BREK Energy (BREK) 10QSB 2005 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period ended September 30, 2005

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

For the transition period from_____________to_____________

Commission file number 000-27753

BREK ENERGY CORPORATION

(Exact name of small business issuer as specified in its charter)

Incorporated in the State of Nevada (State or other jurisdiction of incorporation or organization)	98-0206979 (I.R.S. Employer Identification No.)
Third Floor, 346 Kensington High Street, London, W14 8NS, United Kingdom (Address of principal executive offices)
011-44-20-7371-6668 (Issuer’s telephone number)
19/F, 80 Gloucester Road, Wanchai, Hong Kong, SAR (Former name, former address and former fiscal year, if changed since last report)

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

[   ] Yes [ X ] No

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Class	Outstanding at November 17, 2005
Shares of common stock - $0.0001 par value	59,498,090

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PART I - FINANCIAL INFORMATION

Item 1.Financial Statements.

BREK ENERGY CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

As at September 30, 2005 and December 31, 2004 and

for the nine month periods ended September 30, 2005 and 2004

UNAUDITED

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BREK ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

UNAUDITED

		September 30,			December 31,
		2005			2004
ASSETS
Current Assets
Cash	$	19,293		$	230,848
Trade accounts receivable		84,182			56,802
Prepaids		3,485			1,238
Due from related party (Note 4)		-			116,594
		106,960			405,482
Oil and gas properties, net of $64,953 and $nil in depletion (Note 3)		5,957,752			4,800,422
TOTAL ASSETS	$	6,064,712		$	5,205,904
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	772,689		$	1,026,158
Due to related parties (Note 4)		304,041			168,733
TOTAL LIABILITIES		1,076,730			1,194,891
Commitments and contingencies (Note 8)
Minority interest		72,882			70,001
STOCKHOLDERS' EQUITY
Share capital (Note 5)
Authorized
300,000,000 common shares, $0.001 par value
Issued, outstanding and subscribed
59,498,090 and 55,331,420 common shares		59,497			55,331
Additional paid in capital		65,364,250			56,706,041
Common stock purchase warrants		977,973			8,515,348
Deficit		(61,486,620	)		(61,335,708	)
TOTAL STOCKHOLDERS' EQUITY		4,915,100			3,941,012
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,064,712		$	5,205,904

The accompanying notes are an integral part of these consolidated financial statements

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BREK ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

		Three Months						Nine Months
		Ended September 30,						Ended September 30,
		2005			2004			2005			2004
Revenue	$	235,142		$	135,892		$	521,451		$	207,445
Expenses
Operating expenses
General and administrative		294,281			79,915			669,482			198,909
Total operating expenses		294,281			79,915			669,482			198,909
Net (loss) income before minority interest		(59,139	)		55,977			(148,031	)		8,536
Minority interest		(711	)		(1,466	)		(2,881	)		(3,193	)
Net (loss) income for the period	$	(59,850	)	$	54,511		$	(150,912	)	$	5,343
Basic and diluted (loss) income per share	$	(0.01	)	$	0.01		$	(0.01	)	$	0.01
Weighted average shares outstanding		59,311,496			48,571,965			58,805,415			41,554,834

The accompanying notes are an integral part of these consolidated financial statements

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BREK ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005 and 2004

UNAUDITED

		Common Shares Issued				Additional			Common Stock		Common Shares Subscribed						Accumulated Other
	Number of					Paid in			Purchase		Number of						Comprehensive
		Shares		Amount		Capital			Warrants		Shares			Amount			Income (Loss)			Total
Balance, January 1, 2004		28,713,630	$	28,714	$	54,021,239		$	8,016,124		-		$	-		$	(61,342,202	)	$	723,875
Units issued for cash		17,166,667		17,167		1,398,458			471,875		-			-			-			1,887,500
Units issued for debt		2,691,667		2,692		145,432			49,376		-			-			-			197,500
Finders fees		-		-		(128,750	)		-		-			-			-			(128,750	)
Shares subscribed		-		-		-			-		1,896,956			379,392			-			379,392
Common stock purchase warrants, expired		-		-		360,000			(360,000	)	-			-			-			-
Net income for the nine month period ended,
September 30, 2004		-		-		-			-		-			-			5,343			5,343
Balance September 30, 2004		48,571,964		48,573		55,796,379			8,177,375		1,896,956			379,392			(61,336,859	)		3,064,860
Units issued for cash		6,271,956		6,271		934,524			313,598		-			-			-			1,254,393
Units issued for debt		487,500		487		72,638			24,375		-			-			-			97,500
Finders fees		-		-		(97,500	)		-		-			-			-			(97,500	)
Shares Subscribed		-		-		-			-		(1,896,956	)		(379,392	)		-			(379,392	)
Net income for the three month period ended,
December 31, 2004		-		-		-			-		-			-			1,151			1,151
Balance December 31, 2004		55,331,420		55,331		56,706,041			8,515,348		-			-			(61,335,708	)		3,941,012
Units issued for cash		3,333,336		3,333		746,667			250,000		-			-			-			1,000,000
Units issued for debt		333,334		333		74,667			25,000		-			-			-			100,000
Warrants exercised for cash		500,000		500		124,500			-		-			-			-			125,000
Finders fees		-		-		(100,000	)		-		-			-			-			(100,000	)
Common stock purchase warrants, exercised		-		-		18,750			(18,750	)	-			-			-			-
Common stock purchase warrants, expired		-		-		7,793,625			(7,793,625	)	-			-			-			-
Net income for the nine month period ended,
September 30, 2005		-		-		-			-		-			-			(150,912	)		(150,912	)
Balance September 30, 2005		59,498,090	$	59,497	$	65,364,250		$	977,973		-		$	-		$	(61,486,620	)	$	4,915,100

The accompanying notes are an integral part of these consolidated financial statements

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BREK ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

		Nine Month Periods Ended September 30,
		2005			2004
CASH FLOWS (USED IN) PROVIDED BY OPERATING ACTIVITIES
Net (loss) income for the period	$	(150,912	)	$	5,343
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depletion, oil and gas		64,953			-
Minority interest		2,881			3,193
		(83,078	)		8,536
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable		(27,380	)		6,028
Increase in prepaid expenses		(2,247	)		(522,180	)
Decrease in amount due from related party		116,594			-
Decrease in accounts payable and accrued liabilities		(253,469	)		(223,436	)
Increase (decrease) in amounts due to related parties		135,308			(5,605	)
NET CASH USED IN OPERATING ACTIVITIES		(114,272	)		(736,657	)
CASH FLOWS USED IN INVESTING ACTIVITIES
Cash spent on oil and gas properties		(1,222,283	)		(1,465,392	)
NET CASH USED IN INVESTING ACTIVITIES		(1,222,283	)		(1,465,392	)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from issuance of units for cash		1,000,000			1,887,500
Proceeds from warrants exercised for cash		125,000			-
Proceeds from units subscribed for cash		-			379,392
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,125,000			2,266,892
Net (decrease) increase in cash and cash equivalents		(211,555	)		64,843
Cash at the beginning of the period		230,848			2,318
CASH AT THE END OF THE PERIOD	$	19,293		$	67,161
Supplemental cash information:
Cash paid during the period for:
Interest	$	-		$	-
Non-cash Transactions:
Issuance of common stock purchase warrants	$	275,000		$	521,251
Expiry of common stock purchase warrants	$	7,793,625		$	360,000
Issuance of units to an officer in payment of finders fees	$	100,000		$	128,750
Issuance of units in settlement of debt	$	-		$	32,405
Issuance of units in settlement of amounts due to related parties	$	-		$	36,346

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

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BREK ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

SEPTEMBER 30, 2005

NOTE 1 - ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION

Organization

First Ecommerce Asia Limited (“FEAL”) was incorporated in Hong Kong on September 16, 1998. On January 28, 1999, FEAL, entered into an agreement and plan of merger with JRL Resources Corp., (“JRL Resources”) a company incorporated in the State of Florida on November 13, 1996. Pursuant to the terms of the agreement, plan of merger and related agreements, 3,015,000 newly issued shares of JRL Resources and 985,000 shares held by existing shareholders of JRL Resources were exchanged for two shares of FEAL. As a result of this business combination FEAL become a wholly-owned subsidiary of JRL Resources.

The merger between JRL Resources and FEAL was a merger of a private operating company, (FEAL) into a public shell corporation, with nominal net assets, that resulted in the owners and management of the private company (FEAL) obtaining operating control of the combined company after the transaction. For accounting purposes, the transaction has been treated as a reverse merger, of JRL Resources by FEAL with FEAL deemed to be the accounting acquirer.

Pursuant to an agreement and plan of merger dated February 12, 1999, JRL Resources was merged with and into Brek Energy Corporation (formerly First Ecom.com, Inc.) (“BREK” or the Company”), a company incorporated in the State of Nevada on February 12, 1999, with no shares issued and outstanding. Pursuant to the agreement and plan of merger, all of the 12,040,000 outstanding common shares of JRL Resources were exchanged on a one-for-one basis for newly issued shares of BREK, with BREK being the surviving corporation. For accounting purposes, this merger is treated as a re-incorporation of JRL Resources as BREK.

Principal Activities

During 2001, the Company changed its primary business to that of oil and gas exploration and on July 19, 2001, acquired a 26% non-dilutable voting interest in Gasco Energy, Inc., (“Gasco”). On July 16, 2002, the Company exchanged all of its shareholdings in Gasco for an undivided interest in all of Gasco’s undeveloped mineral leases in Utah, Wyoming, and California. At the same time, the Company acquired an additional undivided interest in Gasco’s undeveloped mineral leases from certain third parties in exchange for the issuance of 4,125,000 shares of the Company. The main focus of the Company’s oil and gas exploration business has been centered in the United States.

In March 2002, the Company acquired a 26% non-dilutable voting interest in Vallenar Energy Corp. (“Vallenar”) another company engaged in oil and gas exploration. On June 28, 2002, the Company increased its ownership of Vallenar to 51.53%.

Basis of Presentation

The unaudited consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2005 and 2004 are not necessarily indicative of the results that may be expected for any interim period or the entire year. For further information, these consolidated financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2004 included in the Company’s annual report on Form 10-KSB.

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BREK ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

SEPTEMBER 30, 2005

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company’s financial statements are based on a number of significant estimates, including oil and gas reserve quantities which is the basis for the calculation of depletion and impairment of oil and gas properties.

Accounts Receivable

Receivables represent valid claims against debtors for sales arising on or before the balance sheet date and are reduced to their estimated net realizable value. An allowance for doubtful accounts is based on an assessment of the collectibility of all past due accounts. At September 30, 2005 and December 31, 2004, all of the trade accounts receivable were considered collectable.

Revenue Recognition

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

Basic and Diluted Net Income (Loss) Per Common Share (“EPS”)

Basic income (loss) per share excludes dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution of securities that could occur if securities or other contracts to issue common stock (such as, convertible preferred stock, warrants to purchase common stock and common stock options) were exercised or converted into common stock.

Potential common shares are excluded from the diluted loss per share computation in net loss periods as their effect would be anti-dilutive.

Oil and Gas Properties

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

Depletion of exploration and development costs is computed using the units of production method based upon estimated proven oil and gas reserves. The costs of unproved properties are withheld from the depletion base until such time as they are either developed or abandoned. The properties are reviewed periodically for impairment. Total well costs are transferred to the depletable pool even when multiple targeted zones have not been fully evaluated. For depletion and depreciation purposes, relative volumes of oil and gas production and reserves are converted at the energy equivalent rate of six thousand cubic feet of natural gas to one barrel of crude oil.

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BREK ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

SEPTEMBER 30, 2005

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Oil and Gas Properties, continued

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

Stock-based Compensation

The Company accounts for its stock-based compensation using Accounting Principles Board Opinion No. 25 (“APB 25”) and related interpretations. 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”) for the stock options granted to the employees and directors of the Company. Accordingly, no compensation cost has been recognized for these options. Compensation expense has been recognized in the accompanying financial statements for stock options that were issued to outside consultants. Had compensation expense for the options granted to employees and directors been determined based on the fair value at the grant date for options, consistent with the provisions of SFAS 123, the Company’s net loss and net loss per share for the three and nine months ended September 30, 2005 and 2004 would have been increased to the pro forma amounts indicated below:

	For the Three Months Ended			For the Three Months Ended		For the Nine Months Ended			For the Nine Months Ended
	September 30, 2005			September 30, 2004		September 30, 2005			September 30, 2004
Net (loss) income attributable to common shareholders:
As reported	$	(59,850	)	$	54,511	$	(150,912	)	$	5,343
Stock based employee compensation determined under the fair value based method		-			-		-			-
Pro forma	$	(59,850	)	$	54,511	$	(150,912	)	$	5,343
Net income(loss) per common share:
As reported	$	(0.01	)	$	0.01	$	(0.01	)	$	0.01
Pro forma	$	(0.01	)	$	0.01	$	(0.01	)	$	0.01

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BREK ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

SEPTEMBER 30, 2005

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Stock-based Compensation, continued

The fair value of the common stock options granted during 2005 and 2004, for disclosure purposes was estimated on the grant dates using the Black Scholes Pricing Model and the following assumptions.

	2005	2004
Expected dividend yield	-	-
Expected price volatility	131% to 151%	131% to 151%
Risk-free interest rate	3% to 5.5%	3% to 5.5%
Expected life of options	5 years	5 years

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123(R), “Share-Based Payment” (“SFAS 123(R)”), which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS 123 (R) is effective for public companies for the first fiscal year beginning after June 15, 2005, supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS 95, Statement of Cash Flows.

SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro-forma disclosure is no longer an alternative. The new standard will be effective for the Company, for the quarter commencing July 1, 2005. SFAS 123(R) permits companies to adopt its requirements using either a “modified prospective” method or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123(R) for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123(R). Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but it also permits entities to restate financial statements of previous periods, either for all periods presented or to the beginning of the fiscal year in which the statement is adopted, based on previous pro forma disclosures made in accordance with SFAS 123. On July 1, 2005, the Company adopted the modified prospective method. The adoption of SFAS 123(R) did not have a material effect on the Company’s financial condition or results of operations.

NOTE 3 - OIL AND GAS PROPERTIES

The Company has a 25% interest in 116,508 gross acres (17,365 net acres) in the Uinta Basin region in Utah, 108,890 gross acres (17, 507 net acres) in the Greater Green River Basin of Wyoming and 3,315 gross acres (828 net acres) in Kern County and San Luis Obispo County in California and a 50% interest in 51,194 gross acres (8,865 net acres) in Edwards County in Texas.

The following table presents information regarding the Company’s costs incurred in the purchase of proved and unproved properties, in exploration and development activities and charges for depletion:

	September 30, 2005				December 31, 2004
Property acquisition costs:
Unproved	$	3,666,307		$	2,832,860
Proved		62,526			-
Exploration and development expenditures		2,293,872			1,967,562
Depletion		(64,953	)		-
Total	$	5,957,752		$	4,800,422

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BREK ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

SEPTEMBER 30, 2005

NOTE 3 - OIL AND GAS PROPERTIES, continued

At September 30, 2005 and December 31, 2004, the Company’s proved and unproved oil and gas properties consisted of leasehold interests and exploration and development costs related to their interests in Texas, Utah, Wyoming and California. At September 30, 2005 and December 31, 2004, the Company’s oil and gas properties were valued as follows:

	September 30, 2005		December 31, 2004
Proved and Unproved Properties
Property acquisition costs:
Utah	$	3,665,865	$	2,832,560
Wyoming		62,768		100
California		100		100
Texas		100		100
Exploration & development costs:
Utah		2,285,372		1,967,562
Wyoming		8,499		-
California		-		-
Texas		-		-
Depletion		(64,953)		-
	$	5,957,752	$	4,800,422

The Company’s proven and unproven properties are evaluated periodically for the possibility of potential impairment. During the period ended September 30, 2005 and the year ended December 31, 2004, no impairment charges were recorded against the Utah, Texas, California or Wyoming properties.

NOTE 4 - RELATED PARTY TRANSACTIONS

At September 30, 2005 and December 31, 2004, the Company was indebted a director in the amount of $123,463.

At September 30, 2005 and December 31, 2004, the Company was indebted a director in the amount of $12,000.

During the nine months ended September 30, 2005 and 2004, the Company had paid or accrued $147,163 and $nil in administrative fees to a company controlled by an officer. At September 30, 2005 the Company was indebted to this related company in the amount of $51,690.

During the nine months ended September 30, 2005 and 2004, the Company had paid or accrued $64,000 and $nil in administrative fees to a director. At September 30, 2005 and December 31, 2004, the Company was indebted to this director in the amounts of $72,956 and $6,998.

During the nine months ended September 30, 2005 and 2004, the Company had paid or accrued $56,000 and $nil in administrative fees to a company controlled by a director. At September 30, 2005, the Company was indebted to this related company in the amount of $14,000.

During the nine months ended September 30, 2005 and 2004, the Company had paid or accrued $40,000 and $nil in administrative fees to the wife of a director. At September 30, 2005, the Company was indebted to this related person in the amount of $10,000.

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BREK ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

SEPTEMBER 30, 2005

NOTE 4 - RELATED PARTY TRANSACTIONS, continued

At September 30, 2005 and December 31, 2004, the Company had $18,702 and $33,270 in accounts payable to other directors, officers or companies controlled by directors or officers.

During the nine months ended September 30, 2005, a director of the Company received 333,334 units in payment of finders’ fees totalling $100,000. During the nine months ended September 30, 2004, this same director received 1,804,167 and 519,020 units in payment of $226,250 in finder’s fees and $25,981 in debt. (Note 5)

At September 30, 2005 the Company was indebted to a limited partnership controlled by relatives of two directors of the Company in the amount of $1,230. At December 31, 2004, the Company had $116,594 in accounts receivable from this same limited partnership.

During the nine months ended September 30, 2005, a director of the Company received 500,000 common shares of the Company upon the exercise of a total of 500,000 share purchase warrants at $0.25 per warrant and payment of $125,000 in cash. (Notes 5 and 7)

NOTE 5 - COMMON STOCK

On January 18, 2005, the Company issued a total of 2,166,668 units at $0.30 per unit by way of a private placement for cash of $650,000. Each unit is comprised of one common share and one common share purchase warrant entitling the holder to purchase one common share for $0.50. The warrants have a term of two years and will expire on January 18, 2007. The fair value of the warrants was estimated to be $162,500 and has been recorded as a separate component of stockholders’ equity. (Note 7)

On January 18, 2005, the Company issued, to a director of the Company, a total of 216,667 units at $0.30 per unit for finders’ fees of $65,000. Each unit is comprised of one common share and one common share purchase warrant entitling the holder to purchase one common share for $0.50. The warrants have a term of two years and will expire on January 18, 2007. The fair value of the warrants was estimated to be $16,250 and has been recorded as a separate component of stockholders’ equity. (Notes 4 and 7)

On January 24, 2005, the Company issued a total of 1,000,000 units at $0.30 per unit by way of a private placement for cash of $300,000. Each unit is comprised of one common share and one common share purchase warrant entitling the holder to purchase one common share for $0.50. The warrants have a term of two years and will expire on January 27, 2007. The fair value of the warrants was estimated to be $75,000 and has been recorded as a separate component of stockholders’ equity. (Note 7)

On January 24, 2005, the Company issued, to a director of the Company, a total of 100,000 units at $0.30 per unit for finders’ fees of $30,000. Each unit is comprised of one common share and one common share purchase warrant entitling the holder to purchase one common share for $0.50. The warrants have a term of two years and will expire on January 24, 2007. The fair value of the warrants was estimated to be $7,500 and has been recorded as a separate component of stockholders’ equity. (Notes 4 and 7)

On February 7, 2005, the Company issued a total of 133,334 units at $0.30 per unit by way of a private placement for cash of $40,000. Each unit is comprised of one common share and one common share purchase warrant entitling the holder to purchase one common share for $0.50. The warrants have a term of two years and will expire on February 7, 2007. The fair value of the warrants was estimated to be $10,000 and has been recorded as a separate component of stockholders’ equity. (Note 7)

On July 7, 2005, the Company issued a total of 33,334 units at $0.30 per unit by way of a private placement for cash of $10,000. Each unit is comprised of one common share and one common share purchase warrant entitling the holder to purchase one common share for $0.50. The warrants have a term of two years and will expire on July 7, 2007. The fair value of the warrants was estimated to be $2,500 and has been recorded as a separate component of stockholders’ equity. (Note 7)

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BREK ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

SEPTEMBER 30, 2005

NOTE 5 - COMMON STOCK, continued

On July 7, 2005, the Company issued, to a director of the Company, a total of 16,667 units at $0.30 per unit for finders’ fees of $5,000. Each unit is comprised of one common share and one common share purchase warrant entitling the holder to purchase one common share for $0.50. The warrants have a term of two years and will expire on July 7, 2007. The fair value of the warrants was estimated to be $1,250 and has been recorded as a separate component of stockholders’ equity. (Notes 4 and 7)

During the nine months ended September 30, 2005, a director of the Company received 500,000 common shares of the Company upon the exercise of a total of 500,000 share purchase warrants at $0.25 per warrant and payment of $125,000 in cash. (Notes 4 and 7)

NOTE 6 - STOCKHOLDER RIGHTS PLAN

On March 1, 2002, the Company approved a Rights Agreement whereby a dividend was declared of one right for each share of the Company’s common stock issued and outstanding on March 20, 2002 including any shares issued subsequent to March 20, 2002. Each right entitles the holder to purchase five shares of the Company’s common stock at an exercise price of $0.01 per right, if certain events occurred relating to a person or group acquiring or attempting to acquire 10% or more of the outstanding of common shares of the Company without the approval of the Company’s board of Directors. The rights are exercisable until December 31, 2020.

At September 30, 2005 and December 31, 2004, the Company had reserved 297,490,450 and 276,657,100 shares for the exercise of these rights for the issued and outstanding shares and 101,822,300 and 147,624,025 for the potential exercise of outstanding options and warrants.

NOTE 7 - STOCK OPTIONS AND WARRANTS

 During the nine months ended September 30, 2005 and 2004, 3,666,670 and 19,858,334 share purchase warrants were issued and 12,327,015 and 100,000 share purchase warrants expired. (Note 5)

During the nine months ended September 30, 2005, a director of the Company received 500,000 common shares of the Company upon the exercise of a total of 500,000 share purchase warrants at $0.25 per warrant and payment of $125,000 in cash. (Notes 4 and 5)

During the nine months ended September 30, 2005 and 2004 no options were issued or cancelled.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

During the nine month period ended September 30, 2005, the Company has been focusing on developing its oil and gas business. As such, the Company has accumulated a deficit of approximately $61 million to date and additional financing will be required by the Company to support development of its oil and gas properties until such time as the Company achieves positive cash flow from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to achieve and maintain profitability and positive cash flow is dependent upon its ability to locate profitable oil and gas properties, generate revenues from its oil and gas production and control production costs. Based upon current plans, the Company expects to incur operating losses in future periods. There is no assurance that the Company will be able to generate revenues in the future. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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BREK ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

SEPTEMBER 30, 2005

NOTE 8 - COMMITMENTS AND CONTINGENCIES, continued

In February 2003 the debtor and guarantor of the note receivable commenced legal action against the Company, in Bermuda, claiming that the Company and its former subsidiary, First Ecom Systems Limited, had promised to develop and supply them with certain software. As a result of this litigation the debtor ceased making the required instalment payments on March 1, 2003. Although the directors believed that this lawsuit was without merit as there was no condition to develop software for the debtor, due to lack of financial resources the Company did not defend its position and no further actions by either party have transpired since February 2003.

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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is management’s discussion and analysis of certain significant factors that will affect or have affected our financial condition and results of operations. Certain statements under this section may constitute “forward-looking statements”. You should read the following discussion in conjunction with the audited consolidated financial statements and the notes included in our form 10-KSB for the year ended December 31, 2004.

Overview

We have been in the oil and gas business since July 2002. We own a minority (between 10% and 25%) working interest in properties in Utah, Wyoming and California, and we own a 51.53% interest in Vallenar Energy Corp., a company with oil and gas leasehold interests in Texas. We are not the operator of any of these oil and gas properties.

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

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

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

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

Financial Condition

We had a net loss of $150,912 during the nine months ended September 30, 2005. As of September 30, 2005, we had a cash balance of $19,293, trade accounts receivable of $84,182 and prepaid expenses of $3,485. When these current assets are offset against our current obligations of $772,689 in accounts payable and accrued liabilities and $304,041 in amounts due to related parties, we are left with a working capital deficit of $969,770 at September 30, 2005.

We believe that our cash and cash equivalents as of the date of this filing are not sufficient to satisfy our working capital needs. As our oil and gas revenues are not yet sufficient to satisfy our operational and working capital requirements, for the foreseeable future we must continue to raise funds through private loans, private placements of our common shares, or the issuance of shares for debt.

Our independent auditors have added an explanatory paragraph to their audit opinions issued in connection with our consolidated financial statements for the fiscal years 2004 and 2003, which states that our ability to continue as a going concern depends upon our ability to resolve liquidity problems, principally by obtaining capital and generating sufficient revenues to become profitable. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to locate profitable oil and gas properties, generate revenues from our oil and gas production, and control drilling, completion and production costs. Based upon current plans, we expect to incur operating losses in future periods. We cannot assure that we will be able to generate revenues in the future. The accompanying financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

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Related-Party Transactions

Included in the $304,041 that is due to related parties at September 30, 2005, is $135,463 in directors’ fees that were accrued during 2002 and 2003, $139,690 in administrative fees accrued during the nine months ended September 30, 2005, and $28,888 that directors and officers or companies controlled by directors and officers paid to creditors on our behalf. None of the amounts due to related parties bear interest or have any fixed terms of repayment.

COMPARISON OF THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004.

Overall Results of Operations

For the three months ended September 30, 2005, we had a net loss of $59,850, or $(0.01) per share, which was an increase of $114,361 from our net income of $54,511 or $0.01 per share for the three months ended September 30, 2004. The increase in net loss for the three months ended September 30, 2005 as compared to the three months ended September 30, 2004 was primarily due to increases in our administrative costs and depletion and increases in our investing and financing activities during the third quarter of 2005.

For the nine months ended September 30, 2005, we had a net loss of $150,912, or $(0.01) per share, which was an increase of $156,255 from our net income of $5,343 or $0.01 per share for the nine months ended September 30, 2004. The increase in net loss for the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004 was primarily due to increases in our administrative, management, professional and regulatory costs, increased depletion and increases in our investing and financing activities during the nine month period ended September 30, 2005.

Revenue

Total revenue for the three months ended September 30, 2005 was $235,142 compared to $135,892 for the three months ended September 30, 2004. The $99,250 increase in revenue during the third quarter of 2005 was due to an increase in the number of and production from our Utah wells.

Total revenue for the nine months ended September 30, 2005 was $521,451 compared to $207,445 for the nine months ended September 30, 2004. The $314,006 increase in revenue during the first nine months of 2005 was due to an increase in the number of and production from our Utah wells.

Operating Expenses

Total operating expenses increased to $294,281 for the three months ended September 30, 2005, from $79,915 for the three months ended September 30, 2004, due to increases in administrative costs ($97,020), professional fees ($94,370), depletion ($23,609), and advertising and promotion ($230). These amounts were offset by a decrease in office expenses ($863).

Total operating expenses increased to $669,482 for the nine months ended September 30, 2005, from $198,909 for the nine months ended September 30, 2004, due to increases in administrative costs ($259,478), professional fees ($184,958) and depletion ($64,953). These amounts were offset by decreases in office expenses ($5,335), bank charges and interest ($4,377), advertising and promotion ($26,520) and telephone ($2,584).

Our administrative and professional fees increased due to the increase in our investing activities and the work required to meet our reporting obligations. We expect our administrative fees to increase during the next nine months as our investing and financing activities increase.

Off-Balance-Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. We do not have any non-consolidated, special-purpose entities.

Liquidity and Capital Resources

As of September 30, 2005, we had a cash balance of $19,293 and negative cash flows from operations of $114,272 for the period then ended. During the nine months ended September 30, 2005, we funded our operations through revenue from our oil and gas properties of $521,451, the private placement of 3,333,336 units for which we received cash of $1,000,000 and the exercise of 500,000 warrants from which we received cash of $125,500. In return for arranging the private placements, we issued 333,334 units to an officer to pay finder’s fees of $100,000. Each unit consists of one common share and one common share purchase warrant.

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The notes to our consolidated financial statements as of September 30, 2005, contain footnote disclosure regarding our uncertain ability to continue as a going concern. We have not generated sufficient revenues to cover our expenses, and we have an accumulated deficit of $61,486,620. As of September 30, 2005, we had $1,076,730 in current liabilities and we cannot assure that we will succeed in developing our business and achieving a profitable level of operations sufficient to meet our ongoing cash needs. We have, however, successfully generated sufficient working capital and liquidity through oil and gas revenues and the private placement of our shares until the date of this filing, and believe that we can continue to do so for the next twelve months.

Below is a discussion of our sources and uses of funds for the nine months ended September 30, 2005.

Net Cash Used In Operating Activities

Net cash used in operating activities during the nine months ended September 30, 2005 was $114,272, primarily the result of a net loss ($150,912), an increase in trade accounts receivable ($27,380), an increase in prepaid expenses ($2,247), a decrease in accounts payable and accrued liabilities ($253,469), all offset by a decrease in the amount due from related parties ($116,594), an increase in amounts due to related parties ($135,308), depletion ($64,953), and an adjustment to minority interest ($2,881).

Net Cash Provided By Financing Activities

We issued 3,333,336 units, for $1,000,000 cash and 500,000 warrants were exercised for $125,000 in cash during the nine months ended September 30, 2005.

Net Cash Used In Investing Activities

During the nine months ended September 30, 2005, we invested $1,222,283 in our oil and gas properties.

Contingencies and Commitments

We had no contingencies or long-term commitments at September 30, 2005, except for the Transworld litigation which is disclosed in the commitments and contingencies section of the notes to our consolidated financial statements appearing elsewhere in this report.

As is customary in the oil and gas industry, we may at times have agreements to reserve or earn acreage or wells. If we do not pay as required by the agreements, we may lose the acreage or wells.

CRITICAL ACCOUNTING POLICIES

Principles of Consolidation

Our consolidated financial statements include the financial statements of our subsidiaries. All significant inter-company balances and transactions have been eliminated.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Our financial statements are based on a number of significant estimates, including oil and gas reserve quantities, which is the basis for the calculation of depletion and impairment of oil and gas properties.

Revenue Recognition

We recognize oil and gas revenue as income when the oil and gas is produced and sold.

Oil and Gas Properties

We follow the full-cost method of accounting whereby we capitalize all costs related to the acquisition of oil and gas leases and acquisition and development of oil and gas properties into a single cost centre (“full-cost pool”). These 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. We generally credit proceeds from property sales to the full-cost pool without recognizing a gain or loss 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.

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

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

Contractual Obligations

We did not have any contractual obligations at September 30, 2005.

Internal and External Sources of Liquidity

We have funded our operations principally through the subscription of common shares and through shares for debt.

Inflation

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

Uncertainties Relating to Forward-Looking Statements

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

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

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

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

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Item 3. Controls and Procedures.

Disclosure Controls and Procedures

Richard N. Jeffs, Brek’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of Brek’s disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act” )) as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on such evaluation, Mr. Jeffs has concluded that, as of the Evaluation Date, Brek’s disclosure controls and procedures are effective in alerting Brek on a timely basis to material information required to be included in its reports filed or submitted under the Exchange Act.

Changes in Internal Controls

During the quarter of the fiscal year covered by this report, there were no changes in Brek’s internal controls or, to Brek’s knowledge, in other factors that have materially affected, or are reasonably likely to materially affect, these controls and procedures subsequent to the date Brek carried out this evaluation.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

During the quarter of the fiscal year covered by this report, no legal proceeding involving Brek or its assets, to the best of Brek’s knowledge, became a reportable event and there have been no material developments in any legal proceedings previously reported by Brek, except for the following:

Texas lawsuit - Burlington Resources Oil & Gas Company, LP vs. Brek Petroleum Inc.

On June 9, 2003, Burlington Resources Oil & Gas Company, LP (“Burlington”) filed a Petition in the District Court in Midland County, Texas of the 142^nd Judicial District claiming that Brek Petroleum Inc. failed to pay for costs incurred by Burlington in drilling oil and gas wells located in Midland County, Texas. Burlington claimed damages in the amount of $658,831. On July 16, 2003, Brek Petroleum Inc. filed its Original Answer to the Petition.

On March 1, 2004, the parties reached a settlement and entered into a Settlement Agreement and Release whereby Brek Petroleum Inc. agreed to pay Burlington a total of $691,874 in 12 equal monthly payments. The total of the settlement was comprised of the original amount claimed for damages, Burlington’s legal fees of $3,278, and court imposed interest. On July 14, 2005, Brek Petroleum Inc. delivered the twelfth and final monthly payment to Burlington.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the quarter of the fiscal year covered by this report, (i) Brek did not modify the instruments defining the rights of its shareholders, (ii) no rights of any shareholders were limited or qualified by any other class of securities, and (iii) Brek did not sell any unregistered equity securities, except for the following:

December 22, 2004 - $0.30 Offering

On December 22, 2004, the board of directors authorized the issuance of up to 3,666,667 units at an offering price of $0.30 per unit. Each unit consisted of one restricted share of common stock and one restricted warrant. Each restricted warrant is convertible into one restricted share of common stock. The restricted warrant is exercisable for two years at an exercise price of $0.50 per warrant. The value of the units was arbitrarily set by Brek and had no relationship to its assets, book value, revenues or other established criteria of value. All the restricted units issued in this offering were issued for investment purposes in a “private transaction”.

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Brek raised $1,000,000 in cash from this offering, which had five closings between January 2005 and July 2005, and issued an aggregate 3,333,336 restricted units to six accredited subscribers in the United States and four non-US subscribers outside the United States and an additional 333,334 restricted units as a finder’s fee to one non-US finder outside the United States, who was an executive officer of Brek.

For the accredited subscribers in the United States, management is satisfied that the requirements of the exemption from the registration and prospectus delivery requirements of the Securities Act of 1933 have been fully complied with, which exemption is specified by the provisions of Section 4(2) of that Act and Rule 506 Regulation D promulgated pursuant to that Act by the Securities and Exchange Commission. Specifically, the offer was made to only accredited investors, as that term is defined under applicable federal and state securities laws. The share certificates representing the shares have been legended with the applicable trading restrictions.

For the non-US subscribers outside the United States, Brek relied upon Section 4(2) of the Securities Act of 1933 and Rule 903 of Regulation S promulgated pursuant to that Act by the Securities and Exchange Commission. Management is satisfied that the requirements of the exemption from the registration and prospectus delivery requirements of the Securities Act of 1933 have been fully complied with. The offering was not a public offering and was not accompanied by any general advertisement or any general solicitation. Brek received from each subscriber a completed and signed subscription agreement containing certain representations and warranties, including, among others, that (a) the subscriber was not a U.S. person, (b) the subscriber subscribed for the shares for their own investment account and not on behalf of a U.S. person, and (c) there was no prearrangement for the sale of the shares with any buyer. No offer was made or accepted in the United States and the share certificates representing the shares have been legended with the applicable trading restrictions.

July 2005 - Exercise of Warrants

On July 29, 2005, Brek issued 400,000 shares of common stock to Rick Jeffs, the president of Brek for the exercise of warrants at an exercise price of $0.25 per warrant. Brek received $100,000 for the exercise of these warrants. These warrants were issued as part of the May 3, 2004 offering at $0.15 per unit.

September 2005 - Exercise of Warrants

On September 28, 2005, Brek issued 100,000 shares of common stock to Rick Jeffs, the president of Brek for the exercise of warrants at an exercise price of $0.25 per warrant. Brek received $25,000 for the exercise of these warrants. These warrants were issued as part of the May 3, 2004 offering at $0.15 per unit.

Item 3. Defaults Upon Senior Securities.

During the quarter of the fiscal year covered by this report, no material default has occurred with respect to any indebtedness of Brek. Also, during this quarter, no material arrearage in the payment of dividends has occurred.

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

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

Item 5.Other Information

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

Item 3.02 - Unregistered Sales of Equity Securities

On December 22, 2004, the board of directors authorized the issuance of up to 3,666,667 units at an offering price of $0.30 per unit. Brek raised $1,000,000 in cash from this offering, which had five closings between January 2005 and July 2005, and issued an aggregate 3,666,670 restricted units to the subscribers. See “Item 2 - Recent Sale of Unregistered Securities” above for more details.

On July 29, 2005, Brek issued 400,000 shares of common stock to Rick Jeffs, the president of Brek for the exercise of warrants at an exercise price of $0.25 per warrant. See “Item 2 - Recent Sale of Unregistered Securities” above for more details.

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On September 28, 2005, Brek issued 100,000 shares of common stock to Rick Jeffs, the president of Brek for the exercise of warrants at an exercise price of $0.25 per warrant. See “Item 2 - Recent Sale of Unregistered Securities” above for more details.

Item 6. Exhibits

(a)   Index to and Description of Exhibits

All Exhibits required to be filed with the Form 10-Q are incorporated by reference to Brek’s previously filed registration statements, annual reports, and Form 8-K’s (current reports).

Exhibit	Description	Status
3.1	Articles of Incorporation filed as an Exhibit to Brek’s registration statement on Form 10 filed on October 21, 1999, and incorporated herein by reference.	Filed
3.2	Bylaws filed as an Exhibit to Brek’s registration statement on Form 10 filed on October 21, 1999, and incorporated herein by reference.	Filed
3.3	Certificate of Amendment to Articles of Incorporation changing the Issuer’s name to Brek Gold Corporation filed as an Exhibit to Brek’s Form 10-KSB filed on April 14, 2004, and incorporated herein by reference.	Filed
10.1	Stock Purchase Agreement dated March 16, 2000 among Brek Energy Corporation, Balaji Exports Ltd., Rajan Chellarm Mahboobani, Ravi Kishinchand Daswani, and Asia Internet Limited, filed as an attached exhibit to Brek’s Form 10-KSB (Annual Report) filed on March 29, 2000, and incorporated herein by reference.	Filed
10.2	Stock Purchase Agreement dated March 12, 2002 between Vallenar Energy Corp. and Brek Energy Corporation, filed as an attached exhibit to Brek’s Form 10-K/A (Annual Report) filed on September 18, 2002, and incorporated herein by reference.	Filed
10.3	Purchase Agreement dated July 16, 2002 among Gasco Energy, Inc., Pannonian Energy Inc., San Joaquin Oil & Gas Ltd., Brek Energy Corporation, Brek Petroleum Inc., Brek Petroleum (California), Inc. and certain stockholders, filed as an attached exhibit to Brek’s Form 8-K (Current Report) filed on July 31, 2002, and incorporated herein by reference	Filed
10.4	Share purchase agreement dated October 19, 2001 among First Ecom.com, Inc., First Commerce Asia Limited, FEDS Acquisition Corporation, First Ecom Systems Limited, Transworld Payment Solutions NV, and First Curacao International Bank NV, filed as an attached exhibit to Brek’s Form 10-KSB (2002 - Annual Report) filed on November 21, 2005, and incorporated herein by reference.	Filed
10.5	License agreements dated October 19, 2001 among First Ecom.com, Inc., First Ecom Systems Limited, and Transworld Payment Solutions NV, filed as an attached exhibit to Brek’s Form 10-KSB (2002 - Annual Report) filed on November 21, 2005, and incorporated herein by reference.	Filed
10.6	Option to Acquire Interests in Oil and Gas Properties dated May 1, 2004 between Brek Petroleum Inc. and Griffin Asset Management, LLC, filed as an attached exhibit to Brek’s Form 10-KSB (2004 - Annual Report) filed on November 21, 2005, and incorporated herein by reference .	Filed
10.7	Natural Gas Purchase Agreement dated December 23, 2004 between Brek Petroleum Inc. and Riverbend Gas Gathering, L.L.C., filed as an attached exhibit to Brek’s Form 10-KSB (2004 - Annual Report) filed on November 21, 2005, and incorporated herein by reference	Filed
21	List of Subsidiaries, filed as an attached exhibit to Brek’s Form 10-KSB (2002 - Annual Report) filed on November 21, 2005, and incorporated herein by reference.	Filed
31	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Included
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Included
99.1	Code of Ethics filed as an Exhibit to Brek’s Form 10-KSB filed as an attached exhibit to Brek’s Form 10-KSB (Annual Report) filed on November 21, 2005, and incorporated herein by reference.	Filed

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, Brek Energy Corporation has caused this report to be signed on its behalf by the undersigned duly authorized person.

BREK ENERGY CORPORATION

By: /s/ Richard N. Jeffs

Name: Richard N. Jeffs

Title:Director and CEO and CFO

Dated:November 17, 2005

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Exhibit 31

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BREK ENERGY CORPORATION

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Richard N. Jeffs, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November 18, 2005

/s/ Richard N. Jeffs

Richard N. Jeffs

Chief Executive Officer

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BREK ENERGY CORPORATION

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Richard N. Jeffs, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November 18, 2005

/s/ Richard N. Jeffs

Richard N. Jeffs

Chief Financial Officer

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Exhibit 32

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CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Brek Energy Corporation (“Brek Energy”) on Form 10-QSB for the period ending September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard N. Jeffs, President and Chief Executive Officer of Brek Energy and a member of the Board of Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ Richard N. Jeffs

Richard N. Jeffs

Chief Executive Officer

November 18, 2005

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CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Brek Energy Corporation (“Brek Energy”) on Form 10-QSB for the period ending September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard N. Jeffs, Chief Financial Officer of Brek Energy and a member of the Board of Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/s/ Richard N. Jeffs

Richard N. Jeffs

Chief Financial Officer

November 18, 2005

Page - 28