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

                                    FORM 10-K
--------------------------------------------------------------------------------

|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                              (I.R.S. Employer
 of Incorporation or Organization)                           Identification No.)

    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 $0.44 per share on the "over the
counter bulletin board" on March 31, 2004 was $147,382,954.

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


<PAGE>

                       DOCUMENT INCORPORATED BY REFERENCE

The Company's proxy statement in connection with its annual meeting of
shareholders to be held in March 2006 is incorporated by reference in 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             6
Item 6.    Selected Financial Data                                                          7
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                              13
Item 11.   Executive Compensation                                                          14
Item 12.   Security Ownership of Certain Beneficial Owners and Management and
             Related Stockholder Matters                                                   14
Item 13.   Certain Relationships and Related Transactions                                  14
Item 14.   Principal Accounting Fees and Services                                          14

                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K                 15
           Signatures                                                                      16

                   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:

 Option Pick-    Working Interest                        Signature Bonus
 ERHC Choice        Percentage        JDZ Block #            Payable
 -----------     ---------------      -----------        ---------------------
    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


<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.  Combined
recoverable  reserves potential of the 17 prospects was estimated by WesternGeco
to be 14.4 billion  barrels of oil. 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.


                                       3
<PAGE>

THE COMPANY HAS NOT ENTERED INTO ANY PRODUCTION SHARING CONTRACTS.

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.


                                       4
<PAGE>

THE  COMPANY'S   COMPETITION  INCLUDES  OIL  AND  GAS  CONGLOMERATES  THAT  HAVE
SIGNIFICANT ADVANTAGES OVER IT.

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  in  "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.

                                     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.


                                       6
<PAGE>

                                                    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
                                       TO BE ISSUED UPON                                REMAINING AVAILABLE
                                          EXERCISE OF          WEIGHTED AVERAGE         FOR FUTURE ISSUANCE
                                          OUTSTANDING         EXERCISE PRICE OF      UNDER EQUITY COMPENSATION
                                        OPTIONS, WARRANTS    OUTSTANDING OPTIONS,   PLANS (EXCLUDING SECURITIES
                                          AND RIGHTS         WARRANTS AND RIGHTS       REFLECTED IN COLUMN A)
                                              (A)                   (B)                          (C)
---------------------------------------------------------------------------------------------------------------
<S>                                          <C>                  <C>                      <C>

Equity Compensation Plans
Approved by Security Holders                 -                     -                       20,000,000
---------------------------------------------------------------------------------------------------------------

Equity Compensation Plans
Not Approved by Security Holders             3,000,000            $  0.20                  -
---------------------------------------------------------------------------------------------------------------

         Total                               3,000,000            $  0.20                  20,000,000
---------------------------------------------------------------------------------------------------------------
</TABLE>

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.


                                       7
<PAGE>

<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
</TABLE>

<TABLE>
<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.

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.


                                       8
<PAGE>

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.

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


                                       9
<PAGE>

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.

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.


                                       10
<PAGE>

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.

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.


                                       11
<PAGE>

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

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.


                                       12
<PAGE>

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.

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.


                                       13
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  required by this Item 10 is incorporated by reference from the
Company's proxy statement.

ITEM 11. EXECUTIVE COMPENSATION

The  information  required by this Item 11 is incorporated by reference from the
Company's proxy statement.

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The  information  required by this Item 12 is incorporated by reference from the
Company's proxy statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required by this Item 13 is incorporated by reference from the
Company's proxy statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Aggregate fees for  professional  services  rendered by PKF for the fiscal years
ended September 30, 2005 and September 30, 2004, were as follows:

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

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


* Malone & Bailey 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-related  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.

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.


                                       14
<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:

EXHIBIT NO.                 IDENTIFICATION OF EXHIBIT

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 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

* Previously filed

  b)  Form 8-K Filings

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


                                       15
<PAGE>

                                   SIGNATURES

In accordance  with the Section 13 or 15(d) of the Exchange Act, the  registrant
caused  this  report to be  signed on  December  29,  2005 on its  behalf by the
undersigned, thereunto duly authorized.

                                         ERHC Energy Inc.

                                         By: /s/ Ali Memon
                                         ---------------------------------------
                                         Ali Memon,
                                         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.

           SIGNATURE                        TITLE                   DATE
--------------------------------     ---------------------    ------------------

/s/ Sir Emeka Offor                  Chairman of the Board    December 29, 2005
--------------------------------
    Sir Emeka Offor

/s/ Ali Memon                        Chief Executive Officer, December 29, 2005
--------------------------------     President and Director
    Ali Memon

/s/ Nicolae Luca                     Director                 December 29, 2005
--------------------------------
    Nicolae Luca

                                     Chief Financial Officer
/s/ Cosmas (Ike) Okpala              (Principal Accounting
--------------------------------     Officer)                 December 29, 2005
    Cosmas (Ike) Okpala

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

/s/ Peter C. Ntephe                  Secretary                December 29, 2005
--------------------------------
    Peter C Ntephe


                                       16
<PAGE>

ERHC ENERGY INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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

                                                                            PAGE
                                                                            ----

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

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

<TABLE>
<CAPTION>
                                                                          2005          2004
                                                                     ------------    ------------
<S>                                                                  <C>             <C>
                                    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
                                                                     ============    ============
</TABLE>


    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.

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.

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.


                                      F-10
<PAGE>

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.

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:

<TABLE>
<CAPTION>
                           ASSUMPTIONS                         2005            2004            2003
------------------------------------------------------     ------------    ------------    -------------
<S>                                                          <C>                <C>                   <C>
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%              --
</TABLE>


                                      F-11
<PAGE>

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.

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


                                      F-12
<PAGE>

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.

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.


                                      F-13
<PAGE>

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>

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 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).


                                      F-14
<PAGE>

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.

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.


                                      F-15
<PAGE>

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
                                                        ==========   ==========

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        $ 21,724,657
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:


                                      F-16
<PAGE>

<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                               (75,747)   (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>

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.


                                      F-17
<PAGE>

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.

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:


                                      F-18

<TABLE>
<CAPTION>
                                  ---------------------------------------    ------------------------------------------
                                     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          $   0.37     $    0.36      $    0.32     $     0.20     $     0.30     $        -
                                  ==========    ==========    ===========    ============   ===========    ============
 Exercisable                       $   0.37     $    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:

<TABLE>
<CAPTION>
                                                                   WEIGHTED                                      WEIGHTED
                                                                    AVERAGE                                       AVERAGE
                                               WARRANTS            EXERCISE                                     CONTRACTUAL
           GRANT GROUPING                     OUTSTANDING            PRICE          EXERCISE 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)


                                      F-19
<PAGE>

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.

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.


                                      F-20
<PAGE>

<TABLE>
<CAPTION>
                                                       2005          2004          2003
                                                   -----------   -----------   -----------

Noncash operating and financing activities:
   Stock issued in exchange for:

<S>                                                <C>           <C>           <C>
      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.

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.


                                      F-21
<PAGE>

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           698,258        980,821        233,704      2,794,699

     Interest expense                            1,045,775        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                               (7,091,068)      (821,359)      (223,628)    (3,134,423)

     Basic and diluted earnings per share      $      (.01   $        --    $        --    $      .01

                                                            FOR THE YEAR ENDED SEPTEMBER 30, 2004
                                               --------------------------------------------------------

                                                   FIRST         SECOND         THIRD          FOURTH
                                                  QUARTER       QUARTER        QUARTER        QUARTER
                                               -----------    -----------    -----------    -----------

     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 recognized in the first quarter.  The adjustment relates to the
improper recognition of interest arising from unamortized  beneficial conversion
costs upon conversion of debt to equity.


                                      F-22