U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended December 31, 1996
Commission File Number 0-18275
ENVIRONMENTAL REMEDIATION HOLDING CORP.
(Name of 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
Indicate by check mark whether the registrant (1) has filed reports required to
be filed by Section 13 of 15 (d) of the Securities Exchange Act during the
preceeding 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 ____
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of December 31, 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
<PAGE>
PART I - Financial Information
ITEM 1. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Page
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
F-1
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORP.
Consolidated Balance Sheets
<TABLE>
<S> <C> <C>
Sep 30, 1996 Dec 31, 1996
------------------ ------------------
ASSETS (Unaudited)
CURRENT ASSETS
Cash $ 0 0
Prepaid expenses 0 0
------------------ ------------------
Total current assets 0 0
------------------ ------------------
FIXED ASSETS (note 1b)
Equipment 3,720,000 3,720,000
Accumulated depreciation (372,000) (465,000)
------------------ ------------------
Total fixed assets 3,348,000 3,255,000
------------------ ------------------
OTHER ASSETS
Deposits 5,000 5,000
Deferred compensation expense, net (note 1d) 427,500 343,750
------------------ ------------------
Total other assets 432,500 348,750
------------------ ------------------
Total Assets $ 3,780,500 3,603,750
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accrued expenses $ 0 0
Notes payable to officer (note 1c) 6,730 6,730
------------------ ------------------
Total liabilities 6,730 6,730
------------------ ------------------
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value, authorized 950,000,000
shares; 3,239,374 issued and outstanding. (note 5) 324 324
Additional paid in capital in excess of par 4,629,598 4,629,598
Deficit accumulated during the development stage (856,152) (1,032,902)
------------------ ------------------
Total Stockholders' Equity 3,773,770 3,597,020
------------------ ------------------
Total Liabilities and Stockholders' Equity $ 3,780,500 3,603,750
================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORP.
Consolidated Statements of Operations
(Unaudited)
3 Months ended December 31,
<TABLE>
<S> <C> <C>
1995 1996
REVENUE
Revenue $ 0 0
----------------- ---------------
Total revenue 0 0
----------------- ---------------
EXPENSES
Automobile 400 0
Bank Charges 53 0
Compensation - officers 42,323 31,250
Consultant fees 5,800 0
Professional fees 0 52,500
Office rent 850 0
Office expenses 0 0
Travel 4,800 0
Depreciation 93,000 93,000
Miscellaneous 0 0
----------------- ---------------
Total expenses 147,226 176,750
----------------- ---------------
Net loss before tax benefit and extraordinary item (147,226) (176,750)
----------------- ---------------
Extraordinary item - forgiveness of debt 60,477 0
----------------- ---------------
Income tax benefit (note 3) 0 0
----------------- ---------------
Net loss $ (86,749) (176,750)
================= ===============
Weighted average number of shares outstanding - 3,239,374
================= ===============
Net loss per share $ - (0.05)
================= ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORP.
Consolidated Statements of Stockholder's Equity
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional Stock Total
Common Paid in Subscrip Accumulated Stockholders'
Stock Capital Receiv Deficit Equity
BALANCE, September
30, 1996 *A $ 324 4,629,598 0 (856,152) 3,773,770
Net loss 0 0 0 (176,750) (176,750)
------------- -------------- ------------- ------------------ -----------------
BALANCE, December
31, 1996 (Unaudited) $ 324 4,629,598 0 (1,032,902) 3,597,020
============= ============== ============= ================== =================
</TABLE>
*A - 3,239,374 shares of common stock outstanding.
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORP.
Consolidated Statements of Cash Flows
(Unaudited)
3 Months ended December 31,
<TABLE>
<S> <C> <C>
1995 1996
--------------- --------------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss $ (86,749) (176,750)
Adjustments to reconcile net loss to net cash used for development activities:
Amortization 31,250 83,750
Stock issued for services rendered 0 0
Depreciation expense 93,000 93,000
Forgiveness of debt (60,477) 0
-------------- --------------
Net cash used for development activities (22,976) 0
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
None 0 0
-------------- --------------
Net cash provided by investing activities 0 0
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Funds advanced by stockholder 22,976 0
-------------- --------------
Net cash provided by financing activities 0 0
-------------- --------------
(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
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORP.
Notes to Consolidated Financial Statements
(Unaudited)
(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.
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 financial statements for the
three months ended December 31, 1995 and 1996 include all adjustments
which in the opinion of management are necessary for fair presentation.
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
outstanding common stock of Environmental Remediation Funding Corp.,
(ERFC), a Delaware corporation, effective on August 19, 1996, in a
reverse triangular merger, which has been accounted for as a reorganiz-
ation of ERFC. At the same time the Company changed its name from
Regional Air Group to Environmental Remediation Holding Corp.
b) 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
undeterminable, 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 remaining useful life of ten years. Expenditures for
maintenance and repairs are charged to operations as incurred.
Depreciation expense for the three months ended December 31, 1995 and
1996 was $93,000 and $93,000, respectively.
c) 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.
d) 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
amortized 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.
e)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 $1,032,902, expiring as follows: $3,404 in
2010, $852,748 in 2011 and $176,750 in 2012. The Company has a $413,200
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
<PAGE>
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 December 31, 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
429,594 shares issued and outstanding. On August 19,1996, the Company
issued 2,863,544 shares of common stock to acquire 100% of the issued
and outstanding common stock of ERFC. On September 3, 1996, the Company
issued 55,000 shares of its common stock under three consulting
contracts previously negotiated.
F-7
<PAGE>
Item 2. Management's Discussion and Analysis or 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.
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.
PART II - Other Information
Item 1. Legal Proceedings.
The Company is not a party to any pending legal proceedings.
Item 2. Changes in Securities
The Company hereby incorporates its Form 8-K filed on September 4, 1996 and its
Form S-8 filed on September 13, 1996.
9
<PAGE>
Item 3. Defaults Upon Senior Securities
None to report.
Item 4. Submission of Matters to a Vote of Security Holders.
None to report.
Item 5. Other Information
None to report.
Item 6. Exhibits and Reports on Form 8-K and 8-K/A.
The Company hereby incorporates its Form 8-K filed on September 4, 1996 and its
Form S-8 filed on September 13, 1996.
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, thereunto duly authorized.
Date: May 13, 1997
ENVIRONMENTAL REMEDIATION HOLDING CORP.
a Colorado Corporation
By: /s/ Sam L. Bass, Jr.
Sam L. Bass, Jr.
CEO and Chairman of the Board
By: /s/ Noreen Wilson
Noreen Wilson
Vice President
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements of Environmental Remediation Holding Corp. for
December 31, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000799235
<NAME> Environmental Remediation Holding Corp.
<MULTIPLIER> 1
<CURRENCY> US Dollar
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
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<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,720,000
<DEPRECIATION> 465,000
<TOTAL-ASSETS> 3,603,750
<CURRENT-LIABILITIES> 6,730
<BONDS> 0
0
0
<COMMON> 324
<OTHER-SE> 3,596,696
<TOTAL-LIABILITY-AND-EQUITY> 3,603,750
<SALES> 0
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<CGS> 0
<TOTAL-COSTS> 176,750
<OTHER-EXPENSES> 0
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