Note 2 – Restatement of Financial Statements

The Company has restated its previously issued consolidated financial statements for the years ended September 30, 2015 and 2014 to reflect emergent developments related to income tax following the completion of an Internal Revenue Service tax audit of the Company’s 2006 tax return.

This restatement is necessitated by the Internal Revenue Service disallowing certain deductions on ERHC’s 2006 tax return. The disallowance resulted from stock based compensation expense that the Company had recognized as a deductible expense in its 2006 tax return. The disallowance was the outcome of an Internal Revenue Service audit of ERHC’s 2006 return, which audit lasted nearly seven years and has been previously disclosed. As such, the consolidated financial statements for the years ended September 30, 2015 and 2014 have been restated to properly reflect the tax liabilities that should have been recorded in 2006.

The effect of the restatement on the September 30, 2015 and 2014 consolidated financial statements is as follows:

	September 30, 2014 (As restated)
	As Previously
	Reported			Adjustment			As Restated
Income tax receivable	$	2,018,533		$	(2,018,533	)	$	-
Total assets	$	11,695,038		$	(2,018,533	)	$	9,676,505
Income tax payable	$	-		$	2,739,607		$	2,739,607
Total current liabilities	$	1,756,576		$	2,739,607		$	4,496,183
Total liabilities	$	2,065,190		$	2,739,607		$	4,804,797
Accumulated deficits	$	(90,848,380	)	$	(4,758,140	)	$	(95,606,520	)
Total shareholders’ equity	$	9,629,848		$	(4,758,140	)	$	4,871,708
Total liabilities and shareholders’ equity	$	11,695,038		$	(2,018,533	)	$	9,676,505

	September 30, 2015 (As restated)
	As Previously
	Reported			Adjustment			As Restated
Income tax payable	$	-		$	2,739,607		$	2,739,607
Total current liabilities	$	1,968,231		$	2,739,607		$	4,707,838
Total liabilities	$	1,971,105		$	2,739,607		$	4,710,712
Accumulated deficits	$	(99,498,316	)	$	(2,739,607	)	$	(102,237,923	)
Total shareholders’ equity	$	5,416,616		$	(2,739,607	)	$	2,677,009
Provision for income taxes	$	2,018,533		$	(2,018,533	)	$	-
Net loss	$	8,649,936		$	(2,018,533	)	$	6,631,403
Total other comprehensive loss	$	9,107,066		$	(2,018,533	)	$	7,088,533