**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**








**[
                X ]**
            **ANNUAL
                REPORT UNDER SECTION 13 0R 15(****d****)
                OF THE SECURITIES EXCHANGE ACT OF
                1934**





For
      the
      fiscal year ended  **December
      31, 2002**





**[ 
                ]**
            **TRANSITION
                REPORT UNDER SECTION 13 0R 15(****d****)
                OF THE SECURITIES EXCHANGE ACT OF
                1934**





For
      the
      transition period from__________ to___________





Commission
      file number  **000-27753**








**BREK
                ENERGY CORPORATION**(Name
                of Small Business Issuer in its
                charter)








Incorporated
                in the State of Nevada
              (State
                or other jurisdiction of incorporation or organization)
            **98-0206979**
              (I.R.S.
                Employer Identification No.)Third
                Floor, 346 Kensington High Street, London, UK
              (Address
                of principal executive offices)
            W14
                8NS
              (Zip
                Code)





Issuer’s
      telephone number: **011-44-20-7371-6668**








Securities
      registered pursuant to Section 12(b) of the Act:


**Title
                of each class**
            **Name
                of each exchange on which registered**None
            N/A








Securities
      registered pursuant to Section 12(g) of the Act:








**shares
                of common stock****-
                $0.001 par value**(Title
                of Class)





Indicate
      by check mark whether the issuer (1) filed all reports required to be filed
      by
      Section 13 or 15(d) of the Exchange Act during the last 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 if disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. **[  
      ]**




***Page
          - 1***





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


**[  
      ] Yes [ X ] No**





State
      issuer’s revenues for its most recent fiscal year.   $
      nil




State
      the
      aggregate market value of the voting and non-voting common equity held by **non-affiliates** computed
      by reference to the price at which the common equity was sold, or the average
      bid and asked price of such common equity, as of a specified date within the
      past 60 days: **$5,298,019
      as of December 31, 2002 ($0.25 close)**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date.





**Class**
            **Outstanding
                at December 31, 2002**shares
                of common stock - $0.001 par value
            26,560,037





Documents
      incorporated by reference: Exhibit 3.1 (Amended and Restated Articles of
      Incorporation) filed on May 14, 2002 as an Exhibit to Brek’s Form 10-K/A (Annual
      Report); Exhibit 3.2 (By-laws) filed on October 21, 1999 as an Exhibit to Brek’s
      Form 10 (Registration Statement); Exhibit 4.1 (1999 Employee Stock Option /
      Warrant Plan) filed on September 11, 2000 as an Exhibit to Brek’s Form S-8
      (Registration Statement); Exhibit 4.2 (Rights Agreement) filed on March 6,
      2002
      as an Exhibit to Brek’s Form 8-K (Current Report); Exhibit 4.3 (2001 Employee
      Stock Option / Warrant Plan) filed on July 10, 2002 as an Exhibit to Brek’s Form
      S-8 (Registration Statement); Exhibit 10.1 (Stock Purchase Agreement) filed
      on
      March 29, 2000 as an Exhibit to Brek’s Form 10-KSB (Annual Report); Exhibit 10.2
      (Stock Purchase Agreement) filed on September 18, 2002 as an attached Exhibit
      to
      Brek’s Form 10-K/A (Annual Report); Exhibit 10.3 (Purchase Agreement) filed on
      July 31, 2002 as an Exhibit to Brek’s Form 8-K (Current Report); Exhibit 10.4
      (Share Purchase Agreement); and Exhibit 10.5 (License Agreements).





Transitional
      Small Business Disclosure Format (Check one): **Yes [  ] No [ x ]**





***Page
          - 2***


**PART
      I**





**Item
      1.**  **Description
      of Business.**





**(a)**
            **Business
                Development**





Brek
      Energy Corporation is a Nevada corporation in the oil and gasbusiness.
      Brek was in the business of developing electronic paymentprocessing
      systems from its inception until July 2001 when it acquiredshares
      in
      Gasco Energy, Inc., an oil and gas exploration company. In July2002,
      Brek exchanged its shares in Gasco for a leasehold interest in 25% of


Gasco’s
        undeveloped properties in Utah, Wyoming and California, which it owns
        and
        operates through subsidiaries, and sold its electronic payment processing
        subsidiary. Since then, Brek has focused on the development of its
        natural gas and oil properties. On March 12, 2002, Brek acquired shares
        in
        Vallenar Energy Corp., an oil and gas exploration company. On June
        28,
        2002, Brek increased its shareholding in Vallenar to 51.53%. See “Business
        of Brek” and “Management’s Discussion and Analysis or Plan of Operations”
        below for more information.
  Brek
        has
        an authorized capital of 300,000,000 shares of common stock with a par
        value
        of $0.001 of which 59,498,090 shares are issued and outstanding.




Neither
      Brek nor any of its subsidiaries have been involved in any bankruptcy,
      receivership or similar proceedings. There have been no material
      reclassifications, mergers, consolidations or purchases or sales of a
      significant amount of assets not in the ordinary course of Brek’s
      business.





**(b)**
            **Business
                of Brek**





Brek
      is a
      natural gas and petroleum exploitation, development, and production company
      engaged in the acquisition, operation and development of unconventional
      hydrocarbon prospects, primarily in the Rocky Mountain region. Brek, through
      its
      subsidiaries, conducts its principal business, which is (1) the acquisition
      of
      leasehold interests in petroleum and natural gas rights, either directly or
      indirectly, and (2) the exploitation and development of properties subject
      to
      these leases. Brek is currently focusing on drilling efforts in the Riverbend
      Project located in the Unita Basin of northeastern Utah, targeting the Wasatch,
      Mesaverde and Blackhawk formations. See “Item 2. Description of Property” below
      for more information.





Brek
      is
      also the majority owner of Vallenar Energy Corp., an oil and gas company with
      a
      strategy of structuring and developing an economically viable enhanced oil
      recovery operation focusing on oil and gas projects located in Texas. See “Item
      2. Description of Property” below for more information.





Brek
      is
      in the early stages of development and has insufficient operating history on
      which to base an evaluation of its business and prospects. Any such evaluation
      must be made in light of the risks frequently encountered by companies in their
      early states of development, particularly for companies in high risk sectors
      such as natural gas and oil. Brek’s longer term ability to emerge from the
      development stage depends upon its natural gas and oil properties proving
      sufficient reserves and if sufficient reserves are proved, bringing these
      properties into production.





***Page
          - 3***











**Products
      and Services**





The
      discovery of natural gas or oil and the ability to produce either one in
      commercial quantities is very speculative. Even assuming that Brek obtains
      the
      necessary financing for drilling, if Brek or its operator does not discover
      and
      produce commercial quantities of natural gas or oil, it will not have any
      products or services to offer and its business could fail. The principal uses
      for natural gas and oil are heating, manufacturing, power, and
      transportation.





Natural
      gas will be gathered through connections between Brek’s natural gas wells and
      the pipeline transmission system. Natural gas sales are by contract, and Brek,
      through its operator, will enter into a contract with the natural gas company
      that will purchase most of the natural gas produced in the area. Natural gas
      purchasers pay well operators 100% of the sale proceeds of natural gas on or
      about the 25th of each month for the previous month’s sales. The operator is
      responsible for all distributions to the working interest and royalty owners.
      There is no standard price for natural gas and prices will fluctuate with the
      seasons and the general market conditions.





Brek
      primarily produces natural gas, and also produces condensate (oil). During
      the
      fiscal year ended December 31, 2002, Brek did not produce any product. When
      Brek
      begins producing natural gas and condensate from its properties, it intends
      to
      sell its product to purchasers in the geographic area of the properties. Natural
      gas, after processing, will be distributed through pipelines. Brek will
      recognize revenue from the sale of natural gas when it reaches the customer’s
      point of purchase in the gas transmission system. The amount Brek recognizes
      for
      each well will be based on the percentage of Brek’s net revenue interest in the
      well, and the remainder will be allocated to other persons holding a net revenue
      interest.





**Market**





Brek
      will
      derive its revenue principally from the sale of natural gas. As a result, Brek’s
      revenues will be determined, to a large degree, by prevailing natural gas
      prices. Brek intends to sell the majority of its natural gas on the open market
      at prevailing market prices. The market price for natural gas is dictated by
      supply and demand, and Brek cannot accurately predict or control the price
      it
      receives for its natural gas.





The
      market for natural gas and oil production is regulated by both the state and
      federal governments. The overall market is mature and, with the exception of
      natural gas, all producers in a producing region will receive the same price.





The
      availability of a ready market for any natural gas or oil produced by Brek
      depends on numerous factors beyond the control of management, including but
      not
      limited to, the extent of domestic production and imports of oil, the proximity
      and capacity of natural gas pipelines, the availability of skilled labor,
      materials and equipment, the effect of state and federal regulation of natural
      gas and oil production, and federal regulation of natural gas sold in interstate
      commerce. Natural gas and oil produced by Brek or its operator in Utah will
      be
      sold to various purchasers who service the areas where Brek’s wells are located.
      During the fiscal year ended December 31, 2002, Brek’s wells were not subject to
      any agreements that prevented Brek from either selling its production on the
      spot market or committing such gas to a long-term contract; however, there
      can
      be no assurance that Brek will have ready access to suitable markets for its
      future natural gas and oil production.





The
      marketability of Brek’s natural gas is not expected to pose a problem for Brek.
      Natural gas can be easily sold wherever it may be produced in the States that
      Brek operates subject to the transportation cost. However, if or when Brek
      starts producing natural gas it could be difficult to sell since transportation
      requires a pipeline. In the areas that Brek is presently pursuing new drilling
      activity for natural gas, other companies have been delayed up to a year because
      of the unavailability of a pipeline. No assurance can be given that natural
      gas
      wells drilled by Brek or its operator will be placed on line within a year
      after
      the well is drilled and completed.





**Distribution
      Methods of Products and Services**





Natural
      gas will be delivered to the purchaser via gathering lines into the main gas
      transmission line. Management anticipates that Brek’s products will be sold to
      any number of purchasers in the area of its properties, however, no assurance
      can be given that Brek will be able to make such sales or that if it does,
      it
      will be able to receive a price that is sufficient to make its operations
      profitable.





**Competition**





Brek’s
      natural gas and oil exploration activities take place in a highly competitive
      and speculative business atmosphere. In seeking suitable natural gas and oil
      properties for acquisition, Brek competes with a number of other companies
      operating in its areas of interest, including large oil and gas companies and
      other independent operators with greater financial resources. Management does
      not believe that Brek’s competitive position in the natural gas and oil industry
      will be significant .




***Page
          - 4***





Competition
      in the natural gas and oil exploration industry also exists in the form of
      competition to acquire the most promising acreage blocks and obtaining the
      most
      favorable prices for transporting the product. Brek is relatively small compared
      to other natural gas and oil exploration companies and may have difficulty
      acquiring additional acreage or projects, and may have difficulty arranging
      for
      the transportation of product, if Brek is successful in its exploration
      efforts.





The
      natural gas industry is very competitive, particularly with respect to the
      acquisition of drilling rigs and natural gas exploration services from
      independent contractors. Brek
      anticipates a tight market for obtaining drilling rigs and services, and the
      manpower to run them. The current high level of drilling activity in Brek’s
      areas of exploration may have a significant adverse impact on the timing and
      profitability of Brek’s operations. In addition, Gasco Energy, Inc., the
      operator on the properties, will be required to obtain drilling permits for
      its
      wells, and there is no assurance that such permits will be available in a timely
      manner or at all.





The
      price
      of natural gas is affected by continuous shifts in supply and demand and is
      controlled by domestic and world markets. Natural gas is becoming the preferred
      source of energy over other fossil fuels because it is an environmentally
      friendlier source of energy. The demand for natural gas is increasing and
      whether or not their will be an adequate supply is very uncertain. Numerous
      well-established companies are focusing significant resources on exploration.
      These companies may be able to compete more effectively than Brek. Due to these
      factors, Brek expects competition to intensify in the natural gas industry
      in
      general and for the acquisition of drilling rigs and natural gas exploration
      services from independent contractors





**Government
      Controls and Regulations**





Brek,
      or
      a venture in which it participates, will be required to obtain local government
      and other permits for drilling oil or gas wells.





Brek
      and
      its operators are subject to stringent federal, state, and local laws and
      regulations governing the discharge of materials into the environment or
      otherwise relating to environmental protection. These laws and regulations
      may
      require the acquisition of permits before drilling commences, limit or prohibit
      operations on environmentally sensitive lands such as wetlands or wilderness
      areas, result in capital expenditures to limit or prevent emissions or
      discharges, and place restrictions on the management of wastes. Failure to
      comply with these laws and regulations may result in the assessment of
      administrative, civil and criminal penalties, the imposition of remedial
      obligations, and the issuance of injunctive relief. Any changes in environmental
      laws and regulations that result in more stringent and costly waste handling,
      disposal or cleanup requirements could have a material adverse effect on our
      operations. While management believes that Brek and its operators are in
      substantial compliance with current environmental laws and regulations and
      that
      continued compliance with existing requirements would not materially affect
      Brek, there is no assurance that this trend will continue in the
      future.





The
      Comprehensive Environmental Response, Compensation and Liability Act, as
      amended, also known as “ **CERCLA** ”
or
      “ **Superfund** ”,
      and
      comparable state laws impose liability without regard to fault or the legality
      of the original conduct, on certain classes of persons who are considered to
      be
      responsible for the release of a hazardous substance into the environment.
      Under
      CERCLA, these “ **responsible
      persons** ”
may
      be
      subject to joint and several liability for the costs of cleaning up the
      hazardous substances that have been released into the environment, for damages
      to natural resources, and for the costs of certain health studies, and it is
      not
      uncommon for neighboring landowners and other third parties to file claims
      for
      personal injury and property damage allegedly caused by the release of hazardous
      substances into the environment.





Brek
      also
      may incur liability under the Resource Conservation and Recovery Act, also
      known
      as “ **RCRA** ”,
      which
      imposes requirements relating to the management and disposal of solid and
      hazardous wastes. While there exists an exclusion from the definition of
      hazardous wastes for “drilling fluids, produced waters, and other wastes
      associated with the exploration, development, or production of crude oil,
      natural gas or geothermal energy”, in the course of Brek’s operations, Brek may
      generate ordinary industrial wastes, including paint wastes, waste solvents,
      and
      waste compressor oils that may be regulated as hazardous waste.





Brek
      currently owns or leases, through its operators, properties that for a number
      of
      years have been used for the exploration and production of natural gas and
      oil.
      Although Brek and its operators have utilized operating and disposal practices
      that were standard in the industry at the time, hydrocarbons or other wastes
      may
      have been disposed of or released on or under the properties owned or leased
      by
      Brek or on or under other locations where such wastes have been taken for
      disposal. In addition, some of these properties may have been operated by third
      parties whose disposal or release of hydrocarbons or other wastes was not under
      Brek’s control. These properties and the wastes disposed thereon may be subject
      to CERCLA, RCRA, and analogous State laws. Under such laws, Brek could be
      required to remove or remediate previously disposed wastes or property
      contamination or to perform remedial operations to prevent future
      contamination.




***Page
          - 5***





The
      Federal Water Pollution Control Act of 1972, as amended, also known as the
      “ **Clean
      Water Act** ”
and
      analogous State laws impose restrictions and strict controls regarding the
      discharge of pollutants, including produced waters and other oil and natural
      gas
      wastes, into state or federal waters. The discharge of pollutants into regulated
      waters is prohibited, except in accord with the terms of a permit issued by
      EPA
      or the state. The Clean Water Act provides civil and criminal penalties for
      any
      discharge of oil in harmful quantities and imposes liabilities for the costs
      of
      removing an oil spill.





The
      Clean
      Air Act, as amended (the “ **CAA** ”),
      restricts the emission of air pollutants from many sources, including natural
      gas and oil operations. New facilities may be required to obtain permits before
      work can begin, and existing facilities may be required to incur capital costs
      in order to remain in compliance. In addition, more stringent regulations
      governing emissions of toxic air pollutants are being developed by the EPA,
      and
      may increase the costs of compliance for some facilities.





Under
      the
      National Environmental Policy Act (the “ **NEPA** ”),
      a
      federal agency, in conjunction with a permit holder, may be required to prepare
      an environmental assessment or a detailed environmental impact statement, also
      known as an “ **EIS** ”
before
      issuing a permit that may significantly affect the quality of the environment.
      Brek or its operators are currently in negotiations with the U.S. Bureau of
      Land
      Management or “ **BLM** ”
      regarding the preparation of an EIS in connection with certain proposed
      exploration and production operations in the Uinta Basin of Utah. Brek expects
      that the EIS will take approximately 18 to 24 months to complete. Until the
      EIS
      is completed and issued by the BLM, Brek will be limited in the number of
      natural gas and oil wells that it or its operator can drill in the areas
      undergoing EIS review. While Brek does not expect that the EIS process will
      result in a significant curtailment in future natural gas and oil production
      from this particular area, Brek can provide no assurance regarding the outcome
      of the EIS process.





Brek
      and
      its subsidiaries are in compliance with the foregoing legislation and will
      continue to comply with the legislation in the future. Management believes
      that
      compliance with the foregoing legislation will not adversely affect Brek’s
      business operations in the future or its competitive position.





**Effect
      of Existing or Probable Governmental Regulations on Brek’s
      Business**





Brek’s
      business is subject to various levels of government controls and regulations,
      which are supplemented and revised from time to time, including various laws
      and
      regulations of the United States, the State of Utah, the State of Wyoming,
      the
      State of California, the State of Texas, and the municipalities in which it
      operates that govern the exploration, development and production of natural
      gas
      and oil. Brek will have to abide and follow the procedures established by the
      entities in those jurisdictions. For instance, the Texas Railroad Commission
      determines all procedures and regulations that concern oil and natural gas
      exploration and production activities in the State of Texas. Brek is unable
      to
      predict what additional legislation or revisions may be proposed that might
      affect its business or when any such proposals, if enacted, might become
      effective. Such changes, however, could require increased capital and operating
      expenditures and could prevent or delay certain operations by Brek or one of
      its
      subsidiaries.





**Dependence
      on One or a Few Major Customers**





During
      the fiscal year ended December 31, 2002, Brek did not have any natural gas
      sales. When Brek has sales Brek will not have any customers as any sales will
      be
      handled by the operator of the properties. The natural gas to be sold by Brek
      is
      a commodity desired by many companies and Brek or its operator are frequently
      contacted regarding the sale of its products. At anytime Brek may be selling
      10%
      or more of its natural gas to one purchaser, such a purchaser is not material
      to
      Brek since if that purchaser fails to purchase Brek’s natural gas for any reason
      Brek can readily sell the natural gas to another party at a price close to
      what
      was paid by the former purchaser.





**Patents/Trade
      Marks/Licences/Franchises/Concessions/Royalty Agreements or Labour
      Contracts**





Neither
      Brek nor its subsidiaries currently own any patents or trade marks. Also, they
      are not party to any license or franchise agreements, concessions, royalty
      agreements or labor contracts arising from any patents or trade
      marks.





Brek’s
      web site is copyrighted upon loading. www.brekenergy.com is a
      registered domain name of Brek. Brek and its subsidiaries will seek further
      trademark protection for any associated domain names.





**Estimate
      of Research and Development Costs**





Brek
      did
      not perform any research activities in the past two fiscal years ended 2002
      and
      2001. Brek spent $529,906 and $nil on exploration and development activities
      during the two fiscal years ended 2002 and 2001 respectively. Also, Brek did
      not
      spend any funds on geological and economical evaluations of its properties
      during the same time period.




***Page
          - 6***





**Number
      of Total Employees and Number of Full Time Employees**





As
      of
      December 31, 2002, Brek had one full time employee and no part time
      employees.





**RISK
      FACTORS**





Brek
      is
      in the development stage and an investment in Brek’s business involves a high
      degree of risk. You should consider each of the following risk factors and
      the
      other information in this Annual Report, including Brek’s financial statements
      and the related notes, in evaluating Brek’s business and prospects. The risks
      and uncertainties described below are not the only ones that impact on Brek’s
      business. Additional risks and uncertainties not presently known to Brek or
      that
      Brek currently considers immaterial may also impair its business operations.
      If
      any of the following risks actually occur, Brek’s business and financial results
      could be harmed. In that case, the trading price of Brek’s shares of common
      stock could decline.





**Risks
      associated with Brek’s business and properties:**





1.Brek is
        a
        development stage company and may not be able to continue as a going concern
        and
        may not be able to raise additional financing.





A
      note
      provided by Brek’s independent auditors in Brek’s financial statements for the
      period from inception, September 16, 1998, through December 31, 2002 contains
      an
      explanatory note that indicates that Brek is a development stage company and
      its
      ability to continue as a going concern and to emerge from the development stage
      is dependent on continued financial support from its shareholders, raising
      additional capital to fund future operations, and ultimately to attain
      profitable business operations.





Brek
      has
      a working capital deficiency and has accumulated losses since inception. These
      factors raise substantial doubt about Brek’s ability to continue as a going
      concern. To date there has been no significant revenue. In a development stage
      company, management devotes most of its activities to developing a market for
      its products and services. These consolidated financial statements have been
      prepared on a going concern basis, which implies that Brek will continue to
      realize its assets and discharge its liabilities in the normal course of
      business. Brek has not generated significant revenue and has never paid any
      dividends. Brek is unlikely to pay dividends or generate significant earnings
      in
      the immediate or foreseeable future. There is no guarantee that Brek will be
      able to raise any equity financing or generate profitable operations. As of
      December 31, 2002, Brek had a working capital deficit of $1,376,726 and had
      accumulated losses of $61,080,323 since its inception. These factors raise
      substantial doubt regarding Brek’s ability to continue as a going
      concern.





This
      note
      may make it more difficult for Brek to raise additional equity or debt financing
      needed to run its business and is not viewed favorably by analysts or investors.
      Brek urges potential investors to review this report before making a decision
      to
      invest in Brek.





**2.**  **Brek
      has
      a limited operating history and has losses that it expects will continue into
      the future, which may prevent Brek achieving success. If the losses continue,
      Brek will have to suspend operations or cease
      operations.**




Brek
      has
      a limited operating history upon which an evaluation of its future success
      or
      failure can be made. You should be aware of the difficulties normally
      encountered by new natural gas exploration companies similarly situated to
      Brek
      and the high rate of failure of such enterprises. Many of these risks and
      uncertainties are described in more detail elsewhere in this “Risk Factors”
section. Brek’s likelihood of success must be considered in light of the
      problems, expenses, difficulties, complications and delays encountered in
      connection with the exploration of the properties that Brek plans to undertake.
      These potential problems include, but are not limited to, unanticipated problems
      relating to exploration, and additional costs and expenses that may exceed
      current estimates. You should consider the likelihood of Brek’s future success
      to be highly speculative in view of its limited operating history, as well
      as
      the complications frequently encountered by other companies in the early stages
      of development. If Brek realizes problems, additional costs, difficulties,
      complications or delays in connection with its exploration activities, it will
      have a material adverse effect on its business operations, results of operations
      and financial condition, and as a result, its business could suspended or
      fail.





Brek
      has
      incurred significant operating losses since inception and has limited financial
      resources to support it until such time that it is able to generate positive
      cash flow from its business operations. As of December 31, 2002, Brek’s net loss
      since inception on September 16, 1998 was $61,080,323. During the 12 months
      ended December 31, 2002, operating expenses increased by $21,983,937. Based
      upon
      its plan of operations for 2003, Brek expected to incur $17,500 per month in
      operating losses for those next 18 months. This will happen because there are
      expenses associated with the proposed natural gas and oil exploration programs
      on its properties. See “Management Discussion and Analysis” on page 21 for more
      details.




***Page
          - 7***





Brek
      cannot guaranty that it will be successful in generating revenues in the future
      or that it will be able to raise any working capital for operating funds.
      Failure to generate revenues or raise any financing may cause Brek to suspend
      or
      cease operations.





Brek’s
      ability to achieve and maintain profitability and positive cash flow is
      dependent upon its ability to generate revenues from its planned business
      operations and to reduce development costs. Without the generation of any
      revenues or any capital being raised in an equity or debt financing, Brek will
      run out of operating funds in one month.





**3.**  ****Brek
      has limited control over activities on properties that Brek does not operate
      and
      depends on Gasco Energy, Inc. to manage, drill and operate the wells, which
      could negatively impact on the exploration and development of Brek’s properties
      and on Brek’s business operations.****





Substantially
      all of Brek’s business operations are conducted through joint operating
      agreements under which Brek owns partial interests in natural gas and oil
      properties. If Brek does not operate the properties in which it owns an
      interest, Brek does not have control over normal operating procedures,
      expenditures or future development of underlying properties. The failure of
      an
      operator of Brek’s wells to adequately perform operations, or an operator’s
      breach of the applicable agreements, could reduce Brek’s production and revenues
      and have a negative impact on Brek’s business operations. The success and timing
      of Brek’s drilling and development activities on properties operated by others
      therefore depends upon a number of factors outside of Brek’s control, including
      the operator’s timing and amount of capital expenditures, expertise and
      financial resources, inclusion of other participants in drilling wells, and
      use
      of technology. Because Brek does not have a majority interest in most wells
      that
      Brek does not operate, Brek may not be in a position to remove the operator
      in
      the event of poor performance .





**4.**  ****Brek’s
      partners and third party operators could suffer financial hardship, which could
      negatively impact on the exploration and development of Brek’s
      properties.****





Liquidity
      and cash flow problems encountered by Brek’s partners or the co-owners of Brek’s
      properties may prevent or delay the drilling of a well or the development of
      a
      project. Brek’s partners and working interest co-owners may be unwilling or
      unable to pay their share of the costs of projects as they become due. In the
      case of a farm-out partner, Brek would have to find a new farm-out partner
      or
      obtain alternative funding in order to complete the exploration and development
      of the prospects subject to the farm-out agreement. In the case of a working
      interest owner, Brek could be required to pay the working interest owner’s share
      of the project costs. Brek cannot assure you that it would be able to obtain
      the
      capital necessary to fund either of these contingencies or that Brek would
      be
      able to find a new farm-out partner.





**5.**  ****The
      exploration and development of Brek’s oil & gas properties require
      substantial capital, which Brek may not be able to obtain, which in turn could
      lead to a loss of Brek’s interest in certain oil & gas properties and a
      decline in Brek’s natural gas and oil
      reserves.****





Brek’s
      current operating funds are less than necessary to complete Brek’s proposed oil
& gas exploration programs, and therefore Brek will need to obtain
      additional financing in order to complete each of the proposed oil & gas
      exploration programs. As of December 31, 2002, Brek had cash in the amount
      of
      $3,801. In 2002, Brek had limited operations and had no income. Brek’s natural
      gas and oil exploration programs call for significant expenses in connection
      with the exploration of the respective natural gas and oil properties. As of
      December 31, 2002, Brek did not have sufficient funds to maintain its interest
      in its natural gas and oil properties and for ongoing administrative expenses
      and needs to raise additional funds to participate in all of its current
      exploration programs on the natural gas and oil properties.





Brek
      has
      relied in the past primarily on the sale of equity capital to fund working
      capital and the acquisition of its prospects and related leases. Failure to
      generate operating cash flow or to obtain additional financing could result
      in
      substantial dilution of its property interests, or delay or cause indefinite
      postponement of further exploration and development of its prospects with the
      possible loss of its oil & gas properties.





Brek
      will
      require significant additional capital to fund its future activities and to
      service current and any future indebtedness. In particular, Brek faces
      uncertainties relating to its ability to generate sufficient cash flows from
      operations to fund the level of capital expenditures required for its natural
      gas and oil exploration and production activities and its obligations under
      various agreements with third parties relating to exploration and development
      of
      certain prospects. Brek’s failure to find the financial resources necessary to
      fund its planned activities and service its debt and other obligations could
      adversely affect Brek’s ability to continue as a going concern.




***Page
          - 8***





Brek
      can
      provide no assurance that it will be able to find the required capital.
      Obtaining additional and acceptable financing would be subject to a number
      of
      factors, including the market prices for natural gas and oil, investor
      acceptance of Brek’s natural gas and oil properties, and investor sentiment.
      These factors may make the timing, amount, terms or conditions of the financing
      unavailable and unacceptable to Brek. The most likely source of future capital
      presently available to Brek is through the sale of equity capital. However,
      any
      sale of share capital will result in dilution to existing shareholders. The
      only
      other anticipated alternatives for the financing of Brek’s proposed natural gas
      and oil exploration programs exploration would be private loans or the offering
      by Brek of an interest in its natural gas and oil properties to be earned by
      another party or parties carrying out further exploration thereof, which is
      not
      presently contemplated.





**6.**  **Brek’s
      and its operator’s ability to market and transport the natural gas and oil that
      is discovered on Brek’s properties is essential to Brek’s business operations,
      but is subject to certain requirements.**





Several
      factors beyond Brek’s control may adversely affect its ability to market the
      natural gas and oil that it discovers. These factors include the proximity,
      capacity and availability of natural gas and oil pipelines and processing
      equipment, market fluctuations of prices, taxes, royalties, land tenure,
      allowable production, and environmental protection. The extent of these factors
      cannot be accurately predicted, but any one or a combination of these factors
      may result in Brek’s inability to sell its natural gas and oil at prices that
      would result in an adequate return on Brek’s invested capital.





**7.**  **As
      a result of substantially all of Brek’s producing properties are located in the
      Rocky Mountains, Brek is vulnerable to certain risks associated with primarily
      operating in one geographical area.**





All
      of
      Brek’s future production is anticipated to be located in, the Rocky Mountain
      Region of the United States. The natural gas prices other companies in the
      Rocky
      Mountain region have received and are currently receiving are at a discount
      to
      natural gas prices in other parts of the United States. The natural gas prices
      other companies in the Rocky Mountain region will receive in the future may
      also
      be at a discount to natural gas prices in other parts of the United States.
      Factors that can cause price volatility for natural gas and crude oil within
      this region are:





•
the
      availability of gathering systems with sufficient capacity to handle local
      production;


•
      seasonal fluctuations in local demand for production;


•
local
      and national gas storage capacity;


•
      interstate pipeline capacity; and


•
the
      availability and cost of gas transportation facilities from the Rocky Mountain
      region.





**8.**  **Brek’s
      business operations could negatively be impacted if there is a shortage of
      supplies, equipment and personnel for the exploration and development on Brek’s
      properties.**





Brek’s
      ability to conduct operations in a timely and cost effective manner depends
      on
      the availability of supplies, equipment and personnel. The natural gas and
      oil
      industry is cyclical and experiences periodic shortages of drilling rigs,
      supplies and experienced personnel. Shortages can delay operations and
      materially increase operating and capital costs, which could negatively impact
      on Brek’s business operations and financial position.





**9.**  **Seasonal
      weather conditions and lease stipulations adversely affect Brek’s ability to
      conduct drilling activities in some of the areas where its properties are
      located.**





Natural
      gas and oil operations in the Rocky Mountains are adversely affected by seasonal
      weather conditions and lease stipulations designed to protect various wildlife.
      In certain areas, including the Uinta Basin, drilling and other natural gas
      and
      oil activities can only be conducted during the spring and summer months. This
      limits Brek’s or its operator’s ability to operate in those areas and can
      intensify competition during those months for drilling rigs, oil field
      equipment, services, supplies and qualified personnel, which may lead to
      periodic shortages. These constraints and the resulting shortages or high costs
      could delay Brek’s or its operator’s operations and materially increase Brek’s
      operating and capital costs.





**10.**  **Brek
      may suffer losses or incur liability for events that Brek or the operator of
      a
      property have chosen not to insure against.**





Although
      management believes the operator of any property in which Brek may acquire
      interests will acquire and maintain appropriate insurance coverage in accordance
      with standard industry practice, Brek may suffer losses from uninsurable hazards
      or from hazards, which Brek or the operator have chosen not to insure against
      because of high premium costs or other reasons. Brek may become subject to
      liability for pollution, fire, explosion, blowouts, cratering and oil spills
      against which Brek cannot insure or against which Brek may elect not to insure.
      Such events could result in substantial damage to natural gas and oil wells,
      producing facilities and other property and personal injury. The payment of
      any
      such liabilities may have a material adverse effect on Brek’s financial position
      and business operations.




***Page
          - 9***





**11.**  **Brek
      may not be able manage growth of its business operations effectively, which
      could result in a negative impact on Brek’s business operations and financial
      condition.**





If 
      Brek is unable to manage growth effectively, its business, financial condition,
      and results of operations condition will be negatively affected. Because of
      Brek’s small size, growth in accordance with its plan of operations, if
      achieved, will place a significant strain on its financial, technical,
      operational and management resources. As Brek expands its activities and
      increases the number of projects it is evaluating or in which it participates,
      there will be additional demands on Brek’s financial, technical and management
      resources. Brek’s systems, procedures or controls may not be adequate to support
      its business operations and Brek’s management may not be able to achieve the
      execution necessary to successfully implement Brek’s plan of operations. The
      failure to continue to upgrade its technical, administrative, operating and
      financial control systems or the occurrence of unexpected expansion
      difficulties, including the recruitment and retention of experienced managers,
      geoscientists and engineers, could have a negative impact on Brek’s business,
      financial condition, and results of operations and its ability to timely execute
      its plan of operations.





**Risks
      associated with Brek’s industry:**





**12.**  **Due
      to the speculative nature of natural gas exploration, there is substantial
      risk
      that Brek will be unable to locate commercial quantities of natural gas, which
      in turn will negatively impact Brek’s business operations.**




The
      search for commercial quantities of natural gas as a business is extremely
      risky. The properties may not contain commercially exploitable quantities of
      natural gas. The exploration expenditures to be made by Brek may not result
      in
      the discovery of commercial quantities of natural gas. Problems such as unusual
      or unexpected formations and other conditions are involved in natural gas
      exploration and often result in unsuccessful exploration efforts. Brek may
      not
      be able to discover and produce commercial quantities of natural gas from its
      properties. If Brek does not discover and produce commercial quantities of
      natural gas, it will not have any products or services to offer and its business
      could fail.





**13.**  **The
      natural gas and oil markets are volatile markets that have a direct impact
      on
      Brek’s revenues and profits and the market conditions will effect whether Brek
      will be able to continue its operations.**




Brek’s
      revenues, operating results, cash flow and future rate of growth are very
      dependent upon prevailing prices for natural gas and oil. Historically, natural
      gas and oil prices and markets have been volatile and not predictable, and
      they
      are likely to continue to be volatile in the future. Prices for natural gas
      and
      oil are subject to wide fluctuations in response to relatively minor changes
      in
      the supply of and demand for natural gas and oil, market uncertainty and a
      variety of additional factors that are beyond our control,
      including:








•
      political conditions in both natural gas and oil producing and exporting
      countries


•
the
      supply and price of both domestic and foreign natural gas and oil


•
the
      worldwide and regional demand for energy


•
the
      effect of domestic and foreign government regulation of production and
      transportation


•
the
      price and availability of alternative energy sources


•
weather
      conditions


•
acts
      of
      war, terrorism and vandalism


•
market
      manipulation




Lower
      natural gas and oil prices may not only decrease Brek’s revenues on a per unit
      basis but also may reduce the amount of natural gas and oil that Brek can
      produce economically. A substantial or extended decline in natural gas and
      oil
      prices may materially and adversely affect Brek’s business operations, financial
      condition, and ability to finance planned capital expenditures.





**14.**  **Competition
      in the** **natural
      gas and oil industry is intense and Brek may not be able to compete effectively
      with its competitors.**





Brek’s
      ability to acquire additional natural gas and oil properties and develop new
      and
      existing properties in the future will depend on its ability to conduct
      operations, to evaluate and select suitable properties, to attract qualified
      personnel, and to consummate transactions in this intensely competitive
      environment. Brek
      competes with other natural gas and oil companies and other independent
      operators possessing greater financial resources and technical facilities than
      Brek in connection with the acquisition of natural gas and oil properties and
      in
      connection with the recruitment and retention of qualified personnel. There
      is
      significant competition for the limited number of natural gas and oil
      opportunities and, as a result, Brek may be unable to acquire an interest in
      attractive natural gas and oil exploration properties on terms it considers
      acceptable on a continuing basis. Brek
      also
      competes for the equipment and labor required to operate and to develop natural
      gas and oil properties. Management believes that Brek’s competitive position in
      the natural gas and oil industry is significant at this time.




***Page
          - 10***





Also,
      larger competitors may be able to absorb the burden of any changes in federal,
      state and local laws and regulations more easily than Brek can, which would
      adversely affect Brek’s competitive position. Also, these competitors may be
      able to pay more for natural gas and oil properties and may be able to define,
      evaluate, bid for and acquire a greater number of properties than Brek can.
      In
      addition, some of Brek’s competitors have been operating in the natural gas and
      oil industry for a much longer time than Brek and have demonstrated the ability
      to operate through industry cycles.





**15.**  **Brek
      is subject to complex laws and regulations, including environmental regulations,
      which could negatively impact the business operations and financial condition
      of
      Brek.**





Development,
      production and sale of natural gas and oil in the United States are subject
      to
      extensive laws and regulations, including environmental laws and regulations.
      Brek may be required to make large expenditures to comply with environmental
      and
      other governmental regulations. Matters subject to regulation
      include:





•
      location and density of wells


•
the
      handling of drilling fluids and obtaining discharge permits for drilling
      operations


•
      emissions into the environment


•
      accounting for and payment of royalties on production from state, federal and
      Indian lands


•
bonds
      for ownership, development and production of natural gas and oil
      properties


•
      transportation of natural gas and oil


•
storage
      and disposition of hazardous waste


•
      operation of wells and reports concerning operations


•
      taxation





Under
      the
      various complex laws and regulations, Brek could be liable for personal
      injuries, property damage, oil spills, discharge of hazardous materials,
      remediation and clean-up costs and other environmental damages. Failure to
      comply with these laws and regulations also may result in the suspension or
      termination of Brek’s operations and subject Brek to administrative, civil and
      criminal penalties. Moreover, these laws and regulations could change in ways
      that substantially increase Brek’s costs. Accordingly, any of these liabilities,
      penalties, suspensions, terminations or regulatory changes could negatively
      impact Brek’s business operations and financial condition.





**16.**  **The
      natural gas and oil industry involves numerous uncertainties and operating
      risks
      that could negatively impact Brek’s business operations and financial
      condition.**





Brek’s
      development, exploitation and exploration activities may be unsuccessful for
      many reasons, including weather, cost overruns, equipment shortages and
      mechanical difficulties. Moreover, the successful drilling of a natural gas
      well
      or an oil well does not ensure a profit on investment. A variety of factors,
      both geological and market-related, can cause a well to become uneconomical
      or
      only marginally economical. In addition to their cost, unsuccessful wells can
      impede Brek’s efforts to replace reserves.





The
      natural gas and oil business involves a variety of operating risks,
      including:


•
      fires


•
      explosions


•
      blow-outs and surface cratering


•
      uncontrollable flows of oil, natural gas, and formation water


•
natural
      disasters, such as adverse weather conditions


•
pipe,
      cement, or pipeline failures


•
casing
      collapses


•
      embedded oil field drilling and service tools


•
      abnormally pressured formations


•
      environmental hazards, such as natural gas leaks, oil spills, pipeline ruptures,
      and discharge of toxic gases




***Page
          - 11***





If
      Brek
      or its operators experience any of these problems, it could affect well bores,
      gathering systems and processing facilities, which could adversely affect Brek’s
      or the operator’s ability to conduct operations. Brek could also incur
      substantial losses as a result of:


•
injury
      or loss of life


•
severe
      damage to and destruction of property, natural resources, and
      equipment


•
      pollution and other environmental damage


•
      clean-up responsibilities


•
      regulatory investigation and penalties


•
      suspension of business operations


•
repairs
      to resume business operations





Brek
      does
      not carry business interruption insurance at levels that would provide enough
      funds for it to continue operating without access to other funds. For some
      risks, Brek may not obtain insurance if management believes the cost of
      available insurance is excessive relative to the risks presented. In addition,
      pollution and environmental risks generally are not fully insurable. If a
      significant accident or other event occurs and is not fully covered by
      insurance, it could negatively impact Brek’s business operations enough to force
      Brek to cease business operations.





**Risks
      associated with Brek and its subsidiaries:**





**17.**  **Brek’s
      stock price is volatile and may fluctuate, which will have a direct impact
      on
      your investment in Brek.**





The
      stock
      markets in general, and the stock prices of natural gas and oil companies in
      particular, have experienced extreme volatility that often has been unrelated
      to
      the operating performance of any specific public company. Brek’s stock price may
      be impacted by factors that are unrelated or disproportionate to its operating
      performance and the
      trading price of Brek’s shares of common stock may not be an accurate reflection
      of their value . The
      market price of Brek’s common stock may fluctuate significantly in response to a
      number of factors, some of which are beyond Brek’s control, such as interest
      rates, increased competition, general economic, political and market conditions, recessions,
      or changes in government regulations, including environmental
      regulations ,
      and
      some of which are within Brek’s control, such as actual
      or
      anticipated variations in Brek’s operating
      results, announcements of new projects and properties, new customers,
      acquisition of potential natural gas and oil entities and prospects, Brek’s
      ability or inability to generate new revenues ,
      and
      results of exploration and development. These
      market fluctuations may adversely affect the market price of Brek’s shares of
      common stock.





**18.**  **A
      small number of Brek’s stockholders own a substantial amount of Brek’s shares of
      common stock, and if such stockholders were to sell those shares in the public
      market within a short period of time, the price of Brek’s shares of common stock
      could drop significantly.**





Because
      a small
      number of Brek’s stockholders own a substantial amount of Brek’s shares of
      common stock, those shareholders will be able to significantly decide who will
      be directors and any other stockholders may not be able to elect any directors.
      Also, sales of a large number of shares of Brek’s shares of common stock or even
      the availability of a substantial number of shares of common stock for sale
      could have the effect of reducing the price per share of Brek’s common stock,
      especially if the shares of common stock continue to be thinly
      traded.





As
      of
      December 31, 2002, there were 26,560,037 shares of common stock issued and
      outstanding, with 13,892,076 shares of common stock of Brek that were freely tradeable and
      5,367,961 shares that were subject to Rule 144. The remaining 7,300,000 shares
      of common stock were restricted from trading. As of December 31, 2002, there
      were 1,843,682 share purchase warrants exercisable into one share of common
      stock each. Also, as of December 31, 2002, there were 1,630,000 stock options
      outstanding, exercisable into one share of common stock each, and there were
      an
      additional 3,320,000 stock options that could be granted under Brek’s 2001 Stock
      Option Plan. If all the share purchase warrants and all the granted options
      were
      exercised, the number of issued and outstanding shares of common stock would
      increase by 3,473,682 shares to 30,033,719 shares of common stock.





**19.**  **A
      change of control of Brek can be delayed, impeded or effected by the directors
      and management, who collectively own 10.7% of the outstanding shares or by
      the
      implementation of Brek’s rights agreement by the board of directors.**




As
        of
        December 31, 2002, Brek’s
        directors and management owned an aggregate of 2,832,961 shares of common
        stock
        and as a result have the ability to influence the vote for a change of voting
        control of Brek or the vote to approve or reject any offer for the purchase
        and
        sale of Brek’s assets.
  Also,
          upon the happening of certain events, the board of directors could vote
          to
          implement Brek’s rights agreement, which would delay, impede or effect a change
          in control of Brek or could impede a merger, consolidation, takeover or
          other
          business combination involving Brek or discourage a potential acquirer
          from
          making a tender offer or otherwise attempting to obtain control of
          Brek **.** See
“Dividends” on page 18 and Exhibit 4.2 - Rights Agreement for more
          details.




***Page
          - 12***





**20.**  **Brek
      may not be able to attract and retain qualified personnel necessary for the
      implementation of its plan of operations and exploration
      programs.**





Brek’s
      current management is inexperienced in operating a natural gas and oil business.
      Brek may need to hire or retain qualified management, employees or consultants
      with expertise in natural gas and oil exploration and development. Brek’s
      success depends on its ability to attract, retain and motivate qualified
      personnel. Key personnel represent a significant asset, and the competition
      for
      these personnel is intense in the natural gas and oil industry. Brek does not
      maintain key person life insurance on any of its personnel. The loss of one
      or
      more of its key employees or its inability to attract, retain and motivate
      qualified personnel could negatively impact Brek’s ability to implement its plan
      of operations and to complete its natural gas and oil programs.





**21.**  **Brek’s
      officers and directors have conflicts of interest in that they are officers
      and
      directors of other companies that will prevent them from devoting full-time
      to
      Brek’s business operations, which may negatively impact on Brek’s business
      operations.**





Brek’s
      officers and directors have conflicts of interest in that they are officers
      and
      directors of other companies. Management’s other activities will prevent them
      from devoting full-time to Brek’s business operations. This will impede Brek’s
      growth and business operations and may reduce its financial results because
      of
      the slow down in operations.





**22.**  **Brek
      has not and does not expect to pay dividends in the foreseeable
      future.**





Brek
      has
      never paid cash dividends on its shares of common stock and has no plans to
      do
      so in the foreseeable future. Brek intends to retain earnings, if any, to
      develop and expand its business operations.





**23.**  **“Penny
      Stock” rules may make buying or selling Brek’s shares of common stock difficult,
      and severely limit their market and liquidity.**





Trading
      in Brek’s shares of common stock is subject to certain regulations adopted by
      the SEC commonly known as the “penny stock” rules. Currently, Brek’s shares of
      common stock qualify as penny stocks and are covered by Section 15(g) of the
      Securities Exchange Act of 1934, which imposes additional sales practice
      requirements on broker/dealers who sell the shares of common stock in the
      aftermarket. The “penny stock” rules govern how broker-dealers can deal with
      their clients and “penny stocks”. For sales of Brek’s shares of common stock,
      the broker/dealer must make a special suitability determination and receive
      from
      you a written agreement prior to making a sale to you.





These
      additional burdens imposed upon broker-dealers by the “penny stock” rules may
      discourage broker-dealers from effecting transactions in Brek’s shares of common
      stock, which could severely limit their market price and liquidity of its shares
      of common stock. This could prevent you from reselling your shares and may
      cause
      the price of the shares to decline. See “Penny Stock rules” on page 20 for more
      details.





**Item
      2.**  **Description
      of Property.**





**Corporate
      Headquarters**





As
      of
      December 31, 2002, Brek operated from its principal executive office at
      19 th Floor,
      80 Gloucester Road, Wanchai, Hong Kong. Brek’s telephone number was
      011-852-2801-5181. Since March 1, 2002, Brek has leased the office space under
      a
      one year term lease at a rental rate of HK$36,458 a month (approximately
      US$4,704/month).


***Page
          - 13***


**Property**





**A.**
            **Petroleum
                and Natural Gas Properties**





Riverbend
      Project, Utah





As
      of
      December 31, 2002, the Riverbend Project comprised approximately 103,227 gross
      acres in the Uinta Basin of northeastern Utah, of which Brek held interests
      in
      approximately 11,141 net acres as of December 31, 2002. Brek’s engineering and
      geologic focus was concentrated on three tight-sand formations in the Uinta
      basin: the Wasatch, Mesaverde and Blackhawk formations.





Greater
      Green River Basin Project, Wyoming





As
      of
      December 31, 2002, Brek had a leasehold interest in approximately 123,700 gross
      acres and 24,369 net acres in this area. Brek held a non-operated interest
      in
      one non-producing well in this area and a non-operated interest in one producing
      well in this area. Brek was considering additional options for this area such
      as
      the farm-out of some of its acreage and other similar type
      transactions.





Crocker
      Canyon Prospect, California





As
      of
      December 31, 2002, Brek had a leasehold interest in approximately 4,068 gross
      acres and 932 net acres in Kern and San Luis Obispo Counties of Southern
      California. Brek had no drilling or development plans for this acreage during
      2003 and planned to continue paying leasehold rentals and other minimum
      geological expenses to preserve Brek’s acreage positions on these
      prospects.





Rocksprings
      Prospect, Edwards County, Texas





In
      March
      2002, Brek acquired 2,512,500 shares of common stock of Vallenar Energy Corp.
      which, together with the 733,333 shares of common stock issuable upon conversion
      of preferred stock of Vallenar Energy Corp. held by Brek, represents
      approximately 25% of Vallenar Energy Corp.’s equity. On June 28, 2002, Brek
      acquired an additional 2 million shares of common stock of Vallenar Energy
      Corp.
      from third parties for $10,000 and subscribed for an additional 800,000 shares
      of common stock of Vallenar Energy Corp. at $0.50 per share ($400,000). At
      December 31, 2002, Brek held a 51.53% equity interest in Vallenar Energy Corp.
      For as long as at least one-half of the preferred stock is outstanding, it
      is
      entitled as a class to at least 29.69% of the total voting power of Vallenar
      Energy Corp. Brek is entitled to designate one director who must sit on the
      executive committee of the board or additional voting rights accrue to the
      preferred stock. All decisions of this executive committee must be unanimous.
      Brek has been playing an active role in the management of Vallenar Energy Corp.
      since 2002.





Vallenar
      Energy Corp. holds leases covering approximately 51,194 gross and 8,865 net
      acres in the Rocksprings Prospect, which is located in central Edwards County,
      Texas, and is a part of the Geronimo Creek Prospect. The Geronimo Creek Prospect
      is a shallow, heavy oil play within the Cretaceous aged Glen Rose limestone
      and
      Travis Peak sandstone. It is a north-south oriented, faulted anticline having
      approximately 75 feet of closure covering approximately 29,500 acres. During
      2002, Vallenar drilled one well, the results were inconclusive, and no further
      work has been performed.





**B.**
            **Oil
                and Gas Operations**





During
      2002, two wells were drilled on the Wyoming property and one well was drilled
      on
      the Texas property. None of these wells were considered to be prospective.
      At
      the end of 2002, no further exploration or development work was planned for
      the
      Texas, California or Wyoming properties. During 2002 one well was drilled on
      the
      Utah property. During 2004, Brek commenced exploration and development of their
      Utah properties and plans to continue with exploration and development of these
      properties as its financial resources permit.




**C.**
            **Volumes,
                Prices and Operating
                Expenses**





Brek
      had
      no production or sales of natural gas prior to its fiscal year ended December
      31, 2002.





**D.**
            **Development,
                Exploration and Acquisition Capital
                Expenditures**





During
      the year ended December 31, 2002, Brek spent $2,032,860 **** in
      development and exploration activities, including property acquisition costs
      net
      of impairment charges of $16,634,187. During the years ended December 31, 2001
      and 2000, Brek spent $nil in development and exploration activities. As of
      December 31, 2002, Brek held a 25% working interest in 230,995 gross acres
      and
      36,442 net acres located in Utah, Wyoming and California. Brek also owns a
      51.53% interest in 51,194 gross acres and 8,865 net acres located in Edwards
      County, Texas. As of December 31, 2002, Brek had no producing gas wells or
      shut-in gas wells on these properties.




***Page
          - 14***





The
      following table presents information regarding Brek’s net costs incurred in the
      purchase of proved and unproved properties and in exploration and development
      activities:





For
                the Years Ended December 312002
            
            
            2001
            
            
            2000Property
                Acquisition Costs:Unproved
            
            $
            18,137,141
            
            
            nil
            
            
            nilProved
            
            
            nil
            
            
            nil
            
            
            nilExploration
                and Development Costs:
            
            $
            529,906
            
            
            nil
            
            
            nilImpairment
                Charges:
            
            
            ($16,634,187
            )
            
            nil
            
            
            nilTotal
            
            $
            2,032,860
            
            
            nil
            
            
            nil





**E.**
            **Productive
                Wells and Acreage**





As
      of
      December 31, 2002, Brek had no producing gas wells or shut-in gas wells on
      its
      properties. Productive
      wells are producing wells and wells capable of production. Shut-in wells are
      wells that are capable of production but are currently not producing. Gross
      wells are the total number of wells in which the Company has an interest. Net
      wells are the sum of Brek’s fractional interests owned in the gross
      wells.





**F.**
            **Undeveloped
                Acreage**





The
      following table sets forth the undeveloped and developed leasehold acreage,
      by
      area, held by Brek as of December 31, 2002. Undeveloped acres are acres on
      which
      wells have not been drilled or completed to a point that would permit the
      production of commercial quantities of oil and gas, regardless of whether or
      not
      such acreage contains proved reserves. Developed acres are acres, which are
      spaced or assignable to productive wells. Gross acres are the total number
      of
      acres in which Brek has a working interest. Net acres are the sum of Brek’s
      fractional interests owned in the gross acres. The table does not include
      acreage that Brek has a contractual right to acquire or to earn through drilling
      projects, or any other acreage for which Brek has not yet received leasehold
      assignments. In certain leases, Brek’s ownership is not the same for all depths;
      therefore, the net acres in these leases are calculated using the greatest
      ownership interest at any depth. Generally this greater interest represents
      Brek’s ownership in the primary objective formation.





Undeveloped
                Acres
            Developed
              AcresGross
            Net
            Gross
            NetUtah
            103,277
            11,141
            nil
            nilWyoming
            123,700
            24,369
            nil
            nilCalifornia
            4,068
            932
            nil
            nilTexas
            51,194
            8,865
            nil
            nilTotal
                Acres
            282,239
            45,307
            nil
            nil





**G.**
            **Drilling
                Activity**





The
      following table sets forth Brek’s drilling activity during the year ended
      December 31, 2002. Brek had no drilling activity during the fiscal years ended
      December 31, 2001 and 2000.





In
      the
      table, “gross” refers to the total wells in which Brek has a working interest,
      and “net” refers to gross wells multiplied by Brek’s working interest. A
      productive well is an exploratory or a development well that is not a dry
      well.





2002Gross
            NetExploratory
                WellsProductive
            3.0
            0.3Dry
            0.0
            0.0Total
                Wells
            3.0
            0.3Development
                WellsProductive
            0.0
            0.0Dry
            0.0
            0.0Total
                Wells
            0.0
            0.0




***Page
          - 15***





**H.**
            **Present
                Activity**





During
      the year ended December 31, 2002 , Brek participated in three exploratory wells,
      two of which were located in the Greater Green River Basin acreage in Wyoming
      and one within the Riverbend Project in Utah .  Overall, Brek had an 8.6%
      net revenue **** interest,
      or net 0.26 wells. All three of these wells were completed and produced natural
      gas in the first quarter of 2003.  One of the Wyoming wells was eventually
      shut-in.





**I.**
            **Delivery
                Commitments**





Brek
      Energy is not obligated to provide a fixed and determinable quantity of oil
      or
      gas in the near future under existing contracts or agreements.





**Item
      3.**  **Legal
      Proceedings.**





As
      of
      December 31, 2002, Brek was not a party to any pending legal proceedings and,
      to
      the best of Brek’s knowledge, none of Brek’s property or assets were the subject
      of any pending legal proceedings, with the exception of the
      following:





Temporary
      Order - British Columbia Securities Commission





On
      November 14, 2002, Brek became aware that itself, Vallenar Energy Corp., Richard
      Jeffs, and Vallenar Energy Corp’s president and CEO, Jeff Paquin, had been named
      in a Temporary Order and Notice of Hearing regarding certain alleged violations
      of the British Columbia Securities Act (the “BCSA”). This Temporary Order and
      Notice of Hearing (the “Temporary Order”) alleged that Messrs. Jeffs and Paquin,
      together with others, engaged in acts in furtherance of trades of shares of
      Brek
      (and other issuers) and advised persons to purchase shares of Brek (and other
      issuers) without being registered under the British Columbia Securities Act.
      The
      Temporary Order required Messrs. Jeffs and Paquin to resign from their positions
      as officers of Brek and Vallenar Energy Corp., and prohibited them and Brek
      and
      Vallenar Energy Corp. from trading in any securities and from engaging in
      investor relations activities in British Columbia. Management believed that
      neither it nor Vallenar Energy Corp. violated the BCSA or engaged in any
      activity that would require them to be registered under the BCSA.





As
      a
      result of the Temporary Order, Richard N. Jeffs resigned as both the CEO and
      president of Brek on November 20, 2002. On December 5, 2002, the British
      Columbia Securities Commission released a decision not to extend the Temporary
      Order against Brek, Mr. Jeffs, Vallenar Energy Corp. and Mr. Paquin, among
      others, as a result of there being insufficient evidence of any
      wrongdoing.





As
      of
      December 31, 2002, Brek and Vallenar Energy Corp., to the best of management’s
      knowledge, were still under investigation by the British Columbia Securities
      Commission. On April 1, 2003, the British Columbia Securities Commission
      withdrew the notice of hearing and had not, to the best of management’s
      knowledge, issued any further notices or orders against Brek or its officers
      or
      directors.





Bermuda
      lawsuit - Transworld Payment Solutions N.V. et al. vs. Brek Energy Corporation
      et al.





On
      February 25, 2003, Transworld Payment Solutions N.V. and First Curacao
      International Bank N.V., the debtor and the guarantor respectively of a note
      receivable, commenced legal action against Brek and others in the Supreme Court
      of Bermuda claiming that Brek and its former subsidiary, First Ecom Systems
      Limited, had promised to develop and supply them with certain software pursuant
      to three license agreements dated October 19, 2001. The plaintiffs were seeking
      rescission of all agreements between the parties or, alternatively, damages
      for
      misrepresentation and breach of agreements. The plaintiffs commenced the lawsuit
      approximately one week before they had to make their first instalment payment
      pursuant to a share purchase agreement dated October 19, 2001. At that time,
      the
      plaintiffs were obligated to make an instalment payment in the amount of
      $1,901,107. The plaintiffs have not made any instalment payments as required
      pursuant to the terms and conditions of the share purchase agreement. See
      Exhibit 10.4 - Share Purchase Agreement and Exhibit 10.5 - License Agreements
      for more details.




***Page
          - 16***





Brek
      and
      the other defendants filed a defence and counterclaim on May 8, 2003 with the
      Supreme Court of Bermuda. In their counterclaim, the defendants were seeking
      specific performance of the share purchase agreement or, alternatively, damages
      for breach of contract. Although the directors believed that the plaintiffs’
claims were without merit as there was no condition to develop software for
      the
      plaintiffs, due to lack of financial resources Brek did not pursue its
      counterclaim. No further action has transpired by any party since Brek filed
      its
      defence and counterclaim.





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





No
      matter
      was submitted to a vote of security holders, through the solicitation of proxies
      or otherwise, during the fourth quarter of the fiscal year covered by this
      report.




**PART
      II**





**Item
      5.**  **Market
      for Common Equity and Related Stockholder Matters.**





**(a)**  **Market
      Information**





Brek’s
      common stock traded on the Nasdaq National Market System under the symbol “FECC”
from June 6, 2000 until February 19, 2002 when the symbol was changed to “BREK”.
      Prior to that, BREK traded on the NASD OTC Bulletin Board under the symbol
      “FECC” since March 8, 1999. On December 3, 2002, Brek was removed from the
      Nasdaq National Market System for failing to maintain minimum listing
      requirements.





The
      table
      below gives the high and low closing prices for each fiscal quarter for the
      2002
      fiscal year and the 2001 fiscal year.


Period
                ended
            High
            Low31
                December 2002
            $0.68
            $0.2230
                September 2002
            $0.81
            $0.5530
                June 2002
            $1.13
            $0.6131
                March 2002
            $0.70
            $0.3931
                December 2001
            $0.62
            $0.3030
                September 2001
            $0.90
            $0.3230
                June 2001
            $1.35
            $0.8131
                March 2001
            $1.88
            $0.75





Brek’s
      common stock has also traded on the Berlin over-the-counter stock exchange
      since
      January 27, 2000 and has been listed on the Bermuda Stock Exchange since
      December 23, 1999.





Subsequent
      to December 3, 2002, Brek’s shares of common stock were quoted on the NASD OTC
      Bulletin Board under the symbol “BREK”. On May 23, 2003, Brek’s shares of common
      stock ceased to be quoted on the NASD OTC Bulletin Board and Brek’s shares of
      common stock were quoted on the gray market under the same symbol,
“BREK”.





The
      table
      below gives the high and low bid information for the one fiscal quarter during
      the 2002 fiscal year for when Brek was quoted on the NASD OTC Bulletin Board.
      The bid information was obtained from Pink Sheets LLC and reflects inter-dealer
      prices, without retail mark-up, mark-down or commission, and may not represent
      actual transactions.




High
                & Low BidsPeriod
                ended
            High
            Low
            Source31
                December 2002
            $0.32
            $0.20
            Pink
                Sheets LLC30
                September 2002
            n/a
            n/a
            n/a30
                June 2002
            n/a
            n/a
            n/a31
                March 2002
            n/a
            n/a
            n/a31
                December 2001
            n/a
            n/a
            n/a30
                September 2001
            n/a
            n/a
            n/a30
                June 2001
            n/a
            n/a
            n/a31
                March 2001
            n/a
            n/a
            n/a




***Page
          - 17***





**(b)**  **Holders
      of Record**





As
      of
      December 31, 2002, there were approximately 139 holders of record of Brek’s
      shares of common stock.





**(c)**  **Dividends**





Brek
      has
      never declared or paid dividends on its shares of common stock. Brek intends
      to
      follow a policy of retaining earnings, if any, to finance the growth of the
      business and does not anticipate paying any cash dividends in the foreseeable
      future. The declaration and payment of future dividends on the shares of common
      stock will be the sole discretion of the board of directors and will depend
      on
      Brek’s profitability and financial condition, capital requirements, statutory
      and contractual restrictions, future prospects and other factors deemed relevant
      by the board of directors.





On
      December 5, 2001, the Board of Directors of Brek adopted a shareholder rights
      plan (the “Rights Plan”). The purpose of the Rights Plan is to deter, and
      protect Brek’s shareholders from, certain coercive and otherwise unfair takeover
      tactics and enable the Board of Directors to represent effectively the interests
      of shareholders in the event of a takeover attempt. The Rights Plan does not
      deter negotiated mergers or business combinations that the Board of Directors
      determines to be in the best interests of Brek and its shareholders. In
      connection with the adoption of the Rights Plan, Brek entered into a rights
      agreement with U.S. Bank, N.A. dated as of March 1, 2002.





On
      March
      20, 2002, the Board of Directors declared a dividend of one common share
      purchase right (a “Right”) for each outstanding share of common stock, par value
      $0.001 per share, of Brek. The dividend was payable on March 20, 2002 to the
      stockholders of record on that date. Upon the happening of certain events,
      the
      board of directors could vote to implement Brek’s rights agreement, which would
      delay, impede or effect a change in control of Brek or could impede a merger,
      consolidation, takeover or other business combination involving Brek or
      discourage a potential acquirer from making a tender offer or otherwise
      attempting to obtain control of Brek **.** Once the
      Rights become exercisable, each Right entitles the registered holder to purchase
      from Brek five shares of common stock at a price of $0.01 per share, subject
      to
      adjustment. The description and terms of the Rights are set forth in the rights
      agreement. See Exhibit 4.2 - Rights Agreement for more details.





**(d)**  **Recent
      Sales of Unregistered Securities**





There
      have been no sales of unregistered securities within the last three years that
      would be required to be disclosed pursuant to Item 701 of Regulation S-B, except
      for the following:





During
      2000, Brek issued 50,000 warrants to a former employee. These warrants were
      exercisable until June 30, 2002 at a price of $8.55 per share.





March
      6, 2000 - $11.40 Offering





On
      March
      6, 2000, Brek issued 3,228,500 units, each of which consisted of one share
      of
      common stock and a five-year warrant to purchase one third of a share of common
      stock for $11.40 per whole share, to 15 non-US investors outside the United
      States for $9.50 per unit. This issuance was exempt from registration pursuant
      to Regulation S.





In
      connection with the private placement on March 6, 2000, Brek granted warrants
      to
      an investment bank to purchase 26,923 shares of common stock at an exercise
      price of $7.80 and 223,925 shares of common stock at an exercise price of $11.40
      per warrant. All of the warrants expired on March 9, 2005.





March
      2000 - Acquisition of Asia Internet Limited





On
      March
      16, 2000, Brek signed an agreement with the owners of Asia Internet Limited
      to
      purchase the entire issued share capital of Asia Internet Limited for a
      consideration of $1.2 million in cash and 24,870 shares of common stock of
      Brek.
      On March 31, 2000, Brek issued 4,974 shares of common stock to Balaji Exports
      Ltd., 12,435 shares of common stock to Rajan Chellarm Mahboobani, and 7,461
      shares of common stock to Ravi Kishinchand Daswani, the share holders of Asia
      Internet Limited, in exchange for all of the issued and outstanding shares
      of
      Asia Internet Limited. Brek relied upon Section 4(2) of the Securities Act
      of
      1933 and Rule 903 of Regulation S promulgated pursuant to that Act by the
      Securities and Exchange Commission. Management is satisfied that the
      requirements of the exemption from the registration and prospectus delivery
      requirements of the Securities Act of 1933 have been fully complied with. The
      offering was not a public offering and was not accompanied by any general
      advertisement or any general solicitation. No offer was made or accepted in
      the
      United States and the share certificates representing the shares were legended
      with the applicable trading restrictions. See Exhibit 10.1 - Stock Purchase
      Agreement for more details.




***Page
          - 18***





July
      2000 - Exercise of Warrants





On
      July
      26, 2000, Brek issued 1,000,000 shares of common stock for the exercise of
      warrants at an exercise price of $7.80 per warrant. These warrants were issued
      as part of the December 23, 1999 offering and expired on December 22,
      2004.





2000
      -
      Stock Options Granted





Under
      the
      1999 Stock Option Plan, Brek granted the following share purchase options during
      the fiscal year ended December 31, 2000:





Date
                of Grant
            Number
                ofOptions
            Exercise
                PriceFebruary
                1, 2000
            797,000
            $9.90February
                25, 2000
            15,000
            9.90March
                1, 2000
            50,000
            9.90April
                1, 2000
            315,000
            9.90April
                17, 2000
            95,000
            13.50May
                12, 2000
            7,000
            14.00June
                19, 2000
            50,000
            9.90August
                29, 2000
            1,145,750
            5.05August
                29, 2000
            285,000
            5.05





On
      August
      29, 2000, Brek approved the granting of new options, with a new exercise price
      of $5.05 per share, providing the holders first rescinded their existing grants.
      Holders of 1,145,740 stock options elected to rescind their grants and these
      were replaced with a like number of new stock options repriced to $5.05 per
      stock option.





2001
      -
      Stock Options Granted





Under
      the
      2001 Stock Option/Warrant Plan, Brek granted the following share purchase
      options to employees, directors and consultants of Brek during the fiscal year
      ended December 31, 2001:


Date
                of Grant
            Number
                ofOptions
            Exercise
                PriceOctober
                31, 2001
            1,260,000
            $0.40





Brek’s
      2001 stock option/warrant plan provides for the granting of stock options or
      warrants for the purchase of a specific number of common shares at a specific
      price for a specific time period to officers, consultants, directors and key
      employees. All share options/warrants granted under the 2001 option/warrant
      plan
      either vest immediately, at 25% per quarter over a period of one year, or on
      a
      performance basis. All options, if remaining unexercised, expire five years
      after the date of issue.





On
      October 31, 2001, Brek approved the granting of new options to employees and
      directors with a new exercise price of $0.40 per share providing the holders
      first rescinded their existing grants of options and warrants (if any). Holders
      of 825,000 options granted under the 1999 Stock Option Plan and 235,000 warrants
      granted on March 29, 2001 elected to rescind their existing grants and these
      were replaced with new grants totalling 765,000 options.





On
      October 31, 2001, Brek also granted new options to employees, directors and
      consultants to purchase up to 495,000 shares of Brek’s common stock at a price
      of $0.40 per share. The options vested immediately and expire on October 31,
      2006. 285,000 of these options were granted to consultants of Brek.





March
      2002 - $0.50 Offering





On
      or
      about April 9, 2002, Brek issued 2,845,000 shares of common stock at $0.50
      per
      share producing aggregate proceeds of $1,397,500, which was net of related
      share
      issue cost of $25,000, received by Brek. The sales were to 14 investors, of
      which 12 were non-US persons outside the United States and two were accredited
      investors in the United States. Of these investors, one was a director and
      executive officer of Brek, one was a director of Brek, and one was an executive
      officer of Brek. The issuances and sales were exempt under Section 4(2) under
      the Securities Act of 1933, and Regulations S and D thereunder. All expenditures
      of proceeds were for normal overhead and other general corporate
      purposes.




***Page
          - 19***





July
      31, 2002 - Purchase Agreement with Gasco Energy, Inc.





On
      July
      31, 2002, Brek issued an aggregate 4,125,000 common shares in exchange for
      an
      undivided interest in oil and gas properties at a deemed value of $2,862,750.
      Brek issued 1,237,500 shares of common stock to Richard N. Jeffs, 1,237,500
      shares of common stock to Wet Coast Management Corp., a company controlled
      by
      Mr. Jeffs, 825,000 shares of common stock to Nicolas Mathys, and 825,000 shares
      of common stock to Ralph Fuoss in exchange for an undivided interest in Gasco
      Energy, Inc’s undeveloped mineral leases. Brek relied upon Section 4(2) of the
      Securities Act of 1933 and Rule 903 of Regulation S promulgated pursuant to
      that
      Act by the Securities and Exchange Commission. Management is satisfied that
      the
      requirements of the exemption from the registration and prospectus delivery
      requirements of the Securities Act of 1933 have been fully complied with. The
      offering was not a public offering and was not accompanied by any general
      advertisement or any general solicitation. No offer was made or accepted in
      the
      United States and the share certificates representing the shares were legended
      with the applicable trading restrictions. See Exhibit 10.3 - Purchase Agreement
      for more details.





August
      23, 2002 - Penalty Payment





On
      August
      23, 2002, Brek issued 80,000 common shares, at a deemed value of $56,800, to
      certain subscribers of the March 28, 2002 private placement as a 10% penalty
      for
      failing to make its S-3 Registration Statement effective within 120 days, as
      required under the terms of their private placement agreements. Brek issued
      68,000 shares of common stock to Warwick Ventures Ltd. and 12,000 shares of
      common stock to Ultratech Capital Management.





September
      10, 2002 - Severance





On
      September 10, 2002, Brek issued 100,000 common shares at a price of $0.70 to
      Gregory Pek, Brek’s former Chief Executive Officer, as part of his severance
      package. See Item 10 - “Executive Compensation” below for more
      information.





September
      24, 2002 - Settlement of accrued bonuses





On
      September 24, 2002, Brek issued 50,000 shares of common stock at $0.68 per
      share
      to each of two directors and an officer of Brek in settlement of $102,000 in
      accrued bonuses payable. Brek issued 50,000 shares of common stock to Ian
      Robinson, 50,000 shares of common stock to Ravi Daswani, and 50,000 shares
      of
      common stock to Kenneth Telford. See Item 10 - “Executive Compensation” below
      for more information.





October
      3, 2002 - Exercise of stock options





On
      September 19, 2002, 50,000 employee stock options, issued under the 2001 stock
      option warrant plan, were exercised at $0.40 per share for cash proceeds of
      $20,000. Upon receipt of the exercise price in full, Brek issued 50,000 shares
      of common stock to Steve Corbin on October 3, 2002.





2002
      -
      Stock Options Granted





Under
      the
      2001 Stock Option/Warrant Plan, Brek granted the following share purchase
      options to employees, directors and consultants of Brek during the fiscal year
      ended December 31, 2002:




Date
                of Grant
            Number
                ofOptions
            Exercise
                PriceJuly
                15, 2002
            420,000
            $0.55





On
      July
      15, 2002, Brek granted options to employees and directors to purchase up to
      370,000 shares of Brek’s common stock at a price of $0.55 per share. The options
      vested immediately and expire on July 15, 2007.





On
      July
      15, 2002, Brek also granted options to officers to purchase up to 50,000 shares
      of Brek’s common stock at a price of $0.55 per share. The options vest 25% every
      6 months, and expire 3 months after termination of employment.





**(e)**
            **Penny
                Stock Rules**





Trading
      in Brek’s shares of common stock is subject to the “penny stock” rules. The SEC
      has adopted regulations that generally define a penny stock to be any equity
      security that has a market price of less than $5.00 per share, subject to
      certain exceptions. These rules require that any broker-dealer who recommends
      Brek’s shares of common stock to persons other than prior customers and
      accredited investors, must, prior to the sale, make a special written
      suitability determination for the purchaser and receive the purchaser’s written
      agreement to execute the transaction. Unless an exception is available, the
      regulations require the delivery, prior to any transaction involving a penny
      stock, of a disclosure schedule explaining the penny stock market and the risks
      associated with trading in the penny stock market. In addition, broker-dealers
      must disclose commissions payable to both the broker-dealer and the registered
      representative and current quotations for the securities they offer. The
      additional burdens imposed upon broker-dealers by such requirements may
      discourage broker-dealers from effecting transactions in Brek’s shares of common
      stock, which could severely limit their market price and liquidity of Brek’s
      shares of common stock.




***Page
          - 20***





The
      “penny stock” rules also imposes additional sales practice requirements on
      broker/dealers who sell penny stock. These rules require a one page summary
      of
      certain essential items. The items include the risk of investing in penny stocks
      in both public offerings and secondary marketing; terms important to in
      understanding of the function of the penny stock market, such as “bid” and
“offer” quotes, a dealers “spread” and broker/dealer compensation; the
      broker/dealer compensation, the broker/dealers duties to its customers,
      including the disclosures required by any other penny stock disclosure rules;
      the customers rights and remedies in causes of fraud in penny stock
      transactions; and, the NASD’s toll free telephone number and the central number
      of the North American Administrators Association, for information on the
      disciplinary history of broker/dealers and their associated
      persons.





**Item
      6.**  **Management’s
      Discussion and Analysis or Plan of Operation.**





The
      following is a discussion and analysis of the consolidated financial condition
      and results of operations of Brek Energy Corporation for the fiscal years ended
      December 31, 2002 and 2001. You should read the following in conjunction with
      the consolidated financial statements and related notes appearing elsewhere
      herein.





**OVERVIEW**




Until
        2002, we focused our operations on the electronic payment processing business.
        During 2001 and 2002, we disposed of our electronic payment processing
        businesses. In July, 2002, we acquired a 25% working interest in
        the
        undeveloped oil and gas leases owned by Gasco Energy, Inc. in Utah, Wyoming
        and California, and we acquired a 51.53% non-dilutable voting interest
        in Vallenar Energy Corp., a company engaged in oil and gas exploration
        in Texas.
  Since
          we
          acquired our oil and gas interests, we have focused our attention on
          our
          oil and gas operations, primarily in Utah and Wyoming. We are not the
          operator on any of the properties. The main focus of our oil and gas exploration
          business is in the Untied States.





As
      of the
      date of this filing, we have participated in the drilling or re-completion
      of
      eleven wells and have ten producing wells in which we have net revenue interests
      of between 8% and 20%. One well, an earning well drilled by Burlington in 2002,
      is shut in. We are still paying for work on one well that was completed during
      the summer of 2005. We believe that this work will increase the production
      in
      the well, with a corresponding increase in revenue.





We
      have
      farmed out the drilling of six wells. Under the farmout agreements, we agreed
      to
      forfeit 100% of our interest in five wells and wellbores and 75% of our interest
      in one well and wellbore, and to relinquish 70% of our leasehold interest in
      the
      acreage surrounding four wells and 75% in the acreage surrounding two wells
      in
      exchange for the right to back in to a 7.5% working interest in four wells
      and
      wellbores when the farmee has recovered 100% of its drilling and operating
      costs, an over-riding royalty interest in the revenue from one well convertible
      to a wellbore interest when the farmee has recovered 100% of its drilling and
      operating costs, and 7.5% of the revenue that we would have earned from one
      well
      had we not relinquished our well and wellbore interests in the
      well.





We
      transferred one-half of our interest in two wells and wellbores and all of
      our
      interest in one well and wellbore, all in Utah, to a small drilling fund for
      which the fund paid us its share of the drilling and completion costs. We used
      the recovered funds to invest in drilling other wells. The well in which we
      transferred all of our interest was an earning well.




We
        did
        not consent to the drilling of twenty wells proposed by Gasco. As a result
        of
        our non-consent, Gasco has drilled or will drill the wells bearing 100% of
        the
        costs and is entitled to all of the revenue generated from the sale of oil
        and
        gas until they have recovered 300% of their drilling costs, 150% of the costs
        of
        newly acquired equipment in the well, and 100% of the operating costs and
        the
        costs of any newly acquired surface equipment beyond the wellhead connections,
        at which time we are entitled to our percentage of the revenue. The average
        cost
        of these non-consent wells is approximately $3.5 million, so we do not expect
        to
        see any revenue from them for some time, if ever. We have not, however,
        forfeited any leasehold interests and can participate in future drilling
        that is
        proposed for other locations on the same lease




***Page
          - 21***





We
      are in
      the early stages of development and have insufficient operating history on
      which
      to base an evaluation of our business and prospects. Any such evaluation must
      be
      made in light of the risks frequently encountered by companies in their early
      states of development, particularly for companies in high risk sectors such
      as
      oil and gas. Our longer-term ability to emerge from the development stage
      depends upon our oil and gas properties proving up sufficient reserves and
      if
      sufficient reserves are proved, bringing these properties into
      production.





Since
      inception we have had recurring operating losses and continuing negative cash
      flows from operations. Due to these factors the consolidated financial
      statements have been prepared on a going concern basis. We believe that our
      cash
      and cash equivalents, as of December 31, 2002, and the date of this filing,
      are
      not sufficient to satisfy our working capital needs and that we must raise
      funds
      by borrowing, raising additional equity or liquidating assets to satisfy our
      operational and working capital requirements in the foreseeable future.





**RESULTS
      OF OPERATIONS**





**Revenues**





We
      are in
      the development stage and had no revenue during the year ended December 31,
      2002. Due to the disposal of our subsidiary, First Ecom Systems Limited, on
      September 30, 2002, all revenue from this electronic systems payment processing
      business was reclassified to discontinued operations for the years ended
      December 31, 2002, 2001 and 2000. We expect to generate revenue from our oil
      and
      gas properties, but it will be nominal until we have drilled enough wells to
      generate meaningful revenue.





Before
      these reclassifications, total revenues for year ended December 31, 2001, were
      $301,978 as compared to $38,223 for the year ended December 31, 2000. At
      December 31, 2002, systems integration revenue of $816,648 related to Asia
      Internet Limited, which we acquired on March 31, 2000, was reclassified to
      discontinued operations. During 2001, $250,567 of the total revenue was due
      to
      consolidation of FEDS revenue for the period from June 19, 2001 to October
      19,
      2001.





**Operating
      Expenses**





Total
      operating expenses increased by $21,983,937 or 9456% from $232,475 for the
      year
      ended December 31, 2001, to $22,216,412 for the year ended December 31, 2002.
      This increase was due to $611,628 in sales and marketing expenses, $6,920,666
      in
      administrative expenses, $836,134 in systems and technology expenses and
      $3,159,505 in charges for impairment of certain long-lived and prepaid assets
      being reclassified to discontinued operations at December 31, 2001, due to
      the
      disposal of First Ecom Systems Limited on September 30, 2002. The increase
      was
      also due to an increase in charges for impairment of certain long-lived assets
      during 2002 of $16,634,187 which was due to the recording of an impairment
      charge on our oil and gas properties, $1,901,106 due to impairment of our note
      receivable and $8,015 due to impairment on our fixed assets. Due to the sale
      of
      First Ecom Systems Limited on September 30, 2002, at December 31, 2002, we
      reclassified First Ecom System Limited’s December 31, 2000, operating expenses
      in the amount of $12,849,315 to discontinued operations. Our operating expenses
      have decreased significantly since 2002 due to our having discontinued all
      electronic payments processing operations.





Before
      these reclassifications, total operating expenses for the years ended December
      31, 2001 and 2000 were $11,760,408 and $12,849,315. The year 2001 included
      a
      non-recurring charge of $3,159,505 for impairment of long-lived assets,
      resulting from the write-down of the carrying value of First Ecommerce Data
      Services Limited as at September 30, 2001, based on sale proceeds in October
      2001, versus a similar charge of $949,418, which resulted from a review of
      the
      carrying value of Brek’s electronic payment processing assets in 2000. Of the
      total operating expenses, $936,586 was due to consolidation of FEDS expenses
      for
      the period June 19, 2001 to October 19, 2001. We reclassified the expenses
      in
      2000 of Asia Internet Limited to discontinued operations. The decrease in
      expenses during 2001 is attributable to a decrease in the number of employees,
      a
      decrease in sales and marketing efforts, decreased systems development and
      the
      discontinuance of the operations of Asia Internet Limited.





**Other
      Items**





Interest
      income decreased to $40,593 during the year ended December 31, 2002, as compared
      to $704, 725 during the year ended December 31, 2001. This decrease was due
      to a
      decrease in our cash, which we used primarily to cover operating costs in our
      payments processing subsidiaries until they were discontinued, and to buy oil
      and gas properties and pay for our oil and gas participation costs.




***Page
          - 22***





Interest
      income decreased to $704,725 during the year ended December 31, 2001 as compared
      to $1,527,959 during the year ended December 31, 2000. This decrease was due
      to
      our decreased cash position during the year and a significant reduction in
      interest rates. The most significant aspect relating to the decrease in cash
      was
      our acquisition of the preferred stock in Gasco Energy Inc.





Interest
      expense for the years ended December 31, 2002 and 2001 was $nil, because we
      did
      not borrow any money during these periods.





Interest
      expense decreased to $nil during the year ended December 31, 2001 as compared
      to
      $2,121 during the year ended December 31, 2000, because we did not borrow any
      money during 2001.





The
      losses in equity investments for the year ended December 31, 2002, consisted
      of
      $796,370, which was our equity in the losses of Gasco before we exchanged our
      Gasco preferred shares for a 25% interest in Gasco’s unproved oil and gas
      properties on July 16, 2002, and $17,011, which was our equity in the losses
      of
      Vallenar before we increased our equity interest to 51.53% on June 28, 2002.





The
      losses of $882,146 in equity investments for the year ended December 31, 2001,
      consisted of our share of the losses before acquisition of the remaining 50%
      interest in First Ecommerce Data Services limited on June 18, 2001 ($390,052),
      and our share of the losses of Gasco Energy, Inc. after we acquired Gasco’s
      preferred stock on July 19, 2001 ($492,094). During the year ended December
      31,
      2000, we recorded an equity loss of $292,118 in an affiliate which was wholly
      attributable to our share of the losses before we acquired the remaining 50%
      interest in First Ecommerce Data Services Limited.





During
      the year ended December 31, 2002, we recorded a write down of our investment
      in
      an equity investment of $3,309,536. This loss adjusted the carrying value of
      our
      equity in Gasco to the fair value amount of $14,402,000, which is based on
      the
      average closing market price of Gasco’s shares for two days before and two days
      after July 16, 2002, the date on which we exchanged our Gasco shares for
      leasehold interests.





During
      the year ended December 31, 2002, we recorded a loss on the sale of our
      investment in shares of uniView Technologies Corporation of $12,611. During
      the
      years ended December 31, 2002, 2001 and 2000, we recorded losses of $34,927,
      $314,339 and $1,632,353 on the write down of our investment in this investment.





During
      the year ended December 31, 2002, we discontinued the operations of First Ecom
      Systems Limited, our payment processing business. The discontinuation of these
      operations resulted in the net operating losses of First Ecom System Limited,
      for the years ended December 31, 2002, 2001 and 2000, of $1,199,755, $11,225,955
      and $12,811,092, being reclassified to discontinued operations.





During
      the year ended December 31, 2001, we discontinued the operations of our systems
      integration business which was carried on through our subsidiary Asia Internet
      Limited. The discontinuation of these operations resulted in a recovery of
      $1,725,551 which was primarily due to the reversal of unvested stock
      compensation costs of $1,852,570. During the years ended December 31, 2001
      and
      2000, we recorded net-operating losses of $236,683 and $4,219,736.





On
      June
      28, 2002, we acquired a further 2 million common shares of Vallenar, which
      increased our equity interest to 51.53%. At December 31, 2002, we recorded
      $302,142, which is the minority shareholders’ 48.47% interest in Vallenar’s
      losses.





**Deferred
      Tax Assets**





We
      recorded a valuation allowance to reduce our deferred tax assets to the amount
      that we believe is more likely than not to be realized. If in the future we
      determine that we will be able to realize deferred tax assets in excess of
      their
      recorded amount, we will adjust the deferred tax assets accordingly, which
      will
      increase income in the period the determination is made. Likewise if we
      determine that we will not be able to realize all or part of our net deferred
      tax assets in the future, an adjustment to the deferred tax asset would be
      charged to income in the period the determination is made.





**Liquidity
      and Capital Resources**





We
      had
      cash and cash equivalents of $3,801 and a working capital deficit of $1,376,726
      at December 31, 2002. During the year ended December 31, 2002, we used
      $2,098,755 in cash for operating activities primarily for an operating loss
      of
      $27,243,917 and $35,863 in imputed interest on notes receivable. These
      expenditures were offset by an $813,381 equity loss in affiliates, $302,142
      attributed to the minority interest, $228,800 in issuance of shares in
      settlement of expenses, $106,975 in stock compensation costs, $102,611 in
      depreciation, $48,976 in losses on disposal of equipment, a $132 loss from
      discontinued operations, a $113, 420 write-down on equipment, a $12,611 loss
      on
      sale of marketable securities, a $34,927 loss recognized on the write-down
      of
      marketable securities, $18,543,307 in charges for certain long lived and prepaid
      assets, $3,309,536 in impairment losses of equity in affiliates, a decrease
      of
      $31,307 in accounts receivable and accrued interest receivable, a decrease
      of
      $390,428 in other prepaid expenses and deposits, an increase of $776,755 in
      accounts payable and accrued liabilities, and an increase of $365,717 in amounts
      due to related parties.




***Page
          - 23***





During
      the year ended December 31, 2002, $1,417,500 in cash was provided by financing
      activities. These financing activities consisted of receipt of $1,422,500 from
      the issuance of common shares and receipt of $20,000 from the exercise of stock
      options, offset by a payment $25,000 in respect of share issue costs.





During
      the year ended December 31, 2002, $1,403,428 in cash was used in investing
      activities, These investing activities included cash of $17,537 spent on the
      purchase of property and equipment, $529,906 spent on our oil and gas
      properties, $772,563 spent on increasing our equity interest in Vallenar and
      $361,085 was the effect of the minority interest on the acquisition of the
      subsidiary, these expenditures were offset by the receipt of loan proceeds
      of
      $270,055, receipt of proceeds from the disposal of equipment of $1,837 and
      receipt of proceeds from the sale of marketable securities of $5,771.




A
        decrease in working capital of $3,702,199 was due to a decrease in current
        assets of $2,559,727 plus an increase in current liabilities of $1,142,472.
        We
        have accumulated a deficit of $61,080,323 since inception and have stockholders’
equity of $598,107. We have no contingencies or long term commitments except
        for
        the Transworld litigation which is disclosed in the contingencies and
        commitments footnote to the financial statements and the Burlington litigation
        which is disclosed in the subsequent event footnote to the financial statement,
        appearing elsewhere herein.





We
      did
      not have any fund raising activities during 2001.





At
      December 31, 2001, we had approximately $2.1 million in cash, cash equivalents
      and marketable securities available to fund operations. We significantly lowered
      our on going expenditures and overhead during 2001 buy reducing the number
      of
      employees, closing offices and leasing more affordable office
      space.





**Plan
      of Operation for the Next Twelve Months**





This
      is a
      discussion of the plan of operation for the twelve months following the date
      of
      this filing. As of December 31, 2002, we had either disposed of or discontinued
      our operations in all of our payments processing subsidiaries and since then
      we
      have focused only on our oil and gas operations, primarily in Utah and Wyoming.
      We own a minority (25%) working interest in our Utah and Wyoming properties
      and
      are not the operator. Subsidiaries of Gasco Energy, Inc. own the majority (75%)
      working interest in these and the California properties, and Gasco Production
      Company is the operator. As a result of this arrangement, we are, to a large
      extent, subject to Gasco’s operating plans. In some cases, we and Gasco together
      own less than 100% of the working interest and the parties with the remaining
      interests are the operators: for example, our and Gasco’s working interests are
      less than 100% on properties in which Burlington has working interests and
      is
      the operator.





We
      expect
      that Gasco or the other operators will propose drilling a number of wells during
      the remainder of 2005 and in 2006 and we hope to participate in them. Our
      participation will depend entirely upon our being able to raise the capital
      required. How much capital we will require depends upon, among other things,
      how
      many wells Gasco proposes and the costs of the wells. We anticipate that a
      well
      will cost between $3.5 million and $4.5 million to complete; in most cases,
      our
      portion of the total cost will be 25%. Drilling costs are difficult to
      anticipate at this time, as costs have been rising steadily during the past
      two
      years, in part because of an increase in demand for materials and expertise
      in
      Asia and an increase in drilling activity in the United States and elsewhere
      in
      the world.





We
      have
      nominal revenue-generating operations and do not have the cash, cash equivalents
      or investments required to finance our participation in drilling programs or
      to
      cover our working capital requirements. We are solely dependent upon external
      financing and are considering several options for raising funds to meet our
      future capital and operating requirements. Any projections of future cash needs
      and cash flows are subject to substantial uncertainty. Our capital requirements
      depend on several factors including participation in drilling programs,
      acquisitions of oil and gas interests, the rate of market acceptance, our
      ability to increase revenues, our purchases of equipment, and other factors.
      If
      our capital requirements vary materially from those planned, we may require
      additional financing sooner than anticipated. We cannot assure that financing
      will be available in amounts or on terms acceptable to us, if at all. If we
      issue equity securities, stockholders may experience additional dilution or
      the
      new equity securities may have rights, preferences or privileges senior to
      those
      of existing holders of common stock. Debt financing, if available, may involve
      restrictive covenants, which could restrict our operations or finances. If
      we
      cannot raise funds or sell assets, if needed, on acceptable terms, we may not
      be
      able to continue our operations, take advantage of future opportunities, or
      respond to competitive pressures or unanticipated requirements which could
      negatively impact our business, operating results and financial condition.
      We
      are a party to certain agreements pursuant to which others may drill oil or
      gas
      wells on property in which we own an interest. We cannot control the timing
      or
      the cost of this drilling. If a well is drilled and we cannot or choose not
      to
      pay our share of the cost of the well, then we will have no rights to any
      production from that well until the operator has recovered its costs under
      the
      applicable agreement.




***Page
          - 24***





**CRITICAL
      ACCOUNTING POLICIES**





**Development
      Stage Activities**





We
      do not
      have significant operations and in accordance with SFAS No. 7, we are considered
      a development stage company.





**Principles
      of Consolidation**





The
      consolidated financial statements include our financial statements and our
      subsidiaries. All significant inter-company balances and transactions have
      been
      eliminated. Affiliated companies (20% to 50% owned companies) in which we do
      not
      have significant influence are accounted for, using the equity method. Our
      share
      of earnings (losses) from these companies are included in the accompanying
      consolidated statements of operations.





The
      financial statements for the period prior to our merger with JRL Resources
      reflect the consolidated financial position and results of operations of FEAL.
      Subsequent to the merger, the financial statements reflect the consolidated
      financial position and results of operations of BREK (as successor to JRL
      Resources subsequent to BREK’s formation and JRL Resources prior to BREK’s
      formation) and its subsidiaries.





**Fair
      Value of Financial Instruments**





The
      carrying values reflected in the consolidated balance sheets for cash and cash
      equivalents, trade accounts receivable, accrued interest receivable, short
      term
      loan, accounts payable and accruals and amounts due to related parties
      approximate their fair values because of the short term nature of these
      instruments. The fair value of the note receivable of $1 is an estimate based
      on
      the value the Company expects to realize within the next twelve months.





**Property
      and Equipment**





Property
      and equipment are stated at cost, less accumulated depreciation. Depreciation
      is
      provided using the straight-line method over the estimated useful lives of
      the
      assets less salvage value as follows:





Leasehold
      improvements  Over
      the
      term of the leases


Computer
      equipment and processing system   3
      years


Furniture,
      fixtures and office
      equipment 5
      years





During
      the year all of the fixed assets were disposed of when the Company changed
      business direction and disposed of their Hong Kong office.





**Goodwill**





We
      adopted the provisions of Statement of Financial Accounting Standards (“SFAS”)
      No. 142 (“SFAS 142”) “Goodwill and Other Intangible Assets” on January 1, 2002.
      SFAS 142 requires, among other things, the discontinuance of amortization for
      goodwill and indefinite life intangible assets. In addition, the standard
      includes provisions for the reclassification of certain existing recognized
      intangibles such as goodwill, reassessment of the useful lives of existing
      recognized intangibles with finite lives, reclassification of certain
      intangibles out of previously reported goodwill and the identification of
      reporting units for purposes of assessing potential future impairments of
      goodwill. SFAS 142 also requires that we complete a transitional goodwill
      impairment test six months from the date of adoption. The effects of adopting
      the non-amortization provisions of SFAS 142, assuming these provisions were
      adopted for the periods presented, are summarized below.





2002
            
            
            2001
            
            
            2000Reported
                net loss
            
            $
            (27,243,917
            )
            $
            (10,461,322
            )
            $
            (17,809,461
            )Add:
                Goodwill amortization
            
            
            -
            
            
            325,671
            
            
            291,282Adjusted
                net loss
            
            $
            (27,243,917
            )
            $
            (10,135,651
            )
            $
            (17,518,179
            )Reported
                basic and diluted loss per share
            
            $
            (1.16
            )
            $
            (0.54
            )
            $
            (0.98
            )Add:
                Goodwill amortization, per basic and diluted share
            
            
            -
            
            
            .02
            
            
            .02Adjusted
                basic and diluted loss per share
            
            $
            (1.16
            )
            $
            (0.52
            )
            $
            (0.96
            )






***Page
          - 25***




During
      the year ended December 31, 2002, goodwill was written off as part of the loss
      from discontinued operations.





**Long-Lived
      Assets**





SFAS
      No.
      144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long-Lived
      Assets” requires the recognition of an impairment loss on long-lived assets if
      the carrying amount exceeds its fair value, as determined using undiscounted
      cash flows expected to result from the use and eventual disposition of the
      asset. We adopted SFAS 144, on January 1, 2002. During the year ended December
      31, 2002, we recorded $18,543,307 in charges for impairment of certain
      long-lived assets.





**Software
      Development Costs**





Internal
      and external costs incurred to develop internal-use computer software are
      expensed during the preliminary project stage and capitalized during the
      application development stage and amortized over three years. During the years
      ended December 31, 2002, 2001, and 2000, and the cumulative period from
      inception to December 31, 2002, $nil, $nil, $130,816 and $225,406 of
      internal-use computer software development costs were expensed. As of December
      31, 2002 and 2001, capitalized software net of accumulated amortization and
      impairment charges were $nil and $68,411.





**Income
      Taxes**





Income
      tax expense is based on pre-tax financial accounting income. We recognize
      deferred tax assets and liabilities based on differences between the financial
      reporting and tax bases of assets and liabilities using the enacted tax rates
      and laws that are expected to be in effect when the differences are expected
      to
      be recovered. We have recorded a valuation allowance to reduce our deferred
      tax
      assets to the amount that we believe is more likely than not to be
      realized.





**Oil
      and Gas Properties**





We
      follow
      the full-cost method of accounting whereby we capitalize all costs related
      to
      the acquisition of oil and gas leases and acquisition and development of oil
      and
      gas properties into a single cost center (“full-cost pool”). Such costs include
      lease acquisition costs, geological and geophysical expenses, overhead directly
      related to exploration and development activities and costs of drilling both
      productive and non-productive wells. Proceeds from property sales are generally
      credited to the full cost pool without gain or loss recognition unless such
      a
      sale would significantly alter the relationship between capitalized costs and
      the proved reserves attributable to these costs. A significant alteration would
      typically involve a sale of 25% or more of the proved reserves related to a
      single full-cost pool.





We
      compute the depletion of exploration and development costs and depreciation
      of
      production equipment using the units-of-production method based upon estimated
      proven oil and gas reserves. We withhold the costs of unproved properties from
      the depletion base until they are either developed or abandoned. We review
      the
      properties periodically for impairment. We transfer total well costs to the
      depletable pool even when multiple targeted zones have not been fully evaluated.
      For depletion and depreciation purposes, we convert relative volumes of oil
      and
      gas production and reserves at the energy equivalent rate of six thousand cubic
      feet of natural gas to one barrel of crude oil. Our oil and gas wells began
      producing after December 31, 2002; accordingly we have not recorded any
      depletion expenses before or during the year ended **** December
      31, 2002.





Under
      the
      full-cost method of accounting, capitalized oil and gas property costs less
      accumulated depletion and net of deferred income taxes may not exceed an amount
      equal to the present value, discounted at 10%, of estimated future net revenues
      from proved oil and gas reserves plus the cost or estimated fair value, if
      lower, of unproven properties. Should capitalized costs exceed this ceiling,
      impairment is recognized. The present value of estimated future net revenues
      is
      computed by applying current prices of oil and gas to estimated future
      production of proved oil and gas reserves as of period-end, less estimated
      future expenditures to be incurred in developing and producing the proved
      reserves assuming the continuation of existing economic conditions.





**Stock-based
      Compensation**





We
      account for stock-based compensation arrangements with employees in accordance
      with the provisions of APB 25 and comply with the disclosure provisions of
      SFAS
      123. Under APB 25, compensation expense is based on the difference, if any,
      between the fair value of our stock and the exercise price of options issued
      on
      the date of grant. We amortize the unearned compensation over the vesting period
      of the individual options.




***Page
          - 26***





For
      stock
      options granted to employees and directors, with exercise prices at or above
      the
      market value of the stock on the grant date, we adopted the disclosure-only
      provisions of SFAS 123. Had compensation cost been recognized based on the
      fair
      value at the date of grant consistent with the method prescribed by SFAS No.
      123, our net losses and loss per share would have been reduced to the following
      pro forma amounts at December 31, 2002. Also disclosed below are the pro-forma
      amounts previously disclosed and pro forma amounts that have been restated
      due
      to a prior period adjustment which was caused by an error in the calculation
      of
      stock based compensation related to stock options issued, reissued and re-priced
      during December 2001, 2000 and 1999:





For
                the Year EndedDecember
                31, 2002Net
                LossAs
                reported
            $(27,243,917)Pro
                forma
            $(27,767,867)Basic
                and Diluted Loss Per ShareAs
                reported
            $(1.16)Pro
                forma
            $(1.19)








Year
                Ended
            Year
                Ended
            Year
                EndedDec
                31, 2001
            Dec
                31, 2000
            Dec
                31, 1999Net
                LossAs
                reported
            $(10,461,322)
            $(17,809,461)
            $(6,788,885)Pro
                forma-as
                previously disclosed
            $(9,542,863)
            $(20,598,526)
            $(8,113,944)-as
                restated
            $(11,228,256)
            $(21,520,755)
            $(8,010,239)Basic
                and Diluted Loss Per ShareAs
                reported
            $(0.55)
            $(0.99)
            $(0.56)Pro
                forma-as
                previously disclosed
            $(0.50)
            $(1.14)
            $(0.67)-as
                restated
            $(0.58)
            $(1.19)
            $(0.67)





The
      fair
      value of the common stock options granted during the years ended December 31,
      2002, 2001, 2000 and 1999, for disclosure purposes was estimated on the grant
      dates using the Black Scholes Pricing Model and the following
      assumptions:





2002Expected
                dividend yield
            -Expected
                price volatility
            131%
                to 151%Risk-free
                interest rate
            3%
                to 5.5%Expected
                life of options
            5
                years





2001
              As
                Restated
            2001
              As
                Previously
              DisclosedExpected
                dividend yield
            -
            -Expected
                price volatility
            151%
            93.15%
                to 150.69%Risk-free
                interest rate
            5.5%
            5.5%Expected
                life of options
            5
                years
            3
                and 5 years




***Page
          - 27***





2000
              As
                Restated
            2000
              As
                Previously DisclosedExpected
                dividend yield
            -
            -Expected
                price volatility
            110%
            93.15%
                to 129.54%Risk-free
                interest rate
            5.5%
            5.5%Expected
                life of options
            5
                years
            3
                years








1999
              As
                Restated
            1999
              As
                Previously
              DisclosedExpected
                dividend yield
            -
            -Expected
                price volatility
            51.45%
                to 91.20%
            54.45%
                to 91.2%Risk-free
                interest rate
            5.5%
            5.5%Expected
                life of options
            5
                years
            3
                years





We
      account for equity instruments issued to non-employees in accordance with the
      provisions of SFAS 123, and Emerging Issues Task Force No. 96-18 (“EITF 96-18”).
      We account for all transactions in which we receive goods or services as
      consideration for the issuance of equity instruments based on the fair value
      of
      the consideration received or the fair value of the equity instrument, whichever
      is more reliably measurable.





We
      account for the re-pricing and re-issuing of stock options under the variable
      accounting provisions of FIN 44.





**Recent
      Accounting Pronouncements**





SFAS
      No.
      141 (“SFAS 141”), “Business Combinations” and SFAS No. 142 (“SFAS 142”),
“Goodwill and Intangible Assets”, were issued by the FASB in June 2001 and
      became effective for us on July 1, 2001 and January 1, 2002, respectively.
      The
      FASB, the Securities and Exchange Commission (“SEC”) and others are engaged in
      deliberations on the issue of whether SFAS 141 and 142 require interests held
      under oil, gas and mineral leases or other contractual arrangements be
      classified as intangible assets. If these interests were deemed to be intangible
      assets, mineral interest use rights for both undeveloped and developed
      leaseholds would be classified separately from oil and gas properties and
      intangible assets on our balance sheets only, but these costs would continue
      to
      be aggregated with other costs of oil and gas properties in the notes to the
      financial statements in accordance with SFAS No. 69 (“SFAS 69”), “Disclosures
      about Oil and Gas Producing Activities”. Additional disclosures required by SFAS
      141 and 142 would also be included in the notes to financial statements.
      Historically, and to our knowledge, we and all other oil and gas companies
      have
      continued to include these oil and gas leasehold interests as part of oil and
      gas properties after SFAS 141 and 142 became effective. We believe that few
      oil
      and natural gas companies have adopted this interpretation or changed their
      balance sheet presentation for oil and gas leaseholds since the implementation
      of SFAS 141 and 142.





As
      applied to companies like Brek that have adopted full-cost accounting for oil
      and gas activities, we understand that this interpretation of SFAS 141 and
      142
      would only affect our balance sheet classification of proved oil and gas
      leaseholds acquired after June 30, 2001 and our unproved oil and gas leaseholds.
      Our results of operations would not be affected, since these leasehold costs
      would continue to be amortized in accordance with full cost accounting rules.
      At
      December 31, 2002, we had undeveloped leaseholds of approximately $2.03 million,
      that would be classified on the balance sheets as “intangible undeveloped
      leaseholds” if we applied the interpretation currently being deliberated. This
      classification would require that we make the disclosures set forth under SFAS
      142 related to these interests. Our current disclosures are those required
      by
      SFAS 69.





We
      will
      continue to classify our oil and gas leaseholds as tangible oil and gas
      properties until further guidance is provided. Although most of our oil and
      gas
      property interests are held under oil and gas leases, we do not expect that
      this
      interpretation, if adopted, would have a material impact on our financial
      condition or results of operations.





**Contractual
      Obligations**





We
      did
      not have any contractual obligations at December 31, 2002, or as of the date
      of
      this filing, except for lease commitments totaling $88,050 for the first quarter
      of 2003.


***Page
          - 28***


**Internal
      and External Sources of Liquidity**





We
      have
      funded our operations principally through the private placement of shares and
      the exercise of stock purchase warrants.





**Inflation**





We
      do not
      believe that inflation will have a material impact on our future
      operations.





**Uncertainties
      Relating to Forward Looking Statements**





This
      Form
      10-KSB Annual Report contains “forward-looking statements” within the meaning of
      the Private Securities Litigation Reform Act of 1995. You can identify these
      statements by our use of words such as “plan”, “expect”, “aim”, “believe”,
“project”, “anticipate”, “intend”, “estimate”, “will”, “should”, “could” and
      other expressions that indicate future events and trends. All statements that
      address expectations or projections about the future, including statements
      about
      our strategy for participating in drilling programs, increasing revenues, and
      raising capital from external sources are forward-looking
      statements.





All
      forward-looking statements are made as of the date of filing of this Form 10-KSB
      and we disclaim any duty to update these statements.





Certain
      parts of this Form 10-KSB may contain “forward-looking statements” within the
      meaning of the Securities Exchange Act of 1934 based on current managements
      expectations. Our actual results could differ materially from those in our
      forward looking statements due to a number of uncertainties including, but
      not
      limited to, those discussed in this section. Factors that could cause our future
      results to differ from these expectations include general economic conditions,
      particularly as they affect our ability to raise sufficient working capital,
      the
      costs of bringing our oil and gas properties into production, and the market
      for
      our production. 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 requires the exercise of judgment. To the extent
      that the assumed events do not occur, our outcome may vary substantially from
      our anticipated or projected results, and accordingly, we express no opinion
      on
      the achievability of those forward-looking statements and give no assurance
      that
      any of the assumptions relating to the forward-looking statements are
      accurate.





We
      may,
      from time to time, make oral forward-looking statements. We strongly advise
      you
      to read the foregoing paragraphs and the risk factors described in this annual
      report and in our other documents filed with the United States Securities and
      Exchange Commission for a description of certain factors that could cause our
      actual results to differ materially from those in the oral forward-looking
      statements. We disclaim any intention or obligation to update or revise any
      oral
      or written forward-looking statements whether as a result of new information,
      future events or otherwise.





**Item
      7.**  **Financial
      Statements**





See
      audited financial statements for the period ended December 31, 2002 and 2001
      attached as Exhibit A to this Form 10-KSB.





**Item
      8.**  **Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure.**





There
      are
      no changes in or disagreements with Brek’s accountants on accounting and
      financial disclosure. Brek’s principal
      independent accountant since November 24, 2004 to the current date is Hall
      & Company, Certified Public Accountants Inc. ,
      16140
      Sand Canyon Avenue, Suite 100, Irvine California, 92618





Effective
      November 24, 2004, Brek’s board of directors approved a change in Brek’s
      independent auditors. None of the reports of Deloitte Touche Tohmatsu, Chartered
      Accountants on the financial statements of Brek’s for the fiscal years ended
      December 31, 2000 and 2001 contained any adverse opinion or disclaimer of
      opinion, or was qualified or modified as to uncertainty, audit scope or
      accounting principles. Although audited statements prepared by Deloitte Touche
      Tohmatsu, Chartered Accountants contained a going concern qualification, such
      financial statements did not contain any adjustments for uncertainties stated
      therein, nor have there been at any time, disagreements between Brek and
      Deloitte Touche Tohmatsu, Chartered Accountants on any matter of accounting
      principles or practices, financial statement disclosure or auditing scope or
      procedure.





Brek
      retained the accounting firm of Hall & Company, Certified Public Accountants
      Inc. , to
      serve
      as its independent accountants to audit its financial statements beginning
      with
      the year ended December 31, 2002. This engagement became effective November
      24,
      2004. Prior to its engagement as Brek’s independent auditors, Hall &
Company, Certified Public Accountants Inc. , had
      not
      been consulted by Brek either with respect to the application of accounting
      principles to a specific transaction or the type of audit opinion that might
      be
      rendered on Brek’s financial statements or on any other matter that was the
      subject of any prior disagreement between Brek and its previous certifying
      accountants.




***Page
          - 29***





**Item
      8A.**  **Controls
      and Procedures.**





Brek
      maintains disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in Brek’s Securities Exchange Act of 1934
      reports is recorded, processed, summarized and reported within the time periods
      specified in the SEC’s rules and forms, and that such information is accumulated
      and communicated to Brek’s management, including its chief executive officer and
      chief financial officer, as appropriate, to allow timely decisions regarding
      required disclosure. Based on their most recent evaluation, which was completed
      within 90 days of the filing of this Form 10-KSB, Brek’s Chief Executive Officer
      and Chief Financial Officer believe Brek’s disclosure controls and procedures
      (as defined in Exchange Act Rules 13a-14 and 15d-14) are effective to ensure
      that information required to be disclosed by Brek in this report is accumulated
      and communicated to Brek’s management, including its principal executive officer
      and principal financial officer, as appropriate, to allow timely decisions
      regarding required disclosure. Based upon the foregoing, Brek’s chief executive
      officer and chief financial officer concluded that Brek’s disclosure controls
      and procedures are effective in connection with the filing of this Annual Report
      on Form 10-KSB for the year ended December 31, 2002.





There
      were no significant changes in Brek’s internal controls or other factors that
      could significantly affect these controls subsequent to the date of their
      evaluation, including any significant deficiencies or material weaknesses of
      internal controls that would require corrective action.








**Item
      8B. Other Information**





During
      the fourth quarter of the fiscal year covered by this Form 10-KSB, Brek reported
      all information that was required to be disclosed in a report on Form 8-K,
      except for the following.





Item
      2.06 - Material Impairments





In
      February 2003, it was determined that a note receivable from Transworld Payment
      Solutions N.V. in the amount of $1,901,107 was impaired due to Transworld
      commencing a legal action against a subsidiary of Brek in which Transworld
      claimed that First Ecom Systems Limited had promised to develop and supply
      them
      with certain software. See “Item 3. Legal Proceedings” above for more
      details.





Item
      2.06 - Material Impairments





Based
      on
      a reserve study completed during the first quarter of 2005, it was determined
      that a $16,634,187 impairment charge needed to be taken against the oil and
      gas
      properties at December 31, 2002.





Item
      3.01 - Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
      Standard; Transfer of Listing





On
      October 31, 2002, Brek received a Nasdaq Staff Determination that Brek’s shares
      of common stock during the 90-day period ending on October 30, 2002, had not
      maintained a closing bid price of $1.00 per share for the ten consecutive
      trading days necessary to qualify for continued listing on the National Market
      System, and that Brek’s shares of common stock were therefore subject to
      de-listing from the Nasdaq National Market on November 8, 2002, for failure
      to
      comply with Marketplace Rule 4450.





Brek
      applied to list its shares of common stock on the Nasdaq SmallCap Market, where
      it would be eligible for re-listing on the National Market System if it
      maintained a closing bid price of $1.00 for 30 consecutive trading days before
      January 28, 2003. However, Brek was unable to maintain the minimum closing
      bid
      price for the required time period and on December 3, 2002, Brek was removed
      from the Nasdaq National Market System for failing to maintain minimum listing
      requirements.





Subsequently,
      on May 23, 2003, Brek’s shares of common stock ceased to be quoted on the NASD
      OTC Bulletin Board for failing to make timely filings with the Securities &
Exchange Commission, a listing requirement of the NASD OTC Bulletin Board,
      following which Brek’s shares of common stock were moved to and quoted on the
      gray market under the same symbol, “BREK”.





Item
      5.02 - Departure of Directors or Principal Officers; Election of Directors;
      Appointments of Principal Officers





In
      September 2002, both Douglas Moore and Andrew Leitch resigned as directors
      of
      Brek.




***Page
          - 30***





On
      October 8, 2002, Greg Pek resigned as both CEO and president of Brek and Richard
      N. Jeffs was appointed the new CEO and president of Brek to replace Mr. Pek.
      At
      that time, Mr. Jeffs was and had been a self-employed businessman since 1990
      and
      a director of a private venture capital company since 1999. See “Item 12.
      Certain Relationships and Related Transactions” below for more
      details.





On
      November 14, 2002, Brek became aware that itself, Vallenar Energy Corp., Richard
      Jeffs, and Vallenar Energy Corp’s president and CEO, Jeff Paquin, had been named
      in a Temporary Order and Notice of Hearing regarding certain alleged violations
      of the British Columbia Securities Act (the “BCSA”). This Temporary Order and
      Notice of Hearing (the “Temporary Order”) alleged that Messrs. Jeffs and Paquin,
      together with others, engaged in acts in furtherance of trades of shares of
      Brek
      (and other issuers) and advised persons to purchase shares of Brek (and other
      issuers) without being registered under the British Columbia Securities Act.
      The
      Temporary Order required Messrs. Jeffs and Paquin to resign from their positions
      as officers of Brek and Vallenar Energy Corp., and prohibited them and Brek
      and
      Vallenar Energy Corp. from trading in any securities and from engaging in
      investor relations activities in British Columbia. Management believed that
      neither it nor Vallenar Energy Corp. violated the BCSA or engaged in any
      activity that would require them to be registered under the BCSA. The British
      Columbia Securities Commission rescinded the temporary orders against Brek,
      Mr.
      Jeffs and others on December 5, 2002, and withdrew the notice of hearing on
      April 1, 2003. To the best of management’s knowledge, the British Columbia
      Securities Commission has issued no further orders or notices in connection
      with
      this matter.





As
      a
      result of the Temporary Order, Richard N. Jeffs resigned as both the CEO and
      president of Brek on November 20, 2002. At that time, the Nominating Committee
      was searching for a qualified candidate who was willing to accept the position,
      but no replacement was appointed. Even without a CEO, the board of directors
      believed, until such a candidate was found, Brek would not adversely affected
      by
      the lack of a CEO. See “Item 3. Legal Proceedings” above for more
      details.





**PART
      III**





**Item
      9.**  **Directors,
      Executive Officers, Promoters and Control Persons; Compliance with Section
      16(a)
      of the Exchange Act.**





**(a)**  **Identify
      Directors and Executive Officers**





Each
      director of Brek or its subsidiaries holds office until (i) the next annual
      meeting of the stockholders, (ii) his successor has been elected and qualified,
      or (iii) the director resigns.





Brek’s
      and its subsidiaries’ management teams as of December 31, 2002 are listed below.





**Management
                  Teams****Brek
                  Energy Corporation****(1)**
              **Brek
                  Petroleum Inc.**
              **Brek
                  Petroleum (California), Inc.**
              **Vallenar
                  Energy Corp.****Gregory
                  Pek**
              Director
              n/a
              n/a
              Director**Ian
                  Robinson**
              Director
              n/a
              n/a
              n/a**Jim
                  Pratt**
              Director
              n/a
              n/a
              n/a**Ravi
                  Daswani**
              Director
              n/a
              n/a
              n/a**Kenneth
                  Telford**
              Chief
                  Financial Officer
              Director,
                  President, Treasurer, and Secretary
              Director,
                  CEO,
                Chief
                  Financial Officer,
                and
                  Secretary
              Director,
                  Vice-President, Treasurer and
                  Secretary
 **(1)** Richard
      Jeffs was briefly the CEO of Brek from September 2002 until his resignation
      in
      November 2002. As of December 31, 2002, no one had been appointed to fill the
      office of CEO.





***Gregory
      Pek*** - Mr.
      Pek (48 years old) has been a director of Brek since March 1999. Mr. Pek was
      a
      co-founder of Brek and was the president and chief executive officer of Brek
      from March 1999 until June 2000. Mr. Pek was the chairman of the board of Brek
      from June 2000 until November 2000. Mr. Pek was the president and co-chief
      executive officer of Brek from October 2000 until August 2001. From August
      2001
      until October 2002, Mr. Pek was the chief executive officer of Brek. Finally,
      from November 2003 until January 2005, Mr. Pek was the chief financial officer
      of Brek. Since December 2002, Mr. Pek has been a director and officer of Global
      Financial Network Limited, a private Hong Kong company. From 1994 to 1999,
      Mr.
      Pek was an executive officer of both David Resources Company Limited, a
      petroleum and wine trading company, and Kong Tai International Holdings Company
      Limited, a real property investment company. From September 1998 to February
      1999, Mr. Pek was a director of Singapore Hong Kong Properties Investment
      Limited, another real property investment company. Mr. Pek obtained a Bachelor
      of Commerce from the University of British Columbia in 1978. In 1981, Mr. Pek
      received his chartered accountant designation after articling with Clarkson
      Gordon.




***Page
          - 31***





***Ian
      Robinson*** - Mr.
      Robinson (64) has been a director of Brek since April 2001. Since 1995, Mr.
      Robinson has been the owner and managing director of Robinson Management
      Limited, a business consulting firm. In 1962, Mr. Robinson received his CPA
      designation from the Institute of Chartered Accountants of Australia.





***Jim
      Pratt*** - Mr.
      Pratt (54) has been a director of Brek since June 2000. In the past five years,
      Mr. Pratt served as the CEO of Peoples Phone in Hong Kong and is currently
      the
      Managing Director of Asia Wireless, a Division of Telstra On Air, Telstra
      Corporation of Australia. Mr. Pratt oversees all of Telstra Group’s wireless
      operations and is responsible for their various investments throughout the
      Asia
      Pacific Region. Mr. Pratt has more than thirty years international management
      experience in the Asia-Pacific telecommunications industry. Also, Mr. Pratt
      currently represents Singtel Optus Limited as the chairman of the GSM
      Association. Mr. Pratt is also an executive director of GlobeTrac Inc., a
      NASDAQ-quoted company.





***Ravi
      Daswani*** - Mr.
      Daswani (36) has been a director of Brek since March 1999. Mr. Daswani was
      Chief
      Operating Officer of Brek from March 3, 1999 until August 31, 2001 and co-Chief
      Executive Officer from October 16, 2000 to August 31, 2001 when he retired
      to
      pursue other business interests. From December 1997 to February 1999 Mr. Daswani
      was the managing director and co-owner of Asia Internet Limited, a Hong Kong
      Internet service provider. For more than three years before December 1997,
      Mr.
      Daswani was the managing director of a wholesale and retail apparel business
      called Daswani S.A., a Panamanian company.





***Kenneth.
      Telford*** - Mr.
      Telford (54) was appointed Brek’s Chief Financial Officer and Secretary in July
      2000. Mr. Telford is both a Chartered Accountant (Canada) and Certified Public
      Accountant (USA). Mr. Telford has been a partner in Sadovnick Telford + Skov,
      Chartered Accountants in Canada and Telford Sadovnick, PLLC, Certified Public
      Accountants in the United States since 1994. Mr. Telford was also previously
      a
      partner in the international accounting firm Touche Ross & Co. (now Deloitte
& Touche) as well as Chief Operating Officer and Chief Financial Officer of
      an automotive rental company. Mr. Telford has advised numerous companies,
      operating in both North America and Asia Pacific, on a broad range of financial
      and business matters including the financial management requirements of U.S.
      publicly listed companies.





**(b)**  **Identify
      Significant Employees**





Brek
      has
      no significant employees.





**(c)**  **Family
      Relationships**





There
      are
      no family relationships among the directors, executive officers or persons
      nominated or chosen by Brek to become directors or executive
      officers.





**(d)**  **Involvement
      in Certain Legal Proceedings**





(1)
            No
                bankruptcy petition has been filed by or against any business of
                which any
                director was a general partner or an executive officer either at
                the time
                of the bankruptcy or within two years prior to that
                time.





(2)
            No
                director has been convicted in a criminal proceeding and is not subject
                to
                a pending criminal proceeding (excluding traffic violations and other
                minor offences).





(3)
            No
                director has been subject to any order, judgement, or decree, not
                subsequently reversed, suspended or vacated, of any court of competent
                jurisdiction, permanently or temporarily enjoining, barring, suspending
                or
                otherwise limiting his involvement in any type of business, securities
                or
                banking activities.





(4)
            No
                director has been found by a court of competent jurisdiction (in
                a civil
                action), the Securities Exchange Commission or the Commodity Futures
                Trading Commission to have violated a federal or state securities
                or
                commodities law, that has not been reversed, suspended, or
                vacated.





**(e)**  **Compliance
      with Section 16(a) of the Exchange Act.**





All
      reports were filed with the SEC on a timely basis and Brek is not aware of
      any
      failures to file a required report during the period covered by this annual
      report, with the exception of the following. Gregory M. Pek, Ian Robinson,
      James
      Pratt, Ravi Daswani, Kenneth Telford, and Richard N. Jeffs, all failed to file
      a
      Form 5 or to provide Brek with a written representation that a Form 5 was not
      required.


***Page
          - 32***


**(f)**  **Audit
      Committee Financial Expert**





Brek
      has
      no financial expert. Management believes the cost related to retaining a
      financial expert at this time is prohibitive. Further, because of Brek’s limited
      operations, management believes the services of a financial expert are not
      warranted.





**(g)**  **Identification
      of Audit Committee**





During
      the fiscal year ended December 31, 2002, the Audit Committee consisted of Ian
      Robinson and James Pratt. The Audit Committee was responsible for (i) reviewing
      the scope of and the fees for the annual audit, (ii) reviewing with the
      independent auditors the corporate accounting practices and policies, (iii)
      reviewing with the independent auditors their final report, and (iv) being
      available to the independent auditors during the year for consultation purposes.
      Each of the members of the Audit Committee was independent within the meaning
      of
      Rule 4200(a)(15) of the NASD listing standards.





As
      of
      December 31, 2002, Brek did not have a written audit committee charter or
      similar document.





**(h)**  **Code
      of Ethics**





As
      of
      December 31, 2002, Brek had not adopted a code of ethics. The board of directors
      decided not adopt a code of ethics at that time as Brek had minimal operations,
      had no employees or management, and the board of directors was managing Brek’s
      minimal operations.





**Item
      10. Executive Compensation** .





Brek
      has
      paid $744,672 in compensation to its named executive officers during its 2002
      fiscal year.





**SUMMARY
      COMPENSATION TABLE**





Long-term
                compensation***Annual
                compensation***
            **Awards**
            **Payouts**Name
                and principal position
              (a)
            Year
              (b)
            Salary
              ($)
              (c)
            Bonus
              ($)
              (d)
            Other
                annual compen-sation
              ($)
              (e)
            Restricted
                stock awards
              ($)
              (f)
            Securities
                underlying options/
              SARs
              (#)
              (g)
            LTIP
                Payouts
              ($)
              (h)
            All
                other compen-sation
              ($)
              (i)**Gregory
                Pek**
              CEO
                / President
              Mar
                1999 - Oct 2000
              Aug
                2001 - Oct 2002
              Co-CEO
                / President
              Oct
                2000 - Aug 2001
            2000
              2001
              2002
            238,172
              218,710
              189,286[1]
            nil
              107,097
              nil
            nil
              15,484[2]
              27,871[2]
            nil
              nil
              nil
            200,000[3]
              75,000[4]
              25,000
            nil
              nil
              nil
            nil
              nil
              70,000[5]**Kenneth
                Telford**
              CFO
              July
                2000 - Oct 2003
            2000
              2001
              2002
            n/a[6]
              259,994
              297,806[7]
            n/a[6]
              117,419
              34,000[8]
            n/a
              13,005[2]
              17,209[2]
            n/a
              nil
              nil
            n/a
              200,000[9]
              50,000
            n/a
              nil
              nil
            n/a
              nil
              nil**Ravi
                Daswani**
              COO
              Mar
                1999 - Aug 2001
              Co-CEO
              Oct
                2000 - Aug 2001
            2000
              2001
              2002
            238,172
              154,839
              n/a[10]
            nil
              109,677
              34,000[10]
            nil
              4,473[2]
              n/a
            nil
              nil
              n/a
            200,000[3]
              75,000[4]
              n/a
            nil
              nil
              n/a
            nil
              nil
              nil[11]**Ian
                Robinson**
              Chairman
              Jan
                2001 - present
            2000
              2001
              2002
            n/a
              15,500
              40,500
              [12]
            n/a
              64,516
              34,000[13]
            n/a
              nil
              nil
            n/a
              nil
              nil
            n/a
              75,000[14]
              25,000
            n/a
              nil
              nil
            n/a
              nil
              nil**Richard
                N. Jeffs**
              CEO
                / President
              Oct
                2002- Nov 2002
            2000
              2001
              2002
            n/a
              n/a
              nil
            n/a
              n/a
              nil
            n/a
              n/a
              nil
            n/a
              n/a
              nil
            n/a
              n/a
              nil
            n/a
              n/a
              nil
            n/a
              n/a
              nil[15]




***Page
          - 33***






[1] Gregory
      Pek accrued $159,038 in additional salary in the fiscal year ended December
      31,
      2002.


[2] Other
      annual compensation consisted of housing expense, director’s fees, and employer
      contributions to the mandatory provident fund in Hong Kong, which is a similar
      program to Social Security in the United States.


[3] On
      August
      29, 2000, 150,000 of these stock options were rescinded and replaced with
      150,000 new stock options, of which 100,000 of the stock options were repriced
      from $9.90 to $5.05 per stock option and 50,000 of the stock options were
      repriced from $7.65 to $5.05 per stock option. The fair market value of Brek’s
      shares of common stock at the time of the grant of the new options was $5.91
      per
      share.


[4] On
      October 31, 2001, these 75,000 stock options, exercisable at $0.40 per stock
      option, were issued in consideration of the return and cancellation of 150,000
      stock options exercisable at $5.05 per stock option and 50,000 stock options
      exercisable at $7.65 per stock option. The fair market value of Brek’s shares of
      common stock at the time of the grant of the new options was $0.41 per
      share.


[5] Gregory
      Pek received 100,000 shares of common stock as severance valued at
      $70,000.


[6] Kenneth
      Telford’s salary did not exceed $100,000 in the fiscal year ended December 31,
      2000.


[7] Kenneth
      Telford accrued $54,000 in additional salary in the fiscal year ended December
      31, 2002.


[8] Kenneth
      Telford received 50,000 shares of common stock in payment of a bonus accrued
      during 2001 in the amount of $34,000. The fair market value of Brek’s shares of
      common stock at the time of the issuance of these shares was $0.68 per
      share.


[9] On
      October 31, 2001, these 200,000 stock options, exercisable at $0.40 per stock
      option, were issued in consideration of the return and cancellation of 100,000
      stock options exercisable at $5.05 per stock option and 50,000 warrants
      exercisable at $1.25 per warrant. The fair market value of Brek’s shares of
      common stock at the time of the grant of the new options was $0.41 per
      share.


[10] Ravi
      Daswani was not an executive office during the fiscal year ended December 31,
      2002. However, Mr. Daswani received 50,000 shares of common stock as a bonus
      payment in lieu of an accrued bonus from 2001 in the amount of $34,000. The
      fair
      market value of Brek’s shares of common stock at the time of the issuance of
      these shares was $0.68 per share.


[11] Ravi
      Daswani accrued $10,320 in directors’ fees for the fiscal year ended December
      31, 2002.


[12] Ian
      Robinson accrued $13,500 in additional salary for the fiscal year ended December
      31, 2002.


[13] Ian
      Robinson received 50,000 shares of common stock in payment of salary accrued
      during 2001 in the amount of $34,000. The fair market value of Brek’s shares of
      common stock at the time of the issuance of these shares was $0.68 per
      share.


[14] On
      October 31, 2001, these 75,000 stock options, exercisable at $0.40 per stock
      option, were issued in consideration of the return and cancellation of 50,000
      stock options exercisable at $5.05 per stock option and 50,000 warrants
      exercisable at $1.25 per warrant. The fair market value of Brek’s shares of
      common stock at the time of the grant of the new options was $0.41 per
      share.


[15] Richard
      N. Jeffs was owed $24,000 for consulting fees at December 31, 2002.





**Grant
      of Stock Options**





During
      the fiscal year ended December 31, 2002, Brek granted an aggregate 420,000
      stock
      options, with the following stock options being granted to the named executive
      officers.





**Name**
            **Number
                of**
              **securities
                underlying**
              **options
                / SARs granted**
              **(#)**
            **Percent
                of total options / SARs granted to employees in fiscal
                year**
            **Exercise
                or base price ($/share)**
            **Expiration
                date**Gregory
                Pek
            25,000
            8.5%
            $0.55
            July
                15, 2007Ian
                Robinson
            25,000
            8.5%
            $0.55
            July
                15, 2007Ken
                Telford
            50,000
            16.9%
            $0.55
            July
                15, 2007Richard
                N. Jeffs
            nil
            nil
            n/a
            n/a





**Existing
      Stock Options**





No
      stock
      options or stock appreciation rights were exercised by any named executive
      officers during the fiscal year ended December 31, 2002.





Existing
      stock options in the hands of named executive officers and senior management
      as
      of December 31, 2002, were as follows:





***Page
          - 34***








**Name**
            **Shares
                acquired on exercise**
              **(#)**
            **Value
                realized**
              **($)**
            **Number
                of securities underlying unexercised options/SARs at
                FY-end**
              **(#)**
            **Value
                of unexercised**
              **in-the-money**
              **options/SARs
                at FY-end**
              **($)****Exercisable**
            **Unexercisable**
            **Exercisable**
            **Unexercisable**Gregory
                Pek
            0
            nil
            81,250
            18,750
            0
            0Ian
                Robinson
            0
            nil
            81,250
            18,750
            0
            0Kenneth
                Telford
            0
            nil
            212,500
            37,500
            0
            0Richard
                N. Jeffs
            0
            nil
            150,000(1)
            0
            0
            0


**(1)**
            Stock
                options granted to Wet Coast Management Corp. which Richard N. Jeffs
                is
                the sole beneficial owner.





**Long
      Term Incentive Plan Awards**





Brek
      did
      not award any long term incentive plans during the fiscal year ended December
      31, 2002.





**Director
      Compensation**





During
      the fiscal year ended December 31, 2002, directors, who are not officers of
      Brek, were paid fees of $10,320 per year in connection with their serving on
      the
      Board. The Chairman of the Board received $54,000 per year. Directors were
      also
      reimbursed for out-of-pocket expenses incurred for attending Board
      meetings.





**Termination
      of Employment**





As
      of
      December 31, 2002, there were no employment agreements between Brek or the
      subsidiaries and any named executive officer, and there were no employment
      agreements or other compensating plans or arrangements with regard to any named
      executive officer that provided for specific compensation in the event of
      resignation, retirement, other termination of employment, a change of control
      of
      Brek, or from a change in a named executive officer’s responsibilities following
      a change in control, with the exception of following:





Gregory
      Pek





In
      January 1999, Brek entered into an employment agreement with Gregory Pek. The
      agreement provided that Brek would pay Mr. Pek a monthly salary of HK$100,000
      (approximately US$12,820) plus an additional month's salary per calendar year
      of
      service as a year-end payment. In January 2000, Mr. Pek's monthly salary was
      increased to HK$150,000 (approximately US$19,230); however, in December 2000
      Mr.
      Pek agreed to have his monthly salary temporarily reduced to HK$100,000
      (approximately US$12,820). Brek entered into new six-month employment agreements
      with Mr. Pek covering the period from March 1, 2001 to August 31, 2001. During
      this period, Mr. Pek’s aggregate monthly salary was HK$165,000 (approximately
      US$21,150) plus an additional lump-sum payment equal to four months’ salary was
      paid to Mr. Pek in August 2001. In August 2001, Brek entered into new one-year
      employment agreements with Mr. Pek that provide for an aggregate monthly salary
      of HK$165,000 (approximately US$21,150) plus an additional month’s salary per
      calendar year of service as a year-end payment. These agreements terminated
      on
      August 31, 2002, and as a result, Brek paid a termination payment to Mr. Pek
      in
      August 2002 equal to three months’ salary.





Kenneth
      Telford





In
      March
      2001, Brek entered into employment agreements with Kenneth Telford, its Chief
      Financial Officer. Pursuant to these agreements, Brek paid Mr. Telford an
      aggregate monthly salary of HK$165,000 (approximately US$21,250) for the period
      from March 1, 2001 through September 30, 2001, and issued Mr. Telford warrants
      to purchase 50,000 shares of Brek’s common stock at an exercise price of US$1.25
      per share, and paid Mr. Telford an additional lump-sum payment in August 2001
      equal to four months’ salary. The agreements also provided for an additional
      month’s salary per calendar year of service as a year-end payment. In August
      2001 Brek entered into new one-year employment agreements with Mr. Telford
      that
      provide for an aggregate monthly salary of HK$165,000 (approximately US$21,250)
      plus an additional month's salary per calendar year of service as a year-end
      payment. This agreement would have terminated on August 31, 2002 unless Brek
      chose to extend the term of the agreement. If Brek did not choose to extend
      the
      term of the agreement, the agreement provided that Brek must pay a termination
      payment to Mr. Telford in August 2002 equal to three months’
salary.





Brek
      and
      Mr. Telford agreed to extend his employment for one year beginning in August
      2002. Under the new arrangement with Mr. Telford, he will be paid $27,000 per
      month. In addition, he will have the option of working less than full time
      if he
      chooses, and if he receives payment from another employer other than Brek for
      time devoted to a job other than being an executive of Brek, Brek may reduce
      its
      payments to Mr. Telford by an amount equal to 80% of the amount of such other
      payments in excess of $3,000 (which reduction may not exceed
      $10,000).




***Page
          - 35***





**Compensation
      Committee**





During
      the fiscal year ended December 31, 2002, Brek’s Compensation Committee consisted
      of the following non-employee members of Brek's board of directors: Ian Robinson
      and James Pratt. The Compensation Committee was responsible for reviewing and
      determining Brek's executive compensation objectives and policies, administers
      Brek's stock plans and grants stock options.





**Item
      11. Security Ownership of Certain Beneficial Holders and
      Management.**





(a)  **Security
      Ownership of Certain Beneficial Owners (more than 5%)**





**(1)**
              **Title
                of Class**
            **(2)**
              **Name
                and Address of Beneficial Owner**
            **(3)**
              **Amount
                and Nature of**
              **Beneficial
                Owner**
            **(4)**
              **Percent**
              **of
                Class**[1]shares
                of
              common
                stock
            **Richard
                N. Jeffs**
              Third
                Floor
              346
                Kensington High Street
              London,
                UK, W14 8NS
            2,685,000[2]
                [3]
            10.05%[4]shares
                of
              common
                stock
            **Gregory
                Pek**
              902
                Henley Building 5
              Queens
                Road Central, Hong Kong
            1,607,500[5]
            6.03%[6]


[1] Based
      on
      26,560,037 shares of common stock issued and outstanding as of December 31,
      2002
      unless indicated otherwise.


[2] This
      number includes 1,286,500 shares of common stock that are beneficially owned
      indirectly.


[3] This
      number includes 150,000 stock options that can be exercised into one share
      of
      common stock per stock option.


[4] Based
      on
      26,710,037 shares of common stock on the assumption that all the stock options
      in footnote #3 above are exercised.


[5] This
      number includes 100,000 stock options that can be exercised into one share
      of
      common stock per stock option.


[6] Based
      on
      26,660,037 shares of common stock on the assumption that all the stock options
      in footnote #5 above are exercised.




**** **(b)**  **Security
      Ownership of Management**







**(1)**
              **Title
                of Class**
            **(2)**
              **Name
                and Address of Beneficial Owner**
            **(3)**
              **Amount
                and Nature of Beneficial Owner**
            **(4)**
              **Percent**
              **of
                Class**[1]shares
                of
              common
                stock
            **Gregory
                Pek**
              902
                Henley Building 5
              Queens
                Road Central, Hong Kong
            1,607,500[2]
            6.03%[3]shares
                of
              common
                stock
            **Ian
                Robinson**
              902
                Henley Boulevard
              5
                Queen Road
              Central,
                Hong Kong
            795,000[4]
                [5]
            2.98%[6]shares
                of
              common
                stock
            **James
                Pratt**
              32
                Greenwich Road, Greenwich
              Sydney,
                NSW 2065 Australia
            120,000[7]
            0.45%[8]shares
                of
              common
                stock
            **Ravi
                Daswani**
              902
                Henley Building 5
              Queens
                Road Central, Hong Kong
            560,461[9]
            2.10%[10]shares
                of
              common
                stock
            **Kenneth
                Telford**
              902
                Henley Building 5
              Queen’s
                Road
              Central,
                Hong Kong
            400,000[11]
            1.49%[12]shares
                of
              common
                stock
            Directors
                and Executive Officers (as a group)
            3,482,961[13]
            12.80%[14]


[1] Based
      on
      26,560,037 shares of common stock issued and outstanding as of December 31,
      2002
      unless indicated otherwise.


[2] This
      number includes 100,000 stock options that can be exercised into one share
      of
      common stock per stock option.


[3] Based
      on
      26,660,037 shares of common stock on the assumption that all the stock options
      in footnote #2 above are exercised.


[4] This
      number includes 125,000 shares of common stock that are beneficially owned
      indirectly.


[5] This
      number includes 100,000 stock options that can be exercised into one share
      of
      common stock per stock option.


[6] Based
      on
      26,660,037 shares of common stock on the assumption that all the stock options
      in footnote #5 above are exercised.


[7] This
      number includes 100,000 stock options that can be exercised into one share
      of
      common stock per stock option.


[8] Based
      on
      26,660,037 shares of common stock on the assumption that all the stock options
      in footnote #7 above are exercised.


[9] This
      number includes 100,000 stock options that can be exercised into one share
      of
      common stock per stock option.


[10] Based
      on
      26,660,037 shares of common stock on the assumption that all stock options
      in
      footnote #9 above are exercised.


[11] This
      number includes 250,000 stock options that can be exercised into one share
      of
      common stock per stock option.


[12] Based
      on
      26,810,037 shares of common stock on the assumption that all the stock options
      in footnote #11 above are exercised.


[13] This
      number includes 650,000 stock options that that can be exercised into one share
      of common stock per stock option.


[14] Based
      on
      27,210,037 shares of common stock on the assumption that all the stock options
      in footnote #13 above are exercised.




***Page
          - 36***





**(c)**  **Changes
      in Control**





Brek
      is
      not aware of any arrangement that may result in a change in control of
      Brek.





**Item
      12. Certain Relationships and Related Transactions.**





**(a)**  **Transactions
      with Related Parties**





During
      the last two fiscal years, no director, executive officer or security holder
      has
      had any direct or indirect interest in any transaction or a series of similar
      transactions that exceeded $60,000 to which Brek or any of its subsidiaries
      was
      a party with the exception of the following:





Investor
      Relations Fees - Pacific Capital Markets Inc.





In
      2001
      and 2002, Brek paid investor relations fees to Pacific Capital Markets Inc.,
      a
      company that was one third owned by Richard Jeffs, in the amount of $241,700
      and
      $187,328 respectively.





Stock
      Purchase Agreement with Vallenar Energy Corp.





On
      March
      12, 2002, Brek paid $12,563 to acquire 2,512,500 common shares of Vallenar
      Energy Corp’s stock and paid $350,000 to acquire 733,333 preferred shares of
      Vallenar Energy Corp. Brek’s interest in Vallenar Energy Corp. is the largest
      outstanding voting block stock. The interest in the preferred shares entitles
      Brek to a minimum 26% of the voting power of Vallenar that will not be diluted
      by further issuances of common stock. The preferred shares are convertible
      into
      733,333 common shares at the discretion of Brek. Also, as a shareholder of
      preferred shares, Brek is entitled to vote as a class on certain extraordinary
      matters such as a merger or other acquisition. See Exhibit 10.2 - Stock Purchase
      Agreement for more details.





During
      2001, Brek advanced $270,055 to Vallenar Energy Corp. Gregory Pek and Ken
      Telford are also directors of Vallenar Energy Corp., and Richard N. Jeffs is
      also a shareholder of Vallenar Energy Corp.





Purchase
      Agreement with Gasco Energy, Inc.





On
      July
      16, 2002, Gasco Energy, Inc. entered into a purchase agreement with Brek and
      other stockholders of Gasco Energy, Inc., including Richard Jeffs and Wet Coast
      Management Corp., which is owned and controlled by Richard Jeffs, pursuant
      to
      which Brek and the others purchased from Gasco Energy, Inc. an undivided 25%
      of
      Gasco Energy, Inc.’s working interests in all undeveloped acreage owned by Gasco
      Energy, Inc., representing 35,169 net undeveloped acres, in exchange for
      6,250,000 shares of common stock of Gasco Energy, Inc. and 500 shares of
      preferred stock of Gasco Energy, Inc. held by Brek and the other stockholders.
      The other stockholders assigned their right to receive their share of such
      working interests to Brek, so that Brek acquired title to all of the working
      interests conveyed by Gasco Energy, Inc. in the transaction. For the assignment
      of their right to Brek, Mr. Jeffs and Wet Coast Management Corp. each received
      1,237,500 shares of common stock in the capital of Brek. Brek also has the
      option to acquire an additional 5% undivided interest in Gasco Energy, Inc.’s
      undeveloped acreage by paying a total of $10.5 million in two equal installments
      on or before January 1, 2004 and January 1, 2005, respectively. A 2.5% interest
      will be conveyed to Brek upon receipt of each installment. Brek must make timely
      payment of the first installment in order to maintain the option to acquire
      the
      additional 2.5% interest with the second installment. See Exhibit 10.3 -
      Purchase Agreement for more details.





***Page
          - 37***








**(b)**  **Transactions
      with Promoters**





During
      the fiscal year ended December 31, 2002, Richard Jeffs, Gregory Pek and Kenneth
      Telford were the only promoters of Brek. None of the promoters received anything
      of value from Brek or its subsidiaries nor is any promoter entitled to receive
      anything of value from Brek or its subsidiaries for services provided as a
      promoter of Brek or its subsidiaries, except for Mr. Jeffs, as disclosed above
      under “Transactions with Related Parties”.




**Item
      13. Exhibits.**





**(a)**  **Index
      to and Description of Exhibits.**





**Exhibit**
            **Description**
            **Status****Exhibit
                A**
            Audited
                Financial Statements for the period ended December 31, 2002
            Included**3.1**
            Amended
                and Restated Articles of Incorporation filed as an Exhibit to Brek’s Form
                10-K/A filed on May 14, 2002, and incorporated herein by
                reference.
            Filed**3.2**
            Bylaws
                filed as an Exhibit to Brek’s registration statement on Form 10 filed on
                October 21, 1999, and incorporated herein by reference.
            Filed**4.1**
            1999
                Stock Option Plan, filed as an Exhibit to Brek’s Form S-8 (Registration
                Statement) filed on September 11, 2000, and incorporated herein by
                reference.
            Filed**4.2**
            Rights
                Agreement dated March 1, 2002 between Brek Energy Corporation and
                U.S.
                Bank N.A., filed as an Exhibit to Brek’s Form 8-K (Current Report) filed
                on March 6, 2002, and incorporated herein by reference.
            Filed**4.3**
            2001
                Employee Stock Option / Warrant Plan, filed as an Exhibit to Brek’s Form
                S-8 (Registration Statement) filed on July 10, 2002, and incorporated
                herein by reference.
            Filed**10.1**
            Stock
                Purchase Agreement dated March 16, 2000 among Brek Energy Corporation,
                Balaji Exports Ltd., Rajan Chellarm Mahboobani, Ravi Kishinchand
                Daswani,
                and Asia Internet Limited, filed as an attached exhibit to Brek’s Form
                10-KSB (Annual Report) filed on March 29, 2000, and incorporated
                herein by
                reference.
            Filed**10.2**
            Stock
                Purchase Agreement dated March 12, 2002 between Vallenar Energy Corp.
                and
                Brek Energy Corporation, filed as an attached exhibit to Brek’s Form
                10-K/A (Annual Report) filed on September 18, 2002, and incorporated
                herein by reference.
            Filed**10.3**
            Purchase
                Agreement dated July 16, 2002 among Gasco Energy, Inc., Pannonian
                Energy
                Inc., San Joaquin Oil & Gas Ltd., Brek Energy Corporation, Brek
                Petroleum Inc., Brek Petroleum (California), Inc. and certain
                stockholders, filed as an attached exhibit to Brek’s Form 8-K (Current
                Report) filed on July 31, 2002, and incorporated herein by
                reference.
            Filed**10.4**
            Share
                purchase agreement dated October 19, 2001 among First Ecom.com, Inc.,
                First Commerce Asia Limited, FEDS Acquisition Corporation, First
                Ecom
                Systems Limited, Transworld Payment Solutions NV, and First Curacao
                International Bank NV.
            Included**10.5**
            License
                agreements dated October 19, 2001 among First Ecom.com, Inc., First
                Ecom
                Systems Limited, and Transworld Payment Solutions NV.
            Included**21**
            List
                  of Subsidiaries, filed as an attached exhibit to Brek’s Form 10-KSB (2002
                  - Annual Report) filed on November, 2005, and incorporated herein
                  by
                  reference.
            Included**31**
            Certifications
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
            Included**32**
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.
            Included





***Page
          - 38***







**Item
      14. Principal Accounting Fees and Services**






**(1)
      Audit Fees**




The
      aggregate fees billed for each of the last two fiscal years for professional
      services rendered by the principal accountant for Brek’s audit of annual
      financial statements and for review of financial statements included in Brek’s
      Form 10-QSB’s or services that are normally provided by the accountant in
      connection with statutory and regulatory filings or engagements for those fiscal
      years were:




2002
      -
      $31,552- Hall & Company, Certified Public Accountants Inc.


2001
      - $0
      - Hall & Company, Certified Public Accountants Inc.





2002
      -
      $57,265 - Deloitte
      Touche Tohmatsu, Chartered Accountants


2001
      -
      $108,000 - Deloitte
      Touche Tohmatsu, Chartered Accountants







**(2)
      Audit-Related Fees**




The
      aggregate fees billed in each of the last two fiscal years for assurance and
      related services by the principal accountants that are reasonably related to
      the
      performance of the audit or review of Brek’s financial statements and are not
      reported in the preceding paragraph were:




2002
      -
      $0- Hall & Company, Certified Public Accountants Inc.


2001
      - $0
      - Hall & Company, Certified Public Accountants Inc.





2002
      - $0
      - Deloitte
      Touche Tohmatsu, Chartered Accountants


2001
      - $0
      - Deloitte
      Touche Tohmatsu, Chartered Accountants







**(3)
      Tax Fees**




The
      aggregate fees billed in each of the last two fiscal years for professional
      services rendered by the principal accountant for tax compliance, tax advice,
      and tax planning were:




2002
      -
      $0- Hall & Company, Certified Public Accountants Inc.


2001
      - $0
      - Hall & Company, Certified Public Accountants Inc.





2002
      - $0
      - Deloitte
      Touche Tohmatsu, Chartered Accountants


2001
      - $0
      - Deloitte
      Touche Tohmatsu, Chartered Accountants







**(4)
      All Other Fees**




The
      aggregate fees billed in each of the last two fiscal years for the products
      and
      services provided by the principal accountant, other than the services reported
      in paragraphs (1), (2), and (3) above were:




2002
      -
      $0- Hall & Company, Certified Public Accountants Inc.


2001
      - $0
      - Hall & Company, Certified Public Accountants Inc.





2002
      -
      $3,500 - Deloitte
      Touche Tohmatsu, Chartered Accountants


2001
      -
      $54,897 - Deloitte
      Touche Tohmatsu, Chartered Accountants







(5)
      Brek’s audit committee’s pre-approval policies and procedures described in
      paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee
      pre-approve all accounting related activities prior to the performance of any
      services by any accountant or auditor.




(6)
      The
      percentage of hours expended on the principal accountant’s engagement to audit
      Brek’s financial statements for the most recent fiscal year that were attributed
      to work performed by persons other than the principal accountant’s full time,
      permanent employees was nil %.




***Page
          - 39***








**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Securities and Exchange Act of 1934,
      Brek has caused this report to be signed on its behalf by the undersigned duly
      authorized person.








**BREK
      ENERGY CORPORATION**


*By:
      /s/ Richard N. Jeffs*      ******


Name:  **Richard
      N. Jeffs**


Title **:**  **Director
      and CEO**


Dated:  **October
      31, 2005**








Pursuant
      to the requirements of the Securities Exchange Act of 1934, the following
      persons on behalf of Brek and in the capacities and on the dates indicated
      have
      signed this report below.








**Signature**
            **Title**
            **Date***/s/
                Richard N. Jeffs*
            President,
                CEO, Principal Executive Officer, CFO, Principal Financial
                Officer
              and
                a member of the Board of Directors
            31
                October 2005*/s/
                Gregory Pek*
            Member
                of the Board of Directors
            4
                November 2005*/s/
                Ian Robinson*
            Member
                of the Board of Directors
            4
                November 2005*/s/
                Michael L. Nazmack*
            Member
                of the Board of Directors
            31
                October 2005*/s/
                Eugene Sweeney*
            Member
                of the Board of Directors
            ****November 2005*/s/
                Shawne Malone*
            Member
                of the Board of Directors
            31
                October 2005





***Page
          - 40***










**Exhibit
      31**












***Page
          - 41***




**BREK
      ENERGY CORPORATION** ****


**CERTIFICATIONS
      PURSUANT TO**


**SECTION
      302 OF THE SARBANES-OXLEY ACT OF 2002**






**CERTIFICATION**






I,
      Richard N. Jeffs, certify that:






1.
 
      I have reviewed this quarterly report on Form 10-KSB of Brek Energy Corporation;




2.
      Based
      on my knowledge, this quarterly report does not contain any untrue statement
      of
      a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were
      made, not misleading with respect to the period covered by this report;




3.
      Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the financial
      condition, results of operations and cash flows of the small business issuer
      as
      of, and for, the periods presented in this report;




4.
      The
      small business issuer’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as defined
      in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
      reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
      small business issuer and have:




(a)
      Designed such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure that
      material information relating to the small business issuer, including its
      consolidated subsidiaries, is made known to us by others within those entities,
      particularly during the period in which this report is being prepared;




(b)
      Designed such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles;




(c)
      Evaluated the effectiveness of the small business issuer’s disclosure controls
      and procedures and presented in this report our conclusions about the
      effectiveness of the disclosure controls and procedures, as of the end of the
      period covered by this report based on such evaluation; and




(d)
      Disclosed in this report any change in the small business issuer’s internal
      control over financial reporting that occurred during the small business
      issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal
      quarter in the case of an annual report) that has materially affected, or is
      reasonably likely to materially affect, the small business issuer’s internal
      control over financial reporting; and




5.
      The
      small business issuer’s other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial reporting,
      to
      the small business issuer’s auditors and the audit committee of the small
      business issuer’s board of directors (or persons performing the equivalent
      functions):




(a)
      All
      significant deficiencies and material weaknesses in the design or operation
      of
      internal control over financial reporting which are reasonably likely to
      adversely affect the small business issuer’s ability to record, process,
      summarize and report financial information; and




(b)
      Any
      fraud, whether or not material, that involves management or other employees
      who
      have a significant role in the small business issuer’s internal control over
      financial reporting.






Date:
      October 31, 2005






*/s/
      Richard N. Jeffs*


Richard
      N. Jeffs


Chief
      Executive Officer




***Page
          - 42***




**BREK
      ENERGY CORPORATION** ****


**CERTIFICATIONS
      PURSUANT TO**


**SECTION
      302 OF THE SARBANES-OXLEY ACT OF 2002**






**CERTIFICATION**






I,
      Richard N. Jeffs, certify that:




1.
 
      I have reviewed this quarterly report on Form 10-KSB of Brek Energy Corporation;




2.
      Based
      on my knowledge, this quarterly report does not contain any untrue statement
      of
      a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were
      made, not misleading with respect to the period covered by this report;




3.
      Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the financial
      condition, results of operations and cash flows of the small business issuer
      as
      of, and for, the periods presented in this report;




4.
      The
      small business issuer’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as defined
      in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
      reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
      small business issuer and have:




(a)
      Designed such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure that
      material information relating to the small business issuer, including its
      consolidated subsidiaries, is made known to us by others within those entities,
      particularly during the period in which this report is being prepared;




(b)
      Designed such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles;




(c)
      Evaluated the effectiveness of the small business issuer’s disclosure controls
      and procedures and presented in this report our conclusions about the
      effectiveness of the disclosure controls and procedures, as of the end of the
      period covered by this report based on such evaluation; and




(d)
      Disclosed in this report any change in the small business issuer’s internal
      control over financial reporting that occurred during the small business
      issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal
      quarter in the case of an annual report) that has materially affected, or is
      reasonably likely to materially affect, the small business issuer’s internal
      control over financial reporting; and




5.
      The
      small business issuer’s other certifying officer(s) and I have disclosed, based
      on our most recent evaluation of internal control over financial reporting,
      to
      the small business issuer’s auditors and the audit committee of the small
      business issuer’s board of directors (or persons performing the equivalent
      functions):




(a)
      All
      significant deficiencies and material weaknesses in the design or operation
      of
      internal control over financial reporting which are reasonably likely to
      adversely affect the small business issuer’s ability to record, process,
      summarize and report financial information; and




(b)
      Any
      fraud, whether or not material, that involves management or other employees
      who
      have a significant role in the small business issuer’s internal control over
      financial reporting.






Date:
      October 31, 2005








*/s/Richard
      N. Jeffs*


Richard
      N. Jeffs


Chief
      Financial Officer




***Page
          - 43***







**Exhibit
      32**










***Page
          - 44***




**CERTIFICATION
      PURSUANT TO**


**18
      U.S.C. SECTION 1350,**


**AS
      ADOPTED PURSUANT TO**


**SECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002**













In
      connection with the Annual Report of Brek Energy Corporation (“Brek”) on Form
      10-KSB for the period ending December 31, 2002 as filed with the Securities
      and
      Exchange Commission on the date hereof (the “Report”), I, Richard N. Jeffs,
      President and Chief Executive Officer of Brek and a member of the Board of
      Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:






(1)
        The Report fully complies with the requirements of section 13(a) or 15(d)
      of the Securities Exchange Act of 1934; and




(2)
        The information contained in the Report fairly represents, the financial
      condition and result of operations of the Company.








*/s/Richard
      N. Jeffs*


Richard
      N. Jeffs


Chief
      Executive Officer






October
      31, 2005




***Page
          - 45***




**CERTIFICATION
      PURSUANT TO**


**18
      U.S.C. SECTION 1350,**


**AS
      ADOPTED PURSUANT TO**


**SECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002**













In
      connection with the Annual Report of Brek Energy Corporation (“Brek”) on Form
      10-KSB for the period ending December 31, 2002 as filed with the Securities
      and
      Exchange Commission on the date hereof (the “Report”), I, Richard n. Jeffs,
      Chief Financial Officer of Brek and a member of the Board of Directors, certify,
      pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:






(1)
        The Report fully complies with the requirements of section 13(a) or 15(d)
      of the Securities Exchange Act of 1934; and




(2)
        The information contained in the Report fairly represents, the financial
      condition and result of operations of the Company.








*/s/Richard
      N. Jeffs*


Richard
      N. Jeffs


Chief
      Financial Officer






October
      31, 2005




***Page
          - 46***




**Exhibit
          A**
 **Financial
          Statements**
 
  
 ***Page
              - 47***
 **BREK
          ENERGY CORPORATION**
 **(Formerly
          First Ecom.com, Inc.)**
 **(A
          Development Stage Company)**
 **DECEMBER
          31, 2002**
 **CONSOLIDATED
          FINANCIAL STATEMENTS**
  REPORT
        OFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM
 
 **CONSOLIDATED
        BALANCE SHEETS**
 
 **CONSOLIDATED
        STATEMENTS OF
        OPERATIONS**
 
 **CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND
        COMPREHENSIVE INCOME**
 
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 
 **NOTES
        TO CONSOLIDATED FINANCIAL
        STATEMENTS**
 
 
 
 ***Page
            - 48***
  16140
          SAND CANYON AVE., SUITE 100
 IRVINE,
          CALIFORNIA 92618
 **H** **ALL** **&** **C** **OMPANY** *Certified
          Public Accountants, Inc* *.* (949)
          910-HALL (4255)
 TAX,
          FINANCIAL AND
          BUSINESS ADVISORY SERVICES FAX
          (949)
          910-4256
  **R****EPORT
          OF****I****NDEPENDENT****R****EGISTERED****P****UBLIC****A****CCOUNTING****F****IRM**
  August
          30, 2005
  To
          the
          Board of Directors and Stockholders of
 Brek
          Energy Corporation (Formerly First Ecom.com, Inc.)
 London,
          United Kingdom
  We
          have
          audited the accompanying consolidated balance sheet of Brek Energy Corporation
          as of December
          31, 2002, and the related consolidated statements of operations, stockholdersâ€TM
equity, and
          cash
          flows for the year then ended. These financial statements are the responsibility
          of the Companyâ€TMs
          management. Our responsibility is to express an opinion on these financial
          statements based
          on
          our audit. The consolidated financial statements of Brek Energy Corporation
          as
          of December
          31, 2000 and 2001 were audited by other auditors whose report dated March
          20,
          2002, expressed
          an unqualified opinion.
  We
          conducted our audit in accordance with the standards of the Public Company
          Accounting Oversight
          Board (United States). Those standards require that we plan and perform
          the
          audit to obtain
          reasonable assurance about whether the financial statements are free of
          material misstatement.
          The Company is not required to have, nor were we engaged to perform, an
          audit of its
          internal control over financial reporting. Our audit included consideration
          of
          internal control over
          financial reporting as a basis for designing audit procedures that are
          appropriate in the circumstance,
          but not for the purpose of expressing an opinion on the effectiveness of
          the Companyâ€TMs
          internal control over financial reporting. Accordingly, we express no such
          opinion. An
          audit
          includes examining, on a test basis, evidence supporting the amounts and
          disclosures in the
          financial statements. An audit also includes assessing the accounting principles
          used and significant
          estimates made by management, as well as evaluating the overall financial
          statement presentation.
          We believe that our audit provides a reasonable basis for our
          opinion.
  In
          our
          opinion, the financial statements referred to above present fairly, in
          all
          material respects, the consolidated
          financial position of Brek Energy Corporation as of December 31, 2002,
          and the results
          of its operations and its cash flows for the year then ended in conformity
          with
          accounting principles
          generally accepted in the United States of America.
  
 **H** **ALL** **&
            C** **OMPANY**
 **Irvine,
            California**
  ***Page
              - 49***
  **BREK
          ENERGY CORPORATION**
 **(Formerly
          First Ecom.com, Inc.)**
 **(A
          Development Stage Company)**
 **CONSOLIDATED
          BALANCE SHEETS**
  
 **December
                    31,****2002**
                
                
                **2001****ASSETS****Current
                    Assets**Cash
                    and cash equivalents
                $
                3,801
                
                $
                2,088,484Trade
                    accounts receivable
                
                877
                
                
                28,858Accrued
                    interest receivable
                
                -
                
                
                3,326Marketable
                    securities (Note 3)
                
                -
                
                
                53,309Prepaid
                    insurance
                
                -
                
                
                288,869Prepaid
                    deposits
                
                -
                
                
                39,226Other
                    prepaid expenses and deposits
                
                32,447
                
                
                94,78037,125
                
                
                2,596,852Note
                    receivable (Note 5)
                
                1
                
                
                1,865,244Loan
                    receivable (Note 6)
                
                -
                
                
                270,055Property
                    and equipment, net (Note 7)
                
                -
                
                
                257,321Oil
                    and gas properties (Note 8)
                
                2,032,860
                
                
                -Equity
                    in affiliate (Note 10)
                
                -
                
                
                18,507,906**TOTAL
                    ASSETS**
                **$**
                **2,069,986**
                
                **$**
                **23,497,378****LIABILITIES
                    AND STOCKHOLDERS' EQUITY****Current
                    Liabilities**Accounts
                    payable and accrued liabilities
                $
                1,048,134
                
                $
                271,379Due
                    to related parties (Note 12)
                
                365,717
                
                
                -**TOTAL
                    LIABILITIES**
                
                **1,413,851**
                
                
                **271,379****Commitments
                    and contingencies (Note 19)****Minority
                    interest (Note 9)**
                
                58,028
                
                
                -**STOCKHOLDERS'
                    EQUITY**Share
                    capital (Note 13)Authorized300,000,000
                    common shares, $0.001 par valueIssued
                    and outstanding26,560,037
                    and 19,210,037 common shares
                
                26,561
                
                
                19,211Additional
                    paid in capital
                
                53,635,745
                
                
                50,250,332Common
                    stock purchase warrants
                
                8,016,124
                
                
                8,016,124Deficit
                    accumulated during the development stage
                
                (61,080,323
                )
                
                (35,059,668
                )**TOTAL
                    STOCKHOLDERS' EQUITY**
                
                **598,107**
                
                
                **23,225,999****TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY**
                **$**
                **2,069,986**
                
                **$**
                **23,497,378**
  The
          accompanying notes are an integral part of these consolidated financial
          statements
 
 
 ***Page
              - 50***
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **CONSOLIDATED
            STATEMENTS OF OPERATIONS**
 **Cumulative****Twelve
                      Months**
                  
                  
                  **from
                      Inception****Ended
                      December 31,**
                  
                  **September
                      16, 1998****2002**
                  
                  
                  **2001**
                  
                  
                  **2000**
                  
                  **to
                      December 31, 2002****Revenue**
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -**Expenses****Operating
                      expenses**General
                      and administrative
                  
                  
                  3,673,105
                  
                  
                  232,475
                  
                  
                  -
                  
                  
                  3,905,580Charges
                      for impairment of certainlong-lived
                      assets, (Notes 5, 7 and 8)
                  
                  
                  18,543,307
                  
                  
                  -
                  
                  
                  -
                  
                  
                  18,543,307Total
                      operating expenses
                  
                  
                  22,216,412
                  
                  
                  232,475
                  
                  
                  -
                  
                  
                  22,448,887**Loss
                      from operations**
                  
                  
                  (22,216,412
                  )
                  
                  (232,475
                  )
                  
                  -
                  
                  
                  (22,448,887
                  )**Other
                      (Expenses) Income**Interest
                      income
                  
                  
                  40,593
                  
                  
                  704,725
                  
                  
                  1,527,959
                  
                  
                  2,310,038Interest
                      expense
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (2,121
                  )
                  
                  (473,545
                  )Loss
                      on sale of marketable securities, (Note 3)
                  
                  
                  (12,611
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (12,611
                  )Loss
                      on write-down of marketable securities, (Note 3)
                  
                  
                  (34,927
                  )
                  
                  (314,339
                  )
                  
                  (1,632,353
                  )
                  
                  (1,981,619
                  )Losses
                      in equity investees (Notes 9 and 10)
                  
                  
                  (813,381
                  )
                  
                  (492,094
                  )
                  
                  -
                  
                  
                  (1,305,475
                  )Write
                      down in investment in equity investee, (Note 10)
                  
                  
                  (3,309,536
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (3,309,536
                  )Total
                      other (expenses) income
                  
                  
                  (4,129,862
                  )
                  
                  (101,708
                  )
                  
                  (106,515
                  )
                  
                  (4,772,748
                  )-**Loss
                      from continuing operations**
                  
                  
                  (26,346,274
                  )
                  
                  (334,183
                  )
                  
                  (106,515
                  )
                  
                  (27,221,635
                  )-**Minority
                      interest, (Note 9)**
                  
                  
                  302,142
                  
                  
                  -
                  
                  
                  -
                  
                  
                  302,142**Net
                      loss before discontinued operations**
                  
                  
                  (26,044,132
                  )
                  
                  (334,183
                  )
                  
                  (106,515
                  )
                  
                  (26,919,493
                  )**Income
                      (loss) from discontinued operations, (Note 11)**Net
                      loss -payment processing
                  
                  
                  (1,199,653
                  )
                  
                  (11,225,955
                  )
                  
                  (12,811,092
                  )
                  
                  (31,590,922
                  )Net
                      loss -system integration
                  
                  
                  -
                  
                  
                  (236,683
                  )
                  
                  (4,219,736
                  )
                  
                  (4,456,419
                  )Equity
                      in loss of affiliate
                  
                  
                  -
                  
                  
                  (390,052
                  )
                  
                  (292,118
                  )
                  
                  (682,170
                  )(Loss)
                      gain on discontinuance (net of $Nil tax effect)
                  
                  
                  (132
                  )
                  
                  1,725,551
                  
                  
                  -
                  
                  
                  1,725,419**Total
                      income (loss) from discontinuance**
                  
                  
                  (1,199,785
                  )
                  
                  (10,127,139
                  )
                  
                  (17,322,946
                  )
                  
                  (35,004,092
                  )**Loss
                      before cumulative effect of accounting change**
                  
                  
                  (27,243,917
                  )
                  
                  (10,461,322
                  )
                  
                  (17,429,461
                  )
                  
                  (61,923,585
                  )**Cumulative
                      effect of accounting change**
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (380,000
                  )
                  
                  (380,000
                  )**Net
                      Loss**
                  
                  $
                  (27,243,917
                  )
                  $
                  (10,461,322
                  )
                  $
                  (17,809,461
                  )
                  $
                  (62,303,585
                  )**Basic
                      and diluted loss per share applicable****to
                      common stockholders**Continuing
                      operations
                  
                  $
                  (1.11
                  )
                  $
                  (0.02
                  )
                  $
                  (0.01
                  )Discontinued
                      operations
                  
                  
                  (0.05
                  )
                  
                  (0.53
                  )
                  
                  (0.96
                  )Cumulative
                      effect of accounting change
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (0.02
                  )$
                  (1.16
                  )
                  $
                  (0.55
                  )
                  $
                  (0.99
                  )**Weighted
                      average shares outstanding**
                  
                  
                  **23,408,585**
                  
                  
                  **19,210,037**
                  
                  
                  **18,064,980**
  The
            accompanying notes are an integral part of these consolidated financial
            statements
  ***Page
              - 51***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **CONSOLIDATED
            STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND
            COMPREHENSIVE INCOME**
 **For
            the years ended December 31, 2002, 2001, 2000, 1999 and for the period
            from
            September 16, 1998 (Inception) to December 31, 1998**
   **Deficit****Common**
                  
                  
                  **Accumulated****Common
                      Stock Issued**
                  
                  
                  **Additional**
                  
                  
                  **Stock**
                  
                  
                  **During
                      the****Number
                      of**
                  
                  
                  
                  
                  
                  **Paid
                      in**
                  
                  
                  **Purchase**
                  
                  
                  **Development****Shares**
                  
                  
                  **Amount**
                  
                  
                  **Capital**
                  
                  
                  **Warrants**
                  
                  
                  **Stage**
                  
                  
                  **Total****Balance,
                      September 16, 1998 (Inception)**
                  
                  -
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -**Balance,
                      December 31, 1998**
                  
                  **-**
                  
                  
                  **-**
                  
                  
                  **-**
                  
                  
                  **-**
                  
                  
                  **-**
                  
                  
                  **-**Impact
                      of merger with JRL Resources Corp.
                  
                  4,040,000
                  
                  
                  4,040
                  
                  
                  (4,940
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (900
                  )Issuance
                      of shares of common stockin
                      lieu of organizational costs
                  
                  8,000,000
                  
                  
                  8,000
                  
                  
                  300,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  308,000Issuance
                      of common stock and warrants
                  
                  2,916,667
                  
                  
                  2,917
                  
                  
                  17,004,583
                  
                  
                  360,000
                  
                  
                  -
                  
                  
                  17,367,500Stock
                      based compensation
                  
                  -
                  
                  
                  -
                  
                  
                  646,532
                  
                  
                  -
                  
                  
                  -
                  
                  
                  646,532Proceeds
                      received on issuance of debt
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -securities
                      with detachable warrants
                  
                  -
                  
                  
                  -
                  
                  
                  410,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  410,000Net
                      loss for the year
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (6,788,885
                  )
                  
                  (6,788,885
                  )**Balance,
                      December 31, 1999,****as
                      previously stated**
                  
                  **14,956,667**
                  
                  
                  **14,957**
                  
                  
                  **18,356,175**
                  
                  
                  **360,000**
                  
                  
                  **(6,788,885**
                  **)**
                  
                  **11,942,247**Prior
                      period adjustment
                  
                  **-**
                  
                  
                  **-**
                  
                  
                  (207,200
                  )
                  
                  **-**
                  
                  
                  207,200
                  
                  
                  -**Balance,
                      December 31, 1999, as restated**
                  
                  **14,956,667**
                  
                  
                  **14,957**
                  
                  
                  **18,148,975**
                  
                  
                  **360,000**
                  
                  
                  **(6,581,685**
                  **)**
                  
                  **11,942,247**Issuance
                      of common stock
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  -(net
                      of issuance costs of $2,095,562)
                  
                  3,228,500
                  
                  
                  3,229
                  
                  
                  20,915,835
                  
                  
                  -
                  
                  
                  
                  
                  
                  20,919,064Fair
                      value of warrants issued with common stock
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  7,656,124
                  
                  
                  -
                  
                  
                  7,656,124Stock
                      based compensation
                  
                  -
                  
                  
                  -
                  
                  
                  3,947,837
                  
                  
                  -
                  
                  
                  -
                  
                  
                  3,947,837Stock
                      issued in business combination
                  
                  24,870
                  
                  
                  25
                  
                  
                  623,963
                  
                  
                  -
                  
                  
                  -
                  
                  
                  623,988Shares
                      issued on exercise of warrants
                  
                  1,000,000
                  
                  
                  1,000
                  
                  
                  7,799,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  7,800,000Cumulative
                      effect of accounting change forbeneficial
                      feature of convertible debt
                  
                  -
                  
                  
                  -
                  
                  
                  380,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  380,000Net
                      loss for the year
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (17,809,461
                  )
                  
                  (17,809,461
                  )**Balance,
                      December 31, 2000,****as
                      previously stated**
                  
                  **19,210,037**
                  
                  
                  **19,211**
                  
                  
                  **51,815,610**
                  
                  
                  **8,016,124**
                  
                  
                  **(24,391,146**
                  **)**
                  
                  **35,459,799**Prior
                      period adjustment
                  
                  **-**
                  
                  
                  **-**
                  
                  
                  (1,852,245
                  )
                  
                  **-**
                  
                  
                  1,852,245
                  
                  
                  -**Balance,
                      December 31, 2000, as restated**
                  
                  **19,210,037**
                  
                  
                  **19,211**
                  
                  
                  **49,963,365**
                  
                  
                  **8,016,124**
                  
                  
                  **(22,538,901**
                  **)**
                  
                  **35,459,799**Issuance
                      of warrants
                  
                  -
                  
                  
                  -
                  
                  
                  174,900
                  
                  
                  -
                  
                  
                  -
                  
                  
                  174,900Cancellation
                      of stock options relating todiscontinued
                      operations
                  
                  -
                  
                  
                  -
                  
                  
                  (1,947,378
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (1,947,378
                  )Net
                      loss for the year
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (10,461,322
                  )
                  
                  (10,461,322
                  )**Balance,
                      December 31, 2001,****as
                      previously stated**
                  
                  **19,210,037**
                  
                  
                  **19,211**
                  
                  
                  **48,190,887**
                  
                  
                  **8,016,124**
                  
                  
                  **(33,000,223**
                  **)**
                  
                  **23,225,999**Prior
                      period adjustment
                  
                  **-**
                  
                  
                  **-**
                  
                  
                  836,183
                  
                  
                  **-**
                  
                  
                  (836,183
                  )
                  
                  -**Balance,
                      December 31, 2001, as restated**
                  
                  **19,210,037**
                  
                  
                  **19,211**
                  
                  
                  **49,027,070**
                  
                  
                  **8,016,124**
                  
                  
                  **(33,836,406**
                  **)**
                  
                  **23,225,999**Issuance
                      of shares of common stock for cash
                  
                  2,845,000
                  
                  
                  2,845
                  
                  
                  1,419,655
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,422,500Share
                      issue costs
                  
                  -
                  
                  
                  -
                  
                  
                  (25,000
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (25,000
                  )Issuance
                      of penalty shares
                  
                  80,000
                  
                  
                  80
                  
                  
                  56,720
                  
                  
                  -
                  
                  
                  -
                  
                  
                  56,800Issuance
                      of shares of common stock inexchange
                      for oil and gas properties
                  
                  4,125,000
                  
                  
                  4,125
                  
                  
                  2,858,625
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,862,750Issuance
                      of shares of common stock
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  -settlement
                      of debt
                  
                  250,000
                  
                  
                  250
                  
                  
                  171,750
                  
                  
                  -
                  
                  
                  -
                  
                  
                  172,000Issuance
                      of shares of common stockupon
                      exercise of stock options
                  
                  50,000
                  
                  
                  50
                  
                  
                  19,950
                  
                  
                  -
                  
                  
                  -
                  
                  
                  20,000Stock
                      compensation expense
                  
                  -
                  
                  
                  -
                  
                  
                  106,975
                  
                  
                  -
                  
                  
                  -
                  
                  
                  106,975Net
                      loss for the year
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (27,243,917
                  )
                  
                  (27,243,917
                  )**Balance,
                      December 31, 2002**
                  
                  **26,560,037**
                  
                  **$**
                  **26,561**
                  
                  **$**
                  **53,635,745**
                  
                  **$**
                  **8,016,124**
                  
                  **$**
                  **(61,080,323**
                  **)**
                  **$**
                  **598,107**
  The
            accompanying notes are an integral part of these consolidated financial
            statements
 ***Page
              - 52***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **CONSOLIDATED
            STATEMENTS OF CASH FLOWS**
 **Cumulative****from
                      Inception,****Year
                      Ended December 31,**
                  
                  **September
                    16, 1998 to****2002**
                  
                  
                  **2001**
                  
                  
                  **2000**
                  
                  
                  **December
                      31, 2002****CASH
                      FLOWS FROM OPERATING ACTIVITIES**Net
                      loss for the period
                  $
                  (27,243,917
                  )
                  $
                  (10,461,322
                  )
                  $
                  (17,809,461
                  )
                  $
                  (62,303,585
                  )Adjustments
                      to reconcile net loss to net cash used in operating activities:Equity
                      loss of affiliates
                  
                  813,381
                  
                  
                  882,146
                  
                  
                  292,118
                  
                  
                  1,987,645Minority
                      interest
                  
                  302,142
                  
                  
                  -
                  
                  
                  -
                  
                  
                  302,142Organizational
                      costs in excess of cash paid
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  300,000Issuance
                      of shares in settlement of expenses
                  
                  228,800
                  
                  
                  -
                  
                  
                  -
                  
                  
                  228,800Stock
                      compensation costs (recovery)
                  
                  106,975
                  
                  
                  (1,772,478
                  )
                  
                  3,947,837
                  
                  
                  2,928,866Depreciation
                  
                  102,611
                  
                  
                  446,366
                  
                  
                  575,587
                  
                  
                  1,374,946(Gain)
                      loss on disposal of equipment
                  
                  48,976
                  
                  
                  125,537
                  
                  
                  (6,085
                  )
                  
                  172,232Loss
                      from discontinued operations
                  
                  132
                  
                  
                  6,943
                  
                  
                  -
                  
                  
                  7,075Write-down
                      of equipment
                  
                  113,420
                  
                  
                  
                  
                  
                  -
                  
                  
                  113,420Accretion
                      of discount on loan
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  410,000Cumulative
                      effect of accounting change for beneficialfeature
                      of convertible debt
                  
                  -
                  
                  
                  -
                  
                  
                  380,000
                  
                  
                  380,000Amortization
                      of goodwill
                  
                  -
                  
                  
                  325,672
                  
                  
                  291,282
                  
                  
                  616,954Imputed
                      interest on notes receivable
                  
                  (35,863
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (35,863
                  )Loss
                      on sale of marketable securities
                  
                  12,611
                  
                  
                  -
                  
                  
                  -
                  
                  
                  12,611Loss
                      recognized on write-down of marketable securities
                  
                  34,927
                  
                  
                  314,339
                  
                  
                  1,632,353
                  
                  
                  1,981,619Charges
                      for certain long-lived and prepaid assets
                  
                  18,543,307
                  
                  
                  3,159,505
                  
                  
                  2,405,829
                  
                  
                  24,108,641Impairment
                      loss of equity in affiliates
                  
                  3,309,536
                  
                  
                  -
                  
                  
                  -
                  
                  
                  3,309,536(3,662,962
                  )
                  
                  (6,973,292
                  )
                  
                  (8,290,540
                  )
                  
                  (24,104,961
                  )Changes
                      in operating assets and liabilities net of businesses acquired:Accounts
                      receivable and accrued interest receivable
                  
                  31,307
                  
                  
                  96,852
                  
                  
                  (52,548
                  )
                  
                  75,611Prepaid
                      financial advisory fee
                  
                  -
                  
                  
                  -
                  
                  
                  672,022
                  
                  
                  -Other
                      prepaid expenses and deposits
                  
                  390,428
                  
                  
                  110,906
                  
                  
                  (651,061
                  )
                  
                  (525,505
                  )Amounts
                      due from stockholders
                  
                  -
                  
                  
                  -
                  
                  
                  12,540
                  
                  
                  -Accounts
                      payable and accrued liabilities
                  
                  776,755
                  
                  
                  (232,942
                  )
                  
                  65,498
                  
                  
                  980,797Amounts
                      due to related parties
                  
                  365,717
                  
                  
                  -
                  
                  
                  (239,727
                  )
                  
                  365,717Deferred
                      rent
                  
                  -
                  
                  
                  -
                  
                  
                  (62,017
                  )
                  
                  -Deferred
                      revenue
                  
                  -
                  
                  
                  (5,604
                  )
                  
                  (12,471
                  )
                  
                  -**NET
                      CASH USED IN OPERATING ACTIVITIES**
                  
                  **(2,098,755**
                  **)**
                  
                  **(7,004,080**
                  **)**
                  
                  **(8,558,304**
                  **)**
                  
                  **(23,208,341**
                  **)****CASH
                      FLOWS USED IN INVESTING ACTIVITIES**Purchases
                      of property and equipment
                  
                  (17,537
                  )
                  
                  (316,323
                  )
                  
                  (520,614
                  )
                  
                  (2,053,646
                  )Cash
                      spent on oil and gas properties
                  
                  (529,906
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (529,906
                  )Acquisition
                      of subsidiary
                  
                  (772,563
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (772,563
                  )Proceeds
                      from disposal of equipment
                  
                  1,837
                  
                  
                  33,284
                  
                  
                  22,803
                  
                  
                  63,730Proceeds
                      from sale of subsidiary
                  
                  -
                  
                  
                  1,418,473
                  
                  
                  -
                  
                  
                  1,418,473Proceeds
                      from sale of marketable securities
                  
                  5,771
                  
                  
                  -
                  
                  
                  -
                  
                  
                  5,771Effect
                      of minority interest on acquisition of subsidiary
                  
                  (361,085
                  )
                  
                  (2,232,059
                  )
                  
                  (1,409,319
                  )
                  
                  (4,002,463
                  )Investment
                      in marketable securities
                  
                  -
                  
                  
                  -
                  
                  
                  (2,000,000
                  )
                  
                  (2,000,000
                  )Investment
                      in and advances to affiliate
                  
                  -
                  
                  
                  (1,752,467
                  )
                  
                  (3,400,000
                  )
                  
                  (5,152,467
                  )Acquisition
                      of Gasco Energy, Inc.
                  
                  -
                  
                  
                  (19,000,000
                  )
                  
                  -
                  
                  
                  (19,000,000
                  )Loan
                      receivable
                  
                  270,055
                  
                  
                  (270,055
                  )
                  
                  -
                  
                  
                  -**NET
                      CASH USED IN INVESTING ACTIVITIES**
                  
                  **(1,403,428**
                  **)**
                  
                  **(22,119,147**
                  **)**
                  
                  **(7,307,130**
                  **)**
                  
                  **(32,023,071**
                  **)****CASH
                      FLOWS FROM FINANCING ACTIVITIES**Proceeds
                      from issuance of common stock
                  
                  1,422,500
                  
                  
                  -
                  
                  
                  30,670,750
                  
                  
                  50,226,250Share
                      issue costs
                  
                  (25,000
                  )
                  
                  -
                  
                  
                  (2,460,458
                  )
                  
                  (2,804,208
                  )Proceeds
                      from exercise of stock options
                  
                  20,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  20,000Proceeds
                      from exercise of warrants
                  
                  -
                  
                  
                  -
                  
                  
                  7,800,000
                  
                  
                  7,800,000Proceeds
                      from short-term loans with detachable warrants
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,000,000Proceeds
                      from short-term loans
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  750,000Repayment
                      of short-term loans
                  
                  -
                  
                  
                  -
                  
                  
                  (27,007
                  )
                  
                  (1,750,000
                  )Principal
                      payments under capital lease obligations
                  
                  -
                  
                  
                  -
                  
                  
                  (5,746
                  )
                  
                  (6,829
                  )**NET
                      CASH PROVIDED BY FINANCING ACTIVITIES**
                  
                  **1,417,500**
                  
                  
                  **-**
                  
                  
                  **35,977,539**
                  
                  
                  **55,235,213****Net
                      increase (decrease) in cash and cash equivalents**
                  
                  **(2,084,683**
                  **)**
                  
                  **(29,123,227**
                  **)**
                  
                  **20,112,105**
                  
                  
                  **3,801****Cash
                      and cash equivalents at the beginning of
                      year/period**
                  
                  2,088,484
                  
                  
                  31,211,711
                  
                  
                  11,099,606
                  
                  
                  -**Cash
                      and cash equivalents at at the end of year/period**
                  **$**
                  **3,801**
                  
                  **$**
                  **2,088,484**
                  
                  **$**
                  **31,211,711**
                  
                  **$**
                  **3,801**Supplemental
                      cash information:Cash
                      paid during the year/period for:Interest
                  $
                  -
                  
                  $
                  -
                  
                  $
                  2,121
                  
                  $
                  63,745Non
                      Cash Transactions:Issuance
                      of shares for oil and gas properties
                  $
                  2,862,750Issuance
                      of penalty shares
                  $
                  56,800Issuance
                      of shares of common stock in settlement of debt
                  $
                  172,000Stock
                      compensation expense
                  $
                  106,975Loan
                      receivable offset against acquisition price of subsidiary
                  $
                  270,000Share
                      exchange to acquire 25% interest in oil and gas properties
                  $
                  17,264,750
 The
            accompanying notes are an integral part of these consolidated financial
            statements
 
 ***Page
              - 53***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          1 - ORGANIZATION AND PRINCIPAL ACTIVITIES**
 
 **Organization**
 First
          Ecommerce Asia Limited (“FEAL”) was incorporated in Hong Kong on September 16,
          1998. On January 28, 1999, FEAL, entered into an agreement and plan of
          merger
          with JRL Resources Corp., (“JRL Resources”) a company incorporated in the State
          of Florida on November 13, 1996. Pursuant to the terms of the agreement,
          plan of
          merger and related agreements, 3,015,000 newly issued shares of JRL Resources
          and 985,000 shares held by existing shareholders of JRL Resources were
          exchanged
          for two shares of FEAL. As a result of this business combination FEAL became
          a
          wholly-owned subsidiary of JRL Resources.
 
 The
          merger between JRL Resources and FEAL was a merger of a private operating
          company, (FEAL) into a public shell corporation, with nominal net assets,
          that
          resulted in the owners and management of the private company (FEAL) obtaining
          operating control of the combined company after the transaction. For accounting
          purposes, the transaction has been treated as a reverse merger, of JRL
          Resources
          by FEAL with FEAL deemed to be the accounting acquirer.
 
 Pursuant
          to an agreement and plan of merger dated February 12, 1999, JRL Resources
          was
          merged with and into Brek Energy Corporation (formerly First Ecom.com,
          Inc.)
          (“BREK” or the Company”), a company incorporated in the State of Nevada on
          February 12, 1999, with no shares issued and outstanding. Pursuant to the
          agreement and plan of merger, all of the 12,040,000 outstanding common
          shares of
          JRL Resources were exchanged on a one-for-one basis for newly issued shares
          of
          BREK, with BREK being the surviving corporation. For accounting purposes,
          this
          merger is treated as a re-incorporation of JRL Resources as BREK.
 
 Details
          of the issuance of common stock are set out in Note 13.
 
 The
          Company was originally established to facilitate electronic payment processing
          of e-commerce transactions for merchants and banks across the Internet.
          The
          Company developed an electronic gateway to convert consumers’ credit card
          information, collected by merchants on the Internet, into a format that
          could be
          processed by banks. The Company disposed of its payment processing business
          on
          September 30, 2002. (Note 11)
 
 During
          2001, the Company changed its primary business to that of oil and gas
          exploration and on July 19, 2001, acquired a 26% non-dilutable voting interest
          in Gasco Energy, Inc., (“Gasco”). On July 16, 2002, the Company exchanged all of
          its shareholdings in Gasco for an undivided interest in all of Gasco’s
          undeveloped mineral leases in Utah, Wyoming, and California. At the same
          time,
          the Company acquired an additional undivided interest in Gasco’s undeveloped
          mineral leases from certain third parties in exchange for the issuance
          of
          4,125,000 shares of the Company. The main focus of the Company’s oil and gas
          exploration business has been centered in the United States. (Notes 8,
          10, 13
          and 20)
 
 In
          March
          2002, the Company acquired a 26% non-dilutable voting interest in Vallenar
          Energy Corp. (“Vallenar”) another company engaged in oil and gas exploration. On
          June 28, 2002, the Company increased its ownership of Vallenar to 51.53%.
          (Note
          9)
 
 **Development
          Stage Activities**
 The
          Company has not commenced significant operations and in accordance with
          SFAS No.
          7, the Company is considered a development stage company.
 
 ***Page
              - 54***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 **Principles
          of Consolidation**
 The
          consolidated financial statements include the financial statements of the
          Company and its subsidiaries. All significant intercompany balances and
          transactions have been eliminated. Affiliated companies (20% to 50% owned
          companies) in which the Company does not have significant influence are
          accounted for, using the equity method. The Company’s share of earnings (losses)
          from these companies are included in the accompanying consolidated statements
          of
          operations.
 
 The
          financial statements for the period prior to the merger with JRL Resources
          reflect the consolidated financial position and results of operations of
          FEAL.
          Subsequent to the merger, the financial statements reflect the consolidated
          financial position and results of operations of BREK (as successor to JRL
          Resources subsequent to BREK’s formation and JRL Resources prior to BREK’s
          formation) and its subsidiaries.
 
 **Accounting
          Estimates**
 The
          preparation of financial statements in conformity with accounting principles
          generally accepted in the United States of America requires management
          to make
          estimates and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of
          the financial statements and the reported amounts of revenues and expenses
          during the reporting period. Actual results could differ from those
          estimates.
 
 **Cash
          and Cash Equivalents**
 For
          purposes of the balance sheets and statements of cash flows, the Company
          considers all highly liquid debt instruments purchased with maturity of
          three
          months or less to be cash equivalents.
 
 **Marketable
          Securities**
 The
          Company considers all marketable securities as available-for-sale. All
          securities are recorded at fair value. Unrealized gains and losses, which
          are
          temporary, on marketable securities are reported as a component of other
          comprehensive income and classified as accumulated other comprehensive
          income
          (loss) in stockholders’ equity (deficit). Realized gains and losses and
          unrealized losses, which are other than temporary on marketable securities
          are
          included in earnings and are derived using the specific identification
          method.
          The Company sold all of their marketable securities during the year ended
          December 31, 2002.
 
 **Investments**
 The
          Company accounts for its investments in entities where it does not have
          majority
          voting or management control, using the equity basis. The gains (losses)
          from
          equity investments are reported as a component of income (loss).
 
 **Concentration
          of Credit Risk**
 Financial
          instruments that potentially subject the Company to a concentration of
          credit
          risk consist primarily of cash and cash equivalents. The Company places
          its cash
          with various major financial institutions and, by policy, limits the amount
          of
          credit exposure with any one financial institution.
 
 **Fair
          Value of Financial Instruments**
 The
          carrying values reflected in the consolidated balance sheets for cash and
          cash
          equivalents, trade accounts receivable, accrued interest receivable, short
          term
          loan, accounts payable and accruals and amounts due to related parties
          approximate their fair values because of the short term nature of these
          instruments. The fair value of the note receivable of $1 is an estimate
          based on
          the value the Company expects to realize within the next twelve months.
  ***Page
              - 55***
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Revenue
          Recognition**
 Oil
          and
          gas revenue will be recognized as income when the oil or gas is produced
          and
          sold.
 
 **Property
          and Equipment**
 Property
          and equipment are stated at cost, less accumulated depreciation. Depreciation
          is
          provided using the straight-line method over the estimated useful lives
          of the
          assets less salvage value as follows:
 
 Leasehold
          improvements Over
          the
          term of the leases
 Computer
          equipment and processing
          system 3
          years
 Furniture,
          fixtures and office
          equipment 5
          years
 
 During
          the year all of the fixed assets were disposed of when the Company changed
          business direction and disposed of their Hong Kong office. (Note 7)
 
 **Goodwill**
 The
          Company adopted the provisions of Statement of Financial Accounting Standards
          (“SFAS”) No. 142 (“SFAS 142”) “Goodwill and Other Intangible Assets” on January
          1, 2002. SFAS 142 requires, among other things, the discontinuance of
          amortization for goodwill and indefinite life intangible assets. In addition,
          the standard includes provisions for the reclassification of certain existing
          recognized intangibles such as goodwill, reassessment of the useful lives
          of
          existing recognized intangibles with finite lives, reclassification of
          certain
          intangibles out of previously reported goodwill and the identification
          of
          reporting units for purposes of assessing potential future impairments
          of
          goodwill. SFAS 142 also requires the Company to complete a transitional
          goodwill
          impairment test six months from the date of adoption. The effects of adopting
          the non-amortization provisions of SFAS 142, assuming these provisions
          were
          adopted for the periods presented, are summarized below.
 
 2002
                
                2001
                
                2000Reported
                    net loss
                
                $
                (27,243,917
                )
                $
                (10,461,322
                )
                $
                (17,809,461
                )Add:
                    Goodwill amortization
                
                
                -
                
                
                325,671
                
                
                291,282Adjusted
                    net loss
                
                $
                (27,243,917
                )
                $
                (10,135,651
                )
                $
                (17,518,179
                )Reported
                    basic and diluted loss per share
                
                $
                (1.16
                )
                $
                (0.54
                )
                $
                (0.98
                )Add:
                    Goodwill amortization, per basic and diluted share
                
                
                -
                
                
                .02
                
                
                .02Adjusted
                    basic and diluted loss per share
                
                $
                (1.16
                )
                $
                0.52
                )
                $
                (0.96
                )
  During
          the year ended December 31, 2002, goodwill was written off as part of the
          loss
          from discontinued operations. (Note 11)
 
 **Long-Lived
          Assets**
 SFAS
          No.
          144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long-Lived
          Assets” requires the recognition of an impairment loss on long-lived assets if
          the carrying amount exceeds its fair value, as determined using undiscounted
          cash flows expected to result from the use and eventual disposition of
          the
          asset. SFAS 144, was adopted by the Company on January 1, 2002. During
          the year
          ended December 31, 2002, the Company recorded $18,543,307 in charges for
          impairment of certain long-lived assets. (Notes 5, 7 and 8)
  ***Page
              - 56***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Software
          Development Costs**
 Internal
          and external costs incurred to develop internal-use computer software are
          expensed during the preliminary project stage and capitalized during the
          application development stage and amortized over three years. During the
          years
          ended December 31, 2002, 2001, and 2000, and the cumulative period from
          inception to December 31, 2002, $Nil, $Nil, $130,816 and $225,406 of
          internal-use computer software development costs were expensed. As of December
          31, 2002 and 2001, capitalized software net of accumulated amortization
          and
          impairment charges were $Nil and $68,411. (Notes 7 and 11)
 
 **Debt
          Issued with Stock Purchase Warrants**
 Debt
          issued with detachable stock purchase warrants is accounted for in accordance
          with the provisions of Accounting Principles Board Opinion No. 14 (“APB 14”),
“Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”.
          Under APB No. 14, the portion of the proceeds of debt securities issued
          with
          detachable stock purchase warrants which is allocable to the warrants is
          accounted for as additional paid-in capital. The allocation is based on
          the
          relative fair values of the two securities at the time of issue. Any resulting
          discount or premium on the debt securities is accounted for as such and
          amortized over the term of the debt securities.
 
 **Foreign
          Currency**
 The
          functional currency of the Company is the Hong Kong dollar. The reporting
          currency of the Company is the United States dollar. Balance sheet accounts
          of
          the Company are translated into United States dollars at exchange rates
          as of
          the balance sheet date. Revenues and expenses are translated at average
          rates
          for the year. The resulting cumulative translation adjustments have been
          recorded as a separate component of stockholders’ equity. Foreign currency
          transaction gains and losses are included in consolidated net loss.
 
 **Income
          Taxes**
 Income
          tax expense is based on pre-tax financial accounting income. The Company
          recognizes deferred tax assets and liabilities based on differences between
          the
          financial reporting and tax bases of assets and liabilities using the enacted
          tax rates and laws that are expected to be in effect when the differences
          are
          expected to be recovered. The Company provides a valuation allowance for
          deferred tax assets for which it does not consider realization of such
          assets to
          be more likely than not.
 
 **Research
          and Development and Advertising**
 Research
          and development and advertising costs are expensed as incurred. Research
          and
          development costs amounted to $Nil in each of the years ended December
          31, 2002,
          2001, 2000 and the cumulative period from inception to December 31, 2002.
          Advertising costs amounted to $129,810, $87,607, $241,485, and $711,081
          for the
          years ended December 31, 2002, 2001, 2000 and the cumulative period from
          inception to December 31, 2002. **
 
 **Start-up
          and Pre-operating Costs**
 Start-up
          and pre-operating costs are expensed as incurred.
 
 **Comprehensive
          Income**
 Comprehensive
          income reflects changes in equity that results from transactions and economic
          events from non-owner sources. The Company had no comprehensive income
          for the
          years ended December 31, 2002, 2001 and 2000.
 
 ***Page
              - 57***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Stock-based
          Compensation**
 The
          Company accounts for stock-based compensation arrangements with employees
          in
          accordance with the provisions of APB 25 and complies with the disclosure
          provisions of SFAS 123. Under APB 25, compensation expense is based on
          the
          difference, if any, between the fair value of the Company’s stock and the
          exercise price of options issued on the date of grant. The unearned compensation
          is being amortized over the vesting period of the individual options.
 
 For
          stock
          options granted to employees and directors of the Company, with exercise
          prices
          at or above the market value of the stock on the grant date, the Company
          adopted
          the disclosure-only provisions of SFAS 123. Had compensation cost been
          recognized based on the fair value at the date of grant consistent with
          the
          method prescribed by SFAS No. 123, the Company’s net losses and loss per share
          would have been increased to the following pro forma amounts at December
          31,
          2002. Also disclosed below are the pro-forma amounts previously disclosed
          and
          pro forma amounts that have been restated due to a prior period adjustment
          which
          was caused by an error in the calculation of stock based compensation related
          to
          stock options issued, reissued and re-priced during December 2001, 2000
          and
          1999:
 
 For
                    the Year EndedDecember
                    31, 2002Net
                    LossAs
                    reported
                $(27,243,917)Pro
                    forma
                $(27,767,867)Basic
                    and Diluted Loss Per ShareAs
                    reported
                $(1.16)Pro
                    forma
                $(1.19)
 
 
 Year
                    Ended
                Year
                    Ended
                Year
                    EndedDec
                    31, 2001
                Dec
                    31, 2000
                Dec
                    31, 1999Net
                    LossAs
                    reported
                $(10,461,322)
                $(17,809,461)
                $(6,788,885)Pro
                    forma-as
                    previously disclosed
                $(9,542,863)
                $(20,598,526)
                $(8,113,944)-as
                    restated
                $(11,228,256)
                $(21,520,755)
                $(8,010,239)Basic
                    and Diluted Loss Per ShareAs
                    reported
                $(0.55)
                $(0.99)
                $(0.56)Pro
                    forma-as
                    previously disclosed
                $(0.50)
                $(1.14)
                $(0.67)-as
                    restated
                $(0.58)
                $(1.19)
                $(0.67)
 
 ***Page
              - 58***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Stock-based
          Compensation, continued**
 The
          fair
          value of the common stock options granted during the years ended December
          31,
          2002, 2001, 2000 and 1999, for disclosure purposes was estimated on the
          grant
          dates using the Black Scholes Pricing Model and the following
          assumptions:
 
 2002Expected
                    dividend yield
                -Expected
                    price volatility
                131%
                    to 151%Risk-free
                    interest rate
                3%
                    to 5.5%Expected
                    life of options
                5
                    years
 
 2001
                  As
                    Restated
                2001
                  As
                    Previously
                  DisclosedExpected
                    dividend yield
                -
                -Expected
                    price volatility
                151%
                93.15%
                    to 150.69%Risk-free
                    interest rate
                5.5%
                5.5%Expected
                    life of options
                5
                    years
                3
                    and 5 years
 
 2000
                  As
                    Restated
                2000
                  As
                    Previously DisclosedExpected
                    dividend yield
                -
                -Expected
                    price volatility
                110%
                93.15%
                    to 129.54%Risk-free
                    interest rate
                5.5%
                5.5%Expected
                    life of options
                5
                    years
                3
                    years
 
 
 1999
                  As
                    Restated
                1999
                  As
                    Previously
                  DisclosedExpected
                    dividend yield
                -
                -Expected
                    price volatility
                51.45%
                    to 91.20%
                54.45%
                    to 91.2%Risk-free
                    interest rate
                5.5%
                5.5%Expected
                    life of options
                5
                    years
                3
                    years
 
 The
          Company accounts for equity instruments issued to non-employees in accordance
          with the provisions of SFAS 123, and Emerging Issues Task Force No. 96-18
          (“EITF
          96-18”). All transactions in which goods or services are consideration received
          for the issuance of equity instruments are accounted for based on the fair
          value
          of the consideration received or the fair value of the equity instrument,
          whichever is more reliably measurable.
 
 The
          Company accounts for the re-pricing and re-issuing of stock options under
          the
          variable accounting provisions of FIN 44.
  ***Page
              - 59***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Oil
          and Gas Properties**
 The
          Company follows the full cost method of accounting whereby all costs related
          to
          the acquisition of oil and gas leases and acquisition and development of
          oil and
          gas properties are capitalized into a single cost center (“full cost pool”).
          Such costs include lease acquisition costs, geological and geophysical
          expenses,
          overhead directly related to exploration and development activities and
          costs of
          drilling both productive and non-productive wells. Proceeds from property
          sales
          are generally credited to the full cost pool without gain or loss recognition
          unless such a sale would significantly alter the relationship between
          capitalized costs and the proved reserves attributable to these costs.
          A
          significant alteration would typically involve a sale of 25% or more of
          the
          proved reserves related to a single full cost pool.
 
 Depletion
          of exploration and development costs and depreciation of production equipment
          is
          computed using the units of production method based upon estimated proven
          oil
          and gas reserves. The costs of unproved properties are withheld from the
          depletion base until such time as they are either developed or abandoned.
          The
          properties are reviewed periodically for impairment. Total well costs are
          transferred to the depletable pool even when multiple targeted zones have
          not
          been fully evaluated. For depletion and depreciation purposes, relative
          volumes
          of oil and gas production and reserves are converted at the energy equivalent
          rate of six thousand cubic feet of natural gas to one barrel of crude oil.
          The
          Company’s oil and gas wells began producing subsequent to December 31, 2002;
          accordingly the Company has not recorded any depletion expenses prior to
          or
          during the year ended **** December
          31, 2002.
 
 Under
          the
          full cost method of accounting, capitalized oil and gas property costs
          less
          accumulated depletion and net of deferred income taxes may not exceed an
          amount
          equal to the present value, discounted at 10%, of estimated future net
          revenues
          from proved oil and gas reserves plus the cost or estimated fair value,
          if
          lower, of unproven properties. Should capitalized costs exceed this ceiling,
          impairment is recognized. The present value of estimated future net revenues
          is
          computed by applying current prices of oil and gas to estimated future
          production of proved oil and gas reserves as of period-end, less estimated
          future expenditures to be incurred in developing and producing the proved
          reserves assuming the continuation of existing economic conditions. (Notes
          8 and
          20)
 
 **Basic
          and Diluted Net Income (Loss) Per Common Share (“EPS”)**
 Basic
          loss per share excludes dilution and is computed by dividing net income
          (loss)
          available to common stockholders by the weighted average number of common
          shares
          outstanding during the period. Diluted loss per share reflects the potential
          dilution of securities that could occur if securities or other contracts
          to
          issue common stock (such as, convertible preferred stock, warrants to purchase
          common stock and common stock options) were exercised or converted into
          common
          stock.
 
 Potential
          common shares are excluded from the diluted loss per share computation
          in net
          loss periods as their effect would be anti-dilutive.
 
 For
          the
          years ended December 31, 2002, 2001 and 2000, options to purchase **** 1,680,000, **** 3,069,500 **** and
          4,272,250 shares of common stock and warrants to purchase **** 1,893,682, **** 2,158,682
          and 2,893,682 shares of common stock were outstanding at various times
          throughout the reported years. **** Also,
          for
          the year ended December 31, 1999, one convertible security to purchase
          125,000
          shares of common stock at $8.00 per share was outstanding for approximately
          five
          months during 1999. **** At
          December 31, 2002, 2001 and 2000, options to purchase **** 1,630,000, **** 1,280,000
          and 1,809,500 shares of common stock and warrants to purchase
          1,843,682, **** 1,893,682
          and 1,893,682 shares of common stock were outstanding. **** The
          effects of all of these securities were not included in the computation
          of
          diluted loss per share, because the Company has been in a net loss position
          for
          all periods since the beginning of operations and the effect would be
          anti-dilutive.
  ***Page
              - 60***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Accounting
          Change**
 In
          November 2000, the EITF reached a partial consensus on Issue No. 00-27,
          “Application of Issue No. 98-5 to Certain Convertible Instruments” (“EITF
          00-27”). Since consensus was reached on Issue No. 98-5 in May 1999, there has
          been diversity in practice as to the measurement of certain beneficial
          features
          of convertible instruments. The consensus reached in EITF 00-27 clarifies
          the
          measurement of such beneficial features. To the extent that this represents
          a
          change in the manner in which an entity previously measured beneficial
          features
          of instruments issued subsequent to May 1999, Issue 00-27 requires an entity
          to
          re-perform the measurement and report any additional charge as a cumulative
          effect of change in accounting principle.
 
 In
          connection with convertible debt issued in 1999, the Company recorded a
          beneficial conversion feature of approximately $50,000 at December 31,
          1999.
          However, in accordance with guidance set forth in EITF 00-27, at December
          31,
          2000, the Company recognized an additional beneficial conversion charge
          of
          approximately $380,000. (Note 16) The charge is measured by the difference
          between the effective conversion price of the debt and the fair value of
          shares
          of common stock into which the debt is convertible, as measured at the
          date of
          issuance. This charge is recognized in the accompanying consolidated statements
          of operations, as a cumulative effect of accounting change for the year
          ended
          December 31, 2000 and as an increase in additional paid in capital in the
          accompanying consolidated statements of changes in stockholders’ equity and
          comprehensive income.
 
 ***Page
              - 61***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Recent
          Accounting Pronouncements**
 SFAS
          No.
          141 (“SFAS 141”), “Business Combinations” and SFAS No. 142 (“SFAS 142”),
“Goodwill and Intangible Assets”, were issued by the FASB in June 2001 and
          became effective for the Company on July 1, 2001 and January 1, 2002,
          respectively. The FASB, the Securities and Exchange Commission (“SEC”) and
          others are engaged in deliberations on the issue of whether SFAS 141 and
          142
          require interests held under oil, gas and mineral leases or other contractual
          arrangements be classified as intangible assets. If such interests were
          deemed
          to be intangible assets, mineral interest use rights for both undeveloped
          and
          developed leaseholds would be classified separately from oil and gas properties
          and intangible assets on the Company’s balance sheets only, but these costs
          would continue to be aggregated with other costs of oil and gas properties
          in
          the notes to the financial statements in accordance with SFAS No. 69 (“SFAS
          69”), “Disclosures about Oil and Gas Producing Activities”. Additional
          disclosures required by SFAS 141 and 142 would also be included in the
          notes to
          financial statements. Historically, and to the Company’s knowledge, we and all
          other oil and gas companies have continued to include these oil and gas
          leasehold interests as part of oil and gas properties after SFAS 141 and
          142
          became effective. The Company believes that few oil and natural gas companies
          have adopted this interpretation or changed their balance sheet presentation
          for
          oil and gas leaseholds since the implementation of SFAS 141 and
          142.
 
 As
          applied to companies like BREK that have adopted full cost accounting for
          oil
          and gas activities, the Company understands that this interpretation of
          SFAS 141
          and 142 would only affect its balance sheet classification of proved oil
          and gas
          leaseholds acquired after June 30, 2001 and its unproved oil and gas leaseholds.
          The Company’s results of operations would not be affected, since these leasehold
          costs would continue to be amortized in accordance with full cost accounting
          rules. At December 31, 2002, the Company had undeveloped leaseholds of
          approximately $2.03 million, that would be classified on the balance sheets
          as
“intangible undeveloped leaseholds” if the Company applied the interpretation
          currently being deliberated. This classification would require the Company
          to
          make the disclosures set forth under SFAS 142 related to these interests.
          The
          Company’s current disclosures are those required by SFAS 69.
 
 The
          Company will continue to classify its oil and gas leaseholds as tangible
          oil and
          gas properties until further guidance is provided. Although most of the
          Company’s oil and gas property interests are held under oil and gas leases, it
          is not expected that this interpretation, if adopted, would have a material
          impact on the Company’s financial condition or results of operations.
 
 In
          August
          2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement
          Obligations”. This statement addresses the diverse accounting practices for
          obligations associated with the retirement of tangible long-lived assets,
          and
          the associated asset retirement costs. This statement establishes a uniform
          methodology for accounting for estimated reclamation and abandonment costs
          whereby reclamation and closure costs including site rehabilitation will
          be
          recorded at the estimated present value of reclamation liabilities and
          will
          increase the carrying amount of the related asset. These reclamation costs
          will
          be allocated to expense over the life of the related assets and will be
          adjusted
          for changes resulting from the passage of time and revisions to either
          the
          timing or the amount of the original present value estimate. The Company
          will be
          required to adopt this standard on January 1, 2003. The Company does not
          anticipate that the adoption of this statement will have a significant
          impact on
          its financial position and results of operations.
 
 ***Page
              - 62***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Recent
          Accounting Pronouncements, continued**
 In
          May
          2002, FASB issued SFAS No. 145 (“SFAS 145”), “Rescission of FASB Statements No.
          4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections”.
          Such standard requires any gain or loss on extinguishments of debt to be
          presented as a component of continuing operations (unless specified criteria
          are
          met) whereas SFAS 4 required that such gains and losses be classified as
          an
          extraordinary item in determining net income. Upon adoption of SFAS 145,
          the
          Company will reclassify any extraordinary gains and losses on the
          extinguishments of debt recorded in prior periods to continuing operations.
          The
          adoption of SFAS 145 did not have a material effect on the Company’s financial
          position or results of operations.
 
 In
          June
          2002, the FASB issued SFAS No. 146 (“SFAS 146”), "Accounting for Costs
          Associated with Exit or Disposal Activities" which addresses financial
          accounting and reporting for costs associated with exit or disposal activities.
          It nullified Emerging Issues Task Force ("EITF") Issue No. 94-3 "Liability
          Recognition for Certain Employee Termination Benefits and Other Costs to
          Exit an
          Activity (including Certain Costs Incurred in a Restructuring)". SFAS 146
          requires that a liability for costs associated with an exit or disposal
          activity
          be recognized when the liability is incurred rather than at the date of
          an
          entity's commitment to an exit plan, as was required under EITF No. 94-3.
          Such
          costs covered by the standard include lease termination costs and certain
          employee severance costs that are associated with a restructuring, discontinued
          operation, plant closing or other exit or disposal activity. SFAS 146 also
          establishes that fair value is the objective for initial measurement of
          the
          liability. SFAS 146 is to be applied prospectively to exit or disposal
          activities initiated after December 31, 2002. The Company does not anticipate
          that this statement will have a material impact on the Company’s financial
          statements or results of operations.
 
 In
          October 2002, the FASB issued SFAS No. 147 (“SFAS 147”), “Acquisitions of
          Certain Financial Institutions”. SFAS 147 provides guidance on the accounting
          for the acquisition of a financial institution. SFAS 147 applies to all
          financial institution acquisitions except those between two or more mutual
          enterprises.
 
 In
          November 2002, the FASB issued Interpretation No. 45 (“FIN 45”), “Guarantors
          Accounting and Disclosure Requirements for Guarantees, Including Indirect
          Guarantees of Indebtedness of Others”. This interpretation elaborates on the
          disclosures to be made by a guarantor in its interim and annual financial
          statements about its obligations under specific guarantees that it has
          issued.
          It also clarifies that a guarantor is required to recognize, at inception
          of a
          guarantee, a liability for the fair value of the obligation undertaken
          in
          issuing the guarantee. The disclosure requirements in this interpretation
          were
          effective for financial statements of interim and annual periods ending
          after
          December 15, 2002. Additionally, the recognition of a guarantor’s obligation
          should be applied on a prospective basis on guarantees issued after December
          31,
          2002. The adoption of FIN 45 is not expected to have a material effect
          on the
          Company’s financial position or results of operations.
 
 
 ***Page
              - 63***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Recent
          Accounting Pronouncements, continued**
 In
          December 2002, the FASB issued SFAS No. 148 (“SFAS 148”), “Accounting for
          Stock-Based Compensation - Transition and Disclosure - an Amendment of
          FASB
          Statement No. 123”. SFAS 148 amends SFAS 123, to provide alternative methods of
          transition for a voluntary change to the fair value based method of accounting
          for stock-based employee compensation. In addition, SFAS 148 amends the
          disclosure requirement of SFAS 123 to require more prominent disclosure
          in both
          annual and interim consolidated financial statements about the method of
          accounting for stock-based employee compensation and the effect of the
          method
          used on reported results. SFAS No. 148 is effective for financial statements
          for
          fiscal years ending after December 15, 2002. The adoption of this Statement
          did
          not have a significant impact on the Company’s financial position or results of
          operations. The Company will continue to account for its stock-based
          compensation using the methods detailed in its stock-based compensation
          accounting policy.
 
 In
          January 2003, the FASB issued FIN No. 46 (“FIN 46”), “Consolidation of Variable
          Interest Entities”. This interpretation explains how to identify variable
          interest entities and how an enterprise assesses its interest in a variable
          interest entity to decide whether to consolidate that entity. This
          interpretation requires existing unconsolidated variable interest entities
          to be
          consolidated by their primary beneficiaries if the entities do not effectively
          disperse risks among the parties involved. FIN 46 requires that the primary
          beneficiary in a variable interest entity consolidate the entity even if
          the
          primary beneficiary does not have a majority voting interest. Variable
          interest
          entities that effectively disperse risks will not be consolidated unless
          a
          single party holds an interest or combination of interest that effectively
          recombines risks that were previously dispersed. This interpretation applies
          immediately to variable interest entities created after January 31, 2003,
          and to
          variable interest entities in which an enterprise obtains an interest after
          that
          date. It applies in the first fiscal year or interim period beginning after
          June
          15, 2003, to variable interest entities in which an enterprise holds a
          variable
          interest that it acquired before February 1, 2003. In addition, FIN 45
          requires
          disclosure of information regarding guarantees or exposures to loss relating
          to
          any variable interest entity existing prior to January 31, 2003, in financial
          statements issued after January 31, 2003. Management believes that the
          adoption
          of FIN 46 will not have a material effect on the Company’s financial position or
          results of operations.
 
 In
          April
          2003, the FASB issued SFAS No. 149 (”SFAS 149”), “Amendment of Statement 133 on
          Derivative Instruments and Hedging Activities,” which clarifies financial
          accounting and reporting for derivative instruments, including certain
          derivative instruments embedded in other contracts and for hedging activities
          under SFAS 133, “Accounting for Derivative Instruments and Hedging Activities”.
          SFAS 149 is effective for contracts entered into or modified after June
          30, 2003
          and for hedging relationships designated after June 30, 2003. The adoption
          of
          SFAS 149 is not expected to have a material effect on the Company’s financial
          condition or results of operations.
 
 In
          May
          2003, the FASB issued SFAS No. 150 (“SFAS 150”), “Accounting for Certain
          Financial Instruments with Characteristics of both Liabilities and Equity.” This
          statement establishes standards for how an issuer classifies and measures
          in its
          statement of financial position certain financial instruments with
          characteristics of both liabilities and equity. In accordance with the
          standard,
          financial instruments that embody obligations for the issuer are required
          to be
          classified as liabilities. SFAS 150 is effective for all financial instruments
          created or modified after May 31, 2003, and otherwise shall be effective
          at the
          beginning of the first interim period beginning after June 15, 2003. The
          adoption of SFAS 150 is not expected to have a material effect on the Company’s
          financial condition or results of operations.
 
 
 ***Page
              - 64***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
          2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 **Recent
          Accounting Pronouncements, continued**
 In
          December 2003, the Financial Accounting Standards Board (“FASB”) issued a
          revised FIN No. 46 (“FIN 46R”), “Consolidation of Variable Interest Entities”.
          Fin 46R addresses consolidation by business enterprises of variable interest
          entities and significantly changes the consolidation application of
          consolidation polices to variable interest entities and, thus improves
          comparability between enterprises engaged in similar activities when those
          activities are conduced through variable interest entities. The Company
          does not
          expect that adoption of FIN 46R will have a material effect on its financial
          position or results of operations.
 
 **Reclassifications**
 Certain
          prior year amounts in the accompanying consolidated financial statements
          have
          been reclassified to conform to the current year’s presentation. These
          reclassifications had no effect on the results of operations of financial
          position for any year/period presented.
 
 **NOTE
          3 - MARKETABLE SECURITIES**
 Marketable
          securities for the year ended December 31, 2001 was comprised of 91,912
          shares
          (representing a 2.7% equity interest), after an 8 for 1 reverse stock split
          on
          September 7, 2001 of uniView Technologies Corporation, a public company
          traded
          on NASDAQ. The Company has written down the carrying value of the shares
          by
          $34,927, $314,339, $1,632,353, and $1,981,619 for the years ended December
          31,
          2002, 2001 2000, and the cumulative period from inception to December 31,
          2002.
          The carrying value of the marketable securities was written down to its
          market
          value as the declines in value were deemed to be other than temporary.
          As of
          December 31, 2002, all shares of uniView Technologies Corporation were
          disposed
          of for consideration of $5,771, resulting in a loss on disposal of $12,611.
 
 **NOTE
          4 - PREPAID FINANCIAL ADVISORY FEE**
 In
          1999, the Company paid a fee of $1,500,000 to a consultant to introduce
          the
          Company to financial institutions and other investors, assist in negotiation
          of
          debt or equity financing, design and implement public relations and investor
          relations programs, and develop an advertising strategy for the
          Company.
 
 These
          services were rendered to the Company over the period from March 5, 1999
          to
          August 31, 2000 and the amount paid was deferred and amortized over the
          life of
          the service agreement on a straight-line basis. For the years ended December
          31,
          2002, 2001 and 2000, and the cumulative period from inception to December
          31,
          2002, the Company recognized approximately $Nil, $Nil, $672,000 and $1,500,000
          in operating expenses in respect of the consultant’s fee.
 
 **NOTE
          5 - NOTE RECEIVABLE**
 On
          October 19, 2001, the Company completed the sale of its 100% interest in
          its
          subsidiary, First Ecommerce Data Services Limited (“FEDS”), to Transworld
          Payment Solutions N.V. (“Transworld”). The guaranteed amount of FEDS operating
          profits is receivable in installments of $350,000, $650,000 and $1,000,000,
          due
          March 1, 2003, 2004 and 2005. The guaranteed installments have been recorded
          at
          their present value with imputed interest of 2% to 3.5%. Imputed interest
          of
          $35,863 and $9,348 were recorded as interest income in the years ended
          December
          31, 2002, and 2001.
 
 ***Page
              - 65***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 **NOTE
          5 - NOTE RECEIVABLE, continued**
 During
          the year, as a result of a dispute with Transworld, the Company undertook
          an
          assessment on its notes receivable and recorded an impairment charge of
          $1,901,106 for the year ended December 31, 2002, to reduce the carrying
          value of
          the asset to the estimated fair value that the Company expects to receive
          within
          the next twelve months. This impairment charge is recorded as an operating
          expense in the consolidated statements of operations, in the charges for
          impairment of certain long-lived and prepaid assets section. (Notes 10
          and 20)
 
 2002
                
                2001Present
                    value of guarantee notes receivable
                
                $
                1,901,107
                
                $
                1,865,244Less:
                    Impairment charge
                
                
                1,901,106
                
                
                -Less:
                    Present value of amount due within one Year
                
                
                1
                
                
                -$
                -
                
                $
                1,865,244
 
 **NOTE
          6 - LOAN RECEIVABLE**
 At
          December 31, 2002 and 2001, the Company had a loan receivable in the amount
          of
          $Nil and $270,055. The note was receivable on demand, secured by 800,000
          common
          shares of the payee and bore interest at 6%. The interest was paid on repayment
          of the note. (Notes 9 and 12) ****
 
 **NOTE
          7 - PROPERTY AND EQUIPMENT**
 
 2002
                
                
                2001Computer
                    equipment and processing system
                
                
                -
                
                $
                513,591Furniture,
                    fixtures and office equipment
                
                
                -
                
                
                67,294-
                
                $
                580,885Less:
                    Accumulated depreciation
                
                
                -
                
                
                (323,564
                )$
                -
                
                $
                257,321
 
 During
          2002, the Company disposed of all of its property and equipment when they
          closed
          their Hong Kong offices and disposed of their payment processing business.
          Closure of the Hong Kong office resulted in an impairment loss on certain
          long
          lived assets of $8,014, which has been recorded in operating expenses under
          charges for impairment of certain long-lived assets on the consolidated
          statements of operations for the year ended December 31, 2002.
 
 Depreciation
          expense charged to results of operations for the years ended December 31,
          2002,
          2001, 2000 and the cumulative period from inception to December 31, 2002,
          was
          $102,611, $446,366, $207,125, $575,587, and $1,374,946. At December 31,
          2002 all
          of the depreciation expenses were reclassified on the consolidated statements
          of
          operations to loss from discontinued operations, net loss - payment
          processing.
 
 ***Page
              - 66***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
          8 - OIL AND GAS PROPERTIES**
 The
          Company has a 25% interest in 103,227 gross acres (11,141 net acres) in
          the
          Uinta Basin region in Utah, 123,700 gross acres (24,369 net acres) in the
          Greater Green River Basin of Wyoming and 4,068 gross acres (932 net acres)
          in
          Kern County and San Luis Obispo County in California and a 50% interest
          in
          51,194 gross acres (8,865 net acres) in Edwards County in Texas.
 
 The
          following table presents the Company’s oil and gas property acquisitions,
          exploration and development expenditures and an adjustment for impairment
          charges:
 
 December
                    31,2002
                
                
                2001Property
                    acquisition costsAcquired
                    in share exchange with Gasco (Note 10)
                
                $
                14,402,000
                
                $
                -Acquired
                    in exchange for common shares of theCompany
                    (Note 10, 12 and 13)
                
                
                2,862,750Acquired
                    upon acquisition of Vallenar (Note 9)
                
                
                872,391Exploration
                    and development expenditures
                
                
                529,90618,667,047
                
                
                -Less:
                    Impairment charges
                
                
                (16,634,187
                )
                
                -$
                2,032,860
                
                $
                -
 
 
 
 
 ***Page
              - 67***
 
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          8 - OIL AND GAS PROPERTIES, continued**
 At
          December 31, 2002, the Company’s proved and unproved oil and gas properties
          consisted of leasehold interests and exploration and development costs
          related
          to their interests in Texas, Utah, Wyoming and California. The Company’s proven
          and unproven properties are evaluated periodically for the possibility
          of
          potential impairment. During 2002, the Company recorded impairment charges
          on
          its proved and unproved acreage as follows:
  
 **Costs**
                
                
                **Impairment** ****
                
                
                **Cost
                    Net of****Charges**
                
                
                **Impairment**
                
                
                **Charges****Proved
                  Properties**WyomingExploration
                  & development costs
                
                $
                416,178
                
                $
                (416,178)
                
                $**Unproved
                  Properties**Property
                  acquisition costs:Utah
                
                
                8,459,726
                
                
                (6,427,166)
                
                
                2,032,560Wyoming
                
                
                8,459,727
                
                
                (8,459,627)
                
                
                100California
                
                
                345,294
                
                
                (345,194)
                
                
                100Texas
                
                
                872,391
                
                
                (872,291)
                
                
                100Exploration
                  & development costs:Wyoming
                
                
                7,661
                
                
                (7,661)
                
                
                -Utah
                
                
                7,662
                
                
                (7,662)
                
                
                -California
                
                
                2,998
                
                
                (2,998)
                
                
                -Texas
                
                
                95,410
                
                
                (95,410)
                
                
                -$
                18,667,047
                
                $
                (16,634,187)
                
                $
                2,032,860
 
  During
          2002, two wells that were drilled on the Wyoming property were not considered
          prospective by the Company and as a result of this assessment an impairment
          charge was recorded against the property.
 
 At
          the
          end of 2002 the Company recorded impairment charges against its unproven
          properties in Texas, California and Wyoming because no exploration or
          development work is expected to be performed on these properties. The Company
          recorded an impairment of their Utah property based on a reserves study
          completed subsequent to December 31, 2002. (Note 20) ****
 
 **NOTE
          9 - MINORITY INTEREST**
 n
          March
          12, 2002, the Company acquired an equity interest of 29.69% in Vallenar,
          a
          company with interests in various oil and gas leases in Texas, by converting
          a
          loan receivable from Vallenar of $270,055 together with a further payment
          of
          $79,945, into 733,333 Series “A” Preferred Shares of Vallenar. The Company also
          acquired 2,512,500 common shares of Vallenar from third parties for $12,563.
          The
          preferred shares, which are convertible into 733,333 common shares of Vallenar,
          provide the Company with a non-dilutable 26% voting interest provided that
          at
          least 50% of Vallenar’s shares remain outstanding.
  ***Page
              - 68***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
          9 - MINORITY INTEREST, continued**
 On
          June 28, 2002, the Company acquired a further 2 million common shares of
          Vallenar, from third parties, for $10,000 and subscribed for an additional
          800,000 common shares of Vallenar at $0.50 per share ($400,000). At December
          31,
          2002, the Company held a 51.53% equity interest in Vallenar.
 
 Prior
          to
          June 28, 2002, the Company accounted for its interest in Vallenar using
          equity
          accounting. The equity in loss of Vallenar for the period from March 12,
          2002 to
          June 28, 2002 was $17,011. This loss has been recorded in the Company’s December
          31, 2002, consolidated statements of operations as equity in losses of
          affiliates, in the losses associated with affiliates section of the financial
          statements.
 
 Subsequent
          to June 28, 2002, the acquisition is being accounted for using purchase
          accounting and accordingly, the results of Vallenar’s operations have been
          included in the Company’s consolidated financial statements from June 28, 2002
          onwards. The total cost of the Vallenar acquisition has been allocated
          to the
          tangible and intangible assets acquired and liabilities assumed based on
          their
          respective fair market values at the effective date of the acquisition.
          Such
          allocations ultimately will be based on further management studies and
          due
          diligence and consequently are preliminary and subject to revision.
 
 The
          excess of the Company’s costs over fair value of the identifiable net assets
          attributable to the Company of $372,643 has been recorded as an increase
          in
          value of the oil and gas properties. (Note 8)
 
 Assets
          acquired and liabilities assumed in the acquisition were as
          follows:
 
 Banks
          and
          fixed
          deposits................................................................................................................ 23,993
 Notes
          receivable from the
          Company............................................................................................ 370,000
 Oil
          and
          gas
          properties..................................................................................................................... 499,748
 Short
          term loan................................................................................................ (29,000)
 Accounts
          payable......................................................................................................................... (121,662)
 
 Net
          book
          value of assets as of June 28,
          2002........................................................................... $743,079
   Cash
          consideration...................................................................................................................... $402,563
 Non-cash
          consideration, subscription
          payable........................................................................ 370,000
 Equity
          in
          loss up to June 28,
          2002................................................................................................ (17,011)
 Share
          of
          net assets
          (51.53%)....................................................................................................... (382,909)
 Excess
          of
          consideration over net book value of assets at
 acquisition
          date............................................................................................................ $372,643
 
 Cash
          outflow from acquisition of subsidiary is made up of:
 
 Cash
          consideration
          paid............................................................................................................ $402,563
 Conversion
          of loans receivable on December 31, 2001 (Note
          6).......................................... (270,055)
 Bank
          and
          fixed deposits
          acquired............................................................................................... (23,993)
 $108,515
 
 ***Page
              - 69***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          10 - EQUITY METHOD INVESTEES**
 **First
          Ecommerce Data Services Limited**
 During
          2000, the Company acquired a 50% interest in FEDS, a joint venture operation
          with the Bank of Bermuda, a principal shareholder of the Company, from
          the Bank
          of Bermuda for $3 million. The excess of the purchase price over the Company’s
          share of the net assets of FEDS at the date of investment based on their
          estimated fair market value at the date of acquisition was allocated to
          goodwill. Goodwill amounted to approximately $1.2 million and was being
          amortized over seven years. In addition, the Company had advanced FEDS
          an
          unsecured, non-interest bearing loan of $400,000.
  2000
 
 Cost
          of
          investment.......................................................................................... $3,000,000
 Share
          in
          losses of
          affiliate................................................................................. (292,118)
 2,707,882
 Loan....................................................................................................................... 400,000
 $3,107,882
 =======
 
 On
          June
          18, 2001, the Company acquired the remaining 50% of the issued shares of
          FEDS
          such that FEDS became a wholly-owned subsidiary of the Company. The purchase
          consideration was $3,581,993 cash for the shares. In addition, the Company
          acquired a shareholder’s loan from the Bank of Bermuda to FEDS in the amount of
          $668,007. Total consideration paid to the Bank of Bermuda was $4,250,000.
          Direct
          costs of $39,542 were incurred in respect of this transaction.
 
 Prior
          to
          June 18, 2001, the Company recorded its share of the losses in FEDS under
          the
          equity method. The Company’s share of such losses were $390,052 for the period
          from January 1 to June 18, 2001, and $292,118 for the year ended December
          31,
          2000. (Note 11)
 
 Subsequent
          to June 18, 2001, the acquisition was accounted for using purchase accounting
          and accordingly, the **** results
          of operations from FEDS have been included in the Company’s consolidated
          financial **** statements
          from June 19, 2001, onwards. The excess of the Company’s costs over the fair
          value of the identifiable net assets of $2,480,877 was recorded as additional
          goodwill **** and
          was
          being amortized on a straight-line basis over seven years. ****
 
 ***Page
              - 70***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          10 -**  **EQUITY
          METHOD INVESTEES, continued**
 **First
          Ecommerce Data Services Limited, continued**
 
 Assets
          acquired and liabilities assumed in the acquisition were as
          follows:
 
 Bank
          and
          fixed
          deposits.................................................................................................... $2,057,483
 Trade
          accounts
          receivable....................................................................................................... 11,959
 Prepaid
          expenses and
          deposits............................................................................................. 164,901
 Property,
          plant and
          equipment........................................................................................... 1,486,077
 Accounts
          payable and other accrued
          liabilities................................................................. (77,636)
 Long
          term
          liabilities............................................................................................................ (1,361,468)
 Estimated
          fair value of net assets at June 18,
          2001 $2,281,316
   Consideration:
 
 Cash,
          net
          of shareholders’ loan of
          $668,007.................................................................. $3,581,993
 Share
          of
          net assets
          (50%)................................................................................................. (1,140,658)
 Direct
          costs............................................................................................................................... 39,542
 Goodwill
          at
          acquisition.................................................................................................... $2,480,877
 
 Cash
          outflow from acquisition of subsidiary is made up of:
 
 Consideration
          paid.........................................................................................................  $4,250,000
 Bank
          and
          fixed deposits
          acquired.................................................................................. (2,057,483)
 Direct
          costs.............................................................................................................................. 39,542
 $2,232,059
 
 On
          October 19, 2001, the Company sold its 100% interest in FEDS for cash of
          $1,663,986 plus 40% of FEDS operating profits for the next three years
          with a
          minimum guaranteed amount of $2 million and a maximum of $3 million.
 
 The
          sale
          of FEDS resulted in no gain or loss being recorded at December 31, 2001,
          because
          the Company had recognized an impairment loss of $3,159,505 at September
          30,
          2001. Revenues and loss from operations, for the period (including impairment
          loss of $3,159,505) from FEDS included in the consolidated statements of
          operations were $250,567 and $664,278, respectively from June 19, 2001
          to
          October 19, 2001. (Note 11) ****
 
 ***Page
              - 71***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          10 -**  **EQUITY
          METHOD INVESTEES, continued**
 **Gasco
          Energy, Inc.**
 On
          July
          19, 2001, the Company acquired an equity interest in Gasco Energy, Inc.
          (“Gasco”), a Nevada Corporation, involved in the exploration of and potential
          development of natural gas reserves on some 103,227 gross acres in the
          Uinta
          Basin region in Utah, 123,700 gross acres in the Greater Green River Basin
          of
          Wyoming and 4,068 gross acres in Kern County and San Luis Obispo County
          in
          California. The Company paid $19 million for 1,000 preferred shares of
          Gasco,
          which were convertible into 9.5 million common shares of Gasco, at the
          Company’s
          option. These preferred shares entitled the Company to a non-dilutable
          26%
          voting interest in Gasco, provided that at least 50% of the preferred shares
          remained outstanding. This equity interest was accounted for as
          follows:
  2002
                
                2001Investment
                    in affiliate, July 19, 2001
                
                $
                19,000,000
                
                $
                19,000,000Less:
                    Share in losses of affiliate, July 19 to December 31, 2001
                
                
                (492,094
                )
                
                (492,094
                )Share
                    in losses of affiliate, January 1 to July 16, 2002
                
                
                (796,370
                )
                
                -Impairment
                    loss of equity in affiliate
                
                
                (3,309,536
                )
                
                -Investment
                    in affiliate, July 16, 2002
                
                
                2,862,750
                
                
                -Less:
                    Share exchange for oil and gas properties (Note 8)
                
                
                (17,264,750
                )
                
                -Investment
                    in affiliate
                
                $
                -
                
                $
                18,507,906
 
 From
          July
          19, 2001 to July 16, 2002, the Company accounted for its interest in Gasco
          using
          the equity method of accounting. The Company’s equity in losses of Gasco during
          the period from acquisition, July 19, 2001 to December 31, 2001 was $492,094,
          for the period from January 1, 2002 to July 16, 2002 was
 $796,370
          and the accumulated losses from July 19, 2001 (date of first acquisition)
          to
          December 31, 2002 were $1,288,464. These losses have been recorded in the
          Company’s consolidated statements of operations, as equity in losses of
          affiliates, in the losses associated with affiliates section.
 
 In
          March
          2002, the Company converted 50% of its preferred shares of Gasco (500 shares)
          into 4,750,000 Gasco common shares and on July 16, 2002, the Company exchanged
          its 4,750,000 common shares of Gasco and 500 preferred shares of Gasco,
          for an
          undivided interest in all of Gasco’s undeveloped mineral leases in Wyoming, Utah
          and California. On July 16, 2002, the Company acquired an additional undivided
          interest in Gasco’s undeveloped mineral leases from certain other Gasco
          shareholders, in exchange for 4,125,000 common shares of the Company. (Notes
          8,
          12 and 13) These transactions gave the Company a combined 25% undivided
          interest
          in all of Gasco’s undeveloped mineral leases.
 
 At
          July
          16, 2002, the Company had recorded an impairment loss of equity in affiliate
          of
          $3,309,536, in the losses associated with affiliates section of the consolidated
          statements of operations. This loss adjusted the carrying value of its
          equity in
          Gasco to the fair value amount of $14,402,000, which is based on the average
          closing market price of Gasco’s shares for two days before and two days after
          the date the Company exchanged its Gasco shares. At July 16, 2002, the
          Company
          recorded the additional undivided interest in Gasco’s undeveloped mineral leases
          from certain other Gasco shareholders, in exchange for 4,125,000 common
          shares
          of the Company at $2,862,750. This was based on the average closing market
          price
          of the common shares of the Company for two days before the date of exchange
          and
          two days after the date of exchange. The fair value of the Gasco shares
          exchanged by the Company and shares of the Company issued for the additional
          undivided interests in the mineral leases, of $14,402,000 and $2,862,750,
          have
          been recorded under oil and gas properties. (Note 8)
  ***Page
              - 72***
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          10 -**  **EQUITY
          METHOD INVESTEES, continued**
 **Gasco
          Energy, Inc., continued**
 The
          Company has an option to acquire an additional 2.5% interest in these
          undeveloped mineral leases by paying $5,250,000 on or before January 1,
          2004. If
          they exercise this option, the Company has the option of acquiring an additional
          undivided 2.5% interest by paying $5,250,000 on or before January 1, 2005.
          (Note
          20)
 
 **NOTE
          11 - DISCONTINUED OPERATIONS**
 **First
          Ecom System Limited**
 On
          September 30, 2002, the Company disposed of its subsidiary, First Ecom
          Systems
          Limited (“FESL”), which was engaged in the electronic payment processing
          operations, for consideration of $12,786. At December 31, 2002, the Company
          recorded a loss on discontinuance in the consolidated statements of operations
          of $132, which is the difference between FESL’s net assets of $12,918 and the
          disposal price.
 
 As
          at
          December 31, 2002, no assets or liabilities of the payment processing business
          were included in the consolidated balance sheet. All FESL’s revenues and
          expenses for the years ended December 31, 2002, 2001, 2000 and the cumulative
          period from inception to December 31, 2002 have been reclassified from
          operations to the income (loss) from discontinued operations section of
          the
          consolidated statements of operations. These net losses were **** $1,199,785,
          $11,225,955, $12,811,092, and $31,590,922 for the years ended December
          31, 2002,
          2001, 2000 and the cumulative period from inception to December 31, 2002.
 
 FESL’s
          revenues from the payment processing business were $67,918, $301,978, $38,223
          and $408,119 for the years ended December 31, 2002, 2001, 2000 and the
          cumulative period from inception to December 31, 2002. FESL’s losses from
          operations for the years ended December 31, 2002, 2001, 2000 and for the
          period
          from inception to December 31, 2002 were $847,906, $851,883, $823 and
          $1,700,612.
 
 **First
          Ecommerce Data Services Limited**
 At
          December 31, 2002, **** the
          Company reclassified its share of equity in losses of affiliate of $390,052
          for
          the period from January 1 to June 18, 2001, and $292,118 for the year ended
          December 31, 2000 to the income (loss) from discontinued operations section
          of
          the **** statements
          of operations. (Note 10)
 
 **Asia
          Internet Limited**
 During
          the first quarter of 2001 the Company decided to discontinue its systems
          integration business, which was carried on through its wholly-owned subsidiary,
          Asia Internet Limited (“AIL”). The discontinued operations resulted in a gain on
          discontinuance of $1,725,551 due to reversal of $1,852,570 of unvested
          stock
          compensation costs previously recorded to AIL employees, net of severance
          pay of
          $127,019. The assets and liabilities of the discontinued operations included
          in
          the accompanying consolidated balance sheet at December 31, 2001 were $7,736
          and
          $148,818. Revenues for the system integration business were $92,237, $816,648,
          and $908,885, for the years ended December 31, 2001 and 2000 and the period
          from
          September 16, 1998 (inception) to December 31, 2001. Net losses-system
          integration, for the years ended December 31, 2001 and 2000 and the period
          from
          September 16, 1998 (inception) to December 31, 2001 were $236,683, $4,219,736
          and $4,456,419, have been recorded as in the income (loss) from discontinued
          operations section of the consolidated statements of operations.
 
 
 ***Page
              - 73***
 
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          12 - RELATED PARTY TRANSACTIONS**
 During
          the year ended December 31, 2002:
 
 The
          Company was indebted to its former President and CEO in the amount of $28,000.
          This debt is unsecured, non-interest bearing and has no set terms of repayment.
          Subsequent to December 31, 2002, this loan was settled by issuance of common
          shares of the Company. (Note 20)
 
 During
          the years ended December 31, 2002, 2001 and 2000, the Company paid investor
          relations fees to a company controlled by the former President and CEO
          of the
          Company in the amount of $187,328, $241,700 and $Nil.
 
 During
          the years ended December 31, 2002, 2001 and 2000 the Company paid legal
          fees to
          a law firm controlled by the wife of the Company’s former President and CEO in
          the amount of $2,503, $Nil and $647. During the period from March 12, 2002,
          the
          date the Company first acquired an equity interest in Vallenar, until June
          28,
          2002, the date of the Company commenced consolidating the financial results
          of
          Vallenar, Vallenar accrued legal fees to a law firm controlled by the wife
          of
          the Company’s former President and CEO in the amount of $33,769, of which, at
          December 31, 2002, there is a balance of unpaid legal fees included in
          accounts
          payable of $30,941. Subsequent to December 31, 2002, this liability was
          settled
          by the issuance of common shares of the Company. (Note 20)
 
 On
          July
          16, 2002, the Company issued 1,237,500 shares of its common stock to the
          Company’s former President and CEO and 1,237,500 shares of its common stock to
          a
          company controlled by the Company’s former President and CEO in exchange for an
          undivided interest in Gasco’s undeveloped mineral leases. (Notes 8, 10 and
          13)
 
 The
          Company had accrued consulting fees payable to the former President and
          CEO in
          the amount of $24,000. Subsequent to December 31, 2002, this liability
          was
          settled by the issuance of common shares of the Company. (Note 20)
 
 The
          Company had accrued consulting fees payable to the wife of the former President
          and CEO in the amount of $10,000. Subsequent to December 31, 2002, this
          liability was settled by the issuance of common shares of the Company.
          (Note
          20)
 
 The
          Company had accrued consulting fees payable to a relative of the former
          President and CEO in the amount of $6,000. Subsequent to December 31, 2002,
          this
          liability was settled by the issuance of common shares of the Company.
          (Note
          20)
  The
          Company paid $12,000 in consulting fees to a company controlled by a former
          director of Vallenar and $39,000 in consulting fees to a former director
          of
          Vallenar.
 
 The
          Company paid $15,000 in consulting fees to a company controlled by a former
          director of Vallenar.
 
 The
          Company paid $351,806 in fees and a housing allowance of $17,209 to an
          officer.
          At December 31, 2002, $54,000 of these fees were unpaid and included in
          accrued
          liabilities. Subsequent to December 31, 2002, $50,000 of this liability
          was
          settled by the issuance of common shares of the Company. **(** Note
          20)
 
 ***Page
              - 74***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 **NOTE
          12 - RELATED PARTY TRANSACTIONS, continued**
 The
          Company paid $418,324 in directors’ fees and paid a housing allowance of $27,871
          to a former CEO. During the year $70,000 of these directors’ fees were paid
          through the issuance of 100,000 common shares of the Company. (Note 13)
          At
          December 31, 2002, $159,038 of the above directors’ fees were unpaid and
          included in accrued liabilities. Subsequent to December 31, 2002, $50,000
          of
          this liability was settled by the issuance of common shares of the Company.
          (Note 20)
 
 The
          Company paid $54,000 in directors’ fees to its Chairman. At December 31, 2002,
          $13,500 of these directors’ fees were unpaid and included in accrued
          liabilities. Subsequent to December 31, 2002, this liability was settled
          by the
          issuance of common shares of the Company. (Note 20)
 
 The
          Company paid $10,320 in directors’ fees to a director. At December 31, 2002,
          $5,160 of these directors’ fees were unpaid and included in accrued liabilities.
          Subsequent to December 31, 2002, this liability was settled by the issuance
          of
          common shares of the Company. (Note 20)
 
 The
          Company paid $10,320 in directors’ fees to a director. At December 31, 2002, the
          Company was indebted to this director in the amount of $14,103. Subsequent
          to
          December 31, 2002, $5,160 of this liability was settled by the issuance
          of
          common shares of the Company. (Note 20)
 
 The
          Company paid $7,457 in directors’ fees to a former director. At December 31,
          2002, $5,160 of these directors’ fees were unpaid and included in accrued
          liabilities. Subsequent to December 31, 2002, $2,580 of this liability
          was
          settled by the issuance of common shares of the Company. (Note 20)
 
 The
          Company paid $7,743 in directors’ fees to a former director. At December 31,
          2002, $5,160 of these directors’ fees were unpaid and included in accrued
          liabilities. Subsequent to December 31, 2002, $2,580 of this liability
          was
          settled by the issuance of common shares of the Company. (Note 20)
 
 During
          the year ended December 31, 2001:
 
 The
          Company paid consulting fees to former directors of $28,628.
 
 The
          Company advanced $270,055 to Vallenar. A director and an officer of the
          Company
          are also directors of Vallenar, and certain shareholders of the Company’s
          affiliate, Gasco are also shareholders of Vallenar. The loan was subsequently
          converted to equity interest. (Note 6)
 
 During
          the year ended December 31, 2000:
 
 On
          March
          31, 2000, the Company acquired AIL in exchange for cash and shares with
          a total
          fair market value of $1.8 million; prior to March 31, 2000, AIL was considered
          a
          related party to the Company as a 30% shareholder of AIL is also a director
          and
          stockholder of the Company. AIL provided technical support, system maintenance
          and other professional services to the Company and purchased computer and
          office
          equipment on behalf of the Company. During the year ended December 31,
          2000, and
          prior to the acquisition of AIL by the Company, the Company paid $91,871
          to AIL
          for the above services. During the year ended December 31, 2000, the amounts
          charged by AIL to the Company for technical support, system maintenance
          and
          other professional services, and purchase of computer and office equipment
          on
          the Company’s behalf were $283,157 for services and $15,290 for
          purchases.
 
 ***Page
              - 75***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 **NOTE
          12 - RELATED PARTY TRANSACTIONS, continued**
 A
          former director and shareholder of the Company was a partner in a law firm
          (the
“Firm”) to which the Company paid legal fees in the ordinary course of its
          business. The amount paid by the Company and charged by the firm during
          the year
          ended December 31, 2000, was $373,497. Effective June 15, 2000, the director
          resigned from the firm and entered into a consultancy agreement directly
          with
          the Company for a monthly fee of $16,129. For the year ended December 31,
          2000,
          $106,153 was paid to this former director.
 
 A
          director of the Company received consulting fees of $25,000, which was
          paid in
          the ordinary course of business.
 
 **NOTE
          13 - COMMON STOCK**
 During
          the year ended December 31, 2002:
 
 The
          Company issued 2,845,000 common shares, under a Reg. S private placement,
          at
          $0.50 per share for cash of $1,422,500 less related share issue costs of
          $25,000, during April 2002.
 
 On
          July
          31, 2002, the Company issued 4,125,000 common shares in exchange for an
          undivided interest in oil and gas properties at a deemed value of $2,862,750.
          The former President and Chief Executive Officer has a direct and indirect
          interest in 2,475,000 of these shares. (Notes 8, 10 and 12)
 
 On
          August
          23, 2002, the Company issued 80,000 common shares, at a deemed value of
          $56,800,
          to certain subscribers of the March 28, 2002 private placement as a 10%
          penalty
          for failing to make its S-3 Registration Statement effective within 120
          days, as
          required under the terms of their private placement agreements.
 
 On
          September 10, 2002, the Company issued 100,000 common shares at a price
          of $0.70
          to the Company’s former Chief Executive Officer, as part of his severance
          package. (Note 12)
 
 On
          September 19, 2002, 50,000 employee stock options, issued under the 2001
          stock
          option warrant plan, were exercised at $0.40 per share for cash proceeds
          of
          $20,000.
 
 On
          September 24, 2002, the Company issued 50,000 common shares at $0.68 to
          each of
          two directors and an officer (150,000 common shares in total) of the Company
          in
          settlement of $102,000 in accrued bonuses payable.
 
 During
          the year ended December 31, 2001, there were no common stock
          transactions.
 
 During
          the year ended December 31, 2000:
 
 On
          July
          26, 2000, 1,000,000 common shares were issued, due to the exercise of warrants
          issued on November 26, 1999, for total proceeds of $7,800,000. (Note
          16)
 
 Pursuant
          to an agreement to acquire all of the outstanding shares of AIL in March
          2000,
          the Company issued 24,870 shares at a deemed total value of
          $623,988.
 
 
 ***Page
              - 76***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          13 - COMMON STOCK, continued**
 On
          March 6, 2000, the Company sold 3,228,500 units at $9.50 per unit for cash
          proceeds of $30,670,750, pursuant to a private placement. Each unit consists
          of
          one share of the Company’s common stock and one stock purchase warrant to
          purchase one third of a share of the Company’s common stock at $11.40 per share.
          The Company recorded share issue costs of $2,095,562 in respect of this
          private
          placement. (Note 16)
 
 During
          the year ended December 31, 1999:
 
 On
          January 28, 1999, the Company issued 8,000,000 common shares to financial
          advisors for services, at a deemed fair value of the services provided
          of
          $300,000, rendered in connection with organizational activities of the
          Company
          plus a nominal amount of cash of $8,000 for total consideration of $308,000
          or
          $0.0385 per share.
 
 On
          March
          3, 1999, the Company issued 500,000 common shares at $4 per share for total
          net
          proceeds of $2,000,000.
 
 On
          September 8, 1999, the Company issued 166,667 common shares at $9 per share
          for
          total net proceeds of $1,500,000.
 
 On
          November 26, 1999, the Company issued 1,000,000 common shares at $6.50
          per share
          for total net proceeds of $6,230,000, net of share issue costs of $270,000.
          Each
          of these shares had attached a five-year warrant to purchase one new common
          share for $7.80 per share. These warrants, which were exercisable at any
          time up
          to November 25, 2004, were exercised in July 26, 2000. (Note 16)
 
 On
          December 23, 1999, the Company issued 1,250,000 common shares at a price
          of
          $6.50 per share for total proceeds of $7,637,500, net of share issue costs
          of
          $487,500. Each of these shares had attached a five-year warrant to purchase
          one-third of one new common share for $7.80 per whole share and is exercisable
          at any time up to December 22, 2004. (Note 16)
 
 **NOTE
          14 - STOCKHOLDER RIGHTS PLAN**
 On
          March 1, 2002, the Company declared a dividend of one right for each share
          of
          the Company’s common stock issued and outstanding on March 20, 2002. Each right
          entitles the holder to purchase five shares of the Companies common stock
          at an
          exercise price of $0.01 per right, if certain events occurred relating
          to a
          person or group acquiring or attempting to acquire 10% or more of the
          outstanding of common shares of the Company without the approval of the
          Company’s board of Directors. The rights are exercisable until December 31,
          2020. Additional shares issued by the Company subsequent to March 20, 2002
          are
          automatically included in the share rights plan.
 
 As
          of
          December 31, 2002, the Company had reserved 132,800,185 shares for the
          exercise
          of these rights for the outstanding issued shares and 17,368,410 for the
          potential exercise of outstanding options and warrants.
 
 ***Page
              - 77***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          15 - STOCK OPTIONS**
 The
          Company has two stock option plans, the 1999 Stock Option Plan and the
          2001
          Stock Option/Warrant Plan. The 1999 Stock Option Plan allows the Company
          to
          grant up to 3,000,000 stock purchase options and the 2001 Stock Option/Warrant
          Plan allows the Company to grant up to 5,000,000 stock purchase options
          or
          warrants.
 
 **1999
          Stock Option Plan**
 The
          Company’s 1999 stock option plan generally provides for the granting of
          non-qualified and incentive stock options for the purchase of common stock
          to
          officers, consultants, directors and key employees. Non-qualified options
          can be
          granted at a price not less than 85% of the market price of the common
          stock at
          the date of grant. Incentive stock options can be granted at the market
          price at
          the date of grant, if granted to a director or consultant who is also an
          officer
          or key employee of the Company or at 110% of market price if granted to
          a
          shareholder holding ten percent or more of the Company’s common shares.
 
 All
          share
          options granted under the 1999 Option Plan are exercisable at 50% one year
          after
          the date of issue and the remaining 50% two years after the date of issue.
          All
          options, if remaining unexercised, expire five years after the date of
          issue.
          All vested options lapse within three months of termination of
          employment.
 
 Under
          the
          1999 Stock Option Plan, the Company granted the following share purchase
          options:
 
 Date
                    of Grant
                Number
                    of
                  Options
                Exercise
                  Price
                Fair
                    Value at
                  date
                    of GrantFebruary
                    1, 2000
                797,000
                $9.90
                $10.13February
                    25, 2000
                15,000
                9.90
                30.00March
                    1, 2000
                50,000
                9.90
                30.44April
                    1, 2000
                315,000
                9.90
                25.09April
                    17, 2000
                95,000
                13.50
                14.00May
                    12, 2000
                7,000
                14.00
                14.03June
                    19, 2000
                50,000
                9.90
                11.25August
                    29, 2000
                1,145,750
                5.05
                5.91August
                    29, 2000
                285,000
                5.05
                5.91June
                    22, 1999
                1,137,500
                7.65
                9.06September
                    15, 1999
                100,000
                7.65
                6.88November
                    4, 1999
                335,000
                7.65
                8.06
 
 On
          August
          29, 2000, the Company approved the granting of new options, with a new
          exercise
          price of $5.05 per share, providing the holders first rescinded their existing
          grants. Holders of 1,145,740 stock options elected to rescind their grants
          and
          these were replaced with a like number of new grants. The modified grants
          were
          accounted for using variable accounting according to FASB Interpretation
          No.
          44.
 
 During
          the year ended December 31, 2002, 20,000 vested options were
          forfeited.
 
 ***Page
              - 78***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          15 - STOCK OPTIONS, continued**
 A
          summary of the activity of the Company’s 1999 stock option plan is presented
          below:
 
 Shares
                    Under
                  Option
                Weighted
                    Average
                  Exercise
                    PriceOutstanding,
                    at December 31, 1999
                1,512,500
                $7.65Granted
                2,759,750
                7.52Forfeited
                (1,317,000)
                7.98Rescinded
                (1,145,750)
                9.68Outstanding,
                    at December 31, 2000
                1,809,500
                5.93Forfeited
                (964,500)
                6.21Rescinded
                (825,000)
                5.52Outstanding,
                    at December 31, 2001
                20,000
                9.34Forfeited
                (20,000)
                9.34Outstanding
                    December 31, 2002
                -
                $
                    -
 
 The
          weighted average fair value of the options granted in 2002, 2001 and 2000
          were
          $nil, $12.03 and $7.13.
 
 **2001
          Stock Option/Warrant Plan**
 The
          Company’s 2001 stock option/warrant plan generally provides for the granting of
          stock options or warrants for the purchase of a specific number of common
          shares
          at a specific price for a specific time period to officers, consultants,
          directors and key employees.
 
 All
          share
          options/warrants granted under the 2001 option/warrant plan either vest
          immediately, at 25% per quarter over a period of one year or on a performance
          basis. All options, if remaining unexercised, expire five years after the
          date
          of issue.
 
 The
          Company granted the following share options to employees, directors and
          consultants:
 
 Date
                    of Grant
                Number
                    of
                  Options
                Exercise
                    Price
                Fair
                    Value at
                  Date
                    of GrantJuly
                    15, 2002
                420,000
                $0.55
                $0.73October
                    31, 2001
                1,260,000
                $0.40
                $0.41
 
 On
          October 31, 2001, the Company approved the granting of new options to employees
          and directors with a new exercise price of $0.40 per share providing the
          holders
          first rescinded their existing grants of options and warrants (if any).
          Holders
          of 825,000 options granted under the 1999 Stock Option Plan and 235,000
          warrants
          granted on March 29, 2001 elected to rescind their existing grants and
          these
          were replaced with new grants totaling 765,000 options. (Note 16) The modified
          grants were accounted for using variable accounting according to FASB
          Interpretation No. 44.
 
 On
          October 31, 2001, the Company granted new options to employees, directors
          and
          consultants to purchase up to 495,000 shares of the Company’s common stock at a
          price of $0.40 per share. The options vest immediately, expire on October
          31,
          2006 and had a fair value on the grant date of $0.41 per share. 150,000
          of these
          options were granted to consultants. During 2002, 50,000 of these options
          were
          exercised.
  ***Page
              - 79***
  **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
          15 - STOCK OPTIONS, continued**
 On
          July 15, 2002, the Company granted options to employees and directors to
          purchase up to 370,000 shares of the Company’s common stock at a price of $0.55
          per share. The options vest immediately, expire on July 15, 2007 and have
          a fair
          value of $0.73 per share.
 
 On
          July
          15, 2002, the Company granted options to directors to purchase up to 50,000
          shares of the Company’s common stock at a price of $0.55 per share. The options
          vest 25% immediately and 25% every 6 months and expire 3 months after
          termination of employment and have a fair value of $0.73 per share.
 
 A
          summary
          of the activity of the Company’s 2001 stock option/warrant plan:
 Shares
                    Under
                Weighted
                    AverageOption
                Exercise
                    PriceOutstanding,
                    at December 31, 2000
                -
                -Granted
                1,260,000
                $0.40Outstanding,
                    at December 31, 2001
                1,260,000
                0.40Granted
                420,000
                0.55Exercised
                (50,000)
                0.40Outstanding,
                    at December 31, 2002
                1,630,000
                $0.44
 
 The
          weighted average fair value of the options granted in 2002 and 2001 was
          $0.65
          and $0.38.At December 31, 2002 and 2001 the weighted-average remaining
          contractual life of the outstanding options was 3.48 and 4.07
          years.
 
 **Compensation
          Expense - Prior Period Adjustment**
 At
          December 31, 2002, it was discovered there was an error in the calculation
          of
          stock based compensation related to stock options issued in prior years.
          The
          Company corrected this error at December 31, 2002. The cumulative effect
          of this
          correction is a decrease in additional paid in capital of $1,223,262 and
          a
          decrease in the accumulated deficit of $1,223,262 as of December 31, 2002.
          Had
          this error been corrected in prior years, it would have decreased (increased)
          the net losses, as reported in the following table:
  **Compensation
                    Expense**
                
                **As
                    Reported**
                
                **As
                    Restated**
                
                **Prior
                    Period Adjustment**December
                    31, 1999
                
                $
                646,532
                
                $
                439,332
                
                $
                (
                    207,200
                )December
                    31, 2000
                
                
                3,947,837
                
                
                2,095,592
                
                
                (1,852,245
                )December
                    31, 2001
                
                
                (1,772,478
                )
                
                (936,295
                )
                
                836,183Totals
                
                $
                2,821,891
                
                $
                1,598,629
                
                $
                (1,223,262
                )
 
 
 During
          the year ended December 31, 2002, the Company recorded compensation costs
          of
          $106,975.
  ***Page
              - 80***
  **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
   **NOTE
          16 - WARRANTS**
 **Warrants
          Issued March 29, 2001**
 On
          March
          29, 2001, the Company issued 265,000 warrants to certain directors and
          employees
          to purchase a total of 265,000 shares of the Company’s common stock at $1.25 per
          share. The market value of the Company’s shares at the date of issue was $0.84
          per share. These warrants were exercisable through March 31, 2004. During
          the
          year ended December 31, 2001, 30,000 of these warrants were returned and
          forfeited and 235,000 of these warrants were rescinded in exchange for
          replacement grants of stock options. (Note 15)
 
 **Warrants
          Exercised July 26, 2000**
 On
          July
          26, 2000, a warrant for one million shares of the Company was exercised
          at a
          price of $7.80 per share. (Note 13)
 
 **Warrants
          Issued June 30, 2000**
 On
          June
          30, 2000, the Company issued 50,000 warrants to a former employee to purchase
          50,000 shares of the Company’s common stock at $8.55 per share. The market value
          of the Company’s shares at the date of issue was $9.84. These warrants were
          exercisable for a period of two years from the date of issue. The fair
          value of
          the warrants was accounted for in operating expenses and estimated on the
          date
          of issue using the Black-Scholes Option-pricing model with the following
          assumptions used: risk-free interest rate of 5.5%; expected life of five
          years;
          87% expected volatility; and no dividends. These warrants were not exercised
          and
          expired on June 30, 2002.
 
 **Warrants
          Issued March 6, 2000**
 On
          March
          6, 2000, the Company sold a total of 3,228,500 units at $9.50 per unit
          pursuant
          to a private placement for cash proceeds of $30,670,750. Each unit consists
          of
          one share of the Company’s common stock and one warrant to purchase one third of
          a share of the Company’s common stock. The warrants, are exercisable through
          March 5, 2005, entitle the holder to purchase one-third of a share of common
          stock at $11.40 per share. (Note 13)
 
 The
          portion of stock proceeds allocated to the warrants was $7,656,124, which
          has
          been recorded as a separate component of additional paid-in capital. In
          consideration for arranging the private placement, the Company granted
          warrants
          to purchase 26,923 shares at $7.80 per share, and 223,925 shares at $11.40
          per
          share, of the Company’s common stock to an investment bank. These warrants
          expire on March 9, 2005. Included in the fair value of warrants issued
          with
          common stock of $7,656,124 is $1,374,446 allocated to the fair value of
          the
          warrants issued to the investment bank in connection with the private placement.
 
 The
          allocations were based on the relative fair value of the warrants and the
          fair
          value was estimated on the date of issue using the Black-Scholes option-pricing
          model using the following assumptions: risk-free interest rate of 5.5%;
          expected
          life of five years; 116% expected volatility; no dividends.
  **Warrants
          Issued December 23, 1999**
 On
          December 23, 1999, the Company issued 1,250,000 common shares at a price
          of
          $6.50 per share. Attached to each share was a five-year warrant to purchase
          one-third of a share of the Company’s common stock for $7.80 until December 22,
          2004. (Note 13)
 
 ***Page
              - 81***
 
 **BREK
              ENERGY CORPORATION**
 **(Formerly
              First Ecom.com, Inc.)**
 **(A
              Development Stage Company)**
 **DECEMBER
              31, 2002**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
          16 - WARRANTS, continued**
 **Warrants
          Issued August 10, 1999**
 On
          August
          10, 1999, the Company entered into an agreement with a company (the “Lender”)
          for the advance of $1,000,000 for three months. Pursuant to the terms of
          the
          loan agreement, the loan bore interest at 12% per annum and was convertible
          into
          common shares of the Company at $8.00 per share at the lender’s option. The
          repayment date of the loan was extended to January 10, 2000 and on December
          30,
          1999, the loan was repaid in full. As discussed in Note 2, the intrinsic
          value
          of the conversion feature at the date of issuance of the loan was $50,000
          which
          was accounted for as additional paid-in capital. The Company recognized
          an
          additional $380,000 deemed financing cost for the beneficial conversion
          feature
          of the convertible short-term note during the fourth quarter of 2000, as
          a
          cumulative effect of a change in accounting principle.
 
 Pursuant
          to this agreement the lender was granted warrants to purchase 100,000 common
          shares of the Company at $8.50 per share, exercisable for five years, commencing
          on August 10, 1999. The relative fair value of these warrants was deemed
          to be
          $360,000 and was recorded as a separate component of additional paid-in
          capital.
          The fair value of warrants issued was estimated on the date of issue using
          the
          Black-Scholes option-pricing model with the following assumptions used:
          risk-free interest rate of 5.5%; expected life of five years; 76.7% volatility;
          no dividends.
 
 **Warrants
          Outstanding**
 At
          December 31, 2002, the Company had the following share purchase warrants
          outstanding:
 
 Number
                    of Shares
                Price
                    Per Share
                Expiry
                    Date100,000
                $8.50
                August
                    9, 2004416,667
                7.80
                December
                    22, 20041,076,167
                11.40
                March
                    5, 200526,923
                7.80
                March
                    9, 2005223,925
                11.40
                March
                    9, 2005
 
 **NOTE
          17 - INCOME TAXES**
 Income
          tax expense has not been recognized for the years ended December 31, 2002,
          2001
          or 2000 and no taxes were payable at December 31, 2002 or 2001, because
          the
          Company is in the development stage and has incurred losses since its inception.
 
 The
          components of the Company’s net tax losses are as follows:
 
 2002
                
                
                2001
                
                
                2000United
                    States of America
                
                $
                (13,270,288
                )
                $
                (6,353,148
                )
                $
                (9,160,736
                )Hong
                    Kong
                
                
                (1,200,964
                )
                
                (3,748,476
                )
                
                (6,977,789
                )Other
                    countries (British Virgin Islands, Bermuda and Canada)
                
                
                (53,385
                )
                
                (359,698
                )
                
                (1,670,936
                )$
                (14,524,637
                )
                $
                (10,461,322
                )
                $
                (17,809,461
                )
  
 ***Page
              - 82***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        17 - INCOME TAXES, continued**
 As
        of December 31, 2002 and 2001, the Company had the following deferred tax
        assets
        that primarily relate to net operating losses. A 100% valuation allowance
        has
        been established, as management believe it is more likely than not that the
        deferred tax assets will not be realized.
 
 2002
              
              2001Federal
                  loss carryforwards
              
              $
              7,783,936
              
              $
              4,066,883State
                  loss carryforwards, Nevada
              
              
              -
              
              
              -Foreign
                  loss carryforwards
              
              
              2,923,633
              
              
              2,731,479Less:
                  Valuation allowance
              
              
              (10,707,569
              )
              
              (6,798,362
              )$
              -
              
              $
              -
 
 The
        Company’s valuation allowance increased during 2002 and 2001 by $3,909,207 and
        $3,357,159.
 
 At
        December 31, 2002 and 2001 the Company had the following net operating loss
        carryforwards (“NOL’s”):
 
 2002
              
              2001United
                  States
              
              $
              26,704,981
              
              $
              13,429,791Foreign
              
              
              20,268,961
              
              
              19,019,514$
              46,973,942
              
              $
              32,449,305
 
 The
        federal NOL’s expire through December 31, 2022 and the Hong Kong NOL’s can be
        carried forward indefinitely.
 
 **NOTE
        18 - SEGMENTED INFORMATION**
 During
        the year ended December 31, 2002, the Company disposed of its payment processing
        business, the Company now has only one business, an oil and gas business
        in the
        United States of America.
 
 **NOTE
        19 - COMMITMENTS AND CONTINGENCIES**
 **Lease
        Commitments**
 The
        Company leases office and other premises under non-cancelable operating leases.
        The lease commitments for the next five years are:
 
 2003
              $88,050Total:
              $88,050
 
 Rent
        expense for the years ended December 31, 2002, 2001, 2000 and the cumulative
        period from inception were $96,481, $372,178, $611,509, and $1,356,599
        respectively.
  ***Page
            - 83***
  **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
        19 - COMMITMENTS AND CONTINGENCIES, continued**
 **Going
        Concern**
 During
        the year the Company changed business direction and has been focusing on
        its oil
        and gas business. As such, the Company has accumulated a deficit in excess
        of
        $61 million to date and additional financing will be required by the Company
        to
        support development of its oil and gas properties until such time as the
        Company
        achieves positive cash flow from operations. These factors raise substantial
        doubt about the Company’s ability to continue as a going concern. The Company’s
        ability to achieve and maintain profitability and positive cash flow is
        dependent upon its ability to locate profitable oil and gas properties, generate
        revenues from its oil and gas production and control production costs. Based
        upon current plans, the Company expects to incur operating losses in future
        periods. There is no assurance that the Company will be able to generate
        revenues in the future. The accompanying financial statements do not include
        any
        adjustments that might be necessary if the Company is unable to continue
        as a
        going concern.
 
 **NOTE
        20 - SUBSEQUENT EVENTS**
 **Contingent
        liabilities**
 In
          February 2003 the debtor and guarantor of the note receivable commenced
          legal
          action against the Company, in Bermuda, claiming that the Company and its
          former
          subsidiary, First Ecom Systems Limited, had promised to develop and supply
          them
          with certain software. As a result of this litigation the debtor ceased
          making
          the required installment payments on March 1, 2003. Although the directors
          believed that this lawsuit was without merit as there was no condition
          to
          develop software for the debtor, due to lack of financial resources the
          Company
          did not defend its position and no further actions by either party have
          transpired since February 2003. (Notes 5 and 9)
 
 On
          June
          9, 2003, a petition was filed against the Company by Burlington Resources
          Oil
& Gas Company , LP (“Burlington”) claiming that Brek failed to pay for costs
          incurred by Burlington in drilling oil and gas wells in Texas. Burlington
          claimed damages of $658,831. On July 16, 2003, Brek Petroleum Inc. filed
          its
          original answer to the petition. On March 1, 2004, the Company and Burlington
          entered into a settlement agreement whereby the Company agreed to pay Burlington
          a total of $691,874, in twelve equal monthly payments, commencing August
          14,
          2004, plus legal and court imposed interest.
 
 **Oil
        and Gas Properties**
 Based
        on
        a December 31, 2004 reserves study, the Company recorded an impairment charge
        on
        their Utah oil and gas properties. Based on this study the Company valued
        the
        Utah oil and gas properties at an amount equal to the present value, discounted
        at 10%, of the estimated future net revenues from proved oil and gas reserves
        of
        approximately $5.7 million (calculated, based on estimated net revenues of
        $18.5
        million) plus the cost, or estimated fair value, if lower of unproved
        properties, less estimated future expenditures to be incurred in developing
        and
        producing the proved reserves of approximately $3.7 million. The present
        value
        of estimated future net revenues was computed by applying current prices
        of oil
        and gas to estimated future production of proved oil and gas reserves as
        of
        December 31, 2004, assuming the continuation of existing economic conditions.
        (Note 8)
 
 The
        Company has an option to acquire an additional 2.5% interest in these
        undeveloped mineral leases by paying $5,250,000 on or before January 1, 2004
        and
        if they exercise this option, the Company has the option of acquiring an
        additional undivided 2.5% interest by paying $5,250,000 on or before January
        1,
        2005. The Company did not exercise either of these options. (Note
        10)
   
 ***Page
            - 84***
 
 **BREK
            ENERGY CORPORATION**
 **(Formerly
            First Ecom.com, Inc.)**
 **(A
            Development Stage Company)**
 **DECEMBER
            31, 2002**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
  
 **NOTE
        20 - SUBSEQUENT EVENTS, continued**
 **Common
        Shares and Warrants**
 On
        April
        14, 2003, the Company issued 277,776 common shares at $0.18 per share by
        way of
        a private placement for total proceeds of $50,000.
 
 On
        April
        14, 2003, the Company converted $308,947 in accounts payable and $28,700
        in
        loans payable into 1,875,817 common shares at $0.18 per share. (Note
        12)
 
 During
        the year ended December 31, 2004, the Company issued 23,438,623 units for
        cash
        of $3,141,893 and 1,804,167 units, to an officer, as a finder’s fee of $226,250
        for arranging placement of 18,041,670 of the 23,438,623 units. These units
        were
        issued at prices between $0.05 and $0.20 per unit. Each unit is comprised
        of one
        common share and one share purchase warrant, each warrant entitles the holder
        to
        purchase one share of the Company’s common stock, is exercisable at prices
        between $0.25 to $0.35 per share and expires within one to three years. The
        fair
        value of the warrants was estimated to be $842,036 (25% of the $3,368,143
        in
        debt or proceeds received from the sale of the units).
 
 During
        the year ended December 31, 2004, the Company issued 1,375,000 units for
        debt of
        $68,750, the units were issued at $0.05 per unit. Each unit is comprised
        of one
        common share and one share purchase warrant, each warrant entitles the holder
        to
        purchase one common share of the Company’s stock, is exercisable at $0.35 per
        share and expires in one year. The fair value of the warrants was estimated
        to
        be $17,188 (25% of the $68,750 in debt).
 
 During
        the seven month period ended July 31, 2005, the Company issued 3,333,335
        units
        for cash of $1,000,000 and 333,334 units, to an officer, as a finder’s fee of
        $100,000, for arranging placement of these units. The units were issued at
        $0.30
        per unit. Each unit is comprised of one common share and one share purchase
        warrant, each warrant entitles the holder to purchase one share of the Company’s
        common stock, is exercisable at $0.50 per share and expires within two years
        of
        the date of issuance. The fair value of the warrants was estimated to be
        $275,000 (25% of the $1,100,000 in debt or proceeds received from the sale
        of
        the units).
 
 On
        July
        25, 2005, an officer of the Company, exchanged 400,000 warrants for 400,000
        shares of the Company’s stock at $0.25 per share.
  On
        September 29, 2005, an officer of the Company exchanged 100,000 warrants
        for
        100,000 shares of the Company's stock at $0.25 per share.
  ***Page
            - 85***
     **Exhibit
          10.4**
  
  
 ***Page
              - 86***
 
  SHARE
        PURCHASE AGREEMENT
    ***Page
            - 87***
  **SHARE
          PURCHASE AGREEMENT**
 
 **By
          and Among**
 **FIRST
          ECOM.COM, INC.**
 **FEDS
          ACQUISITION CORPORATION**
 **FIRST
          ECOM DATA SERVICES ASIA LIMITED,**
 **AND**
 **FIRST
          ECOMMERCE ASIA LIMITED**
 (collectively,
          as “Sellers”)
 
 and
 
 **FIRST
          CURACAO INTERNATIONAL BANK, N.V.**
 (as
          “Purchaser”)
 
 with
          respect to all the issued and outstanding share capital of
 **FIRST
          ECOMMERCE DATA SERVICES LIMITED**
 
 **October
          19, 2001**
 
 **THE
          INSTALLMENT PAYMENTS REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED
          UNDER THE UNITED STATES SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED
          FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE
          OF A
          REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH INSTALLMENT PAYMENTS
          UNDER
          SUCH ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO FIRST
          CURACAO INTERNATIONAL BANK, N.V. AND ITS COUNSEL THAT SUCH REGISTRATION
          IS NOT
          REQUIRED.**
 
 
 ***Page
              - 88***
 
 **SHARE
          PURCHASE AGREEMENT**
 
 
 **THIS
          SHARE PURCHASE AGREEMENT** (together with all schedules, exhibits or other instruments attached hereto,
          this “Agreement”) is entered into effective as of the 19 th day of
          October, 2001 (the “Effective Date) by and among First Ecom.com, Inc., a Nevada
          corporation (“First Ecom”), FEDS Acquisition Corporation, a Nevada corporation
          (“FEDS Acquisition”), First Ecom Data Services Asia Limited, a Hong Kong
          corporation (“FEDS Asia”), First Ecommerce Asia Limited, a Hong Kong corporation
          (“First Asia”) (First Ecom, FEDS Acquisition, FEDS Asia and First Asia being
          sometimes referred to herein individually as a Seller and collectively,
          whether
          two or more, as “Sellers”), and First Curacao International Bank, N.V., a
          Netherlands Antilles company (“Purchaser”).
 
 **WHEREAS** FEDS
          Acquisition is the registered and beneficial owner of all of the issued
          and
          outstanding share capital of First Ecommerce Data Services Limited, a Bermuda
          company (the “Company”); and
 
 **WHEREAS** ,
          FEDS
          Asia is the owner and holder of all rights, titles and interest in and
          to
          certain computer software technologies of interest to Purchases;
          and
 
 **WHEREAS** ,
          First
          Ecom is the registered and beneficial owner of all of the issued and outstanding
          share capital of FEDS Acquisition, First Asia and FEDS Asia; and
 
 **WHEREAS** ,
          First
          Asia is a party to a certain license and distribution agreement with Oasis
          Technology Ltd. of interest to Purchaser; and
 
 **WHEREAS** ,
          upon
          the terms and subject to the conditions set forth in this Agreement, Purchaser
          wishes to purchase, and Sellers wish to transfer or cause to be transferred
          to
          Purchaser, the Company Shares, and to effect such other transfers and grants
          of
          rights and licenses to purchaser as are contemplated herein for the
          consideration set forth below;
 
 **NOW,
          THEREFORE,** in
          consideration of the premises and of the mutual agreements, provisions
          and
          covenants herein contained, and for other good and valuable consideration,
          the
          receipt and sufficiency of which are hereby acknowledged, Purchaser and
          Sellers
          hereby agree as follows:
 
 ARTICLE
          I
          - DEFINITIONS
 
 1.1  Definitions.
          As used in this Agreement, the following capitalized terms shall have the
          meanings ascribed to them below. Other capitalized terms used herein shall
          have
          the meanings given them where they first appear.
 
 “Affiliate”
          of a person or entity shall mean any other person or entity controlled
          by,
          controlling, or under common control with said person or entity, and “control”
for this purpose is understood to include the ownership or voting control
          of
          more than 50% of the outstanding securities of any such person carrying
          the
          power to vote with respect to the direction or management of the person
          or
          entity.
 
 “Business
          Day” shall mean any on which businesses in Bermuda are normally open for
          business, excluding governmental, banking and other generally recognized
          holidays.
 
 ***Page
              - 89***
 “Closing”
          shall mean the closing of the transactions contemplated by this Agreement
          to
          take place upon the execution and delivery of this Agreement as specified
          in
          Article II.
 
 “Closing
          Date” shall mean the date on which Closing takes place.
 
 “Companies
          Act” shall mean the Companies Act 1981 of Bermuda, as amended from time to
          time.
 
 “Company
          Shares” shall have the meaning given it in Section 4.5(a).
 
 “Contracts”
          shall mean any and all contracts, commitments, covenants, promises, notes,
          mortgages, indentures, leases of tangible personal property, licenses,
          franchises, options, warranties, commitments, and other agreements,
          understandings and arrangements (other than those constituting real property
          or
          bank deposit agreements).
 
 “Environmental
          Requirements” shall mean all applicable Legal Requirements, together with any
          other requirements of permits, licenses, certificates, authorizations,
          concessions, franchises or other approvals of any Governmental Authority
          relating to pollution, the protection of human health or safety or the
          environment, including, without limitation all requirements pertaining
          to
          reporting, licensing, permitting, investigation and remediation of emissions,
          discharges, releases, or threatened releases of Hazardous Substances into
          the
          air, surface water, groundwater, or land, ore relating to the manufacture,
          processing distribution, use, treatment, storage, disposal, transport,
          or
          handling of Hazardous Substances; and all requirements pertaining to the
          protection of the health and safety of the Company’s employees, contractors or
          the public.
  “Governmental
          Authority” shall mean any court, governmental department, commission, council,
          board, agency, or other judicial, administrative, regulatory, legislative
          or
          other governmental agency or instrumentality of Bermuda or any foreign
          country,
          or any state, county, municipality or local governmental body located in
          Bermuda
          or any such other foreign country.
 
 “Hazardous
          Substances” shall mean any pollutant, contaminant, material, substance, waste,
          chemical or compound that is regulated, restricted or prohibited by any
          Environmental Requirement or designated by any Governmental Authority to
          be
          hazardous, toxic, radioactive, biohazardous or otherwise a danger to health
          or
          the environment.
 
 “Intellectual
          Property” shall mean any and all discoveries, inventions (patentable or
          otherwise), methods, trade secrets, know-how and other proprietary information,
          utility models, sketches, drawings, designs, charts, lists, reports, forms,
          memoranda, writings, computer software, computer software documentation,
          trademarks and trade names, service marks, and service names, domain names,
          copyrights, patents (including without limitation utility patents, design
          patents, utility models and petty patents), moral rights, in all cases
          whether
          or not registered or registrable, and all rights to renewal and extension
          of
          copyrights, patents or designs to the full term or terms for which such
          copyrights, patents or designs may be issued, renewed or extended, all
          copyright, patent and design registrations and applications therefor, all
          rights
          under judicial orders or injunctions, and the right to recover for past
          and
          future infringements, and also including in the case of patent application
          the
          right to claim priority for such patent applications.
 
 ***Page
              - 90***
 “Legal
          Requirements” means laws, statutes, orders, rules, ordinances, regulations,
          codes, judgments, orders, writs or decrees of any governmental Authority
          having
          jurisdiction over the person or subject matter in question, and any and
          all
          legal duties arising under applicable common law.
 
 ARTICLE
          II - PURCHASE AND SALE
 
 2.1  Purchase
          and Sale of the Company Shares. Subject to the terms and conditions of
          this
          Agreement, Sellers hereby agree to sell and deliver, or cause to be sold
          and
          delivered, to Purchaser or its assignee or nominee, and Purchaser or its
          assignee or nominee hereby agrees to purchase and accept form Sellers,
          all legal
          and beneficial interest in all of the Company Shares, consisting of 3,000,000
          ordinary shares of par value BD$1.00, represented by Certificate No. 8
          (the
“Certificate”, whether one or more), free from all liens, charges, encumbrances,
          equities and claims of third parties of any description, together with
          all
          rights now or hereafter attaching thereto.
 
 2.2  Grant
          of
          Software Licenses; Assignment of Distribution License; Support and Maintenance,
          Subject to the terms and conditions of, this Agreement, Sellers hereby
          agree to
          execute and deliver to Purchaser (i) a Software License Agreement for Merchant
          Accounting and Reporting System, (ii) a Software License Agreement for
          Payment
          Gateway, and (iii) a Software Development License Agreement, each in the
          form of
          Exhibits A, B and C attached hereto and made a part hereof for all purposes,
          respectively, (iv) subject to any necessary consents that remain to be
          obtained
          from Oasis Technology Ltd., a Subdistributor and Assignment Agreement in
          the
          form of Exhibit D attached hereto and made a part hereof for all purposes,
          and
          (v) an End User Support Agreement in the form of Exhibit E attached hereto
          and
          made a part hereof for all purposes.
 
 2.3  Purchase
          Price. The aggregate purchase price (the “Consideration”) to be paid by
          Purchaser for the Company Shares, the grants of the software licenses and
          the
          assignment described in Section 2.2 above, the entry into the End User
          Support
          Agreement described in Section 2.2 above, and the other covenants and agreements
          on the part of Sellers provided for hereunder, shall be US$1,663,986 payable
          at
          Closing in cash, by cashier’s check or by wire transfer of immediately available
          funds to an account designated in writing by Sellers to Purchaser no less
          than
          three Business Days prior to the Closing for this purpose, plus the payments
          required to be paid to Sellers by or on behalf of Purchaser in the amounts
          and
          at the times set forth in Section 7.1 below (the “Installment Payments”). In
          this connection the parties acknowledge and agree that, of the US$1,663,986
          payable at Closing, US$10.00 represents the entire fee for each of the
          license
          agreements described in clauses (i), (ii) ad (iii), respectively, of Section
          2.3, an additional US$10.00 represents the entire fee for the Subdistributor
          and
          Assignment Agreement described in clause (iv) of Section 2.3 , and US$10.00
          represents the entire fee for the end User Support Agreement described
          in clause
          (v) of Section 2.3, and the remaining US$1,663,936, plus the Installment
          Payments, represents the entire purchase price being paid for the Company
          Shares. As provided in Section 10.12 hereof, Purchaser shall be deemed
          to have
          discharged its obligations to make payments hereunder by making such payments
          to
          First Ecom, which shall hold such payments in trust for the other Sellers
          as
          their interest may appear.
 
 ***Page
              - 91***
 2.4  Closing.
          The Closing shall take place at the offices of Appleby Spurling & Kempe,
          Cedar House, 41 Cedar Avenue, Hamilton, Bermuda upon the latest to occur
          of (i)
          immediately upon complete execution and delivery of this Agreement and
          (ii) as
          soon as practicable following complete execution and delivery of this Agreement
          and satisfaction or waiver of all of the conditions to the obligations
          of the
          parties to consummate the transactions contemplated hereby in accordance
          with
          this Agreement, and (iii) at such other time, place and date as is mutually
          agreed to by the parties hereto. The parties acknowledge that the execution
          of
          documents and instruments required hereunder may take place prior to the
          actual
          finding of the Consideration payable at Closing or the satisfaction of
          certain
          conditions to Closing, in which case such documents and instruments shall
          be
          placed into escrow with the firm of Appleby Spurling & Kempe for release
          upon funding and satisfaction of all such conditions, and the Closing Date
          shall
          be the date of such release. Notwithstanding any requirement herein that
          documents or instruments be dated the Closing Date, such documents and
          instruments shall be deemed satisfactory if dated on the date of signing,
          but
          considered effective on the Closing Date, and conditions required to be
          satisfied prior to Closing, and representations and warranties given at
          signing,
          shall be deemed satisfied if satisfied after signing but prior to or on
          the
          Closing Date.
 
 2.5
                Sellers’
                    Actions at the Closing. At or prior to the
                    Closing:
 
 (a)
                Sellers
                    shall deliver to Purchaser:
 
 (i)  (A)  the
          Certificates of Incorporation or other equivalent organizational document
          of
          each of First Ecom, FEDS Acquisition, FEDS Asia and First Asia, respectively,
          certified in each case as of a date no earlier than five (5) Business Days
          prior
          to the Closing Date by the Secretary of State of the State of Nevada or
          equivalent official or office of the jurisdiction of incorporation, and
          (B) a
          certificate of said Secretary of State or other official or office dated
          as of
          no earlier than three (3) Business Days prior to the Closing Date as to
          the due
          incorporation and good standing of each of First Ecom, FEDS Acquisition,
          FEDS
          Asia and First Asia, respectively; and
  
 (ii)  certificates
          of the Secretary or an Assistant Secretary of each of First Ecom, FEDS
          Acquisition, FEDS Asia and First Asia, respectively, dated the Closing
          Date and
          certifying (A) that the Certificate of Incorporation or equivalent
          organizational document of such company has not been amended since the
          date of
          the last amendment referred to in the certificate delivered pursuant to
          clause
          (i) (A) above, (B) that attached thereto is a true and correct copy of
          all
          resolutions adopted by the Board of Directors and, if required under the
          company’s organizational documents or applicable Legal Requirements,
          shareholders of such company authorizing the execution, delivery and performance
          of this Agreement and the ancillary agreements and transactions contemplated
          hereby and that such resolutions have not been amended or modified and
          are in
          full force and effect in the form adopted, and (C) to the incumbency and
          specimen signature of each officer of such company executing this Agreement
          and
          each ancillary agreement to be executed by such company pursuant to this
          Agreement and any certificate or instrument furnished pursuant hereto;
          and
 
 ***Page
              - 92***
 
 (iii)  (A)
          the
          Memorandum of Association of the Company, certified as of a date no earlier
          than
          three (3) Business Days prior to the Closing Date by the Registrar of Companies
          of Bermuda, and (B) a Certificate of Compliance from said Registrar of
          companies
          dated as of no earlier than three (3) Business Days prior to the Closing
          Date as
          to the due incorporation and good standing of the Company; and
 
 (iv)  certificate
          of the Secretary of the Company dated the Closing Date and certifying (A)
          that
          the Memorandum of Association of the Company has not been amended since
          the date
          of the last amendment referred to in the Certificate delivered pursuant
          to
          clause (iii) (A) above, and (B) that attached thereto is a true and correct
          copy
          of all resolutions adopted by the Board of Directors and shareholders of
          the
          Company pursuant to the provisions of Section 2.5(c) below and that such
          resolutions have not been amended or modified and are in full force and
          effect
          in the form adopted, and (C) that the other requirements of Section 2.5(c)
          have
          been fulfilled in accordance with the provisions thereof; and
 
 (v)  an
          opinion of counsel from legal counsel to First Ecom and FEDS Acquisition
          substantially in the form of Exhibit J attached hereto and made a part
          hereof
          for all purposes;
 
 (b)  Sellers
          shall deliver or procure delivery to the Purchaser of the Certificate evidencing
          the Company Shares, accompanied by duly executed share transfer instruments
          in
          the form attached hereto as Exhibit F effecting transfer from FEDS Acquisition
          of all the Company Shares in favor of Purchaser (or its nominee(s)), and,
          in
          connection therewith, Sellers hereby irrevocably appoint, as of the time
          of
          Closing, any corporate officer of Purchaser and any Director of the Company
          as
          Sellers’ attorneys-in-fact and irrevocably instruct any such attorney-in-fact to
          execute all or any form(s) of transfer, surrender and/or other documents(s)
          at
          such attorney-in-fact’s direction in relation to the Company Shares in favor of
          Purchaser or such other person or persons as Purchaser may direct and to
          do all
          such acts and things as may in the opinion of such attorney-in-fact be
          reasonably necessary or reasonably expedient for the purposes of, or in
          connection with, the acceptance of the purchase described in Section 2.1
          and to
          surrender or vest in Purchaser or its nominee(s) the Company Shares;
 
 (c)  To
          the
          extent they have not previously done so, Sellers shall, and shall cause
          the
          Company to, procure that a board meeting of the Company shall be held at
          which
          (i) there shall be submitted and accepted the resignations or otherwise
          arranged
          the removals of directors and officers referred to in Section 4.4(b); (ii)
          there
          shall be appointed as directors and officers of the company the nominees
          of
          Purchaser specified in Section 4.4(b); (iii) the transfers of the Company
          Shares
          contemplated by this Agreement shall be approved and Purchaser and/or its
          nominee(s) shall be registered as the holders of the Company Shares and
          new
          share certificates shall be executed and issued accordingly; (iv) all existing
          instructions of the Company to its banks shall be cancelled and new instructions
          given in such form as Purchaser may require; and (v) the registered office
          of
          the company will be changed to Cedar House, 41 Cedar Avenue, Hamilton HM
          EX,
          Bermuda, all in form and substance reasonably satisfactory to
          Purchaser;
 
 (d)  To
          the
          extent they have not previously done so, Sellers shall, or shall cause
          the
          Company to, procure that the auditors of the Company shall deliver their
          written
          resignation to Purchaser;
  ***Page
              - 93***
  (e)  To
          the
          extent they have not previously done so, Sellers shall cause Company to
          repay to
          First Ecom out of Company’s accounts the US$1,336,014 debt and the US$9,401.27
          interest obligation currently owed by Company to First Ecom, and Sellers
          will
          furnish to Company a release in the form attached hereto as Exhibit G of
          said
          debt and obligation and any and all liens or encumbrances or related
          undertakings securing its or their repayment, together with the originals(s)
          of
          the promissory note or notes evidencing said indebtedness;
 
 (f)  Sellers
          shall, or shall cause the Company to, deliver to Purchaser the statutory
          books
          of the Company complete and accurate up to Closing and any company seal(s),
          memorandum of association, bye-laws and amendments thereto, name change
          certificates and other company filings, and all unused share certificates
          of the
          Company;
 
 (g)  To
          the
          extent they have not previously done so, Sellers shall, or shall cause
          the
          Company to, deliver to Purchaser the unaudited financial statements of
          the
          Company comprising the balance sheet as at, and the year-to-date income
          and cash
          flow statement for the period ending, September 30, 2001;
 
 (h)  To
          the
          extent they have not previously done so, Sellers shall, or shall cause
          their
          appropriate Affiliates to, procure that their names and the names of their
          Affiliates that are the same as or confusingly similar to the Company’s name be
          changed so that they are not, it being understood that “FirstEcom.Com” shall not
          be considered as such for this purpose, and Seller shall deliver to Purchaser
          (i) a copy of the instruments or documentation necessary to do so as certified
          by the appropriate Governmental Authority no earlier than five (5) business
          Days
          prior to the Closing Date or in the event that such certifications cannot
          with
          reasonable diligence be obtained prior to the Closing Date, (ii) evidence
          reasonably satisfactory to Purchaser that applications to accomplish same
          have
          been duly filed and are being diligently pursued;
 
 (i)  To
          the
          extent they have not previously done so, Sellers shall, and shall cause
          the
          Company to, execute and deliver an agreement in the form of Exhibit H attached
          hereto and made a part hereof for the purpose of assigning, conveying and
          transferring to First Ecom or its designee all of the Company’s right, title and
          interest, if any, in and to the logo attached to said Exhibit H, which
          logo is
          and shall remain First Ecom’s or its designee’s property;
 
 (j)  To
          the
          extent they have not previously done so, Sellers shall, or shall cause
          the
          Company to, obtain and deliver to Purchase an accurate and complete copy
          of the
          permission in writing granted form the Bermuda Monetary Authority for the
          transfer of all the Company Shares from FEDS Acquisition to Purchaser
          contemplated by this agreement, all in form and substance reasonably
          satisfactory to Purchaser;
 
 (k)  Sellers
          shall provide confirmation reasonably satisfactory to Purchaser in connection
          with the license currently held by the Company under Section 114 of the
          Companies Act to the effect that (i) said license shall continue in full
          force
          and effect following the transfer of control of the Company from FEDS
          Acquisition to Purchaser contemplated hereunder, and (ii) that the condition
          in
          said license previously limiting to “financial institutions” the range of
          customers to whom the Company would be permitted to render services has
          been or
          will be removed;
  ***Page
              - 94***
  (l)  To
          the
          extent they have not previously done so, Sellers shall, and shall cause
          the
          Company to, procure that the Bye-laws of the Company be amended in the
          following
          respects; (i) amend Bye-law 61, which still requires beneficial ownership
          by
          Bermudians in the Company to be at least 60% and a non-Bermudian holding
          more
          than 40% of the shares of the Company to dispose of the excess, so that
          the
          Bye-laws reflect and permit the ownership by FEDS Acquisition (a non-Bermudian)
          of all the Company Shares and so that they further permit the transfer
          of those
          Company Shares from FEDS Acquisition to Purchaser, and (ii) amend Bye-law
          64,
          which currently provides that the Board of Directors has absolute discretion
          without assigning any reason not to register any share transfer, so that
          such
          discretionary power is removed, all in form and substance reasonably
          satisfactory to Purchaser;
 
 (m)  To
          the
          extent they have not previously done so, Sellers shall cause the Company
          to
          execute and deliver to FEDS Asia an assignment in the form of Exhibit I
          attached
          hereto and made a part hereof for all purposes of all the Company’s right, title
          and interest in and to that certain E-commerce Transaction Processing Agreement
          dated June 22, 2000 entered into between the Company and Wing Hang Bank
          and that
          certain Services Agreement for E-commerce Transaction Processing dated
          November
          30, 2000 between the Company and International Bank of Asia Limited, all
          in form
          and substance reasonably satisfactory to Purchaser;
 
 (n)  To
          the
          extent they have not previously done so, Sellers shall cause the Company
          to
          furnish to the “Customer” under that certain Transaction Processing Agreement
          made effective 20 April 2001 and entered into by and between the Company
          and
          Planet Group, Inc. a letter in form and substance reasonably satisfactory
          to
          Purchaser regarding the provisions of Section 14 of that Agreement;
          and
 
 (o)  To
          the
          extent they have not previously done so, Sellers shall, and shall cause
          the
          Company to, pay to the appropriate governmental Authority any and all applicable
          Bermuda stamp duties incurred with respect to the execution and delivery
          of all
          of the contracts, agreements and other instruments listed in Schedules
          1 or 2,
          the employment-related agreements specified in Section 4.17(b) and the
          Lease
          specified in Section 4.12 (a) below, including without limitation any fines
          or
          penalties for delinquent or insufficient filing or payment with respect
          thereto.
 
 2.6
                Purchaser’s
                    Actions at the Closing. At the
                    Closing:
 
 (a)
                Purchaser
                    shall deliver to Sellers:
 
 (i)  (A)  the
          Articles of Association of Purchaser, certified as of no earlier than five
          (5)
          Business Days prior to the Closing Date by Mr. G.C.A. Smeets, a civil law
          notary
          residing in Curacao, Netherlands Antilles, and (B) a certificate of the
          said Mr.
          G.C.A. Smeets dated as of no earlier than five (5) Business Days prior
          to the
          Closing Date as to the due incorporation and good standing of
          Purchaser;
 
 (ii)  certificate
          of a Managing Director of Purchaser dated the Closing Date and certifying
          (A)
          that the Articles of Association of Purchaser has not been amended since
          the
          date of the last amendment referred to in the Certificate delivered pursuant
          to
          clause (i) (A) above, (B) that attached thereto is a true and correct copy
          of
          all resolutions adopted by the Board of Managing Directors of Purchaser
          authorizing the execution, delivery and performance of this Agreement and
          the
          ancillary agreements and transactions contemplated hereby and that such
          resolutions have not been amended or modified and are in full force and
          effect
          in the form adopted, and (C) to the incumbency and specimen signature of
          each
          officer of Purchaser executing this Agreement and each ancillary agreement
          to be
          executed by purchaser pursuant to this Agreement and any certificate of
          instrument furnished pursuant hereto; and
 
 ***Page
              - 95***
 (b)  Purchaser
          shall deliver to Seller the portion of the Consideration to be paid at
          Closing
          in the form and manner described in Section 2.3 above.
 
 ARTICLE
          III - REPRESENTATIONS AND WARRANTIES
 REGARDING
          SELLERS
 
 Sellers,
          acting jointly and severally, hereby represent and warrant to Purchaser
          as
          follows:
 
 3.1  Organization.
          Each of First Ecom and FEDS Acquisition is a corporation duly incorporated,
          validly existing and in good standing under the laws of the State of Nevada
          and
          has all requisite corporate power and authority to own, lease and operate
          its
          properties and to carry on its business as now being conducted. Each of
          FEDS
          Asia and First Asia is a corporation duly incorporated, validly existing
          and in
          good standing under the laws of Hong Kong and has all requisite corporate
          power
          and authority to own, lease and operate its properties and to carry on
          its
          business as now being conducted. First Ecom is the registered and beneficial
          owner of all of the issued and outstanding share capital of FEDS Acquisition,
          First Asia and FEDS Asia.
 
 3.2  Authority.
          Each Seller has all requisite corporate power and authority to enter into
          this
          Agreement and to perform its obligations hereunder and consummate the
          transactions contemplated hereby. Each Seller’s execution and delivery of this
          Agreement, the performance by such Seller of its obligations hereunder
          and the
          consummation of the transactions contemplated hereby have been duly and
          validly
          authorized by all necessary corporate action on the part of such
          Seller.  FEDS
          Acquisition has the full power to assign, transfer and deliver the Company
          Shares hereunder, free and clear of all covenants, conditions, voting trust
          arrangements, liens, encumbrances, equities, security interests, restrictions,
          claims, charges, and other claims or rights of third parties (“Encumbrances”).
          This Agreement, and each agreement, document or other instrument required
          to be
          executed and delivered hereunder, when executed and delivered by all Sellers
          named as a party thereto, will constitute the valid and legally binding
          obligation of each such named Seller, legally enforceable against such
          Seller in
          accordance with its terms, subject to the effects of bankruptcy, insolvency,
          reorganization, moratorium and other similar laws relating to or affecting
          the
          rights of creditors generally, limitations imposed by applicable law or
          equitable principles upon the specific enforceability of any of the remedies,
          covenants or other provisions of this Agreement, and upon the availability
          of
          injunctive relief or other equitable remedies. FEDS Acquisition acquired
          the
          Company Shares from First Ecom in a bona fide transaction for fair
          consideration, such transfer was duly and validly authorized by all necessary
          corporate action on the part of First Ecom and FEDS Acquisition, and such
          transfer is property stamped and not subject to any executory agreement,
          condition subsequent or other covenant or condition that would reserve
          to First
          Ecom or any other party the right to rescind or otherwise avoid such
          transfer.
 
 ***Page
              - 96***
 3.3  No
          conflict with Other Instruments. Each Seller’s execution and delivery of, and
          performance of its obligations under, this Agreement, each agreement, document
          or other instrument required to be executed and delivered hereunder, and
          the
          transactions contemplated hereby and thereby (i) will not result in any
          violation of, conflict with, constitute a breach, violation or default
          (with or
          without notice of lapse of time, or both), give rise to a right of termination,
          cancellation, forfeiture or acceleration of any obligation or loss of any
          benefit under, or result in the creation or encumbrance on any of the properties
          or assets of any Seller or the Company or any of its or their subsidiaries,
          under (x) any provision of the certificate of incorporation, bylaws, or
          other
          charter or government document of any Seller or (y) any agreement, arrangement,
          contract, understanding, note, mortgage, indenture, lease, franchise, license,
          permit or other instrument to which any Seller is a party or by which any
          Seller
          or any of its properties or assets is bound, (ii) will not conflict with,
          or
          result in any breach or violation of, any Legal Requirement applicable
          to Seller
          or its properties or assets, or (iii) will not result in the imposition
          of any
          Encumbrance upon the Company Shares, except, in the case of clauses (i)
          (y) and
          (ii), for any of the foregoing that would not, individually or in the aggregate,
          have a material adverse effect on Sellers and their subsidiaries, taken
          as a
          whole, or that could not result in the creation of any material lien, charge
          or
          encumbrance upon any assets of any Seller or any of its subsidiaries, or
          that
          could not prevent, materially delay or materially burden the transactions
          contemplated by this Agreement.
 
 3.4  Ownership
          of Securities, FEDS Acquisition will sell the Company Shares pursuant to
          this
          Agreement with full title guarantee (as construed under Bermuda law) and,
          upon
          consummation of the purchase contemplated by this Agreement, Purchaser
          will
          acquire such Company Shares free and clear of all liens, charges, encumbrances,
          equities and claims of third parties of any description with full title
          guarantee and with the benefit of all other rights and advantages belonging
          to
          or accruing on such Company Shares. No Seller is a party to or otherwise
          subject
          to, any trust, voting trust or agreement, proxy or other agreement, arrangement
          or understanding, between or among any persons that affects or relates
          to the
          voting or giving of written consent with respect to the Company Shares
          or any
          other outstanding security of the Company, the election of directors, the
          appointment of officers or other actions of the board of directors of the
          Company (the “Board of Directors”) or the management of the
          Company.
 
 3.5  Sale
          Entirely for Own Account. This Agreement is made with each Seller in reliance
          upon Sellers’ representation to Purchaser, which by the execution of this
          Agreement Seller hereby confirm, that the Installment Payments to be received
          by
          FEDS Acquisition will be acquired for investment for FEDS Acquisition’s own
          account, not as a nominee or agent, and not with a view to the resale or
          distribution of any part thereof, and that no Seller has any present intention
          of selling, granting any participation in, or otherwise distributing the
          same
          other than in each case pursuant to an appropriate exemption from registration
          under applicable law. By executing this Agreement, Sellers further represent
          that no Seller has any contract, undertaking, agreement or arrangement
          with any
          person to sell, transfer or grant participations to such person or to any
          third
          person, with respect to any of the Installment Payments.
 
 ***Page
              - 97***
 3.6  Reliance
          Upon Seller’s Representations. Each Seller understands that the Installment
          Payments are not registered under the United States Securities Act of 1933
          (the
“Securities Act”) on the ground that the sale provided for in this agreement and
          the issuance of securities hereunder is exempt from registration under
          the
          Securities Act pursuant to Section 4(2) thereof and/or Regulation S promulgated
          thereunder, and that Purchaser’s reliance on such exemption is based on every
          Seller’s representations set forth herein. Each Seller realizes that the basis
          for the exemption may not be present if, notwithstanding such representations,
          any Seller has in mind merely acquiring the Installment Payments for a
          fixed or
          determinable period in the future, or for a market rise, or for sale if
          the
          market does not rise. No Seller has any such intention.
 
 3.7  Restricted
          Securities. Each Seller understands that the Installment Payments may not
          be
          sold, transferred or otherwise disposed of or in the United States without
          registration under the Securities Act or an exemption therefrom, and that
          in the
          absence of an effective registration statement covering the Installment
          Payments
          or an available exemption from registration under the Securities Act, the
          Installment Payments must be held indefinitely. In particular, each Seller
          is
          aware that the Installment Payment may not be sold pursuant to Rule 144
          promulgated under the Securities Act unless all of the conditions of that
          Rule
          are met. In this connection, each Seller represents that such Seller understands
          that under Rule 144, the Installment Payments must be held for at least
          one year
          after purchase thereof from Purchaser prior to resale (and possibly longer
          under
          applicable regulations) and that, under certain circumstances, the conditions
          for use of Rule 144 include the availability of public current information
          about
          Purchaser, that sales be effected through a “broker’s transaction” or in
          transactions with a “market maker,” and that the number of securities in respect
          of the Installment Payments being sold not exceed specified limitations.
          Such
          public current information about Purchaser for purposes of Rule 144 is
          not now
          publicly available and may not be in the future.
 
 3.8  Governmental
          Consents and Notices. No consent, approval, order or authorization of,
          or
          registration, declaration of, notice to or qualification or filing with,
          any
          Governmental Authority or regulated public securities exchange or other
          organized public market on which the shares of any such Seller are traded
          (including but not limited to Nasdaq), whether domestic or foreign, is
          required
          to be obtained or submitted by or on behalf of or with respect to any Seller
          in
          connection with the execution and delivery of this Agreement by any Seller
          or
          the consummation by any Seller of the transactions contemplated hereby
          that has
          not been, or will not prior to Closing have been, duly obtained and/or
          submitted, as applicable. No consent, approval, order or authorization
          of, or
          registration, declaration of, notice to or qualification or filing with,
          any
          Governmental Authority or regulated public securities exchange or other
          organized public market on which the shares of any such Seller are traded
          (including but not limited to Nasdaq), whether domestic or foreign, was
          required
          to be obtained or submitted by or on behalf of or with respect to any Seller
          in
          connection with First Ecom’s transfer of Company Shares to FEDS Acquisition that
          has not been duly obtained and/or submitted, as applicable.
 
 3.9  Litigation.
          There is no (a) claim, action, suit or proceeding pending or, to the knowledge
          of Sellers and the Company, threatened against or relating to any Seller
          or any
          of its or their subsidiaries before any Governmental Authority or arbitration
          tribunal, or (b) outstanding judgment, order, writ, injunction or decree,
          or
          application, request or motion therefor, of any court, governmental agency
          or
          arbitration tribunal in a proceeding to which any Seller or any of its
          or their
          subsidiaries was or is a party that would individually or in the aggregate,
          either impair any Seller’s ability to consummate the transactions contemplated
          by this Agreement or have a material adverse effect on Sellers and their
          subsidiaries taken as a whole.
 
 ***Page
              - 98***
 3.10  Insolvency.
          Each of the Sellers is unable to pay its liabilities as they come due,
          and none
          is otherwise “insolvent” under bankruptcy, insolvency, reorganization,
          moratorium and other similar laws relating to or affecting the rights of
          creditors generally that are applicable to such Seller or its assets. No
          order
          has been made, petition presented, resolution passed or meeting convened
          for the
          winding up of any Seller or for an administration order in respect of any
          Seller; no receiver, receiver and manager, administrative receiver or liquidator
          has been appointed of the business or the whole or any part of the assets
          or
          undertaking of any Seller; there are no circumstances that now or with
          the
          passage of time may give rise to the appointment of any such receiver,
          receiver
          and manager, administrative receiver or liquidator, and, to the knowledge
          of
          Sellers and the Company, no such order, petition, resolution, meeting or
          appointment is pending or threatened.
 
 3.11  No
          Misleading Statements. No representation or warranty made herein by any
          Seller
          contains any statement of a material fact that is either untrue or, in
          the light
          of the circumstances under which they are made, misleading.
 
 3.12  Brokers
          or Finders. Neither any Seller nor any of their officers, directors, employees
          or shareholders has employed any broker or finder in connection with the
          transactions contemplated by this Agreement, nor have they incurred, and
          they
          shall not incur, directly or indirectly, any liability for any brokerage
          or
          finders’ fees or agents’ commissions or any similar charges in connection with
          this Agreement or any transaction contemplated hereby.
 
 ARTICLE
          IV - REPRESENTATIONS AND WARRANTIES
 REGARDING
          THE COMPANY
 
 Sellers,
          acting jointly and severally, hereby represent and warrant to Purchaser
          as
          follows:
 
 4.1
                Organization.
 
 (a)  The
          Company is a local company incorporated under a private act known as “The
          Rosebank Investment Company Act, 1957” (the “EDS Act”) by a memorandum of
          association deposited 10 September 1957 (the “Memorandum of Association”) under
          the laws of Bermuda, both of which remain in full force and effect, as
          amended
          to the date hereof, under the Companies Act. True, complete and accurate
          copies
          of the Company’s Memorandum of Association and Bye-laws, as amended to the date
          hereof, and of the minutes of all of directors’ and shareholders’ meetings, and
          the shareholders’ registry, complete and accurate as of the date hereof, have
          been delivered to Purchaser or its counsel. Such documents contain full
          details
          of the rights and restrictions attached to the share capital of the Company,
          and
          all directors’ and shareholders’ resolutions reflected in the said minutes have
          been duly adopted as resolutions of the Company, and have not, except as
          disclosed therein, been rescinded or modified.
 
 ***Page
              - 99***
 (b)  The
          Company holds a validly issued and currently in effect license from the
          Registrar of Companies under Section 114 of the Companies Act permitting
          ownership of up to 100% of the Company Shares by FEDS Acquisition, which
          license
          (i) contains no conditions, and is subject to no express or implied limitations
          by reason of the representations made or other information provided in
          the
          course of making application for such license, that would render the license
          invalid or otherwise jeopardize its scope or continued validity by reason
          of the
          transfer of the Company Shares to Purchaser contemplated hereby, and (ii)
          is
          current in all payments of fees required for maintenance of the license,
          including without limitation the required 2001 annual fee of
          BD$1000.00.
 
 4.2  Qualification;
          Location of Asset and Operations. The Company has all requisite power and
          authority to own, lease and operate its respective properties and to carry
          on
          its business as and where now being conducted. The Company is qualified
          to
          conduct business in its jurisdiction of incorporation and in each such
          other
          jurisdiction where the nature of its assets or the conduct of its business
          requires it to be so qualified. The Company has no assets having a situs
          outside
          of Bermuda and does not have a branch, agency or place of business or any
          permanent establishment (as that expression is defined in the relevant
          double
          taxation relief orders current at the date of this agreement) outside Bermuda
          and is not required to be qualified to do business outside Bermuda.
  4.3  Register
          of shareholders and meetings. The register of shareholders an statutory
          books of
          the company contain complete, true and accurate records of the shares and
          shareholders of the Company and all the other information which they are
          required to contain under the Companies Act up to the date of this Agreement,
          and comply with all the requirements of the Companies Act and all returns,
          particulars, resolutions and other documents required to be delivered by
          the
          Company to the Registrar of Companies have been duly delivered with the
          required
          time limits and no fines or penalties are outstanding or known to be due.
          The
          Company has not received notice of any application or intended application
          for
          the modification of its register of shareholders that is not already reflected
          in the entries recorded therein. The Company has held all regular and special
          meetings of shareholders required of it under the Companies Act or, to
          the
          extent of any delinquency in the convening or completion of such meetings,
          such
          delinquencies have been cured by application to and sanction by the Registrar
          of
          Companies, the convening and completion of such meetings, and the payment
          in
          full of any resulting fines, penalties or assessments. No application has
          been
          made by a shareholder or creditor of the Company or any other person to
          wind-up
          the affairs of the Company on account of any such delinquency. All transfers
          of
          shares of the Company taking place prior to the date hereof have been properly
          stamped and have, received all necessary or appropriate approvals of the
          Bermuda
          Monetary Authority.
 
 4.4
                Board
                    of Directors and Officers.
 
 (a)  As
          of
          August 31, 2001, (i) the number of directors comprising the Company’s Board of
          Directors was six (6), (ii) three of the directors positions were vacant,
          (iii)
          the directors serving in the remaining three positions were Gregory Pek,
          J.
          David Lema and Ian G. Robinson and (iv) the President and Vice President
          positions were held by J. David Lema and Gregory Pek, respectively. Each
          of the
          aforenamed directors and officers was duly appointed in accordance with
          the
          Company’s Memorandum of Association and Bye-laws, and in accordance with the
          Companies Act, and none of them has since their respective appointments
          resigned
          or offered his or her resignation as such. Any other person who previously
          served as a director of the Company has duly and validly resigned or been
          removed from that position, or has vacated the position upon the due expiration
          of his or her term, and no basis for any claim against the Company, its
          Affiliates or its or their directors, officers or shareholders exists,
          and none
          has been asserted, by or on behalf of any previous directors arising out
          of such
          previous service or holding of office or the termination thereof, however
          occasioned.
 
 ***Page
              - 100***
 (b)  Further,
          effective as of the Closing, Sellers and the Company’s Board of Directors have
          taken or caused to be taken all necessary and appropriate actions to (i)
          reduce
          the number of positions in the Company’s Board of Directors from six to two,
          (ii) remove or secure the resignations of Gregory Pek and Ian G. Robinson
          from
          their positions as directors of the Company without any claim for compensation
          or otherwise and replace them with Purchaser’s nominee Michael Sanchez, and
          (iii) remove or secure the resignation of Gregory Pek from his position
          as Vice
          President of the Company without any claim for compensation or otherwise
          and
          replace him with Purchaser’s nominee Michael Sanchez, with the result that the
          Company’s Board of Directors will consist of two directors, namely J. David Lema
          and Michael Sanchez.
 
 4.5
                Capital
                    Structure.
 
 (a)  The
          authorized share capital of the Company consists of 5,000,000 ordinary
          shares
          having a par value of BD1.00 per share, of which 3,000,000 of such shares
          are
          issued and outstanding as of the date hereof, which issued and outstanding
          shares are recorded and duly registered in the Company’s register of
          shareholders in the name of FEDS Acquisition (the “Company Shares”). All issued
          Company Shares are validly issued and fully paid, have been issued in compliance
          with applicable Legal Requirements, and, without limiting the provisions
          of
          Section 4.5(b) below, are not subject to any rights of pre-emption, redemption,
          repurchase, right of first refusal, co-sale right, right of participation,
          right
          of first offer, option or other restriction on transfer, including without
          limitation any such rights that may arise or have existed under the Memorandum
          of Association or Bye-laws of the Company, the Shareholders’ Agreement relating
          to the Company dated May 26, 2000 by and among The Bank of Bermuda Limited,
          First Ecom and the Company (the “Shareholders’ Agreement”), or the Share
          Purchase and Sale Agreement between The Bank of Bermuda Limited and First
          Ecom
          dated June 18, 2001 (the “Share Purchase and Sale Agreement”), or otherwise in
          relation to the sale and purchase of the same hereunder. The rights, preferences
          and privileges of the Company Shares are as set forth in the Company’s
          Memorandum of Association and Bye-laws. The Company has not purchased any
          of its
          own shares. As of the date hereof, without limiting the provisions of Section
          4.5(b) below, there are no other shares or other equity securities of the
          Company and no other options, warrants, calls, conversion rights, commitments
          or
          agreements of any character to which the Company is a party or by which
          the
          Company may be bound that do or may obligate the Company to issue, deliver
          or
          sell, or cause to be issued, delivered or sold, additional shares in the
          Company’s share capital or securities convertible into or exchangeable for the
          Company’s share capital or that do or may obligate the Company to grant, extend
          or enter into any such option, warrant, call, conversion right, commitment
          or
          agreement.
 
 (b)  With
          respect to that certain Transaction Processing Agreement dated 20 April
          2001 and
          entered into by and between the Company and Planet Group, Inc., Company
          has
          issued a letter to the “Customer” thereunder in form and substance reasonably
          satisfactory to purchaser providing notice of the transfer of shares
          contemplated hereby and certain other matters in connection with the provisions
          of Section 14 of said agreement.
 
 ***Page
              - 101***
 (c)  Nothing
          in this Agreement shall oblige Purchaser to buy any issued and outstanding
          shares of the Company or otherwise complete this Agreement unless the sale
          and
          purchase of all such issued and outstanding shares in the Company is completed
          and transferred to Purchaser simultaneously.
 
 (d)  FEDS
          Acquisition owns or holds the entire beneficial interest in the Company
          Shares
          of which it is the holder of record, and such shares are not subject to,
          and the
          Company is not a party to or otherwise subject to, any trust, voting trust
          or
          agreement, proxy or other agreement, arrangement or understanding, between
          or
          among any persons that affects or relates to the voting or giving of written
          consent with respect to the Company Shares or any other outstanding security
          of
          the Company, the election of directors, the appointment of officers or
          other
          actions of the Board of Directors of the Company or the management of the
          Company.
 
 4.6  Subsidiaries;
          Equity Investments. The Company does not now have and, except to the extent
          of
          any such subsidiaries or other controlled companies as the Company may
          have had
          prior to its change of name from “Rosebank Investment Company Limited” to “First
          Ecommerce Data Services Limited” on 12 November 1999, has never had any other
          subsidiaries or companies controlled by the Company and does not own and,
          except
          to the extent of any such equity or other controlling interests as the
          Company
          may have had prior to its change of name from “Rosebank Investment Company
          Limited” to “First Ecommerce Data Services Limited” on 12 November 1999, has
          never owned any equity interest in, or controlled, directly or indirectly,
          any
          other corporation, partnership, joint venture, trust, firm or other
          entity.
 
 4.7  No
          conflict with Other Instruments.
 
 (a)  Except
          as
          otherwise specifically stated in Section 4.7(b), 4.7(c) or 4.7(d) below,
          the
          execution, delivery and performance of this Agreement and the transactions
          contemplated hereby (I) will not result in any violation of, conflict with,
          constitute a breach, violation or default (with or without notice or lapse
          of
          time, or both) under, give rise to a right of termination, cancellation,
          forfeiture or acceleration of any obligation or loss of any benefit under,
          or
          result in the creation of encumbrance on any of the properties or other
          assets
          of any Seller or the Company pursuant to, (i) any provision of the Company’s
          Memorandum of Association and/or Bye-laws or other organizational documents,
          or
          (ii) any agreement, contract, understanding, note, mortgage, indenture,
          lease,
          franchise, license, permit or other instrument to which the Company is
          a party
          or by which the properties or assets of the Company is bound, including
          without
          limitation those contracts listed in Schedules 1 or 2 attached hereto or
          specified in Section 4.17(b) below, or (2) conflict with or result in any
          breach
          or violation of any Legal Requirement applicable to the Company or its
          properties or assets.
 
 (b)  Each
          of
          (i) that certain E-commerce Transaction Processing Agreement dated 12 June
          2001
          and entered into by and between the Company and Provident Bank and Trust
          of
          Belize Limited and (ii) that certain Transaction Processing Services Agreement
          dated 7 August 2001 and entered into by and between the Company and DPI
          Merchant
          Services, Inc. (signed for an on behalf of Data Processors International
          Inc.),
          contain provisions entitling either party to terminate the agreement upon
          a
          change in control of the other party. Neither of those two agreements has
          ever
          generated, nor do they currently generate, a material portion of the Company’s
          net income or revenues.
 
 ***Page
              - 102***
 (c)  Further,
          the Company’s policy of Professional Liability insurance maintained through
          certain Lloyd’s of London syndicates and underwriters and dated 30 March 2000
          entitles Lloyd’s to notice of any merger or acquisition by or of the Company,
          and the Company has given all notice and taken such further action as is
          required of it under said policy in connection with this Agreement and
          the
          transactions contemplated hereby.
 
 (d)  The
          Mastercard Member Service Provider TPP Agreement dated 4 November 1999
          and
          entered into by and between The Bank of Bermuda Limited (as “Processor”) and
          MasterCard International Incorporated, under which the Company has now
          succeeded
          to all the rights and obligations of The Bank of Bermuda Limited as Processor,
          contains a provision obligating the Processor to notify MasterCard International
          Limited of any “material changed circumstances in organizational structure”
experienced by the Processor.
 
 4.8  Governmental
          Consents and Notices. No consent, approval, order or authorization of,
          or
          registration, declaration of, notice to or qualification or filing with
          any
          Governmental Authority or any regulated public securities exchange or other
          organized public market on which the shares of any Seller are traded (including
          but not limited to Nasdaq), whether domestic or foreign, is required to
          be
          obtained or submitted by or on behalf of or with respect to the Company
          in
          connection with the execution, delivery and performance of this Agreement
          or the
          consummation of the transactions contemplated hereby that has not been,
          or will
          not prior to Closing have been, duly obtained and/or submitted, as
          applicable.
 
 4.9  Financial
          Statements. A complete and accurate copy of the Company’s income statement,
          balance sheet and statement of cash flow for the period from January 1,
          2000 to
          December 31, 2000, together with the associated auditors’ and directors’ reports
          and notes thereto (“Audited Financial Statements”), together with the Company’s
          internal monthly income statements, balance sheets and statements of cash
          flow
          statement for the periods from January 1, 2001 through August 31, 2001
          (the
“Unaudited Financial Statements”) have been furnished to Purchaser (the Audited
          Financial Statements and the Unaudited Financial Statements being herein
          referred to collectively as the “Financial Statements”). The Financial
          Statements were prepared in accordance with applicable Companies Act
          requirements and United States generally accepted accounting principles
          consistently applied, and present fairly in all material respects the financial
          condition as at the dates of such statements and results of operations
          of the
          Company for the periods covered thereby, except that the Unaudited Financial
          Statements may be subject to normal and recurring year-end adjustments.
 
 4.10
                Accounting
                    and Other Records
 
 (a)  All
          the
          accounts, books, ledgers and financial and other records of whatsoever
          kind of
          the Company (including all invoices) have been kept in accordance with
          applicable Companies Act requirements and are in the possession of the
          Company
          or under its control. Except as stated in Section 4.10(b) below, none of
          the
          Company’s records, systems, controls, data or information are recorded, stored,
          maintained, operated or otherwise wholly or partly dependent on or held
          by any
          means (including any electronic, mechanical or photographic process whether
          computerized or not) which (including all means of access thereto and therefrom
          are not under the exclusive ownership and direct control of the
          Company.
 
 ***Page
              - 103***
 (b)  Two
          Sun
          E250 servers and related equipment and software owned and operated by FEDS
          Asia
          have been used in connection with the Company’s fulfillment of its obligations
          under the agreements referred to in Section 2.5(m). Upon completion of
          the
          assignment referred to in Section 2.5(m). Upon completion of the assignment
          referred to in Section 2.5(m), such use will no longer be necessary in
          order for
          the Company to continue to render to FEDS Asia in support of those agreements
          the services it has to date been obligated to render to Wing Hang Bank
          and
          International Bank of Asia under those agreements, and will no longer be
          available to the Company.
 
 4.11  Absence
          of Changes. Except as otherwise expressly contemplated by this Agreement,
          since
          August 31, 2001, the Company’s business has been conducted only in the ordinary
          and usual course without any interruption in the nature, scope or manner,
          and
          without limiting the generality of the foregoing:
 
 (i)
          Except as disclosed in this Article IV, there have been no changes in the
          Company’s properties, employees, obligations or liabilities of the Company or in
          its relations with customers, vendors, lessors, licensors or other business
          relationships that, in the aggregate, have had or may be reasonably expected
          to
          have a material adverse effect on the Company;
 
 (ii)
          The
          Company has not issued, or authorized for issuance, or entered into any
          commitment to issue, any equity security, bond, note or other
          security;
 
 (iii)
          Except as disclosed in this Article IV, the Company has not incurred additional
          debt for borrowed money, or incurred any obligation or liability, except
          in the
          ordinary course of business consistent with past practice and, in any event,
          not
          in excess of US$10,000 individually or US$30,000 in the aggregate or the
          equivalent in any other currency;
 
 (iv)
          The
          Company has not discharged any obligation or liability, or discharged,
          settled
          or satisfied any claim, lien or encumbrance, except for current liabilities
          in
          the ordinary course of business consistent with past practice and, in any
          event,
          not in excess of US$10,000 for any single occurrence or US$30,000 in the
          aggregate or the equivalent in any other currency;
 
 (v)
          Except for the payment to Seller of US$1,336,014 in satisfaction of the
          Company’s intercompany debt and US$9,401.27 intercompany interest obligation to
          Seller as contemplated by Section 2.5(e) above, the Company has not declared
          or
          made any dividend, payment or other distribution to its shareholders or
          any
          Affiliate of its shareholders or otherwise on account of any outstanding
          equity
          interest in the Company;
 
 (vi)
          The
          Company has not purchased, redeemed or otherwise acquired or committed
          itself to
          acquire, directly or indirectly, any of its shares;
 
 (vii)
          The
          Company has not conveyed or disposed of, or agreed to conveyor dispose
          of, by
          sale, assignment, lease, license or otherwise, or mortgaged, pledged or
          otherwise encumbered, any of its intangible assets or properties;
 
 ***Page
              - 104***
 (viii)
          The Company has not mortgaged, pledged, or otherwise encumbered any of
          its
          tangible assets or properties;
 
 (ix)
          The
          Company has not disposed of, or agreed to dispose of, by sale, lease, license
          or
          otherwise, any tangible asset or property, except in the ordinary course
          of
          business consistent with past practice;  -
 
 (x)
          The
          Company has not written off any debts, no debt has been released by the
          Company
          on terms under which the debtor pays less than the book value of its debt,
          and
          no debt owing to the Company has proved to any extent to be
          unrecoverable;
 
 (xi)
          The
          Company has not purchased or agreed to purchase or otherwise acquire any
          securities of any corporation, partnership, joint venture, firm or other
          entity;
 
 (xii)
          Except as disclosed in this Article IV or in Schedule 5 attached hereto,
          the
          Company has not made any expenditure or commitment for the purchase,
          acquisition, construction or improvement of a capital asset, except in
          the
          ordinary course of business consistent with past practice and, in any event,
          not
          in excess of US$5,000 for any single item or US$15,000 in the aggregate
          or the
          equivalent in any other currency;
 
 (xiii)
          The Company has not entered into any contract or commitment (whether in
          respect
          of capital expenditure or otherwise) on terms which will allow for less
          than
          full recovery by the Company of costs and overheads or which is of a 10ng-tenn
          nature, or which involves or could involve an ob1igation in excess of US$10,000
          or the equivalent in any other currency; and for this purpose a long-term
          contract or commitment is one which will not be performed in accordance
          with
          its ** terms
          within three months after the date it was entered into or undertaken or
          which is
          incapable of termination by the Company on three months’ notice or
          less;
 
 (xiv)
          The
          Company has not adopted or amended any bonus, incentive, profit-sharing,
          stock
          option, stock purchase, pension, retirement, deferred-compensation, severance,
          life insurance, medical or other benefit plan, agreement, trust, fund or
          arrangement for the benefit of employees of any kind whatsoever, nor entered
          into or amended any agreement relating to employment, services as an independent
          contractor or consultant, or severance or termination pay, nor agreed to
          do any
          of the foregoing;
 
 (xv)
          Except as disclosed in this Article IV, neither any Seller nor the Company
          has
          effected or agreed to effect any change in the Company’s directors, officers or
          employees;
 
 (xvi)
          Except as contemplated in Section 2.5, neither any Seller nor the Company
          has
          effected or committed itself to effect any amendment or modification to
          the
          Company’s Memorandum of Association or Bye-laws;
 
 (xvii)
          The Company has not lost any source of supply that is material to the business
          of the Company;
 
 ***Page
              - 105***
 (xviii)
          The Company has not disposed of or agreed to dispose of any asset for a
          consideration payable by installments where any installment remains
          unpaid;
 
 (xix)
          All
          cash and payments of any kind received by the Company have been credited
          to the
          Company’s accounts with its bankers;
 
 (xx)
          The
          Company has paid its creditors in accordance with the same policy as that
          maintained during prior periods.
 
 (xxi)
          None of the assets of the Company has been diminished by the wrongful act
          of any
          person;
 
 (xxii)
          There has been no material change in the working capital requirements of
          the
          Company;
 
 (xxiii)
          Except for changing market conditions prevailing in the industry generally
          to
          which the Company and its competitors are subject, there has otherwise
          been no
          material adverse change in the Company or its business, assets, operations
          or
          financial condition; provided, however, that transaction volumes from The
          Bank
          of Bermuda Limited have declined significantly since August 31,
          2001.
 
 4.12  Real
          Property.
 
 (a)  Lease.
          The Company is a party to that certain Lease (herein, the “Lease”) dated 18th
          June 2001 between J.H.R. Properties Limited (“Landlord”) and the Company
          (“Tenant”) and Carecorp Limited (“Agent”) covering part of the fourth floor of
          the premises known as “The Emporium” located at 69 Front Street, Hamilton,
          Bermuda (the “Premises”), which provides for a- two year fixed term tenancy
          ending the 31 st of May
          2003, with an option to renew for a further two years which must be (but
          has not
          yet been) exercised on or before February 28, 2002, a complete and accurate
          copy
          of which has previously been furnished to Purchaser by Seller and/or the
          Company. Under the Lease, the Company is obliged to pay rent fixed at
          BD$71,610.00 per annum payable monthly in the sum of BD$5,967.50 *,* with
          a
          service charge payable monthly at the rate of BD$17.35 per square foot,
          but with
          provision for an accounting by the Landlord at the end of each year of
          the
          tenancy. The Lease is in full force and effect, valid, enforceable in accordance
          with its terms subject to the effects. of applicable bankruptcy, insolvency,
          reorganization, moratorium or other similar laws affecting the rights of
          creditors and the effect or availability of rules of law governing specific
          performance, injunctive relief or other equitable remedies. The Lease comprises
          the only real property in which the Company has an interest and which is
          used in
          connection with its business. The Premises are occupied or used by Company
          under
          the Lease, and the terms of that lease permit occupation or use for the
          purposes
          for which the Company currently uses the Premises and contemplates future
          use of
          the Premises. Neither the Premises nor the Company’s occupancy of the Premises
          is in violation of any applicable Legal Requirements, and the Company has
          not
          received any notice restricting the use and enjoyment of the Premises that
          is
          inconsistent with the Company’s current and contemplated future use of the
          Premises. .
 
 (b)  Encumbrances.
 
 (i)
          The
          Lease is held by Company free from any mortgage, debenture, charge, or
          other
          encumbrance securing the repayment of monies or other obligation or liability
          of
          the Company or any other person, and neither the Lease nor the Premises
          covered
          thereby *is* subject
          to any option, right of pre-emption or right of first refusal.
 
 ***Page
              - 106***
 (ii)
          The
          Company has not assigned its interest in the Lease to any other party,
          whether
          an Affiliate of the Company or otherwise, and the Company has not created
          any
          further subtenancy or license of its interest in the Lease and there are
          no
          persons other than the Company in occupation of the Premises.
 
 (iii)
          Without limiting any other representation or warranty contained in this
          Agreement, the Lease is not subject to any restrictive covenants, stipulations,
          easements, profits, rights-of-way, licenses, grants, restrictions, overriding
          interests or other rights vested in third parties, and the Company has
          not
          entered into any agreement or commitment to give or create any of the
          foregoing.
 
 (iv)
          There are no outstanding actions, disputes, claims or demands between the
          Company and any third party affecting the Premises, or any boundaries thereof,
          or with respect to any of the rights appurtenant to the Premises as set
          out in
          the Lease.
 
 (c)  Regulatory
          Matters. The Premises are not being or intended or required by the Company
          to be
          used other than for the uses thereof permitted under applicable Legal
          Requirements, and all necessary permissions have been obtained or deemed
          to have
          been granted by applicable Governmental Authorities for the use, alternations,
          improvements of the Premises by Company. The Company has satisfied any
          charges,
          monetary claims and liabilities imposed by reason of the occupancy or use
          of the
          Premises by the Company under applicable Legal Requirements. The Company
          has
          received no notice of any outstanding and unobserved or unperformed obligation
          with respect to the Premises necessary to comply with any applicable Legal
          Requirements.
 
 (d)  Compliance
          with Lease. The obligations and liabilities imposed and arising under the
          Lease
          on the Company have been fully observed and performed, and any payments
          in
          respect of them due and payable by the Company have been duly paid as and
          when
          due, and no other event has occurred that constitutes, or that with the
          giving
          of notice or the passage of time would constitute, a default or violation
          by the
          Company thereunder or, to the knowledge of Sellers and the Company, by
          any other
          party thereto. The Company has received no notice from the Landlord of
          any
          breaches of the covenants on its part and the conditions contained in the
          Lease
          and the last demand (or receipt for rent if issued) was unqualified and
          the
          Company has not received notice that the Landlord has any intention of
          terminating the Lease. All requisite licenses, consents and approvals required
          of the Company from the Landlord have been obtained, and the covenants
          on the
          part of the Company contained in such licenses, consents and approvals
          have been
          duly performed and observed. The Company has not served any notice on the
          Landlord claiming any breach by the Landlord of its obligations under the
          Lease,
          nor is there any current or, to the knowledge of Sellers and the Company,
          threatened dispute with the Landlord regarding the observance of obligations
          under the Lease (whether by the Landlord or the Company).
 
 ***Page
              - 107***
 4.13  Taxation.
 
 (a)  The
          Company has filed all Tax Returns (as defined below) that it was required
          to
          file within the requisite time limits, and all such Tax. Returns were correct
          and complete in all material respects and were properly made. The Company
          has
          paid all Taxes (as defined below) that are shown to be due on any such
          Tax
          Returns within the time limits set out by law and the provisions and reserves
          for Taxes set forth in the Financial Statements are sufficient to pay all
          unpaid
          Taxes of the Company attributable to all periods ended on or before August
          31,
          2001, and all Taxes attributable to the period from and after August 31,
          2001
          and continuing through the Closing Date are attributable to the operation
          of the
          Company in the ordinary course of business. All Taxes that the Company
          is or was
          required by law to withhold or collect have been duly withheld or collected
          and,
          to the extent required, have been paid to the proper Taxation Authority.
 
 (b)  For
          purposes of this Agreement, “Taxes” means all taxes, charges, fees, levies,
          duties, imposts or other similar assessments or liabilities, including
          without
          limitation income, corporation, capital gains, value added taxes, stamp
          duties,
          and customs duties and excise duties. imposed by Bermuda or any jurisdiction
          elsewhere in the world, and any interest, fines or penalties resulting
          from,
          attributable to or incurred in connection with any tax or any contest or
          dispute
          thereof and “Taxation” shall be construed accordingly. For purposes of this
          Agreement, “Tax Returns” means all returns, declarations, notices, statements,
          applications, reports, clearances, or other information required to be
          supplied
          to a Taxation Authority in connection with Taxes, and ‘‘Taxation Authority”
means any governmental or other fiscal, revenue customs or excise authority,
          department, agency, body or office whether in Bermuda or elsewhere in the
          world
          having authority or jurisdiction to impose or assess in relation to the
          Company
          for any Taxes. .
 
 (c)  No
          investigation or other inquiry of any Tax Returns of the Company by any
          Taxation
          Authority is currently in progress or, to the knowledge of Sellers and
          the
          Company, threatened or contemplated. There are no matters likely to affect
          the
          liability of the Company (whether accrued, contingent or future) to taxation
          of
          any nature whatsoever or to other sums imposed, charged, assessed, levied
          or
‘payable or withdrawal of any relief are disputed with the relevant tax
          authorities.
 
 (d)  The
          amount of tax chargeable to the Company during any accounting period ending
          before August 31, 2001 was not dependent on any concession, agreement or
          other
          formal arrangement with any Taxation Authority when such concessions,
          agreements, or arrangements are in writing.
 
 (e)  All
          pension contributions (both employer’s and employee’s) in respect of employees,
          officers of the Company and any person(s) who, should have been treated
          as such
          for these purposes have been duly paid.
 
 (f)  The
          Company has not at any time:
 
 (i)
          reduced its share capital or repurchased, repaid or redeemed shares of
          any class
          of its share capital or capitalized any profits or reserves or share premium
          account in the form of, or in paying up any amounts unpaid on, any shares,
          debentures or other securities or agreed or resolved to do any of the foregoing;
          or
 
 (ii)
          provided capital to any company on terms whereby the company so capitalized
          has
          in consideration thereof issued shares, loan stock or other securities
          where the
          terms of any such capitalization were otherwise than by way of a bargain
          made at
          arms’ length or where the shares, loan stock or other securities acquired are
          shown in the Financial Statements at a value in excess of their market
          value at
          the time of acquisition.
 
 ***Page
              - 108***
 (g)  All
          documents in the possession of the Company to which the Company is a party
          which
          are necessary to prove the title of the Company to its assets or by virtue
          of
          which the Company has any right have been properly stamped, and for the
          avoidance of doubt this includes adjudication if appropriate, and no such
          documents which are outside Bermuda would attract stamp duty if they were
          brought into Bermuda. All transactions to which the Company is or was a
          party
          and relating to chargeable securities of the Company have been completed
          by duly
          stamped documents of transfer.
 
 (h)  The
          Company is not under any actual or contingent liability to taxation in
          respect
          of any other person, including but not limited to any other company which
          at any
          time has been a member of the same group or consortium as the Company or
          any
          associated company of the Company for taxation purposes.
 
 (i)  Since
          November, 1999, the Company has at all times been resident for taxation
          purposes
          in Bermuda is not chargeable to tax or similar duties or imposts in any
          jurisdiction other than Bermuda and has never had any permanent establishment
          in
          any other country.
 
 4.14  Guaranties.
          There are no actual or contingent liabilities on the part of the Company
          arising
          directly or indirectly out of any agreement, contract, lease, sublease,
          tenancy,
          sub-tenancy, conveyance, transfer, license, deed or any other instrument,
          arrangement or understanding in the nature of a guaranty, indemnity or
          surety
          for the performance or payment by any third party under the terms of that
          or any
          other instrument, arrangement or understanding;
 
 4.15  Contracts.
 
 (a)  Except
          for Contracts that do not obligate, any party thereto to make payments
          or
          furnish goods or services valued in excess of US$500 individually or US$5000
          in
          the aggregate or the equivalent in any other currency,
 
 (i)
          Schedules 1 and 2 attached hereto, together with Section 4.17(b), list
          all of
          the Contracts to which the Company is a party or by which the Company or
          its ** property
          or assets are bound, and complete and accurate copies of all of such Contracts
          have been furnished to Purchaser,
 
 (ii)
          all
          of such Contracts are valid, properly and adequately stamped or adjudicated,
          and
          enforceable in accordance with their respective terms subject to the effects
          of
          applicable bankruptcy, insolvency~ reorganization, moratorium or other
          similar
          laws ** affecting
          the rights of creditors and the effect or availability of rules of law
          governing
          specific performance, injunctive relief or other equitable remedies, such
          Contracts are in full force and effect, free and clear of any liens or
          encumbrances, and no event has occurred that constitutes, or that with
          the
          giving of notice or the passage of time would constitute, a default or
          violation
          by the Company thereunder or, to the knowledge of Sellers and the Company,
          by
          any other party thereto,
 
 ***Page
              - 109***
 (iii)
          the
          Company is a party to each of such Contracts and, except as otherwise provided
          in Section 2.5(m) above, has not assigned or otherwise transferred any
          interest
          therein or any of the rights and benefits accruing therefrom,
 
 (iv)
          no
          third party has notified the Company of any claim, dispute or controversy
          with
          respect to any of such Contracts, nor has the Company received notice or
          warning
          of alleged nonperformance, delay in delivery or other noncompliance by
          the
          Company with respect to its obligations under any of such Contracts, nor,
          to the
          knowledge of Sellers and the Company as of the date hereof (but except
          with
          respect to the change in control issue under the contract’ with DPI Merchant
          Services, Inc. and Provident Bank and Trust of Belize Limited described
          in
          Section 4.7(b) above), are there any facts which exist indicating that
          any of
          such Contracts may be totally or partially terminated or suspended by the
          other
          parties thereto, and
 
 (v)
          except for those Contracts listed in Schedules 1 and 2, there are no other
          agreements, understandings or arrangements, whether written or oral, affecting
          or relating to the ownership, use or operation by the Company of its assets,
          or
          the conduct of its business, or the rights or obligations of any party
          to such
          Contracts.
 
 (b)  The
          Company has not nor, to the knowledge of Sellers and the Company, has any
          of the
          employees of the Company, entered into any Contract containing covenants
          limiting the right of the Company or such employee to compete in any business
          or
          with any person, other than the Contracts listed in Section 4.
          17(b).
 
 (c)  Any
          information contained in any materials previously furnished to Purchaser
          to the
          contrary notwithstanding, the Company has in fact succeeded to all of The
          Bank
          of Bermuda Limited’s rights and obligations as “Processor” under that certain
          Mastercard Member Service Provider Third Party Processor Agreement dated
          4
          November, 1999 between The Bank of Bermuda Limited and MasterCard International
          Incorporated (the “TPP Agreement”), and all MasterCard transactions processed by
          the Company have been processed under appropriate authorization from
          MasterCard;
 
 4.16  Environmental
          Matters.
 
 (a)  The
          Company is and at all times has been, in compliance with all applicable
          Environmental Requirements, including, without limitation, Environmental
          Requirements relating to exposures, emissions, discharges, releases or
          threatened releases of Hazardous Substances into or on land, ambient air,
          surface water, groundwater, personal property or structures (including
          the
          protection, cleanup, removal, remediation or damage thereof), or otherwise
          related to the manufacture, processing, distribution, use, treatment, storage,
          disposal, transport, discharge or handling of Hazardous Substances or related
          to
          health and safety of employees and other persons. The Company has not received
          any notice of any investigation, claim or proceeding against the Company
          relating to any violation or alleged violation on the part of the Company
          under
          any Environmental Requirements, and the Company is not aware of any fact
          or
          circumstance that could involve the Company as a party in any litigation,
          proceeding, investigation or claim under any Environmental
          Requirement.
 
 ***Page
              - 110***
 (b)  The
          Company has not disposed of any Hazardous Substances on or about any properties
          at any time owned, leased or occupied by the Company in a manner that would
          give
          rise to liability of the Company under any Environmental Requirements.
          The
          Company has not itself disposed of any materials at any site being investigated
          or remediated for contamination or possible contamination of the
          environment.
 
 (c)  The
          Company has all permits, licenses and approvals required by Environmental
          Requirements for their use and occupancy of, and for all their operations
          and
          activities conducted on, the Premises and. to the knowledge of Sellers
          and the
          Company, the Company is in full compliance with all such permits, licenses
          and
          approvals, except where such non-compliance would not have an adverse effect
          on
          the Company or its business, assets, operations- or financial
          condition.
 
 4.17  Employees.
 
 (a)  A
          complete and accurate list setting forth all employees, contractors and
          consultants of the Company as of the date hereof, together with their titles
          or
          positions, dates of hire, regular work location and current compensation,
          current salary and benefits, notice period, confidentiality obligations
          and all
          other terms and conditions of employment or engagement, including any additional
          terms and conditions of employment or engagement, whether contained in
          a Company
          or staff handbook or otherwise, has previously been furnished to Purchaser
          by or
          on behalf of Sellers and/or Company.
 
 (b)  The
          employment contracts or other agreements between the Company and any officer,
          director, employee, contractor, consultant or other individual person relating
          to the performance of services consist of those with Mr. David Lema as
“Chief
          Executive Officer” dated June 18, 2001, Mrs. Leslie Pooley-Maughan as “Chief
          Business Officer” dated June 18, 2001, Mr. Kieth Flaherty as “Chief Technology
          Officer” dated June. 18, 2001, Ms. Marcy Judd as “Financial Controller” dated
          June 19, 2001, Mr. Horst Finkbeiner as “Head of Business Analysts/Project
          Management” dated August 2, 2000, Ms. Barbara Gaudette as “Senior Business
          Analyst” dated June 19, 2001, Mr. Arrigo Merlo as “Client Relationship Manager”
effective as of June 29, 2000, Mr. Jason Taylor as “Senior Analyst Programmer”
effective as of June 19, 2001, Mr. David Petty as “Business Analyst” effective
          as of July 9, 2001, Ms. Deborah L.A. King as “Executive Administrative
          Assistant” effective as of August 23, 2001, and Mr. Alexander Fox as “Junior
          Bankcard Switch Technician effective as of October 1, 2001, and complete
          and
          accurate copies of all such agreements have previously been furnished to
          Purchaser by or on behalf of Sellers and/or Company.
 
 (c)  Except
          for Robert St. John, who is to report to work October 29, 2001 as “Senior
          Bankcard Switch Technician” at a salary of US$75,000 annually, there are no
          outstanding offers of employment or engagement made to any person by the
          Company
          and there is no one who has accepted an offer of employment or engagement
          made
          by the Company who has not yet taken up that employment or
          engagement.
 
 (d)  Except
          as
          expressly contemplated by the terms of this Agreement, no officer, director,
          employee, contractor or consultant of the Company identified in the materials
          furnished to Purchaser under subsections (a) or (b) above:
 
 (i)
          has
          given or received notice terminating his or her employment or engagement
          or
          altering its terms, and no such person will be entitled as a result of
          the
          entering into of this Agreement and the sale of the Company Shares to Purchaser
          to give notice of termination or to claim for any payment or benefit or
          to treat
          himself or .herself as being released from any obligation and, to the knowledge
          of Sellers and the Company, no such person is planning to terminate his
          or her
          employment as of or shortly after the Closing; or
 
 ***Page
              - 111***
 (ii) ** is
          currently on sick leave which (as of the date of this Agreement) has been
          for
          more than 14 consecutive days; or
 
 (iii) ** is
          currently on maternity leave.
 
 (e)  As ** of
          August
          31, 2001, there were no outstanding arrears of salary, wages, holiday pay
          or
          other remuneration due to any officer, director, consultant, employee or
          contractor of the Company other than as set forth in the Financial Statements
          except as incurred in the ordinary course of business and not used.
 
 (f)  Except
          or
          Mr. David Petty, whose annual salary was increased from US$68,OOO to US$71,400,
          since August 31, 2001, (i) no change has been made in the rate or basis
          of
          remuneration, fee or other benefits provided for or paid to .any officer,
          director, consultant, employee or contractor of the Company and (ii) no
          change
          has been made in any other terms of employment or engagement of any such
          officer, director, consultant, employee or contractor.
 
 (g)  The
          Company has not entered into any agreement or legally binding commitment
          regarding any future variation in any contract of employment or other agreement
          in respect of any of their officers, directors, employees, consultants
          or
          contractors or any agreement imposing an obligation on the Company to increase
          the basis and/or rates of remuneration or payment and/or the provision
          of other
          benefits to or on behalf of its officers, directors, employees, consultants
          or
          contractors at any future date.
 
 (h)  All ** employees
          of the Company who require a work permit will have a valid work permit
          in force
          at the Closing, except that Kieth Flaherty, Barbara Gaudette Jason Taylor
          and
          Robert St. John are currently in the process of having their work permits
          renewed under the auspices of the Company.
 
 (i)  The
          Company is not liable to pay any industrial levy nor do they have any
          outstanding undischarged liability to pay any Governmental Authority in
          any
          jurisdiction, other than as provided in the Financial Statements, nor any
          taxation, contribution or other impost arising in connection with the employment
          or engagement by the Company of employees, directors, officers, consultants
          or
          contractors.
 
 (j)  The
          Company is not aware of any facts or matters affecting any employee of
          the
          Company which might reasonably be considered grounds for dismissing such
          employee or warning such employee that the continuation of any conduct
          or
          behavior may lead to dismissal.
 
 (k)  No
          grievance or complaint of sex, race or disability discrimination, whether
          formal
          or informal, is pending in an administrative or litigation proceeding nor,
          to
          the knowledge of Sellers and the Company, has been raised by any employee,
          director, officer or consultant or former employee, director, officer or
          consultant of the Company in the twelve months prior to Closing.
 
 ***Page
              - 112***
 (l)  The
          Company has not made any loans to or entered into any credit transaction
          with
          any of its directors or to any employee.
 
 (m)  Except
          as
          expressly listed otherwise in Schedule 3 attached hereto and made a part
          hereof
          for all purposes, the Company has not any deferred compensation, pension,
          health, profit sharing, bonus, stock purchase, stock option, hospitalization,
          insurance., severance, redundancy, workers’ compensation, supplemental
          unemployment benefits, vacation benefits, disability benefits, or any other
          employee benefit or otherwise or welfare benefit plan or obligation covering
          any
          of its officers or employees or any informal understanding with -respect
          to the
          foregoing. -
 
 (n)  The
          Company’s pension plan described in Schedule 3 has been maintained in material
          compliance with its governing rules or terms, and all applicable requirements
          as
          to the filing of reports, documents and notices with Governmental Authorities
          and the furnishing of documents to participants or beneficiaries have been
          satisfied. No employee, former employee or relative or dependent of such
          employee or other participants in said pension plan has made any claim
          against
          the Company in respect thereof.
 
 (o)  The
          Company has not entered into any union membership, security of employment,
          redundancy, recognition or other collective agreement (whether legally
          binding
          or not) with a trade union, works council, staff association, employee
          representatives or other organization or body of employees, nor has the
          Company
          done any act which might be construed as recognition.
 
 (p)  There
          are
          no controversies or labor or trade disputes or union organization activities
          pending or, to the knowledge of Sellers and the Company, threatened between
          the
          Company and any of its employees nor are there facts known to the Company
          which
          might ,indicate that there may be any such dispute or activities.
 
 (q)  To
          the
          knowledge of Sellers and the Company, none of the employees of the Company
          belongs to any union or collective bargaining unit or is represented by
          any,
          works council, staff association or other body representing employees relating
          to their activities as employees of the Company.
 
 (r)  The
          Company has complied with its obligations under all applicable domestic
          and
          foreign equal employment opportunity and other laws and regulations related
          to
          employment or working conditions.
 
 (s)  To
          the
          knowledge of Sellers and the Company, no employee of the Company is in
          violation
          of any agreement of employment, non-competition or confidentiality with
          any
          former employer.
 
 4.18  Intellectual
          Property.
 
 (a)  The
          operations of the Company do not conflict with or infringe, and no one
          has
          asserted to any Seller or to the Company that such operations conflict
          with or
          infringe, any Intellectual Property owned, possessed or used by any third
          party.
          There are no claims, disputes, actions, proceedings, suits or appeals pending
          against Seller or the Company with respect to any such Intellectual Property,
          and, to the knowledge of Sellers and the Company, none has been threatened
          against the Company. Without limitation of the foregoing, the Company has
          complied in all material respects with all express and/or implied obligations
          of
          confidentiality to which it is subject in relation to Intellectual Property
          owned by third parties.
 
 ***Page
              - 113***
 (b)  Except
          as
          expressly stated in the relevant Contracts listed in Schedule 1
          hereto,
 
 (i)
          there
          are no facts or, to the knowledge of Sellers and the Company, alleged facts
          that
          would reasonably serve as a basis for any claim that the Company does not
          have
          the right to use and to transfer the right to use, free of any rights or
          claims
          of others, all Intellectual Property used or held for use by it in the
          development, manufacture, use, sale or other disposition of any or all
          products
          or services presently being used; furnished or sold in the conduct of the
          business of the Company as it has been and is now being conducted (the
          ‘.’Company Intellectual Property”),
 
 (ii)
          the
          Company Intellectual Property referred to in clause (i) immediately above
          are
          free of any unresolved ownership disputes with respect to any third party
          and,
          to the knowledge of Sellers and the Company, there is no unauthorized use,
          infringement or misappropriation of any of the Company Intellectual Property
          by
          any third party, including any employee, or former employee of the Company,
          nor,
          to the knowledge of Sellers and the Company, is there any breach of any
          license,
          sublicense or other agreement authorizing another party to use such Company
          Intellectual Property.
 
 (c)  The
          Company has not entered into any agreement granting any third party the
          right to
          bring infringement actions with respect to, or otherwise to enforce rights
          with
          respect to, any of such Company Intellectual Property.
 
 (d)  The
          Company has taken all measures it deems reasonable and appropriate to maintain
          the confidentiality of such of the Company Intellectual Property the value
          of
          which to the Company is contingent upon maintenance of the confidentiality
          thereof.
 
 (e)  The
          Company has secured valid written assignments from all consultants and
          employees
          who contributed to the creation or development of the Company Intellectual
          Property of the rights to such contributions that the Company does not
          already
          own by operation of law, and no employee or consultant retains any interest
          or
          right in relation to such Company Intellectual Property.
 
 4.19  Compliance
          with Law; Permits.
 
 (a)  All
          licenses, franchises, permits, approvals, clearances, consents, certificates
          and
          other evidences of authority normally issued by a Governmental Authority
          that
          are necessary for the carrying on of the Company’s business (“Permits”) are in
          full force and effect and, to the knowledge of Sellers and the Company,
          the
          Company is not in violation of any Permit in any material respect. The
          Permits
          are not subject to any unusual or onerous conditions. The business of the
          Company has been conducted in accordance with its Memorandum of Association
          and
          Bye-laws and, except where such non-compliance would not have a material
          adverse
          effect on the Company or its business, assets, operations or financial
          condition, all applicable Legal Requirements.
  ***Page
              - 114***
 
 (b)  To
          the
          knowledge of Sellers and the Company, there are no investigations, proceedings,
          inquiries, communications or other circumstances that indicate that any
          Permits
          may be revoked, cancelled, superseded; modified or not renewed.
 
 (c)  No
          outstanding notices in relation to any statutory obligation have been served
          on
          the Company in respect of any of its assets or in respect of any contravention
          or non-compliance with or alleged contravention or non-compliance with
          any
          obligation or otherwise.
 
 (d)  To
          the
          knowledge of Sellers and the Company, there have not been and are not pending,
          or in existence, any investigations or inquiries by, or on behalf of, any
          governmental or administrative or other body in respect of any of the affairs
          of
          the Company.
 
 4.20  Litigation.
          There is no “claim, dispute, action, proceeding, notice, order, suit, appeal or
          investigation, at law or in equity, pending or, to the knowledge of Sellers
          and
          the Company, threatened, against the Company or any pension scheme of the
          Company or any of its directors, officers, employees, former employees
          or
          agents, or involving any of its assets or properties, before any Governmental
          Authority. The Company is not aware that there are any facts which, if
          known to
          shareholders, customers, suppliers, Governmental Authorities or other persons,
          would ** result
          in
          any such claim, dispute, action, proceeding, suit or appeal or investigation
          that would have or would reasonably be likely to have a material adverse
          effect
          on the Company or its business, assets, operations or financial condition.
          The
          Company is not subject to any order, writ, injunction or decree of any
          Governmental Authority, arbitration panel or other tribunal, nor is the
          Company
          in default with respect to any notice, order, writ, injunction or
          decree.
 
 4.21  Tangible
          Personal Property. The items of tangible personal property reflected in
          the
          Company’s Financial Statements or otherwise listed in the “fixed asset
          schedules” furnished to Purchaser by or on behalf of Sellers or the Company in
          connection with the Financial Statements (“Tangible Personal Property”) comprise
          the only material tangible personal property owned by the Company in whole
          or in
          part, are used or held for use in connection with the business of the Company,
          and are owned by the Company free and clear of any and all liens, encumbrances,
          equities, security interests, mortgages, debentures, claims, charges, and
          other
          claims or rights of third parties, and, except as and to the extent provided
          for
          in Section 14 of that certain Transaction Processing Agreement dated 20
          April
          2001 and entered into by and between the Company and Planet Group, Inc.,
          none of
          such Tangible Personal Property is subject to any option, right of pre-emption
          or right of first refusal. All requisite licenses, consents and approvals
          required of the Company for the ownership and/or operation of the Tangible
          Personal Property have been duly obtained or given.
 
 4.22  Computer
          System and Software.
 
 (a)  Subject
          to the terms of any relevant Contracts listed in Schedule 1 attached hereto,
          the
          Company is the legal and beneficial owner free of any and all liens and
          encumbrances or is the lessee of all the items of equipment, hardware.
          firmware
          and accessories relating to the “Computer System”) and no other person (other
          than the lessor, as applicable) has any claims or rights in respect thereof.
          For
          the purposes of this Agreement, “Computer System” means the computer systems,
          including all its equipment, hardware, firmware, software and accessories
          used
          or held for use by the Company in the processing of financial transactions
          for
          its customers.
 
 ***Page
              - 115***
 (b)  Except
          to
          the extent that the Software incorporates code obtained under license from
          Oasis
          Technology Ltd. under the license specified in Schedule I attached hereto,
          and
          except for the Merchant Accounting and Reporting System and Payment Gateway
          software that is the subject of Seller’s obligation to grant licenses under
          Section 2.2 hereof, the Company is the legal and beneficial owner free
          of any
          and all liens and encumbrances of all Software, and such Software was either
          developed by the Company’s employees in the course of their employment or by
          third parties pursuant to agreements under which all rights in the Software
          are
          vested in the Company. For the purposes of this Agreement, “Software” means all
          computer programs and all related object code and source-code and databases
          used
          or held for use by the Company in the processing of financial transactions
          for
          its customers.
 
 (c)  There
          are
          in existence maintenance and support agreements in respect of all equipment,
          hardware, furniture, software and accessories used in the Computer System,
          and
          the Company has not done, or omitted to do, any act which might entitle
          the
          provider of the maintenance and support services to terminate such agreements
          or
          to withhold or refuse to supply any services thereunder, and the Company
          is not
          in dispute with such provider regarding its maintenance and support
          obligations.
 
 (d)  The
          Computer System comprises equipment, hardware, firmware, software including
          source code and object code, supporting materials and accessories which
          are
          necessary to enable the Company to carry on its business in the same manner
          and
          to the same extent as ‘it has been carried on prior to Closing, and the rights
          to use the Computer System or any part thereof will not be adversely affected
          by
          the transactions effected by this Agreement.
 
 4.23  Insurance.
          The Company and its assets are insured against such risks and in such sums
          as
          are described in the policies listed in Schedule 2, a complete and accurate
          copy
          of which policies have previously been furnished to Purchaser. All premiums
          due
          in respect of such insurances have been fully paid or have been paid in
          accordance with the obligations stated in the insurance policies; and the
          next
          renewal date for each of such insurances is a date at least 30 days after
          the
          Closing Date. Nothing has been done or omitted to be done which could make
          any
          policy of insurance void or voidable, or which is likely to result in an
          increase in premium; and none of such insurances is subject to any special
          or
          unusual terms or restrictions or to the payment of any premium in excess
          of the
          normal rate. Each such insurance policy is enforceable and in full force
          and
          effect in accordance with its terms and will continue to be enforceable
          and in
          full force and effect immediately following the Closing in accordance with
          the
          terms thereof as in effect prior to the Closing. The Company is not in
          breach or
          default (including with respect to the payment of premiums or the giving
          of
          notices) under any such policies, no event has occurred which, with notice
          or
          the lapse of time, would constitute such a breach or default or permit
          termination, modification or acceleration, under such policy; and the Company
          has not received any notice from the insurer disclaiming coverage or reserving
          rights with respect to a particular claim or such policy in general. There
          are
          no claims arising against the Company by an employee, a worker or any other
          third party, in respect of any accident or injury and, to the knowledge
          of
          Sellers and the Company, there are no unreported accidents or incidents
          that
          would give rise to such a claim, which are not fully covered by
          insurance.
 
 ***Page
              - 116***
 4.24  Brokers
          or Finders. Neither the Company nor any of its officers, directors, employees
          or
          shareholders has employed any broker or finder in connection with the
          transactions contemplated by this Agreement, nor have they incurred, and
          they
          shall not incur, directly or indirectly, any liability for any brokerage
          or
          finders’ fees or agents’ commissions or any similar charges in connection with
          this Agreement or any transaction contemplated hereby.
 
 4.25  Related
          Parties. No officer or director of the Company has, either directly or
          indirectly, (a) an interest in any corporation, partnership, firm or other
          person or entity which furnishes or sells services or products which are
          similar
          to those furnished or sold by the Company, (b) a beneficial interest in
          any
          contract or agreement to which the Company is a party or by which the Company
          may be bound, or (c) an interest in any of the assets used by the
          Company.
 
 4.26  Certain
          Advances. There are no loans by the Company to any directors, officers,
          employees, consultants or shareholders of the Company, or owing by any
          Affiliate
          of any director or officer of the Company, other than advances in the ordinary
          course of business consistent with past practice to officers and employees
          for
          reimbursable business expenses which are not in excess of US$l,000 or the
          equivalent in any other currency for anyone individual.
 
 4.27  Underlying
          Documents. Copies of any underlying documents listed in this Agreement
          (including without limitation in any Schedule, Exhibit or other attachment
          hereto), or described in this Agreement as having been disclosed or furnished
          to
          Purchaser have been furnished to Purchaser. All such documents furnished
          or made
          available to Purchaser are true and correct copies, and there are no amendments
          or modifications thereto, that have not been included in the documents
          furnished
          to Purchaser.
 
 4.28  Banking
          Facilities. The Company maintains the following banking accounts:
 
 (i)
          an
          investment account at The Bank of Bermuda Limited under account number
          0022319,
          the reported balance of which as of August 31, 2001 was valued at BD$31,715.30,
 
 (ii)
          a
          corporate account at The Bank of Bermuda Limited under account number 804391,
          the reported ba1ances of which as of August 31, 200 1 were valued at
          US$1,443,576.69 and BD$12,020.71,
 
 and
          the
          authorized signatories on these accounts were, immediately prior to taking
          the
          actions required under Section 2.5(c)(iv) above, any two of Gregory Pek,
          David
          Lema, Leslie Pooley-Maughan and Marcy Judd. The Company maintains no other
          deposit accounts or other depositary or financing relationships at any
          other
          financial institution or credit company, and the signatories on the aforesaid
          accounts may be replaced upon notice in writing to The Bank of Bermuda
          Limited.
 
 ***Page
              - 117***
 4.29  Relations
          with Affiliates. Except for (i) First Ecom’s ownership and operation at no cost
          to the Company of the two Sun E250 servers and related equipment and software
          in
          support of the Merchant Accounting and Reporting System portion of the
          Company’s
          business, and (ii) the working capital loan facility extended from First
          Ecom to
          the Company as described in Section 2.5(e) above, the Company has no Contract
          with any of its Affiliates for, and neither the management, operation or
          conduct
          of the Company’s business, nor the goodwill of its vendors, customers or other
          business relations, nor its rights in, maintenance of or access to its
          assets
          and facilities, draws upon, the provision of any services or support from
          First
          Ecom or any other Affiliate of First Ecom.
 
 4.30  Insolvency.
          The Company is ab1e to pay its liabilities as they come due, and is not
          otherwise “insolvent” under bankruptcy, insolvency, reorganization, moratorium
          and other similar laws relating to or affecting the rights of ** creditors
          generally that are applicable to the Company or its assets. No order has
          been
          made, petition presented, resolution passed or meeting convened for the
          winding
          up of the Company or for an administration order in respect of the Company;
          no
          receiver, receiver and manager, administrative receiver or liquidator has
          been
          appointed of the business or the whole or any part of the assets or undertaking
          of the Company; there are no circumstances that now or with the passage
          of time
          may give rise to the appointment of any such receiver, receiver and manager,
          administrative receiver or liquidator, and, to the knowledge of Sellers
          and the
          Company, no such order, petition, resolution, meeting or appointment is
          pending
          or threatened.
 
 4.31  No
          Misleading Statements. No representation or warranty made herein, and nothing
          contained in the materials furnished to Purchaser by or on behalf of Sellers
          and/or the Company in connection with Purchaser’s review and analysis of the
          Company and its business, operations, assets or financial condition (other
          than
          statements of a forward-looking nature, such as those contained in multi-year
          forecasts and projections), contains any statement of a material fact that
          is
          either untrue or, in the light of the circumstances under which they are
          made,
          misleading.
 
 ARTICLE
          V
          - REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
 Purchaser
          represents and warrants to Sellers as follows:
 
 5.1  Organization.
          Purchaser is a corporation duly incorporated, validly existing arid in
          good
          standing under the laws of the Netherlands Antilles and has all requisite
          corporate power and authority to own, lease and operate its properties
          and to
          carryon its business as now being conducted.
 
 5.2  Authority.
          Purchaser has all requisite corporate power and authority to enter into
          this
          Agreement and to perform its obligations hereunder and consummate the
          transactions contemplated hereby. The execution and delivery of this Agreement,
          the performance by Purchaser of its obligations hereunder and the consummation
          of the transactions contemplated hereby have been duly and validly authorized
          by
          all necessary corporate action on the part of Purchaser. This Agreement,
          when
          executed and delivered by Purchaser, will constitute a valid and legally
          binding
          obligation of Purchaser, legally enforceable against Purchaser in accordance
          with its terms, subject to the effects of bankruptcy, insolvency,
          reorganization, moratorium and other similar laws relating to or affecting
          the
          rights of creditors generally, limitations imposed by applicable law or
          equitable principles upon the specific enforceability of any of the remedies,
          covenants or other provisions of this Agreement, and upon the availability
          of
          injunctive relief or other equitable remedies.
 
 ***Page
              - 118***
 5.3  No
          Conflict with Other Instruments. Purchaser’s execution and delivery of, and
          performance of its obligations under. this Agreement (including the Exhibits
          hereto), the related agreements required to be entered into as conditions
          of
          Closing under Article VI hereof, and the transactions contemplated hereby
          (i)
          will not result in any violation of, conflict with, constitute a breach,
          violation or default (with or without notice or lapse of time, or both)
          under,
          give rise to a right of termination, cancellation, forfeiture or acceleration
          of
          any obligation or loss of any benefit under, or result in the creation
          or
          encumbrance on any of the properties or assets of Purchaser or any of its
          subsidiaries, pursuant to (x) any provision of the certificate of incorporation,
          bylaws, or other charter or governing document of Purchaser, or (y) any
          agreement, arrangement, contract, understanding, note, mortgage, indenture,
          lease, franchise, license, permit or other instrument to which Purchaser
          is a
          party or by which Purchaser or any of its properties or assets is bound,
          (b)
          wi11 not conflict with, or result in any breach or violation of, any Legal
          Requirement applicable to Purchaser or its properties or assets, except.
          in the
          case of clauses (i)(y) and (ii) for any of the foregoing that would not,
          individually or in the aggregate, have a material adverse effect on Purchaser
          and its subsidiaries, taken as a whole, or that could not result in the
          creation
          of any material lien, charge or encumbrance upon any assets of Purchaser
          or any
          of its subsidiaries or that could not prevent, materially delay or materially
          burden the transactions. contemplated by this Agreement.
 
 5.4  Governmental
          Consents and Notices. Except for the approval of the Bermuda Monetary Authority
          required for the transfer of Company Shares to Purchaser contemplated by
          Article
          II, no consent, approval, order or authorization of, or registration,
          declaration of, notice to or qualification or filing with, any Governmental
          Authority, whether domestic or foreign, is required to be obtained or submitted
          by or on behalf of or with respect to Purchaser in connection with the
          execution
          and delivery of this Agreement by Purchaser or the consummation by Purchaser
          of
          the transactions contemplated hereby that has not been, or will not prior
          to
          Closing have been, duly obtained and/or submitted, as applicable.
 
 5.5  Litigation.
          There is no (a) claim, action, suit or proceeding pending or, to the knowledge
          of Purchaser, threatened against or relating to Purchaser or its subsidiaries
          before any Governmental Authority or arbitration tribunal, or (b) outstanding
          judgment, order, writ. injunction or decree, or application, request or
          motion
          therefor, of any court, governmental agency or arbitration tribunal in
          a
          proceeding to which Purchaser or any subsidiary of Purchaser was or is
          a party
          that would individually or in the aggregate, either impair Purchaser’s ability
          to consummate the transactions contemplated by this Agreement or have a
          material
          adverse effect on Seller and its subsidiaries taken as a whole.
 
 5.6  No
          Misleading Statements. No representation or warranty made herein by Purchaser
          contains any statement of a material fact that is untrue or, in the light
          of the
          circumstances under which they are made, misleading.
 
 5.7  Brokers
          or Finders. Neither Purchaser nor any of its officers, directors, employees
          or
          shareholders has employed any broker or finder in connection with the
          transactions contemplated by this Agreement, nor have they incurred, and
          they
          shall not incur, directly or indirectly, any liability for any brokerage
          or
          finders’ fees or agents’ commissions or any similar charges in connection with
          this Agreement or any transaction contemplated hereby.
 
 ***Page
              - 119***
 5.8  Acquisition
          for Investment. Purchaser is acquiring the Company Shares for its own account
          and not with the present view to sell the Company Shares in connection
          with the
          distribution thereof.
 
 ARTICLE
          VI - CONDITIONS TO CLOSING
 
 6.1  Conditions
          to Obligations of Each Party to Effect the Closing. The respective obligations
          of each party to this Agreement to consummate the Closing and the transactions
          contemplated by this Agreement shall be subject to the satisfaction at
          or prior
          to the Closing of the following conditions:
 
 (a)  Illegality.
          There shall not have been any Legal Requirement enacted, promulgated or
          deemed
          applicable to the transactions contemplated by this Agreement by any
          Governmental Authority that prevents the consummation of the Closing or
          the
          transactions contemplated by this Agreement or has the effect of making
          the
          purchase of Company Shares illegal.
 
 (b)  Absence
          of Litigation. No action, suit or proceeding concerning Purchaser, the
          Company,
          or any Seller shall be pending by or before any court of competent jurisdiction
          or Governmental Authority wherein an unfavorable judgment, order, decree,
          stipulation or injunction would (i) prevent consummation of any of the
          transactions contemplated by this Agreement or (ii) cause any of the
          transactions contemplated by this Agreement to be rescinded following
          consummation.
 
 6.2  Additional
          Conditions to the Obligations of Sel1ers. The obligations of Sellers to
          consummate the Closing and the transactions contemplated by this Agreement
          shall
          be subject to the satisfaction at or prior to the Closing of each of the
          following conditions, any of which may be waived, in writing, exclusively
          by
          Sellers:
 
 (a)  Representations
          and Warranties. The representations and warranties of Purchaser contained
          in
          this Agreement or in the certificates required to be delivered at the Closing
          pursuant to Section 2.6(a) shall be true and correct on the date hereof
          and on
          and as of the Closing Date, as though made on and as of the Closing Date
          (except
          for representations and warranties made as of a specified date, which need
          be
          true and correct only as of the specified date).
 
 (b)  Agreements
          and Covenants. Purchaser shall have performed or complied in all material
          respects with al1 agreements and covenants required by this Agreement.
          to be
          performed or, complied with by it on or prior to the Closing.
 
 6.3  Additional
          Conditions to the Obligations of Purchaser. The obligations of Purchaser
          to
          consummate the Closing and the transactions contemplated by this Agreement
          shall
          be subject to the satisfaction at or prior to the Closing of each of the
          following conditions, any of which may be waived, in writing, exclusively
          by
          Purchaser:
 
 ***Page
              - 120***
 (a)  Representations
          and Warranties. The representations and warranties of Sellers contained
          in this
          Agreement or in the certificates required to be delivered at the Closing
          pursuant to Section 2.5(a) shall be true and correct on the date hereof
          and on
          and as of the Closing Date, as though made on and as of the Closing Date
          (except
          for representations and warranties made as of a specified date, which need
          be
          true and correct only as of the specified date).
 
 (b)  Agreements
          and Covenants. Sellers and the Company shall have performed or complied
          in all
          material respects with all agreements and covenants, and otherwise shall
          have
          taken all actions, required by this Agreement to be performed or complied
          with
          or taken by them on or prior to the Closing.
 
 (c)  Absence
          of Litigation, Prohibitions or Restrictions. No action, suit or proceeding
          concerning the Company or any Seller shall be pending or threatened in
          writing
          by or before any Governmental Authority out of which may issue a Legal
          Requirement, and no Legal Requirement shall have been issued or determined
          by a
          Governmental Authority to be applicable to the transactions contemplated
          hereby,
          that would: (i) prohibit Purchaser’s ownership of the Company Shares or the
          Company’s ownership or operation of any portion of the business or assets of the
          Company or (ii) compel Purchaser or the Company to dispose of or hold separate,
          as a result of the transactions contemplated hereby, any portion of the
          business
          or assets of the Company or Purchaser; in either case, the unavailability
          of
          which assets or business would have a material adverse effect on Purchaser
          or
          would reasonably be expected to have a material adverse effect on Purchaser’s
          ability to realize the benefits expected from the ** transactions
          contemplated hereby.
 
 (d)  Sellers
          shall have in good faith supported and cooperated with Purchaser in its
          efforts
          to obtain the consent of Oasis Technology Ltd. to the assignment contemplated
          in
          clause (iv) of Section 2.2.
 
 ARTICLE
          VII - POST-CLOSING AGREEMENTS
 
 7.1  Installment
          Payments.
 
 (a)  Within.
          sixty (60) days following the end of each of the three calendar years ending
          December 31, 2002, 2003 and 2004, respectively. Purchaser will pay to FEDS
          Acquisition an amount in U.S. dollars equal to the lesser of:
 
 (i)
          the
          greater of (x) forty percent (40%) of the net operating profits, if any,
          realized by Company during the calendar year in question or (y) the amounts
          set
          forth below under the column headed “Minimum”, or
 
 (ii)
          the
          amounts set forth below under the column headed “Maximum”,
 
 for
          each
          of the years in question, respectively (all dollar amounts are in United
          Stares
          dollars):
 
 ***Page
              - 121***
 YEAR
                MAXIMUM
                MINIMUM2002
                $500,000
                $350,0002003
                $1
                    million
                $650,0002004
                $1.5
                    million
                $1
                    million
 
 (b)  “Net
          operating profits” for this purpose will be calculated after deduction of taxes,
          interest, depreciation and amortization in accordance with United States
          generally accepted accounting principles applied consistently with the
          accounting policies and practices of the Company from period to period,
          excluding (i) any management or other administrative fees or expenses of
          a
          general nature charged to Company by Purchaser or any Affiliate of Purchaser,
          (ii) interest and other charges for facilities granted to Company by Purchaser
          or ,any Affiliate of Purchaser to the extent such charges exceed rates
          generally
          available elsewhere in the, commercial lending market for comparable facilities
          to similarly situated borrowers, and (iii) any reductions of revenue caused
          by
          the transfer of all or a substantial part of Company’s revenue-generating
          operations from Company to Purchaser or any Affiliate of Purchaser.
 
 (c)  Purchaser
          hereby acknowledges its intent to cause Company to be operated following
          Closing
          in a manner consistent with the assumptions and projections identified
          in the
“Business Plan” attached hereto as Schedule 4 and made a part hereof for all
          purposes, including but not limited to providing Company with sufficient
          working
          capital (not exceeding US$4 million) to conduct its business in the manner
          heretofore conducted. In this regard, it is anticipated that Purchaser
          will, as
          soon as practicable following Closing, extend to Company a working capital
          loan
          facility in a principal amount equal to that described in Section 2.5(e)
          on such
          terms and conditions as Purchaser and the Company shall mutually agree.
          Notwithstanding the foregoing, however, Seller and Purchaser agree and
          acknowledge that Company, and Purchaser’s intentions with respect to the
          Company, are subject to changing market conditions in the environment in
          which
          Company operates, and that Purchaser shall have no obligations to cause
          Company
          to be operated in any particular way or furnished with any particular level
          of
          funding. Seller’s sole assurances regarding its participation in future
          operating profits of Company lie in the “Minimum” payment obligations set out in
          the table in Section 7.1 (a) above.
 
 (d)  Following
          the end of each of the said three calendar years, Purchaser shall, or shall
          cause the Company to deliver to Seller annual financial statements of the
          Company that have been audited by an independent auditing firm of international
          stature and reputation, together with the auditors’ statement and notes thereto.
          Such statements shall be delivered to Seller no later than one hundred
          twenty
          (120) days following the end of each such calendar year period, accompanied
          by a
          reconciliation statement prepared by such auditing firm setting forth the
          calculation of “net operating profits” in accordance with the standards set
          forth in subparagraph (b) above and specifying the amount underpaid or
          overpaid
          by Purchaser as compared to said statement. Sellers shall then have up
          the
          thirty (30) days to review such materials and, if no objection is raised
          in
          writing by Sellers within that time, said reconciliation statement shall
          be
          final and binding on the parties. If on the other hand Sellers object to
          said
          materials in any respect by written notice to Purchaser, then the parties
          shall
          work in good faith to resolve their disagreement(s) within the succeeding
          thirty
          (30) day period. During that time, either Sellers or Purchaser may give
          notice
          to the other of its election to refer the disagreement to a second independent
          auditing firm of international stature and reputation, which firm shall
          be
          selected (i) by the firm that audited Purchaser’s financial statements in the
          first place, or (i) if such firm fails or refuses to select a second such
          firm,
          by mutual agreement of Sellers and Purchaser. The decision of the second
          such
          firm shall be final and binding on the parties and may be enforced by a
          court of
          competent jurisdiction. If the second such firm’s decision results in a “net
          operating profit” calculation difference of less than five percent from the
          first such firm’s decision, the costs of the second such firm’s review shall be
          borne by Sellers. If the difference is from five to ten percent., the cost
          shall
          be borne equally between Sellers, on the one hand, and Purchaser, on the
          other.
          If the difference is greater than ten Percent, the cost shall be borne
          by
          Purchaser. Any overpayment by Purchaser shall be refunded by Sellers, and
          any
          underpayment by Purchaser shall be paid to Sellers, promptly upon the parties’
receipt of the final determination.
 
 ***Page
              - 122***
 7.2  Assignment
          of Oasis Distribution License. To the extent that such consent has not
          yet -been
          obtained, and to the extent that Purchaser so requests, Sellers shall continue
          in good- faith to support and cooperate with Purchaser in its efforts to
          obtain
          the consent of Oasis Technology Ltd. to the assignment contemplated by
          clause
          (iv) of Section 2.2.
 
 7.3  Following
          the Closing. Sellers shall, and shall cause their Affiliates to, discontinue
          and
          thereafter refrain from the use of the “FEDS” name and any other such
          trademarks, tradenames, service marks, service names, or logos that are
          the same
          as or confusingly similar to Company’s name, it being understood that
“FirstEcom.Com” shall not be considered as such for this purpose. In addition,
          to the extent that they have not completely done so prior to Closing, Sellers
          shall, and shall cause their appropriate Affiliates to, procure that their
          names
          and the names of their Affiliates that are the same as or confusingly similar
          to
          the Company’s name be changed so that they are not, it being understood that
“FirstEcom.Com” shall not be considered as such for this purpose.
 
 7.4  Post-Closing
          Intercompany Support. For a period of twelve (12) months following the
          Closing,
          and only to the extent that any Seller has within the twelve (12) months
          preceding Closing provided or caused to be provided intercompany operational
          support for Company using the assets, resources or facilities of such Seller
          or
          its Affiliates, Sellers shall continue to provide or cause to be provided
          such
          support as Purchaser shall request in order to maintain Company’s operations at
          the level of functionality and efficiency enjoyed by Company prior to Closing,
          including without limitation the provision of such remote hardware support,
          application hosting, and/or other computer processing functions as ** are
          currently being performed for or on behalf of Company by any Sellers and/or
          its
          Affiliates. Without limiting the foregoing, this includes the servers and
          related hardware, software and data described in Section 4.10 above. It
          is
          understood and agreed that such support shall be at no additional cost
          to
          Purchaser or the Company. This Section 7.4 does not apply to the support
          services covered by that certain End User Support Agreement in the form
          attached
          hereto as Exhibit E and entered into by the parties thereto.
 
 7.5  Processing
          Transactions. From time to time following the Closing, Sellers may contact
          Company to propose the entry by a Seller and/or its designee into agreements
          or
          understandings for the processing by the Company of financial transactions
          referred by such Seller, and Company will be entitled to accept or decline
          or
          propose modifications to such proposals in its sole discretion.
 
 7.6  Post-closing
          Audit. During the course of First Ecom’s annual audit of its financial condition
          and results of operations with respect to the fiscal. year ending December
          31,
          2001, Purchaser agrees that it shall, and shall cause the Company to, permit
          the
          auditors of First Ecom access during reasonable business hours and upon
          reasonable advance notice to the books and records of the Company for the
          purpose of completing their audit of First Ecom’s consolidated financial
          statements for the portion of said fiscal year ending on the Closing Date.
          In
          this connection, Purchaser shall instruct its auditors to provide reasonable
          cooperation with respect to such access. Sellers agree that they shall
          pay and
          be responsible for any out-of-pocket costs and expenses reasonably incurred
          by
          Purchaser in the course of such audit, and that they shall limit such access
          so
          as to minimize the time and disruption necessary to complete the work.
          To the
          extent reasonably practicable, Sellers shall permit Purchaser to make available
          copies of such information as shall the auditors shall require without
          the need
          for actual onsite visits. In any case, such auditing firm and Sellers shall
          be
          required to sign such confidentiality and non-disclosure agreements as
          Purchaser
          shall reasonably require with respect to such information as may be disclosed
          to
          Sellers or their auditor during the course of such review.
 
 ***Page
              - 123***
 7.7  Additional
          Documents and Further Assurances. Each party hereto, at the reasonable
          request
          of the other party hereto, shall execute and deliver such other instruments
          and
          do and perform such other acts and things as may be reasonably necessary
          or
          desirable for effecting completely the consummation of this Agreement and
          the
          transactions contemplated hereby.
 
 ARTICLE
          VIII - INDEMNIFICATION
 
 8.1  Survival
          of Representations and Warranties
 
 (a)  All
          of
          Sellers’ and Purchaser’s representations and warranties in this Agreement or in
          any instrument delivered pursuant to this Agreement shall survive the Closing
          and continue until 5:00 p.m., Bermuda time, on the third anniversary of
          the
          Closing Date (the “Expiration Date”), except that nothing in this Section 8.1
          shall be deemed to limit any right or remedy for fraud with respect to
          the
          representations and warranties set forth in Articles III, IV or V *.* The
          waiver of any condition based on the accuracy of any representation or
          warranty,
          or the performance or compliance of any covenant or obligation, or any
          limitations on the survival of such representations and warranties, will
          not
          affect the right to indemnification set forth in Section 8.2.
 
 (b)  The
          representations, warranties, covenants and obligations of Sellers, and
          the
          rights and remedies that may be exercised by Purchaser, shall not be limited
          or
          otherwise affected by or as a result of any information furnished to, or
          any
          investigation conducted for or on behalf of, or any knowledge acquired
          by,
          Purchaser or its officers, directors, employees, shareholders, agents advisors,
          or representatives as to the accuracy or inaccuracy of any such representation
          or warranty, except as, otherwise expressly provided in this
          Agreement.
 
 8.2  Indemnification.
 
 (a)  Indemnification.
          Subject to the limitations set forth herein, Sellers agree to indemnify
          Purchaser, the Company, their Affiliates, and their respective. shareholders,
          directors, officers, employees, agents and representatives (collectively,
          the
“Indemnified Parties”) for claims, losses, liabilities, damages, deficiencies,
          costs and expenses, including reasonable attorneys’ fees and expenses, and
          expenses of investigation and defense (calculated after deduction for insurance
          proceeds recovered or recoverable) incurred by such Indemnified Party directly
          or indirectly (including, after the Closing. by the Company) as a result
          of (i)
          any inaccuracy or breach of a representation or warranty of Sellers contained
          herein or in any certificate required to be delivered at Closing by Seller
          under
          Section 2.5(a), or (ii) any failure by Sellers or the Company to perform
          or
          comply with any covenant or agreement contained herein, or (iii) any
          transactions, business, or other activities, actions or omissions by or
          on
          behalf of the Company at any time prior to January 1, 2000, or (iv) any
          claim or
          cause or action arising out of the Shareholders’ Agreement or the Share Purchase
          and Sale Agreement (hereinafter individually a “Loss” and collectively
“Losses”), or (v) without limiting any of the foregoing, the failure of the
          Company to have, or any claim or al1egation on the part of any person that
          the
          Company has not, succeeded to all of The Bank of Bermuda Limited’s rights and
          obligations as “Processor” under the TPP Agreement referenced in Section 4.15(
          c) above effective from the first date on which the Company engaged in
          transaction processing for MasterCard transactions, or (vi) the provisions
          of
          Section 14 of that certain Transaction Processing Agreement dated 20 April
          2000
          and entered into by and between the Company and Planet Group, Inc. Sellers
          acknowledge that such Losses, if any, would relate to unresolved contingencies
          existing at the Closing, which if resolved at the Closing would have led
          to a
          reduction in the aggregate purchase price paid by Purchaser. For the avoidance
          of doubt, the Company shall not be liable in respect of any inaccuracy
          or breach
          in any representation, warranty or covenant contained in this Agreement,
          howsoever caused, or in any instrument delivered pursuant to this Agreement
          or
          in connection with the transactions contemplated hereby.
 
 ***Page
              - 124***
 (b)  Third-Party
          Claims. In the event Purchaser becomes aware of a third-party claim which
          Purchaser believes may result in a demand against Sellers hereunder, Purchaser
          shall promptly notify First Ecom of such claim, and First Ecom shall be
          entitled, at its expense, to participate in any defense of such claim.
          If First
          Ecom acknowledges in writing to Purchaser that if the allegations in such
          claim
          are in fact true then any liability arising from the adjudication or other
          settlement of such claim would be for the account of Sellers, then First
          Ecom
          shall be entitled to assume the defense of such claim and shall have the
          power
          to settle such claim. If First Ecom is not entitled to or chooses not to
          assume
          the defense of any such claim, Purchaser shall consult with and attempt
          to
          solicit the consent of First Ecom prior to and in connection with any settlement
          of any such claim, but Purchaser shall have the right in its sole discretion
          to
          settle any such claim. If First Ecom had the right but chose ** not
          to
          assume the defense of any such claim, First Ecom shall be estopped from
          objecting to Purchaser’s claim under this Article VIII for the amount of any
          settlement entered into by Purchaser with respect to such claim.
 
 (c)  Basket;
          Limitations Period. Purchaser shall not be entitled to bring any claim
          against
          Sellers under this Section 8.2 unless and until the aggregate of all such
          c1aims
          equals or exceeds the sum of US$50000. In addition, Purchaser shall not
          be
          entitled to bring any claim against Sellers under this Section 8.2 unless
          Purchaser notifies Sellers in writing of such c1aim on or before the third
          anniversary of the Effective Date of this Agreement.
 
 ARTICLE
          IX-TERMINATION AND WAIVER
 
 9.1  Termination.
          This Agreement may be terminated and the transactions contemplated hereby
          abandoned at any time prior to the Closing:
 
 ***Page
              - 125***
 (a)  By
          mutual
          written consent of Sellers and Purchaser;
 
 (b)  By
          Purchaser if the Closing has not occurred by October 31, 2001 on account
          of the
          failure or non-fulfillment of any of Purchaser’s conditions to Closing set forth
          in Section 6.3 above;
 
 (c)  By
          Sel1ers if the Closing has not occurred by October 31, 2001 on account
          of the
          failure or non-fulfillment of any of Sellers’ conditions to Closing set forth in
          Section 6.2 above; or
 
 (d)  By
          Purchaser or Seller if in any case Closing has not occurred by November
          30, 2001
          (provided that the right to terminate this Agreement under this paragraph
          (d)
          shall not be available to any party whose willful failure to fulfill any
          obligation hereunder has been the cause of, or resulted in, the failure
          of the
          Closing to occur on or before such date).
 
 9.2  Extension
          .of Time, Waiver. At any time prior to the Closing, Purchaser, on the one
          hand,
          and Sellers, on the other hand, may, to the extent legally allowed:
 
 (a)  Extend
          the time for the performance of any of the obligations or other acts of
          the
          other party hereto,
 
 (b)  Waive
          any
          inaccuracies in the representations and warranties made to such party contained
          herein or in any document delivered pursuant hereto,
 
 (c)  Waive
          compliance with any of the agreements or conditions for the benefit of
          such
          party contained herein; provided, that no failure or delay by any party
          hereto
          in exercising any right hereunder shall operate as a waiver thereof nor
          shall
          any single or partial exercise thereof preclude any other or, further exercise
          thereof or the -exercise of any other right hereunder;
 
 provided,
          that any agreement on the part of any party hereto to any such extension
          or
          waiver shall be valid only if set forth in an instrument in writing signed
          on
          behalf of such party that expressly refers to this Section and the particular
          obligation, inaccuracy, agreement or condition that is the subject of the
          waiver.
 
 ARTICLE
          X
          - GENERAL
 
 10.1  Expenses.
          All fees and expenses incurred in connection with the transactions contemplated
          hereby, including, without limitation, all legal, accounting, financial
          advisory, consulting and all other fees and expenses of third parties incurred
          by a party in connection with the negotiation and effectuation of the terms
          and
          conditions of this . Agreement and the transactions contemplated hereby,
          shall
          be the obligation of the respective party incurring such fees and expenses;
          provided, however, that if the purchase and sale of the Company Shares
          is
          consummated, the Company shall not incur financial advisory, brokers’, finders’,
          legal and accounting fees and expenses in excess of US$5000.00 in connection
          with the transactions contemplated hereby, and provided, further, that
          Sellers,
          on the one hand, and Purchaser, on the other, shall each bear one-half
          of the
          applicable Bermuda stamp duties incurred with respect to the transfer of
          the
          certificates representing the Company Shares.
 
 ***Page
              - 126***
 10.2  Public
          Disclosure. Unless otherwise required by applicable Legal Requirements
          (including, without limitation, applicable securities laws) or by the rules
          and
          regulations of a regulated public securities exchange or other organized
          public
          market on which the shares of any Seller are traded (including but not
          limited
          to Nasdaq), prior to the Closing, no disclosure (whether or not in response
          to
          an inquiry) of the discussions or subject matter of this Agreement or the
          transactions contemplated hereby shall be made by any party hereto unless
          approved by Purchaser and Sellers prior to release, provided that such
          approval
          shal1 not be unreasonably withheld.
 
 10.3  Notices.
          Any notice, request, instruction or other document to be given hereunder
          by any
          party to the other shall be in writing and shall be deemed to have been
          given or
          made if in writing and (a) delivered personally, as of the date of such
          delivery, (b) by telecopy as of the date of receipt of confirmation of
          transmission (provided that such telecopy was promptly confirmed by personal
          delivery, first class mail, or courier), or (c) by internationally recognized
          delivery service guaranteeing delivery in two business days or less, with
          the
          price of delivery paid by the sender, as of the date of such delivery,
          to the
          parties at the following addresses and numbers:
 
 (i)  If
          to
          Purchaser:
 
 to:  Mr.
          John
          Chr. MA.M. Deuss
 President
 First
          Curacao International Bank, N.V.
 Kaya
          WFG
          (Jombi)
 Mensing
          Nr. 18,
 Zeelandia,
          Curacao
 Netherlands
          Antilles
 
 with
          a
          copy to:
 
 Transworld
          Oil Limited
 #3
          St.
          James Court
 Flatts
          Village
 Hamilton
          Parish FL04
 Bermuda
 Attn:
          General Counsel
 
 (ii)  If
          to any
          Seller:
 
 to:  First
          Ecom.com, Inc.
 80
          Gloucester Road, 19th Floor
 Wan
          Chai,
          Hong Kong
 
 with
          a
          copy to:
 
 D.
          Roger
          Glenn
 Friedman
          Kaplan
 875
          Third
          Avenue
 New
          York,
          New York 10022
 
 ***Page
              - 127***
 (ii)  If
          to the
          Company:
 
 to:  J.
          David
          Lema,
 Chief
          Executive Officer
 69
          Front
          Street
 Hamilton,
          Bermuda
 
 with
          a
          copy to:
 
 Transworld
          Oil Limited
 #3
          St.
          James Court
 Flatts
          Village  -
 Hamilton
          Parish FL04
 Bermuda
 Attn:
          General Counsel
 
 or
          to
          such other address as may be designated in writing by the parties, by a
          notice
          given as aforesaid.
 
 10.4  Headings
          and Interpretation. The headings of the several sections of this Agreement
          are
          inserted for-convenience of reference only and are not intended to affect
          the
          meaning or interpretation of this Agreement. As used in this Agreement,
          the use
          of pronouns in the masculine, feminine or neutral gender shall be interpreted
          as
          a use of any of the other genders, and the use of plural or singular shall
          be
          interpreted as the use of the other, as the context shall require. Further,
          as
          used in this Agreement, the phrase “to the knowledge of Sellers and the Company”
means to the collective knowledge of any and/or all of them, whether such
          knowledge is held by one, more than one or all of them.
 
 10.5  Counterparts.
          This Agreement may be executed in counterparts, and when so executed each
          counterpart shall be deemed to be an original, and said counterparts together
          shall constitute one and the same instrument.
 
 10.6  Amendment
          or Supplement. This Agreement may not be amended or supplemented except
          by an
          instrument in writing signed by or on behalf of Purchaser and
          Sellers.
 
 10.7  Entire
          Agreement; Assignment. This Agreement, the Schedules and Exhibits hereto,
          and
          the documents and instruments and other agreements among the parties hereto
          referenced herein (a) constitute the entire agreement among the parties
          with
          respect to the subject matter hereof and supersede all prior agreements
          and
          understandings, both written and oral, among the parties with respect to
          the
          subject matter hereof and (b) shall not be assigned by operation of law
          or
          otherwise except as mutually agreed in writing between the parties, except
          that:
 
 (i)
          Purchaser may transfer or assign its rights, interests or obligations hereunder
          in whole or in part to any third party upon notice to Sellers, provided
          that no
          such transfer or assignment shall relieve Purchaser of any of its obligations
          hereunder, and .
 
 ***Page
              - 128***
 (ii)
          Sellers may transfer or assign their rights and interests under Section
          7.1 with
          respect to the Installment Payments in whole or in part to any unrelated
          third
          party in a bona fide, cash-only, arms’ length transaction, provided that they
          first give detailed notice to Purchaser of any such proposed transfer and
          its
          terms, whereupon Purchaser shall have the right and opportunity to elect
          to
          purchase such rights on the same terms, the exercise of which right
          will ** require
          either written or, if given either to First Ecom’s Chief Executive Officer or
          Chief Financial Officer, oral notice received by. First Ecom from Purchaser
          to
          that effect within five (5) Business Days following Purchaser’s receipt of
          Sellers’ notice of proposed transfer, provided that no such transfer or
          assignment shall relieve Sellers of any of their obligations
          hereunder.
 
 This
          Agreement will be binding upon and inure to the benefit of the parties
          and their
          respective successors and permitted assigns.
 
 10.8  Severability.
          In the event that any provision of this Agreement or the application thereof,
          becomes or is declared by a court of competent jurisdiction to be illegal,
          void
          or unenforceable, the remainder of this Agreement will continue in full
          force
          and effect and the application of such provision to other persons or
          circumstances will be interpreted so as reasonably to effect the intent
          of the
          parties hereto. The parties further agree to replace such void or unenforceable
          provision of this Agreement with a valid and enforceable provision that
          will
          achieve, to the extent possible, the economic, business and other purposes
          of
          such void or unenforceable provision.
 
 10.9  Other
          Remedies. Except as otherwise provided herein, any and all remedies herein
          expressly conferred upon a party will be deemed cumulative with and not
          exclusive of any other remedy conferred hereby, or by law or equity upon
          such
          party, and the exercise by a party of anyone remedy wi1l not preclude the
          exercise of any other remedy.
 
 10.10  Governing
          Law. This Agreement shall be governed by and construed in accordance
          with ** the
          laws
          of Bermuda, without regard to the applicable principles of conflicts of
          laws
          thereof.
 
 10.11  Absence
          of Third-Party Beneficiary Rights. No provision of this Agreement is intended,
          or will be interpreted, to provide to or create for any third-party beneficiary
          rights or any other rights of any kind in any client, customer, affiliate,
          shareholder, employee, partner or any party hereto or any other person
          or
          entity, and all provisions hereof will be personal solely between the parties
          to
          this Agreement, except that the provisions of Article VIII shall be for
          the
          benefit of, and enforceable by, the indemnified parties referred to
          therein.
 
 10.12  Joint
          and
          Several Responsibility. Sellers acknowledge and agree that they are entering
          into this Agreement, and that they make the representations, warranties,
          covenants and agreements set forth herein, jointly and severally, with
          full
          recourse on the, part of Purchaser to any and all Sellers for the obligations
          and undertakings of any Seller contained herein. In this respect, each
          Seller
          joins in this Agreement as primary obligor and not as surety, and Purchaser
          shall not be required to proceed first against or exhaust its remedies
          against
          any one or more Sellers as a condition to proceeding hereunder against
          any other
          Seller with respect to any claim arising hereunder. Further, each Seller
          hereby
          irrevocably and exclusively appoints First Ecom as its agent and
          attorney-in-fact for the giving or receipt of all notices or payments,
          the
          granting of all consents, approvals, or waivers, and the taking of all
          such
          other actions and making of all such other elections and/or decisions as
          shall
          be explicitly or implicitly provided or permitted herein to be given, received,
          granted, taken or made by or on behalf of the Sellers or any of them (it
          being
          understood that omitting to take any action or make any election or decision
          shall be deemed the taking of an action or the making of any election or
          decision for this purpose), and to do all such acts and things as may in
          the
          opinion of such attorney-in-fact be reasonably necessary or reasonably
          expedient
          for the purposes thereof, or in connection therewith, and Purchaser shall
          be
          entitled to rely conclusively on any of the foregoing as the action, decision
          or
          election, as the case may be, of each and all of the Sellers. Each Seller
          agrees
          that the foregoing appointment constitutes a power coupled with an interest
          and
          shall be binding upon its successors and assigns. Any payments received
          by First
          Ecom hereunder that properly belong to any of other Seller shall be held
          by
          First Ecom in trust for the benefit of such other Seller, and Sellers hereby
          release, discharge and agree to hold harmless Purchaser for any amounts
          payable
          to any Seller hereunder or pursuant to any transaction or instrument
          contemplated hereby that Purchaser pays to First Ecom.
 
 ***Page
              - 129***
 **IN
          WITNESS WHEREOF** ,
          Purchaser and Sellers have caused this Agreement to be executed and delivered
          all as of the date first above written.
 
 
 “Sellers”:
 
 **FIRST
                    ECOM.COM, INC.**
                  
                  By:*/s/
                    Kenneth G.C. Telford*
                  Name:
                    Kenneth G.C. Telford
                  Title:
                    Secretary
                **FEDS
                    ACQUISITION CORPORATION**
                  
                  By:*/s/
                    Kenneth G.C. Telford*
                  Name:
                    Kenneth G.C. Telford
                  Title:
                    Secretary**FIRST
                    ECOM DATA SERVICES**
                  **ASIA
                    LIMITED**
                  
                  By:*/s/
                    Kenneth G.C. Telford*
                  Name:
                    Kenneth G.C. Telford
                  Title:
                    Secretary
                **FIRST
                    ECOMMERCE ASIA LIMITED**
                  
                  
                  By:*/s/
                    Kenneth G.C. Telford*
                  Name:
                    Kenneth G.C. Telford
                  Title:
                    Secretary“Purchaser”:
                  
                  **FIRST
                    CURACAO INTERNATIONAL BANK, N.V.**
                  
                  By:*/s/
                    John Chr. M.A.M. Deuss*
                  Name:
                    John Chr. M.A.M. Deuss
                  Title:
                    President
  
 ***Page
              - 130***
 Exhibits
          attached:
 
 A  -  Form
          of
          Mars Software License Agreement
 B  -  Form
          of
          Payment Gateway License Agreement
 C  -  Form
          of
          Software Development License Agreement
 D  -  Form
          of
          Oasis Subdistributor and Assignment Agreement
 E  -  Form
          of
          End User Support Agreement
 F  -  Form
          of
          Share Transfer Instruments
 G
          -  Form
          of
          Release And Discharge of  Intercompany
          Debt And Related Liens
 H  -  Assignment
          and Transfer of Logo from the Company to Seller
 I
          -  Assignment
          and Transfer of Wing Hang Bank and International Bank of Asia Contracts
          From The
          Company to FEDS Asia
 J
          -  Form
          of
          Opinion of Legal Counsel to be delivered on behalf of First Ecom and FEDS
          Acquisition
 
 
 Schedules
          attached:
 
 1  -  List
          of
          Contracts
 2  -  List
          of
          Insurance Policies
 3  -  Employee
          Benefits
 4  -  Business
          Plan
 5  -  Capital
          Expenditures and Commitments
 
 
 (END
          OF
          DOCUMENT - SEE ATTACHED EXHIBITS AND SCHEDULES)
 ***Page
            - 131***
 Schedule
        A
 **SOFTWARE
          LICENSE AGREEMENT**
 **FOR**
 **MERCHANT
          ACCOUNTING AND REPORTING SYSTEM**
 
 **SOFTWARE
          LICENSE AGREEMENT** ("Agreement") is entered into effective as of October 19, 2001 (the
“ **Effective
          Date** ”)
          by and
          among First Ecom.com, a Nevada corporation having its principal place of
          business at 80 Gloucester Road, 19 th Floor,
          Wan Chai, Hong Kong ("First Ecom"), and First Ecom Data Services Asia Limited,
          a
          Hong Kong corporation having its principal place of business at 80 Gloucester
          Road, 19 th F  loor,
          Wan
          Chai, Hong Kong (“FEDS Asia”) (First Ecom and FEDS Asia being referred to herein individually,
          jointly and collectively as “ **Licensor** ”),
          and
          Transworld Payment Solutions N.V., a Netherlands Antilles company having
          its
          offices at c/o Julianaplein No. 5, Curacao, Netherlands Antilles (“ **Licensee** ”).
 
 **1.**  **Definitions** .
          As used
          in this Agreement, the capitalized terms defined in the introductory paragraph
          shall have the meanings assigned to them therein, and the following capitalized
          terms shall
          have the meanings assigned to them below:
 
 “ **Affiliate** ”
of
          a
          person or entity means any other person or entity controlled by, controlling,
          or
          under common control with said person or entity, and “control” for this purpose
          is understood to include the ownership or voting control of more than 50%
          of the
          outstanding securities of any such person carrying the power to vote with
          respect to the direction or management of the person or entity.
 
 “ **Documentation** ”
means
          the related hard-copy or electronically reproducible technical documents
          furnished in association with the Software;
 
 “ **Media** ”
means
          the original Licensor-supplied physical materials (if any) containing the
          Software and/or Documentation;
 
 “ **Product** ”
means
          collectively the Media, Software, and Documentation, and all Software,
          Media or
          Documentation updates subsequently provided to Licensee by Licensor or
          its
          authorized distributor;
 
 ***Page
              - 132***
 “ **Software** ”
means
          the original computer files (including all computer programs and data stored
          in
          such files) comprising Licensor's financial transaction management and
          reporting
          computer software product known as "Merchant Accounting and Reporting System” or
“MARS”, and all whole or partial copies thereof, including without limitation
          all modified copies and portions merged into other programs, and further
          including any and all updates, revisions, enhancements, modifications,
          subsequent versions and other derivative works thereof developed and furnished to Licensee by or on behalf of Licensor from time
          to
          time.
 
 Other
          capitalized terms used herein shall have the meanings
          assigned to them where they first appear.
 
 **2.** **Grant
          Of License Rights.** For good and
          valuable consideration in hand received, the receipt and sufficiency of
          which
          are hereby acknowledged, but subject to the terms and conditions set forth
          herein, Licensor grants to Licensee and its Affiliates a paid-up royalty-free,
          non-exclusive, non-transferable, perpetual license to deploy, install,
          execute
          and use solely for Licensee's and/or its Affiliates' internal use as many
          copies
          of the Product, and on such number(s) and type(s) of servers, workstations
          or
          other computer hardware, and in such locations, as Licensee shall deem
          desirable
          from time to time. Any programs, utilities, modules or other software or
          documentation supplied by third parties and embedded in or bundled with
          the
          Product as furnished to Licensee by or on behalf of Licensor are hereby
          expressly included in the scope of this grant. Licensor agrees to deliver,
          promptly upon the execution and delivery of this Agreement (but not before
          November 15, 2001), no less than two (2) master copies of the Software
          in
          executable (machine readable) code format to Licensee on such Media as
          Licensee
          shall reasonably request, together with two (2) copies of the
          Documentation.
 
 ***Page
              - 133***
 **3.**  **Title
          And Copyright** .
          Licensor represents and warrants to Licensee that Licensor is the owner
          and
          holder of all rights, titles and interests in and to the Product, free
          and clear
          of all liens, charges, encumbrances, equities and claims of third parties
          of any
          description. There are no facts or alleged facts known to Licensor which
          would
          reasonably serve as a basis for any claim that Licensor does not have the
          right
          to grant the rights and licenses provided for herein. As between Licensor
          and
          Licensee, Licensee acknowledges and agrees that, except as and to the extent
          otherwise agreed in writing between the parties, all title and copyrights
          in and
          to the Product, are and will remain the property of Licensor and/or its
          affiliates and suppliers, and are protected by applicable copyright laws
          and
          applicable international copyright treaties, and that Licensor neither
          grants
          hereby nor otherwise transfers hereby any rights of ownership therein to
          Licensee or to any third party. Licensee will not claim or assert title
          to or
          ownership of the Product except pursuant to a written agreement expressly
          entitling Licensee to claim or assert such title or ownership. This Agreement,
          when executed and delivered by Licensor and Licensee, w ill constitute
          the valid
          and legally binding obligation of Licensor, legally enforceable against
          Licensor
          in accordance with its terms, subject to the effect of bankruptcy, insolvency,
          reorganization, moratorium and other similar laws relating to or affecting
          the
          rights of creditors generally, limitations imposed by applicable law or
          equitable principles upon the specific enforceability of any of the remedies,
          covenants or the provisions of this Agreement, and upon the availability
          of
          injunctive relief or other equitable remedies.
 
 **4.**  **Restrictions.** Licensee
          will not remove or alter any copyright or, proprietary notice from copies
          of the
          Product. Except in accordance with the terms of this Agreement or any other
          express written agreement between the parties, Licensee agrees (a) not
          to
          decompile, disassemble, reverse engineer or otherwise attempt to derive
          the
          Software’s source code from object code except to the extent expressly permitted
          by applicable law or treaty despite this limitation; (b) not to sell, rent,
          lease, license, sub-license, display, modify, time share, outsource or
          otherwise
          transfer the Product to, or , permit the use of the Product by, any third
          party
          not an Affiliate of Licensee, *provided,* without
          limiting the scope of the license grant hereinabove stated, it is understood
          and
          agreed that this Agreement permits the use of the Product by Licensee and
          its
          Affiliates in support of services rendered to their customers in the normal
          course of their trade or business; and (c) to use reasonable care and protection
          to prevent the unauthorized use, copying, publication or dissemination
          of the
          Product. Licensor has the right to obtain injunctive relief against any
          actual
          or threatened violation of these restrictions, in addition to any other
          available remedies.
 
 ***Page
              - 134***
 **5.**  **Taxes
          And Addition Charges.** All
          license fees paid or payable by the Licensee for the license granted hereunder
          (this "License") do not include, and Licensor will be responsible for,
          any and
          all taxes, duties, levies, tariffs, and other governmental charges now
          or
          hereafter imposed by any governmental authority on the purchase or sale
          of this
          License or the use or possession of the Product by Licensee and/or its
          Affiliates; provided, that Licensee will be responsible for its own corporate
          franchise taxes and taxes based upon its own net income.
 
 **6.**  **Limited
          Warranty.** Licensor
          warrants to Licensee that, for a period of ninety (90) days from the Effective
          Date, (i) the Documentation and Media will be, under normal use, free from
          physical defects, and (ii) the Software will perform in substantial accordance
          with the operating specifications contained in the Documentation that is
          most
          current at the Effective Date. If Licensee notifies Licensor within said
          ninety-day period of its belief that either of these warranties has been
          breached, including a description of the nature or circumstances of such
          breach,
          Licensor will be obligated to use reasonable efforts to remedy the defect(s)
          in
          question within a reasonable period of time or, at Licensor’s option, to replace
          the defective Product component at no additional charge. Licensor, it’s
          authorized distributors and its suppliers do not warrant that the Product
          will
          satisfy Licensee’s requirements, that the operation of the Product will be
          uninterrupted or error free, or that all software defects can be corrected.
          This
          warranty will be void if: (i) the Product is not used in accordance with
          the
          instructions set out in the Documentation, (ii) a Product defect has been
          caused
          by any of Licensee's or a third party's malfunctioning equipment, or (iii)
          Licensee has made modifications to the Product not expressly authorized
          in
          writing by Licensor.
 
 **7.**  **Indemnification
          For Infringement.** Licensor
          will defend or settle, at its own expense any claim against Licensee by
          a third
          party asserting that Licensee's and/or its Affiliates’ use of the Product within
          the scope of this Agreement violates such third party’s patent, copyright,
          trademark, trade -secret or other proprietary rights, and will indemnify
          Licensee against any damages finally awarded against Licensee arising out
          of
          such claim. Licensee will promptly notify Licensor in writing after first
          receiving notice of any such claim, and Licensor will have sole control
          of the
          defense of any action and all negotiations for its settlement or compromise,
          with Licensee's reasonable assistance; provided, that Licensee's approval
          in
          writing shall be required of any settlement or compromise involving any
          admission of fault or wrongdoing on the part of Licensee, and provided,
          further,
          that Licensee may at Licensor's cost and expense take responsibility for
          its own
          defense if and to the extent that Licensee has any reasonable doubt as
          to the
          ability or willingness of Licensor to fund such defense or any award, settlement
          or compromise arising therefrom. Licensor will not be liable for any costs
          or
          expenditures incurred by Licensee without Licensor's prior written consent
          except insofar as Licensee reasonably determines that it is necessary or
          appropriate to incur such costs and expenses in order to preserve its legal
          or
          equitable rights and remedies, protect it from further such claims, or
          minimize
          the losses associated with claims so made. If an order is obtained against
          Licensee’s and/or its Affiliates’ use of the Product by reason of any claimed
          infringement, or if in Licensor's opinion the Product is likely to become
          the
          subject of such a claim, Licensor will, at its option and expense, and
          in
          addition to any other rights and remedies available to Licensee hereunder,
          either (i) procure for Licensee the right to continue using the Product,
          or (ii)
          modify or replace the Product with a compatible, functionally equivalent,
          non-infringing Product.
 
 ***Page
              - 135***
 **8.**  **Support.** Contemporaneously
          with the execution of this Agreement, Licensor and Licensee are entering
          into an
          End User Support Agreement under which Licensor will provide ongoing support
          and
          maintenance beyond the scope and time limits of the warranty period set
          forth in
          Section 6 above, which End User Support Agreement sets forth the terms
          and
          conditions under which Licensee will be entitled to receive such Product
          updates
          and other Product support as may be provided for therein. Notwithstanding
          the
          foregoing, however, it is understood and agreed that, for purposes of this
          Agreement, the Software to which the license granted herein pertains includes
          both the first and second versions of the "MARS" product as well as the
          java-enabled version combined with Licensor's "payment gateway" product
          currently in development. Accordingly, regardless of the terms of the particular
          agreement entered into by the parties as described above, Licensor hereby
          agrees
          to furnish to Licensee at no additional charge the java-enabled version
          of the
          Software when available.
 
 **9.**  **Successors**  **And
          Assigns** .
          This
          Agreement will be binding upon and inure to the benefit of each of the
          parties
          and their respective successors and assigns; provided, however, that Licensee
          may not assign or sublicense this Agreement in whole or in part to any
          person or
          entity not an Affiliate of Licensee without the prior written consent of
          Licensor, and any assignment or sublicense attempted without such consent
          will
          be void.
 
 **10.**  **Governing
          Law.** This
          agreement will be governed by and construed in accordance with the laws
          of
          Bermuda, without regard to conflicts of law principles.
 
 **11.**  **Miscellaneous** .
 
 (a)  Each
          party is an independent contractor under this Agreement, and nothing herein
          will
          be construed to create any partnership, joint venture, or agency relationship
          parties between the parties hereto. Any use of the term "partner" in any
          communication by or between the parties or on their individual or joint
          behalf
          or in any trademark or service mark to describe their relationship is intended
          solely in the colloquial sense of a valued business relationship, and does
          not
          indicate the existence of or an offer to enter into a legal partnership,
          joint
          agency or other relationship involving common ownership or joint and/or
          several
          liability with one another and/or any of their Affiliates. Neither party
          will
          incur any debt or make any express or implied agreement, guarantee, warranty
          or
          representation in the name or on behalf of the other without the other's
          express
          written authorization, and each party will be responsible for its own costs
          and
          expenses incurred in connection with this Agreement. No failure or delay
          by
          either party in exercising any right, power or privilege hereunder will
          operate
          as a waiver thereof, nor will any single or partial exercise thereof preclude
          any other or further exercise thereof or the exercise of any right, power
          or
          privilege hereunder. No remedy expressly provided in this Agreement for
          a breach
          will be the sole or exclusive remedy for such breach, and each party hereby
          reserves to itself, in addition to the remedies expressly provided to it
          in this
          Agreement, all remedies available to it under law and at equity. This Agreement
          may be amended, modified or waived only by a subsequent writing that
          specifically refers to this Agreement and that is signed by both parties,
          and no
          other act, document, usage, or custom will be deemed to amend this Agreement.
          Headings in this Agreement are for convenience of reference only and will
          not
          affect the construction or interpretation of this Agreement. If any provision
          or
          provisions of this Agreement will be held, for any reason to be illegal,
          invalid
          or unenforceable in any circumstance, the remaining provisions will nonetheless
          be legal, valid and enforceable provisions, and the affected provision
          will
          remain legal, valid and enforceable in other circumstances. The terms of
          this
          Agreement that expressly or by implication are intended to continue beyond
          its
          termination will survive any such termination. Under local law and treaties,
          the
          restrictions and limitations of this Agreement may not apply to Licensee;
          Licensee may have other rights and remedies, and be subject to other
          restrictions and limitations.
 
 ***Page
              - 136***
 (b)  IN
          NO
          EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER UNDER THE LAW OF TORT,
          CONTRACT
          OR OTHERWISE, AND INCLUDING AS A RESULT OF NEGLIGENCE, FOR SPECIAL, INCIDENTAL,
          INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE
          PERFORMANCE OR NON-PERFORMANCE HEREOF (EVEN IF THE RESPONSIBLE PARTY HAS
          BEEN
          ADVISED OF OR FORESEES A POSSIBILITY OF ANY SUCH DAMAGES OCCURRING), INCLUDING
          BUT NOT LIMITED TO LOST BUSINESS REVENUE, FAILURE TO REALIZE EXPECTED PROFITS
          OR
          SAVINGS, OR LOSS OF DATA.
 
 (c)  Neither
          party hereto shall be held liable hereunder for any default arising from
          the
          delay in the performance of its obligations hereunder to the extent that
          such
          default or delay:
 (i)
                is
                    caused directly by an event beyond the reasonable control of
                    the
                    defaulting or delaying party (the "Non-performing Party"), such
                    as, but
                    not restricted to, fire, flood, earthquake, elements of nature,
                    acts of
                    war, terrorism, riots, civil disorders, rebellions or revolutions,
                    strikes, lockouts or labor difficulties; and
 
 ***Page
              - 137***
 (ii)
                could
                    not have been prevented by reasonable precautions and cannot
                    possibly be
                    circumvented by the Non-performing Party through the use of commercially
                    reasonable alternative sources, work-around plans or other means;
                    (a
                    “Force Majeure Event”). The Non-performing Party will be excused from any
                    further performance of the obligations affected by such Force
                    Majeure
                    Event for as long as the Force Majeure Event continues and the
                    Non-Performing Party continues to use its reasonable efforts
                    to recommence
                    performance. The Non-performing Party shall immediately notify
                    the other
                    party by telephone (to be confirmed in writing within five (5)
                    days of the
                    inception of the Force Majeure Event) and describe at a reasonable
                    level
                    of detail the circumstances causing such default or delay. During
                    the
                    continuance of a Force Majeure Event affecting Licensor, Licensee
                    shall
                    continue to pay Licensor’s charges for professional services actually
                    rendered and expenses incurred in the actual performance of such
                    services
                    in accordance with this Agreement. Notwithstanding any other
                    provision
                    hereof, this clause (c) will not excuse a breach of any purely
                    monetary
                    obligation.
 
 **12.**  **Joint
          and Several Responsibility.** Each
          of
          First Ecom and FEDS Asia acknowledge and agree that they are entering into
          this
          Agreement, and that they make the representations, warranties, covenants,
          agreements, indemnities and other undertakings and responsibilities of
          Licensor
          set forth herein, jointly and severally, with full recourse on the part
          of
          Licensee to either or both of them for the obligations and undertakings
          of
          Licensor contained herein. In this respect, each of First Ecom and FEDS
          Asia
          joins in this Agreement as primary obligor and not as surety, and Licensee
          shall
          not be required to proceed first against or exhaust its remedies against
          either
          of First Ecom or FEDS Asia as a condition to pr proceeding hereunder against
          the
          other with respect to any claim arising hereunder. Further, each of First
          Ecom
          and FEDS Asia hereby irrevocably and exclusively appoints First Ecom as
          its
          agent and attorney-in-fact for the giving or receipt of all notices or
          payments,
          the granting of all consents, approvals, or waivers, and the taking of
          all such
          other actions and making of all such other elections and/or decisions as
          shall
          be explicitly or implicitly provided or permitted herein to be given, received,
          granted, taken or made by or on behalf of Licensor or either of them (it
          being
          understood that omitting to take any action or make any election or decision
          shall be deemed the taking of an action or the making of any election or
          decision for this purpose), and to do all such acts and things as may in
          the
          opinion of such attorney-in-fact be reasonably necessary or reasonably
          expedient
          for the purposes thereof, or in connection therewith, and Licensee shall
          be
          entitled to rely conclusively on any of the foregoing as the action, decision
          or
          election, as the case may be, of each and both of First Ecom and FEDS Asia.
          Each
          of First Ecom and FEDS Asia agrees that the foregoing appointment constitutes
          a
          power coupled with an interest and shall be binding upon its successors
          and
          assigns. Any payments received by First Ecom hereunder that properly belong
          to
          FEDS Asia shall be held by First Ecom in trust for the benefit of FEDS
          Asia, and
          FEDS Asia hereby releases, discharges and agrees to hold harmless Licensee
          for
          any amounts payable to FEDS Asia that Licensee pays to First Ecom.
 
 ***Page
              - 138***
  **LICENSOR:**
 
 **FIRST
          ECOM.COM, INC.**     **FIRST
          ECOM DATA SERVICES**
 **ASIA
          LIMITED**
 
 By:_____________________   By:_____________________
 Name:
          Kenneth G.C. Telford     Name:
          Kenneth G.C. Telford
 Title:
          Secretary       Title:
          Secretary
 
  **-** **-**
 ***Page
              - 139***
  
 
 **LICENSEE:**
 
 
 **TRANSWORLD
          PAYMENT SOLUTIONS N.V.**
 
 
 By:_____________________
 Name:
          John Chr. M.A.M. Deuss
 Title:
          Managing Director
 
 
 
 
 
 **[END
          OF DOCUMENT]**
      ***Page
            - 140***
  **SOFTWARE
          LICENSE AGREEMENT**
 **FOR**
 **PAYMENT
          GATEWAY**
 
 **THIS
          SOFTWARE LICENSE AGREEMENT (“Agreement”)** is
          entered into effective as of October 19, 2001 (the “ **Effective
          Date** ”)
          by and
          among First Ecom.com, Inc., a Nevada corporation having its principal place
          of
          business at 80 Gloucester Road, 19 th Floor,
          Wan Chai, Hong Kong ("First Ecom"), and First Ecom Data Services Asia Limited,
          a
          Hong Kong corporation having its principal place of business at 80 Gloucester
          Road, 19 th Floor,
          Wan Chai, Hong Kong ("FEDS Asia")(First Ecom and FEDS Asia being referred
          to
          herein individually, jointly and collectively as "Licensor"), and Transworld
          Payment Solutions N.V., a Netherlands Antilles company having its offices
          at c/o
          Julianaplein No. 5, Curacao, Netherlands Antilles ("Licensee").
  
 
 **1.**  **Definitions** .
          As used
          in this Agreement, the capitalized terms defined in the introductory paragraph
          shall have the meanings assigned to them therein, and the following capitalized
          terms shall have the meanings assigned to them below:
 
 “ **Affiliate** ”
of
          a
          person or entity means any other person or entity controlled by, controlling,
          or
          under common control with said person or entity, and “control” for this purpose
          is understood to include the ownership or voting control of more than 50%
          of the
          outstanding securities of any such person carrying the power to vote with
          respect to the direction or management of the person or entity.
 
 “ **Documentation** ” **** means
          the
          related hard-copy or electronically reproducible technical documents furnished
          in association with the Software;
 
 “ **Media** ”
means
          the original Licensor-supplied physical materials (if any) containing the
          Software and/or Documentation;
 
 ***Page
              - 141***
  “ **Product** ”
means
          collectively the Media, Software, and Documentation, and all Software,
          Media or
          Documentation updates subsequently provided to Licensee by Licenosr or
          its
          authorized distributor;
 
 
 “ **Software** ”
means
          the original computer files (including all computer programs and data stored
          in
          such files) comprising Licensor's "Payment Gateway" computer software product
          and all whole or partial copies thereof, which product consists of an electronic
          internet payment gateway that translates various types of financial transaction
          data, including but not limited to transaction data originating from credit,
          debit and check payment methods, into a format that can be read by the
          processing system or systems proprietary to First Ecommerce Data Services
          Limited, including without limitation modified copies and portions merged
          into
          other programs, and further including any and all updates, revisions,
          enhancements, modifications, subsequent versions and other derivative works
          thereof developed and furnished to Licensee by or on behalf of Licensor
          from
          time to time.
 
 Other
          capitalized terms used herein shall have the meanings assigned to them
          where
          they first appear.
 
 **2.**  **Grant
          Of License Rights.** For
          good
          and valuable consideration in hand received, the receipt and sufficiency
          of
          which are hereby acknowledged, but subject to the terms and conditions
          set forth
          herein, Licensor grants to Licensee and its Affiliates a paid-up, royalty-free,
          non-exclusive, transferable, perpetual license to deploy, install, execute
          and
          use solely for Licensee's and/or its Affiliates' internal use as many copies
          of
          the Product, and on such number (s) and type(s) of servers, workstations
          or
          other computer hardware, and in such locations, as Licensee shall deem
          desirable
          from time to time. Any programs, utilities, modules or other software or
          documentation supplied by third parties and embedded in or bundled with
          the
          Product as furnished to Licensee by or on behalf of Licensor are hereby
          expressly included in the scope of this grant. It is understood and agreed
          that
          this Agreement permits the transfer by Licensee of its rights hereunder
          to third
          parties. Licensor agrees to deliver, promptly upon the execution and delivery
          of
          this Agreement (but not before November 15, 2001), no less than two (2)
          master
          copies of the Software in executable (machine readable) code format to
          Licensee
          of such Media as Licensee shall reasonably request, together with two (2)
          copies
          of the Documentation.
  ***Page
              - 142***
 
 **3.**  **Title
          And Copyright** .
          Licensor represents and warrants to Licensee that Licensor is the owner
          and
          holder of all rights, titles and interests in and to the Product, free
          and clear
          of all liens, charges, encumbrances, equities and claims of third parties
          of any
          description. There are no facts or alleged facts known to Licensor which
          would
          reasonably serve as a basis for any claim that Licensor does not have the
          right
          to grant the rights and licenses provided for herein. As between Licensor
          and
          Licensee, Licensee acknowledges and agrees that, except as and to the extent
          otherwise agreed in writing between the parties, all title and copyrights
          in and
          to the Product, are and will remain, are and will remain the property of
          the
          Licensor and/or its affiliates and suppliers, and are protected by applicable
          copyright laws, and applicable international copyright treaties, and that
          Licensor neither grants hereby nor otherwise transfers hereby any rights
          of
          ownership therein to Licensee or to any third party. Licensee will not
          claim or
          assert title to or ownership of the Product except pursuant to a written
          agreement expressly entitling Licensee to claim or assert such title or
          ownership. This Agreement, when executed and delivered by Licensor and
          Licensee,
          will constitute the valid and legally binding obligation of Licensor, legally
          enforceable against Licensor in accordance with its terms, subject to the
          effect
          of bankruptcy, insolvency, reorganization, moratorium and other similar
          laws
          relating to or affecting the rights of creditors generally, limitations
          imposed
          by applicable law or equitable principles upon the specific enforceability
          of
          any of the remedies, covenants or other provisions of this Agreement, and
          upon
          the availability of injunctive relief or other equitable remedies.
 
 ***Page
              - 143***
 **4.**  **Restrictions** .
          Licensee will not remove or alter any copyright or proprietary notice from
          copies of the Product. Except in accordance with the terms of this Agreement
          or
          any other express written agreement between the parties, Licensee agrees
          (a) not
          to decompile, disassemble, reverse engineer or otherwise attempt to derive
          the
          Software’s source code from object code except to the extent expressly permitted
          by applicable law or treaty despite this limitation; and (b) to use reasonable
          care and protection to prevent the unauthorized use, copying, publication
          or
          dissemination of the Product. Licensor has the right to obtain injunctive
          relief
          against any actual or threatened violation of these restrictions, in addition
          to
          any other available remedies.
  **5.**  **Taxes
          And Additional Charges** .
          All
          license fees paid or payable by the Licensee for the license granted hereunder
          (this "License") do not include, and Licensor will be responsible for,
          any and
          all taxes, duties, levies, tariffs, and other governmental charges now
          or
          hereafter imposed by any governmental authority on the purchase or sale
          of this
          License or the use or possession of the Product by Licensee and/or its
          Affiliates; provided, that Licensee will be responsible for its own corporate
          franchise taxes and taxes based upon its own net income.
  **6.**  **Limited
          Warranty.** Licensor
          warrants to Licensee that, for a period of ninety (90) days from the Effective
          Date, (i) the Documentation and Media will be, under normal use, free from
          physical defects, and (ii) the Software will perform in substantial accordance
          with the operating specifications contained in the Documentation that is
          most
          current at the Effective Date. If Licensee notifies Licensor within said
          ninety-day period of its belief that that either of these warranties has
          been
          breached, including a description of nature or circumstances of such breach,
          Licensor will be obligated to use reasonable efforts to remedy the defect(s)
          in
          question within a reasonable period of time or, at Licensor’s option, to replace
          the defective Product component at no additional charge. Licensor, its
          authorized distributors and its suppliers do not warrant that the Product
          will
          satisfy Licensee’s requirements, that the operation of the Product will be
          uninterrupted or error free, or that all software defects can be corrected.
          This
          warranty will be void if: (i) the Product is not used in accordance with
          the
          instructions set out in the Documentation, (ii) a Product defect has been
          caused
          by any of Licensee's or a third party's malfunctioning equipment, or (iii)
          Licensee has made modifications to the Product not expressly authorized
          in
          writing by Licensor.
 
 ***Page
              - 144***
  **7.**  **Indemnification
          For Infringement** .
          Licensor will defend or settle, at its own expense, any claim against Licensee
          by a third party asserting that Licensee's and/or its Affiliates’ use of the
          Product within the scope of this Agreement violates such third party’s patent,
          copyright, trademark, trade secret or other proprietary rights, and will
          indemnify Licensee against any damages finally awarded against Licensee
          arising
          out of such claimi. Licensee will promptly notify Licensor in writing after
          first receiving notice of any such claim, and Licensor will have sole control
          of
          the defense of any action and all negotiations for its settlement or compromise,
          with Licensee's reasonable assistance; provided, that Licensee’s approval in
          writing shall be required of any settlement or compromise involving any
          admission of fault or wrongdoing on the part of Licensee, and provided,
          further,
          that Licensee may at Licensor's cost and expense take responsibility for
          its own
          defense if and to the extent that Licensee has any reasonable doubt as
          to the
          ability or willingness of Licensor to fund such defense or any award, settlement
          or compromise arising therefrom. Licensor will not be liable for any costs
          or
          expenditures incurred by Licensee without Licensor's prior written consent
          except insofar as Licensee reasonably determines that it is necessary or
          appropriate to incur such costs and expenses in order to preserve its legal
          or
          equitable rights and remedies, protect it from further such claims, or
          minimize
          the losses associated with claims so made. If an order is obtained against
          Licensee’s and/or its Affiliates' use of the Product by reason of any claimed
          infringement, or if in Licensor's opinion the Product is likely to become
          the
          subject of such a claim, Licensor will, at its option and expense, and
          in
          addition to any other rights s available to Licensee hereunder, either
          (i)
          procure for Licensee the right to ing the Product, or (ii) modify or replace
          the
          Product with a compatible, equivalent, non-infringing Product.
 
 **8.**  **Support** .
          Contemporaneously with the execution of this Agreement, Licensor and Licensee
          are entering into an End User Support Agreement under which Licensor will
          provide ongoing support and maintenance beyond the scope and time limits
          of the
          warranty period set forth in Section 6 above, which End User Support Agreement
          sets forth the terms and conditions under which Licensee will be entitled
          to
          receive such Product updates and other Product support as may be provided
          for
          therein. Notwithstanding the foregoing, however, it is understood and agreed
          that, for purposes of this Agreement, the Software to which the license
          granted
          herein pertains includes both the first and second versions of the “Payment
          Gateway” product as well as the java-enable version combined with Licensor's
          "MARS" product currently in development. Accordingly, regardless of the
          terms of
          the particular agreement entered into by the parties as described above,
          Licensor hereby agrees to furnish to Licensee at no additional charge the
          java-enabled version of the Software when available.
 
 **9.**  **Successors
          And Assigns** .
          This
          Agreement will be binding upon and inure to the benefit of each of the
          parties
          and their respective successors and assigns; provided, however, that Licensee
          may not assign or sublicense this Agreement in whole or in part to any
          person or
          entity not an Affiliate of Licensee without the prior, written consent
          of
          Licensor, and any assignment or sublicense attempted without such consent
          will
          be void.
 
 **10.**  **Governing
          Law** .
          This
          agreement will be governed by and construed in accordance with the laws
          of
          Bermuda, without regard to conflicts of law principles.
 
 **11.**  **Miscellaneous.**
 
 (a)  Each
          party is an independent contractor under this Agreement, and nothing herein
          will
          be construed to create any partnership, joint venture, or agency relationship
          between the parties hereto. Any use of the term "partner" in any communication
          by or between the parties or on their individual or joint behalf or in
          any
          trademark or service mark to describe their relationship is intended solely
          in
          the colloquial sense of a valued business relationship, and does not indicate
          the existence of or an offer to enter into a legal partnership, joint agency
          or
          other relationship involving common ownership or joint and/or several liability
          with one another and/or any of their Affiliates. Neither party will incur
          any
          debt or make any express or implied agreement, guarantee, warranty or
          representation, in the name or on behalf of the other without the other’s
          express written authorization, and each party will be responsible for its
          own
          costs and expenses incurred in connection with this Agreement. No failure
          or
          delay by either party in exercising any right, power or privilege hereunder
          will
          operate as a waiver thereof, nor will any single or partial exercise thereof
          preclude any other or further exercise thereof or the exercise of any right,
          power or priviledge hereunder. No remedy expressly provided in this Agreement
          for a breach will be the sole or exclusive remedy for such breach, and
          each
          party hereby reserves to itself, in addition to the remedies expressly
          provided
          to it in this Agreement, all remedies available to it under law and at
          equity.
          This Agreement may be amended, modified or waived only by a subsequent
          writing
          that specifically refers to this Agreement and that is signed by both parties,
          and no other act, document, usage, or custom wil1 be deemed to amend this
          Agreement. Headings in this Agreement are for convenience of reference
          only and
          will not affect the construction or interpretation of this Agreement. If
          any
          provision or provisions of this Agreement will be held, for any-reason,
          to be
          illegal, invalid or unenforceable in any circumstance, the remaining provisions
          will nonetheless be legal, valid and enforceable provisions, and the affected
          provision will remain legal, valid and enforceable in other circumstances.
          The
          terms of this Agreement that expressly or by implication are intended to
          continue beyond its termination will survive any such termination. Under
          local
          law and treaties, the restrictions and limitations of this Agreement may
          not
          apply to Licensee; Licensee may have other rights and remedies, and by
          subject
          to other restrictions and limitations.
 
 ***Page
              - 145***
  (b)  IN
          NO
          EVENT SHALL EITHER PARTY BE LIABLE TO THE  OTHER
          UNDER THE LAW OF TORT, CONTRACT OR OTHERWISE, AND INCLUDING AS A RESULT
          OF
          NEGLIGENCE, FOR SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES
          ARISING
          OUT OF THIS AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE HEREOF EVEN
          IF THE
          RESPONSIBLE PARTY HAS BEEN ADVISED OF OR FORESEES A POSSIBILITY OF ANY
          SUCH
          DAMAGES OCCURRING), INCLUDING BUT NOT LIMITED TO LOST BUSINESS REVENUE,
          FAILURE
          TO REALIZE EXPECTED PROFITS OR SAVINGS OR LOSS OF DATA.
 
 (c)  neither
          party hereto shall be held liable hereunder for any default arising
 from
          the
          delay in the performance of its obligations hereunder to the extent that
          such
          default or delay:
 (i)  is
          caused
          directly by an event beyond the reasonable control of the defaulting or
          delaying
          party (the "Non-performing Party"), such as, but not restricted to, fire,
          flood,
          earthquake, elements of nature, acts of war, terrorism, riots, civil disorders,
          rebellions or revolutions, strikes, lockouts or labor difficulties; and
  (ii)  could
          not
          have been prevented by reasonable precautions and cannot possibly be
          circumvented by the Non-performing Party through the use of commercially
          reasonable alternative sources, work-around plans or other means; (“Force
          Majeure Event”). The Non-performing Party will be excused from any further
          performance of the obligations affected by such Force Majeure Event for
          as long
          as the Force Majeure Event continues and the Non-Performing Party continues
          to
          use its reasonable efforts to  recommence
          performance.  The
          Non-performing Party shall immediately notify the other party by telephone
          (to
          be confirmed in writing within five (5) days of the inception of the Force
          Majeure Event) and describe at a reasonable level of detail the circumstances
          causing such default or delay. During the continuance of a Force Majeure
          Event
          affecting Licensor, Licensee shall continue to pay Licensor's charges for
          professional services actually rendered and expenses incurred in the actual
          performance of such services in accordance with this Agreement. Notwithstanding
          any other provision hereof, this clause (c) will not excuse a breach of
          any
          purely monetary obligation.
 
 ***Page
              - 146***
 
 **12.**  **Joint
          and Several Responsibility** .
          Each of
          First Ecom and PEDS Asia acknowledge and agree that they are entering into
          this
          Agreement, and that they make the representations, warranties, covenants,
          agreements, indemnities and other undertakings and responsibilities of
          Licensor
          set forth herein, jointly and severally, with full recourse on the part
          of
          Licensee to either or both of them for the obligations and undertakings
          of
          Licensor contained herein. In this respect, each of First Ecom and FEDS
          Asia
          joins in this Agreement as primary obligor and not as surety, and Licensee
          shall
          not be required to proceed first against or exhaust its remedies against
          either
          of First Ecom or FEDS Asia as a condition to proceeding hereunder against
          the
          other with respect to any claim arising hereunder. Further, each of First
          Ecom
          and FEDS Asia hereby irrevocably and exclusively appoints First Ecom as
          its
          agent and attorney-in-fact for the giving or receipt of all notices or
          payments,
          the granting of all consents, approvals, or waivers, and the taking of
          all such
          other actions and making of all such other elections and/or decisions as
          shall
          be explicitly or implicitly provided or permitted herein to be given, received,
          granted, taken or made by or on behalf of Licensor or either of them (it
          being
          understood that omitting to take any action or make any election or decision
          shall be deemed the taking of an action or the making of any election or
          decision for this purpose), and to do all such acts and things as may in
          the
          opinion of such attorney-in-fact be reasonably necessary or reasonably
          expedient
          for the purposes thereof, or in connection therewith, and Licensee shall
          be
          entitled to rely conclusively on any of the foregoing as the action, decision
          or
          election, as the case may be, of each and both of First Ecom and FEDS Asia.
          Each
          of First Ecom and FEDS Asia agrees that the foregoing appointment constitutes
          a
          power coupled with an interest and shall be binding upon its successors
          and
          assigns. Any payments received by First Ecom hereunder that properly belong
          to
          FEDS Asia shall be held by First Ecom in trust for the benefit of FEDS
          Asia, and
          FEDS Asia hereby releases, discharges and agrees to hold harmless Licensee
          for
          any amounts payable to FEDS Asia that Licensee pays to First Ecom.
 
 **LICENSOR:**
 
 **FIRST
          ECOM.COM, INC.**     **FIRST
          ECOM DATA SERVICES**
 **ASIA
          LIMITED**
 
 By:_____________________   By:_____________________
 Name:
          Kenneth G.C. Telford     Name:
          Kenneth G.C. Telford
 Title:
          Secretary       Title:
          Secretary
 
 
 
 **LICENSEE:**
 
 
 **TRANSWORLD
          PAYMENT SOLUTIONS N.V.**
 
 
 By:_____________________
 Name:
          John Chr. M.A.M. Deuss
 Title:
          Managing Director
 
 ***Page
              - 147***
  **SOFTWARE
          DEVELOPMENT LICENSE AGREEMENT**
 
 This **SOFTWARE
          DEVELOPMENT LICENSE AGREEMENT** (“ **Agreement** ”)
          is
          entered into effective as of October 19, 2001 (the “ **Effective
          Date** ”)
          by and
          among First Ecom.com, Inc., a Nevada corporation having its principal place
          of
          business at 80 Gloucester Road, 19th Floor, Wan Chai, Hong Kong (“First Ecom”),
          and First Ecom Data Services Asia Limited, a Hong Kong corporation having
          its
          principal place of business at 80 Gloucester Road, 19th Floor, Wan Chai,
          Hong
          Kong (“FEDS Asia”)( First Ecom and FEDS Asia being referred to herein
          individually, jointly and collectively as “ **Licensor** ”),
          and
          Transworld Payment Solutions N.V., a Netherlands Antilles company having
          its
          offices at c/o Julianaplein No. 5, Curacao, Netherlands Antilles (“ **Licensee** ”)
          .
 
 **1.**  **Definitions** .
          As used
          in this Agreement, the capitalized terms defined in the introductory paragraph
          shall have the meanings assigned to them therein, and the following capitalized
          terms shall have the meanings assigned to them below:
 
 “ **Affiliate** ”
of
          a
          person or entity means any other person or entity controlled by, controlling,
          or
          under common control with said person or entity, and "control" for this
          purpose
          is understood to include the ownership or voting control of more than 50%
          of the
          outstanding securities of any such person carrying the power to vote with
          respect to the direction or management of the person or entity;
 
 “ **Documentation** ”
means
          the related hard-copy or electronically reproducible technical documents
          created
          in the course of the development of the Software, including without limitation
          all specifications, instructions, technical descriptions, manuals, flow,
          charts,
          pseudo-code, state diagrams, interim versions of programs or parts thereof,
          comments to source code, or other tangible notes or records pertaining
          to the
          Software's development;
 
 “ **Media** ”
means
          the original Licensor-supplied physical materials (if any) containing the
          Software and/or Documentation;
 
 ***Page
              - 148***
  “ **Product** ”
means
          collectively the Media, Software and Documentation, and all Software, Media
          or
          Documentation updates subsequently provided to the Licensee by Licensor
          or its
          authorized distributor;
 
 “ **Software** ”
means
          the original computer files (including all computer programs and data stored
          in
          such files) comprising (i) Licensor’s financial transaction management and
          reporting computer software product known as “Merchant Accounting and Reporting
          system or “MARS”, and system or “MARS”, and (ii) Licensor's “Payment Gateway”
computer software product, which product consists of an electronic internet
          payment gateway that translates various types of financial transaction
          data,
          including but not limited to transaction data originating from credit,
          debit and
          check payment methods, into a format that can be read by the processing
          system
          or systems proprietary to First Ecommerce Data Services Limited, and all
          whole
          or partial copies thereof, including without limitation modified copies
          and
          portions merged into other programs, and further including any and all
          updates,
          revisions, enhancements, modifications, subsequent versions and other derivative
          works thereof developed and furnished to Licensee by or on behalf of Licensor
          from time to time.
 
 Other
          capitalized terms used herein shall have the meanings assigned to them
          where
          they first appear.
 .
 **2.**  **Grant
          Of License Rights.** For
          good
          and valuable consideration in hand received, the receipt and sufficiency
          of
          which are hereby acknowledged, but subject to the terms and conditions
          set forth
          herein, Licensor grants to Licensee and its Affiliates a paid-up, royalty-free,
          non-exclusive, non-transferable, perpetual license to revise, modify, enhance
          and otherwise develop derivative works of the Product. Licensor agrees
          to
          deliver promptly upon the execution and delivery of this Agreement (but
          not
          before November 15, 200l), no less than two (2) master copies of the Software
          in
          source (human readable) code format to Licensee on such Media as Licensee
          shall
          reasonably request, together with two (2) copies of the Documentation,
          including
          without limitation all relevant third party development toolkits and
          licenses.
 
 ***Page
              - 149***
  **3.**  **Title
          And Copyright.** Licensor
          represents and warrants to Licensee that Licensor is the owner and holder
          of all
          rights, titles and interests in and to the Product, free and clear of all
          liens,
          charges, encumbrances, equities and claims of third parties of any description.
          There are no facts or alleged facts known to Licensor which would reasonably
          serve as a basis for any claim that Licensor does not have the right to
          grant
          the rights and licenses provided for herein. As between Licensor and Licensee,
          Licensee acknowledges and agrees that, except as and to the extent otherwise
          agreed in writing between the parties, all title and copyrights in and
          to the
          Product, including without limitation the original code or other copyrightable
          material embedded in any derivative works thereof created by or on behalf
          of
          Licensee pursuant to this Agreement, are and will remain the property of
          Licensor and/or its affiliates and suppliers, and are protected by applicable
          copyright laws, and applicable international copyright treaties, and that
          Licensor neither grants hereby nor otherwise transfers hereby any rights
          of
          ownership therein to Licensee or to any third party; provided, however,
          that any
          incremental additional code or other copyrightable material created by
          or for
          Licensee or its Affiliates shall be the property of Licensee or its Affiliates,
          as applicable, and shall not be subject to the restrictions set forth herein
          except to the extent such incremental material incorporates, is embedded
          in or
          bundled with the Product. Licensee will not claim or assert title to or
          ownership of the Product except pursuant to a written agreement expressly
          entitling Licensee to claim or assert such title or ownership. This Agreement,
          when executed and delivered by Licensor and Licensee, will constitute the
          valid
          and legally binding obligation of Licensor, legally enforceable against
          Licensor
          in accordance with its terms, subject to the effect of bankruptcy, insolvency,
          reorganization, moratorium and other similar laws relating to or affecting
          the
          rights of creditors generally, limitations imposed by applicable law or
          equitable principles upon the specific enforceability of any remedies,
          covenants
          or other provisions of this Agreement, and upon the availability of injunctive
          relief or other equitable remedies.
 
 **4.**  **Restrictions.** Licensee
          will not remove or alter any copyright or proprietary notice from copies
          of the
          Product. Except in accordance with the terms of this Agreement or any other
          express written agreement between the parties, Licensee agrees (a) not
          to sell,
          rent, lease, license, sublicense, display, modify, time share, outsource
          or
          otherwise transfer the Product or any derivative work of the Product to,
          or
          permit the use of the Product or any derivative work of the Product by,
          any
          third party not an affiliate of Licensee, *provided,* without
          limiting the scope of the license grant hereinabove stated, it is understood
          and
          agreed that this Agreement permits the use of any derivative work of the
          Product
          by Licensee and its Affiliates in support of services rendered to their
          customers in the normal course of their trade or business; and (b) to use
          reasonable care and protection to prevent the unauthorized use, copying,
          publication or dissemination of the Product. Licensor has the right to
          obtain
          injunctive relief against any actual or threatened violation of these
          restrictions, in addition to any other available remedies.
 
 **5.**  **Taxes
          And Additional Charges.** All
          license fees paid or payable by the Licensee for the license granted hereunder
          (this "License") do not include, and Licensor will be responsible for,
          any and
          all taxes, duties, levies, tariffs, and other governmental charges now
          or
          hereafter imposed by any governmental authority on the purchase or sale
          of this
          License or the use or possession of the Product by Licensee and/or its
          Affiliates; provided that Licensee will be responsible for its own corporate
          franchise taxes and taxes based upon its own net income.
 
 **6.**  **Limited
          Warranty.** Licensor
          warrants to Licensee that, for a period of ninety (90) days from the Effective
          Date, (i) the Documentation and Media will be, under normal use, free from
          physical defects, and (ii) the Software will perform in substantial accordance
          with the operating specifications contained in the Documentation that is
          most
          current at the Effective Date. If Licensee notifies Licensor within said
          ninety-day period of its belief that either of these warranties has been
          breached, including a description of the nature or circumstances of such
          breach,
          Licensor will be obligated to use reasonable efforts to remedy the defect(s)
          in
          question within a reasonable period of time or, at Licensor’s option, to replace
          the defective Product component at no additional charge. Licensor, its
          authorized distributors and its suppliers do not warrant that the Product
          will
          satisfy Licensee’s requirements, that the operation of the Product will be
          uninterrupted or error free, or that all software defects can be corrected,
          This
          warranty will be void if: (i) the Product is not used in accordance with
          the
          instructions set out in the Documentation, (ii) a Product defect has been
          caused
          by any of Licensee's or a third party's malfunctioning equipment, or (iii)
          Licensee has made modifications to the Product not expressly ** authorized
          in writing by Licensor.
 
 ***Page
              - 150***
  **7.**  **Indemnification
          For Infringement.** Licensor
          will defend or settle, at its own expense, any claim against Licensee by
          a third
          party asserting that Licensee's and/or its Affiliates’ use of the Product within
          the scope of this Agreement violates such third party’s patent, copyright,
          trademark, trade secret or other proprietary rights, and will indemnify
          Licensee
          against any damages finally awarded against Licensee arising out of such
          claim.
          Licensee will promptly notify Licensor in writing after first receiving
          notice
          of any such claim, and Licensor will have sole control of the defense of
          any
          action and all negotiations for its settlement or compromise, with Licensee's
          reasonable assistance; provided, that Licensee's approval in writing shall
          be
          required of any settlement or compromise involving any admission of fault
          or
          wrongdoing on the part of Licensee, and provided, further, that Licensee
          may at
          Licensor's cost and expense take responsibility for its own defense if
          and to
          the extent that Licensee has any reasonable doubt as to the ability or
          willingness of Licensor to fund such defense or any award, settlement or
          compromise arising therefrom. Licensor will not be liable for any costs
          or
          expenditures incurred by Licensee without Licensor's prior written consent
          except insofar as Licensee reasonably determines that it is necessary or
          appropriate to incur such costs and expenses in order to preserve its legal
          or
          equitable rights and remedies, protect it from further such claims, or
          minimize
          the losses associated with claims so made. If an order is obtained against
          the
          Licensee's and/or its Affiliates' use of the Product by reason of any claimed
          infringement, or if in Licensor's opinion the Product is likely to become
          the
          subject of such a claim, Licensor will, at its option and expense, and
          in
          addition to any other rights and remedies available to Licensee hereunder,
          either (i) procure for Licensee the right to continue using the product,
          or (ii)
          modify or replace the Product with a compatible functionally equivalent,
          non-infringing Product.
 
 **8.**  **Support** .
          Contemporaneously with the execution of this Agreement, Licensor and Licensee
          are entering into an End User Support Agreement under which Licensor will
          provide ongoing support and maintenance beyond the scope and time limits
          of the
          warranty period set forth in Section 6 above, which End User Support Agreement
          sets forth the terms and conditions under which Licensee will be entitled
          to
          receive such Product updates and other Product support as may be provided
          for
          therein.
 
 **9.**  **Successors
          And Assigns.** This
          Agreement will be binding upon and inure to the benefit of each of the
          parties
          and their respective successors and assigns; provided, however, that Licensee
          may not assign or sublicense this Agreement in whole or in part to any
          person or
          entity not an Affiliate of Licensee without the prior written consent of
          Licensor, and any assignment or sublicense attempted without such consent
          will
          be void. Notwithstanding the foregoing, if for any reason both First Ecom
          and
          FEDS Asia cease doing business, or both discontinue maintenance and support
          for
          the Software or any portion thereof, then in either case, unless the Software
          or
          portion thereof so affected has been conveyed to a third party, the license
          granted hereunder shall thereupon automatically and without need for further
          action by either party become transferable, and the restrictions contained
          herein on disclosure or dissemination to third parties of the Product or
          derivative works thereof shall thenceforth be of no force or
          effect.
 
 **10.**  **Governing
          Law.** This
          agreement will be governed by and construed in accordance with the laws
          of
          Bermuda, without regard to conf1icts of law principles.
 
 **11.**
                **Miscellaneous.**
 
 (a)  Each
          party is an independent contractor under this Agreement, and nothing herein
          will
          be construed to create any partnership, joint venture, or agency relationship
          between the parties hereto. Any use of the term "partner" in any communication
          by or between the parties or on their individual or joint behalf or in
          any
          trademark or service to describe their relationship is intended solely
          in the
          colloquial sense of a valued business relationship, and does not indicate
          the
          existence of or an offer to enter into a legal partnership, joint agency
          or
          other relationship involving common ownership or joint and/or several liability
          with one another and/or any of their Affiliates. Neither party will incur
          any
          debt or make any express or implied agreement, guarantee, warranty or
          representation in the name or on behalf of the other without the others
          express
          written authorization, and each party will be responsible for its own costs
          and
          expenses incurred in connection with this Agreement. No failure or delay
          by
          either party in exercising any right, power or privilege hereunder will
          operate
          as a waiver thereof, nor will any single or partial exercise thereof preclude
          any other or further exercise thereof or the exercise of any right, power
          or
          privilege hereunder. No remedy expressly provided in this Agreement for
          a breach
          will be the sole or exclusive remedy for such breach, and each party hereby
          reserves to itself, in addition to the remedies expressly provided to it
          in this
          Agreement, all remedies available to it under law and at equity. This Agreement
          may be amended, modified or waived only by a subsequent writing that
          specifically refers to this Agreement and that is signed by both parties,
          and no
          other act, document, usage, or custom will be deemed to amend this Agreement.
          Headings in this Agreement are for the convenience of reference only and
          will
          not affect the construction or interpretation of this Agreement. If any
          provision or provisions of this Agreement will be held, for any reason,
          to be
          illegal, invalid or unenforceable in any circumstance, the remaining provisions
          will nonetheless be legal, valid and enforceable provisions, and the affected
          provision will remain legal, valid and enforceable in other circumstances.
          The
          terms of this Agreement that expressly or by implication are intended to
          continue beyond its termination will survive any such termination. Under
          local
          law and treaties, the restrictions and limitations of this Agreement may
          not
          apply to Licensee; Licensee may have other rights and remedies, and be
          subject
          to other restrictions and limitations.
 
 ***Page
              - 151***
  (b)   IN
          NO
          EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER, UNDER THE LAW OF TORT,
          CONTRACT
          OR OTHER WISE, AND INCLUDING AS A RESULT OF NEGLIGENCE, FOR SPECIAL, INCIDENTAL,
          INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE
          PERFORMANCE OR NON-PERFORMANCE HEREOF EVEN IF THE RESPONSIBLE PARTY HAS
          BEEN
          ADVISED OF OR FORESEES A LIABILITY OF ANY SUCH DAMAGES OCCURRING), INCLUDING
          BUT
          NOT LIMITED. TO LOST BUSINESS REVENUE, FAILURE TO REALIZE EXPECTED PROFITS
          OR
          SAVINGS, OR LOSS OF DATA.
 
 (c)   Neither
          party hereto shall be held liable hereunder for any default arising from
          the
          delay  in
          the
          performance of its obligations hereunder to the extent that such default
          or
          delay:
 
 (i)  is
          caused
          directly by an event beyond the reasonable control of the defaulting party
          or
          delaying party (the “Non-performing Party”), such as, but not restricted to,
          fire, flood, earthquake, elements of nature, acts of war, terrorism, riots,
          civil disorders, rebellions or revolutions, strikes, lockouts or labor
          difficulties; and
 
 
 (ii)  could
          not
          have been prevented by reasonable precautions and cannot
 possibly
          be circumvented by the Non-performing Party through the use of commercially
          reasonable alternative sources, work-around plans or other means; (a “Force
          Majeure Event”). The Non-performing Party will be excused from any further
          performance of the obligations affected by such Force Majeure Event for
          as long
          as the Force Majeure Event continues and the Non-Performing Party continues
          to
          use its reasonable efforts to recommence performance. The Non-performing
          Party
          shall immediately notify the other party by telephone (to be confirmed
          in
          writing within five (5) days of the inception of the Force Majeure Event)
          and
          describe at a reasonable level of detail the circumstances causing such
          default
          or delay. During the continuance of a Force Majeure Event affecting Licensor,
          Licensee shaIl continue to pay Licensor's charges for professional services
          actually rendered and expenses incurred in the actual performance of such
          services in accordance with this Agreement. Notwithstanding any other provisions
          hereof, this clause (c) will not excuse a breach of any purely monetary
          obligation.
 
 **12.**   **Joint
          and Several Responsibility.** Each
          of
          First Ecom and FEDS Asia acknowledge and agree that they are entering into
          this
          Agreement, and that they make the representations, warranties, covenants,
          agreements, indemnities and other undertakings and responsibilities of
          Licensor
          set forth herein, jointly and severally, with full **** recourse
          on the part of Licensee to either or both of them for the obligations and
          undertakings of Licensor contained herein. In this respect, each of First
          Ecom
          and FEDS Asia joins in this Agreement as primary obligor and not as surety,
          and
          Licensee shall not be required to proceed first against or exhaust its
          remedies
          against either of First Ecom or FEDS Asia as a condition to proceeding
          hereunder
          against the other with respect to any claim arising hereunder. Further,
          each of
          First Ecom and FEDS Asia hereby irrevocably and exclusively appoints First
          Ecom
          as its agent and attorney-in-fact for the giving or receipt of all notices
          or
          payments, the granting of all consents, approvals, or waivers, and the
          taking of
          all such other actions and making of all such other elections and/or decisions
          as shall be explicitly or implicitly provided or permitted herein to be
          given,
          received, granted, taken or made by or on behalf of Licensor or either
          of them
          (it being understood that omitting to take any action or make any election
          or
          decision shall be deemed the taking of an action or the making of any election
          or decision for this purpose), and to do all such acts and things as may
          in the
          opinion of such attorney-in-fact be reasonably necessary or reasonably
          expedient
          for the purposes thereof, or in connection therewith, the Licensee shall
          be
          entitled to rely conclusively on any of the foregoing as the action, decision
          or
          election, as the case may be, of each and both of First Ecom and FEDS Asia.
          Each
          of First Ecom and FEDS Asia agrees that the foregoing appointment constitutes
          a
          power coupled with an interest and shall be binding upon its successors
          and
          assigns. Any payments received by First Ecom hereunder that properly belong
          to
          FEDS Asia shall be held by First Ecom  in
          trust
          for the benefit of FEDS Asia, and FEDS Asia hereby releases, discharges
          and
          agrees to hold harmless Licensee for any amounts payable to FEDS Asia that
          Licensee pays  to
          First
          Ecom.
 
 ***Page
              - 152***
  **LICENSOR:**
 
 **FIRST
          ECOM.COM, INC.**     **FIRST
          ECOM DATA SERVICES**
 **ASIA
          LIMITED**
 
 By:_____________________   By:_____________________
 Name:
          Kenneth G.C. Telford     Name:
          Kenneth G.C. Telford
 Title:
          Secretary       Title:
          Secretary
 
 
 **LICENSEE:**
 
 
 **TRANSWORLD
          PAYMENT SOLUTIONS N.V.**
 
 
 By:_____________________
 Name:
          John Chr. M.A.M. Deuss
 Title:
          Managing Director
 
 
 
 
 
 **[END
          OF DOCUMENT]**
   ***Page
              - 153***
    EXHIBIT
        10.5
    ***Page
            - 154***
 **SOFTWARE
          LICENSE AGREEMENT**
 **FOR**
 **MERCHANT
          ACCOUNTING AND REPORTING SYSTEM**
 
 **SOFTWARE
          LICENSE AGREEMENT** ("Agreement") is entered into effective as of October 19, 2001 (the
“ **Effective
          Date** ”)
          by and
          among First Ecom.com, a Nevada corporation having its principal place of
          business at 80 Gloucester Road, 19 th Floor,
          Wan Chai, Hong Kong ("First Ecom"), and First Ecom Data Services Asia Limited,
          a
          Hong Kong corporation having its principal place of business at 80 Gloucester
          Road, 19 th F  loor,
          Wan
          Chai, Hong Kong (“FEDS Asia”) (First Ecom and FEDS Asia being referred to herein individually,
          jointly and collectively as “ **Licensor** ”),
          and
          Transworld Payment Solutions N.V., a Netherlands Antilles company having
          its
          offices at c/o Julianaplein No. 5, Curacao, Netherlands Antilles (“ **Licensee** ”).
 
 **1.**  **Definitions** .
          As used
          in this Agreement, the capitalized terms defined in the introductory paragraph
          shall have the meanings assigned to them therein, and the following capitalized
          terms shall
          have the meanings assigned to them below:
 
 “ **Affiliate** ”
of
          a
          person or entity means any other person or entity controlled by, controlling,
          or
          under common control with said person or entity, and “control” for this purpose
          is understood to include the ownership or voting control of more than 50%
          of the
          outstanding securities of any such person carrying the power to vote with
          respect to the direction or management of the person or entity.
 
 “ **Documentation** ”
means
          the related hard-copy or electronically reproducible technical documents
          furnished in association with the Software;
 
 “ **Media** ”
means
          the original Licensor-supplied physical materials (if any) containing the
          Software and/or Documentation;
 
 “ **Product** ”
means
          collectively the Media, Software, and Documentation, and all Software,
          Media or
          Documentation updates subsequently provided to Licensee by Licensor or
          its
          authorized distributor;
 
 “ **Software** ”
means
          the original computer files (including all computer programs and data stored
          in
          such files) comprising Licensor's financial transaction management and
          reporting
          computer software product known as "Merchant Accounting and Reporting System” or
“MARS”, and all whole or partial copies thereof, including without limitation
          all modified copies and portions merged into other programs, and further
          including any and all updates, revisions, enhancements, modifications,
          subsequent versions and other derivative works thereof developed and furnished to Licensee by or on behalf of Licensor from time
          to
          time.
 
 Other
          capitalized terms used herein shall have the meanings
          assigned to them where they first appear.
 
 **2.** **Grant
          Of License Rights.** For good and
          valuable consideration in hand received, the receipt and sufficiency of
          which
          are hereby acknowledged, but subject to the terms and conditions set forth
          herein, Licensor grants to Licensee and its Affiliates a paid-up royalty-free,
          non-exclusive, non-transferable, perpetual license to deploy, install,
          execute
          and use solely for Licensee's and/or its Affiliates' internal use as many
          copies
          of the Product, and on such number(s) and type(s) of servers, workstations
          or
          other computer hardware, and in such locations, as Licensee shall deem
          desirable
          from time to time. Any programs, utilities, modules or other software or
          documentation supplied by third parties and embedded in or bundled with
          the
          Product as furnished to Licensee by or on behalf of Licensor are hereby
          expressly included in the scope of this grant. Licensor agrees to deliver,
          promptly upon the execution and delivery of this Agreement (but not before
          November 15, 2001), no less than two (2) master copies of the Software
          in
          executable (machine readable) code format to Licensee on such Media as
          Licensee
          shall reasonably request, together with two (2) copies of the
          Documentation.
 
 ***Page
              - 155***
 
 **3.**  **Title
          And Copyright** .
          Licensor represents and warrants to Licensee that Licensor is the owner
          and
          holder of all rights, titles and interests in and to the Product, free
          and clear
          of all liens, charges, encumbrances, equities and claims of third parties
          of any
          description. There are no facts or alleged facts known to Licensor which
          would
          reasonably serve as a basis for any claim that Licensor does not have the
          right
          to grant the rights and licenses provided for herein. As between Licensor
          and
          Licensee, Licensee acknowledges and agrees that, except as and to the extent
          otherwise agreed in writing between the parties, all title and copyrights
          in and
          to the Product, are and will remain the property of Licensor and/or its
          affiliates and suppliers, and are protected by applicable copyright laws
          and
          applicable international copyright treaties, and that Licensor neither
          grants
          hereby nor otherwise transfers hereby any rights of ownership therein to
          Licensee or to any third party. Licensee will not claim or assert title
          to or
          ownership of the Product except pursuant to a written agreement expressly
          entitling Licensee to claim or assert such title or ownership. This Agreement,
          when executed and delivered by Licensor and Licensee, w ill constitute
          the valid
          and legally binding obligation of Licensor, legally enforceable against
          Licensor
          in accordance with its terms, subject to the effect of bankruptcy, insolvency,
          reorganization, moratorium and other similar laws relating to or affecting
          the
          rights of creditors generally, limitations imposed by applicable law or
          equitable principles upon the specific enforceability of any of the remedies,
          covenants or the provisions of this Agreement, and upon the availability
          of
          injunctive relief or other equitable remedies.
 
 **4.**  **Restrictions.** Licensee
          will not remove or alter any copyright or, proprietary notice from copies
          of the
          Product. Except in accordance with the terms of this Agreement or any other
          express written agreement between the parties, Licensee agrees (a) not
          to
          decompile, disassemble, reverse engineer or otherwise attempt to derive
          the
          Software’s source code from object code except to the extent expressly permitted
          by applicable law or treaty despite this limitation; (b) not to sell, rent,
          lease, license, sub-license, display, modify, time share, outsource or
          otherwise
          transfer the Product to, or , permit the use of the Product by, any third
          party
          not an Affiliate of Licensee, *provided,* without
          limiting the scope of the license grant hereinabove stated, it is understood
          and
          agreed that this Agreement permits the use of the Product by Licensee and
          its
          Affiliates in support of services rendered to their customers in the normal
          course of their trade or business; and (c) to use reasonable care and protection
          to prevent the unauthorized use, copying, publication or dissemination
          of the
          Product. Licensor has the right to obtain injunctive relief against any
          actual
          or threatened violation of these restrictions, in addition to any other
          available remedies.
 
 **5.**  **Taxes
          And Addition Charges.** All
          license fees paid or payable by the Licensee for the license granted hereunder
          (this "License") do not include, and Licensor will be responsible for,
          any and
          all taxes, duties, levies, tariffs, and other governmental charges now
          or
          hereafter imposed by any governmental authority on the purchase or sale
          of this
          License or the use or possession of the Product by Licensee and/or its
          Affiliates; provided, that Licensee will be responsible for its own corporate
          franchise taxes and taxes based upon its own net income.
 
 **6.**  **Limited
          Warranty.** Licensor
          warrants to Licensee that, for a period of ninety (90) days from the Effective
          Date, (i) the Documentation and Media will be, under normal use, free from
          physical defects, and (ii) the Software will perform in substantial accordance
          with the operating specifications contained in the Documentation that is
          most
          current at the Effective Date. If Licensee notifies Licensor within said
          ninety-day period of its belief that either of these warranties has been
          breached, including a description of the nature or circumstances of such
          breach,
          Licensor will be obligated to use reasonable efforts to remedy the defect(s)
          in
          question within a reasonable period of time or, at Licensor’s option, to replace
          the defective Product component at no additional charge. Licensor, it’s
          authorized distributors and its suppliers do not warrant that the Product
          will
          satisfy Licensee’s requirements, that the operation of the Product will be
          uninterrupted or error free, or that all software defects can be corrected.
          This
          warranty will be void if: (i) the Product is not used in accordance with
          the
          instructions set out in the Documentation, (ii) a Product defect has been
          caused
          by any of Licensee's or a third party's malfunctioning equipment, or (iii)
          Licensee has made modifications to the Product not expressly authorized
          in
          writing by Licensor.
 
 **7.**  **Indemnification
          For Infringement.** Licensor
          will defend or settle, at its own expense any claim against Licensee by
          a third
          party asserting that Licensee's and/or its Affiliates’ use of the Product within
          the scope of this Agreement violates such third party’s patent, copyright,
          trademark, trade -secret or other proprietary rights, and will indemnify
          Licensee against any damages finally awarded against Licensee arising out
          of
          such claim. Licensee will promptly notify Licensor in writing after first
          receiving notice of any such claim, and Licensor will have sole control
          of the
          defense of any action and all negotiations for its settlement or compromise,
          with Licensee's reasonable assistance; provided, that Licensee's approval
          in
          writing shall be required of any settlement or compromise involving any
          admission of fault or wrongdoing on the part of Licensee, and provided,
          further,
          that Licensee may at Licensor's cost and expense take responsibility for
          its own
          defense if and to the extent that Licensee has any reasonable doubt as
          to the
          ability or willingness of Licensor to fund such defense or any award, settlement
          or compromise arising therefrom. Licensor will not be liable for any costs
          or
          expenditures incurred by Licensee without Licensor's prior written consent
          except insofar as Licensee reasonably determines that it is necessary or
          appropriate to incur such costs and expenses in order to preserve its legal
          or
          equitable rights and remedies, protect it from further such claims, or
          minimize
          the losses associated with claims so made. If an order is obtained against
          Licensee’s and/or its Affiliates’ use of the Product by reason of any claimed
          infringement, or if in Licensor's opinion the Product is likely to become
          the
          subject of such a claim, Licensor will, at its option and expense, and
          in
          addition to any other rights and remedies available to Licensee hereunder,
          either (i) procure for Licensee the right to continue using the Product,
          or (ii)
          modify or replace the Product with a compatible, functionally equivalent,
          non-infringing Product.
 
 ***Page
              - 156***
 
 **8.**  **Support.** Contemporaneously
          with the execution of this Agreement, Licensor and Licensee are entering
          into an
          End User Support Agreement under which Licensor will provide ongoing support
          and
          maintenance beyond the scope and time limits of the warranty period set
          forth in
          Section 6 above, which End User Support Agreement sets forth the terms
          and
          conditions under which Licensee will be entitled to receive such Product
          updates
          and other Product support as may be provided for therein. Notwithstanding
          the
          foregoing, however, it is understood and agreed that, for purposes of this
          Agreement, the Software to which the license granted herein pertains includes
          both the first and second versions of the "MARS" product as well as the
          java-enabled version combined with Licensor's "payment gateway" product
          currently in development. Accordingly, regardless of the terms of the particular
          agreement entered into by the parties as described above, Licensor hereby
          agrees
          to furnish to Licensee at no additional charge the java-enabled version
          of the
          Software when available.
 
 **9.**  **Successors**  **And
          Assigns** .
          This
          Agreement will be binding upon and inure to the benefit of each of the
          parties
          and their respective successors and assigns; provided, however, that Licensee
          may not assign or sublicense this Agreement in whole or in part to any
          person or
          entity not an Affiliate of Licensee without the prior written consent of
          Licensor, and any assignment or sublicense attempted without such consent
          will
          be void.
 
 **10.**  **Governing
          Law.** This
          agreement will be governed by and construed in accordance with the laws
          of
          Bermuda, without regard to conflicts of law principles.
 
 **11.**  **Miscellaneous** .
 
 (a)  Each
          party is an independent contractor under this Agreement, and nothing herein
          will
          be construed to create any partnership, joint venture, or agency relationship
          parties between the parties hereto. Any use of the term "partner" in any
          communication by or between the parties or on their individual or joint
          behalf
          or in any trademark or service mark to describe their relationship is intended
          solely in the colloquial sense of a valued business relationship, and does
          not
          indicate the existence of or an offer to enter into a legal partnership,
          joint
          agency or other relationship involving common ownership or joint and/or
          several
          liability with one another and/or any of their Affiliates. Neither party
          will
          incur any debt or make any express or implied agreement, guarantee, warranty
          or
          representation in the name or on behalf of the other without the other's
          express
          written authorization, and each party will be responsible for its own costs
          and
          expenses incurred in connection with this Agreement. No failure or delay
          by
          either party in exercising any right, power or privilege hereunder will
          operate
          as a waiver thereof, nor will any single or partial exercise thereof preclude
          any other or further exercise thereof or the exercise of any right, power
          or
          privilege hereunder. No remedy expressly provided in this Agreement for
          a breach
          will be the sole or exclusive remedy for such breach, and each party hereby
          reserves to itself, in addition to the remedies expressly provided to it
          in this
          Agreement, all remedies available to it under law and at equity. This Agreement
          may be amended, modified or waived only by a subsequent writing that
          specifically refers to this Agreement and that is signed by both parties,
          and no
          other act, document, usage, or custom will be deemed to amend this Agreement.
          Headings in this Agreement are for convenience of reference only and will
          not
          affect the construction or interpretation of this Agreement. If any provision
          or
          provisions of this Agreement will be held, for any reason to be illegal,
          invalid
          or unenforceable in any circumstance, the remaining provisions will nonetheless
          be legal, valid and enforceable provisions, and the affected provision
          will
          remain legal, valid and enforceable in other circumstances. The terms of
          this
          Agreement that expressly or by implication are intended to continue beyond
          its
          termination will survive any such termination. Under local law and treaties,
          the
          restrictions and limitations of this Agreement may not apply to Licensee;
          Licensee may have other rights and remedies, and be subject to other
          restrictions and limitations.
 
 (b)  IN
          NO
          EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER UNDER THE LAW OF TORT,
          CONTRACT
          OR OTHERWISE, AND INCLUDING AS A RESULT OF NEGLIGENCE, FOR SPECIAL, INCIDENTAL,
          INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE
          PERFORMANCE OR NON-PERFORMANCE HEREOF (EVEN IF THE RESPONSIBLE PARTY HAS
          BEEN
          ADVISED OF OR FORESEES A POSSIBILITY OF ANY SUCH DAMAGES OCCURRING), INCLUDING
          BUT NOT LIMITED TO LOST BUSINESS REVENUE, FAILURE TO REALIZE EXPECTED PROFITS
          OR
          SAVINGS, OR LOSS OF DATA.
 
 (c)  Neither
          party hereto shall be held liable hereunder for any default arising from
          the
          delay in the performance of its obligations hereunder to the extent that
          such
          default or delay:
 (i)
                is
                    caused directly by an event beyond the reasonable control of
                    the
                    defaulting or delaying party (the "Non-performing Party"), such
                    as, but
                    not restricted to, fire, flood, earthquake, elements of nature,
                    acts of
                    war, terrorism, riots, civil disorders, rebellions or revolutions,
                    strikes, lockouts or labor difficulties; and
 
 (ii)
                could
                    not have been prevented by reasonable precautions and cannot
                    possibly be
                    circumvented by the Non-performing Party through the use of commercially
                    reasonable alternative sources, work-around plans or other means;
                    (a
                    “Force Majeure Event”). The Non-performing Party will be excused from any
                    further performance of the obligations affected by such Force
                    Majeure
                    Event for as long as the Force Majeure Event continues and the
                    Non-Performing Party continues to use its reasonable efforts
                    to recommence
                    performance. The Non-performing Party shall immediately notify
                    the other
                    party by telephone (to be confirmed in writing within five (5)
                    days of the
                    inception of the Force Majeure Event) and describe at a reasonable
                    level
                    of detail the circumstances causing such default or delay. During
                    the
                    continuance of a Force Majeure Event affecting Licensor, Licensee
                    shall
                    continue to pay Licensor’s charges for professional services actually
                    rendered and expenses incurred in the actual performance of such
                    services
                    in accordance with this Agreement. Notwithstanding any other
                    provision
                    hereof, this clause (c) will not excuse a breach of any purely
                    monetary
                    obligation.
  
 ***Page
              - 157***
 
 **12.**  **Joint
          and Several Responsibility.** Each
          of
          First Ecom and FEDS Asia acknowledge and agree that they are entering into
          this
          Agreement, and that they make the representations, warranties, covenants,
          agreements, indemnities and other undertakings and responsibilities of
          Licensor
          set forth herein, jointly and severally, with full recourse on the part
          of
          Licensee to either or both of them for the obligations and undertakings
          of
          Licensor contained herein. In this respect, each of First Ecom and FEDS
          Asia
          joins in this Agreement as primary obligor and not as surety, and Licensee
          shall
          not be required to proceed first against or exhaust its remedies against
          either
          of First Ecom or FEDS Asia as a condition to pr proceeding hereunder against
          the
          other with respect to any claim arising hereunder. Further, each of First
          Ecom
          and FEDS Asia hereby irrevocably and exclusively appoints First Ecom as
          its
          agent and attorney-in-fact for the giving or receipt of all notices or
          payments,
          the granting of all consents, approvals, or waivers, and the taking of
          all such
          other actions and making of all such other elections and/or decisions as
          shall
          be explicitly or implicitly provided or permitted herein to be given, received,
          granted, taken or made by or on behalf of Licensor or either of them (it
          being
          understood that omitting to take any action or make any election or decision
          shall be deemed the taking of an action or the making of any election or
          decision for this purpose), and to do all such acts and things as may in
          the
          opinion of such attorney-in-fact be reasonably necessary or reasonably
          expedient
          for the purposes thereof, or in connection therewith, and Licensee shall
          be
          entitled to rely conclusively on any of the foregoing as the action, decision
          or
          election, as the case may be, of each and both of First Ecom and FEDS Asia.
          Each
          of First Ecom and FEDS Asia agrees that the foregoing appointment constitutes
          a
          power coupled with an interest and shall be binding upon its successors
          and
          assigns. Any payments received by First Ecom hereunder that properly belong
          to
          FEDS Asia shall be held by First Ecom in trust for the benefit of FEDS
          Asia, and
          FEDS Asia hereby releases, discharges and agrees to hold harmless Licensee
          for
          any amounts payable to FEDS Asia that Licensee pays to First Ecom.
 
 **LICENSOR:**
 
 **FIRST
          ECOM.COM, INC.**     **FIRST
          ECOM DATA SERVICES**
 **ASIA
          LIMITED**
 
 By:*/s/
          Kenneth G.C. Telford*     By:*/s/
          Kenneth G.C. Telford*
 Name:
          Kenneth G.C. Telford     Name:
          Kenneth G.C. Telford
 Title:
          Secretary       Title:
          Secretary
 
  **-** **-**
 ***Page
              - 158***
  
 
 **LICENSEE:**
 
 
 **TRANSWORLD
          PAYMENT SOLUTIONS N.V.**
 
 
 By:*/s/
          John Chr. M.A.M. Deuss*
 Name:
          John Chr. M.A.M. Deuss
 Title:
          Managing Director
 
 
 
 
 
 **[END
          OF DOCUMENT]**
 
 ***Page
              - 159***
  **SOFTWARE
          LICENSE AGREEMENT**
 **FOR**
 **PAYMENT
          GATEWAY**
 
 **THIS
          SOFTWARE LICENSE AGREEMENT (“Agreement”)** is
          entered into effective as of October 19, 2001 (the “ **Effective
          Date** ”)
          by and
          among First Ecom.com, Inc., a Nevada corporation having its principal place
          of
          business at 80 Gloucester Road, 19 th Floor,
          Wan Chai, Hong Kong ("First Ecom"), and First Ecom Data Services Asia Limited,
          a
          Hong Kong corporation having its principal place of business at 80 Gloucester
          Road, 19 th Floor,
          Wan Chai, Hong Kong ("FEDS Asia")(First Ecom and FEDS Asia being referred
          to
          herein individually, jointly and collectively as "Licensor"), and Transworld
          Payment Solutions N.V., a Netherlands Antilles company having its offices
          at c/o
          Julianaplein No. 5, Curacao, Netherlands Antilles ("Licensee").
  **1.**  **Definitions** .
          As used
          in this Agreement, the capitalized terms defined in the introductory paragraph
          shall have the meanings assigned to them therein, and the following capitalized
          terms shall have the meanings assigned to them below:
 
 “ **Affiliate** ”
of
          a
          person or entity means any other person or entity controlled by, controlling,
          or
          under common control with said person or entity, and “control” for this purpose
          is understood to include the ownership or voting control of more than 50%
          of the
          outstanding securities of any such person carrying the power to vote with
          respect to the direction or management of the person or entity.
 
 “ **Documentation** ” **** means
          the
          related hard-copy or electronically reproducible technical documents furnished
          in association with the Software;
 
 “ **Media** ”
means
          the original Licensor-supplied physical materials (if any) containing the
          Software and/or Documentation;
 
 “ **Product** ”
means
          collectively the Media, Software, and Documentation, and all Software,
          Media or
          Documentation updates subsequently provided to Licensee by Licenosr or
          its
          authorized distributor;
 
 ***Page
              - 160***
 
 “ **Software** ”
means
          the original computer files (including all computer programs and data stored
          in
          such files) comprising Licensor's "Payment Gateway" computer software product
          and all whole or partial copies thereof, which product consists of an electronic
          internet payment gateway that translates various types of financial transaction
          data, including but not limited to transaction data originating from credit,
          debit and check payment methods, into a format that can be read by the
          processing system or systems proprietary to First Ecommerce Data Services
          Limited, including without limitation modified copies and portions merged
          into
          other programs, and further including any and all updates, revisions,
          enhancements, modifications, subsequent versions and other derivative works
          thereof developed and furnished to Licensee by or on behalf of Licensor
          from
          time to time.
 
 Other
          capitalized terms used herein shall have the meanings assigned to them
          where
          they first appear.
 
 **2.**  **Grant
          Of License Rights.** For
          good
          and valuable consideration in hand received, the receipt and sufficiency
          of
          which are hereby acknowledged, but subject to the terms and conditions
          set forth
          herein, Licensor grants to Licensee and its Affiliates a paid-up, royalty-free,
          non-exclusive, transferable, perpetual license to deploy, install, execute
          and
          use solely for Licensee's and/or its Affiliates' internal use as many copies
          of
          the Product, and on such number (s) and type(s) of servers, workstations
          or
          other computer hardware, and in such locations, as Licensee shall deem
          desirable
          from time to time. Any programs, utilities, modules or other software or
          documentation supplied by third parties and embedded in or bundled with
          the
          Product as furnished to Licensee by or on behalf of Licensor are hereby
          expressly included in the scope of this grant. It is understood and agreed
          that
          this Agreement permits the transfer by Licensee of its rights hereunder
          to third
          parties. Licensor agrees to deliver, promptly upon the execution and delivery
          of
          this Agreement (but not before November 15, 2001), no less than two (2)
          master
          copies of the Software in executable (machine readable) code format to
          Licensee
          of such Media as Licensee shall reasonably request, together with two (2)
          copies
          of the Documentation.
  
 **3.**  **Title
          And Copyright** .
          Licensor represents and warrants to Licensee that Licensor is the owner
          and
          holder of all rights, titles and interests in and to the Product, free
          and clear
          of all liens, charges, encumbrances, equities and claims of third parties
          of any
          description. There are no facts or alleged facts known to Licensor which
          would
          reasonably serve as a basis for any claim that Licensor does not have the
          right
          to grant the rights and licenses provided for herein. As between Licensor
          and
          Licensee, Licensee acknowledges and agrees that, except as and to the extent
          otherwise agreed in writing between the parties, all title and copyrights
          in and
          to the Product, are and will remain, are and will remain the property of
          the
          Licensor and/or its affiliates and suppliers, and are protected by applicable
          copyright laws, and applicable international copyright treaties, and that
          Licensor neither grants hereby nor otherwise transfers hereby any rights
          of
          ownership therein to Licensee or to any third party. Licensee will not
          claim or
          assert title to or ownership of the Product except pursuant to a written
          agreement expressly entitling Licensee to claim or assert such title or
          ownership. This Agreement, when executed and delivered by Licensor and
          Licensee,
          will constitute the valid and legally binding obligation of Licensor, legally
          enforceable against Licensor in accordance with its terms, subject to the
          effect
          of bankruptcy, insolvency, reorganization, moratorium and other similar
          laws
          relating to or affecting the rights of creditors generally, limitations
          imposed
          by applicable law or equitable principles upon the specific enforceability
          of
          any of the remedies, covenants or other provisions of this Agreement, and
          upon
          the availability of injunctive relief or other equitable remedies.
 
 **4.**  **Restrictions** .
          Licensee will not remove or alter any copyright or proprietary notice from
          copies of the Product. Except in accordance with the terms of this Agreement
          or
          any other express written agreement between the parties, Licensee agrees
          (a) not
          to decompile, disassemble, reverse engineer or otherwise attempt to derive
          the
          Software’s source code from object code except to the extent expressly permitted
          by applicable law or treaty despite this limitation; and (b) to use reasonable
          care and protection to prevent the unauthorized use, copying, publication
          or
          dissemination of the Product. Licensor has the right to obtain injunctive
          relief
          against any actual or threatened violation of these restrictions, in addition
          to
          any other available remedies.
 
  **5.**  **Taxes
          And Additional Charges** .
          All
          license fees paid or payable by the Licensee for the license granted hereunder
          (this "License") do not include, and Licensor will be responsible for,
          any and
          all taxes, duties, levies, tariffs, and other governmental charges now
          or
          hereafter imposed by any governmental authority on the purchase or sale
          of this
          License or the use or possession of the Product by Licensee and/or its
          Affiliates; provided, that Licensee will be responsible for its own corporate
          franchise taxes and taxes based upon its own net income.
  
 ***Page
              - 161***
  **6.**  **Limited
          Warranty.** Licensor
          warrants to Licensee that, for a period of ninety (90) days from the Effective
          Date, (i) the Documentation and Media will be, under normal use, free from
          physical defects, and (ii) the Software will perform in substantial accordance
          with the operating specifications contained in the Documentation that is
          most
          current at the Effective Date. If Licensee notifies Licensor within said
          ninety-day period of its belief that that either of these warranties has
          been
          breached, including a description of nature or circumstances of such breach,
          Licensor will be obligated to use reasonable efforts to remedy the defect(s)
          in
          question within a reasonable period of time or, at Licensor’s option, to replace
          the defective Product component at no additional charge. Licensor, its
          authorized distributors and its suppliers do not warrant that the Product
          will
          satisfy Licensee’s requirements, that the operation of the Product will be
          uninterrupted or error free, or that all software defects can be corrected.
          This
          warranty will be void if: (i) the Product is not used in accordance with
          the
          instructions set out in the Documentation, (ii) a Product defect has been
          caused
          by any of Licensee's or a third party's malfunctioning equipment, or (iii)
          Licensee has made modifications to the Product not expressly authorized
          in
          writing by Licensor.
 
 **7.**  **Indemnification
          For Infringement** .
          Licensor will defend or settle, at its own expense, any claim against Licensee
          by a third party asserting that Licensee's and/or its Affiliates’ use of the
          Product within the scope of this Agreement violates such third party’s patent,
          copyright, trademark, trade secret or other proprietary rights, and will
          indemnify Licensee against any damages finally awarded against Licensee
          arising
          out of such claimi. Licensee will promptly notify Licensor in writing after
          first receiving notice of any such claim, and Licensor will have sole control
          of
          the defense of any action and all negotiations for its settlement or compromise,
          with Licensee's reasonable assistance; provided, that Licensee’s approval in
          writing shall be required of any settlement or compromise involving any
          admission of fault or wrongdoing on the part of Licensee, and provided,
          further,
          that Licensee may at Licensor's cost and expense take responsibility for
          its own
          defense if and to the extent that Licensee has any reasonable doubt as
          to the
          ability or willingness of Licensor to fund such defense or any award, settlement
          or compromise arising therefrom. Licensor will not be liable for any costs
          or
          expenditures incurred by Licensee without Licensor's prior written consent
          except insofar as Licensee reasonably determines that it is necessary or
          appropriate to incur such costs and expenses in order to preserve its legal
          or
          equitable rights and remedies, protect it from further such claims, or
          minimize
          the losses associated with claims so made. If an order is obtained against
          Licensee’s and/or its Affiliates' use of the Product by reason of any claimed
          infringement, or if in Licensor's opinion the Product is likely to become
          the
          subject of such a claim, Licensor will, at its option and expense, and
          in
          addition to any other rights s available to Licensee hereunder, either
          (i)
          procure for Licensee the right to ing the Product, or (ii) modify or replace
          the
          Product with a compatible, equivalent, non-infringing Product.
 
 **8.**  **Support** .
          Contemporaneously with the execution of this Agreement, Licensor and Licensee
          are entering into an End User Support Agreement under which Licensor will
          provide ongoing support and maintenance beyond the scope and time limits
          of the
          warranty period set forth in Section 6 above, which End User Support Agreement
          sets forth the terms and conditions under which Licensee will be entitled
          to
          receive such Product updates and other Product support as may be provided
          for
          therein. Notwithstanding the foregoing, however, it is understood and agreed
          that, for purposes of this Agreement, the Software to which the license
          granted
          herein pertains includes both the first and second versions of the “Payment
          Gateway” product as well as the java-enable version combined with Licensor's
          "MARS" product currently in development. Accordingly, regardless of the
          terms of
          the particular agreement entered into by the parties as described above,
          Licensor hereby agrees to furnish to Licensee at no additional charge the
          java-enabled version of the Software when available.
 
 **9.**  **Successors
          And Assigns** .
          This
          Agreement will be binding upon and inure to the benefit of each of the
          parties
          and their respective successors and assigns; provided, however, that Licensee
          may not assign or sublicense this Agreement in whole or in part to any
          person or
          entity not an Affiliate of Licensee without the prior, written consent
          of
          Licensor, and any assignment or sublicense attempted without such consent
          will
          be void.
 
 **10.**  **Governing
          Law** .
          This
          agreement will be governed by and construed in accordance with the laws
          of
          Bermuda, without regard to conflicts of law principles.
 
 **11.**  **Miscellaneous.**
 
 (a)  Each
          party is an independent contractor under this Agreement, and nothing herein
          will
          be construed to create any partnership, joint venture, or agency relationship
          between the parties hereto. Any use of the term "partner" in any communication
          by or between the parties or on their individual or joint behalf or in
          any
          trademark or service mark to describe their relationship is intended solely
          in
          the colloquial sense of a valued business relationship, and does not indicate
          the existence of or an offer to enter into a legal partnership, joint agency
          or
          other relationship involving common ownership or joint and/or several liability
          with one another and/or any of their Affiliates. Neither party will incur
          any
          debt or make any express or implied agreement, guarantee, warranty or
          representation, in the name or on behalf of the other without the other’s
          express written authorization, and each party will be responsible for its
          own
          costs and expenses incurred in connection with this Agreement. No failure
          or
          delay by either party in exercising any right, power or privilege hereunder
          will
          operate as a waiver thereof, nor will any single or partial exercise thereof
          preclude any other or further exercise thereof or the exercise of any right,
          power or priviledge hereunder. No remedy expressly provided in this Agreement
          for a breach will be the sole or exclusive remedy for such breach, and
          each
          party hereby reserves to itself, in addition to the remedies expressly
          provided
          to it in this Agreement, all remedies available to it under law and at
          equity.
          This Agreement may be amended, modified or waived only by a subsequent
          writing
          that specifically refers to this Agreement and that is signed by both parties,
          and no other act, document, usage, or custom wil1 be deemed to amend this
          Agreement. Headings in this Agreement are for convenience of reference
          only and
          will not affect the construction or interpretation of this Agreement. If
          any
          provision or provisions of this Agreement will be held, for any-reason,
          to be
          illegal, invalid or unenforceable in any circumstance, the remaining provisions
          will nonetheless be legal, valid and enforceable provisions, and the affected
          provision will remain legal, valid and enforceable in other circumstances.
          The
          terms of this Agreement that expressly or by implication are intended to
          continue beyond its termination will survive any such termination. Under
          local
          law and treaties, the restrictions and limitations of this Agreement may
          not
          apply to Licensee; Licensee may have other rights and remedies, and by
          subject
          to other restrictions and limitations.
 
 ***Page
              - 162***
  (b)  IN
          NO
          EVENT SHALL EITHER PARTY BE LIABLE TO THE  OTHER
          UNDER THE LAW OF TORT, CONTRACT OR OTHERWISE, AND INCLUDING AS A RESULT
          OF
          NEGLIGENCE, FOR SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES
          ARISING
          OUT OF THIS AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE HEREOF EVEN
          IF THE
          RESPONSIBLE PARTY HAS BEEN ADVISED OF OR FORESEES A POSSIBILITY OF ANY
          SUCH
          DAMAGES OCCURRING), INCLUDING BUT NOT LIMITED TO LOST BUSINESS REVENUE,
          FAILURE
          TO REALIZE EXPECTED PROFITS OR SAVINGS OR LOSS OF DATA.
 
 (c)  neither
          party hereto shall be held liable hereunder for any default arising
 from
          the
          delay in the performance of its obligations hereunder to the extent that
          such
          default or delay:
 (i)  is
          caused
          directly by an event beyond the reasonable control of the defaulting or
          delaying
          party (the "Non-performing Party"), such as, but not restricted to, fire,
          flood,
          earthquake, elements of nature, acts of war, terrorism, riots, civil disorders,
          rebellions or revolutions, strikes, lockouts or labor difficulties; and
  (ii)  could
          not
          have been prevented by reasonable precautions and cannot possibly be
          circumvented by the Non-performing Party through the use of commercially
          reasonable alternative sources, work-around plans or other means; (“Force
          Majeure Event”). The Non-performing Party will be excused from any further
          performance of the obligations affected by such Force Majeure Event for
          as long
          as the Force Majeure Event continues and the Non-Performing Party continues
          to
          use its reasonable efforts to  recommence
          performance.  The
          Non-performing Party shall immediately notify the other party by telephone
          (to
          be confirmed in writing within five (5) days of the inception of the Force
          Majeure Event) and describe at a reasonable level of detail the circumstances
          causing such default or delay. During the continuance of a Force Majeure
          Event
          affecting Licensor, Licensee shall continue to pay Licensor's charges for
          professional services actually rendered and expenses incurred in the actual
          performance of such services in accordance with this Agreement. Notwithstanding
          any other provision hereof, this clause (c) will not excuse a breach of
          any
          purely monetary obligation.
 
 **12.**  **Joint
          and Several Responsibility** .
          Each of
          First Ecom and PEDS Asia acknowledge and agree that they are entering into
          this
          Agreement, and that they make the representations, warranties, covenants,
          agreements, indemnities and other undertakings and responsibilities of
          Licensor
          set forth herein, jointly and severally, with full recourse on the part
          of
          Licensee to either or both of them for the obligations and undertakings
          of
          Licensor contained herein. In this respect, each of First Ecom and FEDS
          Asia
          joins in this Agreement as primary obligor and not as surety, and Licensee
          shall
          not be required to proceed first against or exhaust its remedies against
          either
          of First Ecom or FEDS Asia as a condition to proceeding hereunder against
          the
          other with respect to any claim arising hereunder. Further, each of First
          Ecom
          and FEDS Asia hereby irrevocably and exclusively appoints First Ecom as
          its
          agent and attorney-in-fact for the giving or receipt of all notices or
          payments,
          the granting of all consents, approvals, or waivers, and the taking of
          all such
          other actions and making of all such other elections and/or decisions as
          shall
          be explicitly or implicitly provided or permitted herein to be given, received,
          granted, taken or made by or on behalf of Licensor or either of them (it
          being
          understood that omitting to take any action or make any election or decision
          shall be deemed the taking of an action or the making of any election or
          decision for this purpose), and to do all such acts and things as may in
          the
          opinion of such attorney-in-fact be reasonably necessary or reasonably
          expedient
          for the purposes thereof, or in connection therewith, and Licensee shall
          be
          entitled to rely conclusively on any of the foregoing as the action, decision
          or
          election, as the case may be, of each and both of First Ecom and FEDS Asia.
          Each
          of First Ecom and FEDS Asia agrees that the foregoing appointment constitutes
          a
          power coupled with an interest and shall be binding upon its successors
          and
          assigns. Any payments received by First Ecom hereunder that properly belong
          to
          FEDS Asia shall be held by First Ecom in trust for the benefit of FEDS
          Asia, and
          FEDS Asia hereby releases, discharges and agrees to hold harmless Licensee
          for
          any amounts payable to FEDS Asia that Licensee pays to First Ecom.
 
 **LICENSOR:**
 
 **FIRST
          ECOM.COM, INC.**     **FIRST
          ECOM DATA SERVICES**
 **ASIA
          LIMITED**
 
 By:*/s/
          Kenneth G.C. Telford*     By:*/s/
          Kenneth G.C. Telford*
 Name:
          Kenneth G.C. Telford     Name:
          Kenneth G.C. Telford
 Title:
          Secretary       Title:
          Secretary
 
 
 
 **LICENSEE:**
 
 
 **TRANSWORLD
          PAYMENT SOLUTIONS N.V.**
 
 
 By:*/s/
          John Chr. M.A.M. Deuss*
 Name:
          John Chr. M.A.M. Deuss
 Title:
          Managing Director
 ***Page
            - 163***
  **SOFTWARE
          DEVELOPMENT LICENSE AGREEMENT**
 
 This **SOFTWARE
          DEVELOPMENT LICENSE AGREEMENT** (“ **Agreement** ”)
          is
          entered into effective as of October 19, 2001 (the “ **Effective
          Date** ”)
          by and
          among First Ecom.com, Inc., a Nevada corporation having its principal place
          of
          business at 80 Gloucester Road, 19th Floor, Wan Chai, Hong Kong (“First Ecom”),
          and First Ecom Data Services Asia Limited, a Hong Kong corporation having
          its
          principal place of business at 80 Gloucester Road, 19th Floor, Wan Chai,
          Hong
          Kong (“FEDS Asia”)( First Ecom and FEDS Asia being referred to herein
          individually, jointly and collectively as “ **Licensor** ”),
          and
          Transworld Payment Solutions N.V., a Netherlands Antilles company having
          its
          offices at c/o Julianaplein No. 5, Curacao, Netherlands Antilles (“ **Licensee** ”)
          .
 
 **1.**  **Definitions** .
          As used
          in this Agreement, the capitalized terms defined in the introductory paragraph
          shall have the meanings assigned to them therein, and the following capitalized
          terms shall have the meanings assigned to them below:
 
 “ **Affiliate** ”
of
          a
          person or entity means any other person or entity controlled by, controlling,
          or
          under common control with said person or entity, and "control" for this
          purpose
          is understood to include the ownership or voting control of more than 50%
          of the
          outstanding securities of any such person carrying the power to vote with
          respect to the direction or management of the person or entity;
 
 “ **Documentation** ”
means
          the related hard-copy or electronically reproducible technical documents
          created
          in the course of the development of the Software, including without limitation
          all specifications, instructions, technical descriptions, manuals, flow,
          charts,
          pseudo-code, state diagrams, interim versions of programs or parts thereof,
          comments to source code, or other tangible notes or records pertaining
          to the
          Software's development;
 
 “ **Media** ”
means
          the original Licensor-supplied physical materials (if any) containing the
          Software and/or Documentation;
 
 “ **Product** ”
means
          collectively the Media, Software and Documentation, and all Software, Media
          or
          Documentation updates subsequently provided to the Licensee by Licensor
          or its
          authorized distributor;
 
 “ **Software** ”
means
          the original computer files (including all computer programs and data stored
          in
          such files) comprising (i) Licensor’s financial transaction management and
          reporting computer software product known as “Merchant Accounting and Reporting
          system or “MARS”, and system or “MARS”, and (ii) Licensor's “Payment Gateway”
computer software product, which product consists of an electronic internet
          payment gateway that translates various types of financial transaction
          data,
          including but not limited to transaction data originating from credit,
          debit and
          check payment methods, into a format that can be read by the processing
          system
          or systems proprietary to First Ecommerce Data Services Limited, and all
          whole
          or partial copies thereof, including without limitation modified copies
          and
          portions merged into other programs, and further including any and all
          updates,
          revisions, enhancements, modifications, subsequent versions and other derivative
          works thereof developed and furnished to Licensee by or on behalf of Licensor
          from time to time.
 
 Other
          capitalized terms used herein shall have the meanings assigned to them
          where
          they first appear.
  
 **2.**  **Grant
          Of License Rights.** For
          good
          and valuable consideration in hand received, the receipt and sufficiency
          of
          which are hereby acknowledged, but subject to the terms and conditions
          set forth
          herein, Licensor grants to Licensee and its Affiliates a paid-up, royalty-free,
          non-exclusive, non-transferable, perpetual license to revise, modify, enhance
          and otherwise develop derivative works of the Product. Licensor agrees
          to
          deliver promptly upon the execution and delivery of this Agreement (but
          not
          before November 15, 200l), no less than two (2) master copies of the Software
          in
          source (human readable) code format to Licensee on such Media as Licensee
          shall
          reasonably request, together with two (2) copies of the Documentation,
          including
          without limitation all relevant third party development toolkits and
          licenses.
 
 **3.**  **Title
          And Copyright.** Licensor
          represents and warrants to Licensee that Licensor is the owner and holder
          of all
          rights, titles and interests in and to the Product, free and clear of all
          liens,
          charges, encumbrances, equities and claims of third parties of any description.
          There are no facts or alleged facts known to Licensor which would reasonably
          serve as a basis for any claim that Licensor does not have the right to
          grant
          the rights and licenses provided for herein. As between Licensor and Licensee,
          Licensee acknowledges and agrees that, except as and to the extent otherwise
          agreed in writing between the parties, all title and copyrights in and
          to the
          Product, including without limitation the original code or other copyrightable
          material embedded in any derivative works thereof created by or on behalf
          of
          Licensee pursuant to this Agreement, are and will remain the property of
          Licensor and/or its affiliates and suppliers, and are protected by applicable
          copyright laws, and applicable international copyright treaties, and that
          Licensor neither grants hereby nor otherwise transfers hereby any rights
          of
          ownership therein to Licensee or to any third party; provided, however,
          that any
          incremental additional code or other copyrightable material created by
          or for
          Licensee or its Affiliates shall be the property of Licensee or its Affiliates,
          as applicable, and shall not be subject to the restrictions set forth herein
          except to the extent such incremental material incorporates, is embedded
          in or
          bundled with the Product. Licensee will not claim or assert title to or
          ownership of the Product except pursuant to a written agreement expressly
          entitling Licensee to claim or assert such title or ownership. This Agreement,
          when executed and delivered by Licensor and Licensee, will constitute the
          valid
          and legally binding obligation of Licensor, legally enforceable against
          Licensor
          in accordance with its terms, subject to the effect of bankruptcy, insolvency,
          reorganization, moratorium and other similar laws relating to or affecting
          the
          rights of creditors generally, limitations imposed by applicable law or
          equitable principles upon the specific enforceability of any remedies,
          covenants
          or other provisions of this Agreement, and upon the availability of injunctive
          relief or other equitable remedies.
 
 ***Page
              - 164***
  **4.**  **Restrictions.** Licensee
          will not remove or alter any copyright or proprietary notice from copies
          of the
          Product. Except in accordance with the terms of this Agreement or any other
          express written agreement between the parties, Licensee agrees (a) not
          to sell,
          rent, lease, license, sublicense, display, modify, time share, outsource
          or
          otherwise transfer the Product or any derivative work of the Product to,
          or
          permit the use of the Product or any derivative work of the Product by,
          any
          third party not an affiliate of Licensee, *provided,* without
          limiting the scope of the license grant hereinabove stated, it is understood
          and
          agreed that this Agreement permits the use of any derivative work of the
          Product
          by Licensee and its Affiliates in support of services rendered to their
          customers in the normal course of their trade or business; and (b) to use
          reasonable care and protection to prevent the unauthorized use, copying,
          publication or dissemination of the Product. Licensor has the right to
          obtain
          injunctive relief against any actual or threatened violation of these
          restrictions, in addition to any other available remedies.
 
 **5.**  **Taxes
          And Additional Charges.** All
          license fees paid or payable by the Licensee for the license granted hereunder
          (this "License") do not include, and Licensor will be responsible for,
          any and
          all taxes, duties, levies, tariffs, and other governmental charges now
          or
          hereafter imposed by any governmental authority on the purchase or sale
          of this
          License or the use or possession of the Product by Licensee and/or its
          Affiliates; provided that Licensee will be responsible for its own corporate
          franchise taxes and taxes based upon its own net income.
 
 **6.**  **Limited
          Warranty.** Licensor
          warrants to Licensee that, for a period of ninety (90) days from the Effective
          Date, (i) the Documentation and Media will be, under normal use, free from
          physical defects, and (ii) the Software will perform in substantial accordance
          with the operating specifications contained in the Documentation that is
          most
          current at the Effective Date. If Licensee notifies Licensor within said
          ninety-day period of its belief that either of these warranties has been
          breached, including a description of the nature or circumstances of such
          breach,
          Licensor will be obligated to use reasonable efforts to remedy the defect(s)
          in
          question within a reasonable period of time or, at Licensor’s option, to replace
          the defective Product component at no additional charge. Licensor, its
          authorized distributors and its suppliers do not warrant that the Product
          will
          satisfy Licensee’s requirements, that the operation of the Product will be
          uninterrupted or error free, or that all software defects can be corrected,
          This
          warranty will be void if: (i) the Product is not used in accordance with
          the
          instructions set out in the Documentation, (ii) a Product defect has been
          caused
          by any of Licensee's or a third party's malfunctioning equipment, or (iii)
          Licensee has made modifications to the Product not expressly ** authorized
          in writing by Licensor.
 
 **7.**  **Indemnification
          For Infringement.** Licensor
          will defend or settle, at its own expense, any claim against Licensee by
          a third
          party asserting that Licensee's and/or its Affiliates’ use of the Product within
          the scope of this Agreement violates such third party’s patent, copyright,
          trademark, trade secret or other proprietary rights, and will indemnify
          Licensee
          against any damages finally awarded against Licensee arising out of such
          claim.
          Licensee will promptly notify Licensor in writing after first receiving
          notice
          of any such claim, and Licensor will have sole control of the defense of
          any
          action and all negotiations for its settlement or compromise, with Licensee's
          reasonable assistance; provided, that Licensee's approval in writing shall
          be
          required of any settlement or compromise involving any admission of fault
          or
          wrongdoing on the part of Licensee, and provided, further, that Licensee
          may at
          Licensor's cost and expense take responsibility for its own defense if
          and to
          the extent that Licensee has any reasonable doubt as to the ability or
          willingness of Licensor to fund such defense or any award, settlement or
          compromise arising therefrom. Licensor will not be liable for any costs
          or
          expenditures incurred by Licensee without Licensor's prior written consent
          except insofar as Licensee reasonably determines that it is necessary or
          appropriate to incur such costs and expenses in order to preserve its legal
          or
          equitable rights and remedies, protect it from further such claims, or
          minimize
          the losses associated with claims so made. If an order is obtained against
          the
          Licensee's and/or its Affiliates' use of the Product by reason of any claimed
          infringement, or if in Licensor's opinion the Product is likely to become
          the
          subject of such a claim, Licensor will, at its option and expense, and
          in
          addition to any other rights and remedies available to Licensee hereunder,
          either (i) procure for Licensee the right to continue using the product,
          or (ii)
          modify or replace the Product with a compatible functionally equivalent,
          non-infringing Product.
 
 ***Page
              - 165***
  **8.**  **Support** .
          Contemporaneously with the execution of this Agreement, Licensor and Licensee
          are entering into an End User Support Agreement under which Licensor will
          provide ongoing support and maintenance beyond the scope and time limits
          of the
          warranty period set forth in Section 6 above, which End User Support Agreement
          sets forth the terms and conditions under which Licensee will be entitled
          to
          receive such Product updates and other Product support as may be provided
          for
          therein.
 
 **9.**  **Successors
          And Assigns.** This
          Agreement will be binding upon and inure to the benefit of each of the
          parties
          and their respective successors and assigns; provided, however, that Licensee
          may not assign or sublicense this Agreement in whole or in part to any
          person or
          entity not an Affiliate of Licensee without the prior written consent of
          Licensor, and any assignment or sublicense attempted without such consent
          will
          be void. Notwithstanding the foregoing, if for any reason both First Ecom
          and
          FEDS Asia cease doing business, or both discontinue maintenance and support
          for
          the Software or any portion thereof, then in either case, unless the Software
          or
          portion thereof so affected has been conveyed to a third party, the license
          granted hereunder shall thereupon automatically and without need for further
          action by either party become transferable, and the restrictions contained
          herein on disclosure or dissemination to third parties of the Product or
          derivative works thereof shall thenceforth be of no force or
          effect.
 
 **10.**  **Governing
          Law.** This
          agreement will be governed by and construed in accordance with the laws
          of
          Bermuda, without regard to conf1icts of law principles.
 
 **11.**
                **Miscellaneous.**
 
 (a)  Each
          party is an independent contractor under this Agreement, and nothing herein
          will
          be construed to create any partnership, joint venture, or agency relationship
          between the parties hereto. Any use of the term "partner" in any communication
          by or between the parties or on their individual or joint behalf or in
          any
          trademark or service to describe their relationship is intended solely
          in the
          colloquial sense of a valued business relationship, and does not indicate
          the
          existence of or an offer to enter into a legal partnership, joint agency
          or
          other relationship involving common ownership or joint and/or several liability
          with one another and/or any of their Affiliates. Neither party will incur
          any
          debt or make any express or implied agreement, guarantee, warranty or
          representation in the name or on behalf of the other without the others
          express
          written authorization, and each party will be responsible for its own costs
          and
          expenses incurred in connection with this Agreement. No failure or delay
          by
          either party in exercising any right, power or privilege hereunder will
          operate
          as a waiver thereof, nor will any single or partial exercise thereof preclude
          any other or further exercise thereof or the exercise of any right, power
          or
          privilege hereunder. No remedy expressly provided in this Agreement for
          a breach
          will be the sole or exclusive remedy for such breach, and each party hereby
          reserves to itself, in addition to the remedies expressly provided to it
          in this
          Agreement, all remedies available to it under law and at equity. This Agreement
          may be amended, modified or waived only by a subsequent writing that
          specifically refers to this Agreement and that is signed by both parties,
          and no
          other act, document, usage, or custom will be deemed to amend this Agreement.
          Headings in this Agreement are for the convenience of reference only and
          will
          not affect the construction or interpretation of this Agreement. If any
          provision or provisions of this Agreement will be held, for any reason,
          to be
          illegal, invalid or unenforceable in any circumstance, the remaining provisions
          will nonetheless be legal, valid and enforceable provisions, and the affected
          provision will remain legal, valid and enforceable in other circumstances.
          The
          terms of this Agreement that expressly or by implication are intended to
          continue beyond its termination will survive any such termination. Under
          local
          law and treaties, the restrictions and limitations of this Agreement may
          not
          apply to Licensee; Licensee may have other rights and remedies, and be
          subject
          to other restrictions and limitations.
 
 (b)   IN
          NO
          EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER, UNDER THE LAW OF TORT,
          CONTRACT
          OR OTHER WISE, AND INCLUDING AS A RESULT OF NEGLIGENCE, FOR SPECIAL, INCIDENTAL,
          INDIRECT OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE
          PERFORMANCE OR NON-PERFORMANCE HEREOF EVEN IF THE RESPONSIBLE PARTY HAS
          BEEN
          ADVISED OF OR FORESEES A LIABILITY OF ANY SUCH DAMAGES OCCURRING), INCLUDING
          BUT
          NOT LIMITED. TO LOST BUSINESS REVENUE, FAILURE TO REALIZE EXPECTED PROFITS
          OR
          SAVINGS, OR LOSS OF DATA.
 
 (c)   Neither
          party hereto shall be held liable hereunder for any default arising from
          the
          delay  in
          the
          performance of its obligations hereunder to the extent that such default
          or
          delay:
 
 (i)  is
          caused
          directly by an event beyond the reasonable control of the defaulting party
          or
          delaying party (the “Non-performing Party”), such as, but not restricted to,
          fire, flood, earthquake, elements of nature, acts of war, terrorism, riots,
          civil disorders, rebellions or revolutions, strikes, lockouts or labor
          difficulties; and
 
 
 (ii)  could
          not
          have been prevented by reasonable precautions and cannot
 possibly
          be circumvented by the Non-performing Party through the use of commercially
          reasonable alternative sources, work-around plans or other means; (a “Force
          Majeure Event”). The Non-performing Party will be excused from any further
          performance of the obligations affected by such Force Majeure Event for
          as long
          as the Force Majeure Event continues and the Non-Performing Party continues
          to
          use its reasonable efforts to recommence performance. The Non-performing
          Party
          shall immediately notify the other party by telephone (to be confirmed
          in
          writing within five (5) days of the inception of the Force Majeure Event)
          and
          describe at a reasonable level of detail the circumstances causing such
          default
          or delay. During the continuance of a Force Majeure Event affecting Licensor,
          Licensee shaIl continue to pay Licensor's charges for professional services
          actually rendered and expenses incurred in the actual performance of such
          services in accordance with this Agreement. Notwithstanding any other provisions
          hereof, this clause (c) will not excuse a breach of any purely monetary
          obligation.
 
 ***Page
              - 166***
  **12.**   **Joint
          and Several Responsibility.** Each
          of
          First Ecom and FEDS Asia acknowledge and agree that they are entering into
          this
          Agreement, and that they make the representations, warranties, covenants,
          agreements, indemnities and other undertakings and responsibilities of
          Licensor
          set forth herein, jointly and severally, with full **** recourse
          on the part of Licensee to either or both of them for the obligations and
          undertakings of Licensor contained herein. In this respect, each of First
          Ecom
          and FEDS Asia joins in this Agreement as primary obligor and not as surety,
          and
          Licensee shall not be required to proceed first against or exhaust its
          remedies
          against either of First Ecom or FEDS Asia as a condition to proceeding
          hereunder
          against the other with respect to any claim arising hereunder. Further,
          each of
          First Ecom and FEDS Asia hereby irrevocably and exclusively appoints First
          Ecom
          as its agent and attorney-in-fact for the giving or receipt of all notices
          or
          payments, the granting of all consents, approvals, or waivers, and the
          taking of
          all such other actions and making of all such other elections and/or decisions
          as shall be explicitly or implicitly provided or permitted herein to be
          given,
          received, granted, taken or made by or on behalf of Licensor or either
          of them
          (it being understood that omitting to take any action or make any election
          or
          decision shall be deemed the taking of an action or the making of any election
          or decision for this purpose), and to do all such acts and things as may
          in the
          opinion of such attorney-in-fact be reasonably necessary or reasonably
          expedient
          for the purposes thereof, or in connection therewith, the Licensee shall
          be
          entitled to rely conclusively on any of the foregoing as the action, decision
          or
          election, as the case may be, of each and both of First Ecom and FEDS Asia.
          Each
          of First Ecom and FEDS Asia agrees that the foregoing appointment constitutes
          a
          power coupled with an interest and shall be binding upon its successors
          and
          assigns. Any payments received by First Ecom hereunder that properly belong
          to
          FEDS Asia shall be held by First Ecom  in
          trust
          for the benefit of FEDS Asia, and FEDS Asia hereby releases, discharges
          and
          agrees to hold harmless Licensee for any amounts payable to FEDS Asia that
          Licensee pays  to
          First
          Ecom.
 
 **LICENSOR:**
 
 **FIRST
          ECOM.COM, INC.**     **FIRST
          ECOM DATA SERVICES**
 **ASIA
          LIMITED**
 
 By:*/s/
          Kenneth G.C. Telford*    By:*/s/
          Kenneth G.C. Telford*
 Name:
          Kenneth G.C. Telford     Name:
          Kenneth G.C. Telford
 Title:
          Secretary       Title:
          Secretary
 
 
 **LICENSEE:**
 
 
 **TRANSWORLD
          PAYMENT SOLUTIONS N.V.**
 
 
 By:*/s/
          John Chr. M.A.M. Deuss*
 Name:
          John Chr. M.A.M. Deuss
 Title:
          Managing Director
 
 
 
 
 
 **[END
          OF DOCUMENT]**
  ***Page
              - 167***
     Exhibit
        21
     ***Page
            - 168***
   **List
          of Subsidiaries**
 
 **Name
                    of Subsidiary**
                **Jurisdiction
                    of Incorporation**
                **Business
                    Names**Brek
                    Petroleum Inc.
                Nevada
                N/ABrek
                    Petroleum (California) Inc.
                California
                N/AVallenar
                    Energy Corp.
                Nevada
                Nathan
                    Oil Partners LP
   ***Page
            - 169***