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

                                   FORM 10-K/A

ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1996

                      Commission File Number 0-18275

                  ENVIRONMENTAL REMEDIATION HOLDING CORP.
               (Name of small business issuer in its charter)

 COLORADO                                                      88-0218499
(State of Incorporation)                               (IRS Employer ID Number)

                         420 Jericho Turnpike, Suite 321
                             Jericho, New York 11753
                     (Address of principal executive office)

Registrant's telephone number, including area code:  (516) 433-4730

Securities  registered  under  12 (b)  of  the  Exchange  act:  none  Securities
registered under Section 12 (g) of the Exchange Act:
                          Common Stock $.0001 par value

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 of 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  herein,  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
Form10-K  [  ]

Issuer's revenue for its most recent Fiscal Year were: $0

The  aggregate  market  value of the  1,590,634  shares of voting  stock held by
non-affiliatesof   the  Registrant  as  of  September   30,1996  was  $8,759,044
(assuuming  solely  for the  purpose  of this  calculation  that all  directors,
officers and greater than 5% stockholders of the Registrant are "affiliated").

The number of shares  outstanding of the  Registrant's  Common Stock , par value
$.0001 per share, as of September 30, 1996 was 3,239,374

                      Documents Incorporated by Reference:

                       Form 8-K filed on September 4, 1996
                      Form S-8 filed on September 13, 1996
<PAGE>
                                    PART I

ITEM 1.  DESCRIPTION OF BUSINESS

         On  August  23,  1996 the  Shareholders  of  Environmental  Remediation
Funding Corporation (ERFC) a privately held Delaware Corporation incorporated in
September 1995 obtained control of Regional Air Group Corporation  ("RAIR"),  by
way of a Reverse Triangular  Merger.  RAIR issued a total of 2,433,950 shares of
it $.0001 par value  Common  Stock  (restricted)  to  Regional  Air  Opportunity
Development Corp.,  ("RAODC"), a wholly owned subsidiary of RAIR.  Subsequently,
RAODC  acquired  100% of the issued and  outstanding  stock of ERFC from  ERFC's
shareholders in exchange for 2,433,950  shares acquired from RAIR. On August 29,
1996 RAIR filed an  amendment  to the Articles of  Incorporation  authorizing  a
change in the name of the corporation  from Regional Air Group  Incorporation to
Environmental Remediation Holding Corporation.

         Environmental  Remediation  Funding  Corporation  (ERFC) was founded to
pursue  environmental  remediation  contracts  both  in the  United  States  and
overseas,  primarily  in the oil  industry.  ERHC's goal is to acquire  small to
medium  size   environmental   companies   and  create  the  only  full  service
environmental  company  available to the petroleum  industry  today. In industry
terms, ERHC will be a "cradle to grave" environmental  company.  ERHC goal is to
eliminate the current  fragmentation of remedial services prevalent today, and ,
there  by,  increase  overall  quality  control.  ERHC as part of this goal will
reduce the need for multiple levels of subcontractors  and thereby increases its
potential for profit while reducing overall costs to its customers.

         ERHC has specifically  targeted the environmental  needs of the oil and
gas industry.  Moreover,  with ERHC's organization and expertise,  ERHC is fully
capable of utilizing its knowledge and equipment to handle
a variety of difficult and/or hazardous waste streams.

         What  ERHC  hopes to be to its  regional,  national  and  international
clients is an " all inclusive"  environmental  service company.  ERHC will offer
full  services  such  as  environmental  engineering,  consultations,  hazardous
(including  NORM waste) and non hazardous  waste cleanup,  the  manufacture  and
distribution of waste cleanup materials, waste management,  waste transportation
and disposal,  as well as, plug and  abandonment of oil and gas wells.  ERHC has
access to a technology that when proven will increase the output of existing low
producing oil wells using  standard  methods of A.P.I.  maintenance  and further
increase  production  by  utilizing  BAPCO  tool a "state of the art"  method of
lateral  drilling".  This is one of the major  reasons  that ERHC is in  serious
negotiation  for the  purchase of BAPCO.  ERHC hopes to complete the purchase of
BAPCO in early 1997.

         ERHC hopes to have signed a "Master Service Agreement" with Chevron Oil
to complete the plug and  abandonment  (P & A) of over 400 wells in Louisiana in
early 1997.  This contract  could be worth in excess of 70 million  dollars over
the next few years to ERHC.  This is the first of three  large  contracts  under
negotiation  with the oil and gas  industry.  In addition,  ERHC is in the final
stages of  negotiation  with two other major oil  companies  to take over all of
their plug and abandonment  work now being  performed "in house".  The major oil
companies  would prefer to have the  environmental  work completed by an outside
firms as it reduces their costs and overall environmental exposure.  Chevron and
the  other  major oil  companies  are  working  with ERHC for this work not only
because of ERHC  "cradle to grave"  approach  but  because of the oil  companies
prior  experience in working with ERHC's Chief Executive  Officer,  Sam L. Bass,
Jr.

         Mr.  Sam Bass,  Jr.  is  ERHC's  well-known  and    highly  experienced
CEO.  Mr.  Bass has a long standing and  respected    relationship  with all the
major and minor oil  companies  in   the U.S.  and abroad.           ERHC, under
Mr. Bass's guidance, is in a unique position to  obtain  P & A work from all the
major oil companies in Louisiana  and Texas.         The State of Louisiana  has
mandated  that 12,000 oil wells owned by the State,   as well as  30,000+  owned
by the oil  companies,  must be  plugged  and   abandoned  in the  next  two (2)
years.      ERHC has all the necessary  management and technical  qualifications
for the plug and abandonment of oil wells and because of those   qualifications,
is being contacted by all of the major oil companies.
                                        2
<PAGE>
         ERHC with the  assistance of Chevron is desiging a "state of the art" P
& A barge that will handle  pressure up to 10,000 psi, work in waters as shallow
as 19 inches and house up to fifteen  (15 ) people.  This barge will be the only
one of its kind on the gulf  coast  with a triad  of  capabilities:  P & A work,
reworking of wells and  environmental  clean-up.  ERHC will require a minimum of
four (4) barges if we are to  complete  the  Chevron  contract in the time frame
allotted under the agreement under discussion.
 .
         ERHC is in the final stages of  negotiation  to purchased two petroleum
fields,  the Woodbine Field located in Henderson  County , Texas and the Gunsite
Oil Field located in Wichita  Falls,  Texas.  ERHC is  negotiating to obtain the
rights  to a number  of other  oil and gas  producing  properties  in Texas  and
Louisiana.  As these  contracts are  consummated,  ERHC will use standard A.P.I.
methods of  "reworking"  the fields to  increase  production  twenty-five  (25%)
percent  in the  first six  months.  ERHC will then  utilize  the  "BAPCO"  tool
(lateral drilling) along with "rework" techniques to significantly  increase the
fields  production.  The Woodbine and Gunsite Fields are expected to close inthe
first  half of 1997.  They are  comprised  of 1200  acres and 200  wells.  After
reworking the fields using both traditional A.P.I.  methods of reworking and the
BAPCO tool , oil  production  is expected to increased a minimum of 5 times from
initial  production  levels to 1600 barrels a day. (Oil is currently selling for
approximately  twenty  (20)  dollars  per  barrel).  ERHC is in the  process  of
obtaining  independent  geologist's  report on both the Poloxy Gunsite Field and
the Henderson Field which our reports revealed proven primary reserves  ("behind
pipe") of over a million  barrels.  These figures do not include the  additional
reserves located within the sands above Gunsite.

         ERHC believes that the above stated markets have been neglected and are
a  profitable  market  niche that can be  exploited.  This would allow ERHC,  to
become a major player in the oil industry in a relatively  short period  without
the necessity of costly drilling routinely associated with oil exploration.  All
of the fields that have been and will be  acquired by ERHC have proven  reserves
verified by independent geologists.

         ERHC  is  also   negotiating  with  a  number  of  companies  who  have
concessions  to rework  oil and gas wells  overseas  specifically  in  Trinidad,
Indonesia and the Middle East. ERHC intends to offer rework techniques using the
"BAPCO" tool to obtain joint  venture  agreements  with these  companies.  Given
ERHC's knowledge and ability to considerably  increase a field's oil production.
ERHC looks forward to successfully  entering a number of long term  partnerships
in the near future.

         ERHC,  with  a  joint  venture  partner,  is  close  the  completing  a
concession agreement with the Panama Canal Commission that allows ERHC to supply
fuel and supplies to tankers moving through the canal.
ERHC
anticipates,  in its first phase,  to deliver up to one million  gallons of fuel
and supplies daily to the ships.  This agreement  requires ERHC to provide a two
and a half  million  dollar  Letter of  Credit to Texaco  for the fuel they will
provide. ERHC upon the signing of the concession will enter into negotiation for
the  purchase of two fuel  barges and two tugs.  This  Panama  concession  could
conservatively  generate 40 to 60 thousand  dollars a day in gross income.  This
contract  should  expand past the million  gallons a day in sales if the company
adds additional fuel barges.

         There are no  environmental  remediation  businesses  that control more
than two percent of the market.  The industry is fragmented  and  subcontract to
local firms  specializing  in specific needs for general  remediation  projects.
Small firms  offering a limited  scope of services and  locations  are having an
increasingly  difficult time competing  (therefore  open to acquisition by ERHC)
and many principals of small firms suggest that they need to merge to survive.

         Environmental  remediation  firms can generally be categorized into two
groups:  small firms with one or few  regional  offices and giant,  multi-office
firms  with  multi-million  dollar  revenues.  Small  firms  typically  lack the
resources  to complete  may of the more complex  multiple  jobs.  The very large
firms are
                                        3
<PAGE>
often only interested in the colossal, large dollar projects.

ITEM 2. DESCRIPTION OF PROPERTIES

         The Company  leases  approximately  1200 square feet of office space at
420  Jericho  Turnpike,  Suite  321,  Jericho,  New York for use as its  primary
offices. The lease payments are presently $1200.00 per month.

         The Company  leases  approximately  7,000 square feet of warehouse  and
office space at 111 Tubing Road,  Lafayette,  Louisiana.  The lease payments are
$550.00 per month.

ITEM 3. LEGAL PROCEEDINGS

         NONE

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

         NONE

                                     PART II

ITEM 5.  MARKET PRICE OF, DIVIDENS ON THE REGISTRANT'S COMMON EQUITYAND
RELATED STOCKHOLDER MATTERS.

         The  Company's  Common stock has been traded on the  over-the  -counter
market and reported on the OTC  Bulletin  Board,  under the symbol  "ERHC" since
August 23, 1996,  and under the symbol RIAR prior to that.  The following  table
sets forth the high and low bid price of the Company's  Common Stock as reported
on the over-the-counter  market for the periods indicated.  The price represents
inter-dealer quotations,  without retail mark-up,  mark-down commission, and may
not necessarily represent actual transactions.

Stock Price Comparisons

         Quarter Ending             High Sales Price          Low Sales Price
         September 30, 1996               6.2854                    2.0951

There was no trading in the Company's common stock since 1989.

As of September 30, 1996, There were in excess of 1,800 recorded shareholders of
the Company's  Common Stock.  The Registrant has not declared any dividends from
its inception. Management anticipates
that any future profits will be retained to finance the growth..
                                        4
<PAGE>
ITEM 7.  PLAN OF OPERATION.

         During FY 1996 the  Company has placed  themselves  in a position to be
very  profitable  in  the  coming  years.   There  is  expanding  pressure  from
govermental  agencies to resolve the major  difficulties  created by oil and gas
enterprises.  ERHC  addresses  theses  concerns  by  providing  services  to the
petroleum industry, such as, planning for the prevention pollution problems, the
confining and  mitigation of potential  pollution and the actual  cleanup of oil
spills both on the ground and in the water.

         If ERHC is  successful  in obtaining a Master  Service  Agreement  with
Chevron to plug and abandon wells in the Gulf of Mexico, it could be worth up to
70 million dollars during the next three years to
ERHC.
This Master  Service  Agreement  from  Chevron is expected to allows for further
sites to be added to the original
agreement, which may include a significant number of wells in Louisiana..

         Environmental  Remediation  Holding  Corporation,  is in the process of
developing  a Plug and  Abandonment  Division  under the guidance of Sam L. Bass
Jr., CEO of ERHC,  who will utilize the company's  extended  family of technical
experts and the combined  experience of ERHC's  management  and staff.  There is
great  confidence  by ERHC of its ability to service  the needs of its  clients,
using cutting edge  technology  and knowledge of all  environmental  remediation
disciplines

         The plug and abandonment of oil and gas wells is a detailed  process of
shutting  down and  discontinuing  the use of an  older,  unsafe  or  marginally
producing oil or gas wells.  There are many ecological  ramifications if oil and
gas wells are abandoned without following EPA and DEQ mandated guidelines. These
ramificationsare  caused due to aging  equipment  and pipe  casings  can lead to
"blow  outs",  oil and gas seepage  into the water,  or ground and ground  water
contamination.  These  problems  can lead to major  environmental  problems  and
expensive pollution cleanup.

         Environmental   Remediation   Holding   Corporation  has  targeted  the
environmental  remediation  needs of the oil and gas industry,  as well as other
difficult  to handle  waste  streams.  Additionally,  ERHC will begin to acquire
under valued,  marginally  producing  oil and gas  properties  with  significant
verifiable reserves. When those oil and gas properties are acquired, the Company
will use its exclusive "workover  techniques" to increase the wells' production.
The Company  believes that the above stated  market has been  neglected and will
become a profitable market niche that can be exploited.

         ERHC has been in negotiation  for the last month to purchase 60% of the
outstanding shares of Bass American Petroleum Company (BAPCO), which is expected
to become a subsidiary of Environmental  Remediation Holding  Corporation.  Bass
American  Petroleum Company main focus is to obtain a marginally  producing well
and increase  production of that well eight to ten time via a "lateral  drilling
process  using what is called a "lateral  I. P. Tool".  This  process is minimal
when it is compared to actually drilling a new well and gambling on an oil find.
Certainly, the I. P. Tool process is a simple, but effective way to build an oil
company  without the high risk and drilling  costs.  It has been discovered that
there is an eighty percent positive ratio of success. ERHC can buy old producing
wells and increase  production at a ten to fifteen times  increase in production
versus the cost of drilling
                                        5
<PAGE>
         With  ERHC's  broad  range  of  different  specialization's  and led by
experienced  management,  the  Company  can offer  its  regional,  national  and
international clients an all inclusive  environmental service.  Services such as
environmental engineering and consultation, hazardous (including NORM waste) and
non hazardous waste cleanup,  the manufacture and  distribution of waste cleanup
products,  waste management,  waste transportation and disposal, as well as plug
and abandonment of oil and gas wells.

         ERHC's   growth   concentration   will   be  on  the   acquisition   of
complementary,  small to medium environmental  remediation companies,  primarily
energy  related.  Also  the  company  will  seek  transportation   opportunities
associated with the environmental remediation of energy industries.

Stock and Security Transactions Subsequent to September 30, 1996

None

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's  financial  statements are included in a separate  Section of this
report following Item 14.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

The following  table lists the names of all Directors and Executive  Officers of
the Company.

NAME               AGE               POSITION                DATE OF AFFILIATION
Sam L. Bass Jr.    65                  CEO                      August  1996
                                     Chairman

James Day          67                President                  September 1996

James A. Griffin   43                Secretary                  September 1996
                                     Treasurer

James Calendar     58                 Director                  September 1996

William Beaton     60                 Director                  September 1996
                                        CFO
                                         6
<PAGE>
All Directors will serve until the next annual general meeting unless his office
is vacated  in  accordance  with the  Articles  of the  Company.  The  Executive
Officers serve at the pleasure of the Board of Directors.

     Sam L. Bass, Jr., CEO and Chairman of the Board Sam L Bass, Jr. joined ERHC
in 1996, at the time of the merger with RIAR, Mr. Sam L Bass Jr. has over thirty
years  experience  in the  petroleum  industry  both in the  United  States  and
overseas. It is this 30 year history and his close relationship with many of the
heads of the oil companies that has allowed ERHC access to contracts .

         Mr. Bass has founded over twenty  corporations,  predominantly  Oil and
Gas related so his  involvement  with ERHC helps to guarantee  our success.  Mr.
Bass have been a pioneer in downhole  drilling and  stabilization and holds many
patens  in  the  oil   industry.   Sam  Bass  is  recognized  by  several  major
publications,  government agencies,  Fortune 500 Companies and foreign countries
for his  endeavors  that have  resulted in seven  inventions.  Many of which are
presently being used around the world. Sam Bass through Bass Environmental World
Wide was in Kuwait  right after the Gulf War  putting out oil well fires.  It is
this  experience  that Mr. Sam Bass Jr. as CEO brings to ERHC.  It is Mr. Basses
intention to build a company that will make a positive impact on cleaning up the
environment  both in the Unites States and  overseas.  ERHC will also be able to
draw on this 30 years of experience in  determining  which fields are worth ERHC
pursuing.

Senator James Day, President
         Retired United States Senator from Texas. Deceased.

James A. Griffin,  Esq.  Corporate  Secretary and Treasurer
     Mr.  Griffin has served as Secretary / Treasurer and Director and Corporate
Counsel of ERHC since  September of 1996 shortly  after the Company was acquired
through  merger.  Since that time he has continued as corporate  secretary and a
director of the company.  Mr. Griffin received his Doctor of Jurisprudence  from
Tonro law school in Huntington, NY in 1986.

William Beaton CFO and Director
         Mr. Beaton has over 30 years  experience in management and finance.  He
is the former CEO of Clydesdale  Bank of Glasgow,  Scotland until his retirement
in 1995. Since then, he has been a self-employed  consultant providing a variety
of management and financial  consulting to small private and public corporation.
Mr. Beaton has been involved in international oil industry for the last 20 years
that will help ERHC meet its financial obligations.

Jim Calendar Director
     Mr.  Calendar was appointed a Director with ERHC in September of 1997.  Mr.
Calendar has over 30 years  experience in the field of oil and gas  exploration,
drilling,  plug and abandon,  blow-out control. Mr. Calendar has assisted in the
design, construction,  sea trials, and supervision of the first semi-submersible
oil rig operated in the Gulf of Mexico by Unocal.  Mr.  Calendar  supervised the
first offshore well drilled by Unocal  utilizing Louis Record's Control Unit and
Kick System for Blow- and  functioned as UNOCAL's  sole  supervisor on the first
well  drilled by Unocal.  Offshore,  Texas.  Functioned  as UNOCAL's  supervisor
working  with "Red Adair" and "Boots & Coots" for  Blow-out  scenarios.  Gulf of
Mexico until 1972 Designed well and
                                    7
<PAGE>
supervised  first  drill-ship  operated by Unocal in lower Cook Inlet of Alaska.
Introduced  "snow-makers"  for ice road and ice pad  construction on remote area
exploratory  wells in  Southern  Alaska.  Technology  extended  drilling  season
markedly. Designed, constructed and supervised UNOCAL's first remote all-season,
Hercules supported exploratory drill site. Designed,  constructed and supervised
first offshore Ice Island exploratory well drilled in Arctic Ocean (Beaufort Sea
Ice Island).  Designed,  constructed,  and supervised first year-around,  remote
site,  air-supported  exploratory  drilling  pad  north  of the  Arctic  Circle.
Designed and supervised  drilling of the first U.S. offshore Arctic  exploratory
well utilizing a drill-ship  system in Beaufort Sea.  Recalled,  from on-site at
drill-ship in Arctic Ocean to supervise control of Grayling Blowout,  Cook Inlet
of Alaska. Designed and supervised  semi-submersible  exploratory well, Offshore
California (Platform Irene Discovery).  Supervisor for the development and field
testing of UNOCAL's patented Horizontal and Extended Reach Drilling  Technology.
Initiated and supervised development of UNOCAL's current well control technology
and in-house training program.  Other numerous technological and drilling system
developments, platforms, rig designs and specifications. Mr. Calendar will be an
asset to ERHC in the coming year  especially  in pursuing our goal of becoming a
major player in the oil industry.

Pursuant to Section 16 of the Securities  Exchange Act, the Company's  executive
officers and directors and  beneficial  owners of more than 10% of the Company's
common  stock are  required to file  certain,  within  specified  time  periods,
indicating  their holdings of and  transactions  in the Company's  Common Stock.
Based  solely on the review of such  reports  provided  to the  Company,  and/or
written  representations  from such persons regarding the necessity to file such
reports,  the  Company is not aware of any  failures  to file  reports or report
transactions in a timely manner during the Company's fiscal year ended September
30, 1996.

ITEM 10. EXECUTIVE COMPENSATION

The Company has not paid any salaries to the officers or directors of ERHC.  The
Company has placed  755,043 shares in escrow for the benefit of Sam L. Bass, Jr.
as compensation to be earned by Mr. Bass over a four year contract. These shares
were valued at $125,000 per year, for a total of $500,000. ERHC authorized stock
to a number of the board,  but it has not been issued yet. The  directors are to
be  compensated  $25,000 per calendar  year which shall be payable with Rule 144
Restricted Shares of ERHC.

ITEM      12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table sets forth,  as of the date of this Report,  the number of
shares of the Company's outstanding common stock, $.0001 par value, beneficially
owned (as such term is defined in Rule 13d-3 under the  Securities  Exchange Act
of 1934, as amended),  by each director of the Company,  by each named executive
officer  of the  Company,  by  each  beneficial  owner  of  more  than 5% of the
Company's  common stock and by all of the Company's  directors and officers as a
group.
                                      8
<PAGE>
<TABLE>
<CAPTION>
<S>                  <C>                             <C>                                  <C>
Title of Class       Name and Address                Amount and Nature                     % of
                     of Beneficial Owner             of Beneficial Ownership              Class

Common               Sam L. Bass Jr.                       1,499,043                       46.28%



Common               Marvin Gibbons                          157,019                        4.85%

Common               James A. Day                             50,000                        1.54%

Common               Ken Krausman                             10,000                        0.31%
 
Common               James Logan                             352,019                       10.87%

All directors and officers as a group (3 persons)          1,716,062                       52.98%
</TABLE>
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  company  has  no  knowledge  of  any   transaction  or  series  of
transactions or any currently proposed transactions,  or series of transactions,
to which  ERHC was or is to be  party,  in which  the  amount  involved  exceeds
$60,000  involving  management,  or any  person  owning 5% or more of the common
stock, or any member of the immediate family of any of the foregoing persons.

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

Index to financial statements                                               Page

Independent Auditors Report                                                  F-1

Consolidated Balance Sheets                                                  F-2

Consolidated Statement of Operations                                         F-3

Consolidated Statement of Stockholders Equity                                F-4

Consolidated Statement of Cash Flows                                         F-5

Notes to Consolidated Financial Statements                                   F-6

27.      Financial Data Schedule                  

                                             9
<PAGE>
                                SIGNATURES

         Pursuant to the  requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunder duly authorized.

Registrant                                Environmental Remediation Holding Corp

                                            By:  /s/ Sam L. Bass, Jr.
                                                Sam L. Bass Jr. CEO and Chairman


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
in the capacities and on the dates stated:

Signature                                   Title                     Date

/s/ Sam L. Bass, Jr.
Sam L. Bass, Jr.                     CEO and Chairman             May 12, 1997

(Deceased)
Senator James Day                          President

/s/ James A. Griffin
James A. Griffin, Esq.              Secretary and Treasurer       May 12, 1997

/s/ James Calendar
James Calendar                            Director                May 12, 1997


/s/ William Beaton
William Beaton                      Director and CFO              May 12, 1997











                                        10
<PAGE>








                        INDEX TO FINANCIAL STATEMENTS


                                                                            Page

Independent Auditors Report..................................................F-1

Consolidated Balance Sheets .................................................F-2

Consolidated Statements of Operations  ......................................F-3

Consolidated Statements of Stockholders' Equity..............................F-4

Consolidated Statements of Cash Flows   .....................................F-5

Notes to Consolidated Financial Statements  .................................F-6
























<PAGE>







                         REPORT OF INDEPENDENT AUDITORS



TO:  The Board of Directors and Stockholders
         Environmental Remediation Holding Corp.
         Jericho, New York


We have audited the  accompanying  balance sheets of  Environmental  Remediation
Holding Corp., (the "Company") as of September 30, 1995 and 1996 and the related
statements of operations,  stockholders' equity and cash flows for the two years
then ended.  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  generally   accepted  auditing
standards.  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 financial  statements  referred to above present fairly, in
all material respects, the financial position of the Company as of September 30,
1996 and the results of its operations and its cash flows for the two years then
ended in conformity with generally accepted accounting principles.



                                                                            
                                                   Durland & Company, CPAs, P.A.

Palm Beach, Florida
May 9, 1997




                                     F-1
<PAGE>
<TABLE>
<CAPTION>
                     ENVIRONMENTAL REMEDIATION HOLDING CORP.
                           Consolidated Balance Sheets
                                  September 30,
<S>                                                                              <C>                       <C> 
                                                                                 1995                      1996
                                                                          ------------------        ------------------
                            ASSETS
CURRENT ASSETS
  Cash                                                                 $                  0                         0
  Prepaid expenses                                                                        0                         0
                                                                          ------------------        ------------------
    Total current assets                                                                  0                         0
                                                                          ------------------        ------------------
FIXED ASSETS (note 1c)
  Equipment                                                                               0                 3,720,000
  Accumulated depreciation                                                                0                  (372,000)
                                                                          ------------------        ------------------
    Total fixed assets                                                                    0                 3,348,000
                                                                          ------------------        ------------------
OTHER ASSETS
  Deposits                                                                                0                     5,000
  Deferred compensation expense, net (note 1e)                                            0                   427,500
                                                                          ------------------        ------------------
    Total other assets                                                                    0                   432,500
                                                                          ------------------        ------------------
Total Assets                                                           $                  0                 3,780,500
                                                                          ==================        ==================

             LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accrued expenses                                                     $                  0                         0
  Notes payable to officer (note 1d)                                                 40,977                     6,730
                                                                          ------------------        ------------------
    Total current liabilities                                                        40,977                     6,730
                                                                          ------------------        ------------------
LONG TERM LIABILITIES
  Long term debt                                                                     19,500                         0
                                                                          ------------------        ------------------
    Total long term debt                                                             19,500                         0
                                                                          ------------------        ------------------

Total Liabilities                                                                    60,477                     6,730
                                                                          ------------------        ------------------
STOCKHOLDERS' EQUITY
  Common stock, $0.0001 par value, authorized 950,000,000
    shares; 746,483,333 and 3,239,374 issued and outstanding at
    September 30, 1995 and 1996. (note 3)                                            74,648                       324
  Additional paid in capital in excess of par                                     3,654,240                 4,629,598
 Retained earnings (deficit)                                                     (3,789,365)                 (856,152)
                                                                          ------------------        ------------------
Total Stockholders' Equity                                                          (60,477)                 3,773,770
                                                                          ------------------        ------------------
Total Liabilities and Stockholders' Equity                             $                  0                 3,780,500
                                                                          ==================        ==================
</TABLE>
    The accompanying notes are an integral part of the financial statements.

                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                     ENVIRONMENTAL REMEDIATION HOLDING CORP.
                      Consolidated Statements of Operations
                            Year ended September 30,
<S>                                                                             <C>                   <C> 
                                                                                1995                  1996
                              REVENUE
Revenue                                                              $                    0                    0
                                                                          -----------------      ---------------
  Total revenue                                                                           0                    0
                                                                          -----------------      ---------------
                             EXPENSES
Automobile                                                                                0                7,257
Bank charges                                                                              0                  184
Compensation - officers                                                                   0              147,326
Consultant fees                                                                           0              337,956
Professional fees                                                                         0               19,500
Office rent                                                                               0                8,550
Office expenses                                                                       3,404                1,072
Travel                                                                                    0               19,380
Depreciation                                                                              0              372,000
Miscellaneous                                                                             0                    0
                                                                          -----------------      ---------------
  Total expenses                                                                      3,404              913,225
                                                                          -----------------      ---------------
Net loss before tax benefit and extraordinary item                                   (3,404)            (913,225)
                                                                          -----------------      ---------------
Extraordinary item - forgiveness of debt                                                  0               60,477
                                                                          -----------------      ---------------
Income tax benefit (note 2)                                                               0                    0
                                                                          -----------------      ---------------
Net loss                                                             $               (3,404)            (852,748)
                                                                          =================      ===============

Weighted average number of shares outstanding                                       884,407            3,239,374
                                                                          =================      ===============
Net loss per share                                                   $                (0.00)               (0.26)
                                                                          =================      ===============

</TABLE>

















    The accompanying notes are an integral part of the financial statements.

                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                     ENVIRONMENTAL REMEDIATION HOLDING CORP.
                 Consolidated Statements of Stockholder's Equity
<S>                                     <C>                <C>                 <C>            <C>                   <C>    
                                                           Additional        Stock                                     Total
                                        Common              Paid in         Subscrip            Accumulated         Stockholders'
                                         Stock              Capital          Receiv               Deficit              Equity
BALANCE, September
  30, 1995 *A                    $          74,648            3,654,240            0             (3,789,365)               (60,477)

Capital Transactions:
 *B                                        (74,612)              74,612            0                      0                      0

 *C                                            243            4,196,480            0                      0              4,196,723
                                                             (3,785,961)           0              3,785,961                      0

 *D                                              7               73,270            0                      0                 73,277

 *E                                             32               31,963            0                      0                 31,995

 *F                                              6              384,994            0                      0                385,000

Net loss                                         0                    0            0               (852,748)              (852,748)
                                     -------------       --------------  -----------      ------------------      -----------------

BALANCE, September
  30, 1996                       $             324            4,629,598            0               (856,152)             3,773,770
                                     =============       ==============  ===========      ==================      =================

<FN>
*A - 746,483,333 shares of common stock outstanding.

*B - Reverse split - 1 for 2,095 shares - 356,317 shares of common stock outstanding.

*C - 2,433,950 shares issued for the acquisition of Environmental Remediation Funding Corp. - 2,863,544 shares ofcommon stock
     outstanding.

*D - 73,277 shares issued in conjunction with the acquisition of Environmental Remediation Funding Corp. valued at $1.00 per share -
     2,863,544 shares ofcommon stock outstanding.

*E - 320,830 shares issued for $31,995 in cash - 3,184,374 shares of common stock outstanding.

*F - 55,000 shares issued for services - 3,239,374 shares of common stock outstanding.
</FN>
</TABLE>








    The accompanying notes are an integral part of the financial statements.

                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                     ENVIRONMENTAL REMEDIATION HOLDING CORP.
                      Consolidated Statements of Cash Flows
                            Year ended September 30,
<S>                                                                              <C>                      <C>
                                                                                              1995                1996
                                                                                    ------------------    -------------------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss                                                                         $             (3,404)              (852,748)
Adjustments to reconcile net loss to net cash used for development
activities:
    Amortization                                                                                   0                 142,500
    Stock issued for services rendered                                                             0                 315,000
    Depreciation expense                                                                           0                 372,000
    Forgiveness of debt                                                                            0                 (60,477)
                                                                                      ---------------      ------------------
Net cash used for development activities                                                      (3,404)                (83,725)
                                                                                      ---------------      ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Barge deposit                                                                                      0                  (5,000)
                                                                                      ---------------      ------------------
Net cash used by investing activities                                                              0                  (5,000)
                                                                                      ---------------      ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock issued by subsidiary for cash                                                                0                  50,000
Stock issued for cash                                                                              0                  31,995
Funds advanced by stockholder                                                                  3,404                  22,730
Funds repaid to stockholder                                                                        0                 (16,000)
                                                                                      ---------------      ------------------
Net cash provided by financing activities                                                      3,404                  88,725
                                                                                      ---------------      ------------------
(Decrease) increase in cash                                                                        0                       0
                                                                                      ---------------      ------------------
CASH, beginning of period                                                                          0                       0
                                                                                      ---------------      ------------------
CASH, end of period                                                              $                 0                       0
                                                                                      ===============      ==================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Interest paid in cash                                                         $                 0                       0
                                                                                      ===============      ==================
Noncash transactions:
   Stock issued to acquire fixed assets                                          $                 0               3,720,000
                                                                                      ===============      ==================
</TABLE>
















     The accompanying notes are an integral part of the financial statements.
                                       F-5
<PAGE>
                     ENVIRONMENTAL REMEDIATION HOLDING CORP.
                   Notes to Consolidated Financial Statements

(1) Summary of Significant Accounting Policies
     The Company  Environmental Remediation Holding Corp is a Colorado chartered
         corporation which conducts business from its headquarters  in  Jericho,
         New York and was incorporated on May 12, 1986 as Valley View  Ventures,
         Inc.,  which was changed to Regional  Air  Group Corp. on September 20,
         1988.  On  August  29,  1996,  the  name  was  changed to Environmental
         RemediationHolding Corp.

         The  financial   statements  have  been  prepared  in  conformity  with
         generally accepted  accounting  principles.  In preparing the financial
         statements,  management is required to make  estimates and  assumptions
         that affect the reported  amounts of assets and  liabilities  as of the
         dates  of the  statements  of  financial  condition  and  revenues  and
         expenses  for  the  years  then  ended.  Actual  results  could  differ
         significantly  from those estimates.  The following  summarize the more
         significant  accounting  and  reporting  policies and  practices of the
         Company:

     a)  Basis of presentation  The Company acquired 100% of the issued and out-
         standing common stock of Environmental Remediation Funding Corp.(ERFC),
         a Delaware corporation, effective on August 19, 1996, in a reverse tri-
         angular  merger,  which  has  been accounted for as a reorganization of
         ERFC.  The  financial  statements  reflect  the  financial position and
         results of operations of RAGC prior to the acquisition of ERFC and on a
         consolidated basis subsequent to the acquisition.

    b)   Basis of consolidation   The consolidated financial  statements include
         the  accounts  of  the Company and its subsidiary.  Intercompany trans-
         actions have been eliminated.

     c)  Equipment   Equipment was received by ERFC in exchange for common stock
         of ERFC. The fair market value of the equipment was  determined through
         the  use of an independent third party  equipment  appraiser.  The then
         determined  fair  market  value was lower than the previous owners cost
         basis, and the fair market value of the ERFC stock exchanged was undet-
         erminable,  therefore the Company chose to value the equipment received
         using the  appraiser's  valuation. The Company has chosen to depreciate
         the equipment using the straight line method over its estimated remain-
         ing useful life of ten years. Expenditures for  maintenance and repairs
         are  charged  to  operations  as incurred. Depreciation expense for the
         years  ended  September  30,  1995  and  1996,  was  $0  and  $372,000,
         respectively.

     d)  Note payable   The  Company  issued  a  note  payable  to an officer in
         exchange for cash. This note carries no stated maturity date or rate of
         interest. The Company expects to repay this note within twelve months.

     e)  Deferred compensation   ERFC  issued 755,043 shares of its common stock
         into  escrow  in  exchange  for services to be rendered by its Chairman
         under a four year contract. These services were valued at $125,000  per
         year, therefore the Company  is amortizing  this deferred  compensation
         expense  at  a  rate  of  $31,250  per  quarter. These ERFC shares were
         exchanged for shares of the Company on August 19, 1996.

         On August 30,  1996,  the Company  issued  10,000  shares of its common
         stock, valued at $70,000, to an attorney for services to be rendered at
         below market rates for a period of 4 months.  Accordingly,  the Company
         is amortizing this expense over the term of the agreement.

         On October 6,  1995,  and  modified  on  January 2, 1996,  the  Company
         entered  into an  agreement  with a financial  advisor to issue  30,000
         shares  of its  common  stock,  valued at  $210,000,  in  exchange  for
         services  rendered  by the  advisor to assist in  effecting  the merger
         which occured on August 19, 1996.

         On July 15, 1996, the Company  entered into an agreement with a general
         business advisor to issue 15,000 shares of its common stock,  valued at
         $105,000, in exchange for services rendered by the advisor.

      f) Net loss per share  Net loss per share is computed by dividing  the net
         loss by the number of shares outstanding during the period.

(2) Income taxes The Company has a consolidated net operating loss carry-forward
         amounting to $856,152, expiring as follows: $3,404 in 2010 and $852,748
         in 2011.  The  Company has a $342,500 deferred tax asset resulting from
         the loss carry-forward, for which it has established  a 100%  valuation
         allowance,  as until the Company  proceeds with its current development
         plans  it is unclear as to  the ability of the Company to utilize these
         carry-forwards.
                                       F-6
<PAGE>
                     ENVIRONMENTAL REMEDIATION HOLDING CORP.
                   Notes to Consolidated Financial Statements

(3) Stockholders' equity    The  Company  has  authorized  950,000,000 shares of
         $0.0001 par value common stock. On September 30, 1995, the Company  had
         746,483,333  shares  issued  and  outstanding.  On August 14, 1996, the
         Company  completed  a  1 for 2,095 reverse split of its shares, leaving
         356,317 shares issued and outstanding. On August 19, 1996,  the Company
         issued  2,433,950 shares of common stock to acquire 100% of the issued
         and outstanding common stock of ERFC. On August 19, 1996,  the  Company
         also issued 73,277 shares of common stock to a consultant for  services
         valued at $1.00 per share related to the merger. In September 1996, the
         Company  issued  320,830  shares  of  its  common stock in exchange for
         $31,995 in cash. In September 1996, the Company issued 55,000 shares of
         common stock under three consulting contracts previously negotiated.


























                                       F-7
<PAGE>