U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended September 30, 1996
[ ] 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
ENVIRONMENTAL REMEDIATION HOLDING CORP.
(Name of small business issuer in its charter)
Colorado 88-0218499
(State or other jurisdiction of
incorporation or organization) (IRS Employer ID No.)
420 Jericho Turnpike, Suite 321
Jericho, New York 11753
(Address of principal executive offices)
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 or 15(d) of the Securities 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 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 September 30, 1996 - 2,918,544 shares of common stock.
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
Balance Sheets ............................................................F-2
Statements of Operations ...................................................F-3
Statements of Stockholders' Equity .........................................F-4
Statements of Cash Flows ..................................................F-5
Notes to Financial Statements ..............................................F-6
F-1
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ENVIRONMENTAL REMEDIATION HOLDING CORP.
Balance Sheets
<TABLE>
<S> <C> <C>
Dec 31, 1995 Sept 30, 1996
------------------ ------------------
ASSETS (Unaudited)
CURRENT ASSETS
Cash $ 0 535
Prepaid expenses 0 17,000
------------------ ------------------
Total current assets 0 17,535
------------------ ------------------
FIXED ASSETS (note 1b)
Equipment 0 3,887,400
Accumulated depreciation 0 (388,740)
------------------ ------------------
Total fixed assets 0 3,498,660
------------------ ------------------
OTHER ASSETS
Deposits 0 5,000
Deferred compensation expense, net (note 1d) 0 760,000
------------------ ------------------
Total other assets 0 765,000
------------------ ------------------
Total Assets $ 0 4,281,195
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accrued use tax payable $ 0 167,400
Notes payable to officer (note 1c) 0 6,730
------------------ ------------------
Total liabilities 0 174,130
------------------ ------------------
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value, authorized 950,000,000
shares; 2,918,544 issued and outstanding. (note 5) 74,648 292
Additional paid in capital in excess of par 3,654,240 7,878,561
Stock subscriptions receivable 0 (88)
Deficit accumulated during the development stage (3,728,888) (3,771,700)
------------------ ------------------
Total Stockholders' Equity 0 4,107,065
------------------ ------------------
Total Liabilities and Stockholders' Equity $ 0 4,281,195
================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
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ENVIRONMENTAL REMEDIATION HOLDING CORP.
Statements of Operations
(Unaudited)
9 Months ended September 30,
<TABLE>
<S> <C> <C>
1995 1996
REVENUE
Revenue $ 0 0
----------------- ---------------
Total revenue 0 0
----------------- ---------------
EXPENSES
Compensation - officers 0 10,417
Consultant fees 0 0
Professional fees 0 0
Depreciation 0 32,395
Miscellaneous 0 0
----------------- ---------------
Total expenses 0 42,812
----------------- ---------------
Net loss before tax benefit 0 (42,812)
----------------- ---------------
Income tax benefit (note 3) 0 0
----------------- ---------------
Net loss $ 0 (42,812)
================= ===============
Weighted average number of shares outstanding - 2,918,544
================= ===============
Net loss per share $ - (0.01)
================= ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORP.
Statements of Stockholder's Equity
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional Stock Total
Common Paid in Subscrip Accumulated Stockholders'
Stock Capital Receiv Deficit Equity
BALANCE, December
31, 1996 *A $ 74,648 3,654,240 0 (3,728,888) 0
Capital Transactions:
*B (74,605) 74,605 0 0 0
*C 243 3,764,722 (88) 0 3,764,877
*D 6 384,994 0 0 385,000
Net loss 0 0 0 (42,812) (42,812)
------------- -------------- ------------- ------------------ -----------------
BALANCE, September
30, 1996 $ 292 7,878,561 (88) (3,771,700) 4,107,065
============= ============== ============= ================== =================
</TABLE>
*A - 746,483,333 shares of common stock outstanding.
*B - 1 for 2,095 reverse split of the common stock - 429,594 shares of common
stock remaining outstanding.
*C - 2,433,950 shares issued for the acquisition of Environmental Remediation
Funding Corp. - 2,863,544 shares of common stock outstanding.
*D - 55,000 shares issued for services - 2,918,544 shares of common stock
outstanding.
The accompanying notes are an integral part of the financial statements.
F-4
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ENVIRONMENTAL REMEDIATION HOLDING CORP.
Statements of Cash Flows
(Unaudited)
9 Months ended September 30,
<TABLE>
<S> <C> <C>
1995 1996
---------------- --------------
CASH FLOWS FROM DEVELOPMENT ACTIVITIES:
Net loss $ 0 (42,812)
Adjustments to reconcile net loss to net cash used for development activities:
Stock issued for services rendered 0 10,417
Depreciation expense 0 32,395
-------------- --------------
Net cash used for development activities 0 0
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
None 0 0
-------------- --------------
Net cash provided by investing activities 0 0
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
None 0 0
-------------- --------------
Net cash provided by financing activities 0 0
-------------- --------------
(Decrease) increase in cash 0 0
-------------- --------------
CASH, beginning of period 0 535
-------------- --------------
CASH, end of period $ 0 535
============== ==============
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 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. Material estimates that are
particularly susceptible to significant change in the near-term relate
to the book-tax difference of accounting for the development expenses
(see note 3 ). The financial statements for the nine months ended
September 30, 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
reorganization 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 nine months ended September 30, 1995 and
1996 was $0 and $32,395, 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
is amortizing this expense over the term of the agreement.
On October 6, 1995, and modified on January 2, 1996, the Company
entered into an agreement with a financial advisor to issue 30,000
shares of its common stock, valued at $210,000, in exchange for
services rendered by the advisor to assist in effecting the merger
which occured on August 19, 1996.
On July 15, 1996, the Company entered into an agreement with a general
business advisor to issue 15,000 shares of its common stock, valued at
$105,000, in exchange for services rendered by the advisor.
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 $4,276,823, expiring as follows: $3,728,888
by 2004 and $162,630 in 2010 and $$385,305 in 2011. The Company has a
$1,710,700 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 Financial Statements
(5) 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.
The Company hereby incorporates its Form 8-K filed on September 4, 1996 and its
Form S-8 filed on September 13, 1996.
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.
Item 3. Defaults Upon Senior Securities
None to report.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company hereby incorporates its Form 8-K filed on September 4, 1996 and its
Form S-8 filed on September 13, 1996.
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: February 10, 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
9
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