-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QqNFFp09yMVCzhiIlYdXBle8DvraLG/PeNouQQVNw7WduEA4Oz7YpkePWforBtrN 7v7TQu19GuZPvaAv/TDcYA== 0001014060-97-000035.txt : 19970715 0001014060-97-000035.hdr.sgml : 19970715 ACCESSION NUMBER: 0001014060-97-000035 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19970714 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIRONMENTAL REMEDIATION HOLDING CORP CENTRAL INDEX KEY: 0000799235 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 880218499 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-17325 FILM NUMBER: 97640093 BUSINESS ADDRESS: STREET 1: 420 JERICHO PARKWAY STREET 2: STE 321 CITY: NORTHJERICHO STATE: NY ZIP: 11753 BUSINESS PHONE: 5164334730 MAIL ADDRESS: STREET 1: 420 JERICHO PARKWAY STREET 2: STE 321 CITY: JERICHO STATE: NY ZIP: 11753 FORMER COMPANY: FORMER CONFORMED NAME: REGIONAL AIR GROUP CORP DATE OF NAME CHANGE: 19950424 10-K/A 1 AMENDED ANNUAL REPORT U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-K/A ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, 1996 Commission File Number 0-18275 ENVIRONMENTAL REMEDIATION HOLDING CORP. (Name of small business issuer in its charter) COLORADO 88-0218499 (State of Incorporation) (IRS Employer ID Number) 420 Jericho Turnpike, Suite 321 Jericho, New York 11753 (Address of principal executive office) Registrant's telephone number, including area code: (516) 433-4730 Securities registered under 12 (b) of the Exchange act: none Securities registered under Section 12 (g) of the Exchange Act: Common Stock $.0001 par value Check whether the issuer (1) filed all reports required to be filed by Section 13 of 15 (d ) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained herein, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form10-K [ ] Issuer's revenue for its most recent Fiscal Year were: $0 The aggregate market value of the 1,590,634 shares of voting stock held by non-affiliatesof the Registrant as of September 30,1996 was $8,759,044 (assuuming solely for the purpose of this calculation that all directors, officers and greater than 5% stockholders of the Registrant are "affiliated"). The number of shares outstanding of the Registrant's Common Stock , par value $.0001 per share, as of September 30, 1996 was 3,239,374 Documents Incorporated by Reference: Form 8-K filed on September 4, 1996 Form S-8 filed on September 13, 1996 PART I ITEM 1. DESCRIPTION OF BUSINESS On August 23, 1996 the Shareholders of Environmental Remediation Funding Corporation (ERFC) a privately held Delaware Corporation incorporated in September 1995 obtained control of Regional Air Group Corporation ("RAIR"), by way of a Reverse Triangular Merger. RAIR issued a total of 2,433,950 shares of it $.0001 par value Common Stock (restricted) to Regional Air Opportunity Development Corp., ("RAODC"), a wholly owned subsidiary of RAIR. Subsequently, RAODC acquired 100% of the issued and outstanding stock of ERFC from ERFC's shareholders in exchange for 2,433,950 shares acquired from RAIR. On August 29, 1996 RAIR filed an amendment to the Articles of Incorporation authorizing a change in the name of the corporation from Regional Air Group Incorporation to Environmental Remediation Holding Corporation. Environmental Remediation Funding Corporation (ERFC) was founded to pursue environmental remediation contracts both in the United States and overseas, primarily in the oil industry. ERHC's goal is to acquire small to medium size environmental companies and create the only full service environmental company available to the petroleum industry today. In industry terms, ERHC will be a "cradle to grave" environmental company. ERHC goal is to eliminate the current fragmentation of remedial services prevalent today, and , there by, increase overall quality control. ERHC as part of this goal will reduce the need for multiple levels of subcontractors and thereby increases its potential for profit while reducing overall costs to its customers. ERHC has specifically targeted the environmental needs of the oil and gas industry. Moreover, with ERHC's organization and expertise, ERHC is fully capable of utilizing its knowledge and equipment to handle a variety of difficult and/or hazardous waste streams. What ERHC hopes to be to its regional, national and international clients is an " all inclusive" environmental service company. ERHC will offer full services such as environmental engineering, consultations, hazardous (including NORM waste) and non hazardous waste cleanup, the manufacture and distribution of waste cleanup materials, waste management, waste transportation and disposal, as well as, plug and abandonment of oil and gas wells. ERHC has access to a technology that when proven will increase the output of existing low producing oil wells using standard methods of A.P.I. maintenance and further increase production by utilizing BAPCO tool a "state of the art" method of lateral drilling". This is one of the major reasons that ERHC is in serious negotiation for the purchase of BAPCO. ERHC hopes to complete the purchase of BAPCO in early 1997. ERHC hopes to have signed a "Master Service Agreement" with Chevron Oil to complete the plug and abandonment (P & A) of over 400 wells in Louisiana in early 1997. This contract could be worth in excess of 70 million dollars over the next few years to ERHC. This is the first of three large contracts under negotiation with the oil and gas industry. In addition, ERHC is in the final stages of negotiation with two other major oil companies to take over all of their plug and abandonment work now being performed "in house". The major oil companies would prefer to have the environmental work completed by an outside firms as it reduces their costs and overall environmental exposure. Chevron and the other major oil companies are working with ERHC for this work not only because of ERHC "cradle to grave" approach but because of the oil companies prior experience in working with ERHC's Chief Executive Officer, Sam L. Bass, Jr. Mr. Sam Bass, Jr. is ERHC's well-known and highly experienced CEO. Mr. Bass has a long standing and respected relationship with all the major and minor oil companies in the U.S. and abroad. ERHC, under Mr. Bass's guidance, is in a unique position to obtain P & A work from all the major oil companies in Louisiana and Texas. The State of Louisiana has mandated that 12,000 oil wells owned by the State, as well as 30,000+ owned by the oil companies, must be plugged and abandoned in the next two (2) years. ERHC has all the necessary management and technical qualifications for the plug and abandonment of oil wells and because of those qualifications, is being contacted by all of the major oil companies. 2 ERHC with the assistance of Chevron is desiging a "state of the art" P & A barge that will handle pressure up to 10,000 psi, work in waters as shallow as 19 inches and house up to fifteen (15 ) people. This barge will be the only one of its kind on the gulf coast with a triad of capabilities: P & A work, reworking of wells and environmental clean-up. ERHC will require a minimum of four (4) barges if we are to complete the Chevron contract in the time frame allotted under the agreement under discussion. . ERHC is in the final stages of negotiation to purchased two petroleum fields, the Woodbine Field located in Henderson County , Texas and the Gunsite Oil Field located in Wichita Falls, Texas. ERHC is negotiating to obtain the rights to a number of other oil and gas producing properties in Texas and Louisiana. As these contracts are consummated, ERHC will use standard A.P.I. methods of "reworking" the fields to increase production twenty-five (25%) percent in the first six months. ERHC will then utilize the "BAPCO" tool (lateral drilling) along with "rework" techniques to significantly increase the fields production. The Woodbine and Gunsite Fields are expected to close inthe first half of 1997. They are comprised of 1200 acres and 200 wells. After reworking the fields using both traditional A.P.I. methods of reworking and the BAPCO tool , oil production is expected to increased a minimum of 5 times from initial production levels to 1600 barrels a day. (Oil is currently selling for approximately twenty (20) dollars per barrel). ERHC is in the process of obtaining independent geologist's report on both the Poloxy Gunsite Field and the Henderson Field which our reports revealed proven primary reserves ("behind pipe") of over a million barrels. These figures do not include the additional reserves located within the sands above Gunsite. ERHC believes that the above stated markets have been neglected and are a profitable market niche that can be exploited. This would allow ERHC, to become a major player in the oil industry in a relatively short period without the necessity of costly drilling routinely associated with oil exploration. All of the fields that have been and will be acquired by ERHC have proven reserves verified by independent geologists. ERHC is also negotiating with a number of companies who have concessions to rework oil and gas wells overseas specifically in Trinidad, Indonesia and the Middle East. ERHC intends to offer rework techniques using the "BAPCO" tool to obtain joint venture agreements with these companies. Given ERHC's knowledge and ability to considerably increase a field's oil production. ERHC looks forward to successfully entering a number of long term partnerships in the near future. ERHC, with a joint venture partner, is close the completing a concession agreement with the Panama Canal Commission that allows ERHC to supply fuel and supplies to tankers moving through the canal. ERHC anticipates, in its first phase, to deliver up to one million gallons of fuel and supplies daily to the ships. This agreement requires ERHC to provide a two and a half million dollar Letter of Credit to Texaco for the fuel they will provide. ERHC upon the signing of the concession will enter into negotiation for the purchase of two fuel barges and two tugs. This Panama concession could conservatively generate 40 to 60 thousand dollars a day in gross income. This contract should expand past the million gallons a day in sales if the company adds additional fuel barges. There are no environmental remediation businesses that control more than two percent of the market. The industry is fragmented and subcontract to local firms specializing in specific needs for general remediation projects. Small firms offering a limited scope of services and locations are having an increasingly difficult time competing (therefore open to acquisition by ERHC) and many principals of small firms suggest that they need to merge to survive. Environmental remediation firms can generally be categorized into two groups: small firms with one or few regional offices and giant, multi-office firms with multi-million dollar revenues. Small firms typically lack the resources to complete may of the more complex multiple jobs. The very large firms are 3 often only interested in the colossal, large dollar projects. ITEM 2. DESCRIPTION OF PROPERTIES The Company leases approximately 1200 square feet of office space at 420 Jericho Turnpike, Suite 321, Jericho, New York for use as its primary offices. The lease payments are presently $1200.00 per month. The Company leases approximately 7,000 square feet of warehouse and office space at 111 Tubing Road, Lafayette, Louisiana. The lease payments are $550.00 per month. ITEM 3. LEGAL PROCEEDINGS NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE PART II ITEM 5. MARKET PRICE OF, DIVIDENS ON THE REGISTRANT'S COMMON EQUITYAND RELATED STOCKHOLDER MATTERS. The Company's Common stock has been traded on the over-the -counter market and reported on the OTC Bulletin Board, under the symbol "ERHC" since August 23, 1996, and under the symbol RIAR prior to that. The following table sets forth the high and low bid price of the Company's Common Stock as reported on the over-the-counter market for the periods indicated. The price represents inter-dealer quotations, without retail mark-up, mark-down commission, and may not necessarily represent actual transactions. Stock Price Comparisons Quarter Ending High Sales Price Low Sales Price September 30, 1996 6.2854 2.0951 There was no trading in the Company's common stock since 1989. As of September 30, 1996, There were in excess of 1,800 recorded shareholders of the Company's Common Stock. The Registrant has not declared any dividends from its inception. Management anticipates that any future profits will be retained to finance the growth.. 4 ITEM 7. PLAN OF OPERATION. During FY 1996 the Company has placed themselves in a position to be very profitable in the coming years. There is expanding pressure from govermental agencies to resolve the major difficulties created by oil and gas enterprises. ERHC addresses theses concerns by providing services to the petroleum industry, such as, planning for the prevention pollution problems, the confining and mitigation of potential pollution and the actual cleanup of oil spills both on the ground and in the water. If ERHC is successful in obtaining a Master Service Agreement with Chevron to plug and abandon wells in the Gulf of Mexico, it could be worth up to 70 million dollars during the next three years to ERHC. This Master Service Agreement from Chevron is expected to allows for further sites to be added to the original agreement, which may include a significant number of wells in Louisiana.. Environmental Remediation Holding Corporation, is in the process of developing a Plug and Abandonment Division under the guidance of Sam L. Bass Jr., CEO of ERHC, who will utilize the company's extended family of technical experts and the combined experience of ERHC's management and staff. There is great confidence by ERHC of its ability to service the needs of its clients, using cutting edge technology and knowledge of all environmental remediation disciplines The plug and abandonment of oil and gas wells is a detailed process of shutting down and discontinuing the use of an older, unsafe or marginally producing oil or gas wells. There are many ecological ramifications if oil and gas wells are abandoned without following EPA and DEQ mandated guidelines. These ramificationsare caused due to aging equipment and pipe casings can lead to "blow outs", oil and gas seepage into the water, or ground and ground water contamination. These problems can lead to major environmental problems and expensive pollution cleanup. Environmental Remediation Holding Corporation has targeted the environmental remediation needs of the oil and gas industry, as well as other difficult to handle waste streams. Additionally, ERHC will begin to acquire under valued, marginally producing oil and gas properties with significant verifiable reserves. When those oil and gas properties are acquired, the Company will use its exclusive "workover techniques" to increase the wells' production. The Company believes that the above stated market has been neglected and will become a profitable market niche that can be exploited. ERHC has been in negotiation for the last month to purchase 60% of the outstanding shares of Bass American Petroleum Company (BAPCO), which is expected to become a subsidiary of Environmental Remediation Holding Corporation. Bass American Petroleum Company main focus is to obtain a marginally producing well and increase production of that well eight to ten time via a "lateral drilling process using what is called a "lateral I. P. Tool". This process is minimal when it is compared to actually drilling a new well and gambling on an oil find. Certainly, the I. P. Tool process is a simple, but effective way to build an oil company without the high risk and drilling costs. It has been discovered that there is an eighty percent positive ratio of success. ERHC can buy old producing wells and increase production at a ten to fifteen times increase in production versus the cost of drilling 5 With ERHC's broad range of different specialization's and led by experienced management, the Company can offer its regional, national and international clients an all inclusive environmental service. Services such as environmental engineering and consultation, hazardous (including NORM waste) and non hazardous waste cleanup, the manufacture and distribution of waste cleanup products, waste management, waste transportation and disposal, as well as plug and abandonment of oil and gas wells. ERHC's growth concentration will be on the acquisition of complementary, small to medium environmental remediation companies, primarily energy related. Also the company will seek transportation opportunities associated with the environmental remediation of energy industries. Stock and Security Transactions Subsequent to September 30, 1996 None ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's financial statements are included in a separate Section of this report following Item 14. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS The following table lists the names of all Directors and Executive Officers of the Company. NAME AGE POSITION DATE OF AFFILIATION Sam L. Bass Jr. 65 CEO August 1996 Chairman James Day 67 President September 1996 James A. Griffin 43 Secretary September 1996 Treasurer James Calendar 58 Director September 1996 William Beaton 60 Director September 1996 CFO 6 All Directors will serve until the next annual general meeting unless his office is vacated in accordance with the Articles of the Company. The Executive Officers serve at the pleasure of the Board of Directors. Sam L. Bass, Jr., CEO and Chairman of the Board Sam L Bass, Jr. joined ERHC in 1996, at the time of the merger with RIAR, Mr. Sam L Bass Jr. has over thirty years experience in the petroleum industry both in the United States and overseas. It is this 30 year history and his close relationship with many of the heads of the oil companies that has allowed ERHC access to contracts . Mr. Bass has founded over twenty corporations, predominantly Oil and Gas related so his involvement with ERHC helps to guarantee our success. Mr. Bass have been a pioneer in downhole drilling and stabilization and holds many patens in the oil industry. Sam Bass is recognized by several major publications, government agencies, Fortune 500 Companies and foreign countries for his endeavors that have resulted in seven inventions. Many of which are presently being used around the world. Sam Bass through Bass Environmental World Wide was in Kuwait right after the Gulf War putting out oil well fires. It is this experience that Mr. Sam Bass Jr. as CEO brings to ERHC. It is Mr. Basses intention to build a company that will make a positive impact on cleaning up the environment both in the Unites States and overseas. ERHC will also be able to draw on this 30 years of experience in determining which fields are worth ERHC pursuing. Senator James Day, President Retired United States Senator from Texas. Deceased. James A. Griffin, Esq. Corporate Secretary and Treasurer Mr. Griffin has served as Secretary / Treasurer and Director and Corporate Counsel of ERHC since September of 1996 shortly after the Company was acquired through merger. Since that time he has continued as corporate secretary and a director of the company. Mr. Griffin received his Doctor of Jurisprudence from Tonro law school in Huntington, NY in 1986. William Beaton CFO and Director Mr. Beaton has over 30 years experience in management and finance. He is the former CEO of Clydesdale Bank of Glasgow, Scotland until his retirement in 1995. Since then, he has been a self-employed consultant providing a variety of management and financial consulting to small private and public corporation. Mr. Beaton has been involved in international oil industry for the last 20 years that will help ERHC meet its financial obligations. Jim Calendar Director Mr. Calendar was appointed a Director with ERHC in September of 1997. Mr. Calendar has over 30 years experience in the field of oil and gas exploration, drilling, plug and abandon, blow-out control. Mr. Calendar has assisted in the design, construction, sea trials, and supervision of the first semi-submersible oil rig operated in the Gulf of Mexico by Unocal. Mr. Calendar supervised the first offshore well drilled by Unocal utilizing Louis Record's Control Unit and Kick System for Blow- and functioned as UNOCAL's sole supervisor on the first well drilled by Unocal. Offshore, Texas. Functioned as UNOCAL's supervisor working with "Red Adair" and "Boots & Coots" for Blow-out scenarios. Gulf of Mexico until 1972 Designed well and 7 supervised first drill-ship operated by Unocal in lower Cook Inlet of Alaska. Introduced "snow-makers" for ice road and ice pad construction on remote area exploratory wells in Southern Alaska. Technology extended drilling season markedly. Designed, constructed and supervised UNOCAL's first remote all-season, Hercules supported exploratory drill site. Designed, constructed and supervised first offshore Ice Island exploratory well drilled in Arctic Ocean (Beaufort Sea Ice Island). Designed, constructed, and supervised first year-around, remote site, air-supported exploratory drilling pad north of the Arctic Circle. Designed and supervised drilling of the first U.S. offshore Arctic exploratory well utilizing a drill-ship system in Beaufort Sea. Recalled, from on-site at drill-ship in Arctic Ocean to supervise control of Grayling Blowout, Cook Inlet of Alaska. Designed and supervised semi-submersible exploratory well, Offshore California (Platform Irene Discovery). Supervisor for the development and field testing of UNOCAL's patented Horizontal and Extended Reach Drilling Technology. Initiated and supervised development of UNOCAL's current well control technology and in-house training program. Other numerous technological and drilling system developments, platforms, rig designs and specifications. Mr. Calendar will be an asset to ERHC in the coming year especially in pursuing our goal of becoming a major player in the oil industry. Pursuant to Section 16 of the Securities Exchange Act, the Company's executive officers and directors and beneficial owners of more than 10% of the Company's common stock are required to file certain, within specified time periods, indicating their holdings of and transactions in the Company's Common Stock. Based solely on the review of such reports provided to the Company, and/or written representations from such persons regarding the necessity to file such reports, the Company is not aware of any failures to file reports or report transactions in a timely manner during the Company's fiscal year ended September 30, 1996. ITEM 10. EXECUTIVE COMPENSATION The Company has not paid any salaries to the officers or directors of ERHC. The Company has placed 755,043 shares in escrow for the benefit of Sam L. Bass, Jr. as compensation to be earned by Mr. Bass over a four year contract. These shares were valued at $125,000 per year, for a total of $500,000. ERHC authorized stock to a number of the board, but it has not been issued yet. The directors are to be compensated $25,000 per calendar year which shall be payable with Rule 144 Restricted Shares of ERHC. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of the date of this Report, the number of shares of the Company's outstanding common stock, $.0001 par value, beneficially owned (as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), by each director of the Company, by each named executive officer of the Company, by each beneficial owner of more than 5% of the Company's common stock and by all of the Company's directors and officers as a group. 8
Title of Class Name and Address Amount and Nature % of of Beneficial Owner of Beneficial Ownership Class Common Sam L. Bass Jr. 1,499,043 46.28% Common Marvin Gibbons 157,019 4.85% Common James A. Day 50,000 1.54% Common Ken Krausman 10,000 0.31% Common James Logan 352,019 10.87% All directors and officers as a group (3 persons) 1,716,062 52.98%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The company has no knowledge of any transaction or series of transactions or any currently proposed transactions, or series of transactions, to which ERHC was or is to be party, in which the amount involved exceeds $60,000 involving management, or any person owning 5% or more of the common stock, or any member of the immediate family of any of the foregoing persons. ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K Index to financial statements Page Independent Auditors Report F-1 Consolidated Balance Sheets F-2 Consolidated Statement of Operations F-3 Consolidated Statement of Stockholders Equity F-4 Consolidated Statement of Cash Flows F-5 Notes to Consolidated Financial Statements F-6 27. Financial Data Schedule 9 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunder duly authorized. Registrant Environmental Remediation Holding Corp By: /s/ Sam L. Bass, Jr. Sam L. Bass Jr. CEO and Chairman Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in the capacities and on the dates stated: Signature Title Date /s/ Sam L. Bass, Jr. Sam L. Bass, Jr. CEO and Chairman May 12, 1997 (Deceased) Senator James Day President /s/ James A. Griffin James A. Griffin, Esq. Secretary and Treasurer May 12, 1997 /s/ James Calendar James Calendar Director May 12, 1997 /s/ William Beaton William Beaton Director and CFO May 12, 1997 10 INDEX TO FINANCIAL STATEMENTS Page Independent Auditors Report..................................................F-1 Consolidated Balance Sheets .................................................F-2 Consolidated Statements of Operations ......................................F-3 Consolidated Statements of Stockholders' Equity..............................F-4 Consolidated Statements of Cash Flows .....................................F-5 Notes to Consolidated Financial Statements .................................F-6 REPORT OF INDEPENDENT AUDITORS TO: The Board of Directors and Stockholders Environmental Remediation Holding Corp. Jericho, New York We have audited the accompanying balance sheets of Environmental Remediation Holding Corp., (the "Company") as of September 30, 1995 and 1996 and the related statements of operations, stockholders' equity and cash flows for the two years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 1996 and the results of its operations and its cash flows for the two years then ended in conformity with generally accepted accounting principles. Durland & Company, CPAs, P.A. Palm Beach, Florida May 9, 1997 F-1
ENVIRONMENTAL REMEDIATION HOLDING CORP. Consolidated Balance Sheets September 30, 1995 1996 ------------------ ------------------ ASSETS CURRENT ASSETS Cash $ 0 0 Prepaid expenses 0 0 ------------------ ------------------ Total current assets 0 0 ------------------ ------------------ FIXED ASSETS (note 1c) Equipment 0 3,720,000 Accumulated depreciation 0 (372,000) ------------------ ------------------ Total fixed assets 0 3,348,000 ------------------ ------------------ OTHER ASSETS Deposits 0 5,000 Deferred compensation expense, net (note 1e) 0 427,500 ------------------ ------------------ Total other assets 0 432,500 ------------------ ------------------ Total Assets $ 0 3,780,500 ================== ================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accrued expenses $ 0 0 Notes payable to officer (note 1d) 40,977 6,730 ------------------ ------------------ Total current liabilities 40,977 6,730 ------------------ ------------------ LONG TERM LIABILITIES Long term debt 19,500 0 ------------------ ------------------ Total long term debt 19,500 0 ------------------ ------------------ Total Liabilities 60,477 6,730 ------------------ ------------------ STOCKHOLDERS' EQUITY Common stock, $0.0001 par value, authorized 950,000,000 shares; 746,483,333 and 3,239,374 issued and outstanding at September 30, 1995 and 1996. (note 3) 74,648 324 Additional paid in capital in excess of par 3,654,240 4,629,598 Retained earnings (deficit) (3,789,365) (856,152) ------------------ ------------------ Total Stockholders' Equity (60,477) 3,773,770 ------------------ ------------------ Total Liabilities and Stockholders' Equity $ 0 3,780,500 ================== ==================
The accompanying notes are an integral part of the financial statements. F-2
ENVIRONMENTAL REMEDIATION HOLDING CORP. Consolidated Statements of Operations Year ended September 30, 1995 1996 REVENUE Revenue $ 0 0 ----------------- --------------- Total revenue 0 0 ----------------- --------------- EXPENSES Automobile 0 7,257 Bank charges 0 184 Compensation - officers 0 147,326 Consultant fees 0 337,956 Professional fees 0 19,500 Office rent 0 8,550 Office expenses 3,404 1,072 Travel 0 19,380 Depreciation 0 372,000 Miscellaneous 0 0 ----------------- --------------- Total expenses 3,404 913,225 ----------------- --------------- Net loss before tax benefit and extraordinary item (3,404) (913,225) ----------------- --------------- Extraordinary item - forgiveness of debt 0 60,477 ----------------- --------------- Income tax benefit (note 2) 0 0 ----------------- --------------- Net loss $ (3,404) (852,748) ================= =============== Weighted average number of shares outstanding 884,407 3,239,374 ================= =============== Net loss per share $ (0.00) (0.26) ================= ===============
The accompanying notes are an integral part of the financial statements. F-3
ENVIRONMENTAL REMEDIATION HOLDING CORP. Consolidated Statements of Stockholder's Equity Additional Stock Total Common Paid in Subscrip Accumulated Stockholders' Stock Capital Receiv Deficit Equity BALANCE, September 30, 1995 *A $ 74,648 3,654,240 0 (3,789,365) (60,477) Capital Transactions: *B (74,612) 74,612 0 0 0 *C 243 4,196,480 0 0 4,196,723 (3,785,961) 0 3,785,961 0 *D 7 73,270 0 0 73,277 *E 32 31,963 0 0 31,995 *F 6 384,994 0 0 385,000 Net loss 0 0 0 (852,748) (852,748) ------------- -------------- ----------- ------------------ ----------------- BALANCE, September 30, 1996 $ 324 4,629,598 0 (856,152) 3,773,770 ============= ============== =========== ================== ================= *A - 746,483,333 shares of common stock outstanding. *B - Reverse split - 1 for 2,095 shares - 356,317 shares of common stock outstanding. *C - 2,433,950 shares issued for the acquisition of Environmental Remediation Funding Corp. - 2,863,544 shares ofcommon stock outstanding. *D - 73,277 shares issued in conjunction with the acquisition of Environmental Remediation Funding Corp. valued at $1.00 per share - 2,863,544 shares ofcommon stock outstanding. *E - 320,830 shares issued for $31,995 in cash - 3,184,374 shares of common stock outstanding. *F - 55,000 shares issued for services - 3,239,374 shares of common stock outstanding.
The accompanying notes are an integral part of the financial statements. F-4
ENVIRONMENTAL REMEDIATION HOLDING CORP. Consolidated Statements of Cash Flows Year ended September 30, 1995 1996 ------------------ ------------------- CASH FLOWS FROM DEVELOPMENT ACTIVITIES: Net loss $ (3,404) (852,748) Adjustments to reconcile net loss to net cash used for development activities: Amortization 0 142,500 Stock issued for services rendered 0 315,000 Depreciation expense 0 372,000 Forgiveness of debt 0 (60,477) --------------- ------------------ Net cash used for development activities (3,404) (83,725) --------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Barge deposit 0 (5,000) --------------- ------------------ Net cash used by investing activities 0 (5,000) --------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Stock issued by subsidiary for cash 0 50,000 Stock issued for cash 0 31,995 Funds advanced by stockholder 3,404 22,730 Funds repaid to stockholder 0 (16,000) --------------- ------------------ Net cash provided by financing activities 3,404 88,725 --------------- ------------------ (Decrease) increase in cash 0 0 --------------- ------------------ CASH, beginning of period 0 0 --------------- ------------------ CASH, end of period $ 0 0 =============== ================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid in cash $ 0 0 =============== ================== Noncash transactions: Stock issued to acquire fixed assets $ 0 3,720,000 =============== ==================
The accompanying notes are an integral part of the financial statements. F-5 ENVIRONMENTAL REMEDIATION HOLDING CORP. Notes to Consolidated Financial Statements (1) Summary of Significant Accounting Policies The Company Environmental Remediation Holding Corp is a Colorado chartered corporation which conducts business from its headquarters in Jericho, New York and was incorporated on May 12, 1986 as Valley View Ventures, Inc., which was changed to Regional Air Group Corp. on September 20, 1988. On August 29, 1996, the name was changed to Environmental RemediationHolding Corp. The financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the statements of financial condition and revenues and expenses for the years then ended. Actual results could differ significantly from those estimates. The following summarize the more significant accounting and reporting policies and practices of the Company: a) Basis of presentation The Company acquired 100% of the issued and out- standing common stock of Environmental Remediation Funding Corp.(ERFC), a Delaware corporation, effective on August 19, 1996, in a reverse tri- angular merger, which has been accounted for as a reorganization of ERFC. The financial statements reflect the financial position and results of operations of RAGC prior to the acquisition of ERFC and on a consolidated basis subsequent to the acquisition. b) Basis of consolidation The consolidated financial statements include the accounts of the Company and its subsidiary. Intercompany trans- actions have been eliminated. c) Equipment Equipment was received by ERFC in exchange for common stock of ERFC. The fair market value of the equipment was determined through the use of an independent third party equipment appraiser. The then determined fair market value was lower than the previous owners cost basis, and the fair market value of the ERFC stock exchanged was undet- erminable, therefore the Company chose to value the equipment received using the appraiser's valuation. The Company has chosen to depreciate the equipment using the straight line method over its estimated remain- ing useful life of ten years. Expenditures for maintenance and repairs are charged to operations as incurred. Depreciation expense for the years ended September 30, 1995 and 1996, was $0 and $372,000, respectively. d) Note payable The Company issued a note payable to an officer in exchange for cash. This note carries no stated maturity date or rate of interest. The Company expects to repay this note within twelve months. e) Deferred compensation ERFC issued 755,043 shares of its common stock into escrow in exchange for services to be rendered by its Chairman under a four year contract. These services were valued at $125,000 per year, therefore the Company is amortizing this deferred compensation expense at a rate of $31,250 per quarter. These ERFC shares were exchanged for shares of the Company on August 19, 1996. On August 30, 1996, the Company issued 10,000 shares of its common stock, valued at $70,000, to an attorney for services to be rendered at below market rates for a period of 4 months. Accordingly, the Company is amortizing this expense over the term of the agreement. On October 6, 1995, and modified on January 2, 1996, the Company entered into an agreement with a financial advisor to issue 30,000 shares of its common stock, valued at $210,000, in exchange for services rendered by the advisor to assist in effecting the merger which occured on August 19, 1996. On July 15, 1996, the Company entered into an agreement with a general business advisor to issue 15,000 shares of its common stock, valued at $105,000, in exchange for services rendered by the advisor. f) Net loss per share Net loss per share is computed by dividing the net loss by the number of shares outstanding during the period. (2) Income taxes The Company has a consolidated net operating loss carry-forward amounting to $856,152, expiring as follows: $3,404 in 2010 and $852,748 in 2011. The Company has a $342,500 deferred tax asset resulting from the loss carry-forward, for which it has established a 100% valuation allowance, as until the Company proceeds with its current development plans it is unclear as to the ability of the Company to utilize these carry-forwards. F-6 ENVIRONMENTAL REMEDIATION HOLDING CORP. Notes to Consolidated Financial Statements (3) Stockholders' equity The Company has authorized 950,000,000 shares of $0.0001 par value common stock. On September 30, 1995, the Company had 746,483,333 shares issued and outstanding. On August 14, 1996, the Company completed a 1 for 2,095 reverse split of its shares, leaving 356,317 shares issued and outstanding. On August 19, 1996, the Company issued 2,433,950 shares of common stock to acquire 100% of the issued and outstanding common stock of ERFC. On August 19, 1996, the Company also issued 73,277 shares of common stock to a consultant for services valued at $1.00 per share related to the merger. In September 1996, the Company issued 320,830 shares of its common stock in exchange for $31,995 in cash. In September 1996, the Company issued 55,000 shares of common stock under three consulting contracts previously negotiated. F-7 EX-27 2 FDS --
5 This schedule contains summary financial information extracted from the audited financial statements of Environmental Remediation Holding Corp. for September 30, 1996 and is qualified in its entirety by reference to such financial statements. 0000799235 Environmental Remediation Holding Corp. 1 U.S. Dollar YEAR SEP-30-1996 OCT-01-1996 SEP-30-1996 1 0 0 0 0 0 0 3,720,000 372,000 3,780,500 6,730 0 0 0 324 3,773,446 3,773,770 0 0 0 913,225 0 0 0 (913,225) 0 (913,225) 0 60,477 0 (852,748) (0.26) (0.26)
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