S-3/A 1 d51967_s3-a.txt FORM S-3/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 2002 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BREK ENERGY CORPORATION. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) 19TH FLOOR 80 GLOUCESTER ROAD WANCHAI, HONG KONG SAR (852) 2801-5181 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) NEVADA 98-0206979 (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) KENNETH G.C. TELFORD, SECRETARY BREK ENERGY CORPORATION 19TH FLOOR 80 GLOUCESTER ROAD WANCHAI, HONG KONG SAR (852) 2801-5181 (NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE OF AGENT FOR SERVICE) COPY TO: D. ROGER GLENN, ESQ. EDWARDS & ANGELL, LLP 750 LEXINGTON AVENUE NEW YORK, NY 10022 (212) 756-0299 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act") check the following box. |X| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_| CALCULATION OF REGISTRATION FEE
Title of each class Proposed Maximum Proposed Maximum Of Securities to be Amount to be Offering Price Aggregate Amount of Registered Registered Per Share(1) Offering Price Registration Fee(2) Common stock, par value 8,025,000 $0.78 $6,259,500 $575.88 $.001 per share
(1) Based on the last trade price on September 17, 2002 pursuant to Rule 457(c). (2) Of which $210.70 was previously paid upon initial filing. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. PROSPECTUS SEPTEMBER 20, 2002 BREK ENERGY CORPORATION 8,025,000 shares of common stock This Prospectus is being used in connection with the offering from time to time by the holders of up to 8,025,000 shares of our common stock. These holders are referred to herein as the selling stockholders. Our common stock is traded on The Nasdaq National Market System under the symbol "BREK". On September 17, 2002, the last reported sale price of our common stock was $0.78 per share. An investment in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 3. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAVE APPROVED OR DISAPPROVED ANY OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. TABLE OF CONTENTS Available Information ..................................................... 2 Documents Incorporated by Reference ....................................... 2 The Company ............................................................... 3 Risk Factors .............................................................. 3 Use of Proceeds ........................................................... 9 Selling Stockholders ...................................................... 9 Plan of Distribution ...................................................... 11 Legal Matters ............................................................. 12 Experts ................................................................... 12 AVAILABLE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which requires us to file reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). This material may be read and copied at the Public Reference Section of the Commission at the Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a web site that contains reports, proxy statements and other information regarding registrants, including us. The address of the Commission's web site is http://www.sec.gov. Our common stock is quoted on The Nasdaq National Market System ("BREK"), and the material we file with the Commission can also be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006. We have filed with the Commission a registration statement on Form S-3 (together with all exhibits, schedules, amendments, and supplements thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act") covering the common stock offered by this Prospectus. This Prospectus, which forms a part of the Registration Statement, does not contain all the information set forth in the Registration Statement (certain parts of which have been omitted in accordance with the rules and regulations of the Commission). For further information with respect to us and our common stock, you should refer to the Registration Statement. Statements contained in this Prospectus that describe the contents of any contract, agreement, or other document are not necessarily complete, and in each instance, you should refer to the copy of the document filed as an exhibit to the Registration Statement. Each statement about the exhibits is qualified in all respects by reference to such exhibit. The Registration Statement is available on the Commission's web site and may be inspected and copied at the public reference facilities at the Commission's offices at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. DOCUMENTS INCORPORATED BY REFERENCE The following documents that we have filed with the Commission are incorporated herein by reference: (1) Our Annual Report on Form 10-K for the year ended December 31, 2001 as filed with the Commission on April 9, 2002 and amended on May 14, 2002 and September 18, 2002. (2) Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002 as filed with the Commission on May 15, 2002 and amended on August 19, 2002. (3) Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002 as filed with the Commission on August 19, 2002 and amended on September 18, 2002. - 2 - (4) Our Current Report on Form 8-K as filed with the Commission on July 31, 2002. (5) The description of our common stock, $0.001 par value per share, contained in our Registration Statement on Form 10, filed October 21, 1999, as amended. (6) All documents filed by us with the Commission after the date hereof pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this offering shall be deemed to be incorporated by the reference in this Prospectus. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, modified or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. We will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the documents that have been incorporated by reference herein, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference therein). Requests for such copies should be directed to: Kenneth G.C. Telford, Secretary, BREK Energy Corporation, 19th Floor, 80 Gloucester Road, Wanchai, Hong Kong, SAR (852) 2801-5181. THE COMPANY We operate through our subsidiaries in the oil and gas exploration and the electronic payment processing businesses. Before the middle of 2001, our emphasis had been on the electronic payment processing business. Since July 2001, our focus has been on the oil and gas exploration industry. We own interests in oil and gas leases in California, Texas, Utah and Wyoming . RISK FACTORS 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 has a limited operating history, which may prevent it from achieving success. Its revenue and income potential are unproven. It will encounter challenges and difficulties frequently encountered by early-stage companies in new and rapidly evolving markets. Brek's date of inception was September 16, 1998. Chief among these challenges and difficulties are: Being able to adequately prove up its resources Locating and acquiring proper acquisition targets - 3 - Locating and acquiring direct interests in oil and gas prospects Raising adequate additional equity and/or adequate financings Potential acquisitions being able to prove up their resources Persuading banks to outsource their Internet credit card processing Processing a sufficient volume of Internet credit card transactions which, particularly in Asia, may not be present in sufficient quantity to generate required revenues Persuading banks and others to purchase the e-Acquirer and other products 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. 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. 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 the stock of its subsidiary First Ecommerce Data Services Limited to net realizable value. This stock was subsequently sold for $3,451,235, which was its written-down value. On June 30, 2002, Brek's accumulated deficit had grown to approximately $40.4 million. Brek May Not Be Able to Obtain Future Financing Brek will be required to raise additional capital in 2002. It may not be able to raise capital when needed on terms favorable to it or at all. Brek has relied on the sale of its equity capital to fund working capital and the acquisition of its assets. 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 delay or cause indefinite postponement of further exploration and development of its oil and gas prospects or result in the loss or sale of such properties. Brek May Not Be Able to Attract and Retain Personnel Brek may not be successful in attracting, assimilating, or retaining qualified personnel with knowledge and expertise in the various facets of oil and gas exploration and development industry. Like other companies in Hong Kong, Brek faces intense competition for qualified personnel there. Brek does not consider any of its employees to be of key importance. Until August 31, 2002, it had an employment agreement with its chief - 4 - executive officer, but he resigned on that date. It currently has an employment agreement with its chief financial officer. Brek does not carry life insurance on any of its employees. Brek Must Replace Its Chief Executive Officer Gregory M. Pek informed Brek that he did not wish to extend his employment agreement with Brek, which expired on August 31, 2002. Brek will have to engage a new Chief Executive Officer in a timely enough fashion so that Brek is not adversely affected. Brek's Stock Price May Fluctuate 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. In addition, Brek's common stock is sometimes very thinly traded and this characteristic may exaggerate any fluctuations. Brek's trading price may not be an accurate reflection of its value. Future Sales of Shares Could Depress 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. Difficulty of Enforcing Legal Process It may be difficult or impossible to effect service of process within the United States upon the directors of Brek (other than Andrew Leitch), 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. All of Brek's directors, except Andrew Leitch, reside outside the United States. A substantial portion of the assets of such persons are located outside the United States. 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 Oil or Gas Wells may be Unproductive or Uneconomic 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 - 5 - 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 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. Some of the Risks of Drilling and Operating Oil or Gas Wells are Uninsurable 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 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. No Assurance of Titles If an examination of the title history of petroleum and natural gas lease that Brek has purchased reveals that it has been purchased in error from a person who was not the owner of the mineral interest purportedly covered by the lease, Brek's interest would be worthless. In that event, the lease would be lost. 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. If such an examination is ever done, it may reveal that 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. Environmental Regulations May Prevent or Delay Drilling Oil or Gas Wells The petroleum exploration and 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. 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. Such laws and regulations have been changed from time to time in the past and may be changed again in the future to impose an even greater burden on Brek. Governmental Regulations May Increase Expenses and Delay or Prevent Drilling Oil or Gas Wells Any increases in the regulatory burden on the petroleum and natural gas industry created by new legislation would increase Brek's cost of doing business. A major risk affecting drilling is the need to obtain drilling permits. Delays in obtaining drilling permits, the failure to obtrain a drilling permit for a well, or a permit with unreasonable conditions or costs attached to it, could have a material adverse effect on Brek's ability to develop - 6 - its properties fully. 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 Natural Gas and Oil Prices May Fall A decline in the price of natural gas and oil prices would result in a commensurate reduction in Brek's income for the production of oil and gas. In the event prices fall substantially, Brek may not be able to realize a profit from its production and would continue to operate at a loss. 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. Brek May Not Be Able to Compete in This Industry Brek's competitors may be able to pay more for petroleum and natural gas properties than Brek and may be able to better evaluate prospects than Brek. In addition, Brek's competitors may have a greater ability to continue exploration activities during periods of low hydrocarbon market prices. Brek's ability to acquire additional properties and to discover reserves in the future will depend upon its ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. The petroleum and natural gas industry is intensely competitive and Brek competes with other companies, which have greater resources. Many of its competitors 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. 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 May Fail to Expand 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. Brek May Not Be Able to Compete in The Processing Market Brek's competitors have extensive customer bases and strong customer relationships that they could leverage, including relationships with Brek's current and potential customers. This competition will impede Brek's ability to expand its customer base. 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 - 7 - enhance its competitive position could seriously harm its business and operating prospects. It will encounter competition from a number of sources. These competitors also have significantly more established customer service organizations than Brek does. Brek May Not Be Able to Develop Adequate Sales and Marketing Capabilities Brek needs to expand its marketing and sales operations in order to increase market awareness of Brek's services and generate increased revenues. Brek may lack the resources to enable this expansion, however. 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. Competition for qualified sales personnel is intense, however, and Brek may not be able to hire enough qualified individuals in the future. Use of the Internet and Growth of E-commerce May Not Continue Demand for Brek's payment processing business depends on consumers' using the internet for e-commerce. Any reduction in such use will reduce the demand for Brek's payment processing services. 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. 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 or incorporated by reference in this registration statement 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 fact 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. 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 or incorporated by reference in this registration statement 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 include those discussed under the caption "Risk Factors" above. All subsequent written and oral forward- - 8 - looking statements attributable to Brek, or persons acting on its behalf, are expressly qualified in their entirety by these important factors. Brek assumes no duty to update or revise its forward-looking statements based on changes in internal estimates or expectations or otherwise. USE OF PROCEEDS We will not receive any of the proceeds from the sale of our common stock by the selling stockholders pursuant to this prospectus. Of the common stock offered hereby by the selling stockholders, however, 875,000 shares are not currently outstanding but are issuable upon the exercise of presently exercisable options held by certain of the selling shareholders upon payment of an aggregate exercise price of $387,500. If these options are exercised and the company receives this amount, it will be used for general corporate purposes. All of the expenses incurred in connection with the registration of the common stock offered hereby will be paid by us, except for selling commissions and underwriting discounts, if any. SELLING STOCKHOLDERS The Registration Statement of which the Prospectus is a part have been filed pursuant to Rule 415 under the Securities Act to afford the selling stockholders the opportunity to sell their common stock in public transactions rather than pursuant to an exemption from the registration and prospectus delivery requirements of the Securities Act. The following table sets forth information with respect to the selling stockholders that have requested to be included in this prospectus as of the date of this prospectus. The information set forth in the following table has been provided by the selling stockholders identified in such table. - 9 - Shares of common stock Name of Selling Stockholder Owned and Offered Hereby --------------------------- ------------------------ Gregory Pek(5) 400,000(1) Kenneth Telford(6) 350,000(2) Ian Robinson(7) 600,000(1) Liechtenstein Global Trust(8) 1,000,000 Douglas Moore(7) 150,000(3) Bonia Ng 40,000 James Pratt(7) 100,000(1) Greg Gudbranson 20,000 Ravi Daswani(7) 100,000(1) Happy Profit International Limited(8) 80,000 Ultratech Capital Management(8) 132,000 Warwick Ventures Limited(8) 748,000 Roger Glenn 25,000 Colin Low 80,000 Rick Jeffs 1,237,500 Wet Coast Management(8) 1,237,500 Nicolas Mathys 825,000 Ralph Rouse 825,000 Andrew Leitch(7) 75,000(4) --------- TOTAL 8,025,000 ========= ---------- (1) Includes 75,000 shares issuable upon exercise of options at $0.40 per share, and 25,000 shares issuable upon exercise of options at $0.55 per share. (2) Includes 200,000 shares issuable upon exercise of options at $0.40 per share, and 50,000 shares issuable upon exercise of options at $0.55 per share. (3) Includes 125,000 shares issuable upon exercise of options at $0.40 per share, and 25,000 shares issuable upon exercise of options at $0.55 per share. (4) All these shares are issuable upon exercise of options at $0.55 per share. (5) This shareholder is a director and the chief executive officer of Brek (6) This shareholder is the chief financial officer of Brek (7) This shareholder is a director of Brek (8) Brek has been advised that the persons indicated below have the power to vote and dispose of Brek's shares held by the following investors: Liechtenstein Global Trust - Furst Hans-Adam von Liechtenstein, c/o LGT Group Foundation, Herrengase 12, FL-9490 Vaduz; Happy Profit International Limited - Brian Langdon-Pratt, 1219 Bank of America Tower, 12 Harcourt Road, Central, Hong Kong; Ultratech Capital Management - Patrick Thomson, Tradewinds Building, Suite 401, Bay Street, Nassau, Bahamas; Warwick Ventures Limited - Stuart Smith, c/o LOM Securities Bermuda Ltd., 27 Reid Street, Hamilton HN11, Bermuda; and Wet Coast Management - Rick Jeffs, 8 Relton Mews, London SW7 1ET, England. This information was obtained from the shareholders of record or their agents. In the case of Liectenstein Global Trust, the information was obtained from a bank in Switzerland. Brek has no way of independently verifying the accuracy of this information and does not know whether this information is correct. - 10 - PLAN OF DISTRIBUTION The common stock may be sold from time to time to purchasers directly by the selling stockholders. Alternatively, the selling stockholders may from time to time offer the common stock through brokers, dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of the common stock for whom they may act as agents. The selling stockholders and any such brokers, dealers or agents who participate in the distribution of the common stock may be deemed to be "underwriters" within the meaning of the Securities Act and any profit on the sale of the common stock by them and any discounts, commissions, concessions or other compensation received by any such brokers, dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act. To the extent the selling stockholders may be deemed to be underwriters, they may be subject to certain statutory liabilities of the Securities Act, including, but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule l0b-5 under the Exchange Act. The common stock offered hereby may be sold from time to time in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. The common stock may be sold in different ways including, without limitation, by one or more of the following methods: (a) a block trade in which the broker or dealer so engaged will attempt to sell the common stock as agent but may position and resell a portion of the block as principal to facilitate the transaction; (b) purchases by a broker or dealer as principal and resale by such broker or dealer from its account pursuant to this prospectus; (c) ordinary brokerage transactions and transactions in which the broker solicits purchasers; (d) an exchange distribution in accordance with the rules of such exchange; (e) face-to-face transactions between sellers and purchasers without a broker-dealer; and (f) through the writing of options. At any time a particular offer of the common stock is made, a revised prospectus or prospectus supplement, if required, will be distributed which will set forth the aggregate amount of common stock being offered and the terms of the offering, including the name or names of any underwriters, dealers or agents, any discounts, commissions and or other items constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or reallowed or paid to dealers. The registration statement of which this prospectus is a part, will be filed with the Commission to reflect the disclosure of additional information with respect to the distribution of the common stock. In addition, the common stock covered by this prospectus may be sold in private transactions or under Rule 144 rather than pursuant to this prospectus. To the best of our knowledge, there are currently no plans, arrangements or understandings between any selling stockholders and any broker, dealer, agent or underwriter regarding the sale of the common stock by the selling stockholders. There is no assurance that any selling stockholder will sell any or all of the common stock offered by it hereunder or that any such selling stockholder will not transfer, devise or gift such common stock by other means not described herein. The selling stockholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the common stock by the selling stockholders and any other such person. Furthermore, under Regulation M of the Exchange Act, any person engaged in the distribution of the common stock may not simultaneously engage in market-making activities with respect to the common stock being distributed for certain periods prior to the commencement of or during such distribution. All of the foregoing may affect the marketability of the common stock and the ability of any person or entity to engage in market-making activities with respect to the common stock. - 11 - Pursuant to registration rights agreements entered into in connection with the offer and sales of our common stock, we and the applicable selling stockholders will be indemnified by the other against certain liabilities, including certain liabilities under the Securities Act, or will be entitled to contribution in connection therewith. We have agreed to pay all of the expenses incidental to the registration of the common stock. LEGAL MATTERS That the common stock offered hereby was legally issued and is fully paid and non-assessable is being passed upon for us by Cane O'Neill Taylor, LLC. EXPERTS The consolidated financial statements of Brek Energy Corporation as of December 31, 2001 and 2000, and for the years then ended and the period from September 16, 1998 (date of inception) to December 31, 2001, incorporated in this prospectus by reference from the Annual Report on Form 10-K/A of Brek Energy Corporation for the year ended December 31, 2001 have been audited by Deloitte Touche Tohmatsu, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The consolidated statements of operations, stockholders' equity, and cash flows of Brek Energy Corporation for the year ended December 31, 1999 and the period from September 16, 1998 to December 31, 1998, incorporated in this registration statement by reference from the Annual Report on Form 10-K of Brek Energy Corporation for the year ended December 31, 2001 have been audited by KPMG, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The consolidated financial statements of Gasco Energy, Inc. as of December 31, 2001 incorporated in this prospectus by reference from the Annual Report on Form 10-K of Brek Energy Corporation for the year ended December 31, 2001 have been audited by Deloitte & Touche, LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The consolidated balance sheet of Gasco Energy, Inc. (formerly known as Pannonian Energy, Inc.) as of December 31, 2000 and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended, incorporated in this registration statement by reference from the Annual Report on Form 10-K of Brek Energy Corporation for the year ended December 31, 2001 have been audited by Wheeler Wasoff, P.C., independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The consolidated statements of operations, stockholders' equity and cash flows from inception on May 21, 1998 through December 31, 1999 of Gasco Energy, Inc., incorporated in this registration statement by reference from the Annual Report on Form 10-K of Brek Energy Corporation for the year ended December 31, 2001 have been audited by HJ & Associates, LLC., independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. - 12 - NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND THEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US OR THE SELLING STOCKHOLDERS. NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT SHALL CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR OF SUCH PROSPECTUS SUPPLEMENT. - 13 - PART II INFORMATION NOT REQUIRED IN PROSPECTUS 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the expenses (other than brokerage fees and commissions) expected to be incurred in connection with the offering described in this Registration Statement. All amounts are estimated except the Securities and Exchange Commission filing fee. Securities and Exchange Commission filing fee .................. $ 576 Printing expenses .............................................. $ 1,000 Legal fees and expenses ........................................ $20,000 Accounting fees and expenses ................................... $10,000 Transfer agent and registrar fees .............................. $ 1,000 Miscellaneous expenses ......................................... $ 24 ------- Total .......................................................... $32,600 All expenses will be borne by us. 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS Brek will indemnify and hold harmless its directors and officers from any action, suit or proceeding whether civil, criminal, or administrative, or investigative, to the fullest extent legally permissible under the General Corporate Law of the State of Nevada. No director or officer shall have any personal liability to Brek or its stockholders from damages for breach of fiduciary duty as a Director or officer, except that Directors and Officers may be held liable to Brek or its stockholders for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or the payment of dividends in violation of the Nevada Revised Statutes. Brek maintains insurance on behalf of any person who is or was a Director or Officer of Brek. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Directors, officers or third parties controlling Brek pursuant to Nevada law, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. 16. EXHIBITS Exhibit 5.1 - Form of Opinion of Counsel Exhibit 23.1 - Consent of Deloitte Touche Tohmatsu * Exhibit 23.2 - Consent of KPMG * Exhibit 23.3 - Consent of Deloitte & Touche, LLP* Exhibit 23.4 - Consent of Wheeler Wasoff, P.C.* - 2 - Exhibit 23.5 - Consent of HJ & Associates, LLC * Exhibit 23.6 - Consent of Counsel (included in Exhibit 5) Exhibit 24.1 - Power of Attorney - included in Signature Page ---------- * previously filed 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10 (a) (3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15 (d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15 (d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter have been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that is have reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and have duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized on September 18, 2002. Brek Energy Corporation By: /s/ Kenneth G.C. Telford ---------------------------- Kenneth G.C. Telford Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement have been signed below on September 18, 2002 by the following persons in the capacities and on the date indicated. Signature Title --------- ----- /s/ Ian G. Robinson Chairman of the Board and Director ------------------------- Ian G. Robinson /s/ Gregory M. Pek* Chief Executive Officer and Director ------------------------- (Principal executive officer) Gregory M. Pek /s/ Ravi Daswani* Director ------------------------- Ravi Daswani /s/ Douglas Moore* Director ------------------------- Douglas Moore /s/ James Pratt* Director ------------------------- James Pratt /s/ Andrew Leitch* Director ------------------------- Andrew Leitch /s/ Kenneth G.C. Telford Chief Financial Officer ------------------------- (Principal financial and accounting officer) Kenneth G.C. Telford * By Ian G. Robinson, attorney in fact