BREK Energy (BREK) 8-K/A Financial Statements and Exhibits

BREK ENERGY CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On November 30, 2007, 8,000,000 shares of Rock City Energy Corp. (“Rock City”) common stock owned by Brek Energy Corporation (“Brek”) were distributed in a spin-off to Brek’s shareholders of record on October 29, 2007 (the “record date”). The spin-off was required by the Agreement and Plan of Merger dated September 20, 2006 as amended on January 31, 2007, May 29, 2007 and October 22, 2007 between Gasco Energy, Inc., Gasco Acquisition, Inc. and Brek.

In connection with the spin-off holders of 79,678,543 shares of Brek common stock on the record date received a total of 8,000,000 shares of Rock City’s common stock.  No fractional shares were issued and no shares were issued to holders of fewer than 1,000 shares of Brek common stock.  Instead, holders of Brek common stock who would have received a fractional share due to the spin-off had the fractional share rounded up to the next whole share, and holders of Brek common stock who held fewer than 1,000 shares received cash in lieu of these securities.  The cash payment was equal to the product of the number of shares of Rock City’s common stock to which the shareholder was entitled but for the 1,000 share limit times the average of the high and low trading prices for Brek’s common stock over the five trading days immediately prior to the effective date of the spin-off.  These fractional shares resulted in Brek paying cash dividends totaling $27,105 to shareholders holding a total of 1,232,019 shares of Brek at $0.022 per share held.  

The spin-off was accounted for by offsetting Brek’s investment in Rock City of $1,355,552 against the deficit; recording the cash dividends of $27,105 as a cash payment and offsetting this payment against the deficit; and recording the cash paid for spin-off expenses of $13,627 as a cash payment with offsetting entries to deficit on the pro forma condensed consolidated balance sheet at September 30, 2007, and bank charges on the pro forma condensed consolidated statements of operations for the nine months ended September 30, 2007 and the year ended December 31, 2006.

In connection with the spin-off all inter-company balances and transactions that were removed from Brek’s consolidated financial statements were recorded as adjustments in the accompanying condensed consolidated financial statements.

The accompanying pro forma condensed consolidated financial statements illustrate the effect of the spin-off on Brek’s consolidated financial position and consolidated results of operations.  The pro forma condensed consolidated balance sheet as of September 30, 2007 is based on historical balance sheets of Brek and Rock City as of that date and assumes the spin-off took place on that date.  The pro forma condensed consolidated statements of operations for the year ended December 31, 2006 and for the nine months ended September 30, 2007 are based on the historical consolidated statements of operations for Brek and Rock City for those periods.  The pro forma condensed consolidated statements of operations assume the spin-off took place on January 1, 2006.

The pro forma condensed consolidated financial statements may not be indicative of the actual results of the spin-off.  In particular, the pro forma condensed consolidated financial statements are based on management’s current estimate of the allocation of the spin-off costs, the actual allocation of which may differ. 

The accompanying condensed consolidated pro forma financial statements should be read in connection with the historical financial statements of Brek and Rock City.  

BREK ENERGY CORPORATION AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2007

(UNAUDITED)

	Brek
	Energy			Pro Forma
	Consolidated			Adjustments			Ref.		Pro Forma
Assets
Current assets
Cash	$	813,141		$	(735,248	)		(1),(3)	$	77,893
Investment in Rock City Energy Corporation		-			-			(1),(2)		-
Accounts receivable		35,657			15,516			(2),(3)		51,173
Due from Rock City Energy		-			-			(2),(3)		-
Due from Vallenar Energy Corp.		-			-			(2),(3)		-
Total current assets		848,798			(719,732	)				129,066
Oil and gas properties (full cost method)
Proved properties		22,665,639			(100	)				22,665,539
Less accumulated depletion and impairment		(21,285,867	)		-					(21,285,867	)
		1,379,772			(100	)				1,379,672
Total assets	$	2,228,570		$	(719,832	)			$	1,508,738
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	153,405		$	(1,479	)		(3)	$	151,926
Accrued liabilities		47,850			-					47,850
Accrued professional fees		58,271			-			(2),(3)		58,271
Accrued wages payable		98,229			-					98,229
Due to related parties		90,123			-					90,123
Total current liabilities		447,878			(1,479	)				446,399
Noncurrent liabilities
Asset retirement obligation		24,876			-					24,876
Total liabilities		472,754			(1,479	)				471,275
Commitments and contingencies
Minority interest		38,995			(38,995	)		(3)		-
Stockholders' equity
Common stock, $0.001 par value, 300,000,000 authorized; 79,973,062
issued and outstanding at September 30, 2007		79,973			(8,000	)		(3)		71,973
Additional paid-in-capital		69,385,165			(633,430	)		(3)		68,751,735
Accumulated deficit		(67,748,317	)		(37,928	)		(1),(2),(3)		(67,786,245	)
Total stockholders' equity		1,716,821			(679,358	)				1,037,463
Total liabilities and stockholders' equity	$	2,228,570		$	(719,832	)			$	1,508,738

See Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)

BREK ENERGY CORPORATIONAND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007

	Brek
	Energy			Pro Forma
	Consolidated			Adjustments			Ref.		Pro Forma
Revenue	$	207,421		$	-				$	207,421
Operating expenses (income)
General and administrative		762,490			17,343			(4),(5),(6)		779,833
Lease operating		111,333			-					111,333
Gathering operations		59,916			-					59,916
Depletion		44,039			-					44,039
Accretion		1,572			-					1,572
Gain on extinguishment of accounts payable		(84,224	)		-					(84,224	)
Total operating expenses		895,126			17,343					912,469
Net loss from continuing operations before interest income,
franchise taxes and minority interest		(687,705	)		(17,343	)				(705,048	)
Interest income		18,285			-					18,285
Net loss from continuing operations before franchise taxes		(669,420	)		(17,343	)				(686,763	)
and minority interest
Franchise tax		(830	)		-					(830	)
Net loss from continuing operations before minority interest		(670,250	)		(17,343	)				(687,593	)
Minority interest		959			(959	)		(6)		-
Net loss	$	(669,291	)	$	(18,302	)			$	(687,593	)
Net loss per share - basic and diluted:	$	(0.01	)						$	(0.01	)
Weighted average number of shares outstanding -
Basic and diluted		79,973,062								79,973,062

See Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)

BREK ENERGY CORPORATIONAND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

FOR THE YEAR ENDED DECEMBER 31, 2006

	Brek
	Energy			Pro Forma
	Consolidated			Adjustments			Ref.		Pro Forma
Revenue	$	440,537		$	-				$	440,537
Operating expenses
General and administrative		1,193,534			6,010			(4),(5),(6)		1,199,544
Lease operating		126,535			-					126,535
Gathering operations		78,681			-					78,681
Depletion and accretion		77,939			-					77,939
Charges for impairment of oil and gas properties		4,452,754			-					4,452,754
Total operating expenses		5,929,443			6,010					5,935,453
Net loss from continuing operations before franchise tax,
discontinued operations and minority interest		(5,488,906	)		(6,010	)				(5,494,916	)
Franchise Tax		(5,834	)		-					(5,834	)
Net loss from continuing operations before discontinued
operations and minority interest		(5,494,740	)		(6,010	)				(5,500,750	)
Loss from discontinued operations		(26,335	)		-					(26,335	)
Net loss before minority interest		(5,521,075	)		(6,010	)				(5,527,085	)
Minority interest		34,962			(1,078	)		(6)		33,884
Net loss	$	(5,486,113	)	$	(7,088	)			$	(5,493,201	)
Net loss per share - basic and diluted:
Continuing operations	$	(0.09	)						$	(0.09	)
Discontinued operations		(0.00	)							(0.00	)
Net loss per share	$	(0.09	)						$	(0.09	)
Weighted average number of shares outstanding -
basic and diluted		63,467,561								63,467,561

See Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)

BREK ENERGY CORPORATION AND SUBSIDIARIES

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE A - The pro forma adjustments to the condensed consolidated balance sheet are as follows:

(1) To reflect the disposition of Rock City Energy Corporation and the transactions associated with the spin off:

	September 30, 2007
Components of the disposition:
Spin-off of Rock City Energy Corporation Shares	$	(1,355,552	)
Cash dividends		(27,105	)
Cash paid for spin-off expenses		(13,627	)
Allocation of the disposition:
Deficit		1,396,284
	$	-
(2) To adjust for consolidating entries
Investment in Rock City Energy Corporation	$	1,355,552
Deficit		(1,355,552	)
To set up investment in Rock City Energy Corporation
Accounts receivable		15,516
Due from Rock City Energy		(1,730	)
Due from Vallenar Energy Corp.		(13,786	)
To reclassify related party receivables to accounts receivable
(3) Accrued professional fees	$	(150,000	)
Deficit		150,000
To set up intercompany accrued professional fees

(3) To remove Rock City Energy Corporations accounts
Cash	$	(694,516	)
Due from Rock City Energy Corporation		1,730
Due from Vallenar Energy Corp.		13,786
Oil and gas properties		(100	)
Acounts payable		1,479
Accrued professional fees		150,000
Minority interest		38,995
Common stock		8,000
Additional paid-in-capital		633,430
Accumulated deficit		(152,804	)
To account for the spin-off of Rock City
	$	-

NOTE B - The pro forma adjustments to the condensed consolidated statement of operations

 are as follows:

	Year Ended			Nine Months Ended
	December 31, 2006			September 30, 2007
(4) To adjust for consolidating entries
Professional fees	$	-		$	150,000
To set up intercompany professional fees
Interest income		(1,216	)		-
To set up intercompany interest income
	$	(1,216	)	$	150,000
(5) To adjust for spin-off
Bank charges	$	13,627		$	13,627
To record bank charges paid in respect of Rock City Energy
Corporations spin off of shares and cash dividends
	$	13,627		$	13,627
(6) To remove Rock City Energy Corporations accounts
General and administrative	$	6,401		$	146,284
Minority interest		1,078			(959	)
To account for the spin-off of Rock City
	$	7,479		$	145,325