U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
             OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005

[ ] 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: 0-13597


                           AVALON GOLD CORPORATION
                     (Formerly Iceberg Brands Corporation)
            (Exact name of registrant as specified in its charter)

             NEVADA                                      88-0195105
  (State or other jurisdiction of
  incorporation or organization)          (I.R.S. Employer Identification No.)

1288 Alberni  Street, Suite 806, Vancouver, British Columbia, Canada   V6E 4N5
       (Address of registrant's principal executive offices)   (Zip Code)

                                  604.664.0499
              (Registrant's Telephone Number, Including Area Code)


                      APPLICABLE ONLY TO CORPORATE ISSUERS

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act)   Yes [ ]   No  [X]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date.  As of September 30, 2005 there were
37,773,493 shares of the issuer's $0.001 par value common stock issued and
outstanding.

Transitional Small Business disclosure format:  Yes [ ]   No  [X]

===============================================================================

INDEX
                                                                       PAGE
Part I. FINANCIAL INFORMATION

Item 1.   Financial Statements.........................................F1-F-19

Item 2.   Management's Discussion and Analysis or Plan of Operation......2

Item 3.   Controls And Procedures........................................11

Part II. OTHER INFORMATION

Item 1.   Legal Proceedings..............................................12

Item 2.   Changes in Securities and Use of Proceeds......................12

Item 3.   Defaults Upon Senior Securities................................13

Item 4.   Submission of Matters to a Vote of Security Holders............13

Item 5.   Other Information..............................................13

Item 6.   Exhibits and Reports on Form 8-K...............................16

SIGNATURES...............................................................16

===============================================================================


ITEM 1. Financial Statements


                           AVALON ENERGY CORPORATION
                       (Formerly Avalon Gold Corporation)
                         (An Exploration Stage Company)

                          INTERIM FINANCIAL STATEMENTS
                               September 30, 2005
                                  (UNAUDITED)


BALANCE SHEETS..................................F-1

INTERIM STATEMENTS OF OPERATIONS................F-2

INTERIM STATEMENTS OF CASH FLOWS................F-3

NOTES TO INTERIM FINANCIAL STATEMENTS...........F-4

------------------------------------------------------------------------------

                           AVALON ENERGY CORPORATION
                       (Formerly Avalon Gold Corporation)
                         (An Exploration Stage Company)

                                 BALANCE SHEETS

<table>
<caption>

                                                             <c>                 <c>
                                                            September 30,      December 31,
                                                               2005               2004
                                 ASSETS                     -----------        ----------
                                                            (Unaudited)
CURRENT ASSETS
  Cash                                                       $ 104,860          $       -
  Taxes recoverable                                              1,812                610
  Prepaid Expenses                                                   -              4,018
                                                             ----------         ----------
                                                               106,672              4,628

AVAILABLE FOR SALE SECURITIES (Note 3)                          60,000            120,000
DUE FROM GOLDEN SPIRIT GAMAING LTD. (Note 3)                   122,678             45,812
INVESTMENT IN LEGACY MINING LTD (Note 4)                             1                  1
OIL AND GAS PROPERTIES, Unproven (Note 6)                    1,016,823             50,002
                                                            ----------         ----------
                                                          $  1,306,174       $    220,443
                                                            ==========         ==========
                 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Bank overdraft                                          $          -       $      2,187
  Accounts payable and accrued liabilities                      27,795             16,488
  Due to related parties (Note 9)                               35,780             27,058
                                                            ----------         ----------
                                                                63,575             45,733
                                                            ----------         ----------


STOCKHOLDERS' EQUITY (Note 8)
  Common stock, $.001 par value, 200,000,000
   shares authorized 37,773,493 (December 31, 2004-
   22,630,493) shares issued and outstanding                   77,489             62,346
  Additional paid-in capital                               22,295.426         19,220,819
  Deferred Compensation (Note 7)                             (124,040)          (193,462)
  Obligation to issue shares                                        -                  -
  Deficit accumulated during exploration stage            (20,936,276)       (18,904,993)
  Accumulated other comprehensive loss                        (70,000)           (10,000)
                                                            ----------         ----------
                                                            1,242,599            174,710
                                                            ----------         ----------
                                                          $ 1,306,174        $   220,443
                                                            ==========         ==========
COMMITMENTS AND CONTINGENCIES (Note 1 and 11)

The accompanying notes are an integral part of these financial statements

<page>F-1

</table>

                                        AVALON GOLD CORPORATION
                                 (Formerly Iceberg Brands Corporation)
                                    (An Exploration Stage Company)
                                    INTERIM STATEMENT OF OPERATIONS
                                              (Unaudited)
<table>
<caption>

                                     <c>          <c>             <c>            <c>           <c>
                                                                                                Cumulative
                                           Three         Three         Nine          Nine          from
                                           Months        Months       Months        Months       January 1,
                                           ended         ended         ended         ended         1996 to
                                        September 30, September 30, September 30, September 30, September 30,
                                            2005         2004         2005            2004          2005
                                         ----------    ----------   ----------     ----------   ----------
GENERAL AND ADMINISTRATIVE EXPENSES

  Management and consulting fees         $ 298,373    $  56,750   $  948,159     $  397,800    $ 3,873,969
  Consulting fees-Stock based
    compensation(Note 8)                  314,650      290,500       873,710        338,500      1,863,210
  Mineral exploration cost (Note 5)             -        1,000             -        123,014        112,678
  Loss on settlement of debt(Note 8(c)(ii)      -            -             -         62,000        718,784
  General and Administrative               54,258      134,657       170,457        341,839      2,193,151
  Professional fees                        17,571       10,623        38,957         63,992        846,974
  Interest expense                              -            -             -              -         98,282
  Software development costs                    -            -             -              -        737,300
  Litigation settlement                         -            -             -              -      2,291.070
                                       -----------   ----------   -----------    -----------  -------------
LOSS BEFORE THE FOLLOWING               $(684,852)   $(493,530)  $(2,031,283)   $(1,327,145)  $(12,735,418)


OTHER ITEMS:
Property option income                          -           -              -              -        130,000
Write-down of investment in
 Legacy Mining Ltd. (Note 4)                    -           -              -              -       (128,288)
Write-down of oil and gas properties            -           -              -              -     (1,406,000)
Write-off (recovery) of ACGT interest           -           -              -              -     (2,250,937)
Loss on Iceberg Drive Inn Investment            -           -              -              -        (85,000)
                                      ------------  -----------   -----------    -----------  -------------

NET LOSS FOR THE PERIOD                 $(684,852)  $(493,530)   $(2,031,283)   $(1,327,145)  $(16,475,643)
                                      ============  ===========  ============    ===========  =============


BASIC NET LOSS PER SHARE                $   (0.02)  $  (0.03)    $    (0.06)    $    (0.09)
                                       ===========  ==========   ===========     ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING                            36,280,069  16,534,786    32,583,683      13,914,962
                                       =========== ===========   ===========     ===========

The accompanying notes are an integral part of  these financial statements


</table>
<page>F-2

                            AVALON GOLD CORPORATION
                     (Formerly Iceberg Brands Corporation)
                         (An Exploration Stage Company)
                        INTERIM STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<table>
<caption>

                                                               <c>             <c>              <c>
                                                                                                Cumulative
                                                         Nine Months ended Nine Months ended  from January 1,
                                                             September 30,    September 30,      1996 to
                                                                 2005            2004        September 30,2005
                                                             -----------      -----------      -----------
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss for the Period                                     $(2,031,283)    $(1,327,145)    $(16,475,643)
 Adjustments to reconcile net loss to net cash from
  operating activities:
  - Fees and services paid for with common shares                450,922         642,499        3,330,714
  - stock-based compensation                                     873,710         338,500        1,863,210
  - interest paid for with common shares                               -               -           80,872
  - loss on settlement of debt                                         -          62,000          718,784
  - software development costs paid for with common shares             -               -          600,000
  - non-cash exploration cost                                          -         119,000          119,000
  - write-down of interest in oil and gas properties                   -               -        1,406,000
  - write-down on investment in Legacy Mining Ltd.                     -               -          128,288
  - write-down of interest in ACGT Corporation                         -               -        2,250,937
  - loss on Iceberg Drive Inn Investment                               -               -           85,000
  - non-cash options received in shares                                -               -         (130,000)
  - other non-cash expenses                                            -               -        2,557,382
  - net changes in working capital items                          58,123         (24,064)         324,464
                                                              -----------     -----------      -----------
CASH USED IN OPERATING ACTIVITIES                               (648,528)       (189,210)      (3,149,992)
                                                              -----------     -----------      -----------

CASH FLOWS USED IN INVESTING ACTIVITIES
 Investment in Iceberg Acquistion Corporation                          -               -         (120,000)
 Interest in oil and gas property.                              (966,821)              -       (1,701,755)
                                                              -----------     -----------      -----------
CASH USED IN INVESTING ACTIVITIES                               (966,821)              -       (1,821,755)
                                                              -----------     -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES
 Bank overdraft                                                   (2,187)        108,500                -
 Net proceeds on sale of common stock                          1,790,540               -        3,340,279
 Net proceeds from common stock subscriptions                          -               -          633,000
 Net advances (to) from related parties                          (68,144)        115,931          683,327
 Advances receivable                                                   -               -          420,000
                                                              -----------     -----------      -----------
CASH PROVIDED FINANCING ACTIVITIES                             1,720,209         224,431        5,076,606

INCREASE (DECREASE) IN CASH                                      104,860          35,221          104,860

CASH, BEGINNING OF PERIOD                                              -           2,262               -
                                                              -----------     -----------      -----------
CASH, END OF PERIOD                                           $  104,860     $    37,483      $  104,860
                                                              ===========     ===========      ===========
Supplemental Cash Flow Information (Note 10)

                        The accompanying notes are an integral part of these financial statements
<page>F-3
</table>

                           AVALON ENERGY CORPORATION
                       (Formerly Avalon Gold Corporation)
                         (An Exploration Stage Company)
                     NOTES TO INTERIM FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2005
                                  (Unaudited)


NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

The Company was incorporated as Venture Investments Inc. under the Laws of the
State of Nevada on November 29, 1983.  The Company underwent a name change to
Asdar Group on December 10, 1997, a name change to Precise Life Sciences Ltd. on
April 30, 2002, a name change to Iceberg Brands Corporation on March 3, 2003, a
name change to Avalon Gold Corporation on September 8, 2003 and a name change to
Avalon Energy Corporation on March 22, 2005.  The Company was dormant from 1991
to 1996 and currently has no revenue generating operations.  In accordance with
SFAS #7, the Company was considered a development stage company since January 1,
1996 and as a result of changing its business focus to acquisition and
exploration of resource properties is considered to be an exploration stage
company.

Going Concern

The financial statements have been prepared on the basis of a going concern
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business.  The Company has not generated any revenues or
completed development of any commercially acceptable products or services to
date, has incurred losses of $20,936,276 since inception, and further
significant losses are expected to be incurred in the exploration and
development of its mineral properties.  The Company will depend almost
exclusively on outside capital through the issuance of common shares to finance
ongoing operating losses and to fund the acquisition, exploration and
development of its mineral properties.  The ability of the Company to continue
as a going concern is dependent on raising additional capital and ultimately on
generating future profitable operations.  There can be no assurance that the
Company will be able to raise the necessary funds when needed to finance its
ongoing costs.  These factors raise substantial doubt about the ability of the
Company to continue as a going concern.  The accompanying financial statements
do not include any adjustments relative to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty.

<page>F-4

Unaudited Interim Financial Statements

The accompanying unaudited interim financial statements have been prepared in
accordance with United States generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB of
Regulation S-B. They may not include all information and footnotes required by
United States generally accepted accounting principles for complete financial
statements. However, except as disclosed herein, there has been no material
changes in the information disclosed in the notes to the financial statements
for the year ended December 31, 2004 included in the Company's Annual Report on
Form 10-KSB filed with the Securities and Exchange Commission. The interim
unaudited financial statements should be read in conjunction with those
financial statements included in the Form 10-KSB. In the opinion of Management,
all adjustments considered necessary for a fair presentation, consisting solely
of normal recurring adjustments, have been made. Operating results for the nine
months ended September 30, 2005 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2005.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying financial statements are presented in United States dollars and
are prepared in accordance with accounting principles generally accepted in the
United States.

Use of Estimates and Assumptions

Preparation of the Company's financial statements in conformity with United
States generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

Mineral property costs

Mineral property acquisition, exploration and development costs are expensed as
incurred until such time as economic reserves are quantified.  To date the
Company has not established any proven or probable reserves on its mineral
properties.  The Company has adopted the provisions of SFAS No. 143 "Accounting
for Asset Retirement Obligations" which establishes standards for the initial
measurement and subsequent accounting for obligations associated with the sale,
abandonment, or other disposal of long-lived tangible assets arising from the
acquisition, construction or development and for normal operations of such
assets.  The adoption of this standard has had no effect on the Company's
financial position or results of operations.  As at September 30, 2005, any
potential costs relating to the retirement of the Company's mineral property
interest are not yet determinable.

<page>F-5

Oil and Gas Properties

The Company utilizes the full cost method to account for its investment in oil
and gas properties.  Accordingly, all costs associated with acquisition,
exploration and development of oil and gas reserves, including such costs as
leasehold acquisition costs, capitalized interest costs relating to unproved
properties, geological expenditures, tangible and intangible development costs
including direct internal costs are capitalized to the full cost pool.  As of
September 30, 2005, the Company has no properties with proven reserves.  When
the Company obtains proven oil and gas reserves, capitalized costs, including
estimated future costs to develop the reserves and estimated abandonment costs,
net of salvage, will be depleted on the units-of-production method using
estimates of proved reserves.  Investments in unproved properties and major
development projects including capitalized interest, if any, are not depleted
until proved reserves associated with the projects can be determined.  If the
future exploration of unproved properties are determined uneconomical the amount
of such properties are added to the capitalized cost to be depleted.  As of
September 30, 2005, all of the Company's oil and gas properties were unproved
and were excluded from depletion.  At September 30, 2005, management believes
none of the Company's unproved oil and gas properties were considered impaired.

The capitalized costs included in the full cost pool are subject to a "ceiling
test", which limits such costs to the aggregate of the estimated present value,
using a ten percent discount rate, of the future net revenues from proved
reserves, based on current economic and operating conditions plus the lower of
cost and estimated net realizable value of unproven properties.

Sales of proved and unproved properties are accounted for as adjustments of
capitalized costs with no gain or loss recognized, unless such adjustments would
significantly alter the relationship between capitalized costs and proved
reserves of oil and gas, in which case the gain or loss is recognized in the
statement of operations.

Fair Value of Financial Instruments

The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of SFAS No. 107. Disclosures about Fair
Value of Financial Instruments.  The estimated fair value amounts have been
determined by the Company, using available market information and appropriate
valuation methodologies.  The fair value of financial instruments classified as
current assets or liabilities including bank overdraft and accounts payable
approximate carrying value due to the short-term maturity of the instruments.

<page>F-6

Foreign Currency Translation

The financial statements are presented in United States dollars.  In accordance
with SFAS No. 52, "Foreign Currency Translation", foreign denominated monetary
assets and liabilities are translated to their United States dollar equivalents
using foreign exchange rates which prevailed at the balance sheet date.  Revenue
and expenses are translated at average rates of exchange during the year.
Related translation adjustments are reported as a separate component of
stockholders' equity, whereas gains or losses resulting from foreign currency
transactions are included in results of operations.

Available For Sale Securities

The Company holds marketable equity securities which are available-for-sale and
as such, their carrying value is adjusted to market at the end of each quarter.
As required by SFAS 130, unrealized gains and losses on these investments are
recorded as a component of accumulated other comprehensive income (loss) and are
recorded as a component of net income (loss) when realized.  However, if there
is a permanent decline in the available-for-sale securities, this adjustment is
taken into income in the period.  During 2004 the Company has written its
investment in Legacy Mining Ltd. down to $1 because management has determined
that it is not recoverable within a reasonable period of time.

Stock-Based Compensation

In December 2002, the Financial Accounting Standards Board ("FASB") issued
Financial Accounting Standard No. 148, "Accounting for Stock-Based Compensation
- Transition and Disclosure" ("SFAS No. 148"), an amendment of Financial
Accounting Standard No. 123 "Accounting for Stock-Based Compensation" ("SFAS No.
123").  The purpose of SFAS No. 148 is to: (1) provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation, (2) amend the disclosure
provisions to require prominent disclosure about the effects on reported net
income of an entity's accounting policy decisions with respect to stock-based
employee compensation, and (3) to require disclosure of those effects in
financial information.  The disclosure provisions of SFAS No. 148 were effective
for the Company for the year ended December 31, 2003.

The Company has elected to continue to account for stock options granted to
employees and officers using the intrinsic value based method in accordance with
the provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", ("APB No. 25") and comply with the disclosure
provisions of SFAS No. 123 as amended by SFAS No. 148 as described above.  Under
APB No. 25, compensation expense is recognized based on the difference, if any,
on the date of grant between the estimated fair value of the Company's stock and
the amount an employee must pay to acquire the stock.  Compensation expense is
recognized immediately for past services and pro-rata for future services over
the option-vesting period.  In addition, with respect to stock options granted
to employees, the Company provides pro-forma information as required by SFAS No.
123 showing the results of applying the fair value method using the Black-
Scholes option pricing model.

<page>F-7

The following table illustrates the pro forma effect on net income (loss) and
net income (loss) per share as if the Company had accounted for stock-based
employee compensation using the fair value provisions of SFAS No. 123 using the
assumptions as described in Note8:

                                         September 30, 2005  September 30, 2004
                                           ---------------   -----------------
Net loss                      As reported   $ (1,716,633)     $  (1,327,145)
                                           ---------------   ---------------
SFAS 123 compensation expense   Pro-forma              -          (147,500)
                                Pro-forma     (1,716,633)        (1,474,645)
                                           ===============   ===============
Pro-forma net loss per share
     Basis and fully diluted    Pro-forma   $      (0.05)     $      (0.08)
                                           ===============   ===============

The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than employees in accordance with SFAS No. 123
and the conclusions reached by the Emerging Issues Task Force ("EITF") in Issue
No. 96-18.  Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable.  The value of equity instruments
issued for consideration other than employee services is determined on the
earliest of a performance commitment or completion of performance by the
provider of goods or services as defined by EITF 96-18.

The Company has also adopted the provisions of the Financial Accounting
Standards Board Interpretation No.44, Accounting for Certain Transactions
Involving Stock Compensation - An Interpretation of APB Opinion No. 25 ("FIN
44"), which provides guidance as to certain applications of APB No. 25.

Income Taxes

The Company follows the liability method of accounting for income taxes.  Under
this method, deferred income tax assets and liabilities are recognized for the
estimated tax consequences attributable to differences between the financial
statement carrying values and their respective income tax basis (temporary
differences).  The effect on deferred income tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.


NOTE 3 - AVAILABLE FOR SALE SECURITIES

During 2004, the Company received 2,000,000 restricted Rule 144 shares of Golden
Spirit Minerals Ltd. ("Golden Spirit"), a public company with directors and
significant shareholders in common. The restricted shares were received as non-
refundable consideration pursuant to agreements dated November 10, 2004 and
December 10, 2004 with Golden Spirit. Effective December 31, 2004 the Company
recorded an unrealized loss in the carrying value of its available-for-sale
securities totalling $70,000 which was recorded as other comprehensive loss for
the year.  During the nine-month period ended September 30, 2005 the Company
recorded an additional unrealized loss in the carrying value of its available-
for-sale securities totalling $60,000 which was recorded as other comprehensive
loss for the period.  As at September 30, 2005 the Company owned 2,000,000
shares of Golden Spirit's common stock.

<page>F-9

NOTE 4 - INVESTMENT IN LEGACY MINING LTD.

On December 31, 2003, the Company agreed to settle an outstanding debt
receivable of $122,988 from Legacy Mining Ltd. ("Legacy") for the issue of
1,229,880 restricted shares of Legacy at a value of $0.10 per share representing
a 9.8% interest in Legacy. These restricted shares were issued to the Company on
February 20, 2004.  Legacy is a non-reporting entity with a director in common.
Legacy has applied to NASD for a listing on the pink sheets and intends to
become a fully reporting company in the USA.  The Company has written this
investment down to $1 because management has determined that it is not
recoverable within a reasonable period of time.

NOTE 5 - MINERAL PROPERTIES

LSA Mineral Claims

By Agreement dated January 26, 2004 and subsequent amendments dated March 8,
2004 and August 11, 2004 the Company agreed to acquire a ninety-percent (90%)
interest in seven (7) lode mining claims known as the LSA claims, located in
Lander County, Nevada. The Company issued 1,000,000 restricted common shares
valued at $110,000 and paid $1,000 upon signing the agreement. Under the terms
of the agreement, the Company paid $2,500 by April 26, 2004.  Thereafter, on the
last day of each month from May, 2004 to February, 2005, the Company must pay an
additional $500 in cash.  In addition the Company is still required to issue
$17,500 in restricted shares on September 30, 2005 to earn its ninety-percent
(90%) interest.  As of September 30, 2005, the Company has issued shares valued
at $110,000 and paid $4,500 towards the acquisition which has been recorded as
exploration costs for fiscal 2004 and had received an extension to September 30,
2005 to pay an additional $4,500 in cash and issue the additional share
consideration. As at September 30, 2005, management had decided not to proceed
with its acquisition of the LSA claims.

NOTE 6 - OIL AND GAS PROPERTIES

Oil and gas properties include the following:

	            September 30, December 31,
	               2005	    2004
                  ------------  -------------
Acquisition Costs $ 1,016,823   $  50,002
	          ===========   ============

The Company's oil and gas activities are currently conducted in the United
States. The following costs were incurred in oil and gas operation, development,
exploration, and acquisition activities:

<page>F-10

Harvester Property, California, USA:

The Company owns a 2% royalty interest carried at a nominal value of $1 due to
the uncertainty of realization.

LAK Ranch Oil Project, Wyoming, USA:

The Company owns a 0.7% gross overriding royalty interest on 6,360 acres of oil
and natural gas rights located in the Powder River Basin of eastern Wyoming
carried at a nominal value of $1 due to the uncertainty of realization.

Uinta Basin Property, Utah:

On October 26, 2004, the Company entered into a Letter of Intent with Pioneer
Oil and Gas ("Pioneer"), whereby the Company could acquire an undivided Eighty-
Five Percent (85%) working interest and an undivided Sixty-Eight (68%) net
revenue interest in 13,189 acres located in Wasatch County, Utah, known as the
"Uinta Basin".  The Company paid Pioneer a deposit of $50,000 for the exclusive
right to enter into a Participation Agreement with Pioneer on or before January
18, 2005 ("Exclusivity Period").

As part of the agreement, Pioneer has agreed to provide the Company with 2-D
seismic data crossing the acreage, on a confidential basis. Any additional
seismic that Pioneer or the Company may mutually agree to acquire over the
acreage shall be paid entirely by the Company with the parties owning the data
in the same proportion as their working interest in the acreage. In addition,
the Company will be required to drill an initial test well at a location on the
acreage mutually agreed upon by Pioneer and the Company. The Company will serve
as the Operator in drilling the acreage and must drill the initial well prior to
November 1, 2010.

On November 10, 2004, the Company entered into an agreement with Golden Spirit,
a company with directors in common, to sell a 40% working interest in the Uinta
Basin Lease.  Upon signing of the agreement, Golden Spirit issued 1,000,000
restricted Rule 144 common shares.  On December 10, 2004, the Company granted
Golden Spirit an extension until December 24, 2004 to meet the requirements of
the initial agreement. The Company received an additional non-refundable
1,000,000 restricted Rule 144 common shares valued at $60,000 as consideration
for the extension. In return, Avalon was to issue and deliver 2,000,000 shares
of its common stock to Golden Spirit. The Company did not receive the payment of
US$750,000 and on January 4, 2005 the Company issued a default notice to Golden
Spirit for failure to meet the terms of the agreements which were terminated.
The 2,000,000 restricted Rule 144 common shares are recorded as available for
sale securities (see Note 3).

<page>F-11

On January 18, 2005, the Company entered into the Participation Agreement with
Pioneer as described above.  The total consideration paid to Pioneer was
$706,279.  The Company had previously advanced Pioneer $50,000 as an initial
deposit as described above and the balance of $656,279 was paid to Pioneer to
complete the closing.  In addition, certain third parties were responsible for
tabling the Uinta Basin Overpressured Gas Project to the Company.  The Company
issued 1,200,000 restricted common shares valued at $264,000 on February 7, 2005
to these parties for finders' fees.  The Company has also committed to paying a
1.5% gross royalty on all revenue received by it from the Uinta Basin Project.
(Refer to Note 8 (2)(a) and 8(2)(d)).

The Company shall pay One Hundred Percent (100%) of all costs of drilling the
first two wells drilled on the acreage along with 100% of all costs of logging
or testing the wells.  If either of the first two test wells is deemed a dry
hole, the Company shall pay One

Hundred Percent (100%) of all costs of plugging and abandoning such well(s) and
restoration of the surface upon which the well(s) reached its authorized depth
and completion of all tests deemed necessary by the Operator. If the Company
elects to complete either or both of the first two wells drilled on the acreage,
the Company shall pay One Hundred Percent (100%) of all completion costs through
the tanks along with any costs associated to hook up the well(s) to pipeline for
the well(s) to be capable of producing into a commercial pipeline for sale.

After the first two wells drilled, if productive, are hooked-up to a pipeline
and capable of producing oil and gas in commercial quantities, the Company shall
pay 85% of all costs of operating the first two wells and Pioneer shall pay 15%
of the operation costs of such wells as reflected in their working interest
ownership in such wells.

NOTE 7 - DEFERRED COMPENSATION

On December 13, 2002, the Company entered into an agreement with Advantage
Nevada Corporation, ("Advantage") a private company, with a two and one-half
year term, whereby Advantage will provide consulting services to the Company
(valued at $270,000) in exchange for 562,500 restricted shares of the Company's
common stock.  The consultant will provide such services and advice to the
Company in business development, business strategy and corporate image. In
addition, the consultant will assist the Company in developing, studying and
evaluating acquisition proposals within North America.

On December 13, 2002, the Company entered into an agreement with Asiatic
Management Consultants Ltd., ("Asiatic") a private company controlled by a
significant shareholder, with a two and one-half year term, whereby Asiatic will
provide investment-banking services to the Company (valued at $300,000) in
exchange for 62,500 restricted shares of the Company's common stock. The
investment banker will provide access to investors and ongoing funding for the
Company's investments.

<page>F-12

On December 13, 2002, the Company entered into an agreement with a shareholder,
with a two and one-half year term, whereby the shareholder will provide
consulting services to the Company (valued at $120,000) in exchange for 250,000
restricted shares of the Company's common stock. The consultant will provide
such services and advice to the Company in business development, business
strategy and corporate image. In addition, the consultant will assist the
Company in developing, studying and evaluating acquisition proposals outside of
North America.

On January 15, 2004, the Company entered into an agreement with Y.E.N.N. Asset
Management, ("Y.E.N.N.") a private company, for a two year term, whereby
Y.E.N.N. will provide investment-banking services to the Company (valued at
$54,000) in exchange for 450,000 restricted shares of the Company's common
stock. The investment banker will provide access to investors and ongoing
funding for the Company's investments.

On January 15, 2004, the Company entered into an agreement with Inter-Orient
Investments Ltd., ("Inter-Orient") a private company, for a two year term,
whereby Inter-Orient will provide investor relations services to the Company
(valued at $72,000) in exchange for 600,000 restricted shares of the Company's
common stock. The investor relations individual will provide such services as
researching, editing and generating a company profile, relaying the Company's
business perspectives and distribution of corporate updates, including press
releases.

On October 1, 2004, the Company entered into an agreement with an individual,
with a 1-year term, whereby the individual will provide consulting services to
the Company (valued at $13,000) in exchange for 100,000 restricted shares of the
Company's common stock.

On February 1, 2005, the Company entered into an agreement with Holm Investments
Ltd.,("Holm") a private company, for a two year term, whereby Holm Investments
Ltd. will provide investor relations services to the Company (valued at $55,000)
in exchange for 250,000 restricted shares of the Company's common stock. Holm
Investments Ltd. will provide such services as researching, editing and
generating a company profile, relaying the Company's business perspectives and
distribution of corporate updates, including press releases.

<page>F-13

On May 15, 2005, the Company entered into an agreement with Palisades Financial
Ltd., ("Palisades") a private company, for a two year term, whereby Palisades
will provide investment-banking services to the Company (valued at $56,000) in
exchange for 400,000 restricted shares of the Company's common stock. The
investment banker will provide access to investors and ongoing funding for the
Company's investments, particularly the Uinta Basin project.

The Company has been amortizing the costs of these services over the respective
terms of the contracts.  At September 30, 2005 the unamortized portion of the
deferred compensation totaled $124,040 (December 31, 2004 - $193,462)

NOTE 8 - STOCKHOLDERS'EQUITY

1) Authorized Capital

  200,000,000 Common shares with par value of $0.001 per share

  5,000,000 Convertible Preferred Class A voting capital stock with a par value
  of $0.001 per share

  5,000,000 convertible Preferred Class B non-voting with a par value of $0.001
  per share

2) 2005 Stock Transactions

During the nine months ended September 30, 2005, the Company issued:

  (a) During the quarter ended March 31, 2005, the Company completed a private
      placement and issued 5,950,000 Series A Units at $0.15 per unit for total
      proceeds of $892,500.  Each Series A Unit issued by the Company was
      comprised of (i) one restricted share of the Company's $0.001 par value
      common stock and (ii) a series "A" warrant which will enable the
      subscriber to acquire from the Company one share of the Company's $0.001
      par value common stock at a purchase price of $0.50 per share for a period
      of eighteen months.  A finders' fee of ten percent of the total proceeds
      was paid in the form of 595,000 restricted common shares of the Company,
      valued at $130,900.  In addition, the finder who raised the majority of
      the proceeds will also receive a 1.5% gross royalty of all revenue
      produced by the Uinta Basin project and paid to the Company.  The proceeds
      from the sale of these units were used to meet the terms of the
      Participation Agreement with Pioneer and to provide general working
      capital.

  (b) 6,598,000 common shares pursuant to the Company's 2005 Stock Incentive and
      Option Plan at various prices for proceeds of $946,940;

<page>F-14

  (c) 150,000 restricted common shares valued at $31,000 to two consultants as
      compensation for their appointment to the advisory board;

  (d) A total of 1,200,000 restricted common shares to four parties valued at
      $264,000 for their assistance to the Company in acquiring the Uinta Basin
      project;

  (e) A total of 250,000 restricted common shares for a prepaid investor
      relations services contract valued at $55,000 which was recorded as
      deferred compensation; and

  (f) A total of 400,000 restricted common shares for an investment banking
      service contract valued at $56,000 which was recorded as deferred
      compensation expense. (Refer to Note 7).

  (g) A total of 125,000 restricted common shares previously issued for
      consulting services to be rendered in the amount of $16,250 were cancelled
      and returned to treasury.

3) 2004 Stock Transactions

  (i)   During 2004, the Company issued 1,050,000 restricted common shares for
	investor relations and investment banking service contracts valued at
	$126,000 (Refer to Note 7).
 (ii)   During 2004 the Company issued 1,550,000 shares with a fair value of
	$170,500 in settlement of $88,550 of unpaid consulting fees, $14,350 of
	professional fees and $5,600 in office and administrative salaries. The
	difference of $62,000 has been recorded as a loss on settlement of debt.
 (iii)	During 2004 the Company issued 1,000,000 restricted common shares valued
	at $110,000 towards the acquisition of a mineral property (Refer to Note
	5).
 (iv)	During 2004 the Company issued 2,500,000 shares with a fair value of
	$200,000 in settlement of $161,000 of consulting fees, $17,500 of
	professional fees and $21,500 in office and administrative salaries.
  (v)	On July 9, 2004, a total of 210,000 shares of common stock previously
	issued for consulting services to be rendered in the amount of $19,000
	were cancelled and returned to treasury.
 (vi)	On October 1, 2004, the Company issued 100,000 restricted shares of
	common stock valued at $13,000 pursuant to a one year consulting
	agreement with an individual. The consultant will provide such services
	and advice to the Company in business development and strategy in
	connection with the Company's properties.

<page>F-15

(vii)	On November 24, 2004, a total of 65,000 shares of common stock
	previously issued for the acquisition of a mineral property in the
	amount of $10,500 were cancelled and returned to treasury.

4) Stock Options

  (i)  On January 19, 2005, the Company filed a Registration Statement on Form
       S-8 to cover 5,000,000 shares of common stock to be issued pursuant to
       the Company's 2005 Stock Incentive and Option Plan (the "Plan"). A total
       number of 4,568,000 options were granted to consultants during the
       period, all of which were exercised at various prices for cash proceeds
       of $707,340.  All the options granted were to consultants and for an
       employee which stock compensation expenses totalling $671,110 was
       recorded during the period ended September 30, 2005 representing the fair
       value of the options.  The fair value was estimated using the Black-
       Scholes option pricing model assuming an expected life of 5 years, a
       risk-free interest rate of 3% and expected volatilities ranging from 157%
       to 160%.

 (ii) On June 1, 2005, the Company filed a Registration Statement on Form S-8 to
      cover 4,800,000 shares of common stock to be issued pursuant to the
      Company's Stock Option and Incentive Plan (the "plan.") To date 1,980,000
      options have been granted to consultants during the period, all of which
      were exercised at various prices for cash proceeds of $ 179,300.  All the
      options granted were to consultants and for an employee which stock
      compensation expenses totaling $202,600 was recorded during the period
      ended September 30, 2005 representing the fair value of the options.  The
      fair value was estimated using the Black-Scholes option pricing model
      assuming an expected life of 5 years, a risk-free interest rate of 3% and
      expected volatilities ranging from 157% to 160%.

(iii) The Company's stock option activity is as follows:


<table>

                                           <c>                   <c>
	 	                                                  Weighted
                                              Weighted Average  Average Remaining
                           Number of options   Exercise Price    Contractual Life
                   --------------------------------------------------------------
Balance, December 31, 2003, 	        - 	  $      - 	           -
Granted during 2004	       11,350,000 	     0.08 	     5 years
Exercised during 2004         (11,350,000)	    (0.08)	     5 years
---------------------------------------------------------------------------------
Balance, December 31, 2004	       - 	  $     - 	           -
Granted during 2005	       6,598,000	        - 	     5 years
Exercised during 2005	      (6,598,000)	        - 	     5 years
---------------------------------------------------------------------------------
Balance, September 30, 2005	       - 	  $     - 	           -
=================================================================================
</table>

<page>F-16

NOTE 9 - RELATED PARTY TRANSACTIONS

During the nine months ended September 30, 2005 the Company incurred $22,801
(2004 -$29,256) in management fees to directors. At September 30, 2005 the
Company owes $9,000 in management fees to a director.

During the nine months ended September 30, 2005, the Company incurred $16,934
(2004 - $16,525) in rent and office expenses to a private company controlled by
a shareholder.

During the nine months ended September 30, 2005, the Company incurred $735,786
(2004 - $Nil) in consulting fees to significant shareholders and $18,685 (2004 -
$10,850) in professional fees to an employee.

During the nine months ended September 30, 2005, three companies controlled by
significant shareholders earned $31,711 (2004 - $107,166) and a company
controlled by a shareholder earned $18,336 (2004 - $11,250) from the Company,
pursuant to prepaid services agreements (See note 7).

At September 30, 2005 an amount of $122,678 (2004 - $43,701) is receivable from
Golden Spirit (Refer to Note 3).  These amounts are non-interest bearing and
have no specific terms of repayment.

At September 30, 2005, the following amounts are due to related parties:

		       September 30,2005	December 31, 2004
		       ------------------      -------------------
Employee	             $    -	            $15,381
Director		      9,000		      2,000
Significant Shareholder	     26,780	              9,677
	               -----------------       -------------------
	                    $35,780$	            $27,058
                       =================       ===================
All related party transactions are in the normal course of business and are
measured at the exchange amount, which is the amount of consideration
established and agreed to by the related parties.

<page>F-17


NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION

	                             Nine month           Nine month
	                            period ended         period ended
	                         September 30, 2005	September 30, 2004
                                 ------------------     ------------------
Cash paid during the period for:
	Interest	           $     - 	          $     -
	Income taxes	           $     - 	          $     -

During the nine month period ended September 30, 2005 the Company issued:

-250,000 restricted common shares for prepaid investor relations service
 contracts valued at $55,000 (Refer to Note 7).

-150,000 shares with a fair value of $31,000 in settlement of consulting fees to
 two advisory board members.

-1,200,000 restricted common shares valued at $264,000 as a finder's fee towards
 the acquisition of a mineral property.

-595,000 restricted common shares as a finder's fee towards the private
 placement of 5,950,000 restricted common shares.

-400,000 restricted common shares for a prepaid investment banking service
 contract valued at $56,000 (Refer to Note 7).

-125,000 restricted common shares previously issued for consulting services to
 be rendered in the amount of $16,250 were cancelled and returned to treasury.

During the nine month period ended September 30, 2004, the Company issued:

- 1,050,000 restricted common shares for prepaid investor relations and
  investment banking service contracts valued at $126,000 (Refer to Note 7).

- 1,550,000 shares with a fair value of $170,500 in settlement of $88,550 of
  consulting fees, $14,350 of professional fees and $5,600 in office and
  administrative salaries.

- 1,000,000 restricted common shares valued at $110,000 towards the acquisition
  of a mineral property.

<page>F-18

- 2,500,000 shares with a fair value of $200,000 in settlement of $161,000 of
  consulting fees, $17,500 of professional fees and $21,500 in office and
  administrative salaries.

- 210,000 restricted common shares previously issued for consulting services to
  be rendered in the amount of $19,000 were cancelled and returned to treasury.

- 691,667 restricted common shares for stock options in exchange for outstanding
  consulting fees value at $41,500.

- 1,000,000 restricted common shares for stock options in exchange for
  outstanding consulting fees value at $80,000. These shares were cancelled and
  returned to treasury during the same quarter.

NOTE 11 - CONTINGENCY

On February 21, 2002, the Company issued 350,000 shares valued at $119,000 to
Empire Sterling Corporation for services to be rendered with respect to the
acquisition of ACGT Corporation.  The shares were to be held in trust and not
sold until all necessary financing was in place to complete the ACGT
acquisition. Empire Sterling Corporation breached the trust agreement and the
Company placed a stop transfer on these shares and requested they be returned to
the Company. Empire Sterling Corporation failed to return the share certificate
and as such, the Company commenced court proceedings against the principals of
Empire Sterling Corporation. The Company argued for an interim injunction
against all parties and was successful. On May 9, 2002, the Court ordered Empire
Sterling Corporation to deposit the shares with the Court pending judicial
disposition.  The Company continued to file legal process claiming ownership of
the shares and breach of trust inter alia. The Company was successful and has
now applied to have the share certificates released and subsequently cancelled.
As of September 30, 2005, the Company is still in the process of having the
certificates released.

<page>F-19

ITEM 2. Plan of Operation

THIS FOLLOWING INFORMATION SPECIFIES CERTAIN FORWARD-LOOKING STATEMENTS OF
MANAGEMENT OF THE COMPANY. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT
ESTIMATE THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACT.
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY, SUCH AS "MAY", "SHALL", "WILL", "COULD", "EXPECT", "ESTIMATE",
"ANTICIPATE", "PREDICT", "PROBABLE", "POSSIBLE", "SHOULD", "CONTINUE", OR
SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION HAVE BEEN
COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND
CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE OPERATING RESULTS,
HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY
IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.

THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN
THE FOLLOWING INFORMATION REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT
TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND
OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF DATA
AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS FROM
AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO THE
EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY
FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED
ON THE ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. NO ASSURANCE CAN BE
GIVEN THAT ANY OF THE ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS
SPECIFIED IN THE FOLLOWING INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION
TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS.

Our Background.

Avalon Energy Corporation was formed under the laws of the State of Nevada on
November 29, 1983 under the name Venture Group, Inc. On February 11, 1986, an
amendment to the Articles of Incorporation was filed changing the corporate name
to Asdar Corporation. On December 11, 1987, another amendment to the Articles of
Incorporation was filed changing the corporate name to Asdar Group.  On February
18, 2001, Asdar Group filed a Certificate of Reinstatement with the Secretary of
State of Nevada. On April 30, 2002, another amendment to the Articles of
Incorporation was filed changing the corporate name to Precise Life Sciences
Ltd. Additional amendments to the Articles of Incorporation were filed changing
the corporate name as follows:

                   February 18, 2003 - Iceberg Brands Corporation

                   August 28, 2003   - Avalon Gold Corporation

                   March 22, 2005    - Avalon Energy Corporation

<page>2

Avalon Energy Corporation was originally incorporated to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Nevada.  Avalon Energy Corporation, under former management,
from its inception in 1983 to 1986, was engaged primarily in the acquisition of
controlling equity positions in companies experiencing financial or operating
difficulties.  During 1985 and 1986, Avalon Energy Corporation sold its equity
positions in these companies.

Our Business.

Currently, we own certain interests in oil and gas properties (described more
particularly below) and we are also pursuing opportunities in mineral
exploration and development. As of today, we are in the process of researching
potential partnerships and acquisitions which may complement our new business
direction. There is no guarantee that we will be able to successfully enter into
relationships which will produce revenue.  There is no guarantee that we will
not continue to suffer significant losses in the foreseeable future.

Our Oil and Gas Properties

1. The Wyoming Property. The Company owns a 0.7% gross overriding royalty
interest on 6,360 acres of oil and natural gas rights located in the Powder
River Basin of eastern Wyoming carried at a nominal value of $1 due to the
uncertainty of realization. During the year ended December 31, 2004, there was
no production from the Wyoming property.

In January of 2004, Derek Oil and Gas Corporation (DRKOF :OTC BB) and Ivanhoe
Energy (USA) Inc. (IVAN: NASDAQ SC) have formalized their agreement to jointly
develop the LAK Ranch field using thermal recovery technology.

Based on Avalon's ongoing agreement with respect to the LAK Ranch, if Derek
sells any or all of its interest in the LAK Ranch Property, it will pay to
Avalon, subject to adjustments, 7.5% of the net sales proceeds on the first
USD$7,500,000 and 1% on any balance over and above USD$7,500,000.

Under terms of their agreement, Ivanhoe will become operator and earn a 30-per-
cent working interest in the project by financing the $1.1-million in capital
cost of pilot phase. Following the pilot phase, Ivanhoe has the option to
increase its working interest to 60 per cent by providing an additional $3.9-
million in capital costs toward the initial development phase. After the $5-
million (U.S.) threshold is reached, all future capital expenditures will be
shared on a working-interest basis.

<page>3

In the first quarter of 2004, surface preparations were complete and steaming
operations began. Assuming successful development of the project, the companies
expect to recover between 30 and 70 million barrels of oil using thermal
recovery techniques. There is no assurance that these numbers are achievable
given such factors as fluctuations in world prices for oil, general market
conditions, risks inherent in operations and risks generally associated with
enhanced recovery projects.

The LAK Ranch field, originally discovered in the 1920s, covers approximately
7,500 acres in the Powder River basin. Historically, oil production has been
sporadic from a limited number of wells completed in the Newcastle Sand due to
the abnormally low reservoir temperature in this part of the basin. However, the
oil contains high levels of naphtha and the viscosity should respond
dramatically to the application of heat through steam injection. To date, Derek
has completed SAGD test well pair that was drilled to a depth of 1,000 feet and
1,800 feet horizontally into the Newcastle sand formation. Prior to 2004, more
than 5,000 barrels of oil were recovered in limited preliminary testing. Avalon,
through its predecessor Asdar has received royalty payments from the sale of
every barrel of oil sold to date.

Ivanhoe Energy (USA) Inc. received approval on April 13, 2004 from the Wyoming
Oil and Gas Commission to restart steam flooding of the LAK Field and the
associated environmental monitoring plan.

Ivanhoe, as operator, reports that 13,000 barrels of steam were injected into
the reservoir from late April through the end of May, 2004, using the existing
horizontal production well, Derek 1-P. Approximately 70% of the steam has been
recovered to date and oil cuts are beginning to improve as anticipated. The oil
is high-quality 19-degree API gravity, and contains high levels of naphtha. The
second steam cycle began in July, 2004, using a larger quantity of steam at a
higher pressure to further stimulate oil production. The Wyoming Oil and Gas
Conservation Commission has approved the higher surface injection pressure for
the second cycle. The injection phase of the second round of cyclic steaming at
LAK Ranch has been completed, with about 13,000 barrels of steam having been
injected. As of October 12, about 20% of the load water has been recovered and
some oil production has begun. The performance of the second steaming cycle is
at approximately the same level as Ivanhoe's current reservoir model prediction.
Plans are to continue to produce the well and adjust the model based on the
newly acquired data. Depending on the results of the second steam cycle, a third
steam cycle is planned for late this year or early in 2005. To date the results
of the second steam cycle are positive and are similar to results observed in
other heavy oil steam flood.

<page>4

In November, 2004, the first part of the US$900,000 3-D seismic survey was begun
at LAK Ranch. Some 3,800 receiver stations were surveyed and surveying of the
source point locations was commenced. In December, 2004, Ivanhoe Energy (USA)
Inc. reported the successful completion of the data acquisition phase of the 3D
seismic survey, at the LAK Ranch project in NE Wyoming. The survey has yielded
excellent quality data. Processing and interpretation of the 3D data is underway
and is on course for defining high-resolution targets that should permit
continued development of the LAK Ranch.

Plans have begun for an additional vertical well, located approximately 200 feet
north of the existing horizontal well pair. This well will be used for pressure
and/or temperature monitoring of steam injection and for calibrating the seismic
survey with up-to-date sonic data. The vertical well location has been selected
so that it may be used as a future steam injector. Drilling of the well was
completed in March, 2005.

In addition, Pacific Geotechnical Associates, of Bakersfield, California has
been retained to prepare an independent geologic/reservoir model incorporating
all of the available LAK Ranch Project data. A great deal of this project data
is now available in digital format from Ivanhoe Energy (USA) Inc., the project
operator. New well data and 3-D seismic data will be integrated into the model
as it becomes available.

As of the date of this report, the status of the project is as follows:

OPERATIONS PROGRESS:

Complete:

o 1 Million USD 3-D seismic survey shallow interpretation

o Third steam cycle successfully completed

o Successful meeting with JV partner to discuss Pacific Geotechnical

o Associates, Inc. "PGA" development plan

o Determined next phase commitment to the project

o Selected and agreed upon three upcoming vertical injector well locations

o Clearance from surface owner

o Applications to drill steam injection wells submitted to WOGC

o Located drilling rig

<page>5

Current:

o Negotiate a drill date

o Continued improvement in oil rate response

o 3D seismic results continue to unfold and assist with  further understanding
  of the reservoir values

Upcoming:

o Schedule a drill date

o Drill three vertical injector wells in the agreed upon well locations

o Install steam injection lines

o Continuous steam injection into new injection wells

o Production from horizontal well

The Company has received $502 in oil royalties in 2005.

2. The California Property.

The Company owns a 2% royalty interest in the Harvester Property carried at a
nominal value of $1 due to the uncertainty of realization.

3. The Utah Property.

On October 26, 2004, the Company entered in to a letter of intent with Pioneer
Oil and Gas ("Pioneer"), a Utah Corporation for the exclusive right to enter
into a Participation agreement with Pioneer on or before January 18, 2005. The
Company advanced Pioneer a $50,000 non-refundable deposit and in return was
pledged an exclusivity period to carry out its due diligence with respect to
acquiring certain overpressured gas leases in the Uinta Basin, Utah.

On January 18, 2005, the Company entered into a Participation Agreement with
Pioneer to acquire an undivided Eighty-Five Percent (85%) working interest and
an undivided Sixty-Eight (68%) net revenue interest in 13,189 acres located in
Wasatch County, Utah, known as the "Uinta Basin".

<page>6

The Company had an independent title search conducted on the acreage involved in
the Participation Agreement and determined that Pioneer had good and marketable
title to the leases. As such, on January 18, 2005, the Participation Agreement
was duly signed and the balance of $656,279 was delivered to Pioneer to complete
the closing. The total consideration paid to Pioneer to acquire the 13,189 acres
was $706,279.

In addition, certain non-related parties were responsible for tabling the Uinta
Basin Over-pressured Gas Project to the Company.  The Company issued 1,200,000
restricted common shares valued at $264,000 on February 7, 2005 to these parties
for their efforts resulting in the acquisition of 13,189 acres in Wasatch
County, Utah.

As part of the agreement, Pioneer has agreed to provide the Company with 2-D
seismic data crossing the acreage, on a confidential basis. Any additional
seismic that Pioneer or the Company may mutually agree to acquire over the
acreage shall be paid entirely by the Company with the parties owning the data
in the same proportion as their working interest in the acreage. In addition,
the Company will be required to drill an initial test well at a location on the
acreage mutually agreed upon by Pioneer and the Company. The Company will serve
as the Operator in drilling the acreage and must drill the initial well prior to
November 1, 2010.

The Company shall pay One Hundred Percent (100%) of all costs of drilling the
first two wells drilled on the  acreage along with 100% of all costs of logging
or testing the wells.  If either of the first two test wells is deemed a dry
hole, the Company shall pay One Hundred Percent (100%) of all costs of plugging
and abandoning such well(s) and restoration of the surface upon which the
well(s) reached its authorized depth and completion of all tests deemed
necessary by the Operator.

If the Company elects to complete either or both of the first two wells drilled
on the acreage, the Company shall pay One Hundred Percent (100%) of all
completion costs through the tanks along with any costs associated to hook up
the well(s) to pipeline for the well(s) to be capable of producing into a
commercial pipeline for sale.  If the Company does not wish to participate in an
attempted completion of a well, the Company shall so notify Pioneer within
Twenty-Four (24) hours (excluding Saturday, Sunday and legal holidays) after
reaching Casing Point and all electric logs have been received, at which time
the provisions of Article VI of the Operating Agreement shall govern such
completion attempt.

After the first two wells are drilled and if productive are hooked-up to a
pipeline and capable of producing oil and gas in commercial quantities, the
Company shall pay 85% of all costs of operating the first two wells and Pioneer
shall pay 15% of the operation costs of such wells as reflected in their working
interest ownership in such wells.

<page>7

Subsequent wells drilled after the first two wells on the Contract Acreage shall
require Pioneer to either farmout its interest on a well by well basis under
Article VI herein or participate or not participate for its interest in the well
pursuant to the provisions contained in the Operating Agreement.

On November 10, 2004, the Company entered into an agreement with Golden Spirit
Mining Ltd., ("Golden Spirit") a company with directors in common, to sell a 40%
working interest in the Uinta Basin Lease.  Upon signing of the agreement,

Golden Spirit issued 1,000,000 restricted Rule 144 common shares  valued at
$70,000 as a non-refundable deposit to the Company. Golden Spirit had a right to
acquire the 40% working interest in the gas lease upon the Company receiving a
payment of US$750,000 on or before December 10, 2004. Upon receiving the
$750,000, the Company was required to to pay Pioneer $706,279 to acquire its 85%
interest. On December 10, 2004, the Company granted Golden Spirit an extension
until December 24, 2004 to meet the requirements of the initial agreement. The
Company received an additional non-refundable 1,000,000 restricted Rule 144
common shares valued at $60,000 as consideration for the extension. In return,
Avalon will issue and deliver 2,000,000 shares of its common stock to Golden
Spirit. The Company did not receive the payment of US$750,000 and on January 4,
2005 the Company issued a default notice to Golden Spirit for failure to meet
the terms of the agreements which were terminated. The 2,000,000 restricted Rule
144 common shares are recorded as available for sale securities.

The Company has spent $920,279 in acquisition costs and $32,730 in development
costs on the Uinta property to date. The Company is currently receiving
quotations for a seismic survey and an environmental impact study.

Our Mineral Properties - LSA Mineral Claims, Nevada.

By Agreement dated January 26, 2004 and subsequent amendments dated March 8,
2004 and August 11, 2004 the Company agreed to acquire a ninety-percent (90%)
interest in seven (7) lode mining claims known as the LSA claims, located in
Lander County, Nevada. The Company issued 1,000,000 restricted common shares
valued at $110,000 and paid $1,000 upon signing the agreement. Under the terms
of the agreement, the Company paid $2,500 by April 26, 2004.  Thereafter, on the
last day of each month from May, 2004 to February, 2005, the Company must pay an
additional $500 in cash.  In addition the Company is still required to issue
$17,500 in restricted shares on June 30, 2005 to earn its ninety-percent (90%)
interest.  As of September 30, 2005, the Company has issued shares valued at
$110,000 and paid $4,500 towards the acquisition which has been recorded as
exploration costs for fiscal 2004 and had received an extension to September 30,
2005 to pay an additional $4,500 in cash and issue the additional share
consideration. As at September 30, 2005, management has decided not to proceed
with its acquisition of the LSA claims.

<page>8

Available for sale securities

During 2004, the Company received 2,000,000 restricted Rule 144 shares of Golden
Spirit Gaming Ltd. ("Golden Spirit"), a public company with directors and
significant shareholders in common. The restricted shares were received as non-
refundable consideration pursuant to agreements dated November 10, 2004  and
December 10, 2004 with Golden Spirit. Effective December 31, 2004 the Company
recorded an unrealized loss in the carrying value of its available-for-sale
securities totalling $60,000 which was recorded as other comprehensive loss for
the year.  During the nine-month period ended September 30, 2005 the Company
recorded an additional unrealized loss in the carrying value of its available-
for-sale securities totalling $70,000 which was recorded as other comprehensive
loss for the period.  As at September 30, 2005 the Company owned 2,000,000
shares of Golden Spirit's common stock.

Our Investment in Legacy Mining Ltd. On December 31, 2003, the Company agreed to
settle $122,988 of its receivable

from Legacy Mining Ltd. ("Legacy") for the issue of 1,229,880 restricted shares
of Legacy at a value of $0.10 per share representing a 9.8% interest in Legacy.
These restricted shares were issued to the Company on February 20, 2004. Legacy
is a non-reporting entity with a director in common with the Company. Legacy has
applied to NASD for a listing on the pink sheets and intends to become a fully
reporting company in 2005. The Company has written this investment down to $1 as
of December 31, 2004 because management has determined that it is not
recoverable within a reasonable period of time.

Liquidity and Capital Resources.

For the nine months period ended September 30, 2005, we had total assets of
$1,306,174, including cash of $104,860, taxes recoverable of $1,812 and prepaid
expenses of nil.  We have  $1,016,823 invested in oil and gas properties, which
is represented by $1,016,821 for 13,189 acres of gas leases located in Utah,$1
for an oil and gas interest located in Wyoming and $1 for an oil and gas
interest located in San Joaquin, California.  We have available for sale
securities with a fair value of $60,000 as at September 30, 2005, a long-term
investment in Legacy Mining Ltd. recorded at a nominal value of $1 and a long-
term receivable from Golden Spirit Gaming Ltd. at cost of $122,678. The
increase in assets was primarily due the acquisition of the Uinta Basin property
in Utah.

<page>9

At September 30, 2005, we had current liabilities of $63,576, which was
represented by accounts payable and accrued liabilities of $27,796 and $35,780
due to related parties. At December 31, 2004 we had current liabilities of
$45,733. The increase in liabilities was due to an increase in funds due to
related parties and an increase in accounts payable.  At September 30, 2005, we
had a working capital of $43,096 (2004 $41,105).

We do not believe that our current cash resources will be able to maintain our
current operations for an extended period of time.   We will be required to
raise additional funds or arrange for additional financing over the next 12
months to adhere to our development schedule.  No assurance can be given,
however, that we will have access to additional cash in the future, or that
funds will be available on acceptable terms to satisfy our working capital
requirements. If we are not able to arrange for additional funding or if our
officers, directors and shareholders stop advancing funds to us, we may be
forced to make other arrangements for financing such as loans or entering into
strategic alliances. We have not identified any alternative sources of
financing.

Results of Operations

We have not yet realized any revenue from operations to date. During the nine-
month period ended September 30, 2005 the loss from operations is $2,031,283
(2004 $1,327,145).  This increase in the loss was due to an increase in stock
based compensation expenses and consulting expenses.

The cash and equivalents constitute our present internal sources of liquidity.

Because we are not generating any significant revenues, our only external source
of liquidity is the sale of our capital stock and any advances from officers,
directors or shareholders.

Our Plan of Operation for the Next Twelve Months.

We anticipate that we will need to raise additional capital within the next 12
months in order to continue as a going concern.  Such additional capital may be
raised through additional public or private financings, as well as borrowings
and other resources.  To the extent that additional capital is raised through
the sale of equity or equity- related securities, the issuance of such
securities could result in dilution of our stockholders.  There can be no
assurance that additional funding will be available on favorable terms, if at
all.  If adequate funds are not available within the next 12 months, we may be
required to curtail our operations significantly or to obtain funds through
entering into arrangements with collaborative partners or others that may
require us to relinquish rights to certain of our assets that we would not
otherwise relinquish.

<page>10

Avalon Energy Corporation does anticipate some expenditures within the next 12
months for its new acquisition in the Uinta Basin, Utah that should not affect
its liquidity. Avalon will be seeking quotes on performing seismic on its
acreage and it will also be seeking quotes on the cost of an environmental
impact study requested by the regulatory authorities in Utah. Avalon will be
seeking drilling permits in Utah and will incur costs towards an environmental
study with respect to its 13,189 acres. However, if Avalon decides to undertake
a drilling program on its Uinta Basin leases, it will be required to raises
significant funding to drill. It is estimated that drilling one well in the
Uinta Basin requires $3,000,000 to $5,000,000 USD, depending on the depth of the
well. The Company may elect to raise funds for potential drilling through equity
financing or possible joint venture partnerships. Avalon Energy Corporation does
not anticipate any significant mineral exploration costs within the next 12
months, nor does the Avalon Energy Corporation anticipate that it will lease or
purchase any significant equipment within the next 12 months. Avalon Energy
Corporation does not anticipate a significant change in the number of its
employees within the next 12 months.

In July 2005, based on a Well Development Report by Oso Energy Corporation, an
engineering consulting firm based out of Durango, Colorado, it has been
identified that the cost to drill each well would be at least $9,500,000 USD to
a depth of about 16,000 feet.  Management has retained surveyors, based on their
availability, to conduct appropriate work required for a 2-D seismic line.

ITEM 3. Controls and Procedures

a) Evaluation of Disclosure  Controls and Procedures.  Our Chief Executive
Officer, and Chief Financial Officer, have  performed  an  evaluation  of  the
Company's   disclosure   controls  and procedures, as that term is defined in
Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as of September 30, 2005 and each has concluded that such  disclosure
controls and procedures are effective to ensure that  information  required to
be disclosed in our periodic  reports filed under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified by the
Securities and Exchange Commission's rules and forms.

(b) Changes in Internal Controls. There were no changes in the Company's
internal controls or in other factors that could  affect these controls
subsequent to the date of the evaluation.

Code of Ethics:

We intend to adopt a code of ethics in 2005 that applies to our principle
executive officer, principal  financial officer, principle accounting officer or
controller, other persons  performing similar functions.  We intend to post the
text of our code of ethics on our website in connection with our "Investor
Relations" materials.  In addition, we intend to promptly disclose (1) the
nature of any amendment to our code of ethics that applies to our principle
executive officer principal  financial officer, principle accounting officer or
controller, other persons  performing similar functions (2) the nature of any
wavier, including an implicit wavier, from a provision of our code of ethics
that is granted to one of these specific officers, the name of such person who
is granted the waiver and the date of the waiver on our web site in the future.

We do not currently have a code of ethics as this is a new regulatory
requirement and we are examining the various form and contents of other
companies written code of ethics, discussing the merits and meaning of a code of
ethics to determine the best form for our Company.

<page>11

                          PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

On February 21, 2002, the Company issued 350,000 shares valued at $119,000 to
Empire Sterling Corporation for services to be rendered with respect to the
acquisition of ACGT Corporation.  The shares were to be held in trust and not
sold until all necessary financing was in place to complete the ACGT
acquisition. Empire Sterling Corporation breached the trust agreement and the
Company placed a stop transfer on these shares and requested they be returned to
the Company. Empire Sterling Corporation failed to return the share certificate
and as such, the Company commenced court proceedings against the principals of
Empire Sterling Corporation. The Company argued for an interim injunction
against all parties and was successful. On May 9, 2002, the Court ordered Empire
Sterling Corporation to deposit the shares with the Court pending judicial
disposition.  The Company continued to file legal process claiming ownership of
the shares and breach of trust inter alia. The Company was successful and has
now applied to have the share certificate released and subsequently cancelled.
As of September 30, 2005, the Company is still in the legal process of having
the certificate released.

Item 2. Changes in Securities.

2005 StockTransactions

During the quarter ended September 30, 2005, the Company issued

(i)  On January 19, 2005, the Company filed a Registration Statement on Form S-8
     to cover 5,000,000 shares of common stock to be issued pursuant to the
     Company's 2005 Stock Incentive and Option Plan (the "Plan"). A total number
     of 4,568,000 options were granted to consultants  and an employee during
     the period, all of which were exercised at various prices for cash proceeds
     of  $707,340.

(ii) On June 1, 2005, the Company filed a Registration Statement on Form S-8 to
     cover 4,800,000 shares of common stock to be issued pursuant to the
     Company's Stock Option and Incentive Plan (the "plan.") To date 1,980,000
     options have been granted to consultants during the period, all of which
     were exercised at various prices for cash proceeds of $ 179,300.

A total of 125,000 restricted common shares previously issued for consulting
services to be rendered in the amount of $16,250 were cancelled and returned to
treasury.

2004 Stock Transactions

(i)   During 2004, the Company issued 1,050,000 restricted common shares for
      investor relations and investment banking service contracts valued at
      $126,000 .

<page>12

(ii)  During 2004 the Company issued 1,550,000 shares with a fair value of
      $170,500 in settlement of $88,550 of unpaid consulting fees, $14,350 of
      professional fees and $5,600 in office and administrative salaries. The
      difference of $62,000 has been recorded as a loss on settlement of debt.

(iii) During 2004 the Company issued 1,000,000 restricted common shares valued
      at $110,000 towards the acquisition of a mineral property .

(iv)  During 2004 the Company issued 2,500,000 shares with a fair value of
      $200,000 in settlement of $161,000 of consulting fees, $17,500 of
      professional fees and $21,500 in office and administrative salaries.

(v)   On July 9, 2004, a total of 210,000 shares of common stock previously
      issued for consulting services to be rendered in the amount of $19,000
      were cancelled and returned to treasury.

(vi)  On October 1, 2004, the Company issued 100,000 restricted shares of common
      stock valued at $13,000 pursuant to a one year consulting agreement with
      an individual. The consultant will provide such services and advice to the
      Company in business development and strategy in connection with the
      Company's properties.

(vii) On November 24, 2004, a total of 65,000 shares of common stock previously
      issued for the acquisition of a mineral property in the amount of $10,500
      were cancelled and returned to treasury.

Item 3. Defaults Upon Senior Securities.

None.

Item 4.  Submission of Matters to Vote of Security Holders

None.

Item 5.  Other Information

A. Security Ownership of Management

The following table sets forth information as of September 30, 2005 with respect
to the ownership of our common stock by each director and by all officers and
directors as a group.

                                            Amount and Nature of   Percent of
Title of Class  Name of Beneficial Owner      Beneficial Owner        Class
------------------------------------------------------------------------------
Common Stock     Robert Klein
                 4540 Woodgreen Place
                 West Vancouver, B.C., Canada     50,000              0.14 %
                 V7S 2V6

Common Stock	 Carlton Parfitt
                 #2025 -1358 W. Georgia Street
                 Vancouver, B.C.  V7T 1A8         50,000              0.14 %


<page>13

Directors' Compensation.

During the nine months ended September 30, 2005, the Company incurred $22,801
(2004 -$29,256) in management fees to two directors. At September 30, 2005 the
Company owes $9,000 in management fees to one director.

Changes in Directors.

1. RESIGNATION OF REGISTRANT'S DIRECTORS:

On May 17, 2005, the Company accepted the resignation of  Carlton Parfitt as
President and Chief Executive Officer of the Company. The resignation was not
motivated by a disagreement with the Company on any matter relating to the
Company's operations, policies or practices.

<page>13

On May 17, 2005, the Company accepted the resignation of  Robert Klein as
Secretary, Treasurer and Chief Financial Officer of the Company. The resignation
was not motivated by a disagreement with the Company on any matter relating to
the Company''s operations, policies or practices.

2. APPOINTMENT OF REGISTRANT'S OFFICERS AND DIRECTORS:

On May 17, 2005, Robert Klein was appointed President and Chief Executive
Officer of the Company

On May 17, 2005, Carlton Parfitt was appointed Secretary, Treasurer  and Chief
Financial Officer of the Company.

Stock Based Compensation. During the nine months ended September 30, 2005
$873,710 (2004 - $338,500) in stock based compensation was recorded in our
financial statements.  Stock based compensation is an estimate of the intrinsic
value placed in respect to stock options granted to officers, directors,
employees and an estimate of the fair value of stock options granted to
consultants using the Black-Scholes option pricing model We do expect further
stock based compensation in 2005.

<page>14


B. Security Ownership of Certain Beneficial Holders of ten percent or more


                                            Amount and Nature of   Percent of
Title of Class  Name of Beneficial Owner      Beneficial Owner        Class
------------------------------------------------------------------------------
Common Stock	CEDE & Co.
                The Depository Trust Co.
                P.O. Box 222 Bowling Green Station
                New York, New York 10274	    23,089,358       70.12 %

C. Certain Relationships and Related Party Transactions

During the nine months ended September 30, 2005 the Company incurred $22,801
(2004 -$29,256) in management fees to directors. At September 30, 2005 the
Company owes $9,000 in management fees to a director.

During the nine months ended September 30, 2005, the Company incurred $16,934
(2004 -$16,525) in rent and office expenses to a private company controlled by a
shareholder.

During the nine months ended September 30, 2005, the Company incurred $735,786
(2004 -$Nil) in consulting fees to significant shareholders and $18,685 (2004 -
$10,850) in professional fees to an employee.

<page>14

During the nine months ended September 30, 2005, three companies controlled by
significant shareholders earned $31,711 (2004 - $107,166) and a company
controlled by a shareholder earned $18,336 (2003 - $11,250) from the Company,
pursuant to prepaid services agreements

At September 30, 2005 an amount of $122,678 (2004 - $43,701) is receivable from
Golden Spirit.  These amounts are non-interest bearing and have no specific
terms of repayment.

At September 30, 2005, the following amounts are due to related parties:

		         September 30, 2005	December 31, 2004
			--------------------   -------------------
Employee	                  $     -	     $ 15,381
Director		            9,000		2,000
Significant Shareholder		   26,780	        9,677
	               --------------------   --------------------
	                         $ 35,780            $ 27,058
	               ====================   ====================

<page>15

D.  	Description of Property

Property held by the Company.  As of the dates specified in the following table,
we held the following property in the following amounts:

                                    September 30,    December 31,   December 31,
       Cash and Cash Equivalents        2005	        2004           2003
       -------------------------     ---------      -----------   -------------
      	            Total	    $ 104,860 	     $ (2,187)	     $ 2,262
                                     ========       ==========    =============
 We define cash equivalents as all highly liquid investments with maturity of 3
months or less when purchased.   We do not presently own any interests in real
estate or own any inventory or equipment.

Item 6.  Exhibits and Reports on Form 8-K

Index to Exhibits

(i)	Exhibits

31.1	Rule 13a-14(a) Certification of Robert Klein, President
        and Chief Executive Officer

31.2    Rule 13a-14(a) Certification of Carlton Parfitt,
        Chief Financial Officer

32.1    Certification Pursuant to 18 U.S.C. Section 1350 of Robert Klein.

32.2    Certification Pursuant to 18 U.S.C. Section 1350 of Carlton Parfitt.


Reports on Form 8-K: -None-



SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, we
have duly caused this Quarterly Report on Form 10-QSB to be signed on our behalf
by the undersigned; thereunto duly authorized, in the City of Vancouver, British
Columbia, Canada, on November 14, 2005.

Avalon Energy Corporation

a Nevada Corporation

By:      /s/ Robert Klein
    	------------------
    	Robert Klein

Its:     President

<page>16