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,
                2006





OR





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





For
                the transition period ended:
                __________________





Commission
      file number: 000-17325









(Exact
      name of registrant as specified in its charter)





Colorado
            
            88-0218499(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
                Employer 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
      if
      the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
      Securities Act. Yes o No x





Check
      if
      the registrant is not required to file reports pursuant to Section 13 or 15(d)
      of the Act. Yes o No x





Check
      if
      the registrant: (1) has filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





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. o





Check
      if
      the registrant is a large accelerated filer, an accelerated filer or a
      non-accelerated filer.


Large
                Accelerated Filero
            Accelerated
                Filerx
            Non-Accelerated
                Filero





Check
      if
      the registrant is a shell company. Yes o No x





The
      aggregate market value of the voting stock held by non-affiliates of the
      registrant on March 31, 2006 was $372,698,526.





On
      November 30, 2006, the registrant had 718,988,982 shares of common stock issued
      and outstanding.







**TABLE
      OF CONTENTS**




**PART
                I**
            **PAGE**Item
                1.
            Business
            4Item
                1A.
            Risk
                Factors
            5Item
                1B.
            Unresolved
                Staff Comments
            8Item
                2.
            Properties
            8Item
                3.
            Legal
                Proceedings
            8Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            8**PART
                II**Item
                5.
            Market
                for Registrant’s Common Equity, Related Shareholder
                Matters, and Issuer Purchases of Equity
                Securities
            9Item
                6.
            Selected
                Financial Data
            9Item
                7.
            Management’s
                Discussion and Analysis of Financial Condition and****Plan
                of Operations
            10Item
                7A.
            Quantitative
                and Qualitative Disclosures about Market
                Risk
            13Item
                8.
            Financial
                Statements and Supplementary Data
            13Item
                9.
            Changes
                in and Disagreements with Accountants on Accounting
                and Financial Disclosures
            13Item
                9A.
            Controls
                and Procedures
            13Item
                9B.
            Other
                Information
            14**PART
                III**Item
                10.
            Directors
                and Executive Officers of the
                Registrant
            14Item
                11.
            Executive
                Compensation
            17Item
                12.
            Security
                Ownership of Certain Beneficial Owners and
                Management and Related Stockholders Matters
            19Item
                13.
            Certain
                Relationships and Related
                Transactions
            19Item
                14.
            Principal
                Accounting Fees and
                Services
            19**PART
                IV**Item
                15.
            Exhibits
                and Financial Statement Schedules
            20





2
 *Table
            of Contents*





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 and will not update
      any of the forward-looking statements after the date of this report to conform
      prior statements to actual results.




3
 *Table
          of Contents*





**PART
      I**





**Item
              1.**
            **Description
                of Business**





***Overview***




ERHC
      is
      an independent oil and gas company formed in 1986, as a Colorado corporation.
      The Company was engaged in a variety of businesses until 1996, when it began
      its
      current operations. 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 or assets.





***Current
      Business Operations***





In
      April
      2003, the Company and the 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.  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 a previous agreement the
      following rights to participate in exploration and production activities in
      the
      EEZ subject to certain restrictions:  (a) the 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
      would be responsible for its proportionate share of exploration and exploitation
      costs in the EEZ blocks.




The
      following represents the Company’s current rights in the JDZ blocks and the
      signature bonuses payable for each block:





**JDZ**
              **Block**
              **#**
            
            **Original**
              **Working
                Interest Percentage**
            
            **Retained**
              **Percentage**
            
            **Signature
                Bonus Payable**2
            
            30%
            
            22%
            
            Signature
                Bonus Free3
            
            20%
            
            10%
            
            Signature
                Bonus Free4
            
            25%
            
            17.7%
            
            Signature
                Bonus Free5
            
            15%
            
            (a)
            
            Signature
                Bonus Payable6
            
            15%
            
            (a)
            
            Signature
                Bonus Free9
            
            15%
            
            (a)
            
            Signature
                Bonus Payable


_____________


(a)
            No
                contracts have been entered into as of the date
                hereof.





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.





In
      November 2005, the Company entered into a participation agreement with Addax
      Petroleum (Nigeria Offshore 2) Limited ("Addax"), as subsequently amended,
      whereby the Company assigned to Addax a 33.3% participating interest in Block
      4,
      leaving a 17.7% participating interest to the Company. In exchange, Addax paid
      the Company $18,000,000 in the second quarter of fiscal year 2006. Under the
      participation agreement ERHC will support Addax as operator, and Addax will
      pay
      all of the Company's future costs in respect of all petroleum operations in
      Block 4. Addax is entitled to the Company's share of cost oil until Addax
      recovers the Company's costs.





In
      February 2006, the Company entered into a participation agreement with Addax
      Petroleum Resources Nigeria Limited ("Addax Sub") whereby the Company assigned
      to Addax Sub a 15% participating interest in Block 3 of the JDZ, leaving a
      10%
      participating interest to the Company. In exchange, Addax Sub paid the Company
      $7,500,000 in the second quarter of fiscal year 2006. Under this agreement,
      Addax Sub agreed to pay all of the Company's future costs in respect of
      petroleum operations in Block 3. Addax Sub is entitled to the Company's share
      of
      cost oil until Addax Sub recovers the Company's costs.





4
 *Table
          of Contents*




In
      March
      2006, the Company entered into a participation agreement with Sinopec
      International Petroleum Exploration and Production Corporation Nigeria
      ("Sinopec"), and Addax Energy Nigeria Limited ("Addax Ltd."), whereby the
      Company assigned a 28.67% participating interest in Block 2 of the JDZ to
      Sinopec, and a 14.33% participating interest in Block 2 of the JDZ to Addax
      Ltd., leaving a 22% participating interest to the Company. In exchange, Sinopec
      paid the Company $13,600,000 and Addax Ltd. paid the Company $6,800,000 in
      the
      second quarter of fiscal 2006. Under this agreement, ERHC will support Sinopec
      as operator, and Sinopec and Addax Ltd. will pay all of the Company's future
      costs in respect of petroleum operations in Block 2. Sinopec and Addax Ltd.
      are
      entitled to the Company's share of cost oil until they recover the Company's
      costs and Sinopec is to receive 6% interest on its future costs, up to
      $35,000,000, but only to the extent that those interest costs are covered by
      production. The Company agreed to pay a $3,000,000 cash success fee to Feltang
      International Inc. (“Feltang”), a company that was responsible for obtaining
      Sinopec’s participation in Block 2. Additionally, the Company agreed to issue to
      Feltang 5,250,000 shares of common stock and warrants to purchase 6,500,000
      shares at $0.355 per share. The
      finder’s fees due under the Feltang Agreement were exactly the same as those
      that had been due under the Finder's Fee Agreement with Eurasia which had
      sourced the Compay's former partner, Pioneer. Again, without a technical
      operator, following Pioneer’s withdrawal, ERHC would have lost the block
      entirely.




ERHC’s
      goal is to enter into agreements to exploit its interests in Blocks 5, 6 and
      9
      also. Additionally, the Company intends to exploit its rights in the
      EEZ.





***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.





The
      oil
      and gas industry is subject to various types of regulation throughout the world.
      Legislation affecting the oil and gas industry has been pervasive and is under
      constant review for amendment or expansion. Pursuant to such legislation,
      numerous government agencies have issued extensive laws and regulations binding
      on the oil and gas industry and companies engaged in this industry, some of
      which carry substantial penalties for failure to comply. Such laws and
      regulations have a significant impact on oil and gas exploration, production
      and
      marketing and midstream activities. These laws and regulations increase the
      cost
      of doing business and, consequently, will affect results of operations. Inasmuch
      as new legislation affecting the oil and gas industry is commonplace and
      existing laws and regulations are frequently amended or reinterpreted, we are
      unable to predict the future cost or impact of complying with such laws and
      regulations. However, we do not expect that any of these laws and regulations
      will affect our operations in a manner materially different than they would
      affect other oil and gas companies of similar size.





***Competition***





Strong
      competition exists in all sectors of the oil and gas industry. We compete with
      other independent oil and gas companies for equipment and personnel required
      to
      explore, develop and operate properties. Competition
      is also prevalent in the marketing of oil, gas and natural gas liquids. Higher
      recent commodity prices have increased the costs of properties available for
      acquisition, and there are a greater number of companies with the financial
      resources to pursue acquisition opportunities. Certain of our competitors have
      financial and other resources substantially larger than ours, and they have
      also
      established strategic long-term positions and maintain strong governmental
      relationships in countries in which we may seek new entry. As a consequence,
      we
      may be at a competitive disadvantage in bidding for drilling rights. In
      addition, many of our larger competitors may have a competitive advantage when
      responding to factors that affect demand for oil and natural gas production,
      such as changing worldwide prices and levels of production, the cost and
      availability of alternative fuels and the application of government regulations.




***Employees***





The
      Company currently has one executive officer, a principal accounting officer,
      a
      consultant that serves as the Corporate Secretary, and two support staff
      employees that provide services to the Company. The Company believes that its
      relationship with its employees is satisfactory.




**Item
              1A.**
            **RiskFactors**





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 from
      operations***





The
      Company’s business is in 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 operating
      losses of $5,988,756 in fiscal 2006, $4,652,459 in fiscal 2005, $2,085,426
      in
      fiscal 2004 and $68,244,403 since inception. The Company had net income of
      $23,171,536 in fiscal 2006, primarily as a result of entering into production
      sharing agreements under which it sold various participatory interests. The
      Company had net losses of $11,270,478 in fiscal 2005, $3,593,388 in fiscal
      2004,
      and $56,236,175 since inception. The Company expects to incur additional
      operating losses for the foreseeable future.





5
 *Table
            of Contents*





***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 and entering into production sharing
      contracts. The Company will not be the operator with respect to these contracts.
      The Company’s future financial results depend primarily on (1) the ability
      of its participating interest oil and gas companies to provide or obtain
      sufficient financing to meet their financial commitments in the production
      sharing contracts, (2) the ability to discover commercial quantities of oil
      and gas, and (3) the market price for oil and gas. Management cannot predict
      that the production sharing contracts will result in wells being drilled or
      if
      drilled, whether oil and/or gas will be discovered in commercial
      quantities.





***Financing
      will be needed to fund the financial commitments of the production sharing
      contracts***





While
      the
      Company is not required to fund any financial commitments pursuant to the
      production sharing contracts, project financing will be required to fund
      exploration activities. Failure of our venture partners to provide or obtain
      the
      necessary financing will preclude the commencement of exploration activities.





***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. 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:





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





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





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


·
                the
                    availability of deep water drilling
                    rigs


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 interests 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.





***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, experience,
      technical and managerial experience 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.





6
 *Table
            of Contents*





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





At
      September 30, 2006, all of the Company's operations were located outside the
      United States. The Company’s only assets are (i) 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 and (ii)
      production sharing contracts for property located in this region.  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, the value
      of its oil and natural gas exploration concession, as well as its ability to
      exploit its assets could be materially adversely affected.





**One
      shareholder controls approximately 43% of the Company’s outstanding common
      stock**





Chrome
      Oil Services (“Chrome”) 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 or a liquidity event.





***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.





7
 *Table
          of Contents*




**Item
              1B.**
            **UnresolvedStaff
                Comments**





On
      March
      21, 2006, the Company received a comment letter from the SEC regarding its
      filing on Form 10-K for the year ended September 30, 2005. The Company responded
      to that comment letter on April 27, 2006 and amended its Form 10-K in an effort
      to comply with the disclosure requirements of the SEC as indicated in the March
      21, 2006 comment letter. The SEC reviewed the Company’s response and amended
      10-K filing and issued a follow-up comment letter on June 5, 2006 that included
      one unresolved comment. The Company filed a response to the follow-up comment
      letter on September 18, 2006, in which the Company agreed with the SEC’s
      conclusion, but requested further direction in order to comply. Based on
      discussions with staff members at the SEC regarding the response, the remaining
      unresolved comment, as discussed in the following paragraph will require that
      the Company file a second amendment to its Form 10-K for the year ended
      September 30, 2005 and its Form 10-Q for the Quarter ended June 30,
      2006.




The
      remaining unresolved staff comment requires that the Company report as a
      development stage enterprise because it meets the criteria described in
      Statement of Financial Accounting Standards (“SFAS”) No. 7., “Accounting and
      Reporting by Development Stage Enterprises”. The primary impact of reporting as
      a development stage enterprise is (1) the presentation of inception-to-date
      information in the statements of operations, the statement of stockholders’
equity and the statements of cash flows, (2) clear indications on the face
      of
      the financial statements and in the footnotes that the Company is in the
      development stage and (3) a description of the reasons that the Company is
      reporting as a development stage enterprise. The Company is reporting as a
      development stage enterprise in this report on Form 10-K and is in the process
      of amending its Form 10-K for the year ended September 30, 2005 and its Form
      10-Q for the Quarter ended June 30, 2006 to resolve Staff comments.





**Item
              2.**
            **Description
                of Property**





The
      Company’s office is located at 5444 Westheimer Road, Suite 1570, Houston, Texas
      77056 pursuant to a lease for approximately 5,200 sq. ft. that expires in
      December 2011. The Company believes that this space is adequate for the
      foreseeable future.




**Item
              3.**
            **Legal
                Proceedings**





On
      May 4,
      2006, a search warrant issued by the U.S. District Court of the Southern
      District of Texas, Houston Division, was executed on the Company seeking various
      records including, among other matters, documents, if any, related to
      correspondence with foreign governmental officials or entities in Sao Tome
      and
      Nigeria. With the guidance of the law firm of Akin Gump Strauss Hauer & Feld
      LLP, ERHC Energy continues to work with the U.S. Department of Justice in
      connection with the Department’s investigation. The Department of Justice agreed
      to ERHC’s request to return to ERHC a complete copy set of all paper documents
      seized in the Government’s May 4, 2006 search of ERHC’s Houston office. ERHC has
      received a copy set of these business documents. ERHC filed suit in federal
      district court in Texas in June. The lawsuit sought to protect the company’s
      attorney-client privileged documents and to allow ERHC counsel to determine
      the
      factual basis for the Justice Department’s search warrant affidavit, which is
      currently under seal. Although the judge has ordered that the affidavit remain
      under seal, his ruling requires the Justice Department to provide a neutral
      “taint team” to review all seized documents and to identify those that may be
      privileged. The neutral taint team is charged with the responsibility to
      withhold from the investigating attorneys any documents that it believes to
      be
      privileged. The ruling also provides the company with the right to challenge
      the
      Justice Department’s privilege determinations in court. Since the ruling, ERHC
      has been in communication with the Justice Department regarding the Government’s
      compliance with the ordered taint team procedures, and regarding the
      Government’s ongoing investigation.





The
      attorneys of Akin Gump Strauss Hauer & Feld LLP are also assisting in ERHC’s
      response to a related U.S. Securities and Exchange Commission (SEC) subpoena
      issued on May 9, 2006, and to a second related subpoena issued on August 26,
      2006. The subpoenas request a range of documents, including among others, all
      documents related to correspondence with foreign governmental officials or
      entities in Sao Tome and Nigeria as well as for personnel records (specifically,
      those regarding former CFO, Franklin Ihekwoaba) and other corporate records
      from
      the Company. ERHC has responded to both subpoenas.





During
      October 2006, Lakeshore Capital Limited (“Lakeshore”) filed an arbitration claim
      against ERHC before the American Arbitration Association, seeking $4,400,000
      for
      the alleged value of 4,500,000 shares of ERHC common stock and for a warrant
      to
      purchase 1,500,000 shares at an exercise price of $.20 per share, including
      interest and costs.  Lakeshore claims it is owed this sum for services
      previously rendered under a contract with ERHC.  ERHC believes that
      Lakeshore’s claim is entirely without merit, has filed an arbitration response
      disputing Lakeshore’s claim, and intends to vigorously defend all Lakeshore
      claims.





From
      time
      to time, the Company may be subject to routine litigation, claims, or disputes
      in the ordinary course of business 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.





8
 *Table
            of Contents*





**PART
      II**





**Item
              5.**
            **Market
                forRegistrant’s common stock and Related
                Shareholder Matters**





***Market
      and Related Information***





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.





**Stock
      Price Highs & Lows**




**High**
              
              **Low****(per
                  share)****Fiscal
                  Year 2005**First
                  Quarter
              
              $0.55
              
              $0.28Second
                  Quarter
              
              $0.75
              
              $0.42Third
                  Quarter
              
              $0.94
              
              $0.43Fourth
                  Quarter
              
              $0.50
              
              $0.32**Fiscal
                  Year 2006**First
                  Quarter
              
              $0.41
              
              $0.30Second
                  Quarter
              
              $0.95
              
              $0.30Third
                  Quarter
              
              $0.92
              
              $0.40Fourth
                  Quarter
              
              $0.54
              
              $0.37





On
      November 30, 2006, the closing price of the common stock as reported on the
“OTC
      Bulletin Board” was $0.385.  As of November 30, 2006, there were
      approximately 2,236 record owners of the common stock.  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***





The
      Company has sold the following unregistered securities:





·
            During
                the second fiscal quarter of 2006, options issued in 2005, with an
                exercise price of $0.20, were exercised on a cashless basis, which
                exercise resulted in the issuance of an aggregate of 950,140 shares
                of
                common stock.


·
            During
                the second fiscal quarter of 2006, the Company agreed to issue 5,250,000
                shares of common stock and warrants to purchase 6,500,000 shares
                of common
                stock with an exercise price of $0.355 per
                share.


·
            During
                the third fiscal quarter of 2006, options issued in 2004 and 2005,
                with an
                exercise price of $0.20, were exercised on a cashless basis, which
                exercise resulted in the issuance of an aggregate of 1,661,616 shares
                of
                common stock.


·
            During
                the fourth fiscal quarter of 2006, the Company issued 800,000 shares
                of
                common stock upon exercise of warrant agreements for
                $160,000.


·
            During
                the fourth fiscal quarter of 2006, we issued an aggregate of 4,665,000
                shares of common stock to our directors for services rendered as
                more
                fully disclosed in Item 10, Directors and Executive Officers of the
                Registrant. The
                shares include compensation for two members of Board for their past
                services based on independent reports of an accounting firm and a
                compensation consultant.





With
      respect to the sale of the unregistered securities referenced above, all
      transactions were exempt from registration pursuant to Section 4(2) of the
      Securities Act of 1933, as amended. No sales commissions were paid in connection
      with these transactions.





**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, 2006, has been derived from the
      audited financial statements of the Company.  The financial statements as
      of and for the years ended September 30, 2006 and 2005 have been audited by
      Malone & Bailey, PC, and the financial statements as of and for each of the
      three years in the period ended September 30, 2004 have been audited by Pannell
      Kerr Forster of Texas, P.C., independent registered public accounting firms.
      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.





9
 *Table
            of Contents*




**For
                the Years Ended September 30,****Statements
                of Operations Data**
            
            **2006**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002**Revenues
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Operating
                expenses
            
            
            5,988,756
            
            
            4,652,459
            
            
            2,085,426
            
            
            1,944,655
            
            
            2,883,099Interest
                expense
            
            
            (2,099
            )
            
            (1,147,248
            )
            
            (1,671,759
            )
            
            (1,209,227
            )
            
            (1,201,111
            )Other
                Income (expense)
            
            
            31,225,391
            
            
            278,804
            
            
            163,797
            
            
            -
            
            
            -Loss
                on extinguishment of debt
            
            
            -
            
            
            (5,749,575
            )
            
            -
            
            
            -
            
            
            -Provision
                for taxes
            
            
            2,063,000
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income (loss)
            
            
            23,171,536
            
            
            (11,270,478
            )
            
            (3,593,388
            )
            
            (3,153,882
            )
            
            (4,084,210
            )Net
                income (loss) per share - basic and diluted
            
            
            0.03
            
            
            (0.02
            )
            
            (0.01
            )
            
            (0.01
            )
            
            (0.01
            )Weighted
                average shares of common stock outstanding
            
            
            712,063,980
            
            
            671,164,058
            
            
            592,603,441
            
            
            567,788,483
            
            
            542,680,423**As
                of September 30,****Balance
                Sheet Data**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2003**
            
            
            **2002**DRSTP
                Concession fee
            
            $
            2,839,500
            
            $
            5,679,000
            
            $
            5,679,000
            
            $
            5,679,000
            
            $
            5,630,000Total
                assets
            
            
            45,878,249
            
            
            6,720,210
            
            
            5,728,556
            
            
            5,735,744
            
            
            5,672,064Total
                liabilities
            
            
            10,390,126
            
            
            2,779,011
            
            
            14,757,208
            
            
            16,283,506
            
            
            17,739,198Shareholders'
                equity (deficit)
            
            
            35,488,123
            
            
            3,941,199
            
            
            (9,028,652
            )
            
            (10,547,762
            )
            
            (12,067,134
            )




**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 thereto 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***





ERHC
      reports as a development stage enterprise as there are currently no significant
      operations and no revenue has been generated from business activities. 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 only assets, which are rights to working interests in exploration
      acreage in the JDZ and the EEZ.  The Company has entered into production
      sharing agreements with upstream oil and gas companies in these JDZ Blocks.
      The
      technical and operational expertise in conducting exploration operations will
      be
      provided by the Company’s participating interest oil and gas
      companies.





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. The
      Company currently has no other operations.





10
 *Table
            of Contents*





Stock-based
      compensation





During
      the year ended September 30, 2004, the Company issued a former Chief Executive
      Officer an option to purchase 3,000,000 shares of common stock at an exercise
      price of $0.20 per share. Due to the resignation of this employee in January
      2006, the right to purchase 1,000,000 shares did not vest, and in June 2006,
      this former employee exercised 2,000,000 options on a cashless basis for the
      issuance of 1,272,727 shares.





Effective
      October 1, 2005, the Company adopted Statement of Financial Accounting Standards
      (“SFAS”) No. 123R, *Share-Based Payment,* as
      interpreted by SEC Staff Accounting Bulletin No. 107. Prior to October 1,
      2005, the Company had accounted for stock options according to the provisions
      of
      Accounting Principles Board (“APB”) Opinion No. 25, *Accounting for Stock Issued to Employees,* and
      related interpretations, and therefore no related compensation expense was
      recorded for awards granted with no intrinsic value. The Company adopted the
      modified prospective transition method provided for under SFAS No. 123R, and,
      consequently, has not retroactively adjusted results from prior periods. Stock
      awards outstanding under the Company’s current plans have generally been granted
      at prices which are equal to the market value of the Company’s stock on the date
      of grant, generally vest over one year and bear no expiration date. Effective
      October 1, 2005, the Company began recognizing compensation expense ratably
      over
      the vesting period, net of estimated forfeitures. Due to the mutual resignation
      of an employee in January 2006 and the cancellation of the non-vested 1,000,000
      options, the previously recognized expense in the first fiscal quarter of 2006
      of $101,618 has been reversed. The Company currently has no non-vested employee
      options.





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





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.





In
      June
      2006, the FASB issued Interpretation No. 48, “ *Accounting
      for Uncertainty in Income Taxes—An Interpretation of FASB Statement
      No. 109* ”
(“FIN
      No. 48”). FIN No. 48 clarifies the accounting for uncertainty in
      income taxes recognized in an enterprise’s financial statements in accordance
      with Statement No. 109, “Accounting for Income Taxes.” FIN No. 48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement classification, accounting for interest
      and penalties and accounting in interim periods and disclosure. The provisions
      of FIN No. 48 are effective for fiscal years beginning after
      December 15, 2006. The Company does not expect that the adoption of FIN No.
      48 will have a material effect on its financial position or results of
      operations.





***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, 2006 and 2005.





11
 *Table
            of Contents*





***Results
      of Operations***





***Year
      ended September 30, 2006 Compared to Year Ended September 30,
      2005***





During
      fiscal 2006, the Company had general and administrative expenses of $5,979,609
      compared with $4,645,783 in fiscal 2005. This increase was primarily attributed
      to increased legal fees as a result of the Department of Justice investigation.





During
      2006, the Company had net income of $23,171,536, compared to a net loss of
      $11,270,478 for fiscal 2005. The three primary reasons for the $34,442,014
      improvement in net income for the year ended September 30, 2006 were: (i) a
      $30,102,250 net gain from the sale of participation interests in the three
      JDZ
      Blocks under production sharing contracts with various joint venture partners;
      (ii) a $5,749,575 non-cash loss on extinguishment of debt during fiscal 2005
      as
      the result of the issuance of shares in conjunction with a conversion of debt
      to
      common stock; and (iii) fiscal 2006 income tax expense of
      $2,063,000.





During
      fiscal 2006, the Company entered
      into production sharing agreements in Blocks 2, 3 and 4 under which they sold
      various participating interests for total cash proceeds of $45,900,000 which
      resulted in net cash provided by investing activities of $45,896,876, compared
      with net cash used by investing activities of $24,277 for fiscal
      2005.





During
      fiscal 2006 and 2005, the Company had no revenues from which cash flows could
      be
      generated to support operations. In fiscal 2006, the Company relied primarily
      upon cash generated from the sale of interests to fund operations and in fiscal
      2005, the Company relied on borrowings funded from its line of credit as well
      as
      the sale of common stock.





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





During
      fiscal 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
      conversion of debt into common stock.





General
      and administrative expenses were $4,645,783 in fiscal 2005 compared with
      $2,085,426 in fiscal 2004, such increase was the result of the Company canceling
      in December 2004, its management services agreement with Chrome, covering 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 as well as the sale of common stock.




***Liquidity
      and Capital Resources***





As
      of
      September 30, 2006, the Company had working capital of $32,154,019. The Company
      received $45,900,000 in March 2006 from its partners
      when production-sharing agreements in Blocks 2, 3 and 4 were signed. The
      Company believes that it has sufficient liquidity to meet working capital
      requirements for fiscal 2007. The Company has no material commitments for
      capital resources.





***Off-Balance
      Sheet Arrangements***





As
      of
      September 30, 2006, the Company does not have any off-balance sheet
      arrangements.





***Contractual
      Obligations and Commercial Commitments***





The
      following table provides information at September 30, 2006, about the Company’s
      contractual obligations and commercial commitments. The table presents
      contractual obligation by due dates and related contractual commitments by
      expiration dates.








Contractual
                Obligations
            
            Total
            
            Less
                than
              1
                year
            
            1
                -
                3 Years
            
            4
                -
                5 Years
            
            After
              5
                YearsConvertible
                debt
            
            $
            33,513
            
            $
            33,513
            
            $
            -
            
            $
            -
            
            $
            -Settlement
                agreement
            
            
            175,000
            
            
            175,000Operating
                lease
            
            
            545,901
            
            
            90,981
            
            
            321,120
            
            
            133,800
            
            
            -Total
            
            $
            754,414
            
            $
            299,494
            
            $
            321,120
            
            $
            133,800
            
            $
            -





12
 *Table
            of Contents*





**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.  The Company currently has
      no other operations.





At
      September 30, 2006, all of the Company's operations were located outside the
      United States. The Company’s main asset are agreements with DRSTP and the JDA,
      which provide ERHC with rights to participate in exploration and production
      activities in the Gulf of Guinea off the coast of central West Africa. 
This geographic area of interest is controlled by foreign governments that
      have
      historically experienced volatility, which is out of management’s control. The
      Company’s ability to exploit its interests in the agreements in this area may be
      impacted by this circumstance.





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





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





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





**Item
              8.**
            **Financial
                Statements and Supplementary Data**





See
      Index
      to Financial Statement at page F-1.  The financial statements with the
      reports of the independent registered public accounting firms are included
      on
      pages F-2 through F-31 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.**
            **Changesin
                and Disagreements with Accountants on
                Accounting and Financial Disclosures**





On
      November 4, 2005, Pannell Kerr Forster of Texas, P.C. ("PKF") resigned as
      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, Audit
      Committee of the Board Directors engaged Malone & Bailey, PC as our
      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 our engagement of Malone & Bailey,
      we 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 our consolidated
      financial statements.





**Item
              9A.**
            **Controls
                andProcedures**




**Management’s
      Report on Internal Control over Financial Reporting**




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting for the company. Internal control over
      financial reporting is a process to provide reasonable assurance regarding
      the
      reliability of our financial reporting for external purposes in accordance
      with
      accounting principles generally accepted in the United States of America.
      Internal control over financial reporting includes maintaining records that
      in
      reasonable detail accurately and fairly reflect our transactions; providing
      reasonable assurance that transactions are recorded as necessary for preparation
      of our financial statements; providing reasonable assurance that receipts and
      expenditures of our assets are made in accordance with management authorization;
      and providing reasonable assurance that unauthorized acquisition, use or
      disposition of our assets that could have a material effect on our financial
      statements would be prevented or detected on a timely basis. Because of its
      inherent limitations, internal control over financial reporting is not intended
      to provide absolute assurance that a misstatement of our financial statements
      would be prevented or detected.





13
 *Table
            of Contents*





Management
      conducted an evaluation of the effectiveness of our internal control over
      financial reporting based on the framework in Internal Control - Integrated
      Framework issued by the Committee of Sponsoring Organizations of the Treadway
      Commission. Based on this evaluation, management concluded that our internal
      control over financial reporting was effective as of September 30, 2006.





Our
      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, 2006, 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.*




**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 are reasonably likely to materially affect, our
      internal control over financial reporting.






**Item
              9B.**
            **OtherInformation**




None.




**PARTIII**





**Item
              10.**
            **Directorsand
                Executive Officers of the
                Registrant**





The
      following are Directors and Executive Officers of the Company as of November
      30,
      2006:





**Name**
            
            **Age**
            
            **Position**Sir
                Emeka Offor
            
            47
            
            Chairman
                of the BoardNicolae
                Luca
            
            47
            
            Interim
                Chief Executive Officer, and DirectorHoward
                Jeter
            
            59
            
            DirectorAndrew
                Uzoigwe
            
            64
            
            DirectorClement
                Nwizubo
            
            54
            
            DirectorPeter
                C. Ntephe
            
            40
            
            Secretary





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





*Nicolae
      Luca* has
      served as Interim Chief Executive Officer since July 2006 and has served as
      a
      Director since February 2001.  For over five years Mr. Luca has also served
      as the Technical Director for the Nigeria-incorporated entity Chrome Oil
      Services Limited, (a separate and distinct entity from the Bahamas-incorporated
      Chrome Oil Services Limited which is the Company’s majority shareholder). Mr.
      Luca has a Bachelor of Science in Mechanical Engineering.





*Ambassador
      (rtd.) Howard F. Jeter* is the Executive Vice President of GoodWorks
      International, LLC, an international consulting firm focused on business
      facilitation and investment promotion for Africa and the Caribbean. A former
      career diplomat, Ambassador Jeter served for 27 years in the American Foreign
      Service and retired from the State Department with the rank of career
      Minister.


Ambassador
      Jeter was U.S. Ambassador to Nigeria and to the Republic of Botswana, and also
      served as Deputy Assistant Secretary of State for African Affairs, Director
      of
      West African Affairs, and Special Presidential Envoy to Liberia. Other
      diplomatic postings included Namibia, Lesotho, Tanzania, and Mozambique.
      Ambassador Jeter holds a BA Degree in Political Science from Morehouse College,
      a MA in International Relations and Comparative Politics from Columbia
      University, and a MA in African Studies from UCLA. He is a member of Phi Beta
      Kappa, the American Foreign Service Association, and the Council on Foreign
      Relations. Ambassador Jeter is currently Chairman of the U.S. Export-Import
      Bank’s Advisory Committee on Africa and a member of the Board of Directors of
      Africare and Africa Action respectively.


Ambassador
      Jeter has received numerous awards and recognitions for his work and service,
      including a Presidential Meritorious Award, State Department Superior Honor
      Awards, Senior Foreign Service Performance Awards, the Rainbow/Push Coalition
      International Peace and Justice Award, and the prestigious Bennie Trailblazer
      Award from Morehouse College.





14
 *Table
            of Contents*





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





*Clement
      Nwizubo CPA* has
      served as Director and Audit Committee Chairman since March 2006. Mr. Nwizubo
      is
      currently President of Clement E. Nwizubo, CPA, PC, a New-York based firm,
      which
      he founded in 1987. From 1985 to 1987, he was the Manager of Financial Reporting
      at Primerica Corporation. From 1983 to 1985 he was the Audit Manager of Watson
      Rice and Company. Between 1980 and 1983 he worked as a Senior Accountant with
      Stewart Benjamin and Brown. Mr. Nwizubo is a Certified Public Accountant and
      received his BS in Accounting and Business Administration in 1977 from Oneonta
      State College and an MBA in 1980 from Fordham University.





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




All
      Officers serve at the discretion of the Board of Directors.  There are no
      family relationships between or among any Executive Officers and Directors.
      There are no arrangements or understandings between an Executive Officer or
      Director and any other person pursuant to which he was or is to be selected
      as
      an Executive Officer or Director.





***Compensation
      of Directors***





Compensation
      for fiscal 2006 and 2005, as recommended by the Compensation Committee and
      approved by the Board, was as follows:


**Name**
                
                **2006
                    Cash Compensation**
                
                **2006**
                  **Common**
                  **Stock**
                  **Issuances**
                
                **Value
                    of**
                  **2006**
                  **Common**
                  **Stock**
                  **Issuances**
                
                **2006
                    Total Compensation**Sir
                    Emeka Offor
                
                $
                48,900
                
                
                60,000
                
                $
                24,378
                
                $
                73,278Nicolae
                    Luca
                
                
                26,250
                
                
                60,000
                
                
                24,378
                
                
                50,628Howard
                    Jeter
                
                
                40,750
                
                
                60,000
                
                
                24,378
                
                
                65,128Andrew
                    Uzoigwe
                
                
                39,250
                
                
                60,000
                
                
                24,378
                
                
                63,628Clement
                    Nwizubo
                
                
                22,833
                
                
                85,000
                
                
                34,536
                
                
                57,369$
                177,983
                
                
                325,000
                
                $
                132,048
                
                $
                310,031
 
 **Name**
              
              **2005
                  Cash Compensation**
              
              **2005**
                **Common**
                **Stock**
                **Issuances**
              
              **Value
                  of**
                **2005**
                **Common**
                **Stock**
                **Issuances**
              
              **2005
                  Total Compensation**Sir
                  Emeka Offor
              
              $
              33,300
              
              
              *     4,085,000
              
              $
              1,736,125
              
              $
              1,769,425Nicolae
                  Luca
              
              
              19,125
              
              
              85,000
              
              
              36,125
              
              
              55,250Howard
                  Jeter
              
              
              13,292
              
              
              85,000
              
              
              36,125
              
              
              49,417Andrew
                  Uzoigwe
              
              
              13,644
              
              
              85,000
              
              
              36,125
              
              
              49,769$
              79,361
              
              
              4,
                  340,000
              
              $
              1,844,500
              
              $
              1,923,861
  Includes
        compensation for past services to the Company since 2001.


15
 *Table
            of Contents*





It
      is
      expected that the directors will receive compensation in fiscal
      2007.





***Section
      16(a) Beneficial Ownership Reporting Compliance***





Section
      16(a) of the Exchange Act requires the Company’s Directors and Executive
      Officers, and persons who own beneficially more than ten percent (10%) of the
      common stock, to file reports of ownership and changes of ownership with the
      Securities and Exchange Commission.  Copies of all filed reports are
      required to be furnished to us. Based solely on the reports received and the
      representations of the reporting person, the Company believes that these persons
      have complied with all applicable filing requirements during the fiscal year
      ended September 30, 2006, except for late Form 5 filings by each of Messrs.
      Offor, Luca, Jeter, Uzoigwe, Nwizubo, Ntephe and Chrome Oil Services. Each
      late
      Form 5 has been or will be subsequently filed.





***Corporate
      Governance***





The
      Board
      of Directors has adopted a Code of Ethics to govern the conduct of all of the
      Officers, Directors and employees of the Company. In addition, the Board has
      adopted a Charter for the Audit Committee, Governance
      and Nominating Committee Charter, Compensation Committee Charter, FCPA Policy,
      Policy on Insider Trading, Short-Swing Trading Policy and Whistleblower
      Protection Policy. All these can be accessed on the company’s website at
      www.erhc.com




***Director
      Independence***





The
      Board
      of Directors has determined that Messrs. Nwizubo,
      Jeter and Uzoigwe are “Independent” as defined by the Securities and Exchange
      Commission (“SEC”) and for purposes of Section 162(m) of the Internal Code of
      1986, as amended (the “Code”). No Director is deemed independent unless the
      Board affirmatively determines that the Director has no material relationship
      with the Company, either directly or as an Officer, stockholder or partner
      of an
      organization that has a relationship with the Company. In making its
      determination, the Board observes all criteria for independence established
      by
      the rules of the SEC.





***Audit
      Committee***





The
      Company’s Audit Committee is constituted of Messrs. Nwizubo (Chairman), Jeter
      and Uzoigwe. The ultimate responsibility for good corporate governance rests
      with the Board, whose primary role is oversight, counseling and direction to
      the
      Company's management in the best long-term interests of the Company and its
      stockholders. The Audit Committee, in accordance with its charter, has been
      established for the purpose of overseeing the accounting and financial reporting
      processes of the Company and audits of the Company's annual financial
      statements. As described more fully in its charter, the purpose of the Audit
      Committee is to assist the Board in its general oversight of the Company's
      financial reporting, internal controls and audit functions. Management is
      responsible for the preparation, presentation and integrity of the Company's
      financial statements; establishing and applying accounting and financial
      reporting principles; designing and implementing systems of internal controls;
      and establishing procedures designed to reasonably assure compliance with
      accounting standards, applicable laws and regulations. The Company's independent
      auditing firm is responsible for performing an independent audit of the
      consolidated financial statements in accordance with generally accepted auditing
      standards. In accordance with law, the Audit Committee has ultimate authority
      and responsibility to select, compensate, evaluate and, when appropriate,
      replace the Company's independent auditors. The Audit Committee has the
      authority to engage its own outside advisers, including experts in particular
      areas of accounting, as it determines appropriate, apart from counsel or
      advisers hired by management. All of the members of the Audit Committee meet
      the
      independence and experience requirements of the SEC. The Board of Directors
      has
      determined that Mr. Nwizubo qualifies as an “Audit Committee Financial Expert”
as defined by the SEC.





The
      Audit
      Committee members [except the chairman] are not professional accountants or
      auditors, and their functions are not intended to duplicate or to certify the
      activities of management and the independent auditors, nor can the Audit
      Committee certify that the independent auditors are “independent” under
      applicable rules. The Audit Committee serves a Board-level oversight role,
      in
      which it provides advice, counsel and direction to management and the auditors
      on the basis of the information it receives, discussions with management and
      the
      auditors, and the experience of the Audit Committee's members in business,
      financial and accounting matters. Stockholders should understand that the
      designation of “an Audit Committee Financial Expert” is an SEC disclosure
      requirement related to Mr. Nwizubo’s experience and understanding with respect
      to certain accounting and auditing matters. The designation does not impose
      on
      Mr. Nwizubo’s any duties, obligations or liability greater than generally
      imposed on them as members of the Audit Committee and the Board, and this
      designation as an Audit Committee Financial Expert pursuant to this SEC
      requirement does not affect the duties, obligations or liability of any other
      member of the Audit Committee or the Board.





16
 *Table
            of Contents*





**Item
              11.**
            **ExecutiveCompensation**





***Summary
      Compensation Table***





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





**Long-term
                Compensation Awards****Name
                and Principal Positions**
            
            **Fiscal
                Year**
            
            **Annual
                Compensation Salary ($)**
            
            **Bonus
                ($)**
            
            **Restricted
                Stock Awards(s) ($)**
            
            **Securities
                Underlying Options/SARs**Nicolae
                Luca
            
            
            2006
            
            
            -
            
            
            -
            
            
            (1
            )
            
            -Interim
                Chief Executive OfficerWalter
                Brandhuber
            
            
            2006
            
            
            125,000
            
            
            -
            
            
            -
            
            
            -Former
                chief executive officerAli
                Memon
            
            
            2006
            
            
            58,333
            
            
            -
            
            
            -
            
            
            (2
            )Former
                chief executive officer
            
            
            2005
            
            
            187,5002004
            
            
            25,000




__________


(1)
      Mr.
      Luca was issued 85,000 shares in fiscal 2005 and 60,000 shares in fiscal 2006
      for services rendered in his capacity as a Director.


(2)
      Pursuant to Mr. Memon’s employment agreement, Mr. Memon exercised on a cashless
      basis an option to purchase up to 2,000,000 shares of Company common stock
      in
      June 2006 and acquired 1,272,727 shares.




***Option
      Grants in Fiscal Year Ending September 30, 2006***





The
      following table sets forth information concerning individual grants of options
      made during the fiscal year ended September 30, 2006, to our named Executive
      Officers.








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








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





The
      following table sets forth information concerning options exercised during
      the
      fiscal year ended September 30, 2006 and option holdings as of September 30,
      2006, with respect to our named Executive Officers. No stock options or stock
      appreciation rights were issued during the fiscal year.





17
 *Table
            of Contents*





**Aggregated
      Option Exercises in 2006**


**and
      Year-End Option Values**




**Name**
              **(a)**
            
            **Shares
                Acquired********on**
              **Exercise
                (#)**
              **(b)**
            
            **Value********Realized
                ($)**
              **(c)**
            
            **Number
                of Unexercised**
              **Options
                at FY-end**
              **(d)**
            
            **Value
                of Unexercised**
              **in-the-Money
                Options**
              **(e)****Exercisable**
            
            **Unexercisable**
            
            **Exercisable**
            
            **Unexercisable**Nicolae
                Luca
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Walter
                Brandhuber
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**
            
            
            **-**Ali
                Memon
            
            
            1,272,727
            
            $
            700,000
            
            
            -
            
            
            -
            
            
            -
            
            
            -





***Employment
      Contracts***





We
      do not
      have an employment agreement with Mr. Luca, nor do we pay him a salary for
      his
      services as Interim Chief Executive Officer. Mr. Memon’s employment agreement
      with the Company terminated in January 2006 when, by mutual agreement with
      the
      Board on his disengagement from the Company, Mr. Memon resigned his employment
      with the Company. The Company is obligated to pay Mr. Memon $16,667 a month
      through August 2007. Mr. Brandhuber’s employment agreement with the Company
      commenced in January 2006 and terminated in July 2006 when, by mutual agreement
      with the Board on his disengagement from the Company, Mr. Brandhuber resigned
      his employment with the Company and there is no continuing obligation of the
      Company in connection with Mr. Brandhuber’s terminated employment agreement. Mr.
      Ntephe, a consultant, is paid annual compensation of $60,000 for his services
      as
      Secretary. Mr. Ntephe was issued an option, for services rendered, since 2001
      to
      purchase 500,000 shares at an exercise price of $0.20 per share that he
      exercised on a cashless basis in April 2006, for the acquisition of 388,889
      shares of common stock, for value received of $350,000.




***Securities
      Authorized for Issuance Under Equity Compensation
      Plans*** **





In
      November 2004, the Board of Directors adopted a 2004 Compensatory Stock Option
      Plan pursuant to which it reserved 20,000,000 shares for issuance. This plan
      was
      approved at a special meeting of the stockholders of the Company in February
      2005. Under this plan, 7,276,756 shares have been issued and no options,
      warrants or rights are outstanding under this Plan as the date
      hereof.


**Plan
                  Category**
              **Number
                  of securities to be**
                **issued
                  upon exercise of**
                **outstanding
                  options,**
                **warrants
                  and rights**
              **Weighted-average
                  exercise**
                **price
                  of outstanding**
                **options,
                  warrants and**
                **rights**
              **Number
                  of securities**
                **remaining
                  available for**
                **future
                  issuance under**
                **equity
                  compensation plans**
                **(excluding
                  securities**
                **reflected
                  in column (a)****(a)**
              **(b)**
              **(c)****Equity
                  compensation plans**
                **approved
                  by security**
                **holders**
              -
              -
              -**Equity
                  compensation plans**
                **not
                  approved by security**
                **holders**
              -
              -
              -





***Compensation
      Committee Interlocks Insider Participation***





The
      Company’s Compensation Committee is comprised Messrs. Jeter, Uzoigwe and
      Nwizubo. None of the members of the Compensation Committee has been or is an
      officer or employee of the Company, or is involved with a related party
      transaction or a relationship as defined by Item 404 of Regulation S-K. None
      of
      the Company’s Executive Officers serves on the Board of Directors or
      compensation committee of a company that has an Executive Officer that serves
      on
      the Company’s Board or Compensation Committee. No member of the Company’s Board
      is an Executive Officer of a company in which one of the Company’s Executive
      Officers serves as a member of the Board of Directors or compensation committee
      of that company.





18
 *Table
            of Contents*





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





The
      following table and notes thereto set forth certain information regarding
      beneficial ownership of the common stock as of November 30, 2006 by (i) each
      person known by the Company to beneficially own more than five percent of the
      common stock, (ii) each Director, (iii) each named Executive Officer and (iv)
      all Directors and Officers of the Company as a group.  As of November 30,
      2006, there were 718,988,982 shares of common stock issued and
      outstanding.  Beneficial ownership is determined in accordance with rules
      of the SEC and generally includes voting or dispositive power with respect
      to
      such shares.




**Name
                and Address**
            
            **Shares
                of common stock**
              **Beneficially
                Owned**
            
            **Percentage**
              **Of
                Voting Power****Principal
                Shareholders**Chrome
                Oil Services
            
            306,091,433(1)
            
            42.6%No
                22 LobitoWuse
                II, AbujaNigeriaFirst
                Atlantic Bank
            
            60,641,821
            
            8.4%c/o
                John B. GeddieSiegnryl,
                Oshman and GeddieAllen
                ParkwayHouston,
                Texas  77019**Directors
                and Named Executive Officers**Sir
                Emeka Offor
            
            310,236,433(1)(2)
            
            43.0%Nicolae
                Luca
            
            145,000
            
            *Andrew
                Uzoigwe
            
            145,000
            
            *Howard
                Jeter
            
            145,000
            
            *Clement
                Nwizubo
            
            85,000
            
            *Walter
                Brandhuber
            
            -
            
            -Ali
                Memon
            
            -
            
            -All
                executive officers and directors as a group (6 persons)
            
            311,145,322
            
            43.1%


_______________


*
      Less
      than 1%.





(1)
            Includes
                warrants to purchase 2,500,000 shares of the Company’s common stock, of
                which 1,500,000 expire in October 2008 and have a $0.25 per share
                exercise
                price, and 1,000,000 expire in April 2009 and have a $0.25 per share
                exercise price.




(2)
            Sir
                Emeka Offor is the beneficial owner of the shares held of record
                by Chrome
                Oil Services, Ltd., as the sole voting and investment power over
                these
                shares.




**Item
              13.**
            **Certain
                Relationships and Related Transactions**





None.





**Item
              14.**
            **PrincipalAccounting
                Fees and Services**





Aggregate
      fees for professional services rendered by Malone & Bailey, PC for the
      fiscal years ended September 30, 2006 and 2005, were as follows:





**2006**
            
            **2005**Audit
                fee
            
            $
            102,627
            (1)
            $
            151,425
            (2)Audit-related
                fees
            
            $
            -
            
            $
            -Tax
                fees
            
            $
            18,434
            
            $
            32,648All
                other fees
            
            $
            20,140
            
            $
            990


______________


(1)
            Includes
                $12,409 paid to PKF.


(2)
            Includes
                $107,070 paid to PKF.





19
 *Table
            of Contents*





*Audit
      fees* for
      the
      fiscal years ended September 30, 2006 and 2005 represent the aggregate fees
      billed for professional services rendered for the audit of our annual financial
      statements and review of financial statements included in our quarterly reports
      on Form 10-Q or services that are normally provided in connection with statutory
      and regulatory filings or engagements for those fiscal years.





*Tax
      fees* for
      the
      fiscal year ended September 30, 2006 and 2005, represents the aggregate fees
      billed for professional services rendered for tax compliance, tax advice, and
      tax planning.





*All
      other fees* for
      the
      fiscal year ended September 30, 2006 and 2005, represents the aggregate fees
      billed for products and services provided by our audit professionals other
      than
      the services reported in the other categories.  All other fees generally
      relate to fees assessed for corporate tax restructuring and other general
      corporate tax related matters.





***Audit
      Committee Pre-Approval Policies and Procedures***





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 in providing
      services to us for the fiscal year ended September 30, 2006 and has concluded
      that such services are compatible with Malone & Bailey’s independence as the
      Company’s auditors.





**PART
      IV**





**Item
              15.**
            **Exhibitsand
                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 IncorporationExhibit
                  3.2*
              
              BylawsExhibit
                  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 charterExhibit
                  23.1
              
              Consent
                  of Independent Registered Public Accounting FirmExhibit
                  31.1
              
              Certification
                  Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section
                  302 of
                  the Sarbanes-Oxley Act of 2002Exhibit
                  31.2
              
              Certification
                  Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section
                  302 of
                  the Sarbanes-Oxley Act of 2002Exhibit
                  32.1
              
              Certification
                  Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002Exhibit
                  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





20
 *Table
            of Contents*





**SIGNATURES**





In
      accordance with the Section 13 or 15(d) of the Exchange Act, the registrant
      caused this report to be signed on December 14, 2006 on its behalf by the
      undersigned, thereunto duly authorized.





ERHC
                Energy Inc.By:
            //s//Nicolae
                LucaNicolae
                Luca,Interim
                Chief Executive Officer//s//Sylvan
                OdobuluSylvan
                OdobuluPrincipal
                Accounting Officer





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//
                Howard Jeter
            
            Director
            
            December
                14, 2006Howard
                Jeter
            
            Member
                Audit Committee//s//
                Andrew Uzoigwe
            
            Director
            
            December
                14, 2006Andrew
                Uzoigwe
            
            Member
                Audit Committee//s//
                Clement Nwizubo CPA
            
            Director
            
            December
                14, 2006Clement
                Nwizubo
            
            Chairman
                Audit Committee





21
 *Table
          of Contents*




**ERHC
                  ENERGY INC.****A
                  CORPORATION IN THE DEVELOPMENT STAGE****INDEX
                  TO CONSOLIDATED FINANCIAL STATEMENTS****Page(s)**Reports
                  of Independent Public Accounting Firms:Report
                  of Independent Registered Public Accounting Firm on Management's
                  Assessment of Internal Control Over Financial Reporting as of September
                  30, 2006
              
              
              
              
              
              F-2Report
                  of Independent Registered Public Accounting Firm on the Financial
                  Statements for the Years ended September 30, 2006 and 2005
              
              
              
              
              
              F-3Report
                  of Independent Registered Public Accounting Firm on the Financial
                  Statements for for the Year ended September 30, 2004
              
              
              
              
              
              F-4Consolidated
                  Financial Statements:Consolidated
                  Balance Sheets as of September 30, 2006 and 2005
              
              
              
              
              
              F-5Consolidated
                  Statements of Operations for the Years Ended September 30, 2006,
                  2005 and
                  2004, and for the period from inception, September 5, 1995, to
                  September
                  30, 2006
              
              
              
              
              
              F-6Consolidated
                  Statements of Shareholders' Equity (Deficit) for the period from
                  inception, September 5, 1995, to September 30, 2006
              
              
              
              
              
              F-7
                  -F-16Consolidated
                  Statements of Cash Flows for the Years Ended September 30, to 2006,
                  2005
                  and 2004, and for the period from inception, September 5, 1995,
                  to
                  September 30, 2006
              
              
              
              
              
              F-17
                  -F-18Notes
                  to Consolidated Financial Statements
              
              
              
              
              
              F-19-F-30Financial
                  Statement Schedules:NoneAll
                  schedules for which provision is made in the applicable accounting
                  regulations of the Securities and Exchange Commission are not required
                  under instructions or are inapplicable and therefore have been
                  omitted.




F-1
 *Table
          of Contents*





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








To
      the
      Board of Directors and Stockholders of


ERHC
      Energy Inc.


Houston,
      Texas





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.,
      a corporation in the development stage, maintained effective internal control
      over financial reporting as of September 30, 2006, 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.





In
      our
      opinion, management’s assessment that ERHC maintained effective internal control
      over financial reporting as of September 30, 2006, is fairly stated, in all
      material respects, based on criteria established in *Internal
      Control—Integrated Framework* issued
      by the COSO. Also in our opinion, ERHC maintained, in all material respects,
      effective internal control over financial reporting as of September 30, 2006,
      based on criteria established in *Internal
      Control—Integrated Framework* issued
      by the COSO.








Malone
      & Bailey, PC


www.malone-bailey.com


Houston,
      Texas





November
      22, 2006




F-2
 *Table
            of Contents*





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








To
      the
      Board of Directors and Stockholders of


ERHC
      Energy Inc.


Houston,
      Texas





We
      have
      audited the accompanying consolidated balance sheets of ERHC Energy Inc., a
      corporation in the development stage, as of September 30, 2006 and 2005 and
      the
      related consolidated statements of operations, shareholders’ equity (deficit)
      and cash flows for the years 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,
      2006 and 2005, and the results of its operations and its cash flows for the
      years then ended in conformity with accounting principles generally accepted
      in
      the United States of America.





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, 2006, 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 November 22, 2006 expressed an unqualified opinion on
      management’s assessment of internal control over financial reporting and an
      unqualified opinion on the effectiveness of internal control over financial
      reporting.








Malone
      & Bailey, PC


www.malone-bailey.com


Houston,
      Texas





November
      22, 2006





F-3
 *Table
            of Contents*





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








Board
      of
      Directors and Shareholders


ERHC
      Energy Inc.


Houston,
      Texas





We
      have
      audited the accompanying consolidated statement of operations and cash flows
      of
      ERHC Energy Inc. (the “Company”), a development stage company, for the year
      ended September
      30, 2004 and the consolidated statement of shareholders’ equity (deficit) for
      the years ended September 30, 1999 through September 30, 2004. 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 audits 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 statements of operations and cash flows of ERHC Energy
      Inc. for the year ended September 30, 2004 and the consolidated
      statements of stockholders’ equity (deficit) of ERHC Energy Inc. for the years
      ended September 30, 1999 through September 30, 2004 are presented fairly, in
      all
      material respects, 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
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                BALANCE SHEETS****September
                30, 2006 and 2005****2006**
            
            **2005****ASSETS**Current
                assets:Cash
            
            $
            40,991,114
            
            $
            988,490Prepaid
                expenses and other current assets
            
            
            1,073,031
            
            
            32,093Deferred
                tax asset - current
            
            
            480,000
            
            
            -Total
                current assets
            
            
            42,544,145
            
            
            1,020,583DRSTP
                concession fee
            
            
            2,839,500
            
            
            5,679,000Furniture
                and equipment, net
            
            
            14,604
            
            
            20,627Deferred
                tax asset
            
            
            480,000
            
            
            -Total
                assets
            
            $
            45,878,249
            
            $
            6,720,210**LIABILITIES
                AND SHAREHOLDERS' EQUITY**Current
                Liabilities:Accounts
                payable and accrued liabilities
            
            $
            6,784,004
            
            $
            192,634Accounts
                payable and accrued liabilities, related party
            
            
            69,439
            
            
            2,064,675Accrued
                interest
            
            
            5,023
            
            
            3,189Federal
                income taxes payable
            
            
            3,013,147
            
            
            -Asset
                retirement obligation
            
            
            485,000
            
            
            485,000Current
                portion of convertible debt
            
            
            33,513
            
            
            33,513Total
                current liabilities
            
            
            10,390,126
            
            
            2,779,011Commitments
                and contingencies
            
            
            -
            
            
            -Shareholders'
                equity: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 718,988,982 and 710,912,226 at September 30, 2006 and
                2005,
                respectively
            
            
            71,899
            
            
            71,091Additional
                paid-in capital
            
            
            91,652,399
            
            
            83,584,956Deficits
                accumulated in the development stage
            
            
            (56,236,175
            )
            
            (79,407,711
            )Deferred
                compensation
            
            
            -
            
            
            (307,137
            )Total
                shareholders’ equity
            
            
            35,488,123
            
            
            3,941,199Total
                liabilities and shareholders' equity
            
            $
            45,878,249
            
            $
            6,720,210





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





F-5
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF OPERATIONS****For
                the Years Ended September 30, 2004, 2005 and 2006 and for the Period
                from
                Inception,****September
                5, 1995, to September 30, 2006****2004**
            
            **2005**
            
            **2006**
            
            **Inception
                to**
              **September
                30,**
              **2006****(Unaudited)**Operating
                costs and expenses:General
                and administrative expenses
            
            $
            2,085,426
            
            $
            4,645,783
            
            $
            5,979,609
            
            $
            59,138,262Depreciation,
                depletion and amortization
            
            
            -
            
            
            6,676
            
            
            9,147
            
            
            1,364,013Write-offs
                and abandonments
            
            
            -
            
            
            -
            
            
            -
            
            
            7,742,128Loss
                from operations
            
            
            (2,085,426
            )
            
            (4,652,459
            )
            
            (5,988,756
            )
            
            (68,244,403
            )Other
                income and (expenses):Interest
                income
            
            
            -
            
            
            26,494
            
            
            1,123,141
            
            
            1,149,635Gain
                from settlement
            
            
            -
            
            
            252,310
            
            
            -
            
            
            252,310Other
                income
            
            
            163,797
            
            
            -
            
            
            -
            
            
            439,827Gain
                from sale of partial interest in DRSTP Concession
            
            
            -
            
            
            -
            
            
            30,102,250
            
            
            30,102,250Interest
                expense
            
            
            (1,671,759
            )
            
            (1,147,248
            )
            
            (2,099
            )
            
            (12,123,219
            )Loss
                on extinguishment of debt
            
            
            -
            
            
            (5,749,575
            )
            
            -
            
            
            (5,749,575
            )Total
                other income and expenses, net
            
            
            (1,507,962
            )
            
            (6,618,019
            )
            
            31,223,292
            
            
            14,071,228Income
                (loss) before benefit (provision) for income taxes
            
            
            (3,593,388
            )
            
            (11,270,478
            )
            
            25,234,536
            
            
            (54,173,175
            )Benefit
                (provision) for income taxesCurrent
            
            
            -
            
            
            -
            
            
            (3,023,000
            )
            
            (3,023,000
            )Deferred
            
            
            -
            
            
            -
            
            
            960,000
            
            
            960,000Total
                benefit (provision)for income taxes
            
            
            -
            
            
            -
            
            
            (2,063,000
            )
            
            (2,063,000
            )Net
                income (loss)
            
            $
            (3,593,388
            )
            $
            (11,270,478
            )
            $
            23,171,536
            
            $
            (56,236,175
            )Net
                income (loss) per common sharesBasic
                and diluted
            
            $
            (0.01
            )
            $
            (0.02
            )
            $
            0.03Weighted
                average number ofcommon
                shares outstanding -Basic
            
            
            592,603,441
            
            
            671,164,058
            
            
            712,063,980Diluted
            
            
            592,603,441
            
            
            671,164,058
            
            
            717,410,403





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




F-6
 *Table
          of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Common
                Stock**
              **Shares**
            
            **Amount**
            
            **Additional**
              **Paid-In**
              **Capital**
            
            **Accumulated
                Deficit**
            
            **Subscription
                Receivable**
            
            **Deferred
                Compensation**
            
            **Total**Balance
                at September 5, 1995
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Common
                stock issued for cash
            
            
            884,407
            
            
            88
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            88Common
                stock issued for services
            
            
            755,043
            
            
            76
            
            
            499,924
            
            
            -
            
            
            -
            
            
            (500,000
            )
            
            -Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,404
            )
            
            -
            
            
            -
            
            
            (3,404
            )Balance
                at September 30, 1995
            
            
            1,639,450
            
            
            164
            
            
            499,924
            
            
            (3,404
            )
            
            -
            
            
            (500,000
            )
            
            (3,316
            )Common
                stock issued for cash, net of expenses
            
            
            361,330
            
            
            36
            
            
            124,851
            
            
            -
            
            
            -
            
            
            -
            
            
            124,887Common
                stock issued for services
            
            
            138,277
            
            
            14
            
            
            528,263
            
            
            -
            
            
            -
            
            
            -
            
            
            528,277Common
                stock issued for equipment
            
            
            744,000
            
            
            74
            
            
            3,719,926
            
            
            -
            
            
            -
            
            
            -
            
            
            3,720,000Effect
                of reverse merger
            
            
            1,578,470
            
            
            158
            
            
            (243,488
            )
            
            -
            
            
            -
            
            
            -
            
            
            (243,330
            )Amortization
                of deferred compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            72,500
            
            
            72,500Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (728,748
            )
            
            -
            
            
            -
            
            
            (728,748
            )Balance
                at September 30, 1996
            
            
            4,461,527
            
            $
            446
            
            $
            4,629,476
            
            $
            (732,152
            )
            $
            -
            
            $
            (427,500
            )
            $
            3,470,270





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





F-7
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at September 30, 1996
            
            
            4,461,527
            
            $
            446
            
            $
            4,629,476
            
            $
            (732,152
            )
            $
            -
            
            $
            (427,500
            )
            $
            3,470,270Common
                stock issued for cash
            
            
            2,222,171
            
            
            222
            
            
            1,977,357
            
            
            -
            
            
            (913,300
            )
            
            -
            
            
            1,064,279Common
                stock issued for services
            
            
            9,127,981
            
            
            913
            
            
            12,430,725
            
            
            -
            
            
            -
            
            
            -
            
            
            12,431,638Common
                stock issued for oil and gas leases and properties
            
            
            500,000
            
            
            50
            
            
            515,575
            
            
            -
            
            
            -
            
            
            -
            
            
            515,625Common
                stock issued for Chevron contract
            
            
            3,000,000
            
            
            300
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            300Common
                stock issued for BAPCO acquisition
            
            
            4,000,000
            
            
            400
            
            
            499,600
            
            
            -
            
            
            -
            
            
            -
            
            
            500,000Contributed
            
            
            (100,000
            )
            
            (10
            )
            
            (99,990
            )
            
            -
            
            
            -
            
            
            -
            
            
            (100,000
            )Amortization
                of deferred compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            177,500
            
            
            177,500Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (16,913,052
            )
            
            -
            
            
            -
            
            
            (16,913,052
            )Balance
                at September 30, 1997
            
            
            23,211,679
            
            $
            2,321
            
            $
            19,952,743
            
            $
            (17,645,204
            )
            $
            (913,300
            )
            $
            (250,000
            )
            $
            1,146,560





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





F-8
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at September 30, 1997
            
            
            23,211,679
            
            $
            2,321
            
            $
            19,952,743
            
            $
            (17,645,204
            )
            $
            (913,300
            )
            $
            (250,000
            )
            $
            1,146,560Common
                stock and warrants issued for cash
            
            
            1,124,872
            
            
            113
            
            
            972,682
            
            
            -
            
            
            -
            
            
            -
            
            
            972,795Common
                stock issued for services
            
            
            1,020,320
            
            
            102
            
            
            1,526,878
            
            
            -
            
            
            -
            
            
            -
            
            
            1,526,980Common
                stock issued for Uinta acquisition
            
            
            1,000,000
            
            
            100
            
            
            1,999,900
            
            
            -
            
            
            -
            
            
            -
            
            
            2,000,000Common
                stock issued for Nueces acquisition
            
            
            50,000
            
            
            5
            
            
            148,745
            
            
            -
            
            
            -
            
            
            -
            
            
            148,750Common
                stock issued for accounts payable
            
            
            491,646
            
            
            49
            
            
            337,958
            
            
            -
            
            
            -
            
            
            -
            
            
            338,007Beneficial
                conversion feature associated with convertible debt
            
            
            -
            
            
            -
            
            
            1,387,500
            
            
            -
            
            
            -
            
            
            -
            
            
            1,387,500Receipt
                of subscription receivable
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            913,300
            
            
            -
            
            
            913,300Option
                fee and penalty
            
            
            299,536
            
            
            30
            
            
            219,193
            
            
            -
            
            
            -
            
            
            -
            
            
            219,223Common
                stock issued for building equity
            
            
            24,000
            
            
            2
            
            
            69,998
            
            
            -
            
            
            -
            
            
            -
            
            
            70,000Amortization
                of deferred compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            125,000
            
            
            125,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (11,579,024
            )
            
            -
            
            
            -
            
            
            (11,579,024
            )Balance
                at September 30, 1998
            
            
            27,222,053
            
            $
            2,722
            
            $
            26,615,597
            
            $
            (29,224,228
            )
            $
            -
            
            $
            (125,000
            )
            $
            (2,730,909
            )




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





F-9
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at September 30, 1998
            
            
            27,222,053
            
            $
            2,722
            
            $
            26,615,597
            
            $
            (29,224,228
            )
            $
            -
            
            $
            (125,000
            )
            $
            (2,730,909
            )Common
                stock issued for cash
            
            
            397,040,000
            
            
            39,704
            
            
            2,062,296
            
            
            -
            
            
            -
            
            
            -
            
            
            2,102,000Common
                stock issued for services
            
            
            7,169,000
            
            
            717
            
            
            1,034,185
            
            
            -
            
            
            -
            
            
            -
            
            
            1,034,902Common
                stock issued for Uinta settlement
            
            
            7,780,653
            
            
            778
            
            
            2,541,161
            
            
            -
            
            
            -
            
            
            -
            
            
            2,541,939Common
                stock surrendered in BAPCO settlement
            
            
            (7,744,000
            )
            
            (774
            )
            
            (2,709,626
            )
            
            -
            
            
            -
            
            
            -
            
            
            (2,710,400
            )Common
                stock issued for accounts payable, debt,accrued interest and
                penalties
            
            
            42,334,767
            
            
            4,233
            
            
            6,768,054
            
            
            -
            
            
            -
            
            
            -
            
            
            6,772,287Common
                stock issued for officer's salary and bonuses
            
            
            10,580,000
            
            
            1,058
            
            
            4,723,942
            
            
            -
            
            
            -
            
            
            -
            
            
            4,725,000Common
                stock issued for shareholder loans and accrued interest
                payable
            
            
            3,939,505
            
            
            394
            
            
            771,318
            
            
            -
            
            
            -
            
            
            -
            
            
            771,712Reclassification
                of common stock previously presented as a liability
            
            
            750,000
            
            
            75
            
            
            1,499,925
            
            
            -
            
            
            -
            
            
            -
            
            
            1,500,000Amortization
                of deferred compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            125,000
            
            
            125,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (19,727,835
            )
            
            -
            
            
            -
            
            
            (19,727,835
            )Balance
                at September 30, 1999
            
            
            489,071,978
            
            $
            48,907
            
            $
            43,306,852
            
            $
            (48,952,063
            )
            $
            -
            
            $
            -
            
            $
            (5,596,304
            )




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





F-10
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at September 30, 1999
            
            
            489,071,978
            
            $
            48,907
            
            $
            43,306,852
            
            $
            (48,952,063
            )
            $
            -
            
            $
            -
            
            $
            (5,596,304
            )Common
                stock issued for con version of debt and payment of accrued interest
                and
                penalties
            
            
            7,607,092
            
            
            761
            
            
            295,120
            
            
            -
            
            
            -
            
            
            -
            
            
            295,881Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,958,880
            )
            
            -
            
            
            -
            
            
            (1,958,880
            )Balance
                at September 30, 2000
            
            
            496,679,070
            
            
            49,668
            
            
            43,601,972
            
            
            (50,910,943
            )
            
            -
            
            
            -
            
            
            (7,259,303
            )Common
                stock issued for services
            
            
            37,000,000
            
            
            3,700
            
            
            1,846,300
            
            
            -
            
            
            -
            
            
            -
            
            
            1,850,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (6,394,810
            )
            
            -
            
            
            -
            
            
            (6,394,810
            )Balance
                at September 30, 2001
            
            
            533,679,070
            
            $
            53,368
            
            $
            45,448,272
            
            $
            (57,305,753
            )
            $
            -
            
            $
            -
            
            $
            (11,804,113
            )





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





F-11
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at September 30, 2001
            
            
            533,679,070
            
            $
            53,368
            
            $
            45,448,272
            
            $
            (57,305,753
            )
            $
            -
            
            $
            -
            
            $
            (11,804,113
            )Common
                stock issued for cash net of expenses
            
            
            4,000,000
            
            
            400
            
            
            643,100
            
            
            -
            
            
            
            
            
            -
            
            
            643,500Common
                stock issued for services
            
            
            3,475,000
            
            
            348
            
            
            527,652
            
            
            -
            
            
            -
            
            
            -
            
            
            528,000Common
                stock issued for accounts payable
            
            
            4,407,495
            
            
            440
            
            
            817,757
            
            
            -
            
            
            -
            
            
            -
            
            
            818,197Common
                stock issued for con version of debt and pay ment of accrued interest
                and
                penalties
            
            
            7,707,456
            
            
            771
            
            
            1,540,721
            
            
            -
            
            
            -
            
            
            -
            
            
            1,541,492Common
                stock issued for officer's salary and bonuses
            
            
            2,700,000
            
            
            270
            
            
            289,730
            
            
            -
            
            
            -
            
            
            -
            
            
            290,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,084,210
            )
            
            -
            
            
            -
            
            
            (4,084,210
            )Balance
                at September 30, 2002
            
            
            555,969,021
            
            $
            55,597
            
            $
            49,267,232
            
            $
            (61,389,963
            )
            $
            -
            
            $
            -
            
            $
            (12,067,134
            )





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





F-12
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at 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
            
            
            -
            
            
            -
            
            
            -
            
            
            1,072,500Common
                stock issued for accounts payable
            
            
            1,527,986
            
            
            153
            
            
            177,663
            
            
            -
            
            
            -
            
            
            -
            
            
            177,816Common
                stock issued for con version of debt and payment of accrued
                interest
            
            
            17,114,740
            
            
            1,711
            
            
            3,421,227
            
            
            -
            
            
            -
            
            
            -
            
            
            3,422,938Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,153,882
            )
            
            -
            
            
            -
            
            
            (3,153,882
            )Balance
                at September 30, 2003
            
            
            584,051,747
            
            $
            58,405
            
            $
            53,937,678
            
            $
            (64,543,845
            )
            $
            -
            
            $
            -
            
            $
            (10,547,762
            )





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





F-13
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at 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
            
            
            -
            
            
            -
            
            
            -
            
            
            975,000Common
                stock issued for accounts payable
            
            
            1,458,514
            
            
            146
            
            
            533,102
            
            
            -
            
            
            -
            
            
            -
            
            
            533,248Common
                stock issued for con version of debt and payment of accrued
                interest
            
            
            11,185,052
            
            
            1,119
            
            
            2,236,093
            
            
            -
            
            
            -
            
            
            -
            
            
            2,237,212Common
                stock issued for proceeds received in 2003
            
            
            1,000,000
            
            
            100
            
            
            (100
            )
            
            -
            
            
            -
            
            
            -
            
            
            -Beneficial
                conversion feature associated with the con vertible line of
                credit
            
            
            -
            
            
            -
            
            
            1,058,912
            
            
            -
            
            
            -
            
            
            -
            
            
            1,058,912Options
                issued to employee
            
            
            -
            
            
            -
            
            
            765,000
            
            
            -
            
            
            -
            
            
            (765,000
            )
            
            -Amortization
                of deferred compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            308,126
            
            
            308,126Common
                stock issued for cash less exercise of options and/or
                warrants
            
            
            247,882
            
            
            25
            
            
            (25
            )
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,593,388
            )
            
            -
            
            
            -
            
            
            (3,593,388
            )Balance
                at September 30, 2004
            
            
            601,175,135
            
            $
            60,118
            
            $
            59,505,337
            
            $
            (68,137,233
            )
            $
            -
            
            $
            (456,874
            )
            $
            (9,028,652
            )




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





F-14
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS’ EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at 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
            
            
            -
            
            
            -
            
            
            -
            
            
            359,789Common
                stock issued for con version of debt and payment of accrued
                interest
            
            
            107,819,727
            
            
            10,782
            
            
            22,678,054
            
            
            -
            
            
            -
            
            
            -
            
            
            22,688,836Common
                stock issued in settle ment of lawsuits
            
            
            595,000
            
            
            59
            
            
            394,391
            
            
            -
            
            
            -
            
            
            -
            
            
            394,450Variable
                accounting for repriced employee stock options
            
            
            -
            
            
            -
            
            
            300,000
            
            
            -
            
            
            -
            
            
            (300,000
            )
            
            -Beneficial
                conversion feature associated with the con vertible line of
                credit
            
            
            
            
            
            
            
            
            347,517
            
            
            
            
            
            
            
            
            
            
            
            347,517Amortization
                of deferred compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            449,737
            
            
            449,737Common
                stock issued for cash less exercise of options and/or
                warrants
            
            
            587,364
            
            
            59
            
            
            (59
            )
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (11,270,478
            )
            
            -
            
            
            
            
            
            (11,270,478
            )Balance
                at September 30, 2005
            
            
            710,912,226
            
            $
            71,091
            
            $
            83,584,956
            
            $
            (79,407,711
            )
            $
            -
            
            $
            (307,137
            )
            $
            3,941,199





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





F-15
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS' EQUITY****For
                the Period from Inception, September 5, 1995, to September 30, 2006,
                (Unaudited for the Period from Inception to September 30,
                1998)****Additional****Common
                Stock**
            
            
            
            **Paid-In**
            
            **Accumulated**
            
            **Subscription**
            
            **Deferred****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Receivable**
            
            **Compensation**
            
            **Total**Balance
                at September 30, 2005
            
            
            710,912,226
            
            $
            71,091
            
            $
            83,584,956
            
            $
            (79,407,711
            )
            $
            -
            
            $
            (307,137
            )
            $
            3,941,199Variable
                accounting for repriced employee stock options
            
            
            -
            
            
            -
            
            
            (60,660
            )
            
            -
            
            
            -
            
            
            -
            
            
            (60,660
            )Issuance
                of warrants for success fee
            
            
            -
            
            
            -
            
            
            5,154,500
            
            
            -
            
            
            -
            
            
            -
            
            
            5,154,500Issuance
                of options as comp ensation to consultants
            
            
            -
            
            
            -
            
            
            1,145,000
            
            
            -
            
            
            -
            
            
            -
            
            
            1,145,000Common
                stock issued upon exercise of warrants
            
            
            800,000
            
            
            80
            
            
            159,920
            
            
            -
            
            
            -
            
            
            -
            
            
            160,000Amortization
                of deferred compensation
            
            
            -
            
            
            -
            
            
            (307,137
            )
            
            -
            
            
            -
            
            
            307,137
            
            
            -Common
                stock issued for board compensation
            
            
            4,665,000
            
            
            467
            
            
            1,976,081
            
            
            -
            
            
            -
            
            
            -
            
            
            1,976,548Common
                stock issued for cash less exercise of options and/or
                warrants
            
            
            2,611,756
            
            
            261
            
            
            (261
            )
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            23,171,536
            
            
            -
            
            
            -
            
            
            23,171,536Balance
                at September 30, 2006
            
            
            718,988,982
            
            $
            71,899
            
            $
            91,652,399
            
            $
            (56,236,175
            )
            $
            -
            
            $
            -
            
            $
            35,488,123








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





F-16
 *Table
          of Contents*





**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****For
                the Years Ended September 30, 2004, 2005 and 2006 and for the Period
                from
                Inception,****September
                5, 1995, to September 30, 2006****Inception
                to****September
                30,****2004**
            
            **2005**
            
            **2006**
            
            **2006****(Unaudited)**Cash
                Flows from Operating ActivitiesNet
                income (loss)
            
            $
            (3,593,388
            )
            $
            (11,270,478
            )
            $
            23,171,536
            
            $
            (56,236,175
            )Adjustments
                to reconcile net income ( loss) to net cash used by operating activities
                Depreciation, depletion and amortization expenses
            
            
            -
            
            
            6,676
            
            
            9,147
            
            
            1,364,013Write-offs
                and abandonments
            
            
            -
            
            
            -
            
            
            -
            
            
            7,742,128Deferred
                income taxes
            
            
            -
            
            
            -
            
            
            (960,000
            )
            
            (960,000
            )Compensatory
                stock options
            
            
            -
            
            
            -
            
            
            1,084,340
            
            
            1,084,340Gain
                from settlement
            
            
            -
            
            
            (252,310
            )
            
            -
            
            
            (252,310
            )Gain
                on sale of partial interest in DRSTP concession
            
            
            -
            
            
            -
            
            
            (30,102,250
            )
            
            (30,102,250
            )Amortization
                of beneficial conversion feature associated with convertible
                debt
            
            
            629,591
            
            
            784,348
            
            
            -
            
            
            2,793,929Amortization
                of deferred compensation
            
            
            308,126
            
            
            449,737
            
            
            -
            
            
            1,257,863Common
                stock issued for services
            
            
            -
            
            
            -
            
            
            -
            
            
            20,897,077Common
                stock issued for settlements
            
            
            -
            
            
            -
            
            
            -
            
            
            225,989Common
                stock issued for officer bonuses
            
            
            -
            
            
            -
            
            
            -
            
            
            5,015,000Common
                stock issued for interest and penalties on convertible
                debt
            
            
            -
            
            
            -
            
            
            -
            
            
            10,631,768Common
                stock issued for board compensation
            
            
            -
            
            
            -
            
            
            1,976,548
            
            
            1,976,548Gain
                (loss) on extinguishment of debt
            
            
            -
            
            
            5,749,575
            
            
            -
            
            
            5,682,368Changes
                in operating assets and liabilities:Prepaid
                expenses and others current assets
            
            
            (11,193
            )
            
            (5,835
            )
            
            (1,040,938
            )
            
            (1,073,031
            )Accounts
                payable and other accrued liabilities
            
            
            (121,493
            )
            
            324,454
            
            
            (1,210,546
            )
            
            (1,014,723
            )Accrued
                federal income taxes
            
            
            
            
            
            
            
            
            3,013,147
            
            
            3,013,147Accrued
                officers' salaries
            
            
            -
            
            
            (76,275
            )
            
            -
            
            
            -Accounts
                payable, and accrued iabilities, related party
            
            
            -
            
            
            2,146,375
            
            
            (1,995,236
            )
            
            69,439Accrued
                interest - related party
            
            
            1,042,369
            
            
            386,228
            
            
            -
            
            
            -Accrued
                retirement obligation
            
            
            -
            
            
            -
            
            
            -
            
            
            485,000Net
                cash used by operating activities
            
            $
            (1,745,988
            )
            $
            (1,757,505
            )
            $
            (6,054,252
            )
            $
            (27,399,880
            )




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





F-17
 *Table
            of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****For
                the Years Ended September 30, 2004, 2005 and 2006 and for the Period
                from
                Inception,****September
                5, 1995, to September 30, 2006****Inception
                to****September
                30,****2004**
            
            **2005**
            
            **2006**
            
            **2006****(Unaudited)**Cash
                Flows from Investing ActivitiesRelease
                of restricted cash
            
            $
            15,317
            
            $
            3,026
            
            $
            -
            
            $
            -Purchase
                of DRSTP concession
            
            
            -
            
            
            -
            
            
            -
            
            
            (5,679,000
            )Proceeds
                from sale of partial interest in DRSTP concession
            
            
            -
            
            
            -
            
            
            45,900,000
            
            
            45,900,000Purchase
                of furniture and equipment
            
            
            -
            
            
            (27,303
            )
            
            (3,124
            )
            
            (805,392
            )Net
                cash provided (used) by investing activities
            
            
            15,317
            
            
            (24,277
            )
            
            45,896,876
            
            
            39,415,608Cash
                Flows from Financing Activities:Proceeds
                from warrants exercised
            
            
            -
            
            
            -
            
            
            160,000
            
            
            160,000Proceeds
                from common stock, net of expenses
            
            
            975,000
            
            
            -
            
            
            -
            
            
            6,955,049Proceeds
                from related party line of credit
            
            
            -
            
            
            2,750,000
            
            
            -
            
            
            2,750,000Proceeds
                from related party debt
            
            
            -
            
            
            -
            
            
            -
            
            
            158,700Proceeds
                from related party convertible debt
            
            
            752,607
            
            
            -
            
            
            -
            
            
            8,207,706Proceeds
                from convertible debt
            
            
            -
            
            
            -
            
            
            -
            
            
            9,019,937Proceeds
                from note payable to bank
            
            
            -
            
            
            -
            
            
            -
            
            
            175,000Proceeds
                from shareholder loans
            
            
            -
            
            
            -
            
            
            -
            
            
            1,845,809Collection
                of stock subscription receivable
            
            
            -
            
            
            -
            
            
            -
            
            
            913,300Repayment
                of shareholder loans
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,020,607
            )Repayment
                of long-term debt
            
            
            -
            
            
            -
            
            
            -
            
            
            (189,508
            )Net
                cash provided by investing activities
            
            
            1,727,607
            
            
            2,750,000
            
            
            160,000
            
            
            28,975,386Net
                increase (decrease) in cash and cash equivalents
            
            
            (3,064
            )
            
            968,218
            
            
            40,002,624
            
            
            40,991,114Cash
                and cash equivalents, beginning of period
            
            
            23,336
            
            
            20,272
            
            
            988,490
            
            
            -Cash
                and cash equivalents, end of period
            
            $
            20,272
            
            $
            988,490
            
            $
            40,991,114
            
            $
            40,991,114Supplemental
                Disclosure of Cash Flow InformationCash
                paid for interest expense
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Cash
                paid for income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -




The
      accompanying notes are an integral part of these financial
      statements




F-18
 *Table
          of Contents*




**ERHC
                ENERGY INC.****A
                CORPORATION IN THE DEVELOPMENT STAGE****NOTES
                TO CONSOLIDATED FINANCIAL STATEMENTS****For
                the Years Ended September 30, 2006, 2005 and 2004 and for the Period
                from
                Inception,****September
                5, 1995, to September 30,
                2006**




**Note
      1 - Summary of Significant Accounting Policies**





General
      Business and Nature of Operations





ERHC
      Energy Inc. is an independent oil and gas company that reports as a development
      stage enterprise because there are currently no significant operations and
      no
      revenue has been generated from business activities. ERHC 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.  ERHC’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. ERHC’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”).  ERHC has formed
      relationships with upstream oil and gas companies to assist ERHC in exploiting
      its assets in the JDZ as further described in Note 4. ERHC currently has no
      other operations.





Consolidated
      Financial Statements





The
      consolidated financial statements include the accounts of ERHC 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





ERHC
      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





ERHC
      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.





ERHC’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.  ERHC has formed relationships with Sinopec International
      Petroleum Exploration and Production Corporation Nigeria ("Sinopec"), and Addax
      Energy Nigeria Limited ("Addax Ltd.") to assist ERHC in leveraging its interests
      in the EEZ and the JDZ. Should circumstances impede ERHC from perfecting its
      interests in the 2001 Agreement with DRSTP or the 2003 Option Agreement, ERHC’s
      business would be materially affected. Should ERHC perfect its interests in
      the
      2001 Agreement and the 2003 Option Agreement, there is no certainty that ERHC
      will be able to obtain sufficient financial and other resources to develop
      its
      interests.  ERHC currently has no other operations.





F-19
 *Table
            of Contents*





Properties
      and equipment





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





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





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





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





Asset
      Retirement Obligation





ERHC’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 accreted 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 current liability is fully
      accreted and represents management’s best estimate of the fair value of the
      outstanding obligation.





Impairment
      of long-lived assets





ERHC
      evaluates the recoverability of long-lived assets when events and circumstances
      indicate that such assets might be impaired.  ERHC 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.  ERHC has evaluated its investment in its DRSTP
      concession fee in light of its 2003 Option Agreement (see Note 4) and there
      have
      been no events or circumstances that would indicate that such asset might be
      impaired.





F-20
 *Table
            of Contents*




Income
      taxes





ERHC
      accounts for income taxes under the provisions of Statement of Financial
      Accounting Standards 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





ERHC
      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
      income (loss) per share





Basic
      net
      income (loss) per share is computed by dividing net income (loss) by the
      weighted average number of common shares outstanding during the period. 
Diluted income (loss) per share is computed by dividing net income (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 income (loss) per share if they are
      anti-dilutive.  Diluted income (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 years ended September 30, 2006, 2005 and 2004
      the potentially dilutive common shares from stock options and warrants were
      5,346,423, 5,074,847 and 5,395,813 respectively. If all convertible debt
      instruments, including accrued interest were to be considered, an additional
      192,680, 167,565 and 65,492,921 common shares for the years ended
      September 30, 2006, 2005 and 2004, respectively, may have been dilutive
      depending on the results of operations.





Stock-based
      compensation





On
      October 1, 2005, ERHC began recording compensation expense associated with
      stock
      options and other forms of equity compensation in accordance with Statement
      of
      Financial Accounting Standards No. 123R, Share-Based Payment, as interpreted
      by
      SEC Staff Accounting Bulletin No. 107. Prior to October 1, 2005, ERHC had
      accounted for stock options according to the provisions of Accounting Principles
      Board Opinion No. 25, Accounting for Stock Issued to Employees, and related
      interpretations, and therefore no related compensation expense was recorded
      for
      awards granted with no intrinsic value. ERHC adopted the modified prospective
      transition method provided for under SFAS No. 123R, and consequently, has not
      retroactively adjusted results from prior periods. Under this transition method,
      compensation cost associated with stock options recognized in the first quarter
      of Fiscal 2006 includes: 1) quarterly amortization related to the remaining
      unvested portion of all stock option awards granted prior to October 1, 2005,
      based on the grant date fair value estimated in accordance with the original
      provisions of SFAS No. 123; and 2) quarterly amortization related to all stock
      option awards granted subsequent to July 1, 2005, based on the grant-date fair
      value estimated in accordance with the provisions of SFAS No. 123R.





As
      referred to in Note 9, ERHC 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.” Under variable plan
      accounting, compensation expense is adjusted for increases or decreases in
      the
      fair market value of ERHC’s common stock to the extent that the market value
      exceeds the exercise price of the option. Variable plan accounting was applied
      to the re-priced options until the options were exercised in June 2006.





Had
      compensation costs for the stock options granted to an employee been determined
      based on the fair value at the grant date for the year ending September 30,
      2005
      and 2004, 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:





F-21
 *Table
            of Contents*




**Description**
            
            **2005**
            
            **2004**Net
                loss - as reported
            
            $
            (11,270,478
            )
            $
            (3,593,388
            )Plus:
                stock-based compensation expense determined using the intrinsic value
                of
                the option at the measurement date
            
            
            449,737
            
            
            308,126Less:
                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
            )Basic
                and diluted net loss per share - as reported
            
            $
            (0.02
            )
            $
            (0.01
            )Basic
                and diluted net loss per share - proforma
            
            $
            (0.02
            )
            $
            (0.01
            )





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 fair value of options at
      date of grant was estimated using the Black-Sholes option-pricing model with
      the
      following weighted average assumptions:





**Assumptions**
            
            **2005**
            
            **2004**Expected
                life (years)
            
            
            3.58
                years
            
            
            4
                yearsInterest
                rate
            
            
            4.00
            %
            
            4.00
            %Dividend
                yield
            
            
            0.00
            %
            
            0.00
            %Volatility
            
            
            107.00
            %
            
            94.20
            %





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





New
      accounting pronouncements





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.





In
      June
      2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes—An Interpretation of FASB Statement No. 109” (“FIN
      No. 48”). FIN No. 48 clarifies the accounting for uncertainty in
      income taxes recognized in an enterprise’s financial statements in accordance
      with Statement No. 109, “Accounting for Income Taxes.” FIN No. 48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement classification, accounting for interest
      and penalties and accounting in interim periods and disclosure. The provisions
      of FIN No. 48 are effective for fiscal years beginning after
      December 15, 2006. The Company does not expect that the adoption of FIN No.
      48 will have a material effect on its financial position or results of
      operations.





F-22
 *Table
            of Contents*





Reclassifications





During
      the year ended September 30, 2005, ERHC 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- Accounts Payable and Accrued Liabilities**





Accounts
      payable and accrued liabilities consisted of the following as of September
      30,
      2006 and 2005:





2006
            
            2005Accrued
                success fee
            
            $
            1,500,000
            
            $
            -Accrued
                stock payable- success fee
            
            
            4,803,750
            
            
            -Accrued
                settlement payable
            
            
            175,000
            
            
            -Accounts
                payable
            
            
            305,254
            
            
            192,634$
            6,784,004
            
            $
            192,634






**Note 3
      - Revision to Financial Statements**





ERHC
      has
      revised its financial statements to report as a development stage company for
      the year ended September 30, 2006. Accordingly, the statements of operations,
      stockholders’ equity and cash flows include inception to date amounts. The
      consolidated statements of stockholders’ equity (deficit) of the Company for the
      years from inception (September 5, 1995) through September 30, 1998 were audited
      by other auditors who are no longer members of the PCAOB and whose reports
      for
      each of the years ended from inception (September 5, 1995) through September
      30,
      1998 expressed an unqualified opinion on those statements.








**Note
      4- Sao Tome Concession**





In
      November 2005, ERHC sold a 33.3% participating interest in Block 4 to Addax
      Petroleum (Nigeria Offshore 2) Limited ("Addax"), leaving a 17.7% participating
      interest to ERHC. In exchange, Addax paid ERHC $18,000,000 in the second quarter
      of fiscal 2006. Under the participation agreement, ERHC will support Addax
      as
      operator, and Addax will pay all of ERHC's future costs in respect of all
      petroleum operations in Block 4. Addax is entitled to ERHC's share of cost
      oil
      until Addax recovers ERHC's costs.





In
      February 2006, ERHC sold a 15% participating interest in Block 3 of the JDZ
      to
      Addax Petroleum Resources Nigeria Limited ("Addax Sub"), leaving a 10%
      participating interest to ERHC. In exchange, Addax Sub paid ERHC $7,500,000
      in
      the second quarter of fiscal 2006. Under this agreement, Addax Sub agreed to
      pay
      all of ERHC's future costs in respect of petroleum operations in Block 3. Addax
      Sub is entitled to ERHC's share of cost oil until Addax Sub recovers ERHC's
      costs.





In
      March
      2006, ERHC sold a 28.67% participating interest in Block 2 of the JDZ to Sinopec
      International Petroleum Exploration and Production Corporation Nigeria
      ("Sinopec"), and a 14.33% participating interest in Block 2 of the JDZ to Addax
      Energy Nigeria Limited ("Addax Ltd."), leaving a 22% participating interest
      to
      ERHC. In exchange, Sinopec paid ERHC $13,600,000 and Addax Ltd. paid ERHC
      $6,800,000 in the second quarter of fiscal 2006. Under this agreement, ERHC
      will
      support Sinopec as operator, and Sinopec and Addax Ltd. will pay all of ERHC's
      future costs in respect of petroleum operations in Block 2. Sinopec and Addax
      Ltd. are entitled to ERHC's share of cost oil until they recover ERHC's costs
      and Sinopec is to receive 6% interest on its future costs, up to $35,000,000,
      but only to the extent that those interest costs are covered by
      production.





The
      following represents ERHC’s current rights in the JDZ blocks and the signature
      bonuses payable for each block:





**JDZ
                Block #**
            
            **Original
                Working Interest Percentage**
            
            **Retained
                Interest**
            
            **Signature
                Bonus Payable**2
            
            30%
            
            22%
            
            Signature
                Bonus Free3
            
            20%
            
            10%
            
            Signature
                Bonus Free4
            
            25%
            
            17.7%
            
            Signature
                Bonus Free5
            
            15%
            
            (a)
            
            Signature
                Bonus Payable6
            
            15%
            
            (a)
            
            Signature
                Bonus Free9
            
            15%
            
            (a)
            
            Signature
                Bonus Payable


________________


(a)
      No
      contracts have been entered into as of the date hereof.





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





F-23
 *Table
            of Contents*





**Note 5
      - DRSTP Concession Fee**





As
      described in Note 4 ERHC sold various participating interests in Blocks 2,
      3 and 4 for total cash proceeds of $45,900,000. ERHC
      agreed to pay a $3,000,000 cash success fee ($1,500,000 was paid in March 2006
      and the remaining $1,500,000 is included
      in accounts payable at September 30, 2006) to Feltang International Inc., a
      British Virgin Island company that was responsible for obtaining Sinopec’s
      participation in Block 2. ERHC also will issue to Feltang 5,250,000 shares
      of
      common stock and warrants to purchase 6,500,000 shares at an exercise price
      of
      $0.355 per share. The common stock was valued at $4,803,750 (included in
      accounts payable at September 30, 2006) based on the quoted market value of
      the
      common stock on the date Sinopec signed the production sharing agreement. The
      warrants were valued at $5,154,500 based on a valuation using the Black-Scholes
      Option Pricing Model and the following assumptions; market price of $0.915,
      strike price of $0.355, volatility of 115%, interest rate of 4.42%, dividend
      yield of 0% and expected life of 4 years. Following is an analysis of the sale
      of the participating interests in blocks 2, 3 and 4.





**Cost
                Basis**
            
            **Cash
                Proceeds**
            
            **Fees**
            
            **Gain
                Loss**Block
                2
            
            $
            946,500
            
            $
            20,400,000
            
            $
            12,958,250
            
            $
            6,495,250Block
                3
            
            
            946,500
            
            
            7,500,000
            
            
            -
            
            
            6,553,500Block
                4
            
            
            946,500
            
            
            18,000,000
            
            
            -
            
            
            17,053,500Total
            
            $
            2,839,500
            
            $
            45,900,000
            
            $
            12,958,250
            
            $
            30,102,250





Upon
      sale
      of the participation interests, ERHC removed the entire cost of the related
      blocks due to the uncertainty surrounding their unproved interests.





**Note 6
      - Notes Payable**





Convertible
      Debt - Non-Related Party





At
      September 30, 2006, ERHC had $33,513 of nonaffiliated convertible debt and
      $5,032 accrued but unpaid interest outstanding. At September 30, 2006, the
      note
      was in default and ERHC has been unable to locate the payee. If the outstanding
      convertible debt were converted using the conversion price of $0.20 per share,
      ERHC would be required to issue 192,725 shares of common stock based on an
      outstanding principal amount of $33,513 and accrued interest of $5,032. 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.





Convertible
      Debt - Related Party





At
      September 30, 2006, ERHC had no affiliated debt outstanding. During the year
      ended September 30, 2005, ERHC had convertible debt instruments with Chrome
      Energy, L.L.C., 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.





During
      2005, ERHC restructured outstanding debt to Chrome totaling $10,134,084 and
      enter into a new $2,500,000 working capital line of credit. To facilitate the
      debt restructuring, ERHC issued 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, ERHC 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, ERHC issued a 12% note with a principal amount of
      $10,134,084, to be settled at the option of ERHC at $0.175 per share, and
      expiring on January 31, 2007. ERHC also issued a 10% working capital line of
      credit of $2,500,000 to be settled at ERHC’s option 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.





F-24
 *Table
            of Contents*




On
      January 28, 2005, ERHC exercised its right to convert the two new notes 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 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. ERHC issued
      to
      Chrome 73,100,954 shares of ERHC common stock in conversion of the entire
      outstanding principal and accrued interest of these notes. The Notes were
      converted at $0.175 per share.





**Note 7
      - Accrued Salaries**





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




**Note 8
      - Income Taxes**





At
      September 30, 2005 ERHC had a consolidated net operating loss carry-forward
      (“NOL”) of approximately $63.6 million expiring through 2025. ERHC had a
      deferred tax asset of approximately $21.8 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. During the
      year ended September 30, 2006, ERHC recognized a significant gain on the sale
      of
      various participation interests (see Note 5), which utilized a substantial
      portion of the current net operating loss carry-forwards. The net operating
      loss
      carry-forward was also adjusted to remove losses limited under Section 382.





The
      composition of deferred tax assets and the related tax effects at September
      30,
      2006 and September 30, 2005 are as follows:


**2006**
            
            **2005**Net
                operating losses
            
            $
            3,410,000
            
            $
            21,629,493Accrual
                for asset retirement
            
            
            164,900
            
            
            164,900Total
                deferred tax assets
            
            
            3,574,900
            
            
            21,794,393Valuation
                allowance
            
            
            (2,614,900
            )
            
            (21,794,393
            )Net
                deferred tax asset
            
            $
            960,000
            
            $
            -





The
      $960,000 deferred tax asset represents the minimum NOL carryback claim from
      losses in the next two future years against the year ended September 30, 2006
      taxable income should no income be produced in future years.





The
      difference between the income tax benefit (provision) 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 income (loss) for years ended
      September 30, 2006, 2005 and 2004, is as follows:


**Years
                Ended September 30,****2006**
            
            **2005**
            
            **2004**Income
                tax benefit (provision) at federal statutory rate
            
            $
            (8,579,742
            )
            $
            3,831,962
            
            $
            1,221,752Gain
                on sale of assets
            
            
            59,243
            
            
            -
            
            
            -Change
                in valuation allowance
            
            
            19,179,493
            
            
            340,989
            
            
            (536,827
            )Expiration
                and adjustment of NOL’s
            
            
            (12,266,000
            )
            
            (1,022,244
            )
            
            (221,000
            )Director’s
                stock compensation
            
            
            (44,896
            )
            
            (627,130
            )
            
            -Consultants
                stock option expense
            
            
            (368,676
            )
            
            -
            
            
            -Accrued
                interest not paid
            
            
            -
            
            
            (390,064
            )
            
            (354,337
            )Amortization
                of deferred compensation
            
            
            -
            
            
            (152,910
            )
            
            (104,763
            )Loss
                on extinguishment of debt
            
            
            -
            
            
            (1,954,856
            )
            
            -State
                income tax
            
            
            (9,853
            )
            
            -
            
            
            -Penalties
            
            
            (31,771
            )
            
            -
            
            
            -Other
            
            
            (798
            )
            
            (25,747
            )
            
            (4,825
            )Income
                tax benefit (provision)
            
            $
            (2,063,000
            )
            $
            -
            
            $
            -




F-25
 *Table
            of Contents*





**Note 9
      - Shareholders’ Equity**





Common
      Stock and Warrants Issued For Cash





From
      time
      to time, in order to fund operating activities, common stock is issued for
      cash.
      There were no stock issuances with warrants during the years ended September
      30,
      2006 and 2005. During the year ended September 30, 2004, ERHC 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.








Common
      Stock Issued For Settlement of Accounts Payable





ERHC
      has
      issued shares of common stock for settlement of outstanding accounts payable
      to
      various creditors. During the years ended September 30, 2006, 2005 and 2004,
      ERHC issued 0, 735,000 and 1,458,514 shares of common stock with an aggregate
      value of $0, $359,789 and $533,248, respectively, for payment of accounts
      payable balances.





Common
      Stock Issued For Services





During
      the year ended September 30, 2006, ERHC issued 4,665,000 shares of common stock
      for payment of director services as follows: (i) 325,000 shares for 2006
      services rendered, (ii) 340,000 shares for 2005 services rendered, and (iii)
      4,000,000 shares to the chairman of the board for his long-term history of
      services to ERHC.





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





ERHC
      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,
      2006, there were no shares issued for the conversion of convertible debt. During
      the year ended September 30, 2005, non-affiliated note holders converted
      $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. ERHC issued 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, ERHC issued 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, ERHC 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, ERHC 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.





Stock
      Options Issued and Re-Priced





On
      January 1, 2005, ERHC issued options to purchase a total of 1,750,000 shares
      of
      common stock, upon completion of a full year of service to three 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. These options were
      exercised, on a cashless basis, during the year ended September 30, 2006, for
      a
      total of 1,339,030 shares.





During
      the year ended September 30, 2005, ERHC 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 ERHC’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, ERHC incurred
      additional expense of $194,737 as a result of an upward change in the fair
      market value on the underlying common stock. In January 2006, 1,000,000 of
      these
      options were cancelled upon the resignation of the employee and a reduction
      to
      expense of $60,660 was recognized in fiscal 2006. The remaining 2,000,000
      options were exercised, on a cashless basis, in June 2006 and 1,272,727 shares
      were issued.





F-26
 *Table
            of Contents*





Warrants/Options





Information
      regarding warrants/options and their respective changes as of and for the fiscal
      years ended September 30, 2006, 2005 and 2004 are as follows:





**Warrants**
            
            **Options****2006**
            
            **2005**
            
            **2004**
            
            **2006**
            
            **2005**
            
            **2004**Outstanding,
                beginning of year
            
            
            15,166,940
            
            
            16,166,940
            
            
            13,430,000
            
            
            3,000,000
            
            
            3,000,000
            
            
            -Granted
            
            
            6,500,000
            
            
            -
            
            
            3,231,940
            
            
            -
            
            
            -
            
            
            (e)
                3,000,000Exercised
            
            
            (a)
                (800,000
            )
            
            (b)(1,000,000
            )
            
            (c)
                (375,000
            )
            
            (d)
                (2,000,000
            )
            
            -
            
            
            -Expired/cancelled
            
            
            -
            
            
            -
            
            
            (120,000
            )
            
            (1,000,000
            )
            
            -
            
            
            -Outstanding,
                end of year
            
            
            20,866,940
            
            
            15,166,940
            
            
            16,166,940
            
            
            -
            
            
            3,000,000
            
            
            3,000,000Exercisable
            
            
            20,866,940
            
            
            15,166,940
            
            
            16,166,940
            
            
            -
            
            
            2,000,000
            
            
            1,000,000





(a)
            During
                2006, 800,000 warrants were exercised at $0.20 per share and proceeds
                of
                $160,000 were received.


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


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


(d)
            During
                2006, 2,000,000 options were exercised on a cashless basis for 1,272,727
                shares of common stock.


(e)
            During
                the year ended September 30, 2004, ERHC 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, 2006, 2005 and 2004 is as follows:





**Warrants**
            
            **Options****2006**
            
            **2005**
            
            **2004**
            
            **2006**
            
            **2005**
            
            **2004**Outstanding,
                beginning of year
            
            $
            0.37
            
            $
            0.36
            
            $
            0.32
            
            $
            -
            
            $
            0.30
            
            $
            -Granted
            
            
            0.36
            
            
            -
            
            
            0.52
            
            
            -
            
            
            -
            
            
            0.30Exercised
            
            
            0.20
            
            
            0.20
            
            
            0.20
            
            
            -
            
            
            -
            
            
            -Expired/cancelled
            
            
            -
            
            
            -
            
            
            0.50
            
            
            -
            
            
            -
            
            
            -Outstanding,
                end of year
            
            $
            0.37
            
            $
            0.37
            
            $
            0.36
            
            $
            -
            
            $
            0.30
            
            $
            0.30Exercisable
            
            $
            0.37
            
            $
            0.36
            
            $
            0.36
            
            $
            -
            
            $
            0.30
            
            $
            0.30





Significant
      warrant groups outstanding at September 30, 2006, and related weighted average
      exercise price, exercise price range and weighted average remaining contractual
      life information are as follows:





**Grant
                Grouping**
            
            **Warrants
                Outstanding**
            
            **Weighted
                Average Exercise Price**
            
            **Exercise
                Price Range**
            
            **Weighted
                Average Contractual Years**Chrome
            
            
            2,500,000
            
            $
            0.25
            
            $
            0.25
            
            
            1.8Common
                stock purchase
            
            
            17,196,940
            
            
            0.41
            
            
            0.20-0.55
            
            
            1.7S-1/S-3
                contingent
            
            
            1,050,000
            
            
            0.75
            
            
            0.75
            
            
            (a
            )Other
            
            
            120,000
            
            
            3.00
            
            
            3.00
            
            
            2.25


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





F-27
 *Table
            of Contents*





**Note 10
      - Commitments and Contingencies**





Legal
      Proceedings





On
      May 4,
      2006, a Federal court search warrant sought various records including, among
      other matters, documents, if any, related to correspondence with foreign
      governmental officials or entities in Sao Tome and Nigeria. ERHC continues
      to
      cooperate with the U.S. Department of Justice (DOJ) investigation.





Related
      U.S. Securities and Exchange Commission (SEC) subpoenas issued on May 9 and
      August 26, 2006 also requested a range of documents. ERHC has responded to
      both
      subpoenas.





During
      October 2006, Lakeshore Capital Limited filed an arbitration claim against
      ERHC
      seeking $4,400,000 for the alleged value of 4,500,000 shares of ERHC common
      stock and for a warrant to purchase 1,500,000 shares at an exercise price of
      $.20 per share, including interest and costs.  Lakeshore claims it is owed
      this sum for services previously rendered under a contract with ERHC.  ERHC
      believes that Lakeshore’s claim is entirely without merit and intends to
      vigorously defend all Lakeshore claims.





From
      time
      to time, ERHC may be subject to routine litigation, claims, or disputes in
      the
      ordinary course of business which, in the opinion of management, should not
      have
      a materially adverse effect on ERHC’s financial position.





Employment
      and Consulting Agreements





On
      January 23, 2006, ERHC hired Feltang, as discussed in Note 5.





From
      August 1, 2004 until January 20, 2006, Ali Memon was ERHC’s President and Chief
      Executive Officer. Mr. Memon had a three-year employment agreement that
      originally included a base salary of $150,000 per year. On January 20, 2006,
      by
      mutual agreement with the Board of Directors, Ali Memon resigned both positions.
      Under Mr. Memon’s employment agreement, ERHC has expensed the remaining net
      salary to be paid, of which $175,000 remains in accounts payable at September
      30, 2006. This amount will be paid out through the remainder of the contract
      term.





On
      January 21, 2006, the Board of Directors appointed Walter Brandhuber as Director
      and Chief Executive Officer. On March 20, 2006, the Board of Directors appointed
      Franklin Ihekwoaba as Chief Financial Officer. On July 24, 2006, both resigned.
      The Board of Directors appointed Board Member Nicolae Luca as Interim Chief
      Executive Officer until a successor is named. Mr. Luca has served as a
      Non-Executive Director since February 2001. Mr. Luca currently receives no
      cash
      compensation but is reimbursed for related travel and business
      expenses.





On
      January 1, 2005, ERHC hired an individual who requires monthly payment of cash
      and the issuance of options for a total of 500,000 shares of common stock upon
      a
      full year of service. The options issued under this consulting agreement vested
      on December 31, 2005 and included provisions for cashless exercise. These
      options were exercised in April 2006, on a cashless basis, for 388,889 shares.
      Either party may terminate this consulting agreement with 30 days
      notice.





On
      January 1, 2005, ERHC hired an individual who requires monthly payment of cash
      and the issuance of options for a total of 500,000 shares of common stock upon
      a
      full year of service. The options issued under this consulting agreement vested
      on December 31, 2005 and included provisions for cashless exercise. These
      options were exercised in March 2006, on a cashless basis, for 387,640 shares.
      This agreement was terminated in March 2006.





On
      January 1, 2005, ERHC hired an individual who requires monthly payment of cash
      and the issuance of options for a total of 750,000 shares of common stock upon
      a
      full year of service. The options issued under this consulting agreement vested
      on December 31, 2005 and included provisions for cashless exercise. These
      options were exercised in February 2006, on a cashless basis, for 562,500
      shares. This agreement was terminated on January 1, 2006.





During
      May 2003, ERHC hired an individual 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, 2006 and terminates on September 30, 2006. The consultant’s
      compensation was $2,000 per month revised from $10,000 per month effective
      April
      2005. During the years ended September 30, 2006, 2005 and 2004, total expense
      incurred under this consulting agreement was $26,500, $84,970 and $166,370,
      respectively. This agreement was terminated May 1, 2006.





F-28
 *Table
            of Contents*




Operating
      Lease





ERHC
      leases office space at 5444 Westheimer Road, Houston, Texas. The amended lease
      for office space expires December 2011. The monthly base rent payment was $3,567
      based on approximately 1,900 square feet of office space and in December 2006,
      ERHC amended this lease to increase the office space to approximately 5,200
      square feet at a monthly base rent payment of $8,920. During the years ended
      September 30, 2006 and 2005, ERHC incurred lease expense of $43,992 and $31,697,
      respectively. Prior to 2005, lease expense was included in the management
      services agreement with Chrome Oil Services, Ltd., a company controlled by
      ERHC’s board chairman/primary stockholder (See Note 12). The future remaining
      annual lease payments under this lease are as follows:





Year
                Ending September 30,
            
            Amount2007
            
            $
                90,9812008
            
            107,0402009
            
            107,0402010
            
            107,0402011
            
            107,0402012
            
            26,760








**Note
      11 - Supplemental Disclosure of Cash Flows 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, 2006,
      2005
      and 2004.




**2006**
                
                **2005**
                
                **2004**Non-cash
                    operating and financing activities:Stock
                    issued in exchange for:Accounts
                    payable and accrued liabilities
                
                $
                -
                
                $
                359,790
                
                $
                533,248Accrued
                    salaries
                
                
                -
                
                
                394,450
                
                
                -Accrued
                    interest
                
                
                -
                
                
                84,852
                
                
                681,013Accrued
                    interest, related party
                
                
                -
                
                
                2,620,295
                
                
                -Compensation
                
                
                1,976,548
                
                
                -
                
                
                765,000Non-cash
                    investing and financing activities:Stock
                    issued for conversion of non-related party debt to equity
                
                
                -
                
                
                1,592,521
                
                
                1,556,199Beneficial
                    conversion feature associated with convertible debt
                
                
                -
                
                
                347,517
                
                
                1,058,912Exchange
                    of convertible and non convertible debt, related party
                
                
                -
                
                
                10,134,084
                
                
                -Stock
                    issued for conversion of related party debt to equity
                
                
                -
                
                
                12,634,084
                
                
                -





**Note
      12 - Related Party Transactions**





Notes 6
      and 9 deal with historical transactions with ERHC’s primary stockholder.





Management
      Services Agreement





ERHC
      entered into a management services agreement with Chrome Oil Services, Ltd.
      (“COS”) in February 2001.  Pursuant to that agreement, COS provided
      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 for a management fee of
      $68,000 per month.  Former Chief Financial Officer Mr. Okpala and Corporate
      Secretary, Mr. Ntephe were consultants of COS that provided services to ERHC
      and
      these persons received salaries and overhead expense reimbursement
      from COS, not from ERHC. Expenses not covered under the management services
      agreement were borne by the Company. Total management fees incurred during
      the
      years ended September 30, 2006, 2005 and 2004 were $0, $204,000 and $816,000,
      respectively. On December 23, 2004, ERHC and COS cancelled the
      agreement.





F-29
 *Table
            of Contents*




**Note
      13 - Quarterly Financial Information (Unaudited)**





**For
                the Year Ended September 30, 2006****First
                Quarter**
            
            **Second
                Quarter**
            
            **Third
                Quarter**
            
            **Fourth
                Quarter**Revenue
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -General
                and administrative expenses
            
            
            1,232,792
            
            
            1,727,524
            
            
            1,459,282
            
            
            1,569,158Interest
                expense
            
            
            461
            
            
            461
            
            
            461
            
            
            716Other
                income
            
            
            4,269
            
            
            27,399
            
            
            583,269
            
            
            508,204Gain
                on sale of partial interest in DRSTP concession fee
            
            
            -
            
            
            30,102,250
            
            
            -
            
            
            -Benefit
                (provision) for income tax
            
            
            -
            
            
            (2,340,000
            )
            
            300,000
            
            
            (23,000
            )Net
                income (loss) attributable to common stockholders
            
            
            (1,228,984
            )
            
            26,061,664
            
            
            (621,474
            )
            
            (1,039,670
            )Basic
                and diluted earnings per share
            
            $
            -
            
            $
            0.04
            
            $
            -
            
            $
            -





**For
                the Year Ended September 30, 2005****First
                Quarter**
            
            **Second
                Quarter**
            
            **Third
                Quarter**
            
            **Fourth
                Quarter**Revenue
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -General
                and administrative expenses
            
            
            643,235
            
            
            980,821
            
            
            233,704
            
            
            2,794,699Interest
                expense
            
            
            1,045,775
            
            
            100,551
            
            
            461
            
            
            461Other
                income
            
            
            -
            
            
            260,013
            
            
            10,537
            
            
            8,254Loss
                on extinguishments of debt
            
            
            5,749,575
            
            
            -
            
            
            -
            
            
            -Net
                loss attributable to common stockholders
            
            
            (7,438,585
            )
            
            (821,359
            )
            
            (223,628
            )
            
            (2,786,906
            )Basic
                and diluted earnings per share
            
            $
            (0.01
            )
            $
            -
            
            $
            -
            
            $
            -





The
      sum
      of the individual quarterly basic and diluted loss per share amounts may not
      agree with year-to-date basis 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.




**Note
        14- Subsequent Event**
 
 In
        December 2006, ERHC amended its office lease to expand its square footage
        and
        term (See Note 9).






F-30