UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number 0-17325

(Exact name of registrant as specified in its charter)

Colorado
 
88-0218499
(State of Incorporation)
 
(I.R.S. Employer Identification No.)

5444 Westheimer Road
Suite1440
Houston, Texas 77056
(Address of principal executive offices, including zip code)

(713) 626-4700
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") during the preceding 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      No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ☐
Accelerated filer  ☐
   
Non-accelerated filer  ☒
Smaller reporting company  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

The number of shares of common stock, par value $0.0001 per share, outstanding as of May 10, 2017, was 2,879,442,094 .
 


TABLE OF CONTENTS

ERHC ENERGY INC.

Part I. Financial Information
Page
   
Item 1.
5
     
 
5
     
 
6
     
 
7
     
 
8
     
 
9
     
Item 2.
16
     
Item 3.
28
     
Item 4.
28
     
Part II. Other Information
 
     
Item 1.
29
     
Item 6.
31
     
 
32
 
Forward-Looking Statements

ERHC Energy Inc. (also referred to as "ERHC" or the "Company" and denoted by the use of the pronouns "we," "our" and "us" as the case may be in this Report) or its representatives may, from time to time, make or incorporate by reference certain written or oral statements of historical fact, statements  that  include, but are not limited to, information concerning the Company's possible or assumed future business activities and results of operations and statements about the following subjects:

 
business strategy;

growth opportunities;

future development of concessions, exploitation of assets and other business operations;

future market conditions and the effect of such conditions on the Company's future activities or results of operations;

future uses of and requirements for financial resources;

interest rate and foreign exchange risk;

future contractual obligations;

outcomes of legal proceedings including;

future operations outside the United States;

competitive position;

expected financial position;

future cash flows;

future liquidity and sufficiency of capital resources;

future dividends;

financing plans;

tax planning;

budgets for capital and other expenditures;

plans and objectives of management;

compliance with applicable laws; and,

adequacy of insurance or indemnification.

These types of statements and other forward-looking statements inherently are subject to a variety of assumptions, risks and uncertainties that could cause actual results, levels of activity, performance or achievements to differ materially from those expected, projected or expressed in forward-looking statements.  These risks and uncertainties include, among others, the following:

general economic and business conditions;

worldwide demand for oil and natural gas;
 
changes in foreign and domestic oil and gas exploration, development and production activity;

oil and natural gas price fluctuations and related market expectations;

termination, renegotiation or modification of existing contracts;

the ability of the Organization of Petroleum Exporting Countries, commonly referred to as "OPEC", to set and maintain production levels and pricing, and the level of production in non-OPEC countries;

policies of the various governments regarding exploration and development of oil and gas reserves;

advances in exploration and development technology;

the political environment of oil-producing regions;

political instability in the Democratic Republic of Săo Tomé and Príncipe ("DRSTP"), the Federal Republic of Nigeria, Republic of Kenya, and the Republic of Chad;

casualty losses;

competition;

changes in foreign, political, social and economic conditions;

risks of international operations, compliance with foreign laws and taxation policies and expropriation or nationalization of equipment and assets;

risks of potential contractual liabilities;

foreign exchange and currency fluctuations and regulations, and the inability to repatriate income or capital;

risks of war, military operations, other armed hostilities, terrorist acts and embargoes;

regulatory initiatives and compliance with governmental regulations;

compliance with tax laws and regulations;

customer preferences;

effects of litigation and governmental proceedings;

cost, availability and adequacy of insurance;

adequacy of the Company's sources of liquidity;

labor conditions and the availability of qualified personnel; and,

various other matters, many of which are beyond the Company's control.

The risks and uncertainties included here are not exhaustive.  Other sections of this report and the Company's other filings with the U.S. Securities and Exchange Commission ("SEC") include additional factors that could adversely affect the Company's business, results of operations and financial performance.  Given these risks and uncertainties, investors should not place undue reliance on our statements concerning future intent.   Our statements included in this report speak only as of the date of this report.  The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any of our statements to reflect any change in its expectations with regard to the statements or any change in events, conditions or circumstances on which any forward-looking statements are based.
 
PART I. FINANCIAL INFORMATION

Item1.
Financial Statements

ERHC ENERGY INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS

   
March
31, 2017
   
September
30, 2016
 
             
ASSETS
           
             
Current assets:
           
Cash and cash equivalents
 
$
129,646
   
$
439,544
 
Account receivable
   
6,188
     
-
 
Prepaid expenses and other
   
26,201
     
29,505
 
                 
Total current assets
   
162,035
     
469,049
 
Oil and gas properties and concession fees
               
Concession fees
   
5,173,819
     
5,173,819
 
Proved properties
   
173,250
     
510,000
 
Furniture and equipment, net of accumulated depreciation of $530,356 and $509,894 at March 31, 2017 and September 30, 2016, respectively
   
49,619
     
70,081
 
                 
Total assets
 
$
5,558,723
   
$
6,222,949
 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Current liabilities:
               
Accounts payable and accrued liabilities
 
$
10,151,837
   
$
9,273,608
 
Accounts payable – related parties
   
167,813
     
100,438
 
Income tax payable
   
2,739,607
     
2,739,607
 
Convertible note payable, net of discount – short term
   
100,900
     
181,535
 
Derivative liability
   
574,412
     
770,854
 
                 
Total current liabilities
   
13,734,569
     
13,066,042
 
                 
Commitments and contingencies:
               
                 
Shareholders’ equity:
               
Preferred stock, par value $0.0001; authorized 10,000,000 shares; none issued and outstanding
   
-
     
-
 
Common stock, par value $0.0001; authorized 3,000,000,000 shares; issued and outstanding 2,879,442,094 and 47,479,975 shares at March 31, 2017 and September 30, 2016, respectively
   
287,944
     
4,748
 
Additional paid-in capital
   
108,546,669
     
107,436,940
 
Accumulated deficits
   
(117,010,459,
)
   
(114,284,781
)
                 
Total shareholders’ deficits
   
(8,175,846
)
   
(6,843,093
)
                 
Total liabilities and shareholders’ equity
 
$
5,558,723
   
$
6,222,949
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
ERHC ENERGY INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

   
Three Months Ended March 31,
   
Six Months Ended March 31,
 
   
2017
   
2016
   
2017
   
2016
 
                         
Revenue
 
$
18,282
   
$
-
   
$
54,612
   
$
-
 
                                 
Costs and expenses:
                               
General and administrative
   
334,422
     
619,616
     
800,295
     
1,196,056
 
Exploration expenses
   
-
     
375,172
     
746,563
     
780,656
 
Depreciation
   
10,817
     
18,476
     
20,463
     
37,030
 
Loss (gain) on sale of interest in oil and gas concessions, net
   
146,750
     
(2,070,000
)
   
146,750
     
(2,727,805
)
Total costs and expenses
   
491,989
     
(1,056,736
)
   
1,714,071
     
(714,063
)
                                 
(Loss) income from operations
   
(473,707
)
   
1,056,736
     
(1,659,459
)
   
714,063
 
                                 
Other income and (expenses):
                               
Interest income
   
15
     
175
     
52
     
407
 
Loss on MTM of derivative liability
   
(112,332
)
   
(217,381
)
   
(82,099
)
   
(104,997
)
Loss on embedded derivative
   
-
     
(34,484
)
   
(495,837
)
   
(34,484
)
Loss on debt conversions
   
(53,663
)
   
-
     
(133,408
)
   
-
 
Interest expense
   
(150,134
)
   
(100,494
)
   
(354,927
)
   
(181,641
)
Total other income and (expense)
   
(316,114
)
   
(352,184
)
   
(1,066,219
)
   
(320,715
)
                                 
(Loss) income before benefit (provision) for income taxes
   
(789,821
)
   
704,552
     
(2,725,678
)
   
393,348
 
                                 
Benefit (provision) for income taxes:
                               
Current
   
-
     
-
     
-
     
-
 
Deferred
   
-
     
-
     
-
     
-
 
Total benefit (provision)for income taxes
   
-
     
-
     
-
     
-
 
                                 
Net (loss) income
 
$
(789,821
)
 
$
704,552
   
$
(2,725,678
)
 
$
393,348
 
                                 
Net (loss) income per common share -basic and diluted
 
$
(0.00
)
 
$
0.02
   
$
(0.00
)
 
$
0.01
 
                                 
Weighted average number of common shares outstanding - basic
   
2,157,538,254
     
32,484,580
     
1,206,808,633
     
31,064,513
 
Weighted average number of common shares outstanding - diluted
   
2,157,538,254
     
34,489,589
     
1,206,808,633
     
33,036,652
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
ERHC ENERGY INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

 
Three Months Ended March 31,
 
Six Months Ended March 31,
 
 
2017
 
2016
 
2017
 
2016
 
                 
                 
Net (loss) income
 
$
(789,821
)
 
$
704,552
   
$
(2,725,678
)
 
$
393,348
 
Other comprehensive income – unrealized gain on available for sale securities
   
-
     
(44,785
)
   
-
     
191,679
 
                                 
Other comprehensive (loss) income
 
$
(789,821
)
 
$
659,767
   
$
(2,725,678
)
 
$
585,027
 

The accompanying notes are an integral part of these unaudited consolidated financial statements
 
ERHC ENERGY INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

   
Six Months Ended March 31,
 
   
2017
   
2016
 
Cash Flows From Operating Activities:
           
Net (loss) income
 
$
(2,725,678
)
 
$
393,348
 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
               
Depreciation and depletion expense
   
20,462
     
37,030
 
Loss on embedded derivative
   
495,837
     
34,484
 
Loss on debt conversions
   
133,408
     
-
 
Change in fair value of derivatives
   
82,099
     
104,997
 
Loss (gain) on sale of interest in oil and gas concessions, net
   
146,750
     
(2,727,805
)
Amortization of convertible debt discount
   
318,768
     
138,226
 
Amortization of debt issuance cost
   
19,767
     
26,017
 
Changes in operating assets and liabilities:
               
Account receivable
   
(6,188
)
   
-
 
Prepaid expenses and other current assets
   
3,304
     
(79,311
)
Accounts payable and other accrued liabilities
   
859,723
     
(869,418
)
Accounts payable – related parties
   
67,375
     
-
 
Net cash used in operating activities
   
(584,373
)
   
(2,942,432
)
                 
Cash Flows From Investing Activities:
               
Purchase of furniture and equipment
   
-
     
(1,000
)
Purchase of oil and gas properties
   
-
     
(626,598
)
Return payment from purchase of oil gas property
   
125,000
     
-
 
Proceeds from sale of interest in oil and gas concessions
   
65,000
     
4,000,000
 
                 
Net cash provided by investing activities
   
190,000
     
3,372,402
 
                 
Cash Flows From Financing Activities:
               
Principle payment on convertible debt
   
-
     
(26,033
)
Proceeds from convertible debt
   
84,475
     
92,750
 
                 
Net cash provided by financing activities
   
84,475
     
66,717
 
                 
Net increase (decrease) in cash and cash equivalents
   
(309,898
)
   
496,687
 
Cash and cash equivalents, beginning of period
   
439,544
     
757,313
 
Cash and cash equivalents, end of period
 
$
129,646
   
$
1,254,000
 
Non-cash investing and financing activities:
               
Unrealized gain in Investment Oando Energy Resources
 
$
-
   
$
191,679
 
Discount from derivative
 
$
590,837
   
$
95,000
 
Conversion of note payable to common stock
 
$
523,547
   
$
266,566
 
Derivative liabilities extinguished on conversion
 
$
869,378
   
$
484,396
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
ERHC ENERGY INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION AND BUSINESS ORGANIZATION

The consolidated financial statements included herein, which have not been audited pursuant to the rules and regulations of the Securities and Exchange Commission, reflect all adjustments which, in the opinion of management, are necessary to present a fair statement of the results for the interim periods on a basis consistent with the annual audited financial statements.  All such adjustments are of a normal recurring nature.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for an entire year.  Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to such rules and regulations, although ERHC Energy Inc. ("ERHC" or the "Company") believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company's audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016.

Recent accounting pronouncements

There have been no recently issued accounting pronouncements that have had or are expected to have a material impact on the Company's consolidated financial statements.

Going Concern

The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the ordinary and usual course of business. As of March 31, 2017, the Company has a working capital deficit and negative cash flows from operating activities. The Company also has significant tax arrears which resulted from a deduction disallowance made by an IRS audit of ERHC’s 2006 return, which audit lasted nearly seven years and has been previously disclosed.  There is an outstanding IRS lien imposed on ERHC in Harris County, Texas in consequence.  Furthermore, the Company is in significant arrears of cash calls relating to the company’s proportionate share of drilling costs (beyond operator-carried expenses) on the Tarach-1 well in Kenya Block 11A. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on raising additional capital to fund ongoing exploration projects and ultimately on attaining future profitable operations. The Company is continuing with its plan to further seek new opportunity for farm-out i ts assets in Kenya, Chad and the Săo Tomé and Príncipe Exclusive Economic Zone. Management believes that the Company’s current operating strategy will provide the opportunity for the Company to continue as a going concern as long as the Company continues t o obtain additional financing; however there is no assurance that this will occur. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Reclassifications

Certain amounts in the financial statements as of and for the year ended September 30, 2016 have been reclassified to conform with the March 31, 2017 presentation. Such reclassifications have no impact on net loss, shareholders’ equity or cash flows as previously reported.
 
NOTE 2 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted new guidance as of October 1, 2008, related to the measurement of the fair value of certain of its financial assets required to be measured on a recurring basis. Under the new guidance, based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or, other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Interest income on cash and cash equivalents is recognized as earned on the accrual basis.

Investments are accounted for as available for sale securities and reported at fair value, determined based on the quoted prices in an active market for identical assets and classified as Level 1 under the ASC 820.

The Company issued a number of convertible notes payable, and identified derivatives related to these notes. ERHC classifies its derivative liabilities as Level 3 and values them using the methods discussed in Note 6. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed in Note 6 are that of volatility and market price of the underlying common stock of the Company.

As of March 31, 2017, the Company did not have any derivative instruments that were designated as hedges.

The derivative liability as of March 31, 2017, in the amount of $574,412 has a level 3 classification.
 
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of March 31, 2017:

   
Derivative
Liability
 
       
Balance at September 30, 2016
 
$
770,854
 
Increase in derivative value due to issuances of convertible promissory notes
   
590,837
 
Decrease in derivative value due to convertible promissory notes converted to common stocks
   
(869,378
)
Change in fair market value of derivative liabilities on convertible notes due to the mark to market adjustment
   
82,099
 
         
Balance at March 31, 2017
 
$
574,412
 

NOTE 3 – ACCOUNT RECEIVABLES

From October, 2016, the Company started to generate revenue from its new acquired oil and gas properties in Texas. During the six months ended March 31, 2017, the revenue from sales of oil and gas was $54,612. As of March 31, 2017 and September 30, 2016, the Company account receivable from sales of oil and gas was $6,188 and $0, respectively.

NOTE 4 – OIL AND GAS PROPERTIES

The following is an analysis of the cost of oil and gas properties at March 31, 2017 and September 30, 2016:

   
March 31,
2017
   
September 30,
2016
 
             
DRSTP concession
 
$
2,271,600
   
$
2,271,600
 
Chad concession
   
2,800,600
     
2,800,600
 
Pending concessions in other African countries
   
101,619
     
101,619
 
                 
Total Concession fees
 
$
5,173,819
   
$
5,173,819
 

The following is an analysis of change in proved properties as of March 31, 2017:
 
   
Proved
Properties
 
       
Balance at September 30, 2016
 
$
510,000
 
Return of funds deposited
   
(125,000
)
Sale of partial interests
   
(211,750
)
Depletion and amortization
   
-
 
         
Total proved properties
 
$
173,250
 

During the year ended September 30, 2016, NewStar Oil and Gas Company, a wholly- owned subsidiary of ERHC purchased three small producing oil and gas wells in Ganado, Jackson County, Texas. However, during the six months ended March 31, 2017, the Company received a return of portion of funds deposited $125,000, after the seller decided to sell only two of the wells due to rise in oil and gas prices. At March 31, 2017, NewStar applied for and was granted an Operatorship License by the Texas Railroad commission.

During the six months ended March 31, 2017, the Company sold 55% of its working interest in proved properties to a third party for consideration of $65,000, resulting in a net loss of $146, 750.

During the six months ended March 31, 2017, the Company did not record depletion and amortization expense for its wells due to limited operations data and reserve report not available as of March 31, 2017. The Company believes the depletion and amortization expense to be immaterial at March 31, 2017 and will provide the expense at the year end with reserve information become available.
 
NOTE 5 – CONVERTIBLE DEBT

The Company had the following convertible debt outstanding at March 31, 2017:

Lender
Date of
Agreement
 
Term
(Months)
   
Annual
Interest rate
   
Outstanding
balance
   
Accrued
Interest at
Reporting
date
   
Deferred
debt
origination
costs
   
Discount
   
Net
Convertible
Note payable
   
Note
Derivative
Liability
 
Union Capital #4
4/12/2016
   
12
     
8
%
 
$
375
   
$
42
   
$
333
   
$
-
   
$
84
   
$
904
 
Auctus Private Equity Fund
4/27/2016
   
12
     
10
%
   
24,294
     
95
     
99
     
-
     
24,290
     
62,954
 
Black Mountain Equities.
5/20/2016
   
12
     
8
%
   
22,500
     
2,117
     
240
     
22,939
     
1,438
     
53,986
 
Rock Capital #2
5/26/2016
   
12
     
10
%
   
45,659
     
-
     
991
     
-
     
44,668
     
139,728
 
Crown Bridge Partners
6/2/2016
   
12
     
8
%
   
1,672
     
3,072
     
174
     
4,570
     
-
     
5,820
 
Toledo Advisors
6/22/2016
   
12
     
10
%
   
31,981
     
1,605
     
366
     
33,220
     
-
     
100,522
 
LG Capital
8/23/2016
   
12
     
8
%
   
32,000
     
1,526
     
-
     
25,214
     
8,312
     
68,286
 
Auctus Private Equity Fund 2
9/22/2016
   
9
     
10
%
   
58,750
     
3,049
     
-
     
39,691
     
22,108
     
142,212
 
                                                                   
                     
$
217,231
   
$
11,506
   
$
2,203
   
$
125,634
   
$
100,900
   
$
574,412
 

The Company had the following convertible debt outstanding at September 30, 2016:

Lender
Date of
Agreement
 
Term
(Months)
   
Annual
Interest rate
   
Outstanding
balance
   
Accrued
Interest at
Reporting
date
   
Deferred
debt
origination
costs
   
Discount
   
Net Convertible
Note payable
   
Note Derivative
Liability
 
JMJ Financial #4
3/9/2016
   
12
     
8
%
 
$
39,416
   
$
-
   
$
-
   
$
37,114
   
$
2,302
   
$
74,913
 
Adar Bay
3/10/2016
   
12
     
8
%
   
32,000
     
2,000
     
1,544
     
22,863
     
9,593
     
71,087
 
Union Capital #4
4/12/2016
   
12
     
8
%
   
50,000
     
1,732
     
2,126
     
-
     
49,606
     
-
 
Auctus Private Equity Fund
4/27/2016
   
12
     
10
%
   
54,250
     
2,318
     
1,839
     
46,757
     
7,972
     
137,157
 
Black Mountain Equities.
5/20/2016
   
12
     
8
%
   
51,500
     
926
     
4,131
     
-
     
48,295
     
-
 
Rock Capital #2
5/26/2016
   
12
     
10
%
   
55,125
     
529
     
5,950
     
-
     
49,704
     
-
 
Crown Bridge Partners
6/2/2016
   
12
     
8
%
   
53,500
     
1,407
     
1,678
     
45,232
     
7,997
     
143,932
 
Toledo Advisors
6/22/2016
   
12
     
10
%
   
63,000
     
1,726
     
2,396
     
59,309
     
3,021
     
168,812
 
LG Capital
8/23/2016
   
12
     
8
%
   
32,000
     
250
             
31,033
     
1,217
     
43,965
 
Auctus Private Equity Fund 2
9/22/2016
   
9
     
10
%
   
58,750
     
119
             
57,041
     
1,828
     
130,988
 
                                                                   
                     
$
489,541
   
$
11,007
   
$
19,664
   
$
299,349
   
$
181,535
   
$
770,854
 

During the six months ended March 31, 2017 and 2016, the Company issued an aggregate of 2,831,862,119 and 9,437,271, respectively, shares of common stock for conversion of convertible debts of $390,139 and $266,566, respectively, and decrease in derivative value due to conversion of $869,378 and $484,396, respectively. The loss on conversions for six months ended March 31, 2017 and 2016 was $133,408 and $0, respectively.
 
The following table summarizes conversion terms of the notes outstanding at March 31, 2017:

Lender
 
Date of
Agreement
 
Term Of Conversion
 
Eligible for
Conversion
             
Union Capital
 
April 12, 2016
 
Conversion Price for each share of Common Stock equal to 40% of the lowest closing bid price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the same day closing price)".
 
180 after the effective date
Auctus Private Equity Fund, LLC
 
April 27, 2016
 
Conversion Price shall equal the lesser of (i) 55% multiplied by the lowest Trading Price (as defined below) (representing a discount rate of 45%) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion Price
 
On effective date
Black Mountain Equities, Inc.
 
May 20, 2016
 
Conversion Price shall equal 60% of the lowest trade occurring during the twenty (20) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.
 
150 after the effective date
Rock Capital
 
May 26, 2016
 
Conversion Price for each share of Common Stock equal to 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company or its transfer agent
 
180 after the effective date
Crown Bridge Partners LLC
 
June 2, 2016
 
Variable Conversion Price shall mean 50% multiplied by the Market Price (as defined herein)(representing a discount rate of 50%). “Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date.
 
On effective date
Toledo Advisors LLC
 
June 22, 2016
 
Conversion Price for each share of Common Stock equal to 50% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the  twenty prior trading days
 
On effective date
LG Capital
 
August 23, 2016
 
Conversion price shall equal be 60% of the lowest trading price of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future, for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company.
 
On effective date
Auctus Private Equity Fund 2
 
September 22, 2016
 
Conversion Price shall equal the lesser of (i) 55% multiplied by the lowest Trading Price (as defined below) (representing a discount rate of 45%) during the previous twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the date of this Note and (ii) the Variable Conversion Price
 
On effective date
 
NOTE 6 – DERIVATIVE LIABILITIES

As described in Notes 2 and 5, the Company has identified embedded derivatives in notes payables and outstanding warrants.

The fair value of the embedded derivatives related to the convertible notes payable, comprising conversion feature with the reset provisions and the default provisions, at issuance and March 31, 2017 was determined using the multinomial lattice models that value the derivative liability based on a probability weighted discounted cash flow model.  These models are based on future projections of the various potential outcomes and utilize the following assumptions:

·
The stock price would fluctuate with the Company projected volatility;

·
The Derivative Convertible Notes convert at 40% to 60%  of the market prices;

·
An event of default would occur initially 0% of the time, increasing 1.00% per month until it reaches 10%;

·
The projected volatility curve for each valuation period was based on the historical volatility of the Company, ranging between 200% and 260%;

·
The Company would redeem the notes initially 0% of the time, and increase monthly by 1.00% to a maximum of 5.00%;

·
The holders of the notes would automatically convert the notes at the maximum of two times the conversion price if the Company is not in default, with the target conversion price dropping as maturity approaches; and

·
The Holder would convert the note early after 0-90-180 days and at maturity if the registration was effective and the Company was not in default.

As discussed in Note 2, the Company issued convertible notes payable that provide for the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted and all additional convertible debentures and warrants are included in the value of the derivative. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date.

The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date and to fair value as of each subsequent reporting date which at March 31, 2017 was an aggregate of $574,412.

During the six months ended March 31, 2017 and 2016, the Company recorded an aggregate loss of $82,099 and $104,997, respectively, on change in fair value of derivative liabilities. See Note 2 for more information.
 
NOTE 7 – INCOME TAX PAYABLE

During January 2016, the IRS examination identified certain deductions taken by the Company in its 2006 tax year that were disallowed.  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 and the Company recorded a tax payable of $2,739,607. The Company is currently pursuing a reduction of its tax liability through statutory means as outlined in the Internal Revenue Code.  At this point in the process, the IRS has not yet responded to the Company.  As is standard, the lien that exists whenever a taxpayer owes taxes assessed to the Department of the Treasury, has been formally recorded.

NOTE 8 - STOCKHOLDERS' EQUITY

On December 15, 2015, ERHCs' shareholders approved a hundred for one reverse stock split of ERHC's common stock. The reverse stock split became effective on January 15, 2016, and ERHCs' shares of common stock began trading on a post-split basis on the OTC Bulletin Board. The numbers of common stock for periods presented in the consolidated financial statements have been retroactively adjusted to reflect the one-for-hundred reverse stock split.

During the six months ended March 31, 2017 and 2016, the Company issued an aggregate of 2,831,862,119 and 9,437,271, respectively, shares of common stock for conversion of convertible debts of $390,139 and $266,566, respectively, and decrease in derivative value due to conversion of $869,378 and $484,396, respectively. The loss on conversions for six months ended March 31, 2017 and 2016 was $133,408 and $0, respectively.

NOTE 9 – RELATED PARTY TRANSACTIONS

At March 31, 2017 the Company had director compensations payable of $167,813, to non-employee directors.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

COMMITMENTS UNDER PRODUCTION SHARE CONTRACTS

Republic of Kenya Concession Fees and Other Financial Commitments

On June 28, 2012, ERHC entered into a production sharing contract ("PSC") with the Government of the Republic of Kenya for certain land based hydrocarbon exploration and production of Block 11A located in northwestern Kenya.

In October, 2013, the Company entered into a farm-out agreement with CEPSA Kenya Limited, an affiliate of Compañía Española de Petróleos, S.A.U., an international oil and gas company ("CEPSA"). Under the terms of this agreement, the Company assigned and transferred 55% of its participating interest in Kenya Block 11A to CEPSA. In exchange for the transferred rights, CEPSA will carry the Company's proportionate share of obligations and financial costs under the terms and conditions outlined in the farm-out agreement. The agreement was approved in January 2014 by the Kenyan Government and from February 2014, CEPSA took over from ERHC as operator under the production sharing contract ("PSC") for Kenya Block 11A.

·
As of March 31, 2017, the Company was $9,623,089 in arrears of part of its proportionate share of drilling expenses for Kenya Block 11A and therefore in default from May 2016 of its obligation to CEPSA. The drilling expenses are for the Tarach-1 exploratory well which was completed on Kenya Block 11A in summer 2016.

·
The Tarach-1 well was always designed as an exploratory well. An exploratory well is drilled purely for information gathering (“exploration”) purposes in an area that is yet unproven with regard to petroleum resources. The site selection for an exploratory well is based on seismic data and other pre-drill geoscientific surveys.

·
Operator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned

Republic of Chad Concession Fees and Other Financial Commitments

On June 30, 2011, ERHC entered into a production sharing contract ("PSC") with Chad for certain onshore hydrocarbon exploration and development.  In September 2013, the Ministry of Energy and Petroleum of Chad approved ERHC's application to voluntarily relinquish two of the three Blocks covered by the PSC.

As of March 31, 2017, ERHC has paid or incurred:

a.
$2,000,000 as the entire signature bonus

b.
$320,600 in advisers' and ancillary costs related to the PSC
 
c.
$480,000 as legal fees and costs for the drafting and negotiation of the PSC, as provided for in the PSC

d.
$190,872 as costs of Environmental Impact Study, as provided for in the PSC

e.
$448,000 on Aeromagnetic data acquisition survey, in fulfillment of work program obligations under the PSC

f.
$378,374 2015 Training and Surface rental fees, as provided in the PSC

LEGAL PROCEEDINGS

JDZ Blocks 5 and 6

Lawsuit

The Company's rights in JDZ Blocks 5 and 6 are currently the subject of legal proceedings at the London Court of International Arbitration and the Federal High Court in Abuja, Nigeria. The Company instituted both proceedings in November 2008 again st the JDA and the Governments of Nigeria and Săo Tomé and Príncipe.    The Company seeks legal clarification that its rights in the two Blocks remain intact.
 
The issue in contention is contractual. The Company was awarded a 15 percent working interest in each of the Blocks in a 2004/5 bid/licensing round conducted by the JDA following the Company's exercise of preferential rights in the Blocks as guaranteed by contract and treaty.   The JDA and the Government of STP contend that certain correspondence issued by a previous CEO/President of the Company in 2006 amount to a relinquishment of the Company's rights in Blocks 5 and 6 under the Company's contracts with STP which provide for the rights.   The Company contends that no such relinquishment has occurred and has sought recourse to arbitration accordingly. It also filed the suit to prevent any tampering with its said rights in JDZ Blocks 5 and 6 pending the outcome of arbitration.

Proceedings on th e suit and the arbitration are currently suspended while the Company pursues amicable settlement with the Governments of Nigeria and Săo Tomé & Príncipe.

Routine Claims

From time to time, ERHC may be subject to routine litigation, claims, or disputes in the ordinary course of business.  ERHC intends to defend these matters vigorously.  The Company cannot predict with certainty, however, the outcome or effect of any of the arbitration or litigation specifically described above or any other pending litigation or claims.

NOTE 11 – SUBSEQUENT EVENT

As earlier disclosed, the Company has been reviewing its legacy exploration assets with a view to deciding, on an asset-by-asset basis, the feasibility and desirability of retention in the light of conditions in the oil industry and ERHC’s revised strategic focus. In the course of the review, the Company has come to a conclusion regarding Block BDS 2008 in Chad.

After careful consideration, ERHC has elected not to apply for renewal of the Exclusive Exploration Authorization and the Production Sharing Contract over Block BDS 2008 upon the expiration, in April 2017, of the current term.
 
ERHC will be presenting at the 16th Africa Independents Forum in May 2017 in London. This is the premier international forum showcasing independents holding acreage and portfolio assets in Africa

Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the Company's unaudited consolidated financial statements (including the notes thereto) and Item 1A of Part II; "Risk Factors," included elsewhere in this report and the Company's audited consolidated financial statements and the notes thereto, Item 7; and  "Management's Discussion and Analysis of Financial Condition and Plan of Operations" and Item 1A, "Risk Factors" included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016.  The Company's historical results are not necessarily an indication of trends in operating results for any future period.   References to "ERHC" or the "Company" mean ERHC Energy Inc., a Colorado corporation, and, unless expressly stated or the context otherwise requires, its wholly owned subsidiary.

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

We are including the following cautionary statement to make applicable and take advantage of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by us, or on our behalf.  This Quarterly Report on Form 10-Q contains forward-looking statements.  Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, future events or performance and underlying assumptions and other statements which are other than statements of historical facts.  Certain statements contained herein are forward-looking statements and, accordingly, involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.  Our expectations, beliefs and projections are expressed in good faith and are believed by us to have a reasonable basis, including without limitations, management's examination of historical operating trends, data contained in our records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished.  In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements: geopolitical instability where we operate; our ability to meet our capital needs; our ability to raise sufficient capital and/or enter into one or more strategic relationships with one or more industry partners to execute our business plan; our ability and success in finding, developing and acquiring oil and gas reserves; our ability to respond to changes in the oil exploration and production environment, competition, and the availability of personnel in the future to support our activities.

Overview

ERHC Energy Inc. ("ERHC", the “Company”) is an independent oil and gas company formed in 1986, as a Colorado corporation.  The Company’s current focus is to exploit its primary assets, which are rights to working interests in exploration acreage in the Republic of Kenya (“Kenya”), in the Republic of Chad ("Chad"), in the Joint Development Zone (“JDZ”) between the Democratic Republic of Sao Tome and Principe (“DRSTP”), in the Federal Republic of Nigeria (“FRN”) and in the exclusive 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.

ERHC is currently acquiring oil and gas properties in Texas. These US acquisitions are being carried on by and in the name of NewStar Oil& Gas Company, Inc., a wholly owned subsidiary of ERHC (“NewStar”). NewStar is incorporated under the laws of State of Texas. The focus of all acquisitions by Newstar will be producing or near-producing properties with significant upside potential.

The Company's strategy in the JDZ and EEZ is to farm out its working interests to well established oil and gas operators for valuable consideration including upfront cash payments and being carried for ERHC's share of the exploration costs.  This has already been done successfully on Blocks 2, 3 and 4 of the JDZ where ERHC has benefited from partnerships with Addax Petroleum and Sinopec Corporation, which have operated some of the license areas on behalf of ERHC.

Apart from its oil and gas exploration activities in Kenya, Chad, the JDZ and the EEZ, ERHC continues to pursue  other oil and gas opportunities on the African continent. These opportunities also include the possible acquisition of significant equity stakes in other oil and gas exploration and production companies and the resulting indirect interest in the underlying exploration and production assets of such other companies.
 
REPUBLIC OF KENYA

ERHC Kenya Acreage

In June 2012, after months of negotiations between ERHC and the Government of Kenya, the Government awarded Block 11A for oil and gas exploration and development in Kenya to the Company. On June 28, 2012, the Company announced that it had signed a Production Sharing Contract (PSC) on Block 11A with the Government of Kenya.  A PSC is an agreement that governs the relationship between ERHC (and any future joint-venture partners) and the Government of Kenya in respect of exploration and production in the Block awarded to the Company.  The PSC details, among other things, the work commitments (including acquisition of data, drilling of wells, social projects, etc.), the time frame for completion of the work commitments, production sharing between the parties and the Government, and how the costs of exploration, development and production will be recovered.


By virtue of the PSC, the Company holds a 90% interest in Block 11A, which encompasses 11,950.06 square kilometers or 2.95 million square acres.  The Government of Kenya has a 10% carried participating interest up to the declaration of commerciality and may thereafter acquire an additional 10% interest in the PSC in which case the total Government participation would rise to 20%.

Circle Oil Limited (www.circleoilandgas.com) ("Circle") acted as finder in ERHC's acquisition of the Block by facilitating ERHC's entry into Kenya, including the introduction of Dr. Peter Thuo, ERHC's Kenya-based geoscientist and technical adviser who provided liaison services in the pursuit of ERHC's application. Circle's involvement provided significant efficiencies, including substantial cost savings, in ERHC's application process.  By virtue of the terms of the business finder's agreement reached between Circle and ERHC, Circle is entitled to receive a 5% payment on the value of the acquisition accruing to ERHC from the application.  Circle has opted to receive this fee in the form of a carried 5% of ERHC's total interest in Block 11A.

In October, 2013, ERHC entered into a farm-out agreement with CEPSA Kenya Limited, an affiliate of Compañía Española de Petróleos, S.A.U., an international oil and gas company ("CEPSA"). The farm-out agreement was approved by the Government of the Republic of Kenya during the quarter ended March 31, 2014. Under terms of the agreement, ERHC transferred majority of its interest in Kenya Block 11A as well as operatorship to CEPSA. The farm-out agreement includes a carry and other considerations.
 
Kenya Operations Update

·
As previously advised, the Tarach-1 well was always designed as an exploratory well. An exploratory well is drilled purely for information gathering (“exploration”) purposes in an area that is yet unproven with regard to petroleum resources. The site selection for an exploratory well is based on seismic data and other pre-drill geoscientific surveys.

·
Operator analysis of the results if the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned at the year ended September 30, 2016.

It is important to remind investors and other stakeholders that no wells have previously been drilled in our Blocks in Kenya and Chad. While the geological and geophysical work indicates prospectively, there are no guarantees before drilling that there will be a discovery of hydrocarbons. If there is a discovery, there is no guarantee that it will be commercial or in such quantities as to justify a development project.

The Company continues to work with Deloitte Corporate Finance LLC (DCF) on a further farm-down of our interest in the Block to help raise funds for the company.

Key Provisions of the ERHC’s PSC on Block 11A

KENYA BLOCK 11A
   
LICENSE :
PSC with the Government of Kenya (effective September 2012)
   
PARTIES :
ERHC (35%); CEPSA (55%); Government of Kenya (10%) 1

WORK PROGRAM :

Phase 1 (2 years – September 2012 to September 2014)
Minimum Work
 
Minimum Expenditure
 
Status
Acquire and interpret 1,000 square kilometers of gravity and magnetic data
 
$
250,000
 
Completed: 14,943.8 line kilometers of FTG data acquired by January 2014 at an estimated total cost of $2,700,000.
Acquire and interpret 1,000 kilometers of 2D seismic data
 
$
10,000,000
 
Completed: 1,086.6 line kilometers of 2D seismic data acquired by August 2014 at an estimated total cost of $28,300,000

Phase 2 (2 years – September 2014 to September 2016)
Minimum Work
Minimum Expenditure
 
Status
Acquire 750 square kilometers of 3D seismic data
 
$
30,000,000
 
Decision taken not to acquire 3D seismic but to proceed to drilling based on FTG and 2D seismic
OR
OR
   
Drill one (1) well to a minimum depth of 3,000m
 
$
30,000,000
 
Completed

Phase 3 (2 years – September 2016 to September 2018)
Minimum Work
Minimum Expenditure
 
Status
Drill one (1) well to a minimum depth of 3,000m
 
$
30,000,000
 
Not yet arisen
 
OTHER FINANCIAL OBLIGATIONS :

Ministry Training Fund
$175,000 per annum during the exploration period
   
 
$200,000 per annum (minimum) from adoption of first development plan
   
Social Projects :
$50,000 per annum (minimum)
   
Surface Rentals:
$5/km 2 per annum (exploration phase 1); $10/km 2 per annum (exploration phase 2); $15/km 2 per annum (exploration phase 3)
   
 
$100/km 2 per annum (development and production period)

Cost Recovery:
   
Cost Oil
Up to 60% of Cost Oil each fiscal year

Profit Oil
Incremental Production Tranches
 
Government Share
   
Contractor Share
 
0-30,000 barrels per day
   
50
%
   
50
%
Next 25,000 barrels per day
   
60
%
   
40
%
Next 25,000 barrels per day
   
65
%
   
35
%
Next 20,000 barrels per day
   
70
%
   
30
%
Above 100,000 barrels per day
   
78
%
   
22
%

                                                   1 CEPSA is carrying ERHC’s proportionate share of exploration costs except for the first exploration well where ERHC is expected to contribute 25% of its proportionate share of costs of the well.
 
REPUBLIC OF CHAD

ERHC's Chad Acreage

On July 6, 2011, the Company announced that it had signed a Production Sharing Contract (PSC) on the three oil blocks with the Government of Chad.  A PSC is an agreement that governs the relationship between ERHC (and any future joint-venture partners) and the Government of Chad in respect of exploration and production in the Blocks awarded to the Company.  The initial period of exploration commenced on July 12, 2012 with the publication, in Chadian Government’s Gazette Principal, of the Exclusive Exploration Authorization, granted to ERHC by the Government of Chad.

During the quarter ended March 31, 2014, the Company received the arrêté (decree) of the President of Chad giving presidential seal of approval to the Company’s request to obtain oil exploration Block BDS 2008 and its voluntary relinquishment of the Manga and Chari-Ouest III Blocks.


 
Chad Operations Update

ERHC continues to talk with potential farm-in partners. The next stage of exploration is a seismic survey on ERHC’s two focus areas. ERHC is exploring, as one of its funding options, the possibility of a right-to-earn partnership in exchange for seismic services. Based on the result of an aero-magnetic and gravity survey that ERHC completed over the Block, total Petroleum Initially in Place (PIIP) for one of ERHC's two focus areas has been estimated at 278 million barrels (with a high case of 876 million barrels). ERHC holds a 100 percent interest in BDS 2008.

Given the current environment and continued constraints on funding for oil exploration activities, one option we are exploring is the possibility of a right-to-earn partnership in exchange for seismic services. ERHC holds a 100 percent interest in BDS 2008.

Focus Areas
ERHC's exploration focus is on Block BDS 2008 which measures 41,800 square kilometers or 10,329,000 acres. Within this block, two focus areas have been identified:

- North of Esso’s Tega and Maku discoveries in the Doseo basin; and

- East of and on trend with OPIC’s Benoy-1 margin discovery in the Doba basin.


 Key Provisions of ERHC's Production Sharing Contract (PSC) in Chad
CHAD BLOCK BDS 2008
LICENSE :
PSC with the Government of Chad signed June 2011 2
   
PARTIES :
ERHC (100%)

WORK PROGRAM :

Phase 1 (5 years – June 2012 to June 2017) 3
Minimum Work
Minimum
Expenditure
 
Status
Unspecified: annual work program to be proposed yearly by contractor
$15,000,000 in total for the exploration phase
EIA completed;
   
Aero gravity and magnetic survey completed;
   
·
4,720 line kilometers of high precision gravity and magnetic data acquired by November 2014;
   
·
Three leads identified;
     
   
Seismic in preparation;
   
·
2D seismic on focus areas planned for 2016

                                                   2 PSC originally covered thee Blocks; ERHC voluntarily relinquished two Blocks in 2013, retaining only BDS 2008.  Relinquishment and retention approved by Presidential Decree as provided for in PSC. 3 PSC provides for exploration period to run from date of grant of Exclusive Exploration Authorization (“EEA”).  EEA granted to ERHC in June 2012.
 
Phase 2 (3 years)
Minimum Work
Minimum Expenditure
 
Status
Unspecified: annual work program to be proposed yearly by contractor
 
$
1,000,000
 
ERHC proposes an exploration well in this period if Phase 1 G&G studies justify

OTHER FINANCIAL OBLIGATIONS :

Ministry Training
Fund
$250,000 per annum during the exploration period
   
 
$500,000 per annum during the exploitation period
   
Social Projects :
None specified in the PSC
   
Surface Rentals
$1/km 2 per annum (Exploration Phase 1); $5/ km 2 per annum (Exploration Phase 2); $10// km 2 per annum (Extension)
   
 
$100 / km 2 per annum (Exploitation Phase 1); $150 / km 2 per annum (Exploitation Phase 1)

COST RECOVERY AND PRODUCTION SHARING:

Royalty
14.25% for crude oil
   
 
5% for natural gas
   
Cost Oil
Up to 70% of net production after deduction of royalty

Profit Oil
R-Factor, as defined by the PSC 4
 
Less than or
equal to 2.25
   
Between 2.25
and 3
   
Greater than
3
 
Contractor’s share of profit oil
   
60
%
   
50
%
   
40
%
State’s share of profit oil
   
40
%
   
50
%
   
60
%

                                                   4 R-factor is based on a formula defined in the PSC.

ERHC’s exploration team has commenced planning toward 2-D seismic acquisition. The information gathered through an airborne gravity/magnetic survey of the Block in Southern Chad proved to be a significant improvement on current data resolution. ERHC's sub-contractor, Bridgeporth Ltd., a specialist geosciences company, completed the survey during the fourth quarter of 2014, confirming the preliminary leads and revealing additional targets. The main conclusions of the study are as follows:

a) The Graben edge is clearly visible in the southwest corner of the Bridgeporth survey.

b) The data can be used to target seismic acquisition over possible rift associated structures.

c) It appears that the Graben edge will enter into the ERHC block northeast of the Bridgeporth survey.

d) Regional profile data acquired by Bridgeporth suggests that the gravity low to the north of BDS 2008 could indeed be a rifted section.

e) The saddle feature in the west central portion of the Block should be investigated.


As the Company did with the JDZ and Kenya Block 11A, ERHC continues to explore a farm-out to spread risk. The Chad acreage is also within the scope of Deloitte Corporation Finance LLC (DCF)’s engagement and we continue to work with them to find suitable farm-out or joint venture partners.
 
NIGERIA – SAO TOME AND PRINCIPE JOINT DEVELOPMENT ZONE ("JDZ")

Background of the JDZ

In the spring of 2001, Sao Tome & Principe and Nigeria signed a treaty establishing a JDZ for the joint development of petroleum and other resources in the overlapping area of their respective maritime boundaries.  The treaty also established an administrative body, the Joint Development Authority ("JDA"), to administer the treaty and all activities in the JDZ. Revenues derive d from the JDZ will be shared 60:40 between the governments of Nigeria and Săo Tomé & Príncipe, respectively. The JDZ lies approximately 180 kilometers south of Nigeria, in the Gulf of Guinea, one of the most prolific hydrocarbon regions of the world.

ERHC's Rights in the JDZ

In April 2003, the Company and STP entered into an Option Agreement (the "2003 Option Agreement") in which the Company relinquished significant prior legal rights and financial interests in the Joint Development Zone ("JDZ") in exchange for preferential exploration rights in the JDZ.  Following the exercise of ERHC's rights as set forth in the 2003 Option Agreement, the JDA confirmed the award in 2004 of participating interests ("Original Participating Interest") in each of JDZ Blocks 2, 3, 4, 5, 6 and 9 of the JDZ during the 2004/5 licensing round conducted by the JDA.  ERHC also jointly bid with internationally recognized technical partners for additional participating interests in the JDZ during the 2004/5 licensing round.  As a result of the joint bid, ERHC won additional participating interests ("Joint Bid Participating Interest") in Blocks 2, 3 and 4.  The following is a tabulation of ERHC's participating interests in the JDZ.
JDZ Block
 
ERHC Original
Participating Interest
 
ERHC Joint Bid
Participating Interest
 
Participating
Interest(s) Assigned
 
Current ERHC
Retained Participating
Interest
 
                   
2
 
30.00%
 
35.00%
 
43.00%
 
22.00%
 
3
 
20.00%
 
5.00%
 
15.00%
 
10.00%
 
4
 
25.00%
 
35.00%
 
40.50%
 
19.50%
 
5
 
15.00%
 
-
 
-
 
15.00% (in arbitration)
 
6
 
15.00%
 
-
 
-
 
15.00% (in arbitration )
 
9
 
20.00%
 
-
 
-
 
20.00%
 

ERHC's Participating Agreements in the JDZ

The following are the particulars of the Participating Agreements by which ERHC assigned some of its participating interests in JDZ Blocks 2, 3 and 4 to technical partners so that the technical partners would operate the Blocks and carry ERHC's proportionate share of costs in the Blocks until production, if any, commenced from the Blocks:
Date of Participation
Agreement
Party(ies)
to the Participation Agreement
 
Participating
Interest(s)
Assigned
   
Participating
Interest Assigned
Price
 
               
JDZ Block 2 - Participation Agreement - ERHC Retained Interest of 22.00%
             
               
March 2, 2006
Sinopec International Petroleum Exploration Production Co. Nigeria Ltd - a subsidiary of Sinopec International Petroleum and Production Corporation
   
28.67
%
 
$
13,600,000
 
                   
Addax Energy Nigeria Limited - an Addax Petroleum Corporation subsidiary
   
14.33
%
 
$
6,800,000
 
                   
JDZ Block 3 - Participation Agreement - ERHC Retained Interest of 10.00%
               
                   
February 15, 2006
Addax Petroleum Resources Nigeria Limited - a subsidiary of Addax Petroleum Corporation
   
15.00
%
 
$
7,500,000
 
                   
JDZ Block 4 - Participation Agreement - ERHC Retained Interest of 19.50%
               
                   
November 15, 2005
Addax Petroleum Nigeria (Offshore 2) Limited - a subsidiary of Addax Petroleum Corporation
   
40.50
%
 
$
18,000,000
 
 
Under the terms of the Participation Agreements Sinopec and Addax agreed to pay all of ERHC's future costs for petroleum operations ("the carried costs") in respect of ERHC's retained interests in the blocks.  Additionally, Sinopec and Addax are entitled to 100% of ERHC's allocation of cost oil plus up to 50% of ERHC's allocation of profit oil from the retained interests on individual blocks until Sinopec and Addax Sub recover 100% of ERHC's carried costs.

On or about October 2, 2009, Sinopec International Petroleum Exploration and Production Corporation acquired all of the outstanding shares of Addax Petroleum Corporation.

ERHC's JDZ Acreage

ERHC has working interests in six of the nine Blocks in the JDZ, as follows:

JDZ Block 2:  22.0%

JDZ Block 3:  10.0%

JDZ Block 4:  19.5%

JDZ Block 5:  15.0% (in arbitration)

JDZ Block 6:  15.0% (in arbitration)

JDZ Block 9:  20.0%

The working interest percentages represent ERHC's share of all the hydrocarbon production from the blocks and obligates ERHC to pay a corresponding percentage of the costs of drilling, production and operating the blocks.  Through Exploration Phase 1 in blocks 2, 3 and 4, these costs have been carried by the operators.  The operators can only recover their costs by carrying ERHC until production whereupon the operators will recover their costs from production revenues.

In 2009, Sinopec and Addax, ERHC's technical partners and operators in Blocks 2, 3 and 4 undertook an exploratory drilling campaign across the three blocks that was completed in January 2010.

Biogenic gas was discovered in each block and discussions continue between the Joint Development Authority and the parties, including ERHC, that hold interests in JDZ Blocks 2, 3 and 4, regarding drilling results. The meetings with the JDA are aimed at reaching a definitive agreement on how to proceed with the next stage of exploration in the Blocks following the expiration of Exploration Phase I in March 2012.

JDZ Operations Update

The JDZ partnership is currently assessing the data for possible new exploration play concepts in this area. The Nigeria - Săo Tomé and Príncipe Joint Development Authority (JDA) co ntinues to engage with the remaining JDZ contracting parties, including ERHC, on the way forward for further exploration.

SAO TOME AND PRINCIPE EXCLUSIVE ECONOMIC ZONE ("EEZ")

Overview of ERHC's EEZ Blocks

The Săo Tomé and Príncipe EEZ is delineated ove r an expanse of waters offshore Sao Tome and Principe that covers approximately 160,000 square kilometers. In terms of hydrocarbon exploration and exploitation, the EEZ is a frontier region that sits south of the Niger Delta and west of the Gabon salt basin, retaining similarities with each of those prolific hydrocarbon regions.  The regional seismic database comprises approximately 12,000 kilometers of seismic data. Interpretation of that seismic data shows numerous structures in the EEZ that have similar characteristics to known hydrocarbon accumulations in the area.

ERHC's Rights in the EEZ

Under a 2001 agreement with the Government of Sao Tome and Principe ("STP"), ERHC was vested with the rights to participate in exploration and production activities in the EEZ.  These rights included (a) the right to receive up to 100% of two blocks of ERHC's choice and (b) the option to acquire up to a 15% paid working interest in each of two additional blocks of ERHC's choice in the EEZ.  In 2010, ERHC exercised its rights to receive up to 100% of two blocks of ERHC's choice in the EEZ and was duly awarded Blocks 4 and 11 of the EEZ by the Government of STP.

EEZ Block 4 is 5,808 square kilometers, situated directly east of the island of Príncipe.

EEZ Block 11 total s 8,941 square kilometers, situated directly east of the island of Săo Tomé and abuts the territorial waters of Gabon. The southern area of the EEZ, where EEZ Block 11 is situated, contains parts of the Ascension and Fang Fracture Zones.

ERHC will decide whether to take up the option to acquire up to a 15% paid working interest in each of two additional blocks of the EEZ when called upon to exercise the option by the Government of STP in accordance with the agreements which provide for the rights and option.
 
PSC for the EEZ

In July 2014, ERHC and the National Petroleum Agency of Săo Tomé and Príncipe (ANP-STP) announced the conclusion of final terms for the Production Sharing Contract for EEZ Block 11.

A PSC is an agreement that governs the relationship between the Company ( and its joint venture partners) and the Government of Săo Tomé and Príncipe in respect of exploration and production in any Block awarded to the Company.   The PSC spells out, among other things, the work commitments (including acquisition of data, drilling of wells, social projects, etc.), the time frames for accomplishing the work commitments, how production will be shared between the parties and the government, and how the costs of exploration, development and production will be recovered.

In October 2015, the Company reached an agreement with Kosmos Energy (NYSE: KOS), a leading independent oil and gas exploration and production company focused on frontier and emerging areas to tra nsfer all ERHC's rights to Block 11 of the Săo Tomé and Principe Exclusive Economic Zone (EEZ) to Kosmos. The agreement has been approved by the National Petroleum Agency of Sao Tome & Principe ("ANP-STP") as required in the requisite Production Sharing Co ntract ("PSC") for EEZ Block 11.

EEZ Operations Update

ERHC has concluded negotiation of the terms of a Production Sharing Contract with the National Petroleum Agency of Săo Tomé and Principe (ANP-STP) for Block 4. The Company is currently in discussions with potential farm in partners. ERHC holds a 100 percent interest in EEZ Block 4, and 15% right to paid working interest in each of two additional blocks of the EEZ.

United States Operations Update

During the year ended September 30, 2016, NewStar purchased three small producing oil and gas wells in Ganado, Jackson County, Texas. However, during the six months ended March 31, 2017, NewStar received a return of portion of funds deposited $125,000, after the seller decided to sell only two of the wells due to rise in oil and gas prices.On March 20, 2017, NewStar sold 55% of its working interest in proved properties to a third party for consideration of $65,000, resulting in a net loss of $146,750.
 
CURRENT PLANS FOR OPERATIONS

ERHC's principal assets are its interests in rights for exploration for hydrocarbons in Kenya, Chad, the JDZ and the EEZ. ERHC purchased 2 producing oil and gas wells located in Ganado, Jackson County, Texas and starts to have sources of income from its operations. The Company plans to develop its business by the acquisition of other assets which may include revenue-producing assets in diverse geographical areas and the forging of strategic, new business partnerships and alliances.  ERHC cannot currently predict the outcome of negotiations for acquisitions, or, if successful, their impact on the Company's operations.

  a.
ERHC’s management and board continue working toward a strategic realignment of the Company in the light of the current oil-price environment and continued constraints on funding for oil exploration activities,.
 
b.
The Company is refocusing on opportunities for cost-efficient entry into production and producing assets. This is in contrast to the pure exploration model which the Company previously ran and is intended to open up the Company to new streams of investment and revenue.
 
c.
Accordingly, the Company has concluded a Term Sheet with Starcrest Nigeria Energy Limited (“Starcrest”) pursuant to the Memorandum of Understanding earlier signed between the parties. The Term Sheet sets out a 180-day period commencing May 1, 2017 for a definitive agreement between the parties that gives ERHC entry, for valuable consideration, into Starcrest’s current entitlements to production.
 
d.
Starcrest has a significant stake in Elcrest Exploration and Production Company Limited, the holder of 45 percent of Nigeria’s producing OML 40. Starcrest also holds directly OPL 291 and OPL 242 in Nigeria.
 
e.
ERHC continues to bid, as part of several consortia with backing from financing partners, for producing interests in West Africa.
 
PLANS FOR FUNDING OF POTENTIAL ACQUISITIONS

ERHC's future plans will depend on the Company's ability to attract new funding. The Company is implementing a series of steps to fund the geophysical work, including magnetic/gravity and seismic surveys, prior to securing potential farm-out on Chad acreage. Said funding steps include but are not limited to the issuance of a series of convertible notes, which the Company has commenced, issuance of shares of common stock through registered direct offerings, which the Company plans to commence shortly and farm-outs to potential partners on its assets in Africa. The fund raising might include:

·
Farm-outs of part of the Company’s assets in Kenya, Chad and the Săo Tomé and P ríncipe Exclusive Economic Zone

·
Issue shares of common stock through a registered direct offering

·
Other available financing options

The Company is continuing discussions with several international investment advisory and financial brokerage firms to act as financial advisors and intermediaries to ERHC. While ERHC has always used expert professional assistance to formulate and execute its capital raising initiatives, it is re-focusing on the retention of such advisors and intermediaries as a strategic imperative of the increased funding requirements that arise from the rollout of the new work programs in Chad and Kenya.  The new firms retained will perform such financial advisory and investment banking services for the Company as are customary and appropriate in transactions of this type, including assisting the Company in analyzing, structuring, negotiating and effecting proposed capital raises.  These initiatives may include any transaction or series of transactions in which one or more capital providers (existing or otherwise) commits debt capital to the Company, purchases equity of the Company (or securities of the Company convertible into equity), or alternatively funds the Company either directly or through farm-ins, farm-outs or other arrangements in which the capital provider earns an interest in oil and gas properties of the Company.
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The process of preparing financial statements requires that the Company make estimates and assumptions that affect the reported amounts of liabilities and stockholders' equity at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Such estimates primarily relate to realization of oil and gas concession assets and the valuation allowance related to deferred tax assets as of the date of the financial statements; accordingly, actual results may differ from estimated amounts. ERHC's estimates and assumptions are based on current facts, historical experience and various other factors we believe to be reasonable under the circumstances. The most significant estimates with regard to the financial statements included with this report relate to realization of oil and gas concession assets and the valuation allowance related to deferred tax assets.

These estimates and assumptions are reviewed periodically and, as adjustments become necessary, they are reported in earnings in the periods in which they become known.

RECENT ACCOUNTING PRONOUNCEMENTS

In preparing its financial statements and filings, the company considers recent guidance issued related to accounting principles generally accepted in the United States. The Company believes that there has been no new guidance since its most recent annual report on Form 10-K that have a significant impact on its financial statements.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2017 Compared with the Three Months Ended March 31, 2016

From October, 2016, we started to generate revenue from our new acquired oil and gas properties in Texas. During the three months ended March 31, 2017 and 2016, the revenue from sales of oil and gas was $18,282 and $0, respectively.

General and administrative expenses decreased from $619,616 in the three months ended March 31, 2016 to $334,422 in the three months ended March 31, 2017.  The decrease was primarily due to decrease in general and administrative expenses as part of our cost savings plan.

Exploration expense decreased from $375,172 in the three months ended March 31, 2016 to $0 in the three months ended March 31, 2017. The decrease was primarily due to operator analysis of the results of the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned at the year ended September 30, 2016.

Other expenses decreased from $352,184 in the three months ended March 31, 2016 to $316,114 in the three months ended March 31, 2017. The decrease was primarily due to decrease in loss on embedded derivative and changes in mark to market of derivative related to convertible debts by comparison to the same period in fiscal year ended 2016.

During the three months ended March 31, 2017, the Company had a net loss of $789,821 compared with a net income of $704,552 for the three months ended March 31, 2016. The increase in loss resulted from the gain on sale of interest in oil and gas concessions of $2,070,000 during the three months ended March 31, 2016, compared with a loss of $146,750 during the same period in fiscal year 2017.

Six Months Ended March 31, 2017 Compared with the Six Months Ended March 31, 2016

During the six months ended March 31, 2017 and 2016, the revenue from sales of oil and gas was $54,612 and $0, respectively.

General and administrative expenses decreased from $1,196,056 in the six months ended March 31, 2016 to $800,295 in the six months ended March 31, 2017.  The decrease was primarily due to decrease in general and administrative expenses as part of our cost savings plan.

Exploration expense decreased from $780,656 in the six months ended March 31, 2016 to $746,563 in the six months ended March 31, 2017. The decrease was primarily due to operator analysis of the results of the Tarach-1 well shows that it did not encounter any reservoirs. The operator has therefore classified Tarach-1 a dry well. The well has accordingly been plugged and abandoned at the year ended September 30, 2016.

Other expenses increased from $320,715 in the six months ended March 31, 2016 to $1,066,219 in the six months ended March 31, 2017. The increase was primarily due to increase in interest expense and loss on embedded derivative related to convertible debts by comparison to the same period in fiscal year ended 2016.

During the six months ended March 31, 2017, the Company had a net loss of $2,725,678 compared with a net income of $393,348 for the six months ended March 31, 2016. The increase in loss resulted from the gain on sale of interest in oil and gas concessions of $2,070,000 during the three months ended March 31, 2016, compared with a loss of $146,750 during the same period in fiscal year 2017.
 
LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2017, the Company had $129,646 in cash and cash equivalents, and a working deficit of $13,572,534. We are implementing a series of steps to raise funds to support potential acquisition of producing assets.Kenya drilling campaign, prior to securing potential farm-out on Chad acreage. The fund raising might include:

Farm-outs of part of the Company's assets in Kenya, Chad and the Săo Tomé and Príncipe Exclusive Economic Zone

Issue shares of common stock through a registered direct offering

Convertible loans and other debt instruments

Other available financing options

GOING CONCERN

The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the ordinary and usual course of business. As of March 31, 2017, the Company has a working capital deficit and negative cash flows from operating activities. The Company also has significant tax arrears which resulted from a deduction disallowance made by an IRS audit of ERHC’s 2006 return, which audit lasted nearly seven years and has been previously disclosed.  There is an outstanding IRS lien imposed on ERHC in Harris County, Texas in consequence.  Furthermore, the Company is in significant arrears of cash calls relating to the company’s proportionate share of drilling costs (beyond operator-carried expenses) on the Tarach-1 well in Kenya Block 11A. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on raising additional capital to fund ongoing exploration projects and ultimately on attaining future profitable operations. The Company is continuing with its plan to further seek new opportunity for farm-out its assets in Kenya, Chad and the Săo Tomé and Pr íncipe Exclusive Economic Zone. Management believes that the Company’s current operating strategy will provide the opportunity for the Company to continue as a going concern as long as the Company continues to obtain additional financing; however there is no assurance that this will occur. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

OFF-BALANCE SHEET ARRANGEMENTS

At March 31, 2017, the Company had no off-balance sheet arrangements.
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk

The Company's current focus is to exploit its primary assets, which are rights to working interests in oil and gas exploration blocks in Kenya, Chad, the JDZ and EEZ under agreements with the  governments of Kenya, Chad, the JDA and the government of STP respectively.  The Company intends to continue to form relationships with other oil and gas companies with operational, technical and financial capabilities, to partner with the Company in leveraging its interests.  The Company currently has no other operations.

As of March 31, 2017, the Company's primary assets are agreements with Kenya, Chad, STP and the JDA which provide ERHC with rights to participate in exploration and production activities in Kenya, Chad, the EEZ and the JDZ in Africa and 2 producing oil and gas wells in the United States.  This geographic area of interest is controlled by foreign governments that have historically experienced volatility of which is out of management's control. The Company's operations and its 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 that include financial, 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 relative to the local currencies in which future oil and gas producing activities may be denominated.  Furthermore, 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.

Item 4.
Controls and Procedures

The Company maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. The Company’s Chief Financial Officer and Principal Accounting Officer evaluated the effectiveness of disclosure controls and procedures as of March 31, 2017, pursuant to Rule 13a-15(b) under the Exchange Act.  Based on that evaluation, the Company’s Chief Financial Officer and Principal Accounting Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms due to material weakness related to the following:

(i)
The Company’s system of internal controls failed to identify multiple journal entries that were identified by the Company’s external auditor.

Our conclusion related to the effectiveness of our controls is based solely on adjustments made by our external auditor as part of their yearend audit and not based upon any other control deficiencies within the entity.

There was no change in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
 
PART II. OTHER INFORMATION

Item 1.
Legal Proceedings

LEGAL PROCEEDINGS

JDZ BLOCKS 5 AND 6

Arbitration and Lawsuit

The Company’s rights in JDZ Blocks 5 and 6 are currently the subject of legal proceedings filed at the London Court of International Arbitration and the Feder al High Court in Abuja, Nigeria. The Company instituted both proceedings in November 2008 against the JDA and the Governments of Nigeria and Săo Tomé and Príncipe.   The Company seeks legal clarification that its rights in the two Blocks remain intact.

The issue in contention is contractual. The Company was awarded a 15 percent working interest in each of the Blocks in a 2004/5 bid/licensing round conducted by the JDA following the Company’s exercise of preferential rights in the Blocks as guaranteed by contract and treaty.  The JDA and the Government of STP contend that certain correspondence issued by a previous CEO/President of the Company in 2006 amount to a relinquishment of the Company’s rights in Blocks 5 and 6 under the Company’s contracts with STP which provide for the rights.  The Company contends that no such relinquishment has occurred and has sought recourse to arbitration accordingly. It also filed the suit to prevent any tampering with its said rights in JDZ Blocks 5 and 6 pending the outcome of arbitration.

Suspension of Proceedings on the Arbitration and Lawsuit

Proceedings on the suit and the arbitration are currently suspended while the Compan y pursues amicable settlement with the Governments of Nigeria and Săo Tomé Príncipe.

ROUTINE CLAIMS AND OTHER MATTERS

From time to time, ERHC may be subject to routine litigation, claims, or disputes in the ordinary course of business.  ERHC intends to defend these matters vigorously.  The Company cannot predict with certainty, however, the outcome or effect of any of the arbitration or litigation specifically described above or any other pending litigation or claims.
 
Item 1A.
Risk Factors

Our operation and financial results are subject to various risks and uncertainties that could affect our business, financial condition, results of operations, and trading price of our common stock, including but not limited to, failing financial institutions.  Please refer to our annual report on Form 10-K for fiscal year 2016 for additional information concerning these and other uncertainties that could negatively impact the Company.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.
Defaults Upon Senior Securities

None.

Item 4.
Submission of Matters to A Vote of Security Holders

None.

Item 5.
Other Information

None
 
Item 6.
Exhibits

 
Signatures
   
Rule 13a-14(a) Certification of the Chief Executive Officer
   
Rule 13a-14(a) Certification of the Principal Accounting Officer
   
Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer
   
Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Accounting Officer
   
101.INS*
Instance Document
   
101.SCH*
XBRL Taxonomy Extension Schema Document
   
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
   
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
   
 
* Filed or furnished herewith.
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ERHC Energy Inc.
Name
Title
Date
     
/s/ Peter Ntephe
President
May 15, 2017
Peter Ntephe
Chief Executive Officer
 
     
/s/ Sylvan Odobulu
Vice President (Admin) and Controller
May 15, 2017
Sylvan Odobulu
Principal Accounting Officer
 
 
 
32

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