SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                  ANNUAL REPORT


                                    Form 10-K

                                  ANNUAL REPORT
                     PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2001


                             BREK ENERGY CORPORATION
               (Exact Name of Registrant as Specified in Charter)

           Nevada                     0-27753                    98-0206979
(State or Other Jurisdiction        (Commission                (IRS Employer
       of Incorporation)            File Number)             Identification No.)

19th Floor, 80 Gloucester Road, Wan Chai, Hong Kong                 SAR
(Address of Principal Executive Offices)                         (Zip Code)

Registrant's telephone number, including area code        (852) 2801-5181

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

     None

Securities registered pursuant to Section 12(g) of the Act:
     Common Stock, par value $0.001 per share

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes[x] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [X]

Aggregate market value of the voting and non-voting common equity held by non-
affiliates of the registrant as of March 28,2002 was $13,353,022.

Number of shares of Common Stock outstanding as of March 28,2002 was 22,255,037.

Documents incorporated by reference: none


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ITEM 1. BUSINESS

     Brek Energy Corporation operates through its subsidiaries in the oil and
gas exploration and the electronic payment processing businesses. Before the
middle of 2001, its emphasis had been on the electronic payment processing
business. Since it acquired an interest in Gasco Energy, Inc., an oil and gas
exploration company, in July 2001, Brek's focus has been on that industry. Brek
recently acquired an interest in another company engaged in oil and gas
exploration - Vallenar Energy Corp.

     Brek remains in development stage. It has earned insignificant revenues
from its electronic processing operations in its first three years through
December 31,2001, and has not received any revenue from the oil and gas
business. Brek's longer-term ability to emerge from development stage depends
upon developing its oil and gas business and developing sufficient markets and
demand for its electronic processing business.

     Brek has incurred operating losses of $11.46 million, $12.81 million and
$6.35 million for the years ended December 31, 2001, 2000 and 1999. In addition,
Brek had a recovery from discontinued operations of $1.49 million for the year
ended December 31, 2001 versus a loss of $4.22 million for the year ended
December 31, 2000. As at December 31, 2001 Brek's accumulated deficit was
approximately $35.1 million. Brek expects its accumulated deficit to grow for
the foreseeable future. Brek did not raise any equity funds during the year
ended December 31, 2001 and Brek will either have to raise new equity funds,
sell some assets or obtain debt financing sufficient to support Brek's
requirements through the year ended December 31, 2002. Any sale of equity by
Brek will likely result in substantial dilution to its shareholders.

Oil and Gas Exploration By Gasco Energy, Inc.

     By agreement dated July 5, 2001, Brek acquired a series of preferred stock
of Gasco Energy, Inc. which is convertible into approximately 26% of the equity
of Gasco. Brek has elected to convert half of this preferred stock into common
stock. In February 2002, Brek entered into agreements with certain shareholders
of Gasco which provide for Brek to acquire additional 7,000,000 shares of common
stock of Gasco in exchange for 19,250,000 shares of Brek common stock. The only
condition to the exchange is the approval of the stockholders of Brek. Upon
completion of the exchange, Brek will own approximately 45% of the equity of
Gasco and will control approximately 53% of the voting power of Gasco.
Thereafter, for so long as Brek maintains voting control of Gasco, Gasco's
financial statements will be consolidated into Brek's.

     Gasco is engaged in locating and developing hydrocarbon prospects,
primarily located in the Rocky Mountain region. It applies new technologies to
generate and develop high-potential prospects. All of Gasco's properties are
located in the western United States.

     Riverbend Project. Gasco's Riverbend Project consists of approximately
117,000 gross acres in the Uinta Basin of northeastern Utah, some of which is
leased by Gasco, some of which is subject to farmout and other agreements under
which Gasco may earn leasehold interests, and some of which is held by third
parties. Gasco's geologic and engineering focus is concentrated on three
tight-sand formations in the basin: the Wasatch, Mesaverde and Mancos
formations.

In December 2000, Gasco entered into an agreement with Phillips Petroleum, a
major oil and gas company, that defined a 60,000-acre Area of Mutual Interest,
referred to herein as an AMI, within the Riverbend project, not all of which is
currently leased by either Gasco or Phillips. Under the terms of this agreement,
Phillips paid $1,000,000 to Gasco upon execution of the agreement, and later
expended $8,000,000 in connection with drilling and completing three producing
wells. As a result of Phillips' drilling, Gasco earned additional acreage under
certain farmout agreements during 2001. The agreement further afforded Phillips
the right to acquire an 80% interest in all of Gasco's leases and farmout
agreements within the AMI by assigning two leases within the AMI to Gasco.


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There has been some uncertainty as to whether Phillips timely exercised its
right to acquire the 80% interest in all of Gasco's leases and contracts within
the AMI. However, Gasco has indicated its willingness, subject to the
satisfaction of certain conditions, to accept the assignment of the two leases,
which have since been tendered by Phillips, and to proceed with the assignment
of the 80% interest to Phillips, and Phillips has indicated that it will begin
drilling a new earning well in the AMI on April 17, 2002. Gasco is currently
considering whether or not to participate in this well.

During January 2002, Gasco entered into an agreement with Halliburton Energy
Services under which Halliburton has the option to earn a participation interest
proportionate to its investment (not to exceed 50%) by funding the completions
of Wasatch wells. Gasco, at its option, may elect to limit Halliburton's funding
and the resulting participation interest to 25%. Gasco and Halliburton will also
share technical information through the formation of a joint technical team.
Gasco began drilling the first Wasatch well during February 2002. Gasco
anticipates drilling three gross (1.5 net) wells in this area during 2002 and
has set its capital budget for this purpose at $3,000,000. After the wells
drilled under this agreement have reached a payout status, as defined in the
agreement, Halliburton will retain an interest equal to 5% of Gasco's total
interest prior to payout.

Greater Green River Basin Project. In Wyoming, Gasco established an AMI with
Burlington Resources covering approximately 330,000 acres in Sublette County
within the Greater Green River Basin. As of March 15, 2002, Gasco had leased
approximately 67,000 acres in this area. The exploration agreement governing the
AMI requires Burlington to drill two wells and to shoot 180 miles of
high-resolution two-dimension seismic. During 2001, three shallow wells were
drilled in this area for the purpose of holding acreage and earning expiring
leasehold. Two of the wells tested only the Fort Union and Upper Lance
formations and the third well tested all zones. All of these wells have been
cased and are in various stages of completion. They did not evaluate the deeper,
high-potential Middle and Lower Lance formations, which are prolific producers
in the nearby Jonah Field and Pinedale Anticline area. Gasco and Burlington are
targeting these deeper formations with their ongoing seismic and exploration
activities.

In 2001, Burlington drilled two wells and shot 80 miles of seismic. As of March
15, 2002, one of the wells drilled was being completed. Burlington has advised
Gasco that it plans to complete the second well, complete the seismic program
and drill additional wells during 2002. Gasco anticipates participating in the
drilling of one gross well in this area and has set its 2002 capital budget for
this purpose at $750,000.

During 2002, Gasco purchased additional real property in Sublette County,
Wyoming: a 50% interest in 21,613 acres for approximately $1,411,000; a 20%
interest in 4,098 acres for approximately $107,000; and leasehold interests
covering approximately 16,606 acres for approximately $1,500,000. In connection
with this last acquisition, Gasco received an exclusive option to purchase an
additional 72,583 acres in this area. Monthly payments of $300,000 are required
during 2002 in order to maintain this option. Gasco may elect to exercise its
option to complete the transaction at any time.

On February 26, 2002, Gasco began drilling a well in the Southwest Jonah field
located in the Greater Green River Basin in Sublette County, Wyoming. This was
the first well drilled within a newly created AMI with Cabot Oil and Gas,
consisting of nine sections (5,760 gross acres, 1,440 net acres). The well was
drilled to a total depth of 11,000 feet. The well encountered natural gas, but
not in sufficient quantities to be deemed economic. Gasco has an option to drill
additional wells within the AMI if the new interpretation of the


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<PAGE>

well's data in integration with the seismic data warrants such testing. The net
dry hole cost of this well is estimated at $500,000.

Southern California Project. Gasco currently leases approximately 3,900 net
acres in the Kern and San Luis Obispo Counties of southern California. It has no
drilling or development plans for this acreage during 2002, but plans to
continue paying leasehold rentals and other minimum geological expenses to
preserve this acreage. Gasco may consider selling this acreage in the future.

Productive Gas Wells. The following table summarizes Gasco's productive and
shut-in gas wells as of December 31, 2001. 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 Gasco has an interest. Net wells are the sum of Gasco's
fractional interests owned in the gross wells.

                                                          Gross         Net

     Producing gas wells                                    4           1.5
     Shut-in gas wells                                      4           3.2
                                                           ---          ---
         Total                                              8           4.7
                                                           ===          ===

Gasco does not operate any of these wells.

Oil and Gas Acreage. The following table sets forth the undeveloped leasehold
acreage, by area, held by Gasco as of December 31, 2001. 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. Gross acres are the total
number of acres in which Gasco has a working interest. Net acres are the sum of
Gasco's fractional interests owned in the gross acres. In certain leases,
Gasco's ownership is not the same for all depths; therefore, the net acres in
these leases are calculated using the lowest ownership interest at any depth.

                                                    Gross             Net

     Utah                                          116,997           81,034
     Wyoming                                        52,363           45,232
     California                                      3,868            3,866
                                                   -------          -------

         Total acres                               173,228          130,132
                                                   =======          =======

In 2002, the Company acquired approximately 42,317 gross (28,233 net)
undeveloped acres in Sublette County Wyoming. On March 7, 2002, Gasco completed
a strategic exchange of acreage within the Uinta Basin in northeastern Utah,
whereby it received 3,359 gross acres (2,474 net) in exchange for 320 gross
acres (160 net) and the contractual right to earn Wasatch rights on
approximately 2,463 net Uinta Basin acres.

Gasco has an option to acquire 72,583 acres in the Greater Green River Basin.
Gasco can also earn a 37.5% interest in an additional 21,760 acres in Sublette
County Wyoming if it participates in the drilling of one well prior to November
2002. Gasco also has the right to earn a 20% interest in 21,951 gross acres
within the Uinta Basin by participating in the drilling of four wells prior to
February 2004.


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Drilling Activity. The following table sets forth Gasco's drilling activity
during the year ended December 31, 2001. Gasco had no drilling activity during
the years ended December 31, 2000 and 1999.

                                                        Gross           Net
       Exploratory Wells:
     Productive                                           4             1.6
     Dry                                                  2              2
                                                        ---             ---

       Total wells                                        6             3.6
                                                        ===             ===

     Oil and Gas Exploration Projects by Vallenar Energy Corp.

     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 held by Brek, represents
approximately 25% of Vallenar's equity. For as long as at least one-half of the
preferred stock is outstanding, it is entitled as a class to at least 26% of the
total voting power of Vallenar. Brek has agreed, subject to exceptional
circumstances, not to dispose of any shares of preferred stock issuable upon
conversion thereof within the first three years. 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 is playing an active role in the management of
Vallenar.

     Vallenar holds leases covering approximately 8,540 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. Vallenar has advised Brek that it
intends to complete a one-to-two well, controlled situation core test to
determine the recovery factor of the oil. Assuming the core test results are
favorable, Vallenar's management has recommended that a five-acre pilot program
then be implemented to test recovery methods.

Electronic Payment Processing

     Brek was formed on September 16, 1998 with the name of First Ecom.com,
Inc., to facilitate electronic payment processing of e-commerce transactions for
banks and their merchants through the medium of the Internet. It continues to do
business in this area through its wholly owned subsidiary First Ecom Systems
Limited, referred to herein as FESL. FESL has developed an electronic gateway to
convert consumers' credit card information collected by merchants on the
Internet into a format that can be processed by banks. FESL acts as a payment
system service provider between banks, online merchants and consumers. The
principal geographic area in which FESL provides its services is throughout
Asia. FESL charges banks service fees for processing transactions through this
gateway on their behalf. Brek's electronic payment processing business has not
generated any significant revenues to date, and management is reviewing various
options for this business.

     Payment Processing Over the Internet.

     To purchase goods or services over the Internet, a customer generally
visits a merchant's web site to view and select these goods or services.
Purchases are almost invariably paid for by credit card, and prior to furnishing
the goods or services a merchant requires the customer to submit his credit card
details and seek authorization to charge the card for the purchase.

     To accept payment by credit card, a merchant must establish a bank account
with a financial institution and configure his web site for this purpose by
credit cards for goods or services ordered from him online. Payment then occurs
in three steps: authorization, settlement and funds transfer.

     After completing the order form and shipping details on a FESL-enabled
merchant's web site, a customer is redirected to a secure FESL payment page on
the site. The data is encrypted and sent to the FESL's gateway. The payment
gateway then routes the authorization request into the appropriate card network
(e.g. VISA, MasterCard, American Express), where it is forwarded to the bank
that issued the customer's credit card.


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     The issuing bank approves or declines the transaction. If it approves a
transaction, it blocks the relevant amount of funds in the consumer's account,
reducing the cardholder's available credit limit by the authorized amount. Its
response is routed back through the appropriate card network to FESL's payment
gateway and finally over the Internet to the merchant's web site and the
consumer simultaneously. The entire process typically takes less than 10
seconds, so the consumer is advised almost immediately whether or not his
purchase has been approved. The merchant may from time to time review the status
of transactions by accessing the Merchant Accounting & Reporting System
(referred to as MARS), FESL's proprietary software, using a web browser over the
Internet. This software records the status of all purchases made by consumers on
a FESL-enabled merchant's web site.

     In the case of approved purchases the merchant must ship the goods or
provide the services. Once this has been done, the merchant is permitted to
request settlement of the transaction, and does so by initiating the settlement
request in his MARS account, usually on a batch-by-batch basis.

     The settlement request from the merchant is routed to the merchant's
acquiring bank. The acquiring bank will request payment from the bank that
issued the consumer's credit card. The issuing bank then releases the funds to
the merchant's bank, completing the payment process.

     FESL's Operations and Technology.

     FESL continues the program, started in 2000, of working directly with
various banks who in turn offer electronic payment services to their merchant
customers. FESL has enabled two banks, which currently have some 60 merchants
whose e-commerce transactions are authorized and approved through FESL's payment
gateway. From the time they were enabled in 2000 through January 31, 2002, these
banks executed over 250,000 transactions using the FESL's payment gateway.

     In August 2001, FESL entered into an agreement with United Overseas Bank
(Malaysia) Bhd to process its ecommerce transactions. To date one merchant
customer of this bank has been activated.

     In 2002, FESL was certified by American Express to handle ecommerce
transactions for its merchants in the Asia Pacific region. The first merchants
are expected to be activated in the first half of 2002.

     FESL owns and operates its own payment gateway technology and its merchant
accounting and reporting systems on redundant servers in Hong Kong. FESL
maintains engineers at all times to monitor the gateway. The servers have been
in constant operation since September 1999 without failure.

     The software FESL provides to merchants to connect their web sites to
FESL's gateway encrypts the transaction information sent over the Internet to
the gateway, which in turn encrypts the information that it sends to payment
switch. This encryption is 128-bit key strength. A version of this software has
been


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developed in conjunction with Microsoft Corporation as a "plug-in" to the
Microsoft Site Server Commerce Edition suite of programs.

Sold or Discontinued Businesses

Until March 31, 2001, Brek provided systems integration services through its
wholly owned subsidiary, Asia Internet Limited, which was acquired on March 31,
2000. In February 2001 Brek decided, due to the downturn in Internet related
business in Hong Kong and the surrounding area, to terminate this business. Asia
Internet Limited ceased operations effective as of March 31, 2001.

In June 2001 Brek acquired the remaining 50% of the equity of, and loans payable
by, First Ecommerce Data Services Limited, referred to as FEDS, which was
headquartered in Bermuda, from the Bank of Bermuda for cash of $4.25 million
plus the cancellation of options to purchase 500,000 shares of Brek common
stock. On October 19, 2001, Brek 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. In
addition, Brek was paid back loans totaling $1,336,014.

In September 2001, Brek terminated its relationship with the Bank of Bermuda
pursuant to which it had acted as a master merchant for the bank.

Employees

     Brek has significantly reduced its work force and as at February 15, 2002
employed 17 full-time personnel. Of these 9 work within the payment processing
business and the remainder support Brek's corporate functions and oil and gas
business. It is expected that additional personnel will be hired for the oil and
gas business to accomplish Brek's business plans. None of Brek's employees is a
member of a labor union.

Sales and Marketing

     The principal markets for any oil and gas produced by Brek are transmission
pipeline companies, utilities, refining companies and private industry
end-users.

     The principal market for FESL's ecommerce services are banks and their
merchants. In order for merchants to sell goods and services over the internet,
they and their banks must be able to accept and process ecommerce transactions
on widely-held credit cards such as MasterCard and Visa. FESL will continue to
focus its sales efforts in Hong Kong and other Asian markets. Its principal
marketing office is located in Hong Kong with representatives located in Europe
and Malaysia.

Competition

     Oil and Gas Exploration. Brek's natural gas and petroleum exploration
activities take place in a highly competitive and speculative business
atmosphere. In seeking suitable natural gas and petroleum 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 petroleum and natural gas industry will be
significant.

     Competition in the petroleum and natural gas 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 petroleum and natural gas exploration
companies and may have difficulty acquiring additional acreage or projects, and
may have difficulty arranging for the transportation of product, in the event
Brek is successful in its exploration efforts.


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     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 will be required to
obtain drilling permits for its wells, and there is no assurance that such
permits will be available timely or at all.

     The prices of oil and gas are controlled by domestic and world markets.

     Electronic Payment Processing. The most dominant participant in credit card
processing is First Data Corporation, which enjoys a near monopoly of the
industry in North America. Outside of North America, however, First Data is not
dominant. In Asia, FESL's principal market competition will come from three
sources:

     o    Large merchants having their own gateways;

     o    Merchant banks maintaining their own gateways; and

     o    Internet service providers and similar businesses that host merchant
          web sites maintaining their own gateways.

     Many of these competitors are substantially larger than Brek, have longer
operating histories and have much greater resources at their disposal.

     FESL believes that competition will be on the basis of price and quality of
service. Because FESL's gateway is shared by many merchants and banks, FESL
believes that its prices will be competitive on the grounds of economies of
scale. It should be cheaper for each bank and merchant to share the cost of the
FESL's gateway rather than maintain its own. FESL also believes that it will
have an advantage over merchants and banks in maintaining the highest quality of
service possible. Competitors of FESL, however, will have greater resources to
allocate to the development and maintenance of a gateway should they choose to
do so.

Governmental Regulations and Environmental Laws

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

Exploration and production activities relating to oil and gas leases are subject
to numerous environmental laws, rules and regulations. The Federal Clean Water
Act requires the construction of a fresh water containment barrier between the
surface of each drilling site and the underlying water table.

Various federal, state and local laws and regulations covering the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, may affect Brek's operations and costs through their effect on oil
and gas exploration, development and production operations. Environmental laws
and regulations have changed substantially and rapidly over the last 30 years,
and Brek anticipates that there will be continuing changes. Laws and regulations
protecting the environment have generally become more stringent in recent years,
and may in certain circumstances impose "strict liability," rendering a person
liable for environmental damages without regard to negligence or fault on the
part of such person. Such laws and regulations may expose Brek to liability for
the conduct of operations or conditions caused by others, or for acts of Brek
which were in compliance with all applicable laws at the time such acts were
performed. Increasingly strict environmental restrictions and limitations have
resulted in increased operating costs for Brek and other businesses throughout
the United States, and it is possible that the costs of compliance with
environmental laws and regulations will continue to increase. The modification
of existing laws or regulations or the adoption of new laws or regulations
relating to environmental matters could have a material adverse effect on Brek's
operations. In addition, Brek's existing and proposed operations could result in
liability for fires, blowouts, oil spills, discharge of hazardous materials into
surface and subsurface aquifers and other environmental damage, any one of which
could result in personal injury, loss of life, property damage or destruction or
suspension of operations.


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The Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), also known as the "Superfund" law, requires payments for cleanup of
certain abandoned waste disposal sites, even though such waste disposal
activities were undertaken in compliance with regulations applicable at the time
of disposal. Under the Superfund law, one party may, under certain
circumstances, be required to bear more than its proportional share of cleanup
costs at a site where it has responsibility pursuant to the legislation, if
payments cannot be obtained from other responsible parties. Other legislation
mandates cleanup of certain wastes at facilities that are currently being
operated. States also have regulatory programs that can mandate waste cleanup.
CERCLA authorizes the Environmental Protection Agency ("EPA") and, in some
cases, third parties to take actions in response to threats to the public health
or the environment and to seek to recover from the responsible classes of
persons the costs they incur. The scope of financial liability under these laws
involves inherent uncertainties.

It is not anticipated that Brek will be required in the near future to expend
material amounts because of environmental laws and regulations, but inasmuch as
such laws and regulations are frequently changed, Brek is unable to predict the
ultimate future cost of compliance.

Brek believes it is presently in compliance with all applicable federal, state
or local environmental laws, rules or regulations; however, continued compliance
(or failure to comply) and future legislation may have an adverse impact on
Brek's present and contemplated business operations.

The foregoing is only a brief summary of some of the existing environmental
laws, rules and regulations to which Brek's business operations are subject, and
there are many others, the effects of which could have an adverse impact on
Brek. Future legislation in this area will no doubt be enacted and revisions
will be made in current laws. No assurance can be given as to what effect these
present and future laws, rules and regulations will have on Brek's current and
future operations.

     The Company

     Brek was incorporated on February 12, 1999 in the state of Nevada in the
United States. On February 12, 1999, before issuing any shares of capital stock,
Brek consummated an agreement and plan of merger with JRL Resources Corp., a
Florida corporation, whereby JRL's 12,040,000 outstanding shares of common stock
were converted into 12,040,000 shares of Brek's common stock on a one-for-one
basis. JRL was incorporated in Florida on November 13, 1996 and was inactive
from the time of its formation until its merger with Brek. Before August 18,
1998, JRL was named Vantage Sales Corp. Shortly before this merger, JRL had
acquired all the outstanding capital stock of First Ecommerce Asia Limited,
which was then Brek's only direct subsidiary, and is located in Hong Kong.

     First Ecommerce Asia Limited was incorporated in Hong Kong on September 16,
1998. Before December 10, 1998, it was named Gold Pacific Management Limited. On
January 28, 1999 all of First Ecommerce Asia Limited's outstanding shares of
common stock were exchanged for 985,000 of JRL's 1,025,000 then-outstanding
shares plus 3,015,000 newly issued shares, and it became a wholly owned
subsidiary of JRL. For accounting purposes, this transaction was treated as an
acquisition of JRL by First Ecommerce Asia Limited, and therefore the financial
information contained herein is only presented from September 16, 1998, the date
on which First Ecommerce Asia Limited was formed. JRL had no operations before
this date. When JRL was merged into Brek, First Ecommerce Asia Limited became
the subsidiary of Brek.

     Brek's shareholders approved changing the name of the corporation from
First Ecom.com, Inc. to Brek Energy Corporation at the Annual Meeting on January
29, 2002. The amended articles of Brek were filed with the State of Nevada on
January 31, 2002.

     Brek's headquarters are presently located at 19th Floor, 80 Gloucester
Road, Wan Chai, Hong Kong SAR.


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<PAGE>

Risk Factors

     Brek is in development stage and an investment in Brek's common stock
involves a high degree of risk. Brek's business and results of operations could
be seriously harmed and the trading price of Brek's common stock could decline
should any of these risks come to fruition.

     General Risks

Brek's Limited Operating History May Prevent it From Achieving Success

     Brek's date of inception was September 16, 1998. It has a limited operating
history, which may prevent it from achieving success. Brek's revenue and income
potential are unproven. It will encounter challenges and difficulties frequently
encountered by early-stage companies in new and rapidly evolving markets.

Chief among these challenges and difficulties are:

     o    Persuading banks to outsource their Internet credit card processing

     o    Processing a sufficient volume of Internet credit card transactions
          which, particularly in Asia, may not be present in sufficient quantity
          to generate required revenues

     o    persuading banks and others to purchase the e-Acquirer and other
          products

     o    Gasco being able to adequately prove up its resources

     o    Locating and acquiring proper acquisition targets

     o    Locating and acquiring direct interests in oil and gas prospects

     o    Raising adequate additional equity and/or adequate financings

     o    Potential acquisitions being able to prove up their resources


     It may fail to address any of these challenges and failure to do so would
seriously harm Brek's business and operating results. In addition, because of
Brek's limited operating history, it has limited insight into trends that may
emerge and affect Brek's business.

Brek has Incurred Losses and Expects Future Losses

     Brek has experienced operating losses in each period since inception and
expects these operating losses to continue in the foreseeable future. On
December 31, 2001, Brek had an accumulated deficit of approximately $35.1
million, a significant portion of this loss, $10,461,322, was incurred during
the year ended December 31,2001, which included a non-recurring charge of $3.16
million, a further write down of the investment in uniView of $0.314 million and
a recovery from discontinued operations of $1.49 million. Brek has recorded the
non-recurring charge to reduce the carrying value of it assets to net realizable
value. These assets were subsequently sold for and amount equal to the
written-down value. Brek may not have sufficient resources to increase its
revenues enough to achieve profitability. Brek's failure to increase its
revenues significantly would seriously harm Brek's business and operating
results. In fact, Brek may not have any revenue growth.


                                       10

<PAGE>

Financing Risks

Brek has relied on the sale of its equity capital to fund working capital and
the acquisition of its prospects and related leases. Brek will be required to
raise additional capital in 2002. There is no assurance that additional funding
will be available to fund the acquisition, exploration or development of any
additional properties. There can be no assurance that Brek will be able to
obtain adequate financing in the future or that the terms of such financing will
be favorable. Any future financing will likely result in substantial dilution to
Brek's stockholders. Failure to generate operating cash flow or to obtain
additional financing could result in substantial dilution of Brek's oil and gas
interests, or delay or cause indefinite postponement of further exploration and
development of its oil and gas prospects with the possible loss of such
properties.

Substantial Upcoming Dilution

In addition to the dilution that is likely to occur upon raising future
financing, Brek has agreed to issue 19,250,000 shares of its common stock in
order to obtain an increased percentage of Gasco. Brek expects this issuance to
occur in the second quarter of 2002. This issuance will represent 86.5% of the
shares of common stock presently outstanding.

Future Operating Results Will Likely Fluctuate

     Brek's quarterly operating results will likely vary significantly in the
future. As a result, period-to-period comparisons of Brek's operating results
will not be meaningful and should not be relied upon as indicators of Brek's
future performance. In the future, Brek's operating results may be below the
expectations of securities analysts and investors. Brek's failure to meet these
expectations would likely depress the market price of Brek's common stock. To
date, Brek has not had sufficient operating results to gauge any
period-to-period fluctuations.

     Brek plans to generate revenues from both the direct operation of oil and
gas prospects acquired and through acquisition of existing operational entities.
To date, Brek has not acquired any direct prospects or other entities. Any
revenue generated from the oil and gas business depends on acquisitions and
their inherent revenues. Brek has no acquisition targets as yet.

Brek Faces Substantial Competition

     Brek's competitors have longer operating histories and significantly
greater operating financial, technical, marketing and other resources than Brek.
These competitors may adopt aggressive pricing policies.


                                       11
<PAGE>

Brek Must Manage Its Growth and Expansion

     Brek's historical growth has placed, and any future growth is likely to
continue to place, a significant strain on Brek's resources. There can be no
assurance of any future growth. Any failure to manage growth effectively could
seriously harm Brek's business and operating results. To be successful, Brek
will need to continually update management information systems, improve
operating, administrative, financial and accounting systems and controls, train
new employees and maintain close coordination among executive, technical,
accounting, finance, marketing, sales and operations organizations. In addition,
Brek's growth has resulted, and any future growth will result, in increased
responsibilities for management personnel. In the event Brek needs to employ
additional personnel, Brek will need to recruit qualified personnel to staff our
operations. Brek believes that such personnel currently are available at
reasonable salaries and wages in the geographic areas in which Brek operates.
There can be no assurance, however, that such personnel will be available in the
future. In addition, we cannot predict whether the labor staffing at any of
Brek's projects will be unionized, which may result in potentially higher
operating costs.

Brek Must Retain and Attract Key Personnel

     Brek's success depends largely on the skills, experiences and performance
of the members of its senior management and other key personnel. Brek needs
employees with knowledge of Internet and computer technology, banking, Internet
marketing strategy and credit card processing as well as those with expertise in
the various facets of oil and gas exploration and development. Brek may not be
successful in attracting, assimilating, or retaining qualified personnel. In
addition, Brek's future success will depend on Brek's ability to continue
attracting and retaining highly skilled personnel. Like other companies in Hong
Kong, Brek faces intense competition for qualified personnel.

Reliance On Key Personnel

     Brek considers Gregory M. Pek and Kenneth G.C. Telford to be key employees.
The loss of either of them could seriously harm Brek's business. Mr. Erickson is
the President of Gasco. The loss of his services may adversely affect the
business and prospects of Gasco. Brek does not maintain key man life insurance
for any of these employees.

Thin Public Market for Brek's Common Stock; Stock Price May
Fluctuate

     Brek's common stock is sometimes very thinly traded. Its trading price may
not be an accurate reflection of Brek's value. The market price of Brek's common
stock may fluctuate significantly in response to a number of factors, some of
which (such as interest rates, general economic conditions and trading multiples
of comparable companies) are beyond Brek's control, and some of which (such as
operating results, announcements of new products, new customers, acquisition of
potential oil and gas entities and prospects, results of exploration and
development) are within Brek's control.

Future Sales of Shares Could Affect Brek's Stock Price

     If Brek's stockholders sell substantial amounts of Brek's common stock in
the public market, the market price of Brek's common stock could fall. All of
Brek's outstanding common stock is eligible for sale in the public market
immediately.

 Shareholders Will Receive No Dividends

     Brek has never paid dividends and has no current plans to do so. Given
Brek's financial position, it is unlikely that it will pay any dividends in the
foreseeable future. Brek plans instead to retain earnings, if any, to fund
internal growth.


                                       12
<PAGE>

Enforcement of Legal Process

All of the directors of Brek reside outside the United States. Only Mr. Bruner
is a U.S. citizen. A substantial portion of the assets of such persons are
located outside the United States. As a result it may be difficult or impossible
to effect service of process within the United States upon such persons, to
bring suit in the United States or to enforce, in the U.S. courts, any judgment
obtained there against such persons predicated upon any civil liability
provisions of the U.S. federal securities laws.

Foreign courts may not entertain original actions against Brek's directors or
officers predicated solely upon U.S. federal securities laws. Furthermore,
judgments predicated upon any civil liability provisions of the U.S. federal
securities laws may not be directly enforceable in foreign countries.

     Oil and Gas Exploration Risks

Exploration and Production Risks

The business of exploring for and producing oil and gas involves a substantial
risk of investment loss that even a combination of experience, knowledge and
careful evaluation may not be able to overcome. Drilling oil and gas wells
involves the risk that the wells will be unproductive or that, although
productive, the wells do not produce oil and/or gas in economic quantities.
Other hazards, such as unusual or unexpected geological formations, pressures,
fires, blowouts, loss of circulation of drilling fluids or other conditions may
substantially delay or prevent completion of any well. Adverse weather
conditions can also hinder drilling operations. A major risk affecting drilling
is the need to obtain drilling permits from local authorities. Delays in
obtaining drilling permits, the failure to obtain a drilling permit for a well,
or a permit with unreasonable conditions or costs could have a materially
adverse effect on Brek's ability to effectively develop its properties.

A productive well may become uneconomic in the event water or other deleterious
substances are encountered, which impair or prevent the production of oil and/or
gas from the well. In addition, production from any well may be unmarketable if
it is impregnated with water or other deleterious substances.

As with any petroleum property, there can be no assurance that oil and gas will
be produced from the properties in which Brek, or any venture, in which Brek
participates, may obtain an interest. In addition, the marketability of oil and
gas which may be acquired or discovered will be affected by numerous factors
beyond the control of Brek. These factors include the proximity and capacity of
oil and gas 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 not receiving an
adequate return on invested capital. There is no assurance that crude oil or
natural gas in commercial quantities will be discovered by Brek, or any venture
in which Brek participates.

Uninsurable Risks

Although management believes the operator of any properties 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 the operator or Brek has chosen not to
insure against because of high premium costs or other reasons. Brek intends to
engage in participating in the drilling of both exploratory and development
wells. Exploratory wells have much greater dry hole risk than do wells that are
drilled offsetting established production. 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 oil and gas 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.


                                       13
<PAGE>

No Assurance of Titles

Brek plans not to undergo the expense of retaining lawyers to examine the title
to the mineral interest to be placed under lease or already placed under lease.
Rather, Brek will rely upon the judgment of petroleum and natural gas lease
brokers or land men who perform the fieldwork in examining records in the
appropriate governmental office before attempting to place under lease a
specific mineral interest. This practice is widely followed in the petroleum and
natural gas industry.

Prior to the drilling of a petroleum and natural gas well, however, it is the
normal practice in the petroleum and natural gas industry for the person or
company acting as the operator of the well to obtain a preliminary title review
of the spacing unit within which the proposed petroleum and natural gas well is
to be drilled to ensure there are no obvious deficiencies in title to the well.
It frequently happens, as a result of such examinations, that certain curative
work must be done to correct deficiencies in the marketability of the title, and
such curative work entails expense. The work might include obtaining affidavits
of heirship or causing an estate to be administered.

From time to time, the examination made by title lawyers reveals that a
petroleum and natural gas lease or leases is worthless, having been purchased in
error from a person who is not the owner of the mineral interest desired. In
such instances, the amount paid for such petroleum and natural gas lease or
leases is generally lost.

Environmental Regulations

In general, as noted above, the exploration and proposed production activities
of Brek are subject to certain federal, state and local laws and regulations
relating to environmental quality and pollution control. Such laws and
regulations increase the costs of these activities and may prevent or delay the
commencement or continuance of a given operation. Compliance with these laws and
regulations has not had a material effect on Brek's operations or financial
condition to date. Specifically, Brek is subject to legislation regarding
emissions into the environment, water discharges, and storage and disposition of
hazardous wastes. In addition, legislation has been enacted which requires well
and facility sites to be abandoned and reclaimed to the satisfaction of state
authorities. However, such laws and regulations are frequently changed and Brek
is unable to predict the ultimate cost of compliance. Generally, environmental
requirements do not appear to affect Brek any differently or to any greater or
lesser extent than other companies in the industry.

Brek believes that its operations comply, in all material respects, with all
applicable environmental regulations.


                                       14
<PAGE>

Governmental Regulations

Petroleum and natural gas exploration, development and production are subject to
various types of regulation by local, state and federal agencies. Legislation
affecting the petroleum and natural gas industry is under constant review for
amendment and expansion. Also, numerous departments and agencies, both federal
and state, are authorized by statute to issue and have issued rules and
regulations binding on the petroleum and natural gas industry and its individual
members, some of which carry substantial penalties for failure to comply. The
regulatory burden on the petroleum and natural gas industry increases Brek's
cost of doing business and, consequently, affects its profitability. There is no
assurance that laws and regulations enacted in the future will not adversely
affect the petroleum and natural gas industry. However, since these regulations
generally apply to all petroleum and natural gas producers, management of Brek
believes that these regulations should not put Brek at a material disadvantage
with respect to other petroleum and natural gas producers.

Most states in which Brek may own and/or operate properties have statutes, rules
and regulations governing conservation matters including the unitization or
pooling of petroleum and natural gas properties, establishment of maximum rates
of production from petroleum and natural gas wells and the spacing of such
wells.

Petroleum and natural gas mineral rights may be held by individuals or
corporations and, in certain circumstances, by governments having jurisdiction
over the area in which such mineral rights are located. As a general rule,
parties holding such mineral rights grant licenses or leases to third parties to
facilitate the exploration and development of these mineral rights. The terms of
the leases and licenses are generally established to require timely development.
Notwithstanding the ownership of mineral rights, the government of the
jurisdiction in which mineral rights are located generally retains authority
over the manner of development of those rights.

In addition to royalties paid to freehold owners, each state generally imposes a
production or severance tax with respect to production and sale of crude oil,
natural gas and natural gas liquids within their respective jurisdictions. For
the most part, state production taxes are applied as a percentage of production
or sales. Payment of these taxes is in the normal course of operations in the
petroleum and natural gas industry and should not have a material impact on
Brek's financial condition.


                                       15
<PAGE>

Natural Gas and Oil Prices

In recent decades, there have been periods of both worldwide overproduction and
underproduction of hydrocarbons and periods of both increased and relaxed energy
conservation efforts. Such conditions have resulted in periods of excess supply
of, and reduced demand for, crude oil on a worldwide basis and for natural gas
on a domestic basis. These periods have been followed by periods of short supply
of, and increased demand for, crude oil and natural gas. The excess or short
supply of crude oil has placed pressures on prices and has resulted in dramatic
price fluctuations even during relatively short periods of seasonal market
demand.

Competition

The petroleum and natural gas industry is intensely competitive and Brek
competes with other companies, which have greater resources. Many of such
companies not only explore for and produce crude petroleum and natural gas but
also carry on refining operations and market petroleum and other products on a
regional, national or worldwide basis. Such companies may be able to pay more
for productive petroleum and natural gas properties and exploratory prospects to
define, evaluate, bid for and purchase a greater number of properties and
prospects than Brek's financial or human resources permit. Brek's ability to
acquire additional properties and to discover reserves in the future will be
dependent upon its ability to evaluate and select suitable properties and to
consummate transactions in a highly competitive environment. There is also
competition between the petroleum and natural gas industry and other industries
with respect to the supply of energy and fuel to industrial, commercial and
individual customers. There is no assurance that Brek will be able to
effectively compete against such companies.

     Electronic Payment Processing Risks

Brek Depends on the Growth of Its Customer Base

     Brek's success in the payment processing business is substantially
dependent on the growth of its customer base of banks that use its e-Acquirer
system. If it fails to increase its customer base, its business and operating
prospects would be seriously harmed. Brek's ability to attract customers will
depend on a variety of factors, including the price and quality of Brek's
products and services as well as Brek's ability to market its products and
services effectively.


                                       16
<PAGE>

The Processing Market is Highly Competitive

     Brek's payment processing markets are new, rapidly evolving and highly
competitive, and it expects this competition to persist and intensify in the
future. Brek's failure to maintain and enhance its competitive position could
seriously harm its business and operating prospects. It will encounter
competition from a number of sources. Brek's competitors have extensive customer
bases and strong customer relationships that they could leverage, including
relationships with Brek's current and potential customers. These competitors
also have significantly more established customer service organizations than
Brek does.

Brek Needs to Develop and Expand Its Payment Processing Sales and Marketing
Capabilities

     Brek has only been marketing its payment processing services since early
1999. Brek's services require sophisticated sales effort targeted at senior
management of Brek's prospective customers, which are principally banks and
large international conglomerates. Brek needs to expand its marketing and sales
operations in order to increase market awareness of Brek's services and generate
increased revenues. Competition for qualified sales personnel is intense,
however, and Brek may not be able to hire enough qualified individuals in the
future.

Brek Depends on Continued Use of the Internet and Growth of
E-commerce

     Rapid growth in the use of the Internet has occurred only recently. As a
result, its acceptance and use may not continue to develop at historical rates,
and a sufficiently broad base of consumers may not adopt, or continue to use,
the Internet and other online services as a medium of commerce. Demand and
market acceptance for recently introduced services and products over the
Internet are subject to a high level of uncertainty, and there exist few proven
services and products.

     The Internet may not be accepted as a long-term commercial marketplace for
a number of reasons, including potentially inadequate development of the
necessary network infrastructure or delayed development of enabling technologies
and performance improvements. Brek's success will depend, in large part, upon
third parties maintaining the Internet infrastructure to provide a reliable
network backbone with the necessary speed, data capacity, security and hardware
for reliable Internet access and services.


                                       17
<PAGE>

Cautionary Statement Regarding Forward-Looking Statements

In the interest of providing the shareholders with certain information regarding
Brek's future plans and operations, certain statements set forth in this Form
10-K relate to management's future plans and objectives. Such statements are
forward-looking statements within the meanings of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. All statements other than statements of historical facts included in
this report, including, without limitation, statements regarding Brek's future
financial position, business strategy, budgets, projected costs and plans and
objectives of management for future operations, are forward-looking statements.
In addition, forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may," "will," "expect," "intend,"
"project," "estimate," "anticipate," "believe," or "continue" or the negative
thereof or similar terminology. Although any forward-looking statements
contained in this Form 10-K or otherwise expressed by or on behalf of Brek are,
to the knowledge and in the judgment of the officers and directors of Brek,
believed to be reasonable, there can be no assurances that any of these
expectations will prove correct or that any of the actions that are planned will
be taken. Forward-looking statements involve known and unknown risks and
uncertainties, which may cause Brek's actual performance and financial results
in future periods to differ materially from any projection, estimate or
forecasted result. Important factors that could cause actual results to differ
materially from Brek expectations ("Cautionary Statements") include those
discussed in this report under the caption "Risk Factors", above. All subsequent
written and oral forward-looking statements attributable to Brek, or persons
acting on its behalf, are expressly qualified in their entirety by the
Cautionary Statements. Brek assumes no duty to update or revise its
forward-looking statements based on changes in internal estimates or
expectations or otherwise.

ITEM 2. PROPERTIES

     Brek currently leases an office of approximately 2,500 square feet at the
address of its headquarters in Hong Kong for $6,870 per month plus government
rates. This lease expires on February 28, 2003. Gasco and Vallenar hold oil and
gas leases as described above, and each leases office space.

ITEM 3. LEGAL PROCEEDINGS

     Neither Brek, Gasco nor Vallenar is a party to any legal proceedings,
which, in Brek's opinion, after consultation with legal counsel, could have a
material adverse effect on Brek.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At Brek's 2000 Annual Meeting held on January 19,2001, the shareholders
elected the six Board Members for terms which expire at the 2001 Annual Meeting.
The shareholders also ratified the appointment of Deloitte Touche Tohmatsu as
Brek's Independent Accountants. At Brek's 2001 Annual Meeting held on January
29, 2002 the


                                       18
<PAGE>

shareholders elected the seven Board Members for terms which expire at the 2002
Annual Meeting, ratified the appointment of Deloitte Touche Tohmatsu as Brek's
Independent Accountants, approved the creation of the 2001 Stock Option/Warrant
Plan and approved amending the articles of Brek to change its name to Brek
Energy Corporation and to increase the number of authorized common shares from
200 million share with a par value of $0.001 to 300 million shares with a par
value of $0.001. Although a proposal to amend Brek's articles to create 50
million preferred shares received more affirmative votes than negative ones, it
did not receive the approval of a majority of all the outstanding stock, as
required by Nevada law.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

     Brek's common stock has traded on the National Market under the symbol
"FECC" from June 6, 2000 until February 19, 2002 when the symbol was changed to
"BREK". Prior to that it traded on the OTC under the symbol "FECC" since March
8, 1999. 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. In addition, Brek's Units (each of which
consists of one share of common stock and a warrant to purchase one third of a
share of common stock) were listed on the Bermuda Stock Exchange from December
23, 1999 until March 12, 2001 when the units were "unbundled" after which the
units only consist of a warrant to purchase one third of a share of common stock
of Brek. The following table sets forth the high and low closing prices for the
common stock for the periods indicated.

Year/Quarter                                      High                 Low
------------                                    --------            --------
2001
Fourth Quarter                                    0.62                0.30
Third Quarter                                     0.90                0.32
Second Quarter                                    1.35                0.81
First Quarter                                     1.88                0.75

2000

Fourth Quarter                                $   4.00            $   0.75
Third Quarter                                    10.03                4.34
Second Quarter                                   23.00                7.88
First Quarter                                    32.50                7.94

     As of February 28, 2002 there were approximately 107 holders of record of
the common stock. On March 28, 2002, the closing sales price of Brek's common
stock was $0.60 per share.

     Brek has not paid any cash dividends on its Common Stock and does not
presently intend to do so. Future dividend policy will be determined by its
Board of Directors on the basis of its earnings, capital requirements, financial
condition and other factors deemed relevant.

     The transfer agent and registrar of Brek's Common stock is Nevada Agency
and Trust Company, 50 West Liberty, Suite 880, Reno, Nevada 895O1. The transfer
agent and registrar of Brek's Units is The Bank of Bermuda Limited, 6 Front
Street, Hamilton, Bermuda.

Recent Sales of Unregistered Securities

     In March 2002, Brek issued 3,045,000 shares of its common stock at $0.50
per share in transactions exempt from the registration requirements of the
Securities Act of 1933 pursuant to Regulations D and S. Ian Robinson, Gregory
Pek and Kenneth Telford were among the subscribers for these shares.

ITEM 6. SELECTED FINANCIAL DATA

     The following selected financial data should be read in conjunction with
Brek's audited consolidated financial statements appearing elsewhere herein.
For the period from September 16, 1998 (date of inception) to December 31, 1998,
the consolidated financial statements are not presented as all amounts are $Nil.


                                       19
<PAGE>
<TABLE>
<CAPTION>
                                                    Year ended              Year ended              Year ended
                                             December 31, 2001       December 31, 2000       December 31, 1999
                                             -----------------       -----------------       -----------------
<S>                                                <C>                     <C>                      <C>
Revenue

Payment processing                                     301,978                  38,223                   2,634

                                                   -----------             -----------             -----------
Operating expenses

Sales and marketing                                    611,628               2,113,149               1,563,246

General and administrative                           7,153,141               8,297,692               4,241,389
Systems and technology                                 836,134               1,489,056                 552,221
Charges for impairment of certain
long-lived and prepaid assets                        3,159,505                 949,418                      --
                                                   -----------             -----------             -----------
Total expenses                                      11,760,408              12,849,315               6,356,856

Loss from operations                               (11,458,430)            (12,811,092)             (6,354,222)
                                                   -----------             -----------             -----------

Other income/(expenses)
Interest income                                        704,725               1,527,959                  36,761
Interest expense                                            --                  (2,121)               (471,424)
Loss on write down of marketable securities           (314,339)             (1,632,353)                     --
                                                   -----------             -----------             -----------
                                                       390,386                (106,515)               (434,663)
                                                   -----------             -----------             -----------

Equity in loss of affiliates                          (882,146)               (292,118)                     --
                                                   -----------             -----------             -----------

Loss from continuing operations                    (11,950,190)            (13,209,725)             (6,788,885)
                                                   -----------             -----------             -----------

Income (loss) from discontinued operations
Net income (loss)                                     (236,683)             (4,219,736)                     --
Gain on discontinuance (net of $Nil
tax effects)                                         1,725,551                      --                      --
                                                   -----------             -----------             -----------
                                                     1,488,868              (4,219,736)                     --
                                                   -----------             -----------             -----------

Loss before cumulative effect
of accounting change                               (10,461,322)            (17,429,461)             (6,788,885)

Cumulative effect of accounting change                      --                (380,000)                     --
                                                   -----------             -----------             -----------

Net loss                                           (10,461,322)            (17,809,461)             (6,788,885)
                                                   ===========             ===========             ===========
</TABLE>

                                       20
<PAGE>
<TABLE>
<CAPTION>
<S>                                                 <C>                     <C>                     <C>
Basic and diluted loss per share
applicable to common stockholders
  Continuing operations                                  (0.62)                  (0.73)                  (0.56)
  Discontinued operations                                 0.08                   (0.23)                     --
  Cumulative effect of accounting change                    --                   (0.02)                     --
                                                   -----------             -----------             -----------
                                                         (0.54)                  (0.98)                  (0.56)
Weighted average shares used in
computing per share amounts                         19,210,037              18,064,980              12,043,662
                                                   ===========             ===========             ===========

Balance Sheet Data:
                                                       2001                    2000                    1999
                                                        US$                     US$                     US$


Current Assets                                       2,596,852              32,282,424              12,159,946
Note Receivable                                      1,865,244                      --                       --
Loan Receivable                                        270,055                      --                       --
Property and Equipment                                 257,321                 578,866               1,046,237
Total Assets                                        23,497,378              35,969,172              13,206,183
Deferred Rent                                               --                      --                  62,017
Obligation under capital lease                              --                      --                   3,788
(including current installments)
Total Liabilities                                      271,379                 509,373               1,263,936
Stockholders Equity                                 23,225,999              35,459,799              11,942,247
</TABLE>


                                       21
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

General

     During 2001 Brek rationalized its operations, changed its primary focus to
oil and gas exploration, combined its payment gateway and related products into
a new e-Acquirer product, and limited its marketing objectives to enabling banks
in Asia. Brek discontinued the systems integration business of Asia Internet
Limited as part of the rationalization of operations. Brek acquired the
remaining 50% of First Ecommerce Data Services Limited from the Bank of Bermuda
and later in the year sold 100% of it to Transworld Payment Solutions.

     During 2001, Brek acquired a 26% non-dilutable voting interest in Gasco
Energy, Inc. for $19 million and advanced $270,055 to Vallenar Energy Corp.,
which subsequent to the year end formed part of the $350,000 acquisition of
preferred shares of Vallenar, which have a 26% non-dilutable voting interest.

     The majority of Brek's revenues during 2001 came from the operations
carried on through First Ecommerce Data Services Limited during the period of
time that it was a wholly-owned subsidiary however, Brek is still a development
stage enterprise 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 the rapidly evolving sector related
to the Internet. See "Item 1. Business - Risk Factors". There is no assurance
that Brek will be successful in addressing these risks and if it fails to do so,
its financial condition and results of operations would be materially adversely
affected.

Crititical Accounting Policies

     Brek prepares its consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America. The
preparation of Brek's financial statements requires it to make estimates and
assumptions that affect the amounts of assets and liabilities reported and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the amount of revenues and expenses reported during the period
covered by the financial statements. On an on-going basis, Brek evaluates its
estimates and judgments, including those related to its investments. Actual
results may differ from those used in making any such estimates and judgments.

     The following critical accounting policies affect the more significant
assumptions and estimates used in the preparation of Brek's consolidated
financial statements.

     Investment in Affiliate

     Brek has accounted for its interest in Gasco using the equity method. Gasco
has incurred operating losses since Brek's investment in July 2001. Sustained
operating losses of this affiliate or other adverse events could result in
Brek's inability to recover the carrying value of the investment, which may
require Brek to record an impairment charge in the future. Through December 31,
2001, Brek has not recorded an impairment charge for this investment.


                                       22
<PAGE>

     Income Taxes

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

     Impairment of Assets

     Brek reviews all assets on a regular basis to ensure that there is no
impairment in the carrying value. If it determines that there has been a
permanent decline in, or Brek has become unable to recover, the carrying value
of the asset, an impairment charge will be recorded, which will have an adverse
effect upon Brek's future operating results.

Results of Operations

Revenues

Total revenues for 2001 were $301,978 as compared to $38,223 in 2000 and $2,634
in 1999. The systems integration revenue of $816,648 in 2000 which related
directly to Asia Internet Limited which was acquired on March 31,2000 was
reclassified to discontinued operations. Of the total revenue, $250,567 was due
to consolidation of FEDS revenue for the period from June 19, 2001 to October
19, 2001.

Operating Expenses

Total operating expenses incurred for 2001, 2000 and 1999 were $11,760,408,
$12,849,315 and $6,356,856, respectively. 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 the 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 the 2000 year and no charge in 1999. Of
the total operating expenses, $936,586 was due to consolidation of FEDS expenses
for the period June 19,2001 to October 19,2001. A reclassification of the
expenses in 2000 of Asia Internet Limited to discontinued operations was made.
Significant components of operating expenses for 2001 and 2000 consisted of the
following

Expenses                                                 Amount
--------                                                 ------
                                          2001            2000            1999
                                       ----------      ----------      ---------
Operating expenses

Sales and marketing                       611,628       2,113,149      1,563,246
General and administrative              7,153,141       8,297,692      4,241,389
Systems and technology                    836,134       1,489,056        552,221
Charges for impairment of certain
long-lived and prepaid assets           3,159,505         949,418             --
                                       ----------      ----------      ---------
Total expenses                         11,760,408      12,849,315      6,356,856
                                       ==========      ==========      =========

The decrease in expenses during the 2001 year is attributable to Brek decreasing
the number of employees to a low of 14, decreased sales and marketing efforts,
decreased systems development and the discontinuance of the operations of Asia
Internet Limited.


                                       23
<PAGE>

Other Income and Expenses

Interest income decreased to $704,725 in 2001 as compared to $1,527,959 in 2000
and $36,761 in 1999. This decrease was due to Brek's decreased cash position
during the year and a significant reduction in interest rates. The most
significant aspect related to the decrease in cash was due to the acquisition of
the preferred stock in Gasco Energy, Inc.

Interest expense reduced to $nil in 2001 as compared to $2,121 in 2000 and
$471,424 in 1999 as Brek did not have any borrowings during 2001.

The equity in loss of affiliates for 2001 of $882,146 consisted of Brek's share
of the losses before the acquisition of the remaining 50% interest of First
Ecommerce Data Services Limited on June 18, 2001, of $390,052 and Brek's share
of the losses of Gasco Energy, Inc. after the acquisition of its preferred stock
on July 19, 2001. Of $492,094 versus $292,118 in 2000 attributable wholly to
First Ecommerce Data Services Limited and $nil in 1999.

During 2001, Brek recorded a loss of $314,339 on the write down its investment
in shares of uniView Technologies Corporation, a NASDAQ listed company. Brek
purchased 735,295 shares, since reduced to 91,912 due to a share consolidation
in September 2001, of uniView in a August 2000 private placement for $2 million.
The closing market price on December 31, 2001 was $0.58. Brek recorded a loss of
$1,632,353 during the year ended December 31, 2000.

     During 2001, Brek discontinued the operations of its systems integration
business carried on through its subsidiary Asia Internet Limited. The
discontinuation of these operations resulted in a recovery of $1,488,868 due to
the reversal of unvested stock compensation costs of $1,852,570. These
operations had an operating loss of $236,683 during 2001 versus a loss of
$4,219,736 for 2000. There were no systems integration operations during 1999.

There is no cumulative effect of accounting change this year as compared to last
year.


                                       24
<PAGE>

Liquidity and Capital Resources

     Brek did not have any fund raising activities during 2001.

On March 28, 2002, Brek had $2.6 million of cash, cash equivalents and
marketable securities available to fund operations. Brek significantly lowered
its ongoing expenditures and overhead during the 2001 year by reducing the
number of employees, closing offices and leasing more affordable office space.
Although Brek believes that its current cash balances, cash equivalents,
investments and equity holdings could meet its working capital and capital
expenditure needs for 2002, Brek does expect that it will need to raise funds in
order to achieve its desired business objectives on a more timely basis. Because
Brek is not currently generating sufficient cash to fund its operations, Brek
may need to rely on external financing to meet future capital and operating
requirements. Any projections of future cash needs and cash flows are subject to
substantial uncertainty. Brek's capital requirements depend upon several
factors, including the rate of market acceptance, its ability to expand its
customer base and increase revenues, its level of expenditures for marketing and
sales, purchases of equipment, acquisitions of oil and gas entities and
prospects and other factors. If Brek's capital requirements vary materially from
those currently planned, Brek may require additional financing sooner than
anticipated. Brek can make no assurance that financing will be available in
amounts or on terms acceptable to Brek, if at all. Further, if Brek issues
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, and debt financing, if available, may involve
restrictive covenants which could restrict Brek's operations or finances. If
Brek cannot raise funds, if needed, on acceptable terms, Brek may not be able to
continue its operations, grow market share, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements
which could negatively impact Brek's business, operating results and financial
condition. Brek leases office and other premises under non-cancellable operating
leases that call for payments of $216,419 during 2002 and $76,032 during 2003.

Brek does not anticipate receiving any income from its investments in Gasco or
Vallenar for the foreseeable future. The Note Receivable is due, without
interest, as follows:

               March 1, 2003 - $350,000
               March 1, 2004 - $650,000
               March 1, 2005 - $1,000,000

Brek has entered into employment agreements with all of its employees. These
agreements require severance payments ranging from four to 16 weeks' salary upon
termination without cause. If the employees were all terminated without cause,
Brek would have a liability for minimum severance pay of approximately $330,000.

SELECTED UNAUDITED QUARTERLY CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth unaudited quarterly statements of operations data
for the four quarters ended December 31, 2001 and 2000. We believe this
unaudited information has been prepared substantially on the same basis as the
annual audited consolidated financial statements appearing elsewhere in this
report. We believe this data includes all necessary adjustments, consisting only
of normal recurring adjustments, necessary for fair presentation. You should
read the quarterly data together with the consolidated financial statements and
the notes to those statements appearing elsewhere in this report. The
consolidated results of operations for any quarter are not necessarily
indicative of the operating results for any future period. We expect that or
revenues may fluctuate significantly and in fact may be significantly less due
to the closure of the systems integration business.


                                       25
<PAGE>

<TABLE>
<CAPTION>

                                      Three months ended     Three months ended        Three months ended        Three months ended
                                       December 31, 2001     September 30, 2001            June  30, 2001            March 31, 2001
                                      ------------------     ------------------        ------------------        ------------------
<S>                                           <C>                    <C>                       <C>                       <C>
Revenue

Payment processing                                59,142                205,928                    24,152                    12,756
                                             -----------            -----------               -----------               -----------

Operating expenses
Sales and marketing                              217,317                206,049                    15,506                   172,756
General and administrative                     1,970,356              1,725,000                 1,581,343                 1,876,442
Systems and technology                           171,599                483,860                    62,187                   118,488
Charges for impairment of certain
long-lived and prepaid assets                         --              3,159,505                        --                        --
                                             -----------            -----------               -----------               -----------
Total expenses                                 2,359,272              5,574,414                 1,659,036                 2,167,686
                                             -----------            -----------               -----------               -----------

Loss from operations                          (2,300,130)            (5,368,486)               (1,634,884)               (2,154,930)
                                             -----------            -----------               -----------               -----------

Other income/(expenses)
Interest income                                   13,921                 56,504                   246,698                   387,602
Interest expense                                      --                     --                        --                        --
Loss on write down of marketable securities       (6,434)              (307,905)                       --                        --
                                             -----------            -----------               -----------               -----------

                                                   7,487               (251,401)                  246,698                   387,602
                                             -----------            -----------               -----------               -----------

Equity in loss of affiliates                    (336,393)              (155,701)                 (194,653)                 (195,399)
                                             -----------            -----------               -----------               -----------

Loss from continuing operations               (2,629,036)            (5,775,588)               (1,582,839)               (1,962,727)
                                             -----------            -----------               -----------               -----------

Income (loss) from discontinued operations
Net income (loss)                                 (7,627)                    --                     2,271                  (231,327)
Gain on discontinuance                                --                     --                        --                 1,725,551
                                             -----------            -----------               -----------               -----------
                                                  (7,627)                    --                     2,271                 1,494,224
                                             -----------            -----------               -----------               -----------

Loss before cumulative effect
of accounting change                          (2,636,663)            (5,775,588)               (1,580,568)                 (468,503)

Cumulative effect of accounting change                --                     --                        --                        --
                                             -----------            -----------               -----------               -----------

Net loss                                      (2,636,663)            (5,775,588)               (1,580,568)                 (468,503)
                                             ===========            ===========               ===========               ===========


Basic and diluted loss per share
applicable to common stockholders
  Continuing operations                            (0.14)                 (0.30)                    (0.08)                    (0.10)
  Discontinued operations                             --                     --                        --                      0.08
                                             -----------            -----------               -----------               -----------
                                                   (0.14)                 (0.30)                    (0.08)                    (0.02)
Weighted average shares used in
computing per share amounts                   19,210,037             19,210,037                19,210,037                19,210,037
                                             ===========            ===========               ===========               ===========
</TABLE>


                                       26
<PAGE>

<TABLE>
<CAPTION>
                                        Three months ended      Three months ended     Three months ended       Three months ended
                                              Dec 31, 2000           Sept 30, 2000          June 30, 2000            March 31 2000
                                        ------------------      ------------------     ------------------       ------------------
<S>                                             <C>                     <C>                     <C>                     <C>
Revenue

Payment processing                                  10,336                  17,355                   5,730                   4,802
System integration revenue                         178,814                 233,133                 404,701                      --
                                               -----------             -----------             -----------             -----------
Total revenue                                      189,150                 250,488                 410,431                   4,802

Direct costs                                       226,765                 269,279                 340,244                      --
                                               -----------             -----------             -----------             -----------
Gross profit                                       (37,615)                (18,791)                 70,187                   4,802
                                               -----------             -----------             -----------             -----------

Operating expenses
Sales and marketing                               (250,338)                491,206                 698,203                 519,983
General and administrative                       2,697,181               2,223,961               2,742,270               1,872,501
Systems and technology                             729,081               1,251,266               1,424,850                 244,369
Non-recurring charges for impairment of
  certain long-lived and prepaid assets          2,405,829                      --                      --                      --
                                               -----------             -----------             -----------             -----------
   Total expenses                                5,581,753               3,966,433               4,865,323               2,636,853

Operating loss                                  (5,619,368)             (3,985,224)             (4,795,136)             (2,632,051)

Other income/(expenses)
Interest income                                    398,944                 476,273                 474,090                 179,603
Interest expense                                      (387)                    (85)                 (1,385)                   (264)
Loss on write down of marketable
  securities                                    (1,448,553)               (183,800)                     --                      --
                                               -----------             -----------             -----------             -----------

   Total other income (expenses)                (1,049,996)                292,388                 472,705                 179,339
                                               -----------             -----------             -----------             -----------

Equity in loss of affiliates                      (177,695)               (114,423)                     --                      --

Loss before cumulative effect of
  accounting change                             (6,847,060)             (3,807,259)             (4,322,431)             (2,452,712)
                                               -----------             -----------             -----------             -----------

Cumulative effect of accounting
  change                                          (380,000)                     --                      --                      --

Net loss                                        (7,227,060)             (3,807,259)             (4,322,431)             (2,452,712)
                                               ===========             ===========             ===========             ===========


Basic and diluted loss per share
applicable to common stockholders
Before cumulative effect of accounting
change                                               (0.36)                  (0.20)                  (0.24)                  (0.15)
Cumulative effect of accounting change               (0.02)                     --                      --                      --
                                               -----------             -----------             -----------             -----------
                                                     (0.38)                  (0.20)                  (0.24)                  (0.15)
                                               ===========             ===========             ===========             ===========

Weighted average shares used in
computing per share amounts                     19,210,037              18,935,312              18,210,037              15,879,359
                                               ===========             ===========             ===========             ===========
</TABLE>


                                       27
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

     Brek intends to continue marketing its payment processing services
throughout Hong Kong and the Asia-Pacific region as well as North America and
Europe. As a result, its financial results could be affected by factors such as
changes in foreign currency exchange rates or weak economic conditions in its
existing and potential markets, however, the fact that the Hong Kong dollar,
Brek's functional currency, is pegged to the U.S. dollar reduces Brek's risk.

     Brek expects that its initial oil and gas acquisitions will be in the
United States. If Brek makes acquisitions outside of the United States its
financial results could be affected by factors such as changes in foreign
currency exchange rates or weak economic conditions.

Financial Instruments

     Brek primarily invests in fixed rate investments with short maturities,
which do not present a material interest rate risk, however, Brek's interest
income is sensitive to changes in the general level of Hong Kong and U.S.
interest rates. There have been no significant changes in Brek's exposure to
changes in either interest rates or foreign currency exchange rates for the year
ended December 31, 2001. Its exposure to interest rates is limited as it does
not have variable rate and long-term borrowings. Brek is subject to variable
interest rates on its bank deposits that are cash and short-term investments.
These investments are held at cost because there are no significant market price
movements. As of December 31, 2001, a hypothetical 10% immediate increase or
decrease in interest rates would increase or decrease Brek's annual interest
expense and income by approximately $nil and $1,617,000, respectively.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The consolidated financial statements and reports of Brek's independent
public accountants are filed as part of this report on pages F-1 through F-35.

     The consolidated financial statements and reports of the independent public
accountants of Gasco Energy, Inc. are filed as part of this report on pages F-36
through F-55.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     Brek has had no disagreements with its Independent Accountants on
accounting and financial disclosure.


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The names, ages, and terms of office of directors and executive officers of
Brek are set forth below:

Name (1)                     Position With Company

Gregory M. Pek               Director, President, and Chief Executive Officer
Ravi K. Daswani              Director
Douglas Moore                Director
Ian G. Robinson              Director, Chairman of the Board
James Pratt                  Director
Marc Bruner (2)              Director
Kenneth G.C. Telford         Secretary, and Chief Financial Officer

     (1)  None of Brek's officers or directors, other than Marc Bruner, is a
          resident or citizen of the United States

     (2)  Mr. Bruner was appointed as a Member of Brek's Board of Directors on
          July 5, 2001


                                       28
<PAGE>

     Gregory M. Pek, 46, has been a Director of Brek since March 3, 1999 and has
been a Director of First Ecommerce Asia Limited since its inception. Mr. Pek was
President and Chief Executive Officer since March 3, 1999 until June 27, 2000.
Mr. Pek assumed the position of President and co-Chief Executive Officer on
October 16, 2000 until August 31, 2001 when he became Chief Executive Officer
upon the resignation of Mr. Daswani. He was from March 1994 to February 1999 an
executive officer of David Resources Company Limited, Kong Tai International
Holdings Company Limited and from September 1998 to February 1999 a director of
Singapore Hong Kong Properties Investment Limited. Before 1994, Mr. Pek was a
director and officer of a number of public companies in Canada.

     Ravi K. Daswani, 35, has been a Director of Brek since March 3, 1999 and
was a Director of First Ecommerce Asia Limited since its inception until July
2001. 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, he was the managing director of a wholesale and
retail apparel business. He has established international operations trading in
dry goods, consumer electronics, apparel and Internet services in Africa, Latin
America and Asia.

     Ian Robinson, 62, has been a Director of Brek since February 24, 2000, was
appointed Vice-Chairman on November 29, 2000 and Chairman on January 19, 2001.
Mr. Robinson has 45 years of experience as a Chartered Accountant and was a
former senior partner of the Hong Kong office of the international accountancy
firm Ernst & Young. He has been based in Hong Kong since 1980 servicing the Asia
region and has had experience in major countries around the world. Mr. Robinson
specializes in corporate rescue, restructuring, insolvency, investigation,
business valuation and trouble shooting generally. Mr. Robinson also holds a
number of directorships including being a member of the Supervisory Board and
member of the Executive Committee of the Hong Kong Housing Society.

     Douglas Moore, 43, has been a Director of Brek since October 27, 1999. Mr.
Moore is the Chief Executive Officer of Henderson Cyber Limited, the high
technology subsidiary of the Henderson Group, which comprises Henderson Land
Development Company Limited and its subsidiaries. Mr. Moore is also the Head of
Strategic Planning of Henderson Land. Mr. Moore is also a non-executive director
of Blu Spa, a botanical beauty product company. From 1994 until early 2000, Mr.
Moore was the Head of the Hong Kong Market of Credit Suisse and a director of
Credit Suisse Investment Advisory (Hong Kong) Limited. Prior to 1994, Mr. Moore
practiced international and Canadian tax law with the Hong Kong office of
McMillan Binch, a major Canadian law firm. He is a Canadian and a Hong Kong
lawyer.


                                       29
<PAGE>

     James Pratt, 53, was appointed to Brek's Board of Directors in June 2000.
Mr. Pratt is Deputy Chairman of the GSM Association. Mr. Pratt was previously
Managing Director of Asia Wireless, a division of Telstra International, Telstra
Corporation of Australia where he oversaw all of Telstra Group's wireless
operations and investments throughout the Asia Pacific Region. Mr. Pratt was
formerly Chief Executive Officer of Peoples Phone in Hong Kong since 1996. Prior
to this he was general manager of the telecommunications division of Mitsubishi
Electric Australia. Mr. Pratt has more than thirty years international
management experience in the Asia Pacific telecommunications industry.

     Marc Bruner, 52, has been a Member of Brek's Board of Directors since July
5, 2001. Mr. Bruner is Chairman of the Board of Gasco Energy, Inc., an OTCBB
listed natural gas company in which Brek owns preferred stock convertible into
an approximate 26% interest in Gasco, and founder of Pannonian Energy Inc.,
which merged, with Gasco in 2001. Previously, from 1996 to 1998, Mr. Bruner was
the founding chairman of Ultra Petroleum, a TSE and AMEX listed natural gas
company. Mr. Bruner was a founder in 1998 of Pennaco Energy, Inc., a coal bed
methane company, and in 1996 of RIS Resources International, a natural gas
company.

     Kenneth G.C. Telford, 52, has been Brek's Chief Financial Officer and
Secretary since July 1,2000. 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.


                                       30
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

<TABLE>
<CAPTION>
                                                  Annual compensation                          Long term compensation
                                                                                                 Awards      Payouts

                                                                                               Shares of
                                                                                Restricted     common stock
                                                               other annual     stock          underlying    LTIP      All Other
Name and Principal Position  Year       Salary         Bonus   compensation     award(s)       options       Payouts   Compensation
---------------------------  ----       ------         -----   ------------     --------       -------       -------   ------------
<S>                          <C>   <C>              <C>             <C>             <C>       <C>                <C>           <C>
Gregory Pek, CEO             2001      $218,710     $107,097        $15,484                     75,000
                             2000       238,172           --             --          --        200,000           --            --
                             1999       167,742           --             --          --        100,000           --            --

Ravi Daswani, Co-CEO [1]     2001       154,839      109,677          4,473                     75,000
                             2000       238,172           --             --          --        200,000           --            --
                             1999       167,742           --             --          --        100,000           --            --

Kenneth Telford, CFO         2001       259,994      117,419         13,005                    200,000

                                       Does not
                             2000  exceed 100,000                                              100,000
</TABLE>

     (1)  resigned as co-ceo on August 31, 2001

     Directors and executive officers were granted options to purchase the
Company's common stock during the year as follows:

Option grants in Fiscal year ended Dec. 31, 2001

<TABLE>
<CAPTION>
                                  Individual grants
                                                                                        Potential realizable value at assumed
                                                                                       annual rates of Stock price appreciation
                                                                                                   for option term
                                      Percent of
                                      Total
                   Number of          options
                   securities         granted to     Exercise                                       Value at grant date
                   underlying         employees in   of base         Market                      ------------------------
Name               options granted    fiscal year    price ($/Sh)    price    Expiration Date     0%       5%        10%
----               ---------------    -----------    ------------    -----    ---------------    ---      ---      ------
<S>                         <C>            <C>           <C>          <C>     <C>                 <C>     <C>      <C>
Gregory Pek, CEO            75,000         5.9%          0.40         0.41    31-Oct-06           750     9,246    19,523
Ravi Daswani                75,000         5.9%          0.40         0.41    31-Oct-06           750     9,246    19,523
Ian Robinson                75,000         5.9%          0.40         0.41    31-Oct-06           750     9,246    19,523
Douglas Moore              125,000         9.8%          0.40         0.41    31-Oct-06         1,250    15,409    32,539
James Pratt                 75,000         5.9%          0.40         0.41    31-Oct-06           750     9,246    19,523
Marc Bruner                 75,000         5.9%          0.40         0.41    31-Oct-06           750     9,246    19,523
Kenneth Telford            200,000        15.6%          0.40         0.41    31-Oct-06         2,000    24,655    52,062
</TABLE>


Total effective options as at Dec. 31, 2001   1,280,000

Replacement Option Grants

On October 31, 2001, the named executives set forth below rescinded options and
warrants to purchase Brek's common stock, and Brek reissued a new number of new
options having five-year terms and exercise prices equal to the then-fair value
of the stock (which were lower than the exercise prices of the options and
warrants rescinded). See "Report of Compensation Committee of the Board of
Directors."


                                       31
<PAGE>
<TABLE>
<CAPTION>

                                                                                               Length (months) of
                                                                        Exercise price of     option/warrant term
                                            Number of options/warrants  options/warrants      remaining at Date of
                                                     rescinded             rescinded              Replacement
                                 New        ------------------------- ----------------------   -------------------
                    Number of    exercise
Name                new options  price       Options    Warrants      Options     Warrants     Options     Warrants
----                -----------  -----       -------    --------      -------     --------     -------     --------
<S>                 <C>          <C>         <C>          <C>           <C>         <C>           <C>         <C>
Gregory Pek, CEO     75,000      0.40        150,000          --        5.05          --          46          --
                                              50,000          --        7.65          --          32          --
Ravi Daswani         75,000      0.40        150,000          --        5.05          --          46          --
                                              50,000          --        7.65          --          32          --
Ian Robinson         75,000      0.40         50,000      50,000        5.05        1.25          46          53
Douglas Moore       125,000      0.40        100,000      30,000        5.05        1.25          46          53
James Pratt          75,000      0.40         50,000      30,000        5.05        1.25          46          53
Kenneth Telford     200,000      0.40        100,000      50,000        5.05        1.25          46          53
</TABLE>

     No share options were exercised during the year; share options outstanding
in the hands of directors and senior management as of December 31, 2001 were as
follows:

<TABLE>
<CAPTION>


                                                        Number of securities underlying
                                                         unexercised options at fiscal          Value of Unexercised In-The -Money
                       Shares                                   year end (#)                      options at fiscal year end ($)
                     acquired on                        -------------------------------         ----------------------------------
        Name        exercise (#)   value realized ($)   Exercisable       Unexercisable         Exercisable          Unexercisable
        ----        ------------   ------------------   -----------       -------------         -----------          -------------
<S>                      <C>               <C>             <C>                 <C>                     <C>                <C>
Gregory Pek, CEO         0                 0               75,000              0                       0                  0
Ravi Daswani             0                 0               75,000              0                       0                  0
Ian Robinson             0                 0               75,000              0                       0                  0
Douglas Moore            0                 0              125,000              0                       0                  0
James Pratt              0                 0               75,000              0                       0                  0
Marc Bruner              0                 0               75,000              0                       0                  0
Kenneth Telford          0                 0              200,000              0                       0                  0
</TABLE>


                                       32
<PAGE>

Directors' Compensation

     Directors, who are not officers of the Company, are paid fees of $10,280
per year in connection with their serving on the Board. The Chairman of the
Board receives $54,000 per year. Directors are reimbursed for out-of-pocket
expenses incurred with attending Board meetings.

Employment Agreements

     Gregory Pek.

Brek entered into an employment agreement with Gregory Pek, its President and
Chief Executive Officer, the term of which commenced in January 1999. This
agreement provided that Brek would pay Mr. Pek a monthly salary of HK $100,000
(approximately USD 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 USD 19,230); however, in December 2000
Mr. Pek agreed to have his monthly salary temporarily reduced to HK $100,000
(approximately USD 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 USD 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 USD 21,150) plus an
additional month's salary per calendar year of service as a year-end payment.
These agreements will terminate on August 31, 2002 unless Brek chooses to extend
the terms of such agreements. If Brek does not choose to extend the terms of
such agreements, the agreements provide that Brek must pay a termination payment
to Mr. Pek in August 2002 equal to three months' salary.

     Ravi Daswani.

Brek entered into an employment agreement with Ravi Daswani, who served as the
Senior Vice President and Chief Operating Officer until his resignation in
August 2001, the term of which commenced in January 1999. This agreement
provided that Brek would pay Mr. Daswani a monthly salary of HK $100,000
(approximately USD 12,820) plus an additional month's salary per calendar year
of service as a year-end payment. In January 2000 Mr. Daswani's monthly salary
was increased to HK $150,000 (approximately USD 19,230); however, in December
2000 Mr. Daswani agreed to have his monthly salary temporarily reduced to HK
$100,000 (approximately USD 12,820). Brek entered into a new six-month
employment agreement with Mr. Daswani covering the period from March 1, 2001 to
August 31, 2001. Under this agreement, Mr. Daswani was paid (i) a monthly salary
of HK $150,000 (approximately USD 19,230), (ii) an additional lump-sum payment
equal to four months' salary on August 31, 2001 and (iii) a prorated portion of
one month's salary, equal to HK $100,000 (approximately USD 12,820), on August
31, 2001.

     Kenneth Telford.

Brek entered into employment agreements with Kenneth Telford, its Chief
Financial Officer, the terms of which commenced in March 2001. Pursuant to these
agreements, Brek paid Mr. Telford an aggregate monthly salary of HK $165,000
(approximately USD 21,250), for the period from March 1, 2001 through September
30, 2001, issued Mr. Telford warrants to purchase 50,000 shares of Brek's common
stock at an exercise price of USD 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 USD 21,250) plus an additional month's
salary per calendar year of service as a year-end payment. This agreement will
terminate on August 31, 2002 unless Brek chooses to extend the term of the
agreement. If Brek does not choose to extend the term of the agreement, the
agreement provides that Brek must pay a termination payment to Mr. Telford in
August 2002 equal to three months' salary.


                                       33
<PAGE>

Report of Compensation Committee

of the Board of Directors

     Notwithstanding anything to the contrary set forth in any of Brek's
previous or future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the "Exchange Act') that might incorporate this Form 10-K
Annual Report or future filings with the Securities and Exchange Commission, in
whole or in part, the following report shall not be deemed to be incorporated by
reference into any such filing.

Membership and Role of the Compensation Committee

     The Compensation Committee consists of the following non-employee members
of Brek's Board of Directors: Douglas Moore, Ian Robinson and James Pratt. The
Compensation Committee reviews and determines Brek's executive compensation
objectives and policies, administers Brek's stock plans and grants stock
options.

     In Hong Kong, competition for executive talent is intense in our industry.
With this perspective, the Compensation Committee reviews and sets the
compensation of Brek's executive officers.

Executive Compensation Program

Objectives

     The objectives of Brek's executive compensation program are to:

     o    Attract and retain highly talented and productive executives

     o    Provide incentives for superior performance

     o    Align the interests of executive officers with the interests of Brek's
          stockholders by basing a significant portion of compensation upon
          Brek's performance

Components

     Brek's executive compensation program combines the following two
components, in addition to the benefit plans offered to all employees: base
salary and long-term incentive compensation consisting of stock option grants.

     It is Brek's policy to set base salary levels and long-term incentive
compensation on a comparable level with an average of those of select
corporations to which Brek compares itself for purposes of executive
compensation. Brek selects such corporations on the basis of a number of
factors, such as their size and complexity, the nature of their businesses, the
regions in which they operate, the structure of their compensation programs and
the availability of compensation information. The corporations selected for such
comparison may vary from year to year based upon market conditions and changes
in both Brek's and the corporations' businesses over time. Brek believes that
competitive compensation levels are necessary to attract and retain the
high-caliber executives necessary for the successful conduct of Brek's business.

     Each component of Brek's executive compensation program serves a specific
purpose in meeting Brek's objectives. The components of Brek's executive
compensation program are described below, except for any variations arising from
individual provisions of employment agreements that Brek enters into upon hiring
an executive.


                                       34
<PAGE>

Base Salary

     The Compensation Committee annually reviews the salaries of Brek's
executives. When setting base salary levels in a manner consistent with the
objectives outlined above, the Committee considers competitive market conditions
for executive compensation, Company performance and individual performance. The
measures of individual performance considered in setting 2001 salaries included,
to the extent applicable to an individual executive officer, a number of
quantitative and qualitative factors such as Brek's historical and recent
financial performance in the principal area of responsibility of the officer
(including such measures as gross margin, net income, sales, customer count and
market share), the individual's progress toward non-financial goals within his
area of responsibility, individual performance, experience and level of
responsibility and other contributions to Brek's success. The Compensation
Committee has not found it practicable, nor has it attempted, to assign relative
weights to the specific factors used in determining base salary levels, and the
specific factors used may vary among individual officers. As is typical for most
corporations, payment of base salary is not conditioned upon the achievement of
any specific, pre-determined performance targets.

Long-term incentive compensation.

 Brek believes that option grants align executive interests with stockholder
interests by creating a direct link between compensation and stockholder return,
give executives a significant, long-term interest in Brek's success, and help
retain key executives in a competitive market for executive talent.

Brek's Stock Option Plan authorizes the Committee to grant stock options to
executives. Option grants are made from time to time to executives whose
contributions have or will have a significant impact on Brek's long-term
performance. Brek's determination of whether option grants are appropriate each
year is based upon individual performance measures established for each
individual. Options are not necessarily granted to each executive during each
year. Generally, options granted to executive officers vest in equal annual
installments over a period of two years and expire five years from the date of
grant.

     Benefits. Brek believes that it must offer a competitive benefit program to
attract and retain key executives.

During 2001, Brek provided medical and other benefits to its executive officers
that are generally available to Brek's other employees.

Compensation of the Chief Executive Officer. The chief Executive Officer's
compensation plan for 2001 included the same elements and performance measures
as the plans of Brek's other executive officers.


Submitted by:              Douglas Moore
                           Ian Robinson
                           James Pratt


                                       35
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the current beneficial ownership of Brek's
common stock by (i) each person known by Brek to beneficially own five percent
or more of Brek's outstanding common stock, (ii) Brek's Chief Executive Officer
and Directors and (iii) all of Brek's Executive officers and Directors as a
group. Except as otherwise indicated, all shares of Common Stock are
beneficially owned, and investment and voting power is held, by the person named
as owner.

Name and Address of                   Number of Shares          Percentage
Beneficial Owner                    Beneficially Owned           Ownership
----------------                    ------------------           ---------

Gregory M. Pek                         1,782,500(3)                8.01%
Ravi K. Daswani                          485,461(3)                2.18%
Power Broadcasting Inc.                1,333,333(1)                5.99%
Douglas Moore                            391,667(2)                1.76%
Ian Robinson                             595,000(3)                2.67%
James Pratt                               95,000(3)                0.43%
Marc Bruner                               75,000(3)                0.34%
Kenneth Telford                          300,000(4)                1.35%

Executive Officers and
  Directors as a group                 3,724,628(5)               16.74%

(1)  Includes warrants to purchase 333,333 shares of common stock.

(2)  Includes options to purchase 125,000 shares and warrants to purchase 66,667
     shares of common stock.

(3)  Includes options to purchase 75,000 shares of common stock.

(4)  Includes options to purchase 200,000 shares

(5)  Includes options to purchase 700,000 shares and warrants to purchase 66,667
     shares of common stock.


                                       36
<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During 2001, Brek paid consulting fees of $28,629 to former directors.

     During 2001, Brek advanced $270,055 to Vallenar Energy Corp. A director and
officer of Brek are also directors of Vallenar, and certain shareholders of
Brek's affiliate, Gasco, are also shareholders of Vallenar.

     Mr. Bruner has agreed to exchange three million shares of Gasco common
stock for 8,250,000 shares of newly issued Brek common stock. Brek expects this
exchange to occur in the second quarter of 2002.

     Mssers. Pek, Robinson and Telford agreed in February 2002 to subscribe for
200,000 , 500,000 and 100,000 shares of Brek common stock, respectively, at
$0.50 per share, the prevailing market price of the stock at the time of the
agreement. These transactions were completed in March 2002.

     Brek believes that the above transactions are on terms at least as
favorable to it as could have been obtained in an arm's length transaction.

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K

FINANCIAL STATEMENTS

(See pages F-1 to F-55 below)

EXHIBITS

3.1  Articles of Incorporation*

3.2  By-laws*

4.1  Specimen Stock Certificate*

11.1 Computation of Earnings (Loss) Per Share

21.1 List of Subsidiaries

23.1 Consent of Deloitte Touche Tohmatsu

23.2 Consent of KPMG

23.3 Consent of Deloitte & Touche, LLP

23.4 Consent of Wheeler Wasoff, P.C.

23.5 Consent of  HJ & Associates, LLC

*    Incorporated by reference to the Company's Registration Statement on Form
     10 filed October 21, 1999


                                       37
<PAGE>

REPORTS ON FORM 8-K

Form 8-K Filed on January 10, 2000 in Regard to Private Placement Made in
December 1999

Form 8-K Filed on March 17, 2000 in Regard to Private Placement Completed on
March 6, 2000

Form 8-K Filed on September 25,2000 in Regard to Resignation of Independent
Accountants and Appointment of New Independent Accountants

Form 8-K Filed on December 1,2000 in Regard to Status of Company Operations

Form 8-K Filed on January 30,2001 in Regard to Status of Company Operations

Form 8-K Filed on April 5, 2001 in Regard to Financial Results for the Fiscal
Year ended December 31, 2000

Form 8-K Filed on May 14, 2001 in Regard to Memorandum of Understanding to merge
with Gasco Energy, Inc.

Form 8-K Filed on May 21, 2001 in Regard to Financial Results for the First
Quarter ended March 31, 2001

Form 8-K Filed on June 22, 2001 in Regard to Acquisition of Remaining interest
of FEDS

Form 8-K Filed on July 23, 2001 in Regard to Acquisition of Shares of Gasco
Energy, Inc.

Form 8-KA Filed on September 18, 2001 in Regard to Acquisition of Remaining
interest of FEDS

Form 8-K Filed on November 2, 2001 in Regard to Disposal of FEDS Shares

Form 8-KA Filed on November 7, 2001 in Regard to Acquisition of Shares of Gasco
Energy, Inc.

Form 8-KA Filed on December 3, 2001 in Regard to Disposal of FEDS Shares

Form 8-K Filed on February 1, 2002 in Regard to Results of Annual Meeting


                                       38
<PAGE>


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Independent Auditors' Reports......................................F-1 & F-2


Consolidated Balance Sheets at December 31, 2001 and 2000...............F-3


Consolidated Statements of Operations for the years
  ended December 31, 2001, 2000, 1999 and for the
  period from September 16, 1998 to December 31, 2001...................F-4


Consolidated Statements of Stockholders' Equity for the
  years ended December 31, 2001, 2000, 1999 and for the
  period from September 16, 1998 to December 31, 2001...................F-5


Consolidated Statements of Cash Flows for the years
  ended December 31, 2001, 2000, 1999 and for the
  period from September 16, 1998 to December 31, 2001..............F-6 & F-7


Notes to Consolidated Financial Statements........................F-8 - F-35


                               GASCO ENERGY, INC.
                        Consolidated Financial Statements
                        and Independent Auditors' Reports
                       For the years ended 2001, 2000 and
                    1999 and for the period from inception to
                                December 31, 2001

           INDEX TO FINANCIAL GASCO ENERGY, INC. FINANCIAL STATEMENTS

Independent Auditors' Reports                                        F-36 - F-38

Consolidated Balance Sheets at December 31, 2001 and 2000            F-39

Consolidated Statements of Operations for the Years Ended
    December 31, 2001, 2000 and 1999                                 F-40

Consolidated Statements of Stockholders' Equity for the Years
    Ended December 31, 2001, 2000 and 1999                           F-41

Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2001, 2000 and 1999                                 F-42

Notes to Consolidated Financial Statements                           F-43 - F-55

<PAGE>

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF BREK ENERGY CORPORATION (Formerly
First Ecom.com, Inc.)

We have audited the accompanying consolidated balance sheets of Brek Energy
Corporation and subsidiaries (a development stage company) ("the Company") as of
December 31, 2001 and 2000, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 2001 and the period from September 16, 1998 (date
of inception) to December 31, 2001. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. The Company's
consolidated financial statements as of and for the year ended December 31, 1999
and the period from September 16, 1998 (date of inception) through December 31,
1999 (not presented separately herein) were audited by other auditors whose
report, dated February 28, 2000, expressed an unqualified opinion on those
statements. The consolidated financial statements for the period from September
16, 1998 (date of inception) through December 31, 1999 reflect total revenues
and net loss of $2,634 and $6,788,885, respectively, of the related totals. The
other auditors' report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for such prior period, is based solely on the
report of such other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 audits and the report of
other auditors provides a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, such
consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Company as of December 31, 2001 and 2000,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 2001 and for the period from September 16, 1998
(date of inception) to December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.

As discussed in note 2 to the consolidated financial statements, Brek Energy
Corporation changed its method of accounting for certain convertible instruments
during the year ended December 31, 2000 and during the year ended December 31,
2001, the Company changed its method of accounting for goodwill to conform with
transitional provisions of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" that require the discontinuance of
goodwill and indefinite life intangible assets amortization for acquisitions and
investments made after June 30, 2001.


Deloitte Touche Tohmatsu
Hong Kong
March 20, 2002, except for note 20(f) as to which the date is April 8, 2002.



                                      F-1
<PAGE>


INDEPENDENT AUDITORS' REPORT

TO The Board of Directors and Stockholders BREK ENERGY CORPORATION (Formerly
First Ecom.com, Inc.)

We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Brek Energy Corporation and subsidiaries
(a group of companies in development stage) (together "the Group") for the year
ended December 31, 1999 and the period from September 16, 1998 (date of
inception) to December 31, 1999 (such statements of cumulative results of
operations, stockholders' equity and cash flows are not separately presented
herein). These financial statements are the responsibility of the Group's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in Hong Kong and the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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 consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Brek Energy Corporation and subsidiaries (a group of companies in development
stage) for the year ended December 31, 1999 and the period from September 16,
1998 (date of inception) to December 31, 1999 in conformity with accounting
principles generally accepted in the United States of America.





KPMG
Hong Kong
February 28, 2000


                                      F-2
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS

                (In United States dollars, except share amounts)

<TABLE>
<CAPTION>
                                                                                                        December 31,
                                                                                                        ------------
                                                                                                   2001                2000
                                                                                               ------------       ------------
<S>                                                                                            <C>                <C>
                                               ASSETS

Current Assets:
       Cash and cash equivalents ........................................................      $  2,088,484       $ 31,211,711
       Trade accounts receivable (net of allowance for doubtful accounts
         of $Nil and $11,558 at December 31, 2001 and 2000) .............................            28,858             71,015
       Accrued interest receivable ......................................................             3,326             85,586
       Marketable securities (Note 3) ...................................................            53,309            367,648
       Prepaid insurance ................................................................           288,869            256,361
       Rental deposits ..................................................................            39,226            168,325
       Other prepaid expenses and deposits ..............................................            94,780            121,778
                                                                                               ------------       ------------

                Total current assets ....................................................         2,596,852         32,282,424
     Note receivable (Note 5) ...........................................................         1,865,244                 --
     Loan receivable (Note 6) ...........................................................           270,055                 --
     Property and equipment, net (Note 7) ...............................................           257,321            578,866
     Investment in and advances to affiliates (Note 9) ..................................        18,507,906          3,107,882
                                                                                               ------------       ------------

                Total assets ............................................................      $ 23,497,378       $ 35,969,172
                                                                                               ============       ============


                                           LIABILITIES AND STOCKHOLDERS' EQUITY

     Current liabilities:
       Accounts payable .................................................................      $     15,389       $    120,974
       Accrued professional and consulting fees .........................................            65,611            208,654
       Accrued salaries .................................................................           129,032             40,256
       Accrued printing costs ...........................................................            30,000                 --
       Other accrued liabilities ........................................................            31,347            133,885
       Deferred revenue .................................................................                --              5,604
                                                                                               ------------       ------------

                Total current liabilities ...............................................           271,379            509,373
                                                                                               ------------       ------------

     Commitments and Contingencies (Note 18)

     Stockholders' equity:
       Common stock 200,000,000 shares authorized, $0.001 par value,
         shares issued and outstanding: 2001: 19,210,037;
         2000: 19,210,037 ...............................................................            19,211             19,211
       Additional paid-in capital .......................................................        58,266,456         60,038,934
       Deficit accumulated during the development stage .................................       (35,059,668)       (24,598,346)
                                                                                               ------------       ------------

                Total stockholders' equity ..............................................        23,225,999         35,459,799
                                                                                               ------------       ------------

                Total Liabilities and Stockholders' Equity ..............................        23,497,378       $ 35,969,172
                                                                                               ============       ============
</TABLE>


                See notes to consolidated financial statements.

                                      F-3
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                (In United States dollars, except share amounts)

<TABLE>
<CAPTION>
                                                                                                                       Cumulative
                                                                                                                          from
                                                                                                                       September
                                                                                                                     16, 1998 (date
                                                                                    Year ended December 31,         of inception) to
                                                                                    -----------------------           December 31,
                                                                          2001            2000           1999            2001
                                                                      ------------    ------------    ------------    ------------
<S>                                                                   <C>             <C>             <C>             <C>
Revenue
       Payment processing .........................................   $    301,978    $     38,223    $      2,634    $    342,835
                                                                      ------------    ------------    ------------    ------------
     Operating expenses:
       Sales and marketing (including stock based compensation
       costs (recovery) of $(108,352), $285,482, $233,528 and
       $410,658 for the years ended December 31, 2001, 2000 and
       1999 and the period from September 16, 1998 (date of
       inception) to December 31, 2001 ............................        611,628       2,113,149       1,563,246       4,288,023
       General and administrative (including stock based
         compensation costs of $312,246, $1,443,530, $256,369 and
         $2,012,145 for the years ended December 31, 2001, 2000 and
         1999 and the period from September 16, 1998 (date of
         inception) to December 31, 2001 ..........................      7,153,141       8,297,692       4,241,389      19,692,222
       Systems and technology (including stock based compensation
         costs (recovery) of $(123,802), $59,307, $156,635 and
         $92,140 for the years ended December 31, 2001, 2000 and
         1999 and the period from September 16, 1998 (date of
         inception) to December 31, 2001 ..........................        836,134       1,489,056         552,221       2,877,411
       Charges for impairment of certain long-lived and prepaid
        assets (Notes 8 and 9) ....................................      3,159,505         949,418              --       4,108,923
                                                                      ------------    ------------    ------------    ------------

                Total operating expenses ..........................     11,760,408      12,849,315       6,356,856      30,966,579
                                                                      ------------    ------------    ------------    ------------

     Loss from operations .........................................    (11,458,430)    (12,811,092)     (6,354,222)    (30,623,744)
                                                                      ------------    ------------    ------------    ------------

     Other income (expenses):
       Interest income ............................................        704,725       1,527,959          36,761       2,269,445
       Interest expense ...........................................             --          (2,121)       (471,424)       (473,545)
       Loss on write down of marketable securities (Note 3) .......       (314,339)     (1,632,353)             --      (1,946,692)
                                                                      ------------    ------------    ------------    ------------

                Total other income (expenses) .....................        390,386        (106,515)       (434,663)       (150,792)
                                                                      ------------    ------------    ------------    ------------

     Equity in loss of affiliates (Note 9) ........................       (882,146)       (292,118)             --      (1,174,264)
                                                                      ------------    ------------    ------------    ------------

     Loss from continuing operations ..............................    (11,950,190)    (13,209,725)     (6,788,885)    (31,948,800)
                                                                      ------------    ------------    ------------    ------------

     Income (loss) from discontinued operations (Note 15)
       Net loss ...................................................       (236,683)     (4,219,736)             --      (4,456,419)
       Gain on discontinuance (net of $Nil tax effects) ...........      1,725,551              --              --       1,725,551
                                                                      ------------    ------------    ------------    ------------

                Total income (loss) from discontinued operations ..      1,488,868      (4,219,736)             --      (2,730,868)
                                                                      ------------    ------------    ------------    ------------

     Loss before cumulative effect of accounting change ...........    (10,461,322)    (17,429,461)     (6,788,885)    (34,679,668)

     Cumulative effect of accounting change .......................             --        (380,000)             --        (380,000)
                                                                      ------------    ------------    ------------    ------------

     Net loss .....................................................   $(10,461,322)   $(17,809,461)   $ (6,788,885)   $(35,059,668)
                                                                      ============    ============    ============    ============

     Basic and diluted loss per share applicable to
     common stockholders
       Continuing operations ......................................          (0.62)          (0.73)          (0.56)          (1.78)
       Discontinued operations ....................................           0.08           (0.23)             --           (0.15)
       Cumulative effect of accounting change .....................             --           (0.02)             --           (0.02)
                                                                      ------------    ------------    ------------    ------------

       ............................................................          (0.54)          (0.98)          (0.56)          (1.95)
                                                                      ============    ============    ============    ============

       Weighted average shares used in computing per share amounts      19,210,037      18,064,980      12,043,662      17,947,593
                                                                      ============    ============    ============    ============
</TABLE>


                See notes to consolidated financial statements.

                                      F-4
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                (In United States dollars, except share amounts)
<TABLE>
<CAPTION>

                                                                                                    Deficit
                                                                                                  accumulated
                                                         Common stock           Additional        during the            Total
                                                         ------------            paid-in          development       stockholders'
                                                   Shares         Amount         capital             stage             equity
                                                   ------         ------         -------             -----             ------
<S>                                               <C>             <C>          <C>                <C>                <C>
Balance at September 16, 1998
  (date of inception) ......................              --      $    --      $         --       $         --       $         --
                                                  ----------      -------      ------------       ------------       ------------

Balance at December 31, 1998 ...............              --           --                --                 --                 --
Impact of merger with JRL
  Resources Corp. ..........................       4,040,000        4,040            (4,940)                --               (900)
Issuance of shares of common stock
  in lieu of organizational costs ..........       8,000,000        8,000           300,000                 --            308,000
Issuance of common stock and
  warrants .................................       2,916,667        2,917        17,364,583                 --         17,367,500
Stock based compensation ...................              --           --           646,532                 --            646,532
Proceeds received on issuance of debt
  securities with detachable warrants ......              --           --           410,000                 --            410,000
Net loss for the year ......................              --           --                --         (6,788,885)        (6,788,885)
                                                  ----------      -------      ------------       ------------       ------------

Balance at December 31, 1999 ...............      14,956,667       14,957        18,716,175         (6,788,885)        11,942,247
Issuance of common stock (net of
  issuance cost of $2,095,562) .............       3,228,500        3,229        20,915,835                 --         20,919,064
Fair value of warrants issued with
  common stock .............................              --           --         7,656,124                 --          7,656,124
Stock-based compensation ...................              --           --         3,947,837                 --          3,947,837
Shares issued in business
  combination (Note 1) .....................          24,870           25           623,963                 --            623,988
Shares issued on exercise of warrants ......       1,000,000        1,000         7,799,000                 --          7,800,000
Cumulative effect of accounting change
  for beneficial feature of convertible debt              --           --           380,000                 --            380,000
Net loss for the year ......................              --           --                --        (17,809,461)       (17,809,461)
                                                  ----------      -------      ------------       ------------       ------------

Balance at December 31, 2000 ...............      19,210,037       19,211        60,038,934        (24,598,346)        35,459,799
Issuance of warrants .......................              --           --           174,900                 --            174,900
Cancellation of stock options relating
  to discontinued operations ...............              --           --        (1,947,378)                --         (1,947,378)
Net loss for the year ......................              --           --                --        (10,461,322)       (10,461,322)
                                                  ----------      -------      ------------       ------------       ------------
Balance at December 31, 2001 ...............      19,210,037      $19,211      $ 58,266,456       $(35,059,668)      $ 23,225,999
                                                  ==========      =======      ============       ============       ============
</TABLE>


                See notes to consolidated financial statements.

                                      F-5
<PAGE>

                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                (In United States dollars, except share amounts)
<TABLE>
<CAPTION>
                                                                                                                        Cumulative
                                                                                                                           from
                                                                                                                         September
                                                                                                                         16, 1998
                                                                              Year ended December 31,                 (inception) to
                                                                      --------------------------------------           December 31,
                                                                      2001             2000             1999               2001
                                                                      ----             ----             ----               ----
<S>                                                              <C>               <C>               <C>               <C>
Cash flows from operating activities:
Net loss ...................................................     $(10,461,322)     $(17,809,461)     $ (6,788,885)     $(35,059,668)
Adjustments to reconcile net loss to net cash used
 in operating activities:
  Equity loss in affiliates ................................          882,146           292,118                --         1,174,264
  Organizational costs in excess of cash paid ..............               --                --           300,000           300,000
  Stock compensation costs (recovery) ......................       (1,772,478)        3,947,837           646,532         2,821,891
  Depreciation .............................................          446,366           575,587           250,382         1,272,335
  (Gain) loss on disposal of equipment .....................          125,537            (6,085)            3,804           123,256
  Loss on disposal of equipment from discontinued operations            6,943                --                --             6,943
  Accretion of discount on loan ............................               --                --           410,000           410,000
  Cumulative effect of accounting change for
    beneficial feature of convertible debt .................               --           380,000                --           380,000
  Amortization of goodwill .................................          325,672           291,282                --           616,954
  Loss recognized on write down of marketable securities ...          314,339         1,632,353                --         1,946,692
  Charges for certain long-lived and prepaid assets ........        3,159,505         2,405,829                --         5,565,334
Changes in operating assets and liabilities
 net of business acquired:
  Trade accounts receivable and accrued interest receivable            96,852           (52,548)               --            44,304
  Prepaid financial advisory fee ...........................               --           672,022          (672,022)               --
  Other prepaid expenses and deposits ......................          110,906          (651,061)         (375,778)         (915,933)
  Amounts due from stockholders ............................               --            12,540           (12,540)               --
  Accounts payable .........................................          (96,706)          183,506           235,340           322,140
  Accrued professional and consulting fees .................         (143,043)          102,821           105,833            65,611
  Accrued salaries .........................................           88,776            40,256                --           129,032
  Other accrued liabilities ................................          (81,969)         (261,085)           30,313          (312,741)
  Amounts due to related companies .........................               --          (239,727)          239,727                --
  Deferred rent ............................................               --           (62,017)           62,017                --
  Deferred revenue .........................................           (5,604)          (12,471)           18,075                --
                                                                 ------------      ------------      ------------      ------------

Net cash used in operating activities ......................       (7,004,080)       (8,558,304)       (5,547,202)      (21,109,586)
                                                                 ------------      ------------      ------------      ------------

Cash flows from investing activities:
  Purchase of property and equipment .......................         (316,323)         (520,614)       (1,199,172)       (2,036,109)
  Proceeds from disposal of equipment ......................           33,284            22,803             5,806            61,893
  Proceeds from sale of subsidiary .........................        1,418,473                --                --         1,418,473
  Effect of acquisition of subsidiary on cash ..............       (2,232,059)       (1,409,319)               --        (3,641,378)
  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 ......................      (22,119,147)       (7,307,130)       (1,193,366)      (30,619,643)
                                                                 ------------      ------------      ------------      ------------

Cash flows from financing activities:
  Proceeds from issuance of common stock ...................               --        30,670,750        18,133,000        48,803,750
  Share issue cost paid ....................................               --        (2,460,458)         (318,750)       (2,779,208)
  Proceeds from exercise of warrants .......................               --         7,800,000                --         7,800,000
  Proceeds from short term loans with detachable warrants ..               --                --         1,000,000         1,000,000
  Proceeds from short term loans ...........................               --                --           750,000           750,000
  Repayment of short term loan .............................               --           (27,007)       (1,722,993)       (1,750,000)
  Principal payments under capital lease obligations .......               --            (5,746)           (1,083)           (6,829)
                                                                 ------------      ------------      ------------      ------------

Net cash provided by financing activities ..................               --        35,977,539        17,840,174        53,817,713
                                                                 ------------      ------------      ------------      ------------

Net increase (decrease) in cash and cash equivalents .......      (29,123,227)       20,112,105        11,099,606         2,088,484

Cash and cash equivalents at beginning of year/period ......       31,211,711        11,099,606                --                --
                                                                 ------------      ------------      ------------      ------------

Cash and cash equivalents at end of year/period ............     $  2,088,484      $ 31,211,711      $ 11,099,606      $  2,088,484
                                                                 ============      ============      ============      ============

Supplemental cash information:
Cash paid during the year/period:
  Interest .................................................     $         --      $      2,121      $     61,624      $     63,745
                                                                 ============      ============      ============      ============
</TABLE>


                                      F-6
<PAGE>

                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

                (In United States dollars, except share amounts)


Non-cash transactions during the year ended December 31, 2001:

(a)  In conjunction with the sale of its subsidiary, First Ecommerce Data
     Services Limited, the Company received from the purchaser a note receivable
     with a minimum guarantee amount of $2 million (Notes 5 and 9).

Non-cash transactions during the year ended December 31, 2000:

(a)  In connection with the issue of 3,228,500 common shares on March 6, 2000 by
     the Company, warrants to purchase 250,848 shares of the Company's common
     stock were granted to an investment bank, in addition to cash commission.

(b)  In conjunction with the acquisition of Asia Internet Limited, the Company
     issued 24,870 shares with a fair value of $623,988.

Non-cash transactions during the year ended December 31, 1999:

(a)  Property and equipment amounting to $4,871 were acquired under a capital
     lease during the year ended December 31, 1999.

(b)  Issuance of 8,000,000 shares to financial advisors for services rendered in
     connection with organization activities of the Group at a deemed value of
     $300,000, in excess of $8,000 cash received.

(c)  During the year ended December 31, 1999, $646,532 in compensation expense
     was recorded for options granted.


                See notes to consolidated financial statements.


                                      F-7
<PAGE>

                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                (In United States dollars, except share amounts)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES

         First Ecommerce Asia Limited ("FEAL") was incorporated in Hong Kong on
         September 16, 1998 with two shares of HK$1 per share issued and
         outstanding. On January 28, 1999, FEAL entered into an agreement and
         plan of merger with JRL Resources Corp., a company incorporated in the
         State of Florida on November 13, 1996 with 1,025,000 common shares
         issued and outstanding ("JRL Resources"), which had been inactive since
         its formation. Pursuant to the terms of the agreement and 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 the two shares of FEAL, and 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 non-operating public shell corporation
         with nominal net assets that resulted in the owners and management of
         the private company (FEAL) having operating control of the combined
         company after the transaction. For accounting purposes, the transaction
         has been treated as a reverse acquisition 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 established to facilitate electronic payment processing
         of e-commerce transactions for merchants and banks across the Internet.
         The Company has developed an electronic gateway to convert consumers'
         credit card information collected by merchants on the Internet into a
         format that can be processed by banks. The Company acts as an
         intermediary payment system service provider between on-line merchants,
         consumers and banks. The principal geographic area in which the Company
         provides its services is throughout Asia. The Company charges its
         merchants and banks service fees to process transactions through this
         gateway.

         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"). While the main focus
         of the oil and gas exploration business has been centered in the United
         States, the Company has been investigating various prospects throughout
         the world (see Notes 9 and 20).

         Since its inception, the Company has been in the development stage. The
         Company has acquired and developed its software and hardware and been
         developing its markets for the electronic payment processing business,
         however, through December 31, 2001, the Company had insignificant
         revenues from operations. The Company's affiliate, Gasco has been
         accumulating oil and gas acreage and commenced drilling to determine
         the extent of natural gas resources. The Company's ability to emerge
         from development stage is ultimately dependent upon the operations,
         including developing sufficient markets.


                                      F-8
<PAGE>

                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         These financial statements have been prepared on the going concern
         basis notwithstanding that the Company has recurring operating losses
         and continuing negative cash flows from operations. The directors of
         the Company believe that the Company's cash and cash equivalents as of
         December 31, 2001; the private placement completed subsequent to the
         year end (see Note 20); and the Company's ability to borrow funds
         and/or raise additional equity are adequate to satisfy the Company's
         working capital requirements for the foreseeable future.

         On March 31, 2000, the Company acquired the entire issued share capital
         of Asia Internet Limited ("AIL"), a company incorporated in Hong Kong,
         for cash consideration of $1.2 million and the issuance of 24,870
         shares of common stock at a fair value of $25.09 per share. AIL
         provided systems integration services. The acquisition of AIL has been
         accounted for by the purchase method of accounting and, accordingly,
         the results of operations for the period from March 31, 2000 are
         included in the consolidated financial statements. Assets acquired and
         liabilities assumed have been recorded at their estimated fair values.
         The excess of the purchase price over the fair value of net assets of
         AIL of $1,747,693 was initially recorded as goodwill, which was to be
         amortized over 3 years. The amount of goodwill was subsequently subject
         to an impairment test. The results of the impairment test determined
         that such goodwill be written off during the year ended December 31,
         2000 (see Note 8).

         The following unaudited pro forma financial information presents the
         results of operations of AIL that would have been included in the
         consolidated financial statements as if the acquisition had occurred as
         of the beginning of 2000 and 1999, after giving effect to certain
         adjustments, including amortization of goodwill. The unaudited pro
         forma financial information does not necessarily reflect the results of
         AIL's operations that would have occurred had the Company and AIL
         constituted a single entity during such periods.
<TABLE>
<CAPTION>
                                                                         Period from
                                                                        September 16,
                                               For the year ended       1998 (date of
                                                  December 31,          inception) to
                                                 ------------            December 31,
                                            2000            1999            2001
                                            ----            ----            ----
                                         (Unaudited)     (Unaudited)     (Unaudited)
<S>                                     <C>               <C>            <C>
     Pro forma revenue included in
       discontinued operations ....     $    966,164      $  46,203      $ 1,012,367
                                        ============      =========      ===========

     Pro forma loss ...............     $   (468,951)     $(783,317)     $(1,252,268)
                                        ============      =========      ===========

     Basic pro forma loss per share     $      (0.03)     $   (0.06)
                                        ============      =========
</TABLE>

         The basic pro forma loss per share amounts are based on the pro forma
         loss for the respective periods and weighted average number of
         outstanding shares for the years ended December 31, 2000 and 1999 of
         18,071,096 and 12,068,532, respectively.


                                      F-9
<PAGE>

                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)

1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         AIL ceased operations on March 31, 2001, and its operations have been
         recorded as discontinued operations. Results for the period April 1,
         2000 to December 31, 2000 have been reclassified in the financial
         statements for comparative purposes (see Note 15).

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 in consolidation. Affiliated companies (20% to 50% owned
         companies) in which the Company has significant influence are accounted
         for using the equity method. The Company's share of earnings (losses)
         of these companies is included in the accompanying consolidated
         statement of operations.

         The financial statements as of and for the year ended December 31, 1999
         and 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 subsidiary FEAL as well as
         AIL from the date of its acquisition by BREK.

         Cash and cash equivalents - Cash and cash equivalents include cash on
         hand, demand deposits and highly liquid instruments with maturities of
         three months or less when purchased.

         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
         shareholders' equity. Realised 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.
         Marketable securities consist of equity securities.

         Investments - The Company accounts for its investments in entities
         where it does not have majority voting or management control, but does
         have significant influence, using the equity basis. The gains (losses)
         from equity investments are reported as a component of income (loss).

         Financial Instruments and Financial Risk - The Company's financial
         instruments consist of current assets and liabilities, a note
         receivable, a loan receivable and its investment in its equity
         affiliate. The fair values of the current assets and liabilities
         approximate the carrying amounts due to the short-term nature of these
         instruments. The fair value of the note receivable approximates its
         carrying value. The fair value of the loan receivable of $1,865,244 is
         an estimate based on current rates available to the issuer for credit
         of the same remaining duration.


                                      F-10
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Goodwill - Goodwill is amortized on a straight-line basis over the
         expected benefit period, estimated at three to seven years, from the
         date of acquisition.

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

                                                             Over the term
         Leasehold improvements                              of the leases
         Computer equipment and processing system            3 years
         Furniture, fixtures and office equipment            5 years

         Impairment - The company accounts for long-lived assets in accordance
         with the provisions of Statement of Financial Accounting Standards
         ("SFAS") No. 121, "Accounting for the Impairment of Long-lived Assets
         and for Long-lived Assets to Be Disposed Of." This statement requires
         that long-lived assets and certain identifiable intangibles be reviewed
         for impairment whenever events or changes in circumstances indicate
         that the carrying amount of an asset may not be recoverable.
         Recoverability of assets to be held and used is measured by a
         comparison of the carrying amount of an asset to future net cash flows
         expected to be generated by the asset. If such assets are considered to
         be impaired, the impairment to be recognized is measured by the amount
         by which the carrying amount of the assets exceeds the fair value of
         the assets. Assets to be disposed of are reported at the lower of
         carrying amount or fair value less costs to sell.

         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, 2001, 2000, 1999 and the cumulative period from
         inception, Nil, $130,816, $94,590 and $225,406 of internal-use computer
         software development costs were expensed, respectively. As of December
         31, 2001 and 2000, capitalized software net of accumulated amortization
         and impairment charges (Note 8) was $68,411 and $Nil, respectively.

         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, "Accounting
         for Convertible Debt and Debt Issued with Stock Purchase Warrants"
         ("APB No. 14"). 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.

         Revenue and cost recognition - Fees generated by transactions processed
         on behalf of banks and merchants are recognized when the transaction is
         processed, the fee is determinable, collectibility is probable and
         evidence of the arrangement exists. One time fees received for the
         initiation of online payment processing are recognized when services
         provided. Revenue from systems integration services are recognized over
         the contract-term based on the percentage of completion.


                                      F-11
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


2.       Summary of Significant Accounting Policies (continued)

         Costs directly related to a contract that would not have been incurred
         but for that contract (incremental direct costs) are deferred and
         charged to expense in proportion to the revenue recognized. All other
         costs, such as costs of services performed under the contract, general
         and administrative expenses, advertising expenses and costs associated
         with the negotiation of a contract prior to it being consummated, are
         charged to expense as incurred.

         Use of estimates - Management has made a number of estimates and
         assumptions relating to the reporting of assets and liabilities and the
         disclosure of contingent assets and liabilities to prepare these
         financial statements in conformity with generally accepted accounting
         principles. Actual results could differ from those estimates.

         Foreign currency translation - 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 of the balance
         sheet date. Income statement items are translated at the average rates
         during the year. Net translation gains and losses are recorded as a
         separate component of stockholders' equity. Foreign currency
         transaction gains and losses are included in the determination of net
         loss.

         Income taxes - Deferred income taxes are provided using the asset and
         liability method. Under this method, deferred income taxes are
         recognized for all significant temporary differences and operating loss
         carry forward are classified as current or non-current based upon the
         classification of the related asset or liability in the financial
         statements or their expected reversal if they do not relate to a
         balance sheet item. A valuation allowance is provided to reduce the
         amount of deferred tax assets if it is considered more likely than not
         that some portion of, or all of, the deferred tax assets will not be
         realized.

         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, 2001,
         2000, 1999 and the cumulative period from inception. Advertising costs
         amounted to $87,607, $241,485, $252,179 and $581,271, respectively in
         the years ended December 31, 2001, 2000, 1999 and the cumulative period
         from inception, respectively.

         Start-up and pre-operating costs - Start-up and pre-operating costs are
         expensed as incurred.

         Comprehensive income - The Company has adopted SFAS No. 130, "Reporting
         Comprehensive Income", which establishes standards for reporting and
         display of comprehensive income, its components and accumulated
         balances. Comprehensive income is defined to include all changes in
         equity during a period from non-owner sources. The Company had no items
         of other comprehensive income for the three years ended December 31,
         2001.


                                      F-12
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


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 Accounting Principles Board Opinion No. 25, "Accounting
         for Stock Issued to Employees" ("APB No. 25") and complies with the
         disclosure provisions of SFAS No. 123 "Accounting for Stock-Based
         Compensation". Under APB No. 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.

         The Company accounts for equity instruments issued to non-employees in
         accordance with the provisions of SFAS No. 123 and Emerging Issues Task
         Force ("EITF") 96-18. All transactions in which goods or services are
         the 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.

         Net income (loss) per share ("EPS") - Basic EPS excludes dilution and
         is computed by dividing net income (loss) attributable to common
         stockholders by the weighted average of common shares outstanding for
         the period. Diluted EPS reflects the potential dilution that could
         occur if securities or other contracts to issue common stock
         (convertible preferred stock, warrants to purchase common stock and
         common stock options) were exercised or converted into common stock
         using the treasury stock method. Potential common shares in the diluted
         EPS computation are excluded in net loss periods as their effect would
         be antidilutive. For the years ended December 31, 2001, 2000 and 1999,
         options to purchase 3,069,500, 4,272,250 and 1,572,500 shares of common
         stock and warrants to purchase 2,158,682, 2,893,682 and 1,516,667
         shares of common stock were outstanding at various times throughout the
         reported years, respectively. 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 5 months of
         1999. The effects of all of these securities were not included in the
         computation of diluted EPS, as the Company is in a net loss position
         for all periods since the beginning of operations. At December 31,
         2001, 2000 and 1999, options to purchase 1,280,000, 1,809,500 and
         1,512,500 shares of common stock and warrants to purchase 1,893,682,
         1,893,682 and 1,516,667 shares of common stock were outstanding,
         respectively.


                                      F-13
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Recent accounting pronouncements - In June 1998, the Financial
         Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting
         for Derivative Financial Instruments and Hedging Activities", which
         requires companies to record derivative financial instruments on their
         balance sheets as assets or liabilities, measured at fair value. Gains
         and losses resulting from changes in the values of those derivatives
         would be accounted for depending on the use of the derivative and
         whether it qualifies for hedge accounting. The key criterion for hedge
         accounting is that the hedging relationship must be highly effective in
         achieving offsetting changes in fair value or cash flows. In June 1999,
         the FASB issued SFAS No. 137, "Accounting for Derivative Instruments
         and Hedging Activities - Deferral of Effective Date of FASB Statement
         No. 133", which amends SFAS 133 to be effective for all fiscal years
         beginning after June 15, 2000. In September 2000, the FASB issued SFAS
         No. 140, "Accounting for Transfers and Servicing of Financial Assets
         and Extinguishments of Liabilities - a Replacement of FASB No. 125".
         The Company's adoption of these pronouncements during 2001 did not have
         any impact on the results of operations or financial position.

         In June 2001, the FASB issued SFAS No. 141, "Business Combinations."
         SFAS 141 requires the use of the purchase method of accounting for
         business combinations initiated after June 30, 2001 and eliminates the
         pooling-of-interests method. The adoption of SFAS 141 on July 1, 2001
         did not have a significant impact on the Company's financial
         statements.

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
         Intangible Assets", which is effective January 1, 2002. SFAS 142
         requires, among other things, the discontinuance of goodwill and
         indefinite-life intangible asset amortization. In addition, the
         standard includes provisions for the reclassification of certain
         existing recognized intangibles as goodwill, reassessment of the useful
         lives of the 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 No. 142 also
         requires the Company to complete a transitional goodwill impairment
         test six months from the date of adoption.


                                      F-14
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         In 2001, the Company adopted transition provisions of SFAS No. 142,
         which require the discontinuance of goodwill and indefinite life
         intangible assets amortization for acquisitions and investments made
         after June 30, 2001. As a result, the excess of cost over the Company's
         proportionate share of net assets of Gasco Energy, Inc., in which the
         Company acquired an interest on July 19, 2001, has not been amortized
         as would have been required prior to the adoption of the transition
         provisions of SFAS No. 142. The Company will be required to adopt the
         remaining provisions of SFAS No. 142 on January 1, 2002. Had the
         Company been accounting for its goodwill under SFAS No. 142 for the
         periods presented, the Company's net loss and loss per share would have
         been as follows:

<TABLE>
<CAPTION>
                                                                                      Year ended December 31,
                                                                        ----------------------------------------------------
                                                                           2001                2000                1999
                                                                        ------------        ------------        ------------
<S>                                                                     <C>                 <C>                 <C>
         Reported net loss......................................        $(10,461,322)       $(17,809,461)       $ (6,788,885)
         Add: Goodwill amortization.............................             325,671             291,282                  --
                                                                        ------------        ------------        ------------

         Adjusted net loss......................................        $(10,135,651)       $(17,518,179)       $ (6,788,885)
                                                                        ============        ============        ============

         Reported basic and diluted loss per share..............        $      (0.54)       $      (0.98)       $      (0.56)
         Add: Goodwill amortization, per basic
           and diluted share....................................                0.02                0.02                  --
                                                                        ------------        ------------        ------------

         Adjusted basic and diluted loss per share..............        $      (0.52)       $      (0.96)       $      (0.56)
                                                                        ============        ============        ============
</TABLE>


         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.
         The Company will be required to adopt this standard on January 1, 2003.
         The Company is reviewing the statement to determine what effect it will
         have, if any, on its financial position and results of operations.

         The FASB also recently issued SFAS No. 144, "Accounting for the
         Impairment or Disposal of Long-Lived Assets," that is applicable to the
         Company on January 2002. The FASB's new rules on asset impairment
         supersede FASB Statement 121, "Accounting for the Impairment of
         Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and
         portions of APB Opinion 30, "Reporting the Results of Operations." This
         Standard provides a single accounting model for long-lived assets to be
         disposed of and significantly changes the criteria that would have to
         be met to classify an asset as held-for-sale. Classification as
         held-for-sale is an important distinction since such assets are not
         depreciated and are stated at the lower of fair value and carrying
         amount. This Standard also requires expected future operating losses
         from discontinued operations to be displayed in the period(s) in which
         the losses are incurred, rather than as of the measurement date as
         presently required. The Company does not expect implementation of this
         pronouncement to materially affect the results of its operations or
         financial position.


                                      F-15
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


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 had
         previously recorded a beneficial conversion feature of approximately
         $50,000. However, in accordance with the guidance set forth in EITF
         00-27, the Company has recognized an additional beneficial conversion
         charge of approximately $380,000. 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 year ended December 31, 2000 as a cumulative effect
         of change in accounting principle in the accompanying statement of
         operations, and an increase in additional paid-in capital in the
         accompanying statement of stockholders' equity.

         Reclassifications - Certain prior year amounts in the accompanying
         financial statements have been reclassified to conform to current year
         presentation. These reclassifications had no effect on the results of
         operations or financial position for any year/period presented.


                                      F-16
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


3.       MARKETABLE SECURITIES

         Marketable securities comprise of 91,912 shares, after an 8 for 1
         reverse stock split on September 7, 2001, of uniView Technologies
         Corporation, a public company traded on NASDAQ, representing a 2.7%
         equity interest. The Company has written down the carrying value of
         the shares by $314,339, $1,632,353, $ Nil and $1,946,692 for the years
         ended December 31, 2001, 2000 and 1999 and the cumulative period from
         inception, respectively. The carrying value of the marketable
         securities was written down to its market value as the declines in
         value were deemed other than temporary.


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 was
         amortised over the life of the service agreement on a straight-line
         basis. For the years ended December 31, 2001, 2000, 1999 and the
         cumulative period from inception, the Company recognized approximately
         $Nil, $672,000, $828,000 and $1,500,000, respectively in operating
         expenses in respect of the consultant's fee.


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. (Note 9). 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,
         respectively. The guaranteed installments have been recorded at their
         present value with imputed interest of 2% to 3.5%. Imputed interest of
         $9,348 was recorded as interest income in the year ended December 31,
         2001.


6.       LOAN RECEIVABLE

         During 2001, the Company advanced $270,055 and is expecting to advance
         a further $79,945 to Vallenar Energy Corp. ("Vallenar"), a company
         investigating various oil prospects in the southern part of the United
         States of America. As at December 31, 2001, a third party held $54,945
         of the future advance in trust which is classified as other prepaid
         expenses and deposits. Subsequent to December 31, 2001, these amounts
         were converted to an equity ownership (see Note 20).


                                      F-17
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


7.       PROPERTY AND EQUIPMENT, NET

<TABLE>
<CAPTION>
                                                                  2001         2000
                                                               ---------    ----------
<S>                                                            <C>          <C>
         Leasehold improvements...........................     $      --    $  318,227
         Computer equipment and processing system.........       513,591       570,824
         Furniture, fixtures and office equipment.........        67,294       280,026
                                                               ---------    ----------

                                                                 580,885     1,169,077
         Less accumulated depreciation....................      (323,564)     (590,211)
                                                               ---------    ----------

                                                               $ 257,321    $  578,866
                                                               =========    ==========
</TABLE>


         Depreciation expense charged to results of operations for the years
         ended December 31, 2001, 2000, 1999 and the cumulative period from
         inception were $446,366 (of which $207,125 is attributable to FEDS),
         $575,587, $250,382 and $1,272,335, respectively.


8.       CHARGES FOR CERTAIN LONG-LIVED ASSETS AND PREPAID ASSETS

         On October 19, 2001, the Company has disposed of its investment in FEDS
         and recognized an impairment loss of $3,159,505 for the year ended
         December 31, 2001 (see Note 9).

         In addition, as a result of certain changes that have occurred within
         the Company and modifications to the Company's business plan, the
         Company undertook an impairment review of its long-lived assets and
         certain prepaid assets during the quarter ended December 31, 2000. In
         its assessment, the Company determined that the amounts capitalized for
         its processing system, goodwill relating to AIL and certain prepaid
         assets, totalling $449,418, $1,456,411 and $500,000, respectively, were
         not expected to generate positive cash flows in the foreseeable future.
         Accordingly, in the year ended December 31, 2000, the Company recorded
         a provision of $2,405,829, which represented the difference between the
         book value of these assets and their estimated fair value. Due to the
         discontinuance of AIL in March 2001, the impairment charge related to
         AIL of $1,456,411 has been reclassified as a component of the net loss
         from discontinued operations for comparative purpose.


                                      F-18
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


9.       INVESTMENT IN AND ADVANCES TO AFFILIATES

         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 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.

         The acquisition has been accounted for using purchase accounting, and
         accordingly, the results of operations of FEDS has 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 has been recorded as additional
         goodwill and has been amortized over a straight-line basis over seven
         years.

         Prior to June 18, 2001, the Company recorded its share of the losses of
         FEDS under the equity method. The Company's share of such losses was
         $390,052 for the period from January 1 to June 18, 2001, and $292,118
         for the year ended December 31, 2000.


                                      F-19
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


9.       INVESTMENT IN AND ADVANCES TO AFFILIATES (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 guarantee amount of $2 million and a maximum
         of $3 million.

         The sale of FEDS resulted in no gain or loss being recorded during the
         quarter ended December 31, 2001 as the Company had recognized an
         impairment loss of $3,159,505 at September 30, 2001. Revenues and loss
         from operations (including impairment loss of $3,159,505) from FEDS
         included in the accompanying consolidated statements of operations were
         $250,567 and $664,278, respectively, for the period from June 19, 2001
         to October 19, 2001.


                                      F-20
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


9.       INVESTMENT IN AND ADVANCES TO AFFILIATES (CONTINUED)

         Gasco Energy, Inc.

         On July 19, 2001, the Company acquired an equity interest in Gasco
         Energy, Inc. ("Gasco"), a Nevada Corporation traded on the
         Over-the-Counter Bulletin Board. The Company paid $19 million for
         preferred shares which are convertible into 9.5 million common shares
         at the Company's option. These preferred shares bear no cumulative
         dividends.

         This acquisition entitles the Company to 26% of the voting power of
         Gasco, which will not be diluted by further issuances of common stock.
         The Company is entitled to a seat on Gasco's board of directors and a
         position on the executive committee, which will be largely responsible
         for operating the business of Gasco. The Company's shares are also
         entitled to vote as a class on certain extraordinary matters for
         extraordinary circumstances. The Company has agreed not to dispose of
         its stake for three years, however, the Company is permitted to dispose
         of up to 10% of its holdings annually.

         The Company accounts for its interest in Gasco using the equity method
         of accounting. The total cost of Gasco acquisition is 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 Company's equity in losses of Gasco during the year ended December
         31, 2001 is $492,094.

         Summarized financial information of Gasco is shown below.

<TABLE>
<CAPTION>
                                                                    2001             2000
                                                                    ----             ----
<S>                                                              <C>                <C>
         Assets, liabilities and stockholders' equity:

         Current assets......................................    $12,453,684        $1,007,984
         Non current assets..................................      9,204,841         1,999,275
         Current liabilities.................................        593,100         1,428,354
         Non current liabilities.............................             --                --
         Stockholders' equity................................     21,065,425         1,578,905

<CAPTION>
                                                                    2001             2000              1999
                                                                    ----             ----              ----
<S>                                                              <C>                <C>             <C>
         Operating results:

         Net sales...........................................    $    36,850        $       --        $      --
         Loss from continuing operations.....................     (4,129,459)         (843,261)        (736,834)
         Net loss............................................     (4,129,459)         (843,261)        (736,834)
         Deemed distribution on preferred shares.............    (11,400,000)               --               --
         Net loss attributable to common shareholders........    (15,529,459)         (843,261)        (736,834)
</TABLE>


                                      F-21
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


9.       INVESTMENT IN AND ADVANCES TO AFFILIATES (CONTINUED)

         Gasco recognized $11,400,000 as a deemed distribution to the holders of
         the preferred shares, being the Company, upon issuance due to a
         beneficial conversion feature of the preferred shares into Gasco's
         common stock in accordance with EITF 98-5, "Accounting for Convertible
         Securities with Beneficial Conversion Features or Contingently
         Adjustable Conversion Ratios to Certain Convertible Instruments" and
         EITF 00-27. The deemed distribution is the difference between the
         market price on the date of issuance ($3.20) and the conversion rate.

         The financial information for December 31, 2000 and 1999 is in respect
         of Pannonian Energy, Inc. ("Pannonian") prior to its merger with Gasco
         on February 1, 2001. Gasco accounted for this transaction as a reverse
         acquisition with Pannonian as an accounting acquirer.


10.      INCOME TAXES

         As the Company is in its development stage and incurred losses since
         its inception, no income tax expense was recognized for the years ended
         December 31, 2001, 2000 and 1999. There were no taxes payable at
         December 31, 2001, 2000 and 1999.

         The components of net loss are as follows:

<TABLE>
<CAPTION>
                                                                                        Year ended December 31,
                                                                        ---------------------------------------------------
                                                                            2001                2000                1999
                                                                        ------------        ------------        -----------
<S>                                                                    <C>                  <C>                 <C>
         United States of America...............................       $  (6,353,148)       $ (9,160,736)       $(3,320,145)
         Hong Kong..............................................          (3,748,476)         (6,977,789)        (3,296,455)
         Other countries (British Virgin Islands,
           Bermuda and Canada)..................................            (359,698)         (1,670,936)          (172,285)
                                                                        ------------        ------------        -----------

                                                                        $(10,461,322)       $(17,809,461)       $(6,788,885)
                                                                        ============        ============        ===========
</TABLE>


                                      F-22
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


10.      INCOME TAXES (continued)

         During the years ended December 31, 2001, 2000 and 1999, the Company
         operated predominantly in Hong Kong and is therefore subject to Hong
         Kong Profits Tax. A reconciliation of income taxes computed at the Hong
         Kong statutory tax rate of 16% to the income tax expense is as follows:

<TABLE>
<CAPTION>
                                                                                 2001             2000             1999
                                                                             -----------       -----------      -----------
<S>                                                                          <C>               <C>              <C>
         Income tax benefit at statutory tax rate......................      $ 1,673,812       $ 2,849,514      $ 1,086,222
         Effect of rate differential on transactions subject
           to rates of other tax jurisdictions.........................        1,462,612           393,723          291,300
         Non-deductible items
           Stock-based compensation....................................          283,596          (631,654)        (103,445)
           Charge on write down of marketable securities...............          (50,294)         (261,176)            -
           Charge for long-lived assets and amortization
               of goodwill.............................................          (52,108)         (313,026)            -
           Other.......................................................             -             (171,062)            -
         Non-taxable items primarily interest income...................           53,731           193,217            1,942
         Valuation allowance...........................................       (3,371,349)       (2,059,536)      (1,276,019)
                                                                             -----------       -----------      -----------
                                                                             $        --       $        --      $        --
                                                                             ===========       ===========      ===========
</TABLE>


         The components of deferred income tax assets and liabilities are as
         follows:
<TABLE>
<CAPTION>
                                                                                             2001                  2000
                                                                                             ----                  ----
<S>                                                                                       <C>                   <C>
         Deferred tax assets:
           Net operating loss carry forwards....................................          $ 6,798,362           $ 3,441,203
           Less valuation allowance.............................................           (6,706,904)           (3,335,555)
                                                                                          -----------           -----------

           Net deferred tax assets..............................................               91,458               105,648
         Deferred tax liabilities:..............................................
           Property and equipment, principally due to differences
             in depreciation....................................................               91,458               105,648
                                                                                          -----------           -----------

         Net deferred tax assets/liabilities....................................          $        --           $        --
                                                                                          ===========           ===========
</TABLE>

         Net operating loss carryforwards at December 31, 2001, 2000 and 1999,
         of $17,071,744, $13,076,137 and $5,241,936, respectively, relating to
         the Company's operations in Hong Kong can be carried forward
         indefinitely. Net unconsolidated operating loss carry forwards of BREK
         at December 31, 2001, 2000 and 1999, of $9,033,426, $5,047,907 and
         $1,618,331, respectively, can be carried forward for 20 years. Net
         operating loss carryforward at December 31, 2001 of $4,140,107,
         relating to the Company's subsidiary incorporated in the United States
         of America can be carried forward for 15 years.


                                      F-23
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


11.      STOCK OPTIONS

         The 1999 Stock Option Plan allows the Company to grant up to 3,000,000
         stock options to employees and directors. In addition, the Company's
         2001 Stock Option/Warrant Plan allows the Company to grant up to
         5,000,000 stock options to employees, directors and consultants.

         2001 Stock Option/Warrant Plan

         During the year ended December 31, 2001, the Company granted the
         following share options to employees, directors and consultants:

                                 Number of                        Fair Value at
         Date of Grant            Options       Exercise Price    date of grant
         -------------           ---------      --------------    -------------

         October 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 an 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. The fair value of the shares at
         the date of the replacement grants was $0.41 per share. The modified
         grants were accounted for using variable accounting according to FASB
         Interpretation No. 44. Additionally, 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 fair value of the shares at the date of grant was $0.41
         per share. Of the 495,000 options issued on October 31, 2001, 285,000
         options were granted to consultants to purchase up to 285,000 shares of
         the Company's common stock at a price of $0.40 per share. The fair
         value of the options amounting to $108,300 were accounted for as
         operating expenses and the fair value 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 5
         years; 151% expected volatility; and no dividends.

         The options granted on October 31, 2001 are vested immediately and will
         expire on October 31, 2006.


                                      F-24
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


11.      STOCK OPTIONS (CONTINUED)

         1999 Stock Option Plan

         The Company granted the following share options to employees, directors
         and consultants:

                                 Number        Exercise        Fair Value at
         Date of Grant         of Options        Price         date of Grant
         -------------         ----------        -----         -------------
                                                   $                 $

         February 1, 2000        797,000           9.90              10.13
         February 25, 2000        15,000           9.90              30.00
         March 1, 2000            50,000           9.90              30.44
         April 1, 2000           315,000           9.90              25.09
         April 17, 2000           95,000          13.50              14.00
         May 12, 2000              7,000          14.00              14.03
         June 19, 2000            50,000           9.90              11.25
         August 29, 2000       1,145,750           5.05               5.91
         August 29, 2000         285,000           5.05               5.91
         June 22, 1999         1,137,500           7.65               9.06
         September 15, 1999      100,000           7.65               6.88
         November 4, 1999        335,000           7.65               8.06

         On August 29, 2000, the Company approved the granting of new options,
         providing the holders first rescinded their existing grants, with a new
         exercise price of $5.05 per share. Holders of 1,145,750 stock options
         elected to rescind their grants and these were replaced with a like
         number of new grants. The fair value of the shares at the date of the
         replacement grants was $5.91 per share. The modified grants were
         accounted for using variable accounting according to FASB
         Interpretation No. 44.

         Additionally, on August 29, 2000, the company granted new options to
         purchase up to 285,000 shares of the Company's common stock at a price
         of $5.05 per share. The fair value of the shares at the dates of grant
         was $5.91 per share.

         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.

         During the year ended December 31, 2001, the Company had a net recovery
         of compensation costs of $1,772,478 relating to stock options after the
         reversal of $1,947,378 of unvested stock compensation costs previously
         recorded due to the forfeiture of 964,500 options upon the termination
         of staff; $1,852,570 of such cost related to the system integration
         business, which the Company decided to discontinue during the quarter
         ended March 31, 2001. During the years ended December 31, 2000, 1999
         and the cumulative period from inception to December 31, 2001,
         compensation expense was $3,947,837 (including AIL compensation charges
         of $2,159,518 which has been reclassified to discontinued operations to
         conform to current year presentation), $646,532 and $2,821,891,
         respectively.


                                      F-25
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


11.      STOCK OPTIONS (continued)

         Had compensation costs been determined consistent with the fair value
         approach enumerated in SFAS No. 123, the Company's net loss for the
         years ended December 31, 2001, 2000 and 1999, would have been as below:

<TABLE>
<CAPTION>
                                                                                        Year ended
                                                                                       December 31,
                                                                     2001                  2000                  1999
                                                                     ----                  ----                  ----
                                                                       $                     $                     $
<S>                                                                <C>                   <C>                   <C>
         Net loss                       As reported                10,461,322            17,809,461            6,788,885
                                        Proforma                    9,542,863            20,598,526            8,113,944

         Net loss per share             As reported                      0.54                  0.98              0.56
                                        Proforma                         0.50                  1.14              0.67
</TABLE>

         For the stock options granted during the year ended December 31, 2001,
         the fair value of options used in calculating the proforma information
         above has been estimated as of the date of grant using the
         Black-Scholes option-pricing model with the following assumptions used:
         risk-free interest rate of 5.5% (2000 and 1999: 5.5%); expected life of
         3 and 5 years (2000 and 1999: 3 years); expected volatility ranging
         from 93.15% to 150.69% (2000: 93.15% to 129.54%; 1999: 51.45% to
         91.2%), depending on the date of grant; and no dividends.

         A summary of the activity of the Company's stock option plans are
         presented below:

         2001 Stock Option/Warrant Plan

<TABLE>
<CAPTION>
                                                                                               Weighted
                                                                          Number                average
                                                                        of options          exercise price
                                                                        ----------          --------------
<S>                                                                     <C>                 <C>
         Outstanding at beginning of year.............................           --             $   --
         Granted......................................................    1,260,000               0.40
                                                                          ---------             ------

         Outstanding at end of year...................................    1,260,000               0.40
                                                                          =========             ======


         Total options outstanding and exercisable at year end........    1,260,000                 --
                                                                          =========             ======


         Weighted-average fair value..................................                            0.38
                                                                                                ======
</TABLE>

         At December 31, 2001 the weighted-average remaining contractual life of
         outstanding options was 4.83 years.


                                      F-26
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


11.      STOCK OPTIONS (continued)

         1999 Stock Option Plan

<TABLE>
<CAPTION>
                                                                           Year ended December 31,
                                                        2001                        2000                      1999
                                               ------------------------    ------------------------   ---------------------------
                                                            Weighted-                   Weighted-                     Weighted-
                                                Number       average        Number       average        Number         average
                                              of options exercise price   of options exercise price    of options   exercise price
                                              ---------- --------------   ---------- --------------    -----------   --------------
                                                                $                           $                              $

<S>                                           <C>              <C>        <C>              <C>         <C>              <C>
         Outstanding at beginning of year.    1,809,500        5.93        1,512,500       7.65               --            --
         Granted..........................           --          --        2,759,750       7.52        1,572,500          7.65
         Forfeited........................     (964,500)       6.21       (1,317,000)      7.98          (60,000)         7.65
         Rescinded........................     (825,000)       5.52       (1,145,750)      9.68               --            --
                                              ---------       -----       ----------      -----        ---------         -----

         Outstanding at end of year.......       20,000        9.34        1,809,500       5.93        1,512,500          7.65
                                              =========       =====       =========        ====        =========         =====

         Options exercisable at year end..       20,000          --          393,750         --               --            --
                                              =========       =====       ==========       ====        =========         =====

         Weighted-average fair value......                    12.03                        7.13                           3.97
                                                              =====                       =====                          =====
</TABLE>

         Subsequent to December 31, 2001, the remaining 1999 Stock Option Plan
         options were forfeited.


12.      SHORT TERM LOANS AND WARRANTS

         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 are exercisable through March 31, 2004. During the year ended
         December 31, 2001, 30,000 warrants were returned and forfeited and
         235,000 warrants were rescinded in exchange for replacement grants of
         stock options (Note 11).

         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 units 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, which are exercisable through March 5,
         2005, entitle the holder to purchase one-third of a share of common
         stock at $11.40 per share.

         The portion of the stock proceeds which is allocable to the warrants
         was $7,656,124 and has been accounted for as additional paid-in
         capital. The allocation is based on the relative fair value of the
         warrants and fair value 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 5 years; 116%
         expected volatility; and no dividends.


                                      F-27
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


12.      SHORT TERM LOANS AND WARRANTS (continued)

         In connection with the private placement on March 6, 2000, 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 fair
         value 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 5 years; 116% expected
         volatility; and no dividends.

         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 will be exercisable for a period of
         two years from the date of issue. The fair value of the warrants were
         accounted for as operating expenses and fair value 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 5 years; 87% expected volatility; and no dividends.

         On July 26, 2000, the holder of a warrant for one million shares of the
         Company exercised its right to acquire one million shares at a price of
         $7.80 per share.

         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 bears interest at
         12% per annum and is convertible into the common shares of the Company
         at $8 per share at the Lender's option. The repayment date of the loan
         was subsequently extended to January 10, 2000. On December 30, 1999,
         the loan was fully repaid.

         The Lender was also granted at origination, warrants to purchase
         100,000 common shares of the Company at $8.50 per share, exercisable
         for 5 years commencing on August 10, 1999. The intrinsic value of the
         conversion feature at the date of issuance of the loan of $50,000 has
         been accounted for as additional paid-in capital.

         The portion of the loan proceeds issued which is allocable to the
         detachable warrants was $360,000 and has been accounted for as
         additional paid-in capital. The allocation is based on the fair value
         of the loan of $1,000,000 and the fair value of the warrants at the
         date of issue $566,000.

         The effective interest rate of the loan was calculated to be 280% per
         annum as a result of the allocation of a portion of the proceeds to the
         detachable warrants and the conversion feature, the resultant discount
         of $410,000 created therefrom, and the amortisation of the discount to
         the initial maturity date.

         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 5
         years; 76.7% expected volatility; and no dividends.


                                      F-28
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


12.      SHORT TERM LOANS AND WARRANTS (continued)

         On October 27, 1999 the Company entered into a loan agreement with a
         company wholly-owned by three shareholders of the Company for the
         advance of $250,000 repayable by January 21, 2000. Pursuant to the
         terms of the loan agreement, the loan bears interest at 12% per annum.
         On December 30, 1999, $222,993 was repaid and the remaining $27,007 was
         repaid in 2000.

         On November 12, 1999, the Company entered into a loan agreement with
         the same company wholly owned by three shareholders of the Company for
         the advance of a $500,000 short-term loan repayable on or before
         January 10, 2000. Pursuant to the terms of the loan agreement, the loan
         bears interest at 12% per annum. On December 30, 1999, this loan was
         fully repaid.

         The Company has warrants to purchase the following number of common
         shares of the Company outstanding as at December 31, 2001.

                                        Price
         Number of shares             per share           Expiry date
         ----------------             ---------           -----------

                   50,000               $8.55             June 30, 2002
                  100,000                8.50             August 9, 2004
                  416,667                7.80             December 23, 2004
                1,076,167               11.40             March 5, 2005
                   26,923                7.80             March 9, 2005
                  223,925               11.40             March 9, 2005

         As discussed in Note 2, the Company recognized a $380,000 deemed
         financing cost for the beneficial conversion feature of the convertible
         short term notes. This cost was recognized in the fourth quarter of
         2000 as a cumulative effect of a change in accounting principle.


13.      COMMON STOCK

         In July 2000, 1,000,000 shares were issued for total proceeds of
         $7,800,000 upon warrants issued on November 26, 1999, being exercised.

         Pursuant to the 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.


                                      F-29
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


13.      COMMON STOCK (continued)

         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 the 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 2000.

         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.


14.      SHAREHOLDER RIGHTS PLAN

         On December 5, 2001, the Company adopted a rights plan to declare a
         dividend distribution of one common share purchase right (a "right")
         for each outstanding share of the Company's common stock as of a record
         date which shall not be declared later than March 31, 2002 (Note
         20(e)).

         Each right would entitle shareholders to buy five common shares at
         $0.01 per share if certain events occurred relating to a person or
         group acquiring or attempting to acquire 10% or more of the outstanding
         shares of common stock without the approval of the Company's Board of
         Directors. The rights are exercisable until December 31, 2020.


                                      F-30
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


15.      DISCONTINUED OPERATIONS

         Asia Internet Limited

         The Company decided in the first quarter of 2001 to discontinue its
         systems integration business, which was carried on through its
         wholly-owned subsidiary, 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 relating 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 and 2000 were $7,736,
         and $273,431, $148,818 and $363,344, respectively. Revenues for the
         system integration business were $92,237, $816,648, and $908,885 for
         the year ended 2001 and 2000 and the period from September 16, 1998
         (inception) to December 31, 2001, respectively. Net loss was $236,683
         and $4,219,736 for the years ended December 31, 2001 and 2000,
         respectively.


16.      RELATED PARTY TRANSACTIONS

         During the year ended December 31, 2001, the Company paid consulting
         fees to certain former directors of $28,629.

         During 2001, the Company advanced $270,055 to Vallenar. A director and
         officer of the Company are also directors of Vallenar, and certain
         shareholders of the Company's affiliate, Gasco, are also shareholders
         of Vallenar.

         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 (1999:
         $465,442) 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, respectively (1999:
         $401,054 for services and $148,526 for purchases, respectively).

         On March 31, 2000, the Company completed the acquisition of AIL and
         AIL's assets and liabilities have been consolidated into the Company's
         financial statements as of that date.

         A 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 (1999:
         $315,056 advanced to the firm by the Company and $395,364 the amount
         charged by the firm). 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.


                                      F-31
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


16.      RELATED PARTY TRANSACTIONS (continued)

         During the year ended December 31, 2000, a director of the Company
         received consulting fees of $25,000 of which the Company paid in the
         ordinary course of its business.

         In 1999, the Company issued 8,000,000 shares to financial advisors for
         services rendered in connection with organizational activities of the
         Company at a deemed value of $300,000, in excess of $8,000 cash
         received.

         During 1999, a director of the Company was a partner in a professional
         firm to which the Company had paid consultancy fees in the ordinary
         course of its business. The amount charged by the firm to the Company
         during the year ended December 31, 1999 was $234,319. As at December
         31, 1999, the Company owed the firm $109,227.


17.      SEGMENT INFORMATION

         In 2001, the Company changed the composition of its segments to reflect
         the discontinuation of the systems integration business and to reflect
         the internal reorganization around oil and gas development and
         exploitation and payment processing. Prior year disclosures have been
         restated for consistent presentation.

         Payment processing is viewed as operating in two different geographical
         areas, Asia Pacific and Americas. The Company's oil and gas operations
         only operate in the Americas. The discontinued systems integration
         activities only operated in Asia Pacific. Summarized financial
         information by segment for the years ended December 31, 2001, 2000 and
         1999, as taken from internal management reports is as follows:

<TABLE>
<CAPTION>
                                                                           For the year ended December 31,
                                                                      ---------------------------------------
                                                                         2001         2000           1999
                                                                      ---------     --------        ---------
<S>                                                                   <C>           <C>             <C>
         Revenue

         Segments
         Payment processing
           Asia Pacific...........................................    $  51,411     $ 38,223        $   2,634
           Americas...............................................      250,567           --               --
         Oil and gas..............................................           --           --               --
                                                                      ---------     --------        ---------
                                                                      $ 301,978     $ 38,223        $   2,634
                                                                      =========     ========        =========
</TABLE>


                                      F-32
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


17.      SEGMENT INFORMATION (continued)

<TABLE>
<CAPTION>
                                                               For the year ended December 31,
                                                               -------------------------------
                                                        2001                 2000              1999
                                                     ------------        ------------      ------------
<S>                                                  <C>                 <C>               <C>
         Profit and Loss

         Segments
         Payment processing
           Asia Pacific...........................   $ (6,673,642)       $(13,087,841)     $ (6,788,885)
           Americas...............................     (4,551,979)           (501,884)               --
         Oil and gas..............................       (724,569)                 --                --
         Discontinued operations..................      1,488,868          (4,219,736)               --
                                                     ------------        ------------      ------------
                                                     $(10,461,322)       $(17,809,461)     $ (6,788,885)
                                                     ============        ============      ============

<CAPTION>
                                                                                    As at
                                                                                 December 31,
                                                                       ---------------------------------
                                                                          2001                  2000
                                                                       -----------           -----------
<S>                                                                    <C>                   <C>
         Assets

         Segments
         Payment processing
           Asia Pacific......................................          $   230,561           $32,692,717
           Americas..........................................                   --             3,127,637
         Oil and gas.........................................           23,259,081                    --
         Discontinued operations.............................                7,736               148,818
                                                                       -----------           -----------
                                                                       $23,497,378           $35,969,172
                                                                       ===========           ===========
</TABLE>

         Stock compensation (recovery) expense by segment is as follows:

<TABLE>
<CAPTION>
                                                                                Cumulative from
                                                                               September 16, 1998
                                         For the year ended December 31,      (date of inception)
                                     --------------------------------------           to
                                         2001          2000         1999       December 31, 2001
                                     -----------    ----------   ----------    -----------------
<S>                                  <C>            <C>          <C>              <C>
         Segments
         Payment processing
           Asia Pacific ...........  $    20,007    $1,759,554   $  646,532       $2,426,093
           Americas ...............      (28,765)       28,765           --               --
         Oil and gas ..............       88,850            --           --           88,850
         Discontinued operations ..   (1,852,570)    2,159,518           --          306,948
                                     -----------    ----------   ----------       ----------
                                     $(1,772,478)   $3,947,837   $  646,532       $2,821,891
                                     ===========    ==========   ==========       ==========
</TABLE>

         Depreciation expense for the payment processing segment for the years
         ended December 31, 2001, 2000, 1999 and the cumulative period from
         inception were $444,687, $553,806, $250,382 and $1,248,875,
         respectively. Depreciation expense for the systems integration segment
         for the years ended December 31, 2001, 2000, 1999 and the cumulative
         period from inception were $1,679, $21,781, $Nil and $23,460,
         respectively.

         Americas payment processing profit and loss includes $390,052, $292,118
         and $Nil of equity in the losses of investees accounted for by the
         equity method for the years ended December 31, 2001, 2000 and 1999,
         respectively. Oil and gas profit and loss includes $492,094 of equity
         in the loss of an investee accounted for by the equity method for the
         year ended December 31, 2001.

         Oil and gas assets as of December 31, 2001 included $18,507,906 of
         investment in an equity method investee. Americas payment processing
         assets as of December 31, 2000 include $3,107,882 of investment in an
         equity method investee.


                                      F-33
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


18.      COMMITMENTS AND CONTINGENCIES

         The Company leases office and other premises under non-cancellable
         operating leases. The lease commitments for the next five years are:

         2002.............................................      $216,419
         2003.............................................        76,032
                                                                --------

         Total............................................      $292,451
                                                                ========


         Rent expense for the years ended December 31, 2001, 2000, 1999 and the
         cumulative period from inception was $372,178, $611,509, $276,431 and
         $1,260,118, respectively.

         The Company has entered into employment agreements with its employees.
         These agreements require severance payments of a minimum of four weeks
         salary upon their termination without cause. If the employment
         agreements were terminated without cause, at December 31, 2001, the
         Company would have a liability for minimum contractual severance pay of
         approximately $330,000.

19.      CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES

         Financial instruments, which potentially subject the Company to
         concentration of credit risk, consist principally of cash and cash
         equivalents, trade accounts receivable, a note receivable and a loan
         receivable. The fair values of the current assets and liabilities and
         the note receivable approximate the carrying amounts due to the
         short-term nature of these instruments. The fair value of the loan
         receivable of $1,865,244 is an estimate based on current rates
         available to the issuer for credit of the same remaining duration.

         The Company's business activities and accounts receivable are
         principally in Hong Kong with a limited number of customers. The
         largest customer accounts for 52% of the total revenue excluding those
         post acquisition revenue recorded from FEDS which was sold on October
         19, 2001.

         The Company maintains allowances for estimated potential bad debt
         losses. During the years ended December 31, 2001 and 2000, the Company
         maintained provisions for doubtful accounts of $Nil and $11,558,
         respectively. Bad debt expense was $12,531, $40,768, $35,884 and
         $89,183, for the years ended December 31, 2001, 2000, 1999 and the
         cumulative period from inception, respectively. The write-offs of bad
         debt provisions were $24,089, $29,210, $35,884 and $89,183 for the
         years ended December 31, 2001, 2000, 1999 and the cumulative period
         from inception, respectively.


                                      F-34
<PAGE>


                             BREK ENERGY CORPORATION
                         (Formerly First Ecom.com, Inc.)
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                (In United States dollars, except share amounts)


20.      SUBSEQUENT EVENTS

         Subsequent to December 31, 2001:

         (a)      At the Company's annual meeting of stockholders held on
                  January 29, 2002 resolutions to change of the Company's name
                  from First Ecom.com, Inc. to Brek Energy Corporation and to
                  increase of authorized capital from 200,000,000 common shares
                  to 300,000,000 common shares were approved.

         (b)      On January 16, 2002 the Company entered into agreements with
                  holders of 7,000,000 common shares of Gasco to exchange
                  their Gasco shares for a total of 19,250,000 shares of the
                  Company, subject to the approval of the Company's
                  shareholders.

         (c)      On March 11, 2002 the Company exercised an option to convert
                  500 of its Gasco preferred shares into 4,750,000 Gasco common
                  shares. The remaining 500 Gasco preferred shares retains the
                  26% voting right in Gasco (see Note 9).

         (d)      On March 12, 2002 the Company converted its loan receivable of
                  $325,000 (see Note 6) plus an additional $25,000 into 733,333
                  Series 'A' Preferred Shares of Vallenar. In addition, the
                  Company acquired 2,512,500 common shares of Vallenar for
                  $12,562. After additional equity financing being undertaken by
                  Vallenar, it is anticipated that the Company will hold a 26%
                  equity interest.

         (e)      On March 20, 2002, the Company declared a dividend of one
                  common share purchase right for each outstanding share of
                  common stock of the Company. The dividend is payable to the
                  shareholders of record on that date. The Company has reserved
                  96,050,185 treasury shares for the exercise of these rights.

         (f)      In March 2002, the Company issued 3,045,000 common shares by
                  way of a private placement to various insiders and affiliates
                  for total proceeds of $1,522,500.


                                      F-35
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of Gasco Energy, Inc.:

We have audited the accompanying consolidated balance sheet of Gasco Energy,
Inc. and subsidiaries (the "Company"), a development stage company, (formerly
known as San Joaquin Resources, Inc.) as of December 31, 2001, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended, and for the period from May 21, 1998 (date of
incorporation) to December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The Company's
financial statements as of December 31, 2000 and for the year then ended and for
the period May 21, 1998 (date of incorporation) through December 31, 2000 and
the financial statements for the year ended December 31, 1999 and for the period
May 21, 1998 (date of incorporation) through December 31, 1999 were audited by
other auditors whose reports, dated September 20, 2001 and December 4, 2000,
expressed unqualified opinions on those statements, and both reports included an
explanatory paragraph describing conditions which raised substantial doubt about
the Company's ability to continue as a going concern. The financial statements
for the period May 21, 1998 (date of incorporation) through December 31, 2000
reflect total revenues and net loss of $200,000 and $1,586,095, respectively, of
the related totals. The other auditors' reports have been furnished to us, and
our opinion, insofar as it relates to the amounts included for such prior
periods, is based solely on the reports of such other auditors.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 and the reports of
other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the reports of other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2001, and the results of
its operations and its cash flows for the year then ended, and for the period
from May 21, 1998 (date of incorporation) to December 31, 2001, in conformity
with accounting principles generally accepted in the United States of America.


Deloitte & Touche, LLP


Denver, Colorado
March 15, 2002


                                      F-36
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


To The Board of Directors and Stockholders GASCO ENERGY, INC.

We have audited the accompanying balance sheet of Gasco Energy, Inc. (formerly
known as Pannonian Energy Inc.) and subsidiaries (a development stage company)
as of December 31, 2000, the related consolidated statements of operations,
stockholders' equity and cash flows for the year then ended, and cumulative
amounts from inception to December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The consolidated
financial statements of the Company as of December 31, 1998 and 1999 were
audited by other auditors whose report dated December 4, 2000 included an
explanatory paragraph describing conditions which raise substantial doubt about
the Company's ability to continue as a going concern.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Gasco
Energy, Inc. and its subsidiaries as of December 31, 2000, and the results of
their operations and their cash flows for the year then ended and cumulative
amounts from inception to December 31, 2000 in conformity with accounting
principals generally accepted in the United States of America.


                                            Wheeler Wasoff, P.C.

Denver, Colorado
September 20, 2001


                                      F-37
<PAGE>


Report of Independent Accountants

To the Board of Directors and Shareholders of Gasco Energy, Inc. (formerly
Pannonian Energy, Inc.)

In our opinion, the accompanying statements of operations, changes in
stockholders equity and cash flows from inception on May 21, 1998 through
December 31, 1999 present fairly, in all material respects, the results of
operations and cash flows of Gasco Energy, Inc, (formerly Pannonian Energy,
Inc.) from inception on May 21, 1998 through December 31, 1999 in conformity
with accounting principles generally accepted in the United States of America.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance wit
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

The accompanying financial statements from inception on May 21, 1998 through
December 31, 1999 have been prepared assuming that the Company will continue as
a going concern. As discussed in Note 2 to the December 31, 1999 financial
statements (not presented separately herein) the Company has suffered recurring
losses from operations and net operating cash outflows that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2 to the December 31, 1999
financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



HJ & Associates, LLC
Salt Lake City, Utah
December 4, 2000


                                      F-38
<PAGE>

                               GASCO ENERGY, INC.
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                ---------------------------
                                                                                    2001            2000
                                                                                ------------    -----------
<S>                                                                             <C>             <C>
ASSETS

CURRENT ASSETS
     Cash and cash equivalents                                                  $ 12,296,585    $   881,041
     Accounts receivable and prepaid expenses                                        157,099         13,923
     Due from joint interest partners                                                     --        113,020
                                                                                ------------    -----------
        Total Current Assets                                                      12,453,684      1,007,984

OIL AND GAS PROPERTIES, at cost, accounted for using
      the full cost method of accounting                                           9,152,740      1,991,290
PROPERTY AND EQUIPMENT, net                                                           52,101          7,985
                                                                                ------------    -----------
                                                                                $ 21,658,525    $ 3,007,259
                                                                                ============    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable and accrued expenses                                      $    593,100    $   221,972
     Accrued-bonus payable                                                                --        423,000
     Notes payable-related                                                                --        544,280
     Notes payable-other                                                                  --        239,102
                                                                                ------------    -----------
        Total Current Liabilities                                                    593,100      1,428,354
                                                                                ------------    -----------
COMMITMENTS (see Note 9)

STOCKHOLDERS' EQUITY
   Series A Convertible Redeemable preferred stock-$.001 par value; 5,000,000
        shares authorized; 1,000 shares issued and outstanding in 2001,
        none in 2000                                                                       1             --
   Common stock-$.0001 par value; 100,000,000 shares authorized;
       27,252,500 shares issued and 27,178,800 shares outstanding in 2001;
       13,800,595 shares issued and outstanding in 2000                                2,725          1,380
   Additional paid in capital                                                     38,569,923      3,163,620
   Deferred compensation                                                            (261,375)
   Deficit accumulated during the development stage                              (17,115,554)    (1,586,095)
   Less cost of treasury stock of 73,700 common shares in 2001                      (130,295)            --
                                                                                ------------    -----------
                                                                                  21,065,425      1,578,905
                                                                                ------------    -----------
                                                                                $ 21,658,525    $ 3,007,259
                                                                                ============    ===========
</TABLE>

               The accompanying notes are an integral part of the
                       consolidated financial statements.


                                      F-39
<PAGE>


                               GASCO ENERGY, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                       For the Year Ended                 Cumulative
                                                          December 31,                  from Inception
                                         --------------------------------------------   to December 31,
                                             2001             2000           1999            2001
                                         ------------    ------------    ------------   ---------------
<S>                                      <C>             <C>             <C>             <C>
REVENUES
     Oil and gas                         $     36,850              --              --    $     36,850
     Gain on sale of permit                        --    $    200,000              --         200,000
     Interest                                 193,352              --              --         193,352
                                         ------------    ------------    ------------    ------------
                                              230,202         200,000    $         --         430,202
                                         ------------    ------------    ------------    ------------
OPERATING EXPENSES
     General and administrative             4,331,825         951,734         738,153       6,027,175
     Lease operating                           12,679              --              --          12,679
     Interest                                  67,363          61,776          13,347         142,486
                                         ------------    ------------    ------------    ------------
                                            4,411,867       1,013,510         751,500       6,182,340
                                         ------------    ------------    ------------    ------------
OTHER INCOME (EXPENSES)                        52,206         (29,751)         14,666          36,584
                                         ------------    ------------    ------------    ------------
NET LOSS                                   (4,129,459)       (843,261)       (736,834)     (5,715,554)
                                         ------------    ------------    ------------    ------------
Series A Convertible Redeemable
   Preferred Stock deemed distribution    (11,400,000)             --              --     (11,400,000)
                                         ------------    ------------    ------------    ------------
NET LOSS ATTRIBUTABLE TO
    COMMON SHAREHOLDERS                  $(15,529,459)   $   (843,261)   $   (736,834)   $(17,115,554)
                                         ============    ============    ============    ============
NET LOSS PER COMMON SHARE
    BASIC AND DILUTED                    $      (0.63)   $      (0.06)   $      (0.06)   $      (1.01)
                                         ============    ============    ============    ============
WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING - BASIC AND DILUTED       24,835,144      13,800,595      11,923,093      16,998,353
                                         ============    ============    ============    ============
</TABLE>

               The accompanying notes are an integral part of the
                       consolidated financial statements.


                                      F-40
<PAGE>


                               GASCO ENERGY, INC.
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                          Convertible Redeemable                                        Additional
                                                              Preferred Stock                 Common Stock                Paid in
                                                          Shares           Amount         Shares         Amount           Capital
                                                        -----------     -----------     ----------    ------------     -----------
<S>                                                     <C>             <C>             <C>           <C>              <C>
Balance, at Inception (May 21, 1998)
   Net loss                                                      --              --             --              --              --
                                                        -----------     -----------     ----------    ------------     -----------
Balance, December 31, 1998                                       --              --             --              --              --
   Issuance of common shares                                     --              --     13,800,595    $      1,380     $ 3,163,620
   Net loss                                                      --              --             --              --              --
                                                        -----------     -----------     ----------    ------------     -----------
Balance, December 31, 1999                                       --              --     13,800,595           1,380       3,163,620
   Net loss                                                      --              --             --              --              --
                                                        -----------     -----------     ----------    ------------     -----------
Balance, December 31, 2000                                                              13,800,595           1,380       3,163,620
   Distribution of assets                                                                                               (2,023,568)
   Issuance of common shares in connection with
    reverse acquisition of San Joaquin Resources, Inc.                                   9,549,405             955         571,389
   Issuance of 1,000 convertible redeemable
    preferred shares                                          1,000     $         1                                     17,430,366
   Issuance of common shares                                                             3,902,500             390       7,343,147
   Options issued for services                                                                                             686,148
   Amortization of deferred compensation expense
   Deemed distribution                                                                                                  11,400,000
   Repurchase of common stock
   Net loss                                                      --              --             --              --              --
                                                        -----------     -----------     ----------    ------------     -----------
Balance, December 31, 2001                                    1,000     $         1     27,252,500    $      2,725     $38,571,102
                                                        ===========     ===========     ==========    ============     ===========

<CAPTION>
                                                            Deferred        Accumulated      Treasury
                                                          Compensation        Deficit          Stock             Total
                                                          ------------     ------------     ------------     ------------
<S>                                                        <C>             <C>              <C>              <C>
Balance, at Inception (May 21, 1998)
   Net loss                                                         --     $     (6,000)              --     $     (6,000)
                                                           -----------     ------------     ------------     ------------
Balance, December 31, 1998                                          --           (6,000)              --           (6,000)
   Issuance of common shares                                        --               --               --        3,163,620
   Net loss                                                         --         (736,834)              --         (736,834)
                                                           -----------     ------------     ------------     ------------
Balance, December 31, 1999                                          --         (742,834)              --         (742,834)
   Net loss                                                         --         (843,261)              --         (843,261)
                                                           -----------     ------------     ------------     ------------
Balance, December 31, 2000                                                   (1,586,095)              --        1,578,905
   Distribution of assets                                                                                      (2,023,568)
   Issuance of common shares in connection with                                                                        --
    reverse acquisition of San Joaquin Resources, Inc.                                                            572,344
   Issuance of 1,000 convertible redeemable
    preferred shares                                                                                           17,430,367
   Issuance of common shares                                                                                    7,343,537
   Options issued for services                             $  (686,148)
   Amortization of deferred compensation expense               423,594                                            423,594
   Deemed distribution                                                      (11,400,000)                               --
   Repurchase of common stock                                                                   (130,295)        (130,295)
   Net loss                                                         --       (4,129,459)              --       (4,129,459)
                                                           -----------     ------------     ------------     ------------
Balance, December 31, 2001                                 $  (262,554)    $(17,115,554)    $   (130,295)    $ 21,065,425
                                                           ===========     ============     ============     ============
</TABLE>


               The accompanying notes are an integral part of the
                       consolidated financial statements.


                                      F-41
<PAGE>


                               GASCO ENERGY, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                          For the Year Ended                 Cumulative
                                                                             December 31,                  from Inception
                                                             ------------------------------------------   to December 31,
                                                                 2001            2000           1999            2001
                                                             ------------    -----------    -----------   ---------------
<S>                                                          <C>             <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                $ (4,129,459)   $  (843,261)   $  (736,834)   $ (5,715,554)
     Adjustments to reconcile net loss to net cash used by
         operating activities
         Depreciation and abandonment expense                       5,760         16,347            537          22,644
         Stock option compensation                                423,594             --         50,000         473,594
         Non-cash charges for legal and interest expense               --        213,831             --         213,831
         Gain on sale of permit                                        --       (200,000)            --        (200,000)
         Changes in assets and liabilities provided (used)
           cash net of noncash activity
            Accounts receivable and prepaids                       11,323         23,449        (37,372)       (157,099)
            Accounts payable and accruals                         (51,872)       609,249         20,082         593,100
                                                             ------------    -----------    -----------    ------------
     Net cash used by operating activities                     (3,740,654)      (180,385)      (703,587)     (4,769,484)
                                                             ------------    -----------    -----------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Cash paid for equipment                                      (49,876)            --         (3,582)        (53,458)
     Cash paid for oil and gas properties                      (7,395,867)      (566,204)      (884,919)     (8,702,132)
     Cash received upon recapitalization and merger               265,029             --             --         265,029
     Proceeds from sale of oil and gas interests                       --      1,394,797             --       1,394,797
                                                             ------------    -----------    -----------    ------------
     Net cash provided by (used in) investing activities       (7,180,714)       828,593       (888,501)     (7,095,764)
                                                             ------------    -----------    -----------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from sale of common stock                         6,826,218             --      1,515,000       8,341,218
     Proceeds from sale of preferred stock                     19,000,000             --             --      19,000,000
     Repurchase of common shares                                 (130,295)            --             --        (130,295)
     Cash paid for offering costs                              (2,144,468)            --             --      (2,144,468)
     Proceeds from short-term borrowings                          500,000        252,871        316,991       1,069,862
     Repayments of short-term borrowings                         (714,543)      (183,528)       (76,413)       (974,484)
     Distribution to Rubicon Oil and Gas, Inc.                 (1,000,000)            --             --      (1,000,000)
                                                             ------------    -----------    -----------    ------------
     Net cash provided by financing activities                 22,336,912         69,343      1,755,578      24,161,833
                                                             ------------    -----------    -----------    ------------
NET INCREASE IN CASH                                           11,415,544        717,551        163,490      12,296,585
CASH, BEGINNING OF PERIODS                                        881,041        163,490             --              --
                                                             ------------    -----------    -----------    ------------
CASH, END OF PERIODS                                         $ 12,296,585    $   881,041    $   163,490    $ 12,296,585
                                                             ============    ===========    ===========    ============
</TABLE>


               The accompanying notes are an integral part of the
                       consolidated financial statements.


                                      F-42
<PAGE>


                                GASCO ENERGY INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

NOTE 1 - ORGANIZATION

Gasco Energy, Inc. ("Gasco" or the "Company") (formerly known as San Joaquin
Resources Inc. ("SJRI")) is an independent energy company engaged in the
exploration, development and acquisition of crude oil and natural gas reserves
in the western United States.

On February 1, 2001, SJRI, a Nevada corporation, and Pannonian Energy, Inc.
("Pannonian"), a Delaware corporation, entered into an Agreement and Plan of
Reorganization (the "Pannonian Agreement") whereby a subsidiary of SJRI merged
into Pannonian and SJRI issued 14,000,000 shares of its common stock to the
former shareholders of Pannonian in exchange for all of the outstanding shares
and warrants of Pannonian. Certain shareholders of SJRI surrendered for
cancellation 2,438,930 common shares of the Company's capital in connection with
the transaction, and as a result the existing shareholders of Pannonian acquired
control of the combined company. For financial reporting purposes this business
combination is accounted for as a reverse acquisition with Pannonian as the
accounting acquirer.

The reverse acquisition was valued at $572,344 and was allocated as follows:

    Oil and gas properties                         $ 265,836
    Receivables, prepaid and other, net               41,479
    Cash                                             265,029
                                                   ---------
     Net assets acquired                           $ 572,344
                                                   =========

The Company is considered a development stage company, as were both Pannonian
and SJRI, as defined by Statement of Accounting Standards No. 7.

Under the terms of the Pannonian Agreement, Pannonian was required, prior to
closing of the merger on March 30, 2001, to divest itself of all assets not
associated with its "Riverbend" area of interest (the non-Riverbend assets). The
"spin-offs" were accounted for at the recorded amounts. The net book value of
the non-Riverbend assets in the United States transferred, including cash of
$1,000,000 and liabilities of $555,185, was approximately $1,850,000. The
non-Riverbend assets located outside the United States were held by Pannonian
International Ltd. ("PIL"), the shares of which were distributed to the
Pannonian stockholders. The book value of PIL as of the date of distribution was
approximately $174,000.

The following (unaudited) pro forma information presents the financial
information of the Company as if the consolidation of Gasco and Pannonian had
taken place on January 1 of each year presented. The pro forma results are not
indicative of future results.


                                      F-43
<PAGE>

<TABLE>
<CAPTION>
                                         For the Year Ended December 31,
                           -----------------------------------------------------------
                                       2001                            2000
                           --------------------------      ---------------------------
                           As Reported     Pro Forma       As Reported      Pro Forma
                           -----------    -----------      -----------     -----------
<S>                        <C>            <C>              <C>             <C>
Revenue                    $    36,850    $    36,850      $       --      $        --
Net loss                    (4,129,459)    (4,172,061)       (843,261)      (1,047,888)
Net loss per share basic
 and diluted               $     (0.63)   $     (0.63)     $    (0.06)     $     (0.09)
                           ===========    ===========      ==========      ===========
</TABLE>

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include Gasco and its wholly
owned subsidiaries, Pannonian and San Joaquin Oil and Gas, Ltd. as of December
31, 2001. The consolidated financial statements as of and for the year ended
December 31, 2000 include Pannonian and its wholly owned subsidiary PIL. The
statements for the year ended December 31, 1999 include only Pannonian. All
significant intercompany transactions have been eliminated upon consolidation.

All share and per share amounts included in these financial statements have been
restated to show the retroactive effect of the conversion of Pannonian shares
into SJRI/Gasco shares.

Cash and Cash Equivalents

All highly liquid investments purchased with an initial maturity of three months
or less are considered to be cash equivalents.

Property, Plant and Equipment

The Company follows the full cost method of accounting whereby all costs related
to the 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.


                                      F-44
<PAGE>


Depletion of exploration and development costs and depreciation of production
equipment is computed using the units of production method based upon estimated
proved 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. 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. Gasco's wells began producing in late
October of 2001; therefore, the Company does not have sufficient production
information by which reserves can be estimated. Because of this, and because the
costs associated with the Company's oil and gas properties relate to projects
which have not yet been associated with proved reserves, the Company has not
recorded depletion expense during the year ended December 31, 2001.

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 unproved properties. Should capitalized costs exceed this
ceiling, an 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. Under
the full cost method of accounting the Company is not currently required to
perform a ceiling test, as described above, because the Company's oil and gas
property costs relate to unevaluated or unproved properties which are not
associated with proved reserves.

Impairment of Long-lived Assets

The Company's unproved properties are evaluated periodically for the possibility
of potential impairment. Other than oil and gas properties, the Company has no
other long-lived assets and to date has not recognized any impairment losses.

Revenue Recognition

Oil and gas revenue is recognized as income when the oil or gas is produced and
sold.

Computation of Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss)
attributable to the common shareholders by the weighted average number of common
shares outstanding during the reporting period. Diluted income per common share
includes the potential dilution that could occur upon exercise of the options to
acquire common stock computed using the treasury stock method which assumes that
the increase in the number of shares is reduced by the number of shares which
could have been repurchased by the Company with the proceeds from the exercise
of the options (which were assumed to have been made at the average market price
of the common shares during the reporting period). The options described in Note
3 have not been included in the computation of diluted income (loss) per share
during all periods because their inclusion would have been anti-dilutive.


                                      F-45
<PAGE>


Use of Estimates

The preparation of the financial statements for the Company in conformity with
generally accepted accounting principles 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 these estimates.

Other Comprehensive Income

The Company does not have any items of other comprehensive income for the years
ended December 31, 2001, 2000 and 1999. Therefore, total comprehensive income
(loss) is the same as net income (loss) for these periods.

Income Taxes

The Company uses the liability method of accounting for income taxes under which
deferred tax assets and liabilities are recognized for the future tax
consequences of temporary differences between the accounting bases and the tax
bases of the Company's assets and liabilities. The deferred tax assets and
liabilities are computed using enacted tax rates in effect for the year in which
the temporary differences are expected to reverse.

Stock Based Compensation

The Company accounts for its stock-based compensation using Accounting
Principles Board's Opinion No. 25 ("APB No. 25"). Under APB 25, compensation
expense is recognized for stock options with an exercise price that is less than
the market price on the grant date of the option. For stock options with
exercise prices at or above the market value of the stock on the grant date, the
Company adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS
123"). Under SFAS 123, the Company provides pro forma information regarding net
income (loss) as if compensation expense for the options granted had been
determined in accordance with the fair value method of SFAS 123.

Concentration of Credit Risk

     The Company's cash equivalents are exposed to concentrations of credit
     risk. The Company manages and controls this risk by investing these funds
     with a major financial institution.

Recent Accounting Pronouncements

In June 2001, SFAS No. 141, "Business Combinations" was issued by the FASB. SFAS
No. 141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. The Company has evaluated the
provisions of this statement and has determined it will have no impact on its
financial position or results of operations.

In June 2001, SFAS No. 142, "Goodwill and Other Intangible Assets" was issued by
the FASB. SFAS No. 142 changes the accounting for goodwill from an amortization


                                      F-46
<PAGE>


method to an impairment-only approach. Amortization of goodwill, including
goodwill recorded in past business combinations, will cease upon adoption of
this statement. Goodwill and certain intangible assets will remain on the
balance sheet and not be amortized. On an annual basis, and when there is reason
to suspect that their values have been diminished or impaired, these assets must
be tested for impairment, and write-downs may be necessary. The Company is
required to implement SFAS No. 142 on January 1, 2002 and has determined it will
have no impact on its financial position or results of operations.

In June 2001 the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations, " which requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
The asset retirement liability will be allocated to operating expense by using a
systematic and rational method. The statement is effective for fiscal years
beginning June 15, 2002. The Company has not yet determined the impact of
adoption of this statement.

In August 2001, the FASB issued SFAS No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 requires that long-lived assets be
measured at the lower of carrying amount or fair value less costs to sell,
whether reported in continuing operations or in discontinued operations.
Therefore, discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet occurred. SFAS
No. 144 is effective for financial statements issued for fiscal years beginning
after December 15, 2001 and generally is to be applied prospectively. The
Company has evaluated the provisions of these statements and has determined it
will have no impact on its financial position or results of operations.

Reclassifications

Certain reclassifications have been made to prior years' amounts to conform to
the classifications used in the current year.

NOTE 3 - OIL AND GAS PROPERTY

At December 31, the Company's unproved properties consist of leasehold costs in
the following areas:

                                              2001                 2000
                                          ----------            ---------
  Utah                                    $3,843,270            $ 473,546
  Wyoming                                  5,034,930                   --
  California                                 274,540                   --
  Non-riverbend assets                                          1,405,242
  Foreign concessions                                             112,502
                                          ----------           ----------
                                                  --
                                          $9,152,740           $1,991,290
                                          ==========           ==========

NOTE 4 - PROPERTY DISPOSITIONS

On March 30, 2001, the Company divested itself of all assets not associated with


                                      F-47
<PAGE>


its "Riverbend" area of interest (the non-Riverbend assets), as required by the
Pannonian Agreement described in Note 1. The divestiture is summarized below.

        Oil and gas properties                  $ 1,405,242
        Cash                                      1,000,000
        Liabilities transferred                    (555,185)
                                                -----------
                                                $ 1,850,057

The oil and gas properties, cash and liabilities were transferred to a newly
formed entity Rubicon Oil and Gas, Inc. ("Rubicon"). The Pannonian shareholders
were allocated shares in Rubicon on a one for one basis with their Pannonian
shares.

The Company held, through PIL, non-United States oil and gas properties. In
accordance with the Agreement, the Company distributed, as a dividend in kind,
all of the outstanding shares of PIL to the shareholders of the Company on a one
to one basis with their Pannonian shares. The book value of the PIL shares as of
the date of distribution was approximately $174,000.

NOTE 5 - STOCKHOLDERS' EQUITY

The Company's capital stock consists of 100,000,000 shares of common stock, par
value $0.0001 per share, and 5,000,000 shares of preferred stock, par value
$0.001 per share.

Series A Convertible Redeemable Preferred Stock - Gasco has 1,000 shares of
Series A Convertible Redeemable Preferred Stock ("Preferred Stock") issued and
outstanding. The Preferred Stock is convertible into 9,500,000 shares of Gasco
Common Stock, has no fixed dividend rate and is entitled to a $1.00 per share
liquidation preference. The Preferred Stock is entitled to vote along with the
Gasco common stock and, for so long as at least half of the Preferred Stock
remains outstanding, is entitled to 26% of the combined voting power of all the
common stock and preferred stock. The Preferred Stock is also entitled to vote
as a class on certain matters. The Company may at its option redeem the
outstanding portion of the Preferred Stock for $19,000 per share on or after
August 31, 2006 if the last sale price for the Company's common stock was at
least $2.00 per share (adjusted for any splits) for the previous 20 day period.

In July 2001, Brek Energy Corporation (formerly known as First Ecom.com, Inc.)
("Brek") purchased 1,000 shares of the Company's Preferred Stock for
$19,000,000. Brek agreed not to transfer the Preferred Stock or the common stock
issuable upon conversion thereof for three years (the "lock up period") except
under certain circumstances and except for 10% of such common stock per year.
During the lock up period, Brek has given the Company the right of first refusal
on all of the Company securities it holds. Certain principal stockholders of the
Company also gave Brek a similar right of first refusal for a five-year period.
Costs of the sale, including 1,025,000 shares of common stock valued at
$3,280,000 ($3.20 per share), were $4,849,633. The total costs of the sale
included $1,500,000 and the issuance of 125,000 shares of common stock valued at
$400,000 paid to Canaccord International Ltd. and the issuance of 900,000 shares
of common stock valued at $2,880,000 paid to Wet Coast Management Corp. as
brokerage commissions.

The Company recognized $11,400,000 as a deemed distribution to the holders of
the Preferred Stock upon issuance due to a beneficial conversion feature into


                                      F-48
<PAGE>


the Company's common stock in accordance with Emerging Issues Task Force
("EITF") 98-5, "Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios to Certain Convertible
Instruments" and EITF 00-27 "Application of EITF Issue 98-5". The deemed
distribution is the difference between the market price on the date of issuance
($3.20) and the conversion rate.

Common Stock - Gasco has 27,252,000 shares of Common Stock issued and 27,178,300
shares outstanding as of December 31, 2001. The common shareholders are entitled
to one vote per share on all matters to be voted on by the shareholders;
however, there are no cumulative voting rights. Additionally, as long as 50% of
the Preferred Stock is outstanding, the Preferred Stock holders are entitled to
vote as a class equal to 26%, therefore, the common shareholders are effectively
entitled to 0.74 votes per share. The common shareholders are entitled to
dividends and other distributions as may be declared by the board of directors.
Upon liquidation or dissolution, the common shareholders will be entitled to
share ratably in the distribution of all assets remaining available for
distribution after satisfaction of all liabilities and payment of the
liquidation preference of any outstanding preferred stock.

The Company's common stock equity transactions during 2001 are described as
follows:

In connection with the Pannonian/SJRI merger, SJRI issued an option to a
Pannonian officer, to purchase 1,000,000 shares of the Company's common stock at
$1.00 per share. The $269,000 fair market value of the option determined using
the Black Scholes Pricing model, was charged to operations of the combined
company during the year ended December 31, 2001.

During January and May 2001, the Company issued 2,275,000 shares of common stock
for cash at $3.00 per share, pursuant to private placements for gross proceeds
of $6,825,000. The costs of these offerings were $574,835, $191,250 of which was
paid to Canaccord International Ltd. and $150,000 of which was paid to DMD
Investments as broker commissions. In September 2001, the Company issued an
additional 227,500 shares of common stock for no additional consideration to the
holders of the original shares in accordance with the terms of the offering. The
offering was conducted in accordance with the provisions of Regulation S under
the Securities Act of 1933, and all purchasers were residents of foreign
countries.

In April 2001, the Company paid cash of $200,808 and issued 75,000 shares of its
common stock, valued at $247,500 ($3.30 per share), for unproved oil and gas
properties from an unrelated entity.

In July 2001, the Company acquired unproved oil and gas properties from an
entity for $700,000 cash and 300,000 shares of the Company's common stock,
valued at $846,000 ($2.82 per share). See related party discussion in Note 8 for
further discussion.

During December 2001, the Company repurchased 73,700 shares of its own stock on
the open market at prices ranging from $1.12 to $2.46 per share.

Stock Option Plan - During the year ended December 31, 2001, the Company granted
options to employees, directors and consultants to purchase an aggregate
6,519,000 shares of the Company's common stock at exercise prices ranging from
$1.89 to $3.15 per share. The options vest at varying schedules within three


                                      F-49
<PAGE>


years of their grant date and expire within ten years from the grant date. The
aggregate fair market value of options, determined using the Black Scholes
Pricing Model, granted to consultants, including the Pannonian officer issuance
above, of $423,594 was charged to operations during the year ended December 31,
2001.

During the first quarter of 2002, the Company issued an additional 250,000
options to purchase shares of common stock to employees and directors of the
Company, at exercise prices ranging from $1.68 to $1.75 per share. The options
vest quarterly over a two-year period and expire within ten years from the grant
date.

A summary of the options granted to purchase common stock and the changes
therein during the year ended December 31, 2001 is presented below. There were
no options issued during the years ended December 31, 2000 or 1999.

<TABLE>
<CAPTION>

                                                          Number of    Weighted Average
                                                          Options       Exercise Price
                                                         ----------    ----------------
<S>                                                       <C>              <C>
Outstanding as of December 31, 2000                              --        $  --
Granted                                                   6,519,000         2.25
Cancelled                                                  (126,250)        3.03
                                                         ----------        -----
Outstanding as of December 31, 2001                       6,392,750        $2.23
                                                         ==========        =====
Exercisable as of December 31, 2001                       5,137,250        $2.01
                                                         ==========        =====
Weighted average fair value of options granted                             $1.37
                                                                           =====
Weighted average remaining contractual life of options outstanding          8.91 years
                                                                           ===========
</TABLE>

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation ("SFAS
123") for the stock options granted to the employees and directors of the
Company. Accordingly, no compensation cost has been recognized for these
options. Had compensation expense for the options granted been determined based
on the fair value at the grant date for the options, consistent with the
provisions of SFAS 123, the Company's net loss and net loss per share for the
year ended December 31, 2001 would have been increased to the pro forma amounts
indicated below:

    Net loss:                 As reported           $(4,129,459)
                              Pro forma              (9,811,728)

    Net loss per share:       As reported                $(0.63)
                              Pro forma                   (0.85)


                                      F-50
<PAGE>


The fair value of the common stock options granted during 2001, for disclosure
purposes was estimated on the grant dates using the Black Scholes Pricing Model
and the following assumptions.

             Expected dividend yield                      --
             Expected price volatility                   89%
             Risk-free interest rate             3.8% - 4.9%
             Expected life of options                5 years

NOTE 6 - STATEMENT OF CASH FLOWS

The following transactions represent the non-cash investing activities of the
Company during the year ended December 31, 2001.

          The Company issued 375,000 shares of common stock for oil and gas
          properties, valued at $1,093,500 ($2.82 to $3.30 per share).

          The Company issued 1,025,000 shares of common stock in conjunction
          with the sale of preferred stock, valued at $3,280,000 ($3.20 per
          share).

The following transactions represent the non-cash financing activities of the
Company during the year ended December 31, 2000.

          Certain individuals paid legal fees on behalf of the Company for which
          they were issued promissory notes in the aggregate amount of $198,193.

          The Company entered into notes for the acquisition of oil and gas
          properties in the aggregate amount of $781,917. The Company assumed an
          18.75% interest in the notes, which was $143,609. The notes and the
          related properties were spun off as part of the Pannonian Agreement as
          described in Notes 1 and 4.

Cash paid for interest was $67,363, $11,072 and $23,292 for the years ended
December 31, 2001, 2000 and 1999, respectively.

NOTE 7 - NOTES PAYABLE

Notes payable - related at December 31, 2000 consists four notes totaling
$529,280 payable to directors or officers of the Company and one note payable of
$15,000 to an entity owned by a director of the Company with similar terms
bearing interest at rates ranging from 5% to 10%.

Notes payable - other at December 31, 2000 consists of two notes totaling
$239,102 payable to unrelated entities bearing interest at 6% and 12%.

All of these notes were settled during 2001.

NOTE 8 - INCOME TAXES

The Company has generated net operating losses of $4,200,000, $1,300,000 and
$740,000. The Company did not recognize income tax expense during the years
ended December 31, 2001, 2000, or 1999 because of the Company's operating
losses. The net operating losses may be offset against taxable income through
2021.


                                      F-51
<PAGE>


During the years ended December 31, 2001 and 2000, the tax benefits of the net
operating losses of approximately $1,600,000 and $192,000 were offset by
valuation allowances of the same amounts. The increase in valuation allowance
reduces the net tax rate to zero. The Company has fully reserved the tax
benefits of these net operating losses because the likelihood of realizing these
tax benefits cannot be determined at this time.

The temporary differences between the timing of reporting certain items for
financial and tax reporting purposes, consist primarily of exploration costs
related to oil and gas properties.

NOTE 9 - RELATED PARTY TRANSACTIONS

One of the Company's directors earned a combined total of $9,000 in consulting
fees from Rubicon and PIL during 2001.

A director of the Company earned consulting fees of $52,000 and $50,000 from the
Company during the years ended December 31, 2001 and 2000, respectively. During
2001, the Company paid $240,000 in consulting fees to a company owned by a
director of Gasco. The fees paid to the director's company are committed through
January 31, 2006.

An officer of the Company earned a $28,000 fee and 12,500 shares of Gasco's
common stock for consulting services provided in connection with a property
acquisition described in Note 4. This same officer was paid $22,879 in
consulting fees prior to his appointment. As part of this officer's offer of
employment, the Company has committed to purchase the consulting business of the
officer for 250,000 shares of common stock. The transaction is expected to be
completed within the next year.

An officer of the Company was an employee of and owns less than 1% interest in
an entity from which Gasco purchased acreage in Utah and Wyoming during 2001 and
2002.

During 2000, the Company incurred debt to related parties in the aggregate
amount of $366,657 for cash loans, expenses paid on behalf of the Company and
conversion of interest to debt. Repayments made during 2000 aggregated $63,000.

The Board of Directors approved the payment of bonuses and directors fees to the
officers and directors of the Company in the aggregate amount of $455,000, of
which $32,000 was paid as of December 31, 2000. The remaining balance was paid
during 2001.

During 2000, the Company paid consulting and professional fees to officers,
directors and related parties of $96,000.

Certain of the Company's directors and officers have working and/or overriding
royalty interests in oil and gas properties in which the Company has an
interest. It is expected that the directors and officers may participate with
the Company in future projects. All participation by directors and officers will
continue to be approved by the disinterested members of the Company's Board of
Directors.

The Company's management believes that the above transactions and services were
provided in the normal course of business with terms that could be obtained from
non-related sources.


                                      F-52
<PAGE>


NOTE 10 - COMMITMENTS

The Company leases office facilities in Denver, Colorado for approximately
$34,500 per year under a lease that expires on August 30, 2004. Remaining
commitments under this lease mature as follows:

     Year Ending December 31,                 Annual Rentals
     ------------------------                 --------------
            2002                                 $34,775
            2003                                  35,960
            2004                                  24,500
                                                 -------
                                                 $95,235

Rent expense for the years ending December 31, 2001, 2000 and 1999 was $46,476,
$52,573 and $45,216, respectively.

As is customary in the oil and gas industry, the Company may at times have
commitments in place to reserve or earn certain acreage positions or wells. If
the Company does not pay such commitments, the acreage positions or wells may be
lost.

The Company has entered into employment agreements with certain key officers
through January 31, 2006. Total compensation for the officers covered is
$560,000 per annum. The agreements contain clauses regarding termination and
demotion of the officer that would require payment of an amount ranging from one
times compensation to up to approximately ten times the defined compensation.
Included in the employment agreements is a bonus calculation for each of the
covered officers totaling 2.125% of a defined cash flow figure based on net
after tax earnings adjusted for certain expenses. The agreements also contain
anti-dilution provisions that contain the requirements to grant options to the
officers and one director for them to remain at their current ownership
percentages.

NOTE 11 - EMPLOYEE BENEFIT PLANS

The Company adopted a 401(k) profit sharing plan (the "Plan") in October 2001,
available to employees who meet the Plan's eligibility requirements. The Plan is
a defined contribution plan. The Company may make discretionary contributions to
the Plan and is required to contribute 3% of the participating employee's
compensation to the Plan. The contributions made by the Company totaled $6,270
during the year ended December 31, 2001.

NOTE 12 - SELECTED QUARTERLY INFORMATION (Unaudited)

The following represents selected quarterly financial information for the years
ended December 31, 2001 and 2000.


                                      F-53
<PAGE>

<TABLE>
<CAPTION>
         2001                               For the Quarter Ended
         ----             ----------------------------------------------------------
                          March 31,        June 30,     September 30,   December 31,
                          ---------       ---------     -------------   ------------
<S>                       <C>             <C>             <C>           <C>
Gross revenue             $      --       $      --       $      --     $    36,850a
Net revenue from oil
  and gas operations             --              --              --          24,171a
Net loss                   (653,369)       (875,624)       (744,516)     (1,855,950)b
Net loss per share
  basic and diluted           (0.03)          (0.04)          (0.45)c         (0.07)
</TABLE>

a - The increase in gross revenue and net revenue from oil and gas operations
during the fourth quarter is due to the revenue and lease operating expenses
from two wells that were drilled during the third and fourth quarters.

b - The increase in the net loss during the fourth quarter of 2001 is primarily
due to increased general and administrative expenses resulting from the
increased level of operating activity associated with the commencement of the
Company's own operations.

c - The increase in the net loss per share during the third quarter of 2001 is
due to the recognition of $11,400,000 in a deemed distribution to the holders of
the Preferred Stock as further described in Note 3.

         2000                           For the Quarter Ended
         ----           --------------------------------------------------------
                        March 31,     June 30,     September 30,    December 31,
                        ---------     --------     -------------    ------------
Gross revenue           $     --      $     --       $      --       $      --
Net revenue from oil
  and gas operations          --            --              --              --
Net income (loss)        (58,459)      (98,423)       (162,692)       (523,687)
Net loss per share
  basic and diluted           --         (0.01)          (0.01)          (0.04)

NOTE 13 - SUBSEQUENT EVENTS

The Company acquired a 50% interest in 21,613 acres in Sublette County Wyoming
for approximately $1,411,000 on February 13, 2002.

On February 19, 2002, the Company acquired leasehold interests covering
approximately 16,606 acres in the Greater Green River Basin located in
west-central Wyoming for $1,500,000. In connection with this transaction, the
Company received an exclusive option to purchase an additional 72,583 acres in
this area by making monthly payments of $300,000 during 2002 in order to
maintain this option. The Company may elect to exercise its option to complete
the transaction at any time.

In connection with its drilling projects, the Company entered into a $2,000,000
letter of credit during February 2002. The letter of credit is collateralized


                                      F-54
<PAGE>


with cash and it terminates in August 2002.

On March 7, 2002, the Company completed a strategic exchange of certain of its
properties in the Uinta Basin located in northeastern Utah. The Company received
approximately 2,474 net acres located in its Uinta Basin Riverbend Project in
exchange for 160 net acres and the contractual right to earn Wasatch rights on
approximately 2,463 net Uinta Basin acres. The acreage that the Company receives
contains four well bores, two of which are producing, and three of which have
recompletion opportunities.

During March 2002, Brek entered into agreements with individual shareholders of
Gasco to acquire 7,000,000 shares of Gasco's common stock in exchange for
19,250,000 shares of Brek. Additionally, Brek has exercised its right to convert
50% of its Preferred Stock into 4,750,000 common shares, which will result in
Brek having approximately 53% voting control of Gasco with a 45% equity
interest. The share exchange is subject to the approval of Brek shareholders.


                                      F-55
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                          BREK ENERGY CORPORATION.


                                          /S/ Kenneth G.C. Telford
                                          ------------------------
                                              Kenneth G.C. Telford
                                              Secretary and Chief
                                              Financial Officer



<TABLE>
<CAPTION>


       Signature                            Title                         Date
       ---------                            -----                         ----

<S>                            <C>                                      <C>
/S/  Gregory M. Pek            Director, President, and Chief           March 28, 2002
------------------------       Executive Officer (principal
Gregory M. Pek                 executive officer)


/S/  Ravi K. Daswani           Director                                 March 28, 2002
------------------------
Ravi K. Daswani

/S/  Douglas Moore             Director                                 March 28, 2002
------------------------
Douglas Moore

/S/  Ian G. Robinson           Director & Chairman of the Board         March 28, 2002
------------------------
Ian G. Robinson

/S/ James Pratt               Director                                  March 28, 2002
------------------------
James Pratt

/S/ Marc Bruner               Director                                  March 28, 2002
------------------------
Marc Bruner

/S/ Kenneth G.C. Telford      Secretary & Chief Financial Officer       March 28, 2002
------------------------      (principal accounting officer)
Kenneth G.C. Telford
</TABLE>


                                       39