ERHC Energy Inc (ERHE)

[RUBY1100]

ERHC NEWS 10 Q Feb 11/2008

http://biz.yahoo.com/e/080211/erhe.ob10-q.html

December 31, 2007, the Company had $33,970,197 in cash and cash equivalents

hmmm.... Included in current liabilities is also a $4,803,750 liability to Feltang International Inc. that will be satisfied upon issuance of 5,250,000 shares of common stock.


Form 10-Q for ERHC ENERGY INC


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11-Feb-2008

Quarterly Report



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, "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, 2007, Item 1A of Part II, "Risk Factors," included in the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2006 and Item 1A of Part II, "Risk Factors," included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006. 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 Coloradocorporation, and, unless expressly stated or the context otherwise requires, its wholly owned subsidiary.

Overview

ERHC reports as a development stage enterprise as there are currently no significant operations and no revenue has been generated from business activities. The Company was formed in 1986, as a Coloradocorporation, and was engaged in a variety of businesses until 1996, when it began its current operations as an independent oil and gas company. The Company's goal is to maximize its value through exploration and exploitation of oil and gas reserves in the Gulfof Guineaoffshore central West Africa. The Company's current focus is to exploit its only assets, which are rights to working interests in exploration acreage in the Joint Development Zone ("JDZ") between the Democratic Republic of Sao Tome & Principe ("DRSTP" or "Sao Tome") and the Federal Republic of Nigeria ("FRN" or "Nigeria") and in the exclusive territorial 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 and entered into production sharing agreements with upstream oil and gas companies in certain of these JDZ Blocks. The technical and operational expertise in conducting exploration operations will be provided by such oil and gas companies and the Company's various consortium partners.


Saleof Participation Interests

The following represents ERHC's current rights in the JDZ blocks.

ERHC ERHC Current ERHC
Original Joint Bid Retained
Participating Participating Participating Participating
JDZ Block # Interest(1) Interest Interest(s) Sold Interest

2 30% 35% 43% (2) 22%
3 20% 5% 15% (3) 10%
4 25% 35% 33.3% (4) 26.7% (6)
5 15% (5) (5) (5)
6 15% (5) (5) (5)
9 20% (5) (5) (5)




(1) Original Participating Interest granted pursuant to the Option Agreement, dated April 2, 2003, between DRSTP and ERHC (the "2003 Option Agreement").

(2) In March 2006, ERHC sold an aggregate 28.67% participating interest to Sinopec and an aggregate 14.33% participating interest to Addax Ltd.

(3) In February 2006, ERHC sold a 15% participating interest to Addax Sub.

(4) By a Participation Agreement made in November 2005 and subsequently amended, ERHC sold 33.3% participating interest to Addax.

(5) No contracts have been entered into as of the date hereof. ERHC's goal is to enter into agreements to exploit its interests in Blocks 5, 6 and 9 also. Additionally, the Company intends to exploit its rights in the EEZ.

(6) Includes the 9% reclaimed from Godsonic by ERHC on behalf of the ERHC/Addax consortium following Godsonic's inability to fulfill financial and other conditions upon which the 9% was to have been assigned to Godsonic. Pursuant to the Amendment to the Participation Agreement made on April 11, 2006, the 9% is subject to distribution between Addax (7.2%) and ERHC (1.8%), if agreement is reached between the parties on the amount payable by Addax to ERHC for said interest.



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Table of Contents
Results of Operations

Three Months Ended December 31, 2007Compared with Three Months Ended December 31, 2006

During the three months ended December 31, 2007, the Company had a net loss of $586,765 compared with a net loss of $522,142 for the three months ended December 31, 2006. Interest income decreased from $543,632 in the three months ended December 31, 2006 to $431,863 in the three months ended December 31, 2007 due to a decline in the significant cash balance maintained by the Company following the sale of the participation interests in 2006. General and administrative expenses decreased from $1,331,898 in the three months ended December 31, 2006 to $1,011,447 in the three months ended December 31, 2007 primarily due to a decrease of $673,116 in legal fees, from $893,733 in the three months ended December 31, 2006, to $220,617 in the three months ended December 31, 2007. The decrease in legal fees was due to reduction in required assistance in connection with the Justice Department investigation of the Company, and the decrease was partially offset by an increase in public relations expense of $133,407 from $2,002 in the three months ended December 31, 2006 to $135,409 in the three months ended December 31, 2007. See "Legal Proceedings" in Item 1 of Part II of this report.

Liquidity and Capital Resources

As of December 31, 2007, the Company had $33,970,197 in cash and cash equivalents and short-term investments and positive working capital of $30,571,579. Management believes that this cash position should be sufficient to support the Company's working capital requirements for more than 12 months.

Off-Balance Sheet Arrangements

At December 31, 2007, the Company had no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition or results of operations.

Debt Financing Arrangements

At December 31, 2007, the Company had short-term debt of $33,513 bearing interest at 5.5% per year payable to an individual. The Company had other current liabilities of $5,594,349 including related party liabilities as follows: $62,314 owed to Chrome Management Services Inc. and $40,150 due to the Company's board of directors for directors' fees. Included in current liabilities is also a $4,803,750 liability to Feltang International Inc. that will be satisfied upon issuance of 5,250,000 shares of common stock.