily  transacts its business with two financial  institutions.
From time to time the amount on deposit in either one of these  institutions may
exceed the $100,000  federally  insured  limit.  The balances are  maintained in
demand accounts to minimize risk.


                                       8
<PAGE>

The Company's current focus is to exploit its only assets,  which are agreements
with  the  DRSTP  concerning  oil and gas  exploration  in EEZ and  with the JDA
concerning  oil  and  gas  exploration  in  the  JDZ.  The  Company  has  formed
relationships  with other oil and gas companies with the technical and financial
capabilities  to assist the Company in  leveraging  its interests in the EEZ and
the JDZ. Should  circumstances  impede the Company from perfecting its interests
in the 2001  Agreement  with DRSTP,  or the 2003 Option  Agreement the Company's
business would be materially affected.  Should the Company perfect its interests
in the 2001 Agreement and the 2003 Option Agreement,  there is no certainty that
the Company will be able to obtain  sufficient  financial and other resources to
develop its interests. The Company currently has no other operations.

Stock-based compensation

The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
123 -  "Accounting  for Stock  Based  Compensation."  Under SFAS No. 123, we are
permitted  to either  record  expenses  for  stock  options  and other  employee
compensation plans based on their fair value at the date of grant or to continue
to apply the Company's  current  accounting  policy under Accounting  Principles
Board,  ("APB")  Opinion No. 25 "Accounting  for Stock Issued to Employees," and
recognize  compensation  expense,  if any,  based on the intrinsic  value of the
equity  instrument at the measurement date. In December of 2002, the FASB issued
SFAS No.  148,  "Accounting  for Stock-  Based  Compensation  -  Transition  and
Disclosure  - An  Amendment to FASB  Statement  No. 123" to provide  alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for  stock-based  employee  compensation.  The Company elected to not
change  to  the  fair  value  based  method  of   accounting   for  stock  based
compensation.  Additionally,  the statement amended  disclosure  requirements of
SFAS No. 123 to require  more  prominent  disclosure  in both annual and interim
financial  statements.  We elected  to  continue  following  APB No. 25 and when
required, provide the pro forma provisions of SFAS No. 123.

Impairment of long-lived assets

The Company  evaluates the  recoverability  of long-lived assets when events and
circumstances   indicate  that  such  assets  might  be  impaired.  The  Company
determines  impairment by comparing the undiscounted future cash flows estimated
to  be  generated  by  these  assets  to  their  respective   carrying  amounts.
Impairments  are  charged  to  operations  in the  period  to which  events  and
circumstances  indicate  that such assets might be impaired.  Management  of the
Company has evaluated its  investment in its DRSTP  concession  fee and believes
that there have been no events or  circumstances  that would  indicate that such
asset might be impaired.

New accounting pronouncements

On December 16, 2004, as amended on April 14, 2005, the FASB issued SFAS No. 123
(revised 2004),  "Share-Based Payment" ("SFAS No. 123(R)"). SFAS No. 123(R) will
require companies to measure all employee stock-based  compensation awards using
a fair value  method  and record  such  expense  in its  consolidated  financial
statements.  In addition,  the adoption of SFAS No. 123(R)  requires  additional
accounting  and  disclosure  related  to the  income  tax and cash flow  effects
resulting from share-based  payment  arrangements.  SFAS No. 123(R) is effective
beginning as of the first interim  reporting  period for fiscal years  beginning
after December 15, 2005. We are in the process of determining  the impact of the
requirements  of SFAS  No.  123(R).  The  financial  statement  impact  from the
implementation of the requirements of SFAS No. 123(R) may  significantly  impact
the  Company's  future  results of  operations  and the Company will continue to
evaluate it to determine the degree of significance.

On November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs, an Amendment
of ARB No. 43,  Chapter 4. The standard  requires that abnormal  amounts of idle
capacity  and  spoilage  costs  within  inventory  be excluded  from the cost of
inventory  and  expensed  when  incurred.  The  provisions  of SFAS No.  151 are
applicable to inventory  costs incurred during fiscal years beginning after June
15,  2005.  The  adoption  of SFAS No. 151 is  expected to have no impact on the
Company's consolidated financial statements.

In  December  2004,  the FASB issued SFAS No.  153,  "Exchanges  of  Nonmonetary
Assets--an  amendment of Accounting  Principles Board ("APB") Opinion No. 29" is
effective  for fiscal  years  beginning  after  June 15,  2005.  This  Statement
addresses the  measurement of exchange of nonmonetary  assets and eliminates the
exception  from fair value  measurement  for  nonmonetary  exchanges  of similar
productive  assets in  paragraph  21(b) of APB Opinion No. 29,  "Accounting  for
Nonmonetary  Transactions"  and replaces it with an exception for exchanges that
do not have  commercial  substance.  The adoption of SFAS No. 153 is expected to
have no impact on the Company's consolidated financial statements.


                                       9
<PAGE>

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3". This
statement  changes the  requirements  for the  accounting for and reporting of a
change in accounting principle.  This statement applies to all voluntary changes
in accounting  principle.  It also applies to changes  required by an accounting
pronouncement  in the unusual instance that the  pronouncement  does not include
specific transition provisions. SFAS 154 is effective for accounting changes and
corrections  of errors made in fiscal years  beginning  after December 15, 2005.
Adoption  of SFAS No.  154 is not  expected  to have an effect on the  Company's
consolidated financial statements.

Results of Operations

Year ended September 30, 2005 Compared to Year Ended September 30, 2004

During the year ended  September  30, 2005,  the Company  incurred a net loss of
$11,270,478,  compared to a net loss of $3,593,388 for the year ended  September
30, 2004. A  significant  portion of the increase in net loss for the year ended
September 30, 2005 was  attributable to a $5,749,575 loss on  extinguishment  of
debt related to the  inducement  to Chrome to convert debt into common stock and
the addition of board compensation of $1,990,361.

Effective  December 31, 2004,  the Company  cancelled  its  management  services
agreement with Chrome and began to cover all its operating expenses.

During 2005 and 2004, the Company had no revenues from which cash flows could be
generated to support  operations  and thus relied on borrowings  funded from its
line of credit provided by Chrome as well as the sale of common stock.


Year ended September 30, 2004 Compared to Year Ended September 30, 2003

During the year ended  September  30, 2004,  the Company  incurred a net loss of
$3,593,388,  compared to a net loss of $3,153,882  for the year ended  September
30, 2003. A  significant  portion of the increase in net loss for the year ended
September 30, 2004 was  attributable to a $463,000  increase in interest expense
related  primarily to the  amortization  of the debt discount which was recorded
due to the  beneficial  conversion  feature  attributable  to  borrowings on the
Chrome line of credit during the year ended September 30, 2004 and the recording
of $308,000 in  compensation  expense for options  granted to an employee during
the year ended  September 30, 2004. This  corresponding  increase in expense was
offset by a decrease of approximately  $167,000 of various expenses  incurred in
carrying  out the  ongoing  activities  of the  Company,  of which no one single
amount was deemed to be  significant.  Also during the year ended  September 30,
2004 other  income  increased by $163,796 as a result of receipt of net proceeds
from an insurance claim. There was no comparable amount in 2003.

During February 2001, the Company negotiated a management  services agreement by
and  between  COS and the  Company  whereby  the  Company  would  pay a  monthly
management  fee of $68,000 for various  services to be provided by COS inclusive
of all general office  expenses.  Total expenses  incurred under this management
services  agreement were $816,000 for each of the years ended September 30, 2004
and 2003. The Company's executive officers incurred  significant travel expenses
of  approximately  $418,000 and $434,000 for the years ended  September 30, 2004
and 2003, respectively, as they continued negotiations with officials of the FRN
and DRSTP as well as numerous trips to the United States from Nigeria by several
Chrome executives while managing the ongoing affairs of the Company. The Company
anticipates  travel  related  expenses  will continue to be  significant  as the
Company further develops its business  interests.  The net loss per common share
was $0.01, basic and diluted,  for the year ended September 30, 2004 compared to
a net loss per  common  share of $0.01,  basic and  diluted,  for the year ended
September 30, 2003.

During 2004 and 2003, the Company had no revenues from which cash flows could be
generated to support  operations  and thus relied on borrowings  funded from its
line of credit provided by Chrome as well as the sale of common stock.


Liquidity and Capital Resources

As  of  September  30,  2005,  the  Company  had  negative  working  capital  of
$1,758,428.  Subsequent  to  September  30,  2005,  the Board of  Directors  has
approved the Company raising an additional  $1,000,000 of working capital in the
market as soon as practicable.

Historically,  the  Company  has  financed  its  operations  from  the sale on a
best-efforts basis of debt and equity securities  (including the issuance of its
securities  in exchange for goods and  services).  There have been no cash flows
generated  from  operations in the past two years.  During the fiscal year ended
September 30, 2005, the Company  received  advances on the Chrome line of credit
for $2,750,000  before conversion of this line into common stock of the Company.
In fiscal year 2004, the Company raised additional  capital of $975,000 from the
sales of its common stock and $752,607 from borrowings  under its Chrome line of
credit.


                                       10
<PAGE>

Management  will be required to raise  additional  capital through the sale on a
best-efforts  basis of common  stock and debt  securities,  and will  attempt to
continue  raising  capital  resources  until such time as the Company  generates
revenues sufficient to maintain itself as a viable entity. It is expected that a
minimum  of  $2,500,000   will  need  to  be  raised  to  fund  working  capital
requirements in fiscal 2006. However,  there is no assurance that such financing
will be obtained.

The  Company  presently  intends to utilize  any  available  sources of funds to
provide for general  corporate  overhead and to continue to pursue its interests
in  the  JDZ  and  EEZ.   If  the   Company   is   successful   in   negotiating
production-sharing  agreements  in Blocks  2, 3 and 4, The  Company  expects  to
receive  funding from its partners  that will  support its  operations  in those
blocks.

Debt Financing Arrangements

As of  September  30,  2005,  $33,513 of  convertible  debt of the  Company  was
outstanding.  At September  30, 2004,  $11,024,774  of  convertible  debt of the
Company was outstanding  (of which  $9,398,741 was owed to Chrome) with maturity
dates  ranging  from  demand to February  15,  2005,  bearing  interest at rates
ranging from 5.5% to 20%, and convertible at $0.20 per share.

The total convertible debt includes the Company's two lines of credit. The first
is a 10%  working  line of credit in the amount of  $1,800,000,  all of which is
outstanding.  The  $1,800,000  line of credit  matured  September  2004, but was
extended  until  January  2005.  The second is a $5,000,000  senior  convertible
promissory  note  bearing  interest  at a rate of 10%  per  annum,  maturing  in
February  2004.  In February  2004,  the Company  extended  the  maturity on the
$5,000,000  line of credit to  February  15,  2005 under  similar  terms.  As of
September 30, 2004,  approximately  $3,962,761 is outstanding under this line of
credit. Additionally, interest accrued and unpaid on these notes as of September
30, 2004 is $2,192,182,  of which $2,126,265 is owed to Chrome. At the option of
the note  holders,  unpaid  interest can be  converted  into common stock of the
Company.

The  Company  agreed to  restructure  all Chrome  debt,  including  the lines of
credit.  As of December  24, 2004,  Chrome has agreed to cancel all  outstanding
debt (the "Old Notes") in exchange for a new 12% note with a principal amount of
$10,134,084,  convertible at the option of the Company at $0.175 per share,  and
expiring on January 31,  2007.  Chrome also agreed to provide the Company with a
new 10%  working  capital  loan in the amount of  $2,500,000,  which  expires in
January  2007 and is  convertible  at the  option of the  Company  at $0.175 per
share.  In exchange for the  cancellation  and exchange of the Old Notes and the
new  working  capital  line of  credit,  the  Company  agreed  to  issue  Chrome
14,023,352 shares of common stock, 12,465,202 issued immediately, 623,260 shares
issued on the advance of $1,000,000 and the remainder issued throughout the term
of the working capital loan. In addition ERHC issued 12,308,560 shares of common
stock  to  satisfy  current   interest  accrued  but  not  paid  of  $2,461,712.
Furthermore,  as of December 24, 2004,  ERHC has  received  agreements  from the
nonaffiliated note holders to convert $1,678,999 of convertible debt and accrued
interest into  8,386,855  shares of common stock.  As of September 30, 2005, the
Company has $33,513 of nonaffiliated  convertible debt and $3,189 of accrued but
unpaid interest outstanding.

Contractual Obligations and Commercial Commitments

The  following  table  provides  information  at September  30, 2005,  about the
Company's contractual obligations and commercial commitments. The table presents
contractual  obligation  by due dates and  related  contractual  commitments  by
expiration dates.

<TABLE>
<CAPTION>
                                              Less than           1 - 3           4 - 5           After 5
Contractual Obligations        Total            1 year            Years           Years            Years
-----------------------   --------------   --------------   --------------   --------------   --------------
<S>                       <C>              <C>              <C>              <C>              <C>
Convertible debt(1)       $       33,513   $       33,513   $           --   $           --   $           --
                          --------------   --------------   --------------   --------------   --------------

            Total         $       33,513   $       33,513   $           --   $           --   $           --
                          ==============   ==============   ==============   ==============   ==============
</TABLE>


      (1)   See Note 5 to the Financial Statements in this Annual Report on Form
            10K.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

The Company's  current focus is to exploit its only assets,  which are rights to
working interest in the JDZ and EEZ under agreements with the JDA and DRSTP. The
Company  intends to form  relationships  with other oil and gas  companies  with
technical and  financial  capabilities  to assist the Company in leveraging  its
interests in the EEZ and the JDZ. Should  circumstances  impede the Company from
perfecting  its  interests in the 2001  Agreement  with DRSTP or the 2003 Option
Agreement,  the  Company's  business  would be  materially  affected  and  could
possibly  cease to exist.  Should the Company  perfect its interests in the 2001
Agreement and the 2003 Option Agreement,  there is no certainty that the Company
will be able to obtain  sufficient  financial and other resources to develop its
interests. The Company currently has no other operations.


                                       11
<PAGE>

At September 30, 2005, all of the Company's  operations were located outside the
United States.  The Company's only assets are agreements with DRSTP and the JDA,
which provide ERHC with rights to  participate  in  exploration  and  production
activities  in the Gulf of Guinea off the coast of  central  West  Africa.  This
geographic  area of  interest is  controlled  by foreign  governments  that have
historically  experienced volatility,  which is out of management's control. The
Company's ability to exploit its interests in the agreements in this area may be
impacted by this circumstance.

The  future  success  of the  Company's  international  operations  may  also be
adversely affected by risks associated with international activities,  including
economic   and   labor   conditions,   political   instability,   risk  of  war,
expropriation,  renegotiation  or modification of existing  contracts,  tax laws
(including host-country import-export, excise and income taxes and United States
taxes on  foreign  subsidiaries)  and  changes  in the value of the U.S.  dollar
versus the local currencies in which future oil and gas producing activities may
be  denominated.  As well,  changes in exchange  rates may adversely  affect the
Company's future results of operations and financial condition.

Market risks relating to the Company's  operations result primarily from changes
in interest rates as well as credit risk concentrations.  The Company's interest
expense is generally  not  sensitive to changes in the general level of interest
rates in the United States,  particularly  because a substantial majority of its
indebtedness is at fixed rates.

The Company holds no derivative financial or commodity instruments,  nor does it
engage in any foreign currency denominated transactions.

Item 8. Financial Statements and Supplementary Data

See Index to  Financial  Statements  and  Schedule  at page F-1.  The  financial
statements with the report of the independent registered public accounting firms
are included on pages F-2 through  F-22 of this  document.  Financial  statement
schedules  other  than those  included  herein  have been  omitted  because  the
required  information is contained in the financial statements or related notes,
or such information is not applicable.

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosures

On November 4, 2005,  Pannell Kerr Forster of Texas,  P.C.  ("PKF") notified the
Company that it resigned as the Company's  independent auditor.  PKF's report on
the financial statements for the fiscal years ended September 30, 2004 and 2003,
contained no adverse  opinion or  disclaimer of opinion and was not qualified or
modified as to  uncertainty,  audit scope or  accounting  principles.  The Audit
Committee  of the  Company's  Board of  Directors  was  informed of, but did not
recommend or approve, PKF's resignation.

During  the  Company's  fiscal  years  September  30,  2004  and  2003,  and the
subsequent   interim  periods  preceding  PKF's   resignation,   there  were  no
disagreements between the Company and PKF on any matter of accounting principles
or practices,  financial statement  disclosure,  or auditing scope or procedure,
which  disagreements,  if not resolved to PKF's satisfaction,  would have caused
PKF to make  reference to the subject matter of the  disagreement  in connection
with their report.

On November  14,  2005,  the audit  committee  of the board of  directors of the
Company engaged Malone & Bailey, PC as the Company's new independent auditor for
the fiscal year ended  September  30,  2005.  During the two most recent  fiscal
years ended September 30, 2004 and September 30, 2003 and the subsequent interim
periods  prior to the Company's  engagement of Malone & Bailey,  the Company did
not  consult  with  Malone & Bailey  regarding  the  application  of  accounting
principles to a specific Transaction,  either completed or proposed, or the type
of audit opinion that might be rendered on the Company's  consolidated financial
statements.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that information  required to be disclosed in the Company's reports under
the Exchange Act is recorded, processed, summarized and reported within the time
periods  specified in the SEC's rules and forms,  and that such  information  is
accumulated  and  communicated  to  management,  including the  Company's  Chief
Executive Officer and Chief Financial Officer,  as appropriate,  to allow timely
decisions  regarding  required  disclosure.   The  Company's  management,   with
participation  of the  Company's  Chief  Executive  Officer and Chief  Financial
Officer,  has evaluated the effectiveness of the Company's  disclosure  controls
and procedures as of the end of the fiscal year covered by this Annual Report on
Form 10-K. As described below under Management's Report on Internal Control Over
Financial  Reporting,  the Company has  identified  material  weaknesses  in the
Company's internal control over financial  reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)).  The Company's Chief Executive Officer and Chief
Financial Officer have concluded that as a result of the material weaknesses, as
of the end of the  period  covered  by this  Annual  Report  on Form  10-K,  the
Company's disclosure controls and procedures were not effective.

Management's Report on Internal Control over Financial Reporting


                                       12
<PAGE>

The management of the Company is responsible  for  establishing  and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Securities  Exchange Act of 1934. The Company's internal
control over  financial  reporting is designed to provide  reasonable  assurance
regarding  the  reliability  of  financial  reporting  and  the  preparation  of
financial statements for external purposes in accordance with generally accepted
accounting  principles in the United States of America.  The Company's  internal
control over financial  reporting  includes those policies and procedures  that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately
and  fairly  reflect  the  transactions  and  dispositions  of the assets of the
Company;  (ii) provide  reasonable  assurance that  transactions are recorded as
necessary to permit  preparation  of financial  statements  in  accordance  with
generally accepted accounting principles,  and that receipts and expenditures of
the Company are being made only in accordance with  authorizations of management
and directors of the Company;  and (iii) provide reasonable  assurance regarding
prevention or timely detection of unauthorized  acquisition,  use or disposition
of the  Company's  assets  that could have a  material  effect on the  financial
statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the  policies  or  procedures  may  deteriorate.  Management  assessed  the
effectiveness of the Company's  internal control over financial  reporting as of
September 30, 2005. In making this assessment,  management used the criteria set
forth by the Committee of Sponsoring  Organizations  of the Treadway  Commission
(COSO) in Internal Control-Integrated Framework.

Based on our  assessment and those  criteria,  management has concluded that the
Company did not maintain effective internal control over financial  reporting as
of  September  30,  2005 as a result  of  material  weaknesses  in (a)  internal
controls surrounding corporate governance, and (b) internal controls surrounding
the accounting for common stock issuances.

A  material  weakness  is  a  control  deficiency,  or  combination  of  control
deficiencies,  that  results  in more than a remote  likelihood  that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.

Internal Controls Surrounding Corporate Governance:

The  principal  factors  contributing  to the  material  weakness  in  corporate
governance are as follows:

o     Inadequate number of independent directors.
o     Lack of independent audit committee.
o     Lack of audit committee financial expert.

If  these   weaknesses  are  not  addressed,   they  could  result  in  material
misstatements  of annual  or  interim  financial  statements  that  might not be
detected, corrected or disclosed in a timely manner, or at all.

Internal Controls  Surrounding the Accounting for Transactions  Involving Common
Stock:

The  principal  factor  contributing  to the  material  weakness  in the
accounting for issuances of shares of common stock is based on:

o     The  existence  of  differences  in the  number of shares of common  stock
      outstanding  as reflected in the  Company's  accounting  records and prior
      financial  reports and the number reported by the Company's stock transfer
      agent that resulted in a change in previously issued financial  statements
      at September 30, 2005.
o     An error in accounting  for  conversion of debt to equity that occurred in
      fiscal 2005 and resulted in a $347,517  audit  adjustment at September 30,
      2005.

The  Company's  independent   registered  public  accounting  firm  has  audited
management's  assessment of the effectiveness of the Company's  internal control
over  financial  reporting as of September  30, 2005,  as stated in their report
which  appears  on page F-2 of this  Form  10-K  under  the  heading,  Report of
Independent Registered Public Accounting Firm.


Remediation  Plans for Material  Weaknesses in Internal  Control over  Financial
Reporting


Corporate Governance


The Company has retained an executive recruiting firm to aid them in a search of
an independent  financial  expert to chair the audit  committee.  The Company is
also is the process of amending  their  Audit  Committee  Charter to include the
responsibilities  of the financial  expert and to ensure  independent  directors
fill all positions on the committee.


Accounting for Stock Issuances

The Company is implementing  enhancements to its internal control over financial
reporting to provide reasonable  assurance those errors and control deficiencies
in its  accounting for stock  issuances will not recur.  These steps include the
engagement of independent financial reporting consultants for review of critical
accounting areas and disclosures and material non-standard transactions.


                                       13
<PAGE>

Until these changes are completed, weaknesses will continue to exist. Management
presently  anticipates that the changes  necessary to remediate these weaknesses
will be in place by the conclusion of the next fiscal year.


Changes in Internal Control over Financial Reporting

Except as otherwise discussed herein, there have been no changes in our internal
control over  financial  reporting  during the most  recently  completed  fiscal
quarter that have  materially  affected,  or is reasonably  likely to materially
affect, our internal control over financial reporting.


                                       14
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

The following are directors and executive  officers of the Company as of January
21, 2006:

<TABLE>
<CAPTION>
      Name                Age            Position                   Member/Position Since
      ----                ---            --------                   ---------------------
<S>                       <C>       <C>                             <C>
Sir Emeka Offor           46        Chairman of the Board              February 2001
Walter Brandhuber         52        Chief Executive Officer,           January 2006
                                       President and Director
Nicolae Luca              46        Director                           February 2001
Howard Jeter              58        Director                           April 2005
Andrew Uzoigwe            63        Director                           April 2005
Cosmas (Ike) Okpala       42        Chief Financial Officer            June 2004
Peter C. Ntephe           39        Secretary                          February 2001
</TABLE>

Sir Emeka Offor has served as the  chairman of the board of ERHC since  February
2001.  In  addition  to his duties as  chairman,  Sir Emeka  Offor is  currently
chairman of Chrome Consortium.  He is the director and shareholder of Chrome Oil
Services Limited ("COS"). COS is the company's majority  shareholder.  Sir Emeka
has held these positions at various times since 1995. Apart from owning majority
interests  in these  companies,  Sir  Emeka  Offor  has  majority  interests  in
aviation, banking and insurance companies.

Walter Brandhuber served as a senior consultant at CRA International Limited, in
London,  England, from September,  2005 until his appointment in January 2006 as
president  and chief  executive  officer  of the  Company.  He was also a senior
consultant  with  G.E.A.R.S  Limited  from July  2003.  From  1999 to 2003,  Mr.
Brandhuber  served  as a  managing  director  and  member  of the  board of Odin
Petroleum N.V. based in London, England and Amsterdam, Netherlands. From 1999 to
2000,  Mr.  Brandhuber  served on the board of Calverton  Limited.  From 1989 to
1998, Mr.  Brandhuber  worked at Union Texas Petroleum,  his last position being
vice-president.  Mr.  Brandhuber  has an MBA (Hons) from the University of Notre
Dame,  a BA (cum  laude) from the Loyola  University  of Chicago and a Doctor of
Jurisprudence from the University of Oklahoma.

Nicolae Luca has served as a director since February 2001. Since April 1998, Mr.
Luca has also  served as the  technical  director  for the  Nigeria-incorporated
entity  Chrome Oil Services  Limited,  (a separate and distinct  entity from the
Bahamas-incorporated Chrome Oil Services Limited which is the Company's majority
shareholder). Mr. Luca has a bachelor of science in mechanical engineering.

Howard Jeter has served as a director  since April 2005.  Howard  Jeter  retired
with the rank of career  Minister  from the State  Department in 2003 after a 27
-year  career in Foreign  Service.  Ambassador  Jeter is the  immediate  past US
Ambassador to Nigeria. He also served as Deputy Assistant Secretary of State for
African Affairs,  State Director for West Africa,  President  Clinton's  Special
Envoy for Liberia and Ambassador to Botswana.  Ambassador Jeter was Deputy Chief
of  Mission  and later  Charge d' Affairs  in  Lesotho  and  Namibia He also had
multi-year assignments in Tanzania and Mozambique. Ambassador Jeter has been the
recipient of numerous  awards,  including the Presidential  Meritorious  Service
Awards,  Superior Honor Awards and several  Performance  Awards. He received the
Bennie Trailblazer Award from Morehouse College and the International  Peace and
Justice Award from the rainbow  Coalition.  Ambassador  Jeter is a member of the
Council on Foreign Relations,  the American Foreign Service  Association and Phi
Beta Kappa.  He earned his  Bachelor  of Arts Degree with Honors from  Morehouse
College and Masters Degrees in International Relations, Comparative Politics and
African Studies from the Columbia  University and University of California,  Los
Angeles  (UCLA) He is  currently  the  Executive  Vice  President  of  GoodWorks
International, an international consulting and business advisory group, Chairman
of the Advisory  Committee on Africa, US Export - Import Bank and a board member
of Africare and African Action.

Andrew Uzoigwe has served as a director since April 2005. . Dr. Uzoigwe  started
his career with Dow Chemical  Company where he held various senior  positions in
its Walnut Creek  Research  Center and in its  Specialty  Chemicals  Facility in
Pittsburgh,  California.  He joined the Nigerian National Petroleum  Corporation
(NNPC) in 1981.  During his tenure in at NNPC,  Dr.  Uzoigwe held several senior
technical  and  management   positions  including  Chief  Engineer  and  Project
Coordinator  (Petrochemicals),  Group General Manager (R&D  Division),  Managing
Director of NNPC's  Refining  and  Petrochemicals  subsidiaries.  In 1999 he was
appointed the Group Executive Director  (Exploration & Production) a position he
held until he retired  from NNPC in 2002.  Dr.  Uzoigwe  has also  served in the
Governing  Boards of Raw Material  Research and  Development  Council,  National
Management  Agency.  He has traveled  extensively on numerous  professional  and
official assignments on behalf of NNPC and the Nigerian Government.  Dr. Uzoigwe
is a Registered  Professional  mechanical Engineer and a Registered Professional
Chemical  Engineer in the State of  California.  He is a fellow of the  Nigerian
Society of Chemical  Engineers and a Fellow of the Polymer Institute of Nigeria.
He has BSc (Mechanical Engineering) and Master of Business Administration Degree
from  University of California at Berkley.  He also holds Msc and PhD Degrees in
Petroleum and Chemical Engineering from Stanford University California.


Cosmas  (Ike)  Okpala has served as chief  financial  officer of ERHC since June
2004.  From  February  2003 until  serving at ERHC,  Mr. Okpala served as Senior
Manager/Head  of the Investment  Banking  Division of African  Express Bank Plc.
From April 2001 to February  2003,  Mr. Okpala  served as General  Manager/Chief
Operating Officer of First Capital Guaranty  Limited.  Mr. Okpala had previously
spent  11  years  in  various   financial   positions  with  banks  and  private
institutions.  Mr.  Okpala holds three  degrees  including a Masters of Business
Administration  from the  University of Nigeria,  a Masters of Banking & Finance
from FINAFRICA,  Italy and a Bachelor of Science in Business Administration from
California State University, U.S.A.


                                       15
<PAGE>

Peter C. Ntephe has served as secretary of ERHC since February  2001.  From 1987
to 1992,  Mr. Ntephe worked with Serena David Dokubo and Company,  rising to the
Head of the Corporate  Legal  Services  Department.  From 1992 to 1999, he was a
partner in the law firm of NSW Law and oversaw the firm's  provision  of company
secretarial  services  to  corporate  clients.  From 1999 to 2001,  he was Chief
Legislative Aide to the Chairman of the Senate Committee for Judiciary and Legal
Matters,  National  Assembly of Nigeria.  Mr.  Ntephe has a  Bachelors'  and two
Masters degrees in law, the second Masters being a specialization  in regulatory
issues from the University of London.

All officers  serve at the  discretion of the board of  directors.  There are no
family  relationships  between or among any  executive  officers and  directors.
There are no  arrangements  or  understandings  between an executive  officer or
director and any other  person  pursuant to which he was or is to be selected as
an executive officer or director. None of the executive officers or directors is
involved in any legal proceedings described in Item 401(f) of Regulation S-K.

The Company  entered into a management  services  agreement with COS in February
2001.  Pursuant to that agreement,  COS provided the Company with management and
business  development  services,  in  addition to making  available  specialized
services in the areas of refinery maintenance,  engineering design, and upstream
oil  industry  services.  COS  provided  the Company  with such  services  for a
management fee of $68,000 per month. Messrs. Okpala, and Ntephe were consultants
to COS and received fees and overhead expense  reimbursement  from COS. Expenses
not covered under the management  services  agreement were borne by the Company.
Total management fees incurred during each of the years ended September 30, 2005
and September 30, 2004 were $204,000 and $816,000,  respectively.  The Company's
executive  officers incurred  significant  direct expense for travel and related
expenses of approximately $279,000 and $418,000 during the years ended September
30, 2005 and 2004, respectively,  which were reimbursed by the Company to COS or
directly to the officers.  At September 30, 2005 and 2004,  accounts payable and
other  accrued  liabilities  included  $0 and  $3,231  respectively  owed to one
officer for direct  travel  expenses.  In addition  to the  management  services
agreement,  the Company had one employment agreement with Mr. Memon. On December
23, 2004,  the Company and COS  cancelled,  effective  December  31,  2004,  the
management  services  agreement.   Beginning  on  January  1,  2005,  ERHC  made
arrangements  to assume  and  provide  directly  all  services  currently  being
provided under such management services agreement.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's directors and executive
officers,  and persons who own  beneficially  more than ten percent (10%) of the
common  stock,  to file reports of ownership  and changes of ownership  with the
Securities and Exchange Commission.  Copies of all filed reports are required to
be furnished to us. Based solely on the reports received and the representations
of the reporting  person,  the Company believes that these persons have complied
with all applicable filing  requirements  during the fiscal year ended September
30, 2005,  except for a late Form 3 filing by Mr. Uzoigwe,  a late Form 4 and/or
Form 5 for Sir Emeka Offer and Chrome  Energy LLC, and a late Form 4 for Mr. Ali
Memon reporting the grant of options. Each late Form 3, Form 4 and/or Form 5 has
been or will be subsequently filed.

Code of Ethics for the CEO, CFO and Senior Financial Officers

The  Company  has adopted the CEO,  CFO and Senior  Financial  Officers  Code of
Ethical Conduct. The Board believes that these individuals must set an exemplary
standard  of  conduct,  particularly  in  the  areas  of  accounting,   internal
accounting control, auditing and finance. This code sets forth ethical standards
the designated officers must adhere to and other aspects of accounting, auditing
and  financial  compliance.  The  Code of  Ethics  for the CEO,  CFO and  Senior
Financial    Officers   is    available    on   the    Company's    website   at
http://www.erhc.com/CorporateGovernance.htm.  The  information  contained on our
website is not incorporated by reference herein into this Report on Form 10-K.

Audit Committee Matters

The Company's  Audit  Committee was constituted of Mr. Ali Memon and Mr. Nicolae
Luca until Mr.  Memon's  disengagement  from the  Company in January  2006.  Mr.
Memon's  place  as  president  and  chief  executive  was  taken  by Mr.  Walter
Brandhuber  who also  replaced  Mr.  Memon on the  audit  committee.  The  Audit
Committee is  responsible  for,  among other  things,  overseeing  the Company's
accounting  and  financial  reporting  processes  and  audits  of the  Company's
financial statements.  There are currently no members of the Audit Committee who
qualify as an "audit committee  financial  expert." The two members of the Audit
Committee are also not "independent"  directors as defined in federal securities
laws.  The  Company's  securities  are traded on over the  counter and it is not
legally obligated to have independent  directors or an audit committee financial
expert  on  the  audit  committee.   To  strengthen  its  financial   management
nonetheless,  the Company intends reconstitute its Audit Committee to be made up
of solely independent directors, one of whom would qualify as an audit committee
financial  expert.  It is expected that this will be done not later than the end
of the current  fiscal year of the Company,  although no  guarantees  are hereby
given in that regard.


                                       16
<PAGE>

Item 11.  Executive Compensation

The following table sets forth certain information regarding compensation paid
by the Company to its chief executive officer and other executive officers who
received total annual salary and bonus that exceeded $100,000 during the periods
involved.

Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                          Long-term Compensation Awards
                                                                                          -----------------------------
                                                    Annual                                  Restricted      Securities
                                     Fiscal      Compensation                                 Stock         Underlying
Name and Principal Positions          Year         Salary ($)            Bonus ($)         Awards(s)($)    Options/SARs
----------------------------     -------------   -------------         -------------      -------------   -------------
<S>                              <C>             <C>                   <C>                <C>             <C>
Ali Memon                            2005              187,500(1)                 --                 --              --
  Chief Executive Officer            2004               25,000(2)                                             3,000,000(3)

Chude Mba                            2004               70,000(4)(5)              --                 --              --
  Chief Executive Officer            2003               84,000(5)                 --                 --              --
                                     2002               84,000(5)                 --                 --              --
</TABLE>

(1)   Represents  three  months  at  $150,000  per year and  nine  months  at an
      increased salary of $200,000 per year.

(2)   Ali Memon  joined the  Company in August  2004.  The amount  includes  all
      compensation earned since August 2004.

(3)   Pursuant to Mr. Memon's employment agreement and subject to the provisions
      for termination of employment in that agreement,  Mr. Memon was awarded an
      option to purchase up to  3,000,000  shares of Company  common  stock,  of
      which  1,000,000  shares vested on September 1, 2004 and 1,000,000  shares
      vested on August 1, 2005.

(4)   Represents  compensation  paid to Mr. Mba from October 1, 2003,  until his
      resignation on July 31, 2004.

(5)   The Company paid a management  services fee of $68,000 per month to COS, a
      component of which is an amount representing  compensation to this officer
      for services provided under the management services agreement.

Option Grants in Fiscal Year Ending September 30, 2005

The  following  table sets forth  information  concerning  individual  grants of
options  made  during the fiscal year ended  September  30,  2005,  to our named
executive  officers.  No stock options or stock appreciation  rights were issued
during the fiscal year.

<TABLE>
<CAPTION>
                                                                                           Potential Realizable Value at
                                                                                        Assumed Annual Rates of Stock Price
                                         Individual Grants                               Appreciation for Options Term (1)
                --------------------------------------------------------------------   ------------------------------------
                   Number of       Percent Of
                   Securities        Total
                   Underlying     Options/SARs    Exercise      Market
                  Option/SARs      Granted to      Of Base    Price at   Expiration
    Name          Granted (#)     Employees In      Price      Date of     Date            5%          10%
    (a)              (b)        Fiscal Year (c)  ($/Sh) (d)     Grant       (e)           (f)         (g)              0%
-----------     --------------  ---------------  ----------   ---------  -----------   ---------   ------------  ----------
<S>             <C>             <C>              <C>          <C>        <C>           <C>         <C>             <C>
  Ali Memon           -               -              -            -           -              -            -               -
</TABLE>


Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values

The following table sets forth information  concerning  options exercised during
the fiscal year ended September 30, 2005 and option holdings as of September 30,
2005,  with respect to our named executive  officers.  No stock options or stock
appreciation rights were issued during the fiscal year.


                                       17
<PAGE>

                       Aggregated Option Exercises in 2005
                           and Year-End Option Values

<TABLE>
<CAPTION>
                       Shares
                      Acquired
                         on        Value Realized         Number of Unexercised                Value of Unexercised
       Name          Exercise(#)       ($)                 Options at FY-end                in-the-Money Options (1)
        (a)              (b)           (c)                        (d)                                (e)
------------------- ------------- ----------------- ----------------------------------- --------------------------------
                                                     Exercisable      Unexercisable       Exercisable      Unexercisable
                                                     -----------      -------------       -----------      -------------
<S>                 <C>            <C>                <C>                                 <C>
  Ali Memon              -               -            2,000,000         1,000,000          $340,000           $170,000
</TABLE>

(1)   The values of the  unexercised  options above are based on the  difference
      between the exercise price of the options and the fair market value of our
      common stock at the end of the fiscal year ended September 30, 2005, which
      was $0.37 per share.

Compensation of Directors

Compensation  expense for the year ended  September 30, 2005, as  recommended by
the  Compensation  Committee  and  approved by the board,  is shown in the table
below.

                       Non-Executive Director Compensation

Director Name       Fees     Common Shares    Value      Total
---------------   --------   -------------   --------   --------

Sir Emeka Offor   $ 33,300          85,000   $ 36,125   $ 69,425
Nicolae Luca        19,125          85,000     36,125     55,250
Howard Jeter        13,292          85,000     36,125     49,417
Andrew Uzoigwe      13,644          85,000     36,125     49,769
                  --------   -------------   --------   --------
                  $ 79,361         340,000   $144,500   $223,861
                  --------   -------------   --------   --------

As of January  25,  2006,  none of the  compensation  approved  as above for the
directors  has been paid or issued to any of the  directors.  Also  approved was
compensation  for past  services for directors  Offor and Luca.  Sir Emeka Offor
will  receive  4,000,000  shares of common stock  valued at  $1,700,000  for all
services  rendered from 2001 through 2004 and Nicolae Luca will receive  $66,500
for his  past  services  rendered  from  2001  to  2004.  None  of the  approved
compensation  for past  services has been paid or issued to Offor and Luca as of
January 25, 2006.

Employment Contracts

Mr. Memon's employment agreement with the Company terminated on January 20, 2006
when, by mutual agreement with the board on his disengagement  from the Company,
Mr. Memon  resigned  his  employment  with the  Company.  The Board of Directors
approved Mr. Walter  Brandhuber's  appointment as president and chief  executive
officer on January 21, 2006.

Long Term Incentive Plan Awards and Benefit Plans

No executive  officer  received any long-term  incentive  plan awards during the
fiscal year ended  September  30,  2005.  The Company  has not  established  any
defined  plan or  actuarial  plan  under  which  benefits  are  provided  to its
executive officers.

Securities Authorized for Issuance Under Equity Compensation Plans

In November 2004, the board of directors  authorized a 2004  Compensatory  Stock
Option Plan,  which was approved at a special meeting of the stockholders of the
Company on February 4, 2005. Under this plan 4,340,000 shares have been approved
for  issuance by the Board of Directors  as board  compensation  for current and
past services.


                                       18
<PAGE>

<TABLE>
<CAPTION>
---------------------------------  ------------------------------  -------------------------------  ------------------------------
         Plan Category              Number of securities to be       Weighted-average exercise          Number of securities
                                      issued upon exercise of      price of outstanding options,       remaining available for
                                       outstanding options,             warrants and rights         future issuance under equity
                                        warrants and rights                                              compensation plans
                                                                                                        (excluding securities
                                                                                                       reflected in column (a))
---------------------------------  ------------------------------  -------------------------------  ------------------------------
                                                (a)                             (b)                              (c)
---------------------------------  ------------------------------  -------------------------------  ------------------------------
<S>                                <C>                             <C>                              <C>
 Equity compensation plans                   4,340,000                         $0.425                        15,660,000
  approved by security holders
---------------------------------  ------------------------------  -------------------------------  ------------------------------
 Equity compensation plans not               4,750,000                         $0.20                              0
  approved by security holders
---------------------------------  ------------------------------  -------------------------------  ------------------------------
             Total                           9,090,000                         $0.307                        15,660,000
---------------------------------  ------------------------------  -------------------------------  ------------------------------
</TABLE>


Compensation Committee Interlocks Insider Participation

The  Company's  Compensation  Committee  is comprised  Mr.  Howard Jeter and Dr.
Andrew Uzoigwe. None of the members of the Compensation Committee has been or is
an officer or employee of the Company, or is involved with a related transaction
or a  relationship  as  defined  by  Item  404 of  Regulation  S-K.  None of the
Company's  executive  officers  serves on the board of directors or compensation
committee  of a  company  that  has an  executive  officer  that  serves  on the
Company's board or Compensation  Committee.  No member of the Company's board is
an  executive  officer  of a  company  in which one of the  Company's  executive
officers serves as a member of the board of directors or compensation  committee
of that company.


Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters

The following  table and notes thereto set forth certain  information  regarding
beneficial  ownership  of the common  stock as of November  15, 2005 by (i) each
person  known by the Company to  beneficially  own more than five percent of the
common stock, (ii) each director (iii) each named executive officer and (iv) all
directors and officers of the Company as a group.

<TABLE>
<CAPTION>
                                                 Shares of common stock          Percentage
             Name and Address                      Beneficially Owned         Of Voting Power
---------------------------------------------  --------------------------  ---------------------
<S>                                            <C>                         <C>
Chrome Oil Services Ltd/Sir Emeka Offor              306,091,433(1)                43.03%(2)
Ali Memon                                              2,000,000(3)                  *
Ike Okpala                                               500,000(4)                  *
Nicolae Luca                                                -                        -
Peter Ntephe                                             500,000(5)                  *
Andrew Uzoigwe                                              -                        -
Howard Jeter                                                -                        -

First Atlantic Bank                                   60,641,821(6)                 8.52%(2)
All executive officers and directors
  as a group (7 persons)                             309,091,433                   43.45%(2)
</TABLE>

* Less than 1%.

The address of each  beneficial  owner,  except First Atlantic Bank, is c/o ERHC
Energy, Inc., 5444 Westheimer Road, Suite 1570, Houston, Texas 77056.

Beneficial  ownership  is  determined  in  accordance  with rules of the SEC and
generally includes voting or dispositive power with respect to such shares.

      (1)   In March 2005, Chrome Energy LLC ("Chrome") transferred all holdings
            in the Company to Chrome Oil Services Ltd. ("COS").  Previously, COS
            was the sole member of Chrome.  Sir Emeka Offor was the sole manager
            of  Chrome  and the sole  shareholder  and  director  of COS.  As of
            November 15, 2005, COS owns 303,591,433 shares of the Company stock,
            and warrants to purchase  2,500,000  shares of the Company's  common
            stock,  of which  1,500,000  expire in October 2008 and have a $0.40
            per share  exercise  price,  and 1,000,000  expire in April 2009 and
            have a $0.25 per share exercise price.


                                       19
<PAGE>

      (2)   Shares  beneficially  owned and  percentage of ownership is based on
            711,412,226  shares of common stock  outstanding  as of November 15,
            2005,  2,500,000  immediately  exercisable warrants held by COS, Mr.
            Memon's  immediately  exercisable  options for  2,000,000  shares of
            common  stock,  Mr.  Okpala's  immediately  exercisable  options for
            500,000,  and  Mr.  Ntephe's  immediately  exercisable  options  for
            500,000.

      (3)   Includes options for 2,000,000 shares immediately exercisable by Mr.
            Memon.

      (4)   Includes options for 500,000 shares  immediately  exercisable by Mr.
            Okpala.

      (5)   Includes options for 500,000 shares  immediately  exercisable by Mr.
            Ntephe.

      (6)   These shares are owned by affiliates of First  Atlantic Bank, and it
            is the  understanding  of  the  Company  that  First  Atlantic  Bank
            beneficially owns such shares.  First Atlantic Bank's address is c/o
            John b.  Geddie of  Siegnyrl,  Oshman  and  Geddie,  Allen  Parkway,
            Houston Texas 77019.

Item 13. Certain Relationships and Related Transactions

As more fully described in Item 10 above,  the Company entered into a management
services  agreement  with COS.  At the time,  Chrome was the  Company's  largest
shareholder.  Sir Emeka  Offor,  the  chairman of the board of  directors,  is a
director and shareholder of COS. As such, COS is an affiliate of Sir Emeka Offor
and Chrome.  On December  23,  2004,  the Company and COS  cancelled,  effective
December 31, 2004, the management services agreement.

In December  2004,  the Company  reached an agreement with Chrome to restructure
all their  outstanding notes payable.  Pursuant to the debt restructure,  Chrome
agreed to cancel all their outstanding notes in exchange for a new 12% note with
a principal  amount of $10,134,084,  convertible at the option of the Company at
$0.175 per share,  and  expiring on January 31, 2007.  Chrome also  provided the
Company  with a new  10%  working  capital  line  of  credit  in the  amount  of
$2,500,000,  which would expire on January 31, 2007 and would be  convertible at
the option of the Company at $0.175 per share. In exchange for the  cancellation
and  exchange  of the notes and the new  working  capital  line of  credit,  the
Company  agreed to issue Chrome  14,023,352  shares of common stock;  12,465,202
issued  immediately,  623,260  shares  on the  advance  of  $1,000,000,  and the
remaining  934,890  shares upon receipt of an  additional  $1,500,000  available
under the working capital loan. In addition,  ERHC issued  12,308,359  shares of
common stock to satisfy current interest accrued but not paid of $2,461,712.

On January  28,  2005,  the Company  exercised  its right to convert the two new
notes, dated December 15, 2004, in favor of Chrome,  with a principal balance of
$10,134,084  and accrued  interest of $146,597 and dated  December 15, 2004,  in
favor of Chrome  with an original  principal  amount of  $2,500,000  and accrued
interest of $11,986.  The Company  issued to Chrome  73,100,962 of  unregistered
shares of ERHC common stock in  conversion of the entire  outstanding  principal
and accrued interest of the Consolidated Note and the Promissory Note. They were
converted at $0.175 per share  pursuant to the terms of such notes and cancelled
in their  entirety.  ERHC issued  these  shares  pursuant to Section 4(2) of the
Securities Act of 1933, as amended.

Item 14. Principal Accounting Fees and Services

Aggregate  fees for  professional  services  rendered by Pannell Kerr Forster of
Texas,  P.C. ("PKF") for the fiscal years ended September 30, 2005 and September
30, 2004, were as follows:

                       2005        2004
                     --------    --------

Audit fee            $107,000*   $ 47,290
Audit-related fees   $     --    $     --
Tax fees             $     --    $     --
All other fees       $    990    $  4,275


* Malone & Bailey, PC was not engaged until subsequent to September 30, 2005.

Audit fees for the fiscal years ended  September 30, 2005 and 2004 represent the
aggregate fees billed for professional services rendered by PKF for the audit of
our annual financial  statements and review of financial  statements included in
our  quarterly  reports on Form 10-Q or services  that are normally  provided in
connection with statutory and regulatory filings or engagements for those fiscal
years.

Tax fees for the fiscal year ended  September 30, 2005 and 2004,  represents the
aggregate  fees  billed  for  professional  services  rendered  by PKF  for  tax
compliance, tax advice, and tax planning.


                                       20
<PAGE>

All other fees for the fiscal year ended September 30, 2005 and 2004, represents
the aggregate fees billed for products and services  provided by PKF, other than
the services reported in the other  categories.  All other fees generally relate
to tax fees assessed for corporate tax restructuring and other general corporate
tax related matters.

Audit Committee Pre-Approval Policies and Procedures

A representative  of the independent  registered public accounting firm normally
attends each meeting of the Audit  Committee.  The Audit  Committee on an annual
basis reviews audit and non-audit services performed by the independent auditor.
All audit and non-audit services are pre-approved by the Audit Committee,  which
considers,  among other things,  the possible  effect of the performance of such
services on the auditors'  independence.  The Audit Committee has considered the
role of Malone & Bailey,  PC in  providing  services  to us for the fiscal  year
ended  September  30, 2005 and has concluded  that such services are  compatible
with Malone & Bailey's independence as the Company's auditors.


                                       21
<PAGE>

                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

a)    Consolidated Financial Statements and Schedules:

      1.    Consolidated   Financial  Statements:   See  Index  to  Consolidated
            Financial  Statements  immediately  following the signature pages of
            this report.

      2.    Consolidated Financial Statement Schedule: See Index to Consolidated
            Financial  Statements  immediately  following the signature pages of
            this report.

      3.    The following documents are filed as exhibits to this report:

<TABLE>
<CAPTION>
EXHIBIT NO.                                     IDENTIFICATION OF EXHIBIT
<S>                    <C>
  Exhibit 3.1*         Articles of Incorporation
  Exhibit 3.2*         Bylaws
  Exhibit 4.1*         Specimen Common Stock Certificate.
  Exhibit 4.2*         Form of Amended and Restated 12% Convertible Promissory Note, dated effective January 2001.
  Exhibit 4.3*         Form of Amended and Restated 5.5% Convertible Promissory Note, dated effective January 2001.
  Exhibit 4.4*         20% Convertible Promissory Note, dated January 31, 2001, in favor of Chrome.
  Exhibit 4.5*         Term Loan Agreement, dated February 15, 2001, by and between Chrome and ERHC.
  Exhibit 4.6*         Senior Secured 10%  Exchangeable  10% Convertible  Promissory  Note,  dated January 31, 2001, in favor of
                        Chrome.
  Exhibit 4.7*         Form of Warrant  entitling  Chrome to purchase  common stock of the Company,  exercise price of $0.40 per
                        share.
  Exhibit 10.1*        Option  Agreement,  dated April 7, 2003,  by and between the Company and the  Democratic  Republic of Sao
                        Tome and Principe (incorporated herein by reference to Exhibit 10.1 of Form 8-K filed April 2, 2003)
  Exhibit 10.2*        Management  and  Administrative  Services  Agreement  by and between  Chrome Oil  Services,  Ltd. and the
                        Company. (Incorporated by reference to Form 10-KSB filed September 24, 2001).
  Exhibit 10.4*        Letter Agreement,  dated November 29, 2004, by and between the Company and Chrome (incorporated herein by
                        reference to Exhibit 10.1 of Form 8-K filed December 29, 2004).
  Exhibit 10.5*        Promissory Note, dated December 15, 2004, made by the Company in favor of Chrome  (incorporated herein by
                        reference to Exhibit 10.2 of Form 8-K filed December 29, 2004).
  Exhibit 10.6*        Promissory Note, dated December 15, 2004, made by the Company in favor of Chrome  (incorporated herein by
                        reference to Exhibit 10.3 of Form 8-K filed December 29, 2004).
  Exhibit 10.7*        Employment Agreement with Ali Memon.
  Exhibit 10.8*        Audit committee charter
  Exhibit 23.1        Consent of Independent Registered Public Accounting Firm
  Exhibit 31.1         Certification   Pursuant  to  18  U.S.C  Section  1350,  as  adopted  Pursuant  to  Section  302  of  the
                        Sarbanes-Oxley Act of 2002
  Exhibit 31.2         Certification   Pursuant  to  18  U.S.C  Section  1350,  as  adopted  Pursuant  to  Section  302  of  the
                        Sarbanes-Oxley Act of 2002
  Exhibit 32.1         Certification   Pursuant  to  18  U.S.C  Section  1350,  as  adopted  Pursuant  to  Section  906  of  the
                        Sarbanes-Oxley Act of 2002
  Exhibit 32.2         Certification   Pursuant  to  18  U.S.C  Section  1350,  as  adopted  Pursuant  to  Section  906  of  the
                        Sarbanes-Oxley Act of 2002
</TABLE>


* Previously filed

      b)    Form 8-K Filings

            Current Report on Form 8-K dated December 28, 2004, reporting Item 1
            and Item 5.


                                       22
<PAGE>

                                   SIGNATURES

In accordance with the Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on April 13, 2006 on its behalf by the
undersigned, thereunto duly authorized.

ERHC Energy Inc.
By:                 /s/ Walter Brandhuber
                    ------------------------------------------------------
                        Walter Brandhuber,
                        Chief Executive Officer and President

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.

<TABLE>
<CAPTION>
           Signature                           Title                             Date
--------------------------------
<S>                                   <C>                                   <C>
/s/ Sir Emeka Offor                   Chairman of the Board                 April 13, 2006
--------------------------------
    Sir Emeka Offor


/s/ Walter Brandhuber                 Chief Executive Officer,              April 13, 2006
--------------------------------      President and Director
    Walter Brandhuber


/s/ Nicolae Luca                      Director                              April 13, 2006
--------------------------------
    Nicolae Luca


/s/ Franklin Ihekwaba                 Chief Financial Officer (Principal    April 13, 2006
--------------------------------      Accounting Officer)
    Franklin Ihekwaba
</TABLE>


                                       23
<PAGE>

ERHC ENERGY INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
                                                                                               PAGE
                                                                                               ----
<S>                                                                                            <C>
Report of Independent Registered Public Accounting Firm on Management's Assessment of
    Internal Control Over Financial Reporting as of September 30, 2005                          F-2

Report of Independent Registered Public Accounting Firm on the Financial Statements for
    the Year ended September 30, 2005                                                           F-3

Report of Independent Registered Public Accounting Firm on the Financial Statements for
    the Years ended September 30, 2004 and 2003                                                 F-4

Financial Statements:

   Consolidated Balance Sheets as of September 30, 2005 and 2004                                F-5

   Consolidated Statements of Operations for the Years Ended September 30,
      2005, 2004 and 2003                                                                       F-6

   Consolidated Statements of Shareholders' Equity (Deficit) for the Years Ended
      September 30, 2005, 2004 and 2003                                                         F-7

   Consolidated Statements of Cash Flows for the Years Ended September 30,
      2005, 2004 and 2003                                                                       F-8

   Notes to Consolidated Financial Statements                                                   F-9

Financial Statement Schedules

   None
</TABLE>

All  schedules  for  which  provision  is  made  in  the  applicable  accounting
regulations  of the  Securities  and Exchange  Commission are not required under
related instructions or are inapplicable and therefore have been omitted.


                                      F-1

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
ERHC Energy Inc.

We have audited  management's  assessment,  included in  Management's  Report on
Internal  Control Over Financial  Reporting  appearing  under Item 9A, that ERHC
Energy Inc. ("ERHC") did not maintain  effective internal control over financial
reporting as of September 30, 2005, because of the effect of material weaknesses
in (a)  internal  controls  surrounding  corporate  governance  and (b) internal
controls surrounding the accounting for common stock issuances based on criteria
established in Internal  Control - Integrated  Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). ERHC's management
is  responsible  for  maintaining  effective  internal  control  over  financial
reporting and for its assessment of the  effectiveness  of internal control over
financial reporting. Our responsibility is to express an opinion on management's
assessment  and on  the  effectiveness  of  the  ERHC's  internal  control  over
financial reporting based on our audit.

We  conducted  our  audit  of  internal  control  over  financial  reporting  in
accordance with the standards of the Public Company  Accounting  Oversight Board
(United States).  Those standards  require that we plan and perform the audit to
obtain  reasonable  assurance  about  whether  effective  internal  control over
financial reporting was maintained in all material respects.  Our audit included
obtaining  an  understanding  of  internal  control  over  financial  reporting,
evaluating  management's  assessment,  testing  and  evaluating  the  design and
operating   effectiveness  of  internal  control,   and  performing  such  other
procedures as we consider  necessary in the  circumstances.  We believe that our
audit provides a reasonable basis for our opinion.

A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (i) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions of the assets of the company;  (ii)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company;  and (iii) provide  reasonable  assurance  regarding  prevention or
timely  detection  of  unauthorized  acquisition,  use,  or  disposition  of the
company's assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

A  material  weakness  is  a  control  deficiency,  or  combination  of  control
deficiencies,  that  results  in more than a remote  likelihood  that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. The following material weaknesses have been identified and included
in  management's  assessment.  Material  weaknesses  in  (a)  internal  controls
surrounding  corporate  governance  and (b) internal  controls  surrounding  the
accounting for common stock issuances. These material weaknesses were considered
in  determining  the nature,  timing,  and extent of audit tests  applied in our
audit of the 2005 financial  statements,  this report does not affect our report
dated December 28, 2005 on those financial statements.

In our opinion,  management's  assessment  that ERHC did not maintain  effective
internal  control over  financial  reporting as of September 30, 2005, is fairly
stated,  in all material  respects,  based on criteria  established  in Internal
Control - Integrated Framework issued by the COSO. Also, in our opinion, because
of the effects of the material weaknesses  described above on the achievement of
the  objectives  of the  control  criteria,  ERHC has not  maintained  effective
internal  control over  financial  reporting as of September 30, 2005,  based on
criteria  established in Internal  Control - Integrated  Framework issued by the
COSO.



/s/ Malone & Bailey, PC
-----------------------
Malone & Bailey, PC
www.malone-bailey.com
Houston, Texas

December 28, 2005


                                      F-2
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
ERHC Energy Inc.

We have audited the accompanying  consolidated balance sheet of ERHC Energy Inc.
("ERHC") as of September  30, 2005 and the related  consolidated  statements  of
operations,  cash flows,  and  shareholders'  equity (deficit) for the year then
ended.  These financial  statements are the responsibility of ERHC's management.
Our responsibility is to express an opinion on these financial  statements based
on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of 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  audit  provides  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 ERHC as of September
30, 2005, and the results of its operations and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that ERHC will continue as a going concern. As shown in the financial statements
and  discussed in Note 2, ERHC has incurred  significant  recurring  losses from
operations  since inception and is dependent on outside sources of financing for
continuation  of its  operations.  These factors raise  substantial  doubt about
ERHC's ability to continue as a going concern. Management's plans with regard to
this matter are also  discussed  in Note 2. These  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

We have also  audited,  in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States), the effectiveness of ERHC's internal
control over  financial  reporting as of September  30, 2005,  based on criteria
established in Internal  Control - Integrated  Framework issued by the Committee
of Sponsoring  Organizations of the Treadway  Commission  (COSO), and our report
dated  December  28,  2005  expressed  an  unqualified  opinion on  management's
assessment of internal  control over financial  reporting and an adverse opinion
on the effectiveness of internal control over financial reporting.



/s/ Malone & Bailey, PC
-----------------------
Malone & Bailey, PC
www.malone-bailey.com
Houston, Texas

December 28, 2005


                                      F-3
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Shareholders

ERHC Energy Inc.

We have audited the accompanying  consolidated balance sheet of ERHC Energy Inc.
(the  "Company")  as  of  September  30,  2004,  and  the  related  consolidated
statements of operations,  cash flows,  and  shareholders'  equity (deficit) for
each of the two years in the period  ended  September  30, 2004 and 2003.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of 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 ERHC Energy Inc. as
of September 30, 2004 and 2003,  and the results of its  operations and its cash
flows  for each of the two  years in the  period  ended  September  30,  2004 in
conformity with U.S. generally accepted accounting principles.




/s/ Pannell Kerr Forster of Texas, P.C.
---------------------------------------
Pannell Kerr Forster of Texas, P.C.
Houston, Texas
December 28, 2004


                                      F-4
<PAGE>

ERHC ENERGY INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2005 and 2004
--------------------------------------------------------------------------------

                                                          2005          2004
                                                       ----------    ----------

                                     ASSETS

Current assets:

  Cash                                                 $  988,490    $   20,272
  Restricted cash                                              --         3,026
  Prepaid expenses and other current assets                32,093        26,258
                                                       ----------    ----------

    Total current assets                                1,020,583        49,556

DRSTP concession fee                                    5,679,000     5,679,000
Furniture and equipment, net                               20,627            --
                                                       ----------    ----------

        Total assets                                   $6,720,210    $5,728,556
                                                       ==========    ==========

                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:

  Accounts payable and accrued liabilities             $  192,634    $  227,970
  Accounts payable and accrued liabilities,
    related party                                       2,064,675            --
  Accrued officers salaries                                    --       723,035
  Accrued interest                                          3,189        65,917
  Accrued interest, related party                              --     2,256,189
  Asset retirement obligation                             485,000       485,000
  Current portion of convertible debt                      33,513     1,626,033
                                                       ----------    ----------

      Total current liabilities                         2,779,011     5,384,144

Nonconvertible debt, related party                             --       403,644
Convertible debt, related party, net of discount               --     8,969,420
                                                       ----------    ----------

        Total liabilities                               2,779,011    14,757,208
                                                       ----------    ----------

Commitments and contingencies:

Shareholders' equity (deficit):
  Preferred stock, par value $0.0001; authorized
    10,000,000; none issued and outstanding                    --            --
  Common stock, par value $0.0001; authorized
    950,000,000 shares; issued and outstanding
    710,912,226 and 601,175,135 at September 30,
    2005 and 2004, respectively                            71,091        60,118

     Additional paid-in capital                        83,584,956    59,505,337
     Accumulated deficit                              (79,407,711)  (68,137,233)
     Deferred compensation                               (307,137)     (456,874)
                                                       ----------    ----------
        Total shareholders' equity (deficit)            3,941,199    (9,028,652)
                                                       ----------    ----------

          Total liabilities and shareholders'
            equity (deficit)                           $6,720,210    $5,728,556
                                                       ==========    ==========

   The accompanying notes are an integral part of these financial statements


                                      F-5
<PAGE>

ERHC ENERGY INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended September 30, 2005, 2004 and 2003
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                   2005            2004             2003
                                              -------------    -------------    -------------
<S>                                           <C>              <C>              <C>
General and administrative expenses           $   4,652,459    $   2,085,426    $   1,944,655
                                              -------------    -------------    -------------

Other income and (expenses):
    Interest income                                  26,494               --               --
    Gain from settlement                            252,310               --               --
    Other income                                         --          163,797               --
    Interest expense                             (1,147,248)      (1,671,759)      (1,209,227)
    Loss on extinguishment of debt               (5,749,575)              --               --
                                              -------------    -------------    -------------
       Total other income and expenses, net      (6,618,019)      (1,507,962)      (1,209,227)
                                              -------------    -------------    -------------
          Net loss                            $ (11,270,478)   $  (3,593,388)   $  (3,153,882)
                                              =============    =============    =============
Net loss per common share - basic
    and diluted                               $       (0.02)   $       (0.01)   $       (0.01)
                                              =============    =============    =============
Weighted average number of common
    shares outstanding -  basic and diluted     671,164,058      592,603,441      567,788,483
                                              =============    =============    =============
</TABLE>


    The accompanying notes are an integral part of these financial statements


                                      F-6
<PAGE>

ERHC ENERGY INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Years Ended September 30, 2005, 2004 and 2003
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                           Common Stock           Additional
                                    ---------------------------     Paid-In       Accumulated       Deferred
                                       Shares         Amount        Capital         Deficit       Compensation       Total
                                    ------------   ------------   ------------    ------------    ------------    ------------
<S>                                  <C>           <C>            <C>             <C>             <C>             <C>
Balance - September 30, 2002         555,969,021   $     55,597   $ 49,267,232    $(61,389,963)   $         --    $(12,067,134)
Common stock issued for cash,
     net of expenses                   9,440,000            944      1,071,556              --              --       1,072,500
Common stock issued for
     accounts payable                  1,527,986            153        177,663              --              --         177,816
Common stock issued for con -
     version of debt and payment
     of accrued interest              17,114,740          1,711      3,421,227              --              --       3,422,938
Net loss                                      --             --             --      (3,153,882)             --      (3,153,882)
                                    ------------   ------------   ------------    ------------    ------------    ------------
Balance - September 30, 2003         584,051,747         58,405     53,937,678     (64,543,845)             --     (10,547,762)
Common stock issued for cash,
     net of expenses                   3,231,940            323        974,677              --              --         975,000
Common stock issued for
     accounts payable                  1,458,514            146        533,102              --              --         533,248
Common stock issued for con-
     version of debt and payment
     of accrued interest              11,185,052          1,119      2,236,093              --              --       2,237,212
Common stock issued for
     proceeds received in 2003         1,000,000            100           (100)             --              --              --
Beneficial conversion feature
     associated with the
     convertible line of
     credit                                   --             --      1,058,912              --              --       1,058,912
Options issued to employee                    --             --        765,000              --        (765,000)             --
Amortization of deferred
     compensation                             --             --             --              --         308,126         308,126
Common stock issued for cash-
     less exercise of options
     and warrants                        247,882             25            (25)             --              --              --

Net loss                                      --             --             --      (3,593,388)             --      (3,593,388)
                                    ------------   ------------   ------------    ------------    ------------    ------------

Balance - September 30, 2004         601,175,135         60,118     59,505,337     (68,137,233)       (456,874)     (9,028,652)
Common stock issued for
     accounts payable                    735,000             73        359,716              --              --         359,789
Common stock issued for con -
     version of debt and payment
     of accrued interest             107,819,727         10,782     22,678,054              --              --      22,688,836
Common stock issued in settle-
     ment of lawsuits                    595,000             59        394,391              --              --         394,450
Variable accounting for re-
     priced employee stock
     options                                  --             --        300,000              --        (300,000)             --
Beneficial conversion feature
     associated with con-
     vertible line of
     credit                                   --             --        347,517              --              --         347,517
Amortization of deferred
     compensation                             --             --             --              --         449,737         449,737
Common stock issued for cash-
     less exercise of options and
     warrants                            587,364             59            (59)             --              --              --
Net loss                                      --             --             --     (11,270,478)             --     (11,270,478)
                                    ------------   ------------   ------------    ------------    ------------    ------------
Balance - September 30, 2005         710,912,226   $     71,091   $ 83,584,956    $(79,407,711)   $   (307,137)   $  3,941,199
                                    ============   ============   ============    ============    ============    ============
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                      F-7
<PAGE>

ERHC ENERGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2005, 2004 and 2003
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               2005             2004           2003
                                                            ------------    ------------    ------------
<S>                                                         <C>             <C>             <C>
Cash Flows From Operating Activities
     Net loss                                               $(11,270,478)   $ (3,593,388)   $ (3,153,882)
     Adjustments to reconcile net loss to net cash
        used by operating activities:
        Depreciation expense                                       6,676              --              --
        Gain from settlement                                    (252,310)             --              --
        Amortization of beneficial conversion feature
           associated with convertible debt                      784,348         629,591              --
        Amortization of deferred compensation                    449,737         308,126              --
        Loss on extinguishment of debt                         5,749,575              --              --
        Changes in operating assets and liabilities:
           Prepaid expenses and other current assets              (5,835)        (11,193)          6,685
           Accounts payable and other accrued liabilities        324,454        (121,493)        110,244
           Accrued officers' salaries                            (76,275)             --              --
           Accounts payable, and accrued liabilities
              related party                                    2,146,375              --              --
           Accrued interest - related party                      386,228       1,042,369       1,209,226
                                                            ------------    ------------    ------------
              Net cash used by operating activities           (1,757,505)     (1,745,988)     (1,827,727)
                                                            ------------    ------------    ------------

Cash Flows From Investing Activities
     Release of restricted cash                                    3,026          15,317            (269)
     Investment in DRSTP concession                                   --              --         (49,000)
     Purchase of furniture and equipment                         (27,303)             --              --
                                                            ------------    ------------    ------------
              Net cash used by investing activities              (24,277)         15,317         (49,269)
                                                            ------------    ------------    ------------

Cash Flows From Financing Activities:
     Proceeds from line of credit, related party               2,750,000              --              --
     Proceeds from convertible debt, related party                    --         752,607         825,592
     Proceeds from common stock, net of expenses                      --         975,000       1,072,500
                                                            ------------    ------------    ------------
              Net cash provided by financing activities        2,750,000       1,727,607       1,898,092
                                                            ------------    ------------    ------------

Net increase (decrease) in cash and cash equivalents             968,218          (3,064)         21,096

Cash and cash equivalents, beginning of period                    20,272          23,336           2,240
                                                            ------------    ------------    ------------

Cash and cash equivalents, end of period                    $    988,490    $     20,272    $     23,336
                                                            ============    ============    ============
</TABLE>


    The accompanying notes are an integral part of these financial statements


                                      F-8
<PAGE>

ERHC ENERGY INC.
NOTES TO THE CONSOLIDATED FINANCIAL STSTEMENTS
--------------------------------------------------------------------------------

Note 1 - Summary of Significant Accounting Policies

General Business and Nature of Operations

ERHC  Energy  Inc.  ("ERHC"  or the  "Company")  is an  independent  oil and gas
company.  The Company  was formed in 1986,  as a Colorado  corporation,  and was
engaged  in a variety  of  businesses  until  1996,  when it began  its  current
operations  as an  independent  oil and gas company.  The  Company's  goal is to
maximize its value through  exploration and exploitation of oil and gas reserves
in the Gulf of Guinea  offshore of central West Africa.  The  Company's  current
focus is to  exploit  its  assets,  which are  rights to  working  interests  in
exploration acreage in the Joint Development Zone ("JDZ") between the Democratic
Republic of Sao Tome & Principe  ("DRSTP")  and the Federal  Republic of Nigeria
("FRN")  and in the  exclusive  territorial  waters of Sao Tome (the  "Exclusive
Economic Zone" or "EEZ"). The Company has formed relationships with upstream oil
and gas companies to assist the Company in  exploiting  its assets in the JDZ as
further described in Note 3. The Company currently has no other operations.

In May 1997, the Company  entered into an exclusive joint venture with the DRSTP
(the "1997  Agreement").  On May 21, 2001,  the 1997 Agreement was replaced by a
Memorandum of Agreement (the "2001 Agreement"),  which was embodied in a Consent
Award  issued by the  arbitrator  as a result  of the  satisfaction  of  several
conditions,  including  the  ratification  of a treaty  between  the FRN and the
DRSTP. The 2001 Agreement gives the Company rights to participate in exploration
and production  activities in both the exclusive  territorial waters of Sao Tome
referred  to as the EEZ and an area  between  Sao  Tome and the FRN that the two
nations have designated as a JDZ.

In April 2003, the Company and DRSTP entered into an Option Agreement (the "2003
Option Agreement") in which the Company relinquished certain financial interests
in the JDZ in exchange  for  exploration  rights in the JDZ. In April 2003,  the
Company  additionally   entered  into  an  administration   agreement  with  the
Nigeria-Sao  Tome  and  Principe  Joint  Development   Authority  ("JDA").   The
administration  agreement is the formal  agreement by the JDA that it will fully
implement ERHC's  preferential rights to working interests in the JDZ acreage as
set  forth  in the  2003  Option  Agreement  and  describes  certain  procedures
regarding the exercising of these rights.  However, ERHC retained under the 2001
Agreement the following  rights to  participate  in  exploration  and production
activities in the EEZ subject to certain  restrictions:  (a) right to receive up
to two blocks of ERHC's  choice,  and (b) the option to acquire up to a 15% paid
working  interest in up to two blocks of ERHC's  choice in the EEZ.  The Company
will be required to pay its  proportionate  share of the signature bonus and all
other costs related to the  exploration  and  exploitation  of the blocks in the
EEZ.

Consolidated Financial Statements

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned subsidiary after  elimination of all significant  inter-company
accounts and transactions.

Use of estimates

The consolidated  financial  statements have been prepared in conformity with U.
S.  generally  accepted  accounting  principles.  In preparing the  consolidated
financial  statements,  management is required to make estimates and assumptions
that affect the reported  amounts of assets and  liabilities  and  disclosure of
contingent  assets and  liabilities at the date of the financial  statements and
revenues  and  expenses  during the  reporting  period for the years then ended.
Actual results could differ significantly from those estimates.

Cash equivalents

The Company considers all highly liquid short-term  investments with an original
maturity of three months or less, when purchased, to be cash equivalents.

Concentration of risks

The Company  primarily  transacts its business with two financial  institutions.
From time to time the amount on deposit in either one of theses institutions may
exceed the $100,000  federally  insured  limit.  The balances are  maintained in
demand accounts to minimize risk.


                                      F-9
<PAGE>

The Company's current focus is to exploit its assets,  which are agreements with
the DRSTP  concerning oil and gas exploration in EEZ and with the JDA concerning
oil and gas  exploration in the JDZ. The Company has formed  relationships  with
Pioneer Natural  Resources  ("Pioneer") and Addax Petroleum  ("Addax") to assist
the  Company  in  leveraging  its  interests  in the  EEZ and  the  JDZ.  Should
circumstances  impede the Company  from  perfecting  its  interests  in the 2001
Agreement with DRSTP, or the 2003 Option Agreement the Company's  business would
be  materially  affected.  Should the Company  perfect its interests in the 2001
Agreement and the 2003 Option Agreement,  there is no certainty that the Company
will be able to obtain  sufficient  financial and other resources to develop its
interests. The Company currently has no other operations.

Properties and equipment

The Company uses the  successful  efforts  method of accounting  for oil and gas
producing  activities.  Under  this  method,  acquisition  costs for  proved and
unproved properties are capitalized when incurred.  Exploration costs, including
geological and geophysical  costs, the costs of carrying and retaining  unproved
properties and exploratory dry hole drilling  costs,  are expensed.  Development
costs,  including the costs to drill and equip development wells, and successful
exploratory   drilling  costs  to  locate  proved   reserves  are   capitalized.
Exploratory   drilling  costs  are   capitalized   when  incurred   pending  the
determination  of whether a well has found proved  reserves.  A determination of
whether a well has found  proved  reserves  is made  shortly  after  drilling is
completed.   The   determination   is  based  on  a  process   that   relies  on
interpretations  of available  geologic,  geophysic,  and engineering data. If a
well is determined to be  successful,  the  capitalized  drilling  costs will be
reclassified  as part of the cost of the  well.  If a well is  determined  to be
unsuccessful,  the capitalized  drilling costs will be charged to expense in the
period  the  determination  is made.  If an  exploratory  well  requires a major
capital  expenditure  before  production  can begin,  the cost of  drilling  the
exploratory  well will continue to be carried as an asset pending  determination
of  whether  proved  reserves  have been  found only as long as: i) the well has
found a sufficient quantity of reserves to justify its completion as a producing
well if the  required  capital  expenditure  is made  and  ii)  drilling  of the
additional exploratory wells is under way or firmly planned for the near future.
If drilling in the area is not under way or firmly  planned,  or if the well has
not found a commercially  producible quantity of reserves,  the exploratory well
is assumed to be impaired, and its costs are charged to expense.

In the  absence of a  determination  as to whether the  reserves  that have been
found can be  classified as proved,  the costs of drilling  such an  exploratory
well is not carried as an asset for more than one year  following  completion of
drilling.  If, after that year has passed, a determination  that proved reserves
exist  cannot be made,  the well is  assumed to be  impaired,  and its costs are
charged to expense.  Its costs can,  however,  continue to be  capitalized  if a
sufficient  quantity  of  reserves  are  discovered  in the well to justify  its
completion as a producing well and sufficient  progress is made in assessing the
reserves and the well's economic and operating feasibility.

The impairment of unamortized  capital costs is measured at a lease level and is
reduced to fair value if it is  determined  that the sum of expected  future net
cash flows is less than the net book value. The Company determines if impairment
has occurred  through either adverse changes or as a result of the annual review
of all fields.

Development  costs  of  proved  oil  and  gas  properties,  including  estimated
dismantlement,  restoration and abandonment  costs and  acquisition  costs,  are
depreciated  and  depleted  on a field basis by the  units-of-production  method
using proved developed and proved reserves,  respectively. The costs of unproved
oil and gas properties are generally combined and impaired over a period that is
based on the  average  holding  period  for such  properties  and the  Company's
experience of successful drilling.

Asset retirement obligation

The Company's asset  retirement  obligation  ("ARO") relates to the plugging and
abandonment  of certain oil and gas  properties  in Wichita  Falls,  Texas.  The
provisions  of SFAS No. 143 require  the fair value of a liability  for an asset
retirement  obligation  to be  recorded  and a  corresponding  increase  in  the
carrying  amount  of the  associated  asset.  The  cost of the  tangible  asset,
including the initially  recognized  asset  retirement cost is depleted over the
useful life of the asset.  If the fair value of the estimated  asset  retirement
obligation changes,  an adjustment is recorded to the retirement  obligation and
the asset  retirement  cost.  The  offsetting  ARO liability is recorded at fair
value,  and  accretion  expense  recognized  as  the  discounted   liability  is
accredited to its expected settlement value. The fair value of the ARO asset and
liability is measured  using  expected  future cash out flows  discounted at the
Company's  credit adjusted risk free interest rate. These oil and gas properties
were abandoned and written off during the year ended  September 30, 1999 and the
Company  believes  the  current  liability  is  fully  accreted  and  represents
management's best estimate of the fair value of the outstanding obligation.


                                      F-10
<PAGE>

Impairment of long-lived assets

The Company  evaluates the  recoverability  of long-lived assets when events and
circumstances   indicate  that  such  assets  might  be  impaired.  The  Company
determines  impairment by comparing the undiscounted future cash flows estimated
to  be  generated  by  these  assets  to  their  respective   carrying  amounts.
Impairments  are  charged  to  operations  in the  period  to which  events  and
circumstances  indicate  that such assets might be impaired.  Management  of the
Company has evaluated its investment in its DRSTP concession fee in light of its
2003 Option  Agreement  (see Note 3) and believes that there have been no events
or circumstances that would indicate that such asset might be impaired.

Income taxes

The Company  accounts  for income  taxes under the  provisions  of  Statement of
Financial Accounting Standards ("SFAS") No. 109 - "Accounting for Income Taxes,"
which  provides for an asset and  liability  approach in  accounting  for income
taxes.  Under this approach,  deferred tax assets and liabilities are recognized
based on anticipated future tax consequences,  using currently enacted tax laws,
attributable to differences  between  financial  statement  carrying  amounts of
assets and liabilities and their respective tax bases.

Common stock issued for goods received and services rendered

The Company has issued  shares of common  stock for goods  received and services
rendered.  The costs of the goods or services are valued  according to the terms
of relative  agreements or market value on the date of  obligation.  The cost of
the goods or services has been charged to operations.

Net loss per share

Basic loss per share is computed by dividing  net loss by the  weighted  average
number of common shares outstanding during the period. Diluted loss per share is
computed  by  dividing  net  loss  by the  weighted  average  number  of  shares
outstanding,   after  giving  effect  to  potentially   dilutive   common  share
equivalents  outstanding  during the period.  Potentially  dilutive common share
equivalents  are not  included in the  computation  of diluted loss per share if
they are  anti-dilutive.  Diluted loss per common share is the same as basic for
all periods presented  because the effect of potentially  dilutive common shares
arising from outstanding stock warrants and options was  anti-dilutive.  For the
year ended September 30, 2005 and 2004, the  potentially  dilutive common shares
from stock options and warrants were  10,925,000  and  5,395,813,  respectively.
There were no  potentially  dilutive  common stock  options and warrants for the
year ended September 30, 2003. If all convertible  debt  instruments,  including
accrued interest were to be considered,  an additional  167,565,  65,492,921 and
76,162,918  common shares for the three years ended September 30, 2005, 2004 and
2003,  respectively,  may  have  been  dilutive  depending  on  the  results  of
operations of the Company.

Stock-based compensation

In November 2004, the Board of Directors  authorized a 2004  Compensatory  Stock
Option Plan,  which was approved at a special meeting of the stockholders of the
Company held on February 4, 2005.

The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
123 - "Accounting for Stock Based Compensation." Under SFAS No. 123, the Company
is permitted to either  record  expenses  for stock  options and other  employee
compensation plans based on their fair value at the date of grant or to continue
to apply the Company's  current  accounting  policy under Accounting  Principles
Board,  ("APB")  Opinion No. 25 "Accounting  for Stock Issued to Employees," and
recognize  compensation  expense,  if any,  based on the intrinsic  value of the
equity  instrument at the measurement date. In December of 2002, the FASB issued
SFAS No.  148,  "Accounting  for Stock-  Based  Compensation  -  Transition  and
Disclosure  - An  Amendment to FASB  Statement  No. 123" to provide  alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for  stock-based  employee  compensation.  The Company elected to not
change  to  the  fair  value  based  method  of   accounting   for  stock  based
compensation.  Additionally,  the statement amended  disclosure  requirements of
SFAS No. 123 to require  more  prominent  disclosure  in both annual and interim
financial  statements.  We elected  to  continue  following  APB No. 25 and when
required, provide the pro forma provisions of SFAS No. 123.


                                      F-11
<PAGE>

As referred to in Note 9, the Company  changed the  exercise  price of 3,000,000
options effective January 1, 2005. Such options for which the exercise price has
been  changed are  referred to as  re-priced  options and are  accounted  for as
compensatory  options using variable  accounting  treatments in accordance  with
FASB Interpretation No. 44, "Accounting for Certain Transactions involving Stock
Based Compensation - an Interpretation of APB No. 25" ("FIN44").  Under variable
plan accounting,  compensation expense is adjusted for increases or decreases in
the fair  market  value of the  Company's  common  stock to the extent  that the
market value exceeds the exercise price of the option.  Variable plan accounting
is applied to the re-priced options until the options are exercised,  forfeited,
or expire unexercised.

Had  compensation  costs for the  stock  options  granted  to an  employee  been
determined  based  on the fair  value at the  grant  date for the  years  ending
September 30, 2005,  2004, and 2003,  consistent with the provisions of SFAS No.
123, the net loss and net loss per share would have been  reflective  of the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
                           Description                         2005             2004             2003
--------------------------------------------------------   -------------    -------------    -------------
<S>                                                        <C>              <C>              <C>
Net loss - as reported                                     $ (11,270,478)   $  (3,593,388)   $  (3,153,882)

    Plus: stock-based compensation expense determined
       using the intrinsic value of the option at the
       measurement date                                          449,737          308,126               --

    Less: stock-based employee compensation determined
       under fair value method for all awards granted to
       Employees                                                (456,793)        (519,483)              --
                                                           -------------    -------------    -------------

Net loss - pro forma                                       $ (11,277,534)   $  (3,804,745)   $  (3,153,882)
                                                           =============    =============    =============
Basic and diluted net loss per share - as reported         $       (0.02)   $       (0.01)   $       (0.01)
                                                           =============    =============    =============
Basic and diluted net loss per share - proforma            $       (0.02)   $       (0.01)   $       (0.01
                                                           =============    =============    =============
</TABLE>


The weighted  average fair value at date of grant for options  re-priced  during
the fiscal year ended  September 30, 2005 was $0.38.  The weighted  average fair
value  at date of grant  for  options  granted  during  the  fiscal  year  ended
September 30, 2004 was $0.40. The Company did not grant options to employees for
the fiscal year ended  September 30, 2003.  The fair value of options at date of
grant  was  estimated  using  the  Black-Sholes  option-pricing  model  with the
following weighted average assumptions:

         Assumptions                2005           2004          2003
----------------------------    -----------    -----------    ---------

Expected life (years)            3.58 years        4 years            -

Interest rate                         4.00%          4.00%            -

Dividend yield                        0.00%          0.00%            -

Volatility                          107.00%         94.20%            -

The  Black-Scholes  option valuation model was developed for estimating the fair
value  of  traded  options  that  have no  vesting  restrictions  and are  fully
transferable.  Because  option  valuation  models  require the use of subjective
assumptions,  changes in these  assumptions can materially affect the fair value
of the options.  The Company's options do not have the characteristics of traded
options;  therefore,  the option valuation  models do not necessarily  provide a
reliable measure of the fair value of its options.

New accounting pronouncements

On December 16, 2004,  as amended on April 14, 2005,  the  Financial  Accounting
Standards Board (FASB) issued FASB "SFAS" No. 123 (revised  2004),  "Share-Based
Payment" ("SFAS No. 123(R)"),  which is a revision of SFAS No. 123,  "Accounting
for Stock-Based  Compensation."  SFAS No. 123(R)  supersedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees,"  and amends SFAS No. 95,  "Statement
of Cash Flows."  Generally,  the  approach in SFAS No.  123(R) is similar to the
approach  described  in SFAS No. 123.  However,  SFAS No.  123(R)  requires  all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the income  statement based on their fair values.  Pro forma
disclosure is no longer an  alternative.  The new standard will be effective for
public entities in the first interim or annual  reporting period beginning after
June 15, 2005.  The Company has not yet assessed the impact of adopting this new
standard.


                                      F-12
<PAGE>

In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs, an Amendment
of ARB No. 43,  Chapter 4. The standard  requires that abnormal  amounts of idle
capacity  and  spoilage  costs  within  inventory  be excluded  from the cost of
inventory  and  expensed  when  incurred.  The  provisions  of SFAS No.  151 are
applicable to inventory  costs incurred during fiscal years beginning after June
15,  2005.  The  adoption  of SFAS No. 151 is  expected to have no impact on the
Company's consolidated financial statements.

In  December,  2004,  the FASB issued SFAS No. 153,  "Exchanges  of  Nonmonetary
Assets--an  amendment of Accounting  Principles Board ("APB") Opinion No. 29" is
effective  for fiscal  years  beginning  after  June 15,  2005.  This  Statement
addresses the  measurement of exchange of nonmonetary  assets and eliminates the
exception  from fair value  measurement  for  nonmonetary  exchanges  of similar
productive  assets in  paragraph  21(b) of APB Opinion No. 29,  "Accounting  for
Nonmonetary  Transactions"  and replaces it with an exception for exchanges that
do not have  commercial  substance.  The adoption of SFAS No. 153 is expected to
have no impact on the Company's consolidated financial statements.

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3". This
statement  changes the  requirements  for the  accounting for and reporting of a
change in accounting principle.  This statement applies to all voluntary changes
in accounting  principle.  It also applies to changes  required by an accounting
pronouncement  in the unusual instance that the  pronouncement  does not include
specific transition provisions. SFAS 154 is effective for accounting changes and
corrections  of errors made in fiscal years  beginning  after December 15, 2005.
Adoption  of  SFAS  154 is not  expected  to  have an  effect  on the  Company's
consolidated financial statements.

Reclassifications

During the year ended  September  30,  2005 the  Company  corrected  a 1,222,153
understatement  in the  number of shares of common  stock  outstanding  that has
consistently  existed for many years.  The shares were issued at a time when the
stock had no significant value and,  accordingly,  the correction of outstanding
shares resulted in a $122 increase in common stock and a corresponding  decrease
in additional  paid-in  capital.  All periods  presented  have been corrected to
include these additional shares.

Note 2 - Going Concern

The Company's  current  liabilities  exceed its current  assets by $1,758,428 at
September  30,  2005.  The  Company  has  incurred  net  losses of  $11,270,478,
$3,593,388,  and $3,153,882 in fiscal years 2005,  2004 and 2003,  respectively.
These  conditions  raise  substantial  doubt as to the ability of the Company to
continue as a going  concern.  The Company is in ongoing  negotiations  to raise
general  operating  funds and funds for specific  projects.  Management  will be
required to, and expects to, raise  additional  capital  through the issuance of
debt  securities  and  offerings  of  equity  securities  to fund the  Company's
operations,  and will attempt to continue  raising capital  resources until such
time as the Company generates revenues sufficient to maintain itself as a viable
entity. However, there is no assurance that such financing will be obtained.

The Company's current focus is to exploit its only assets,  which are agreements
with the DRSTP concerning oil and natural gas exploration in Sao Tome, an island
nation  located in the Gulf of Guinea off the coast of central West Africa,  and
in a JDZ  between  Sao  Tome and the  FRN.  The  Company  is  currently  forming
relationships  with other oil and gas companies  having  technical and financial
capabilities  to assist the Company in leveraging  its interests in Sao Tome and
the JDZ.  Should  circumstances  impede the  Company's  progress in  negotiating
production-sharing  contracts to develop its interests in the 2001 Agreement and
the 2003 Option Agreement with DRSTP, the Company's  business would be adversely
affected.    Should   the   Company   complete   successful    negotiations   of
production-sharing  contracts,  there is no  certainty  that the Company and its
joint  venture  partner(s)  will be able to  successfully  develop the Company's
interests. The Company currently has no other operations.

The Company  expects to continue  borrowing  funds from Chrome in the future but
there is no assurance  that funds will be made available or under similar terms.
If the  Company is  successful  in its efforts to  negotiate  production-sharing
contracts,  it expects that those contracts will provide cash to the Company for
continued  operations.  In prior years, the Company was able to raise funds in a
timely manner, but there is no assurance that they will continue to do so in the
future. The accompanying  financial  statements have been prepared assuming that
the  Company  will  continue  as a going  concern.  If the  Company is unable to
continue as a going concern,  the values realized from the Company's  assets may
be less than the carrying  amounts  reported in its  financial  statements.  The
accompanying financial statements do not include any adjustments relating to the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.


                                      F-13
<PAGE>

Note 3 - Sao Tome Concession

Concession Fee Payment

The 1997  Agreement  required the Company to pay a $5,000,000  concession fee to
the DRSTP.

In October 1999,  the DRSTP claimed that the Company had breached  certain terms
of the 1997 Agreement and announced a termination of the Agreement.  The Company
immediately  exercised its rights to have the matter  settled via  international
arbitration in accordance with the terms of the 1997 Agreement.

Concession Fee Agreement

In May 1997, the Company  entered into an exclusive joint venture with the DRSTP
(the "1997  Agreement").  On May 21, 2001,  the 1997 Agreement was replaced by a
Memorandum of Agreement (the "2001 Agreement"),  which was embodied in a Consent
Award  issued by the  arbitrator  as a result  of the  satisfaction  of  several
conditions,  including  the  ratification  of a treaty  between  the FRN and the
DRSTP. The 2001 Agreement gives the Company rights to participate in exploration
and production  activities in both the exclusive  territorial waters of Sao Tome
referred  to as the EEZ and an area  between  Sao  Tome and the FRN that the two
nations have designated as a JDZ.

After  the  acquisition  by Chrome  in  February  2001,  the  Company  initiated
negotiations with the DRSTP concurrent with the arbitration  process. On May 21,
2001,  the Company and the DRSTP  reached the 2001  Agreement,  witnessed by the
FRN, which replaced the 1997 Agreement and suspended the arbitration process. In
July 2002,  the 2001  Agreement  was  embodied in a Consent  Award issued by the
arbitrator as a result of the satisfaction of several conditions,  including the
ratification  of a treaty  between  the FRN and the  DRSTP  relative  to the JDZ
between the countries, and will remain in effect through September 30, 2024.

In April 2003, the Company and DRSTP entered into an Option Agreement (the "2003
Option Agreement") in which the Company relinquished certain financial interests
in the JDZ in exchange  for  exploration  rights in the JDZ. In April 2003,  the
Company  additionally   entered  into  an  administration   agreement  with  the
Nigeria-Sao  Tome  and  Principe  Joint  Development   Authority  ("JDA").   The
administration  agreement is the formal  agreement by the JDA that it will fully
implement ERHC's  preferential rights to working interests in the JDZ acreage as
set  forth  in the  2003  Option  Agreement  and  describes  certain  procedures
regarding the exercising of these rights.  However, ERHC retained under the 2001
Agreement the following  rights to  participate  in  exploration  and production
activities in the EEZ subject to certain  restrictions:  (a) right to receive up
to two blocks of ERHC's  choice,  and (b) the option to acquire up to a 15% paid
working  interest in up to two blocks of ERHC's  choice in the EEZ.  The Company
will be required to pay its  proportionate  share of the signature bonus and all
other costs related to the  exploration  and  exploitation  of the blocks in the
EEZ.

Under the 2003 Option Agreement, ERHC may exercise options to acquire fractional
working  interests in six (6) of the nine (9) blocks that have been announced by
the JDA and  will be  available  for  bidding  in the  JDZ.  A block  is an area
designated as an individual  unit for exploration or production of crude oil and
natural gas. Additionally, the amount of signature bonus that is payable by ERHC
to acquire these working interests is zero in four (4) blocks. ERHC must pay its
proportionate share of any signature bonuses in two (2) blocks.

On April 13,  2004,  the Company  submitted a letter to the JDA  exercising  its
option rights in the JDZ. The options exercised by the Company were:

<TABLE>
<CAPTION>
   Option Pick-ERHC         Working Interest
        Choice                 Percentage             JDZ Block#                  Signature Bonus Payable
-----------------------    --------------------    ---------------    ----------------------------------------------

                        <C>                     <C>                <C>
          1                        15%                   6                         Signature Bonus Free
          2                        15%                   5               100% of 15% of the total Signature Bonus
          3                        20%                   3                         Signature Bonus Free
          4                        30%                   2                         Signature Bonus Free
          5                        25%                   4                         Signature Bonus Free
          6                        20%                   9               100% of 20% of the total Signature Bonus
</TABLE>

This  exercise of the Company's  rights was subject to the condition  that if no
license is awarded or a license is awarded and subsequently withdrawn by the JDA
prior to the  commencement  of operations,  ERHC will be entitled to receive its
working interest in that block in a future license awarded for the block.


                                      F-14
<PAGE>

On April 26, 2004,  the Company  announced  that,  at meetings on April 23rd and
24th,  2004, the Joint  Ministerial  Council ("JMC") of the JDZ acknowledged the
Company's option  selections for award of interests  pursuant to the exercise of
rights under the April 7, 2003 Administration Agreement.

In August 2004, the Company entered into a Participation  Agreement with Pioneer
whereby the companies  will jointly  apply for rights in the  production-sharing
contract for Block 2 of the JDZ.

In September 2004, the Company entered into a Participation Agreement with Noble
whereby the companies  will jointly apply for rights in the  production  sharing
contract for Block 4 of the JDZ.

In December  2004,  the Company  entered  into a  Participation  Agreement  with
Pioneer   under  which  the  companies   jointly   applied  for  rights  in  the
production-sharing contract for Block 3 of the JDZ.

In May  2005,  the JDA  announced  the  awards  for the  blocks  in the 2004 JDZ
Licensing Round.  The awards included both the preferential  rights interests in
Blocks plus additional bid interests awarded to bid groups. The awards were:

o     In Block 2, the  Pioneer  and ERHC group was  awarded  35%  interest  as a
      result of the joint bid  submitted by the  companies.  In addition the JDA
      confirmed  the  award  to  ERHC of its 30%  Option  Interest,  free of any
      signature bonus.

o     In Block 3, the Pioneer and ERHC group was awarded 5% interest as a result
      of the joint bid submitted by the companies. In addition the JDA confirmed
      the award to ERHC of its 20% Option Interest, free of any signature bonus.

o     In Block 4 the Noble and ERHC group was awarded  35%  interest as a result
      of the joint bid submitted by the companies. In addition the JDA confirmed
      the award to ERHC of its 25% Option Interest, free of any signature bonus.
      The  Company  originally  formed a  relationship  Noble  Energy  Resources
      ("Noble")  to  negotiate  a  production  sharing  agreement  for  Block 4.
      However, Noble subsequently withdrew from negotiations and the company has
      entered  into an  agreement  with Addax  Petroleum  under which Addax will
      replace Noble in the ERHC/Noble  group.  Approval for Addax to participate
      in Block 4 has been requested from the JDA.

o     In  Block  5,  the JDA  confirmed  the  award  to  ERHC of its 15%  Option
      Interest, with signature bonus payable.

o     In  Block  6,  the JDA  confirmed  the  award  to  ERHC of its 15%  Option
      Interest, free of any signature bonus payable.

In June 2005,  ERHC  accepted the awards by the JDA for Blocks 2, 3, 4, 5 and 6,
subject to the execution of a mutually  acceptable  production-sharing  contract
and joint operating agreement for each block.

The above is only a brief  summary  of the terms of the 2001  Agreement  and the
2003 Option  Agreement and such  summaries do not purport to be complete and are
qualified in their  entirety by reference to the 2001  Agreement and 2003 Option
Agreement, respectively (any and all related documents).

Note 4 - Restricted Cash

At  September  30,  2004 the  Company had  restricted  cash of $3,026  which was
invested in an  interest-bearing  certificate of deposit,  pledged as collateral
for a letter of credit  for a  performance  bond  covering  certain  oil and gas
properties.  These oil and gas properties  were abandoned and written off during
the year ended September 30, 1999. The company was released from the performance
bond in 2005.

Note 5 - Notes Payable

Convertible Debt - Non-Related Party

The company had several convertible debt notes with individual third parties and
all but one of those  notes had been  repaid  or  converted  to common  stock at
September  30,  2005.  At  September  30,  2005,  the  Company  has  $33,513  of
nonaffiliated   convertible   debt  and  $3,189  accrued  but  unpaid   interest
outstanding.  At  September  30,  2005,  the  note  was  in  default  and if the
outstanding  convertible debt were converted using the conversion price of $0.20
per share, the Company would be required to issue 167,565 shares of common stock
based on an outstanding principal amount of $33,513.


                                      F-15
<PAGE>

At September 30, 2004, the Company's nonaffiliated  convertible debt and related
accrued but unpaid interest totaled $1,626,033 and $65,917, respectively. During
the year ended September 30, 2005, non-affiliated note holders agreed to convert
$1,592,520 of  convertible  debt and $84,850 of accrued  interest into 8,386,855
shares of common stock. The conversion price was $0.20 per share.

During the year  ended  September  30,  2004,  the  Company  received  notice of
conversion of  convertible  debt of $1,556,199  and accrued  interest of $88,867
into 8,225,330 shares of common stock.

Convertible Debt - Related Party

At September 30, 2004, the Company had convertible  debt instruments with Chrome
Energy, L.L.C ("Chrome"), a related party totaling $8,969,420,  bearing interest
at rates ranging from 5.5% to 20%.  Certain of the maturity dates on these notes
had been  extended and all were  converted  during the year ended  September 30,
2005.  Interest  accrued  and unpaid on these  notes at  September  30, 2004 was
$2,126,265.

During  2005,  the  Company  reached an  agreement  with  Chrome to  restructure
outstanding  debt totaling  $10,134,084 and enter into a new $2,500,000  working
capital line of credit. To facilitate the debt restructuring, the Company agreed
to  issue  Chrome   14,023,352   shares  of  common  stock;   12,465,202  shares
immediately,  623,260  shares on the  advance of  $1,000,000  and the  remaining
934,890 shares upon receipt of the  additional  $1,500,000  available  under the
working capital line. In addition the Company issued 12,308,560 shares of common
stock to satisfy  current  interest  accrued but not paid of  $2,461,712  on the
notes that were consolidated into the new $10,134,084 note.

Pursuant to the debt restructure agreement, the Company issued a 12% note with a
principal  amount of $10,134,084,  to be settled at the option of the Company at
$0.175 per share,  and expiring on January 31,  2007.  The Company also issued a
10% working  capital line of credit in the amount of $2,500,000 to be settled at
the option of the Company at $0.175 per share.  When the working capital line of
credit was fully  funded in January  2005,  there was  $12,634,084  of principal
outstanding under these two notes.

On January  28,  2005,  the Company  exercised  its right to convert the two new
notes (the "Consolidated Note"), dated at December 15, 2004, in favor of Chrome,
with a principal balance of $10,134,084 and accrued interest at January 28, 2005
of $146,597,  and (the "Promissory Note"),  dated at December 15, 2004, in favor
of Chrome with an original  principal  amount of $2,500,000 and accrued interest
at January 28, 2005 of $11,986.

The Company issued to Chrome  73,100,954 of  unregistered  shares of ERHC common
stock in conversion of the entire outstanding  principal and accrued interest of
the  Consolidated  Note  and the  Promissory  Note.  The  Consolidated  Note and
Promissory Note were converted at $0.175 per share pursuant to the terms of such
notes and cancelled in their entirety. ERHC issued these shares pursuant Section
4(2) of the Securities Act of 1933, as amended.

At September  30,  2005,  the Company has no  convertible  debt with any related
party.

Note 6 - Accrued Salaries

At September  30, 2004,  the Company had accrued  salaries of $723,035,  owed to
former officers of the Company. The amounts and rights claimed by these officers
were subject to lawsuits in which the Company  negotiated  final  settlements in
2005. During the year ended September 30, 2005, the Company paid cash of $76,275
and issued 595,000 shares of common stock,  valued at $394,450,  to fully settle
these claims.  The Company  recognized a $252,310  gain in  connection  with the
settlement.

Note 7 - Accrued Interest

Accrued interest consists of the following at September 30, 2005 and 2004:

                                                           2005          2004
                                                        ----------   ----------

Accrued interest - non convertible related party loan   $       --   $  129,924

Accrued interest - convertible related party loans              --    2,126,265

Accrued interest - convertible debt                          3,189       65,917
                                                        ----------   ----------

Total                                                   $    3,189   $2,322,106
                                                        ==========   ==========


                                      F-16
<PAGE>

In  December  2004,   the  Company   called  the   conversion   feature  on  the
non-affiliated  convertible  debt of $1,592,520 and accrued  interest of $84,850
and issued  7,962,605  and  424,250  shares of common  stock  respectively  at a
conversion price of $0.20 per share. In January 2004, the Company  solicited the
consent  of  non-affiliated  convertible  debt  holders to pay  interest  due on
January 31, 2004 with common stock of the Company having a per share  conversion
price to $0.20 per share.  During the year ended September 30, 2004, the Company
issued 951,450 shares of common stock to these  non-affiliated  convertible debt
holders (444,330 shares were for conversions of notes during 2004) and 2,453,607
shares  of  common  stock to Chrome  for  payment  of  accrued  interest  in the
aggregate amounts of $190,290 and $490,723, respectively.

Note 8 - Income Taxes

At  September  30,  2005 the  Company  has a  consolidated  net  operating  loss
carry-forward  ("NOL") of approximately $63.6 million expiring through 2025. The
Company has a deferred tax asset of approximately  $22.8 million  resulting from
this NOL. The loss carry forwards are subject to certain  limitations  under the
Internal Revenue Code including  Section 382 of the Tax Reform Act of 1986. ERHC
believes that the utilization of this net operating loss carry forwards could be
significantly  limited due to the changes in ownership and control. The ultimate
realization of the resulting net deferred tax asset is dependent upon generating
sufficient  taxable income prior to expiration of the NOLs. Due to the nature of
these NOLs and since  realization is not assured,  management has  established a
valuation allowance relating to the deferred tax asset for both 2005 and 2004 in
an amount equal to the deferred tax asset.

The  composition of deferred tax assets and the related tax effects at September
30, 2005 and 2004 are as follows:

                                   2005             2004
                               ------------    ------------

Net operating losses           $ 21,629,493    $ 21,724,651
Accrual for asset retirement        164,900         164,900
Accrued litigation expenses              --         245,831

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

  Total deferred tax assets      21,794,393      22,135.382
  Valuation allowance           (21,794,393)    (22,135,382)
                               ------------    ------------

    Net deferred tax asset     $         --    $         --
                               ============    ============

The difference  between the income tax benefit in the accompanying  statement of
operations and the amount that would result if the U.S.  federal  statutory rate
of 34% were applied to pre-tax loss for the years ended September 30, 2005, 2004
and 2003 is as follows:

CHECK FOR SPACE - may have overwritten text

<TABLE>
<CAPTION>
                                           2005                          2004                         2003
                                --------------------------    --------------------------    --------------------------
                                   Amount            %           Amount           %           Amount            %
                                -----------    -----------    -----------    -----------    -----------    -----------
<S>                             <C>            <C>            <C>            <C>            <C>            <C>
Benefit for income tax at
  federal statutory rate          3,831,962           34.0%   $ 1,221,752           34.0%   $ 3,558,869           34.0%
Loss on debt extinguishments     (1,954,856)         (17.3)            --             --             --             --
Directors stock compensation       (627,130)          (5.6)            --                            --             --
Accrued interest not paid          (390,064)          (3.5)      (354,337)          (9.9)      (411,136)          (3.9)
Amortization of deferred
  compensation                     (152,910)          (1.4)      (104,763)          (2.9)            --             --
Other                               (25,747)          (0.1)        (4,825)          (0.1)            --             --
Expiration of net operating
  losses                         (1,022,244)          (9.1)      (221,000)          (6.2)            --             --
Change in valuation allowance       340,989            3.0       (536,827)         (14.9)    (3,147,733)         (30.1)
                                -----------    -----------    -----------    -----------    -----------    -----------
Effective rate                  $        --              -%   $        --              -%   $        --              -%
                                ===========    ===========    ===========    ===========    ===========    ===========
</TABLE>


                                      F-17
<PAGE>

Note 9 - Shareholders' Equity (Deficit)

Common Stock and Warrants Issued For Cash

From time to time, in order to fund operating activities of the Company,  common
stock is issued for cash.  Generally,  offerings of the  Company's  common stock
include  warrants  to acquire  common  stock of the  Company  at fixed  exercise
prices.  Occasionally,  depending on the nature of the offering and restrictions
imposed on the shares being  acquired,  the exercise price of the warrant may be
below  the fair  market  value  of the  underlying  common  stock on the date of
issuance.  There  was no stock  issued  with  warrants  during  the  year  ended
September 30, 2005.  During the year ended September 30, 2004 the Company issued
3,231,940  shares of common  stock,  with  warrants to  purchase  an  additional
3,231,940  shares at exercise  prices ranging from $0.50 to $0.55,  for net cash
proceeds  of  $975,000.  During the year ended  September  30,  2003 the Company
issued 9,440,000 shares of common stock, with warrants to purchase an additional
7,840,000  shares at exercise  prices ranging from $0.20 to $0.50,  for net cash
proceeds of $1,072,500.

Common Stock Issued For Settlement of Accounts Payable

The Company has issued  shares of common  stock for  settlement  of  outstanding
accounts  payable to various  creditors.  During the years ended  September  30,
2005, 2004 and 2003, the Company issued 735,000,  1,458,514 and 1,527,986 shares
of common stock with an  aggregate  value of  $359,789,  $533,248 and  $177,816,
respectively, for payment of accounts payable balances.

Common Stock Issued For Conversion of Debt and Payment of Accrued Interest

The Company has issued shares of common stock for the  conversion of convertible
debt notes and accrued interest on convertible debt notes. During the year ended
September 30, 2005,  non-affiliated note holders agreed to convert $1,677,371 of
convertible debt and accrued interest into 8,386,855 shares of common stock. The
conversion  price was $0.20 per share.  The Company  also agreed to issue Chrome
14,023,352 shares of common stock, 12,465,202 issued immediately, 623,260 shares
issued on the  advance of  $1,000,000  and the  remaining  934,890  shares  upon
receipt of an additional $1,500,000 available under the working capital line. In
addition,  the  Company  agreed to issue  12,308,359  shares of common  stock to
satisfy  current  interest  accrued  but not paid of  $2,461,712.  The shares of
common stock to Chrome for entering into the debt restructuring had a fair value
of $5,749,575 and have been recorded as a loss on extinguishment of debt.

During the year ended September 30, 2005, the Company issued  73,100,954  shares
of  common  stock to  Chrome  for  conversion  of all of its  debt  representing
$12,634,084 of principal and $158,583 of accrued interest.

During the year ended September 30, 2004, the Company issued 7,780,995 shares of
common stock for the  conversion of  $1,556,199  worth of  convertible  debt and
issued  3,404,057  shares of common stock for the payment of $681,013 of accrued
interest  on  convertible  debt.  During the year ended  September  30, 2003 the
Company  issued  13,612,495  shares  of  common  stock  for  the  conversion  of
$2,722,499 worth of convertible debt and issued 3,502,245 shares of common stock
for  the  payment  of  $700,439  accrued  interest  on  convertible   debt.  All
conversions and interest payments were based upon a conversion price of $0.20.

Stock Options Issued and Re-Priced

On January 1, 2005,  the Company  agreed to issue options to purchase a total of
1,250,000  shares of common stock,  upon completion of a full year of service to
two consultants as part of their initial  compensation  packages.  These options
have an exercise  price of $0.20 per share and vest on  December  31,  2005.  On
September 1, 2005,  the Company  agreed to issue  options to purchase a total of
500,000 shares of common stock,  upon  completion of a full year of service to a
consultant as part of his initial  compensation  package.  These options have an
exercise price of $0.20 per share and vest on September 1, 2006.

During the year ended  September  30,  2005,  the Company  modified the exercise
price of 3,000,000 options granted to one employee from $0.30 per share to $0.20
per share,  which made those options subject to variable plan accounting.  Under
variable  plan  accounting,  compensation  expense is adjusted for  increases or
decreases in the fair market value of the  Company's  common stock to the extent
that the market  value  exceeds the new exercise  price of the option.  Variable
plan  accounting  is applied to the  re-priced  options  until the  options  are
exercised,  forfeited,  or expire unexercised.  For the year ended September 30,
2005,  the  Company  incurred  additional  expense of $194,737 as a result of an
upward change in the fair market value on the underlying common stock.


                                      F-18
<PAGE>

Common Stock Issued For Proceeds Previously Received

During September 2003, the Company entered into a stock  subscription  agreement
to issue  1,000,000  shares of common  stock at $0.25 per share  generating  and
receiving  total  proceeds of $250,000 as of September  30, 2003.  However,  the
shares were not issued  until  November  2003.  The total  proceeds  received of
$250,000 was recorded in  additional  paid-in  capital at September 30, 2003 and
the Company has excluded  these shares in its  calculation  of weighted  average
number of basic and diluted common stock shares  outstanding  for the year ended
September  30, 2003. In connection  with the sale of stock,  1,000,000  warrants
were issued with a weighted average exercise price of $0.50 per warrant expiring
in September 2007.

Warrants

Information  regarding  warrants and their respective  changes as of and for the
fiscal years ended September 30, 2005, 2004 and 2003 are as follows:

<TABLE>
<CAPTION>
                                                    Warrants                                   Options
                                    ----------------------------------------    ---------------------------------------
                                       2005           2004          2003           2005          2004           2003
                                    -----------   -----------    -----------    -----------   -----------   -----------
<S>                                  <C>           <C>             <C>            <C>         <C>           <C>
Outstanding, beginning of year       16,166,940    13,430,000      8,780,575      3,000,000            --            --
Granted                                      --     3,231,940      7,840,000             --   (c)3,000,000           --
Exercised                         (a)(1,000,000)  (b)(375,000)            --             --            --            --
Expired/cancelled                            --      (120,000)    (3,190,575)            --            --            --
                                    -----------   -----------    -----------    -----------   -----------   -----------
 Outstanding, end of year            15,166,940    16,166,940     13,430,000      3,000,000     3,000,000            --
                                    ===========   ===========    ===========    ===========   ===========   ===========
 Exercisable                         15,166,940    16,166,940     13,430,000      2,000,000     1,000,000            --
                                    ===========   ===========    ===========    ===========   ===========   ===========
</TABLE>

(a) During 2005,  1,000,000  warrants  were  exercised  on a cashless  basis for
587,364 shares of common stock.

(b) During July 2004,  375,000  warrants were  exercised on a cashless basis for
247,882 shares of common stock.

(c) During the year ended  September  30, 2004,  the Company  issued  options to
purchase  3,000,000 shares of common stock to an employee as part of his initial
compensation  package.  These options have a revalued  exercise price of $0.20 a
share, with 1,000,000 options vesting in each of September 2004, August 2005 and
August 2006.

The weighted average option and warrant exercise price information as of and for
the fiscal years ended September 30, 2005, 2004 and 2003 is as follows:

<TABLE>
<CAPTION>
                                                 Warrants                                   Options
                                 ----------------------------------------  ---------------------------------------
                                    2005           2004          2003           2005          2004           2003
                                 -----------   -----------   -----------   -----------   -----------   -----------
<S>                              <C>           <C>           <C>           <C>           <C>           <C>

Outstanding, beginning of year   $      0.36   $      0.32   $      0.86   $        --   $        --   $        --
Granted                                   --          0.52            --          0.20          0.30            --
Exercised                               0.20          0.20            --            --            --            --
Expired/cancelled                         --          0.50          1.99            --            --            --
                                 -----------   -----------   -----------   -----------   -----------   -----------
Outstanding, end of year         $       .37   $      0.36   $      0.32   $      0.20   $      0.30   $        --
                                 ===========   ===========   ===========   ===========   ===========   ===========
Exercisable                      $       .37   $      0.36   $      0.32   $      0.20   $      0.30   $        --
                                 ===========   ===========   ===========   ===========   ===========   ===========
</TABLE>


Significant  warrant  groups  outstanding  at September  30,  2005,  and related
weighted  average  exercise  price,  exercise  price range and weighted  average
remaining contractual life information are as follows:


                                      F-19
<PAGE>

<TABLE>
<CAPTION>
                                                   Weighted                         Weighted
                                                   Average         Exercise          Average
                                   Warrants        Exercise         Price         Contractual
      Grant Grouping             Outstanding        Price           Range            Years
--------------------------      -------------    ------------    ------------    --------------
<S>                             <C>              <C>             <C>             <C>
Chrome                               2,500,000          $0.25           $0.25              3.2
Common stock purchase               11,496,940           0.33       0.20-0.55              1.7
S-1/S-3 contingent                   1,050,000           0.75            0.75              (a)
Other                                  120,000           3.00            3.00             3.25
</TABLE>

(a) These warrants  expire 14 months after the Company files an effective S-1 or
S-3 registration statement.

Note 10 - Commitments and Contingencies

Litigation

During August 1999 and February 2001, the Company  underwent changes of control.
Following  the changes of control of the  Company,  new  management  and the new
board of directors  were  required to expend  significant  Company  resources to
settle claims and expenses  arising out of the conduct of prior  management.  In
addition, the Company faced additional unresolved claims and disputes, including
suits seeking  recoveries in excess of $1.0 million brought by former  employees
and  officers for back salary and other  amounts.  The Company  negotiated  full
settlement  of these  claims in 2005 and cash of  $76,275  was paid and  595,000
shares  of  common  stock  was  issued  at a  value  of  $394,450  and a gain on
settlement  of $252,310  was  recognized.  As of  September  30, 2004  officers'
salaries of $723,035 were accrued in connection with these claims.

Additionally,  from time to time, certain potential obligations are presented to
the  Company  that  may  have  originated  during  periods  not  under  existing
management's  control.  These  alleged  obligations  are generally for goods and
services for which the Company has no record. The Company actively  investigates
these claims as they arise.  All known material  obligations of the Company have
been  recorded  and  reflected  in the  financial  statements,  but  there is no
certainty  that all material  claims have been presented to the Company nor have
the benefits of available  statutes of limitations been considered,  should they
apply.

Operating Lease

The Company leases office space at 5444 Westheimer  Road,  Houston,  Texas.  The
lease for office space expires  February  2006. The monthly base rent payment is
$3,567 based on approximately 1,900 square feet of office space. Upon expiration
of its current lease,  the Company expects to lease the same space or comparable
space in the normal  course of  business.  During the year ended  September  30,
2005,  the  company  incurred  lease  expense of $31,697.  Prior to 2005,  lease
expense  was  included  in the  management  services  agreement  with Chrome Oil
Services,  Ltd. ("COS"),  a company  controlled by the Company's board chairman/
primary stockholder. (See note 12)

Employment and Consulting Agreements

The  Company's  President  and Chief  Executive  Officer,  Mr. Ali Memon,  has a
three-year  employment  agreement  that  began on August 1, 2004 and  originally
included a base salary of $150,000 per year.  On January 25, 2005,  the Board of
Directors  approved an increase in Mr.  Memon's salary from $150,000 to $200,000
per year for the remaining term of the contract,  beginning January 1, 2005, and
expiring July 31, 2007.

Effective  January 1, 2005, the Company entered into consulting  agreements with
two  individuals,  which  require  payment of cash and issuance of options for a
total of  1,250,000  shares of common  stock upon  completion  of a full year of
service.  These options have an exercise  price of $0.20 per share and will vest
immediately  upon  issuance and will have no expiration  date.  Either party may
terminate these  consulting  agreements with 30 days notice.  The options issued
under these consulting agreements include provisions for cashless exercise.

Effective January 1, 2005, the Company entered into a consulting  agreement with
an individual  which requires  payment of cash and the issuance of options for a
total of  500,000  shares of common  stock  upon a full  year of  service  (This
agreement was signed  September 1, 2005,  but was effective at January 1, 2005).
These  options  have an  exercise  price  of  $0.20  per  share  and  will  vest
immediately  upon  issuance and will have no expiration  date.  Either party may
terminate these  consulting  agreements with 30 days notice.  The options issued
under these consulting agreements include provisions for cashless exercise.


                                      F-20
<PAGE>

In August 2005, the Company entered into an agreement with a consulting group to
identify and introduce to the Company oil and gas acquisition  opportunities  in
Nigeria.  The  Company is  required  to pay a base fee of $1,000  per month.  In
addition  the  Company  shall  pay a  success  fee  of  $75,000  per  successful
acquisition,  as  defined.  The  agreement  has a term of one year  but  expires
immediately  upon the 30 day  written  notice of  termination  by either  party,
without penalty to either party.

In August 2005, the Company entered into an agreement with a consulting group to
identify  and  introduce  to the Company oil and gas  acquisition  interests  in
oil/mining  leases granted by the government of the Federal Republic of Nigeria.
The Company is required to pay a base fee of $1,000 per month.  In addition  the
Company  shall pay a success  fee of  $80,000  per  successful  acquisition,  as
defined.  The  agreement  also  provides  for the  payment  of  legal  fees  per
successful  transaction,  as defined.  The  agreement has a term of one year but
expires  immediately  upon the 30 day written  notice of  termination  by either
party, without penalty to either party.

During May 2003,  the Company  entered into a consulting  agreement  for general
consulting services,  including transaction support and evaluation of geological
and seismic data. The Agreement has been revised several times.  The most recent
revision became effective on April 1, 2005 and terminates on September 30, 2005.
This revision  reduced the  consultant's  compensation to $2,000 per month (from
the former rate of $10,000  per  month).  In  addition,  the  revised  agreement
provides  for a one-time  success fee of $50,000  and  500,000  shares of common
stock if the Company  closes a transaction  for sale of its interest in the JDZ.
During the years ended September 30, 2005 and 2004, total expense incurred under
this consulting agreement was $84,970 and $166,370, respectively.

In May 2002, the Company  entered into an agreement  with a consulting  group to
advise the Company in securing  financing of up to $1,500,000 and in structuring
a joint venture  arrangement  with a partner.  This  agreement  expired in March
2005.  During the year ended September 30, 2005, no expenses were incurred under
this  agreement.  During the year  ended  September  30,  2004,  total  expenses
incurred  under this  consulting  agreement  were $27,462,  of which $25,000 was
charged against additional paid-in capital.

Note 11 - Supplemental Disclosure of Cash Flow Information

Following is an analysis of non-cash  operating  and  financing  activities  and
non-cash  investing and financing  activities for the years ended  September 30,
2005, 2004 and 2003.

<TABLE>
<CAPTION>
                                                        2005         2004          2003
                                                    -----------   -----------   -----------
<S>                                                 <C>           <C>           <C>
Noncash operating and financing activities:
  Stock issued in exchange for:
    Accounts payable and accrued liabilities        $   359,790   $   533,248   $   177,816
    Accrued salaries                                    394,450            --            --
    Accrued interest                                     84,852       681,013       700,439
    Accrued interest, related party                   2,620,295            --            --

Noncash investing and financing activities:
    Stock issued for conversion of non-related
      party debt to equity                            1,592,521            --            --
    Beneficial conversion feature associated with
      convertible debt                                  347,517     1,058,912            --
    Exchange of convertible and non convertible
      debt, related party                            10,134,084            --     2,722,499
    Stock issued for conversion of related party
      debt to equity                                 12,634,084            --            --
</TABLE>

The Company did not make cash  payments  for  interest or income taxes in any of
the three years ended September 30, 2005.

Note 12 - Related Party Transactions

Since the Company began its current business  operations,  it has been dependent
on its primary  stockholder/  board  chairman and companies he controls for debt
and equity financing.  Transactions with this stockholder are described in notes
5 and 9.


                                      F-21
<PAGE>

Management Services Agreement

The  Company  entered  into a  management  services  agreement  with  Chrome Oil
Services,  Ltd.  ("COS") in  February  2001.  Pursuant  to that  agreement,  COS
provided  the Company  with  management  and  business  development  services in
addition to providing  specified services in the areas of refinery  maintenance,
engineering  design,  and  upstream oil industry  services.  COS provided  these
services to the Company for a management fee of $68,000 per month. Messrs Okpala
and Ntephe were  consultants  of COS that  provides  services to the Company and
these persons receive salaries and overhead expense  reimbursement from COS, not
from the Company.  Expenses not covered under the management  services agreement
were borne by the Company.  Total  management  fees incurred  during each of the
years ended  September  30,  2005,  2004 and 2003 were  $204,000,  $816,000  and
$816,000,  respectively.  On December 23, 2004,  the Company and COS  cancelled,
effective  December 31, 2004, the  management  services  agreement.  In 2005 the
Company entered into consulting agreements with Messrs Okpala and Ntephe.

Related Party Liabilities

The Company's executive officers incurred  significant direct expense for travel
and related expenses of approximately  $279,000,  $418,000,  and $434,000 during
the three years ended  September  30,  2005,  2004,  and 2003  respectively.  At
September  30, 2004  accounts  payable and other  accrued  liabilities  included
$3,231, of amounts owed to one officer for direct travel expenses.

Note 13 - Quarterly Financial Information (Unaudited)

<TABLE>
<CAPTION>
                                                          For the Year Ended September 30, 2005
                                               --------------------------------------------------------
                                                  First         Second          Third         Fourth
                                                 Quarter        Quarter        Quarter        Quarter
                                               -----------    -----------    -----------    -----------
<S>                                            <C>            <C>            <C>            <C>
Revenue                                        $        --    $        --    $        --    $        --

General and administrative expenses                643,235        980,821        233,704      2,794,699
Interest expense                                   698,258        100,551            461        347,978
Other Income                                            --        260,013         10,537          8,254
Loss on extinguishments of debt                  5,749,575             --             --             --
Net loss attributable to common stockholders   (7,091,0685)      (821,359)      (223,628)    (3,134,423)
Basic and diluted earnings per share           $      (.01)   $        --    $        --    $      (.01)
<CAPTION>
                                                          For the Year Ended September 30, 2004
                                               --------------------------------------------------------
                                                  First         Second          Third         Fourth
                                                 Quarter        Quarter        Quarter        Quarter
                                               -----------    -----------    -----------    -----------
<S>                                            <C>            <C>            <C>            <C>
Revenue                                        $        --    $        --    $        --    $        --

General and administrative expenses                564,702        361,687        656,399        502,638
Interest expense                                   421,894        354,279        516,846        378,740
Other Income                                            --             --        163,797             --
Net loss attributable to common
  stockholders                                    (986,596)      (715,966)    (1,009,449)      (881,377)
Basic and diluted earnings per share           $        --    $        --    $        --    $        --
</TABLE>

The sum of the individual quarterly basic and diluted loss per share amounts may
not agree with year-to-date basic and diluted loss per share amounts as a result
of each  period's  computation  being based on the  weighted  average  number of
common shares outstanding during that period.

In the fourth  quarter  of 2005,  the  Company  made a  $347,517  adjustment  to
interest expense. The adjustment relates to the improper recognition of interest
arising from unamortized  beneficial conversion costs upon conversion of debt to
equity.


                                      F-22