UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_________________

Amendment No. 1
to

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of earliest event reported: August 3, 2005

CHILCO RIVER HOLDINGS INC.
(Exact Name of Registrant as Specified in Charter)

Nevada
(State or Other Jurisdiction
of Incorporation)

0001278595
(Commission File Number)

98-0419129
(IRS Employer Identification No.)

16027 Arrow Hwy Suite D
Irwindale, CA 91706
(Address of Principal Executive Offices) (Zip Code)

646-330-5859
(Registrant’s Telephone Number, including Area Code)

595 Howe Street, Suite 206
Vancouver, British Columbia, Canada, V6C 2T5
(Former name or address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

[ ]

Written communications pursuant to Rule 415 under the Securities Act

[ ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

EXPLANATORY NOTE

This Amendment No. 1 to Form 8-K is being filed to include the proper Exhibit 99.9, which was inadvertently omitted from the Form 8-K filed by Registrant on August 9, 2005. No other changes to the Form 8-K have been made.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical or current facts included in this current report on Form 8-K or incorporated by reference herein, including, without limitation, statements regarding our 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”, “estimate”, “anticipate”, “believe” or “continue” or the negative thereof or variations thereon or similar terminology. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors include, among other things, those matters discussed under the caption “Risk Factors,” as well as the following:

•

the impact of general economic conditions in the Peru;

•

industry conditions, including competition;

•

business strategies and intended results;

•

our ability to integrate acquisitions into our operations and management;

•

risks associated with the hotel industry and real estate markets in general;

•

the impact of terrorist activity or war, threats of terrorist activity or war and responses to terrorist activity on the economy in general and the travel and hotel industries in particular;

•

travelers' fears of exposure to contagious diseases;

•

legislative or regulatory requirements; and

•

access to capital markets.

Although we believe that these statements are based upon reasonable assumptions, we can give no assurance that our goals will be achieved. Given these uncertainties, prospective investors are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this report. We assume no obligation to update or revise them or provide reasons why actual results may differ.

Item 1.01. Entry into a Material Definitive Agreement

Share Exchange Agreement

On July 15, 2005, Chilco River Holdings Inc., a Nevada Registrant (the “ Registrant ” or the “ Corporation ”), entered into a Share Exchange Agreement dated July 15, 2005 (the “ Share Exchange Agreement ”), with KUBUK International, Inc., a California Registrant (the “ Kubuk ”); Tom Liu, David Liu, Lee Kuen Cheung, Wai Yung Lau, Zheng Liu, Yizhi Zeng, Luisa Wong, Jack Xu, Yong Yang and Guoxiu Yan (“ Shareholders ”); and Tom Liu as Shareholders Representative (“ Shareholders Representative ”). The Registrant agreed to acquire or cause one or more of its affiliates to acquire, all of the outstanding capital stock and other equity interests of Kubuk from the Shareholders by issuing 19,250,000 shares of the Registrant’s common stock (the “ Exchange Shares ”) as consideration on the terms and subject to the conditions set forth in the Share Exchange Agreement (the “ Share Exchange ”). The Registrant filed a current report on Form 8-K on July 20, 2005, describing the material terms of the Share Exchange Agreement. On August 3, 2005, the Registrant closed the Share Exchange.

Escrow Agreement

Under the terms of the Share Exchange Agreement, the Registrant, Kubuk, the Shareholders, Tom Liu and David Liu (as “ Principal Shareholders ”) and an escrow agent were required to enter into an escrow agreement under which the Shareholders were required to place shares of common stock issued in the Share Exchange into escrow to satisfy certain obligations under the Share Exchange Agreement.

In connection with the closing of the Share Exchange, the Registrant, the Shareholders, the Shareholder Representative and Wasserman, Comden, Casselman & Pearson, LLP , as “ Escrow Agent ”, entered into an escrow agreement dated August 3, 2005.

The parties agreed that the Registrant shall place the following Exchange Shares in escrow, subject to release as follows:

Financing Transaction Escrow : The Shareholders will place an aggregate of 5,000,000 Exchange Shares into Escrow (the “ Shareholder Escrow Shares ”). The Shareholders and the Registrant agreed that the Registration shall, and each of Tom Liu and David Liu (the “ Shareholder Principals ”) shall take all reasonable actions to, obtain the highest price per share of common stock, or any rights, options or warrants to purchase, or securities of any type whatsoever) issued by the Registrant in connection with the Financing Transaction or Subsequent Financing Transaction shall be in excess of $1.00 per share (the “ Minimum Price Covenant ”). In addition, the Shareholders and Kubuk, jointly and severally, agreed that Kubuk would deliver audited financial statements of Kubuk (“ Kubuk Financials ”) to the Registrant no later than the earlier of (i) 60 days after the Closing Date or (ii) the date that permits the filing of any registration statement required to be filed under the terms of the Financing Transaction (the “ Financial Statement Covenant ”). The Shareholder Escrow Shares will be released from escrow as liquidated damages for breach of either the Minimum Price Covenant and Minimum Price Covenant as follows:

(i)

if Minimum Price Covenant is breached, then the number of Shareholder Escrow Shares to be cancelled as liquidated damages shall be calculated as follows:

X = (A/B) — A

where: X = Number of Shareholder Escrow Shares Cancelled

A = 5,000,000

B = Purchase Price Per Share

For the purposes of this Agreement, “Purchase Price Per Share” shall be determined based on completing the Financing Transaction to raise a minimum of $5,000,000 and is defined as cash consideration received or to be received by Chilco or the fair market value of any property received or to be received by Chilco (as shall be verified by Chilco’s independent accounting firm) for each Chilco Common Share issued or to be issued pursuant to exercise or conversion of any convertible or exchangeable security.

(ii)

if the Financial Statement Covenant is breached, then 360,000 Shareholder Escrow Shares shall be released and cancelled as liquidated damages and not a penalty for the breach of the covenant.

Co-Sale Escrow . The Shareholder Principals will place 1,250,000 Exchange Shares into escrow (the “ Co-Sale Escrow ”). The Registrant shall use commercially reasonable efforts to permit the Shareholder Principals to offer and sale up to 1,250,000 Exchange Shares to investors on a co-sale basis, in one or more private transactions in connection with the Subsequent Financing Transaction; provided that the Registrant has first raised $15,000,000 in the Subsequent Financing Transaction for the Registrant. After the Registrant has raised $15,000,000 in the Subsequent Financing Transaction, the Registrant will not offer shares of its common stock for its own behalf until the Shareholder Principals have sold shares from the Co-Sale Escrow for proceeds of $5,000,000 or all of the shares are released from Escrow. The Shareholder Principals shall receive all of proceeds from the sale of the shares from the Co-Sale Escrow. The Escrow Agent shall release the shares from the Co-Sale Escrow: (i) to the purchasers of such shares and any remaining shares to the Shareholder Principals once the Shareholder Principals have sold shares for proceeds of $5,000,000; or (ii) to the Shareholder Principals if the Registrant has not raised $15,000,000 in the Subsequent Financing Transaction prior to the third anniversary of the Closing Date.

Rightholder Escrow . The Shareholders will place an aggregate of 2,000,000 Exchange Shares (the “ Rightholder Escrow Shares ”) into Escrow (the “ Rightholder Escrow ”). Kubuk has obligations to Nefilim Associates, LLC, a Massachusetts limited liability company, T Morgan LLC, a Delaware limited liability company, and Sean Sullivan (the “ Rightholders ”) to issue capital stock of Kubuk or an entity acquired by or acquiring Kubuk (collectively, the “ Consultant Rights ”) upon satisfaction of certain conditions under the terms of Consulting Agreements dated May 9, 2005 with respect to Sean Sullivan, May 19, 2005 with respect to Nefilim Associates, LLC and June 1, 2005 with respect to T Morgan LLC (collectively, the “ Consultant Agreements ”). Exchange Shares will be released from the Rightholder Escrow as follows:

(i)

te Escrow Agent shall release the Rightholder Escrow Shares to the Rightholders, if the Registrant has raised a total of $5,000,000 in the Financing Transaction for the Registrant within thirty (30) days of the Company delivering the Kubuk Financials to the Registrant, subject to a redemption and cancellation

right by Chilco with respect to sixty percent (60%) of the Rightholder Escrow Shares, if Chilco has not raised a total of $5,000,000, $10,000,000, $15,000,000 and $20,000,000 (which amount shall include the proceeds paid to the Shareholder Principals under the co sale rights), in the Subsequent Financing Transaction for the Registrant within six (6) or twelve (12) months from the Closing Date; and

(ii)

the Escrow Agent shall release one hundred percent (100%) of the Rightholder Escrow Shares to the Registrant for cancellation if Chilco has not raised a total of $5,000,000 in the Financing Transaction for the Registrant within thirty days of the Registrant delivering the Kubuk Financials to the Registrant.

Share Contribution Agreement

Under the terms of the Share Exchange Agreement, the Registrant, KUBUK and the Shareholders agreed that the Registrant shall have 2,200,000 shares of common stock issued and outstanding immediately prior to the closing of the Share Exchange.

In connection with the Share Exchange, the Registrant and Mr. Roy entered into a Share Contribution Agreement dated effective as of August 3, 2005, under which Mr. Roy contributed an aggregate of 3,564,000 shares of the Registrant’s common stock to the Registrant as a Capital Contribution. Former officers and directors, contributed a total of 400,000 shares of common stock: Robert Krause contributed 200,000 shares and Thomas Brady contributed 200,000 shares. The Registrant accepted Mr. Roy’s capital contribution and the cancellation of shares by Mr. Krause and Mr. Brady and cancelled 3,964,000 shares of common stock. No consideration was paid to Mr. Roy in connection with the contribution and cancellation of the shares.

Stock Subscription Agreement

Under the terms of the Share Exchange Agreement, the Registrant, KUBUK and the Shareholders agreed that the Registrant would satisfy certain debt obligations prior to the closing of the Share Exchange. The Registrant borrowed certain funds from lenders (the “ Lenders ”) pursuant to bridge loans in the amount of $100,000 (the “ Bridge Loans ”) to satisfy certain current liabilities due immediately prior to Closing. The Lenders and the Registrant agreed to convert the Bridge Loans into shares of common stock of the Registrant at $2.00 per share.

The Registrant and the Lenders entered into stock subscription agreements under which the Registrant issued 50,000 shares of common stock to the Lender in full satisfaction of the Bridge Loans.

Item 2.01. Completion of Acquisition or Disposition of Assets

On July 15, 2005, we entered into a Share Exchange Agreement with Kubuk International, Inc., a California Registrant; its shareholders, Tom Liu, David Liu, Lee Kuen Cheung, Wai Yung Lau, Zheng Liu, Yizhi Zeng, Luisa Wong, Jack Xu, Yong Yang and Guoxiu Yan; and Tom Liu, as Shareholders Representative. Under the terms of the Share Exchange Agreement, we agreed to acquire all of the issued and outstanding capital stock of Kubuk from the Shareholders. Kubuk owns and operates, through its wholly-owned subsidiaries, Kubuk Investment SAC and Kubuk Gaming SAC, the Hotel Cinco Estrellas in Lima, Peru (also known as the Bruce Hotel and Casino), and owns all of the assets, licenses and other rights used in connection with the business of the Bruce Hotel and Casino.

Closing of Share Exchange . On August 3, 2005, the Registrant completed the acquisition of Kubuk International Inc. in accordance with the terms of the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the Registrant acquired all of the outstanding capital stock and other equity interests of Kubuk from the Shareholders by issuing 19,250,000 Exchange Shares as consideration on the terms and subject to the conditions set forth in the Share Exchange Agreement. Kubuk had 51,000,400 shares of common stock issued and outstanding, and the Shareholders received 0.3749970588 Exchange Shares for each share of Kubuk common stock tendered. No fractional shares were issued to Kubuk shareholders.

Escrow Arrangements . Under the terms of the Share Exchange Agreement, the Registrant, Kubuk, the Shareholders, the Principal Shareholders and Wasserman, Comden, Casselman & Pearson, LLP, as “Escrow Agent”, entered into an escrow agreement dated August 3, 2005, under which the Shareholders were required to place shares of common stock issued in the Share Exchange into escrow to satisfy certain obligations under the Share Exchange Agreement. The Shareholders placed a total of 5,000,000 Exchange Shares into escrow to secure certain obligations by the Registrant and the Principal Shares to raise $5,000,000 at a minimum share price of $1.00 per share and 2,000,000 Exchange Shares into escrow to satisfy certain obligations to consultants to Kubuk. The Principal Shareholders contributed a total of 1,250,000 Exchange Shares into escrow for the purposes of exercising certain co-sale rights granted by the Registrant to the Shareholder Principals. See, “Item 1.01 Entry into a Material Definitive Agreement — Escrow Agreement” for a complete description of the terms of the escrow.

Share Contribution . In connection with the closing of the Share Exchange, Gavin Roy, the founding shareholder of the Registrant, and two former officers and directors agreed to contribute an aggregate of 3,964,000 shares of the Registrant’s common stock to the Registrant as an additional capital contribution and the Registrant agreed to accept the Capital Contribution. The shares were cancelled effective as of August 3, 2005.

Director and Officer Appointments : The Registrant appointed five new directors to its Board of Directors: Tom Liu, Wai Yung Lau, Jack Xu , Yong Yang and Sean Sullivan. Robert Krause resigned as a member of the Registrant’s Board of Directors. After Closing, the Registrant’s Board of Directors consists of six members, the newly appointed board members and Gavin Roy. Tom Liu was appointed as the Registrant’s Chairman and Chief Executive Officer effective immediately upon Closing.

Proposed Financings : The Registrant intends to secure financing in the amount of $5,000,000 in one or more transactions as soon as practicable on terms acceptable to us and the Shareholders (the “ Financing Transaction ”), and to raise an additional $20,000,000 (the “ Subsequent Financing Transaction ”) for working capital purposes. The Registrant intends to use the proceeds from these transactions, if any, to implement a plan by Kubuk’s management to expand, renovate and modernize the current facilities of the Bruce Hotel & Casino. As of the date of Closing, the Registrant had no firm commitments with respect to the Financing Transaction or the Subsequent Financing Transaction.

DESCRIPTION OF BUSINESS

This Description of Chilco River Holdings Inc. was prepared to update public information related to Chilco River Holdings Inc. and its business as of August 1, 2005.

History

We were incorporated on May 8, 2003 under the laws of the State of Nevada. We maintain our registered agent’s office at 6100 Neil Road, Suite 500, Reno, Nevada 89511, and our principal executive office is located at 16027 Arrow Hwy Suite D, Irwindale, CA 91706, and an office at the Bruce Hotel & Casino at Jiron Francisco Bolognesi # 171-191 in the Miraflores District, Province and Department of Lima.

Our Mineral Exploration Business

Since our inception, we have been engaged in the business of acquiring mineral exploration properties. We currently own all rights, title and interest in one property located in British Columbia, Canada. We purchased all right, title and interest in one unpatented claim in the New Westminster Mining Division of the Province of British Columbia, known as the PEG Claim under an agreement dated November 3, 2003. The claim consists of 16 units located in southwestern British Columbia, Canada, from Nicholson & Associates of Vancouver, British Columbia, subject to a 2-1/2% net smelter royalty and a 7-1/2% gross rock revenue royal from the sale of rock and gravel to NIC. We have the right to reduce the net smelter royalty to 1% by paying Nicholson & Associates $1 million within 12 months from the date we commence commercial production on the property. We agreed to pay advance royalties of $25,000 annually commencing on November 3, 2006. Nicholson & Associates agreed to provide to us with geological consulting services for the claims and to maintain the claims in good standing for at least 24 months from the recording date of claim.

We completed an initial exploration program on the PEG Claim, at a cost of $2,854. A report has been prepared which recommended a further two-stage program. We will not be able to determine whether or not our mineral claim contains a commercially exploitable mineral deposit until appropriate further exploratory work is done and an economic evaluation based on that work concludes economic viability. Our property is an exploration stage property with no known ore reserves, and we cannot assure you that any commercially viable mineral deposit exists on our property. We were unable to secure funding to conduct additional exploration work on the PEG Claim and we suspended work on the PEG Claim. Our management began exploring other business opportunities at the beginning of 2005.

Forward Stock Split

On July 11, 2005 at 5:00 p.m. (Eastern Standard Time)(Record Date), we effected a 2 for 1 forward stock split of our issued and outstanding shares of common stock, par value $0.001, by way of share dividend payable upon surrender of certificates pursuant to Section 78.215 of the Nevada General Registrant Law. The share dividend is payable upon surrender of the outstanding share certificates. Shareholders are required to surrender their existing share certificates representing shares of common stock issued before the Record Date by tendering the such share certificates to our transfer agent. Upon surrender of the outstanding share certificates representing the issued and outstanding shares of common stock held by shareholders on the Record Date, our transfer agent will issue new share certificates giving effect to the share dividend so that each one share of common stock of the Registrant issued and outstanding prior to the Record Date shall represent two post-split shares of our common stock. Immediately prior to the stock dividend, we had 3,057,000 shares of common stock issued and outstanding. After giving effect to the stock dividend, we had 6,114,000 shares of common stock issued and outstanding.

Acquisition of Bruce Hotel & Casino

On July 15, 2005, we entered into a Share Exchange Agreement with Kubuk International, Inc., a California corporation; its shareholders, Tom Liu, David Liu, Lee Kuen Cheung, Wai Yung Lau, Zheng Liu, Yizhi Zeng, Luisa Wong, Jack Xu, Yong Yang and Guoxiu Yan; and Tom Liu, as Shareholders Representative. Under the terms of the Share Exchange Agreement, we agreed to acquire all of the issued and outstanding capital stock of Kubuk from the Shareholders. Kubuk owns and operates, through its wholly-owned subsidiaries, Kubuk Investment SAC and Kubuk Gaming SAC, the Hotel Cinco Estrellas in Lima, Peru (also known as the Bruce Hotel and Casino), and owns all of the assets, licenses and other rights used in connection with the business of the Bruce Hotel and Casino. We closed the share exchange transaction on August 3, 2005, and Kubuk International, Inc. became our wholly-owned subsidiary.

The terms of the Share Exchange Agreement and the transactions thereunder are described under “Item 1.01 — Entry into a Material Definitive Agreement.”

History of the Bruce Hotel & Casino

Kubuk, through its wholly-owned subsidiaries, Kubuk Investment SAC and Kubuk Gaming SAC, own all of the assets of and operates the Bruce Hotel & Casino. Kubuk acquired the Bruce Hotel & Casino from Bruce Grupo Diversion S.A.C., a corporation owned and controlled by David Liu. Bruce Grupo Diversion S.A.C. operated the Bruce Hotel & Casino since 2002. The Bruce Hotel & Casino has been in operation since 1997.

The Bruce Hotel & Casino is located Jiron Francisco Bolognesi # 171-191 in the Miraflores District, Province and Department of Lima, approximately 30 minutes from Jorge Charvez International Airport in the heart of Miraflores. The Bruce Hotel & Casino is a “destination” hotel location for visitors traveling to the Republic of Peru, particularly, those from the People’s Republic of China. The Bruce Hotel & Casino business consists of a hotel, restaurants, a gaming casino and real property. Prior to signing the Share Exchange Agreement, we developed a plan to expand, renovate and modernize the current facilities of the Bruce Hotel & Casino and temporarily suspended the operation of the gaming room in March 2005. We intend to raise capital to fund the expansion, renovation and modernization of the Bruce Hotel & Casino.

Acquisition of the Bruce Hotel & Casino from Bruce Grupo Diversion S.A.C.

On August 04, 2001, Bruce Grupo Diversion S.A.C. and Kubuk Investment S.A.C. entered into a sell and purchase agreement of the real property at Jiron Francisco Bolognesi # 171-191 in the Miraflores District, Province and Department of Lima, the 14 story building is the location of the Bruce Hotel & Casino was contributed into Kubuk Investment S.A.C. The sell and purchase agreement was registered into the Public Records of Lima, and was notarized by Dra. Maria Soledad Perez Tello. The purchase price was $2,904,000.00 and was divided into five quotas after the initial payment of $400,000. The entire quota was paid off on May 21, 2005.

In Febuary of 2005, Bruce Grupo Diversion S.A.C. and Kubuk Investment S.A.C. entered a sale and purchase agreement of the real property at Jiron Francisco Bolognesi # 155-191 in the Miraflores District, Province and Department of Lima, the 7 story building along with parking garage was the location of Bruce Grupo Diversion S.A.C. and was contributed into Kubuk Investment S.A.C. The sale and purchase agreement was registered into to the Public Records of Lima, and was notarized by Dr. Fredy Cruzado Rios. The purchasing price was $400,000 and was paid.

The personal property and movable property necessary for the operation of a hotel and casino were transferred to Kubuk Investment and Kubuk Gaming in 2005.

On June 15, 2005, all of the issued and outstanding shares of capital stock of Kubuk Investment S.A.C. and Kubuk Gaming S.A.C. were acquired by Kubuk Investment S.A.C. in a share exchange by which the stockholders of Kubuk Investment and Kubuk Gaming acquired the voting common stock of Kubuk International in exchange for the common stock of Kubuk International pursuant to Internal Revenue Code Section 368(a)(1)(B).

On July 1st, 2005, the Peruvian gaming authority (MINCETUR) issued a gaming license to Kubuk Gaming S.A.C.

Bruce Hotel & Casino Business

The Bruce Hotel & Casino is located at Jiron Francisco Bolognesi # 171-191 in the Miraflores District, Province and Department of Lima, approximately 30 minutes from Jorge Charvez International Airport in the heart of Miraflores. The Bruce Hotel & Casino is a “destination” hotel and casino location for visitors traveling to the Republic of Peru and caters to visitors from the People’s Republic of China.

The Bruce Hotel & Casino is a full service hospitality facility with standard and premium lodging accommodations (rooms and suites). In addition, the hotel encompasses several dining facilities and a full featured Gambling Casino with traditional gaming tables and slot machines.

Hotel: The Bruce Hotel & Casino is a 60 room full service hospitality facility with standard and premium lodging accommodations (rooms and suites) and dining facilities. The amenities include guest suites and rooms, sauna, air conditioning, mini-bar, telephone, hair dryer, wake-up service/alarm-clock, radio, satellite TV and safe deposit boxes. The hotel can accommodate 200 guests. In addition, the hotel offers a gaming room, meeting/banquet facilities and a barber/beauty shop. The room fare ranges from $70 for a standard room to $95 for an executive suite.

The area surrounding the Bruce Hotel and Casino is primarily urban infrastructure, such as asphalt roads, concrete sidewalks, city water and sewage, public electricity and garbage collection as well as phone lines. The Bruce Hotel and Casino is located on commercial property and is located on a major thoroughfare. Miraflores District is one of the most important financial and commercial centers of Lima and approximately 20 minutes from the historical center of Lima.

Restaurants : The Bruce Hotel & Casino features two full service restaurants serving Chinese and international cuisine. The restaurants seat 200 guests, respectively. The Bruce Hotel & Casino holds a retail liquor license.

Gaming Casino : The gaming casino is a full featured casino with 20 traditional gaming tables (blackjack, roulette, craps and poker) and approximately 220 slot machines. The casino is located on the second floor of the Hotel and is approximately 622 share meters. The casino features two full bars, VIP area and can accommodate 300 guests.

The gaming casino operates under a gaming license issued to Kubuk Gaming SAC by the Republic of Peru. The gaming casino is currently closed for remodeling and is scheduled to reopen to the public in the fourth quarter of 2005.

Slot Room : The slot room is located on the first floor of the Hotel next to the lobby. The slot room features 212 slot machines and can accommodate approximately 300 guests.

Real Property : Kubuk owns all of the real property and assets used in the operation of the Bruce Hotel & Casino. The property consists of one seven-story building and one fourteen-story building that are physically connected and have been configured for use as a hotel, casino and office space. The property also includes a parking garage. Kubuk owns all of the fixtures, improvements, systems, furniture, gaming machines and gaming tables and the other contents currently used in the business of the Bruce Hotel & Casino. See. “Description of Property” below.

Regulation and Licensing

Hotel : The Bruce Hotel & Casino maintains a Five Star Hotel license issued by the Ministry Of External of Commerce and Tourism Assistant Ministry of Tourism National Office of Tourism Development.

Gaming Regulations : The ownership and operation of casino gaming facilities are subject to extensive regulations by the National Bureau of Tourism of the Department of Foreign Trade and Tourism (the “Tourism Bureau”). We are required to obtain and maintain a gaming license to conduct gaming. The limitation, conditioning or suspension of our gaming license could (and the revocation or non-renewal of gaming license, or the failure to reauthorize gaming would) materially adversely affect our operations. In addition, changes in law that restrict or prohibit our gaming operations could have a material adverse effect on us.

In general, issuance of gaming license require the following:

(a) The exploitation of slots machines or casino must be complementary to tourism activity. Therefore, it impossible to operate casino and slots machines, without a hotel or a restaurant as principal activity. By regulations, the casino and slot machines must be within a 5 star rating hotel or a 5 fork rating restaurant if located in the country’s capital city of Lima. Outside of Lima, casinos can be in three- or four-star hotels or resorts and at five-star restaurants.

(b) The principal shareholders must demonstrate economic solvency and moral suitability in order to operate casino and slot machines. A series of background check must be conducted before the issuance of the license.

(c) The Peruvian law demands the delivery of a letter deposit before the operation of the rooms. For the room of slots machines the letter deposit will be equal to one thousand dollars for every slot machine. In the case of the casino, the letter deposit it will be equal to five hundred thousand dollars.

(d) There are restrictions for the geographical location of the room of game. The location of the operation needs to be 150 meters away from churches, educational institutions, barracks and hospitals.

Licenses are valid for five years and renewable based on the above criteria.

Gaming License : Gaming licenses are issued under Law No. 27155, “Law that Regulates the Exploitation of Casino Games and Slot Machines”, which grants the National Bureau of Tourism the administrative powers to authorize related to the application of said Law, which states in subsection a) article 25, that the National Bureau of Tourism has the powers to issue and revoke authorizations for the exploitation of casino games.

Kubuk Gaming, SAC holds a license No. 060-MINCETUR/VMT/DNT, pursuant to the Tourism Bureau’s Director Resolution issued on July 1, 2005. Under this license, the Bruce Hotel is authorized to operate twenty-one (21) gaming tables featuring Black Jack, Roulette American Style, Roulette French Style, Pal Gow Polar, Punto and Banca, Craps and Caribbean Poker. In addition, the Bruce Hotel & Casino operates 220 slot machines. This license is valid for five years.

Kubuk Gaming, SAC holds a second license No. 145-MINCETUR/VMT/DNT pursuant to the Tourism Bureau’s Director Resolutions issued on July 1, 2005. Under this license, the Bruce Hotel is authorized to operate 212 slot machines and 93 “read-only” game programs. This license expires on April 27, 2009.

Taxation : The Bruce Hotel & Casino is subject to regulatory, legal, tax or ancillary government oversight of the Federal Republic of Peru. Net profits derived from the operations of Kubuk Investment SAC and Kubuk Gaming SAC are subject to taxation at the federal, state and local levels. The Federal Republic of Peru imposes a 12% fixed gaming tax on the total amount of all wagers made by players less all payments received by such players. We also collect a 19% (IGV) sales tax from the consumers of the hotel, restaurant, and sauna. The corporate tax is charged at 30% of total income. If Kubuk Gaming SAC or Kubuk Investment SAC totally or partially distributes its profits (“utilidades”), an additional rate of 4.1% will be imposed on the distributed amount, provided that the company actually distributes its profits (“utilidades”) in cash or in kind.

Competition

The gaming industry, including the development, operation and management of casinos, racetracks and other types of gaming facilities, is highly competitive, especially given the rapid rate at which the industry is expanding. For example, we compete with a number of gaming facilities of varying quality and size, including gaming facilities that are more established and have more resources, along with other forms of gaming and entertainment. Many competitors have available to them substantially greater financial and personnel resources than us. Competition in the future may also be affected by overbuilding which can adversely affect patronage levels. Given the current regulatory climate and limited number of new gaming opportunities, it is likely that competition in our industry will intensify in the future.

We compete with six local casinos, Casino Golden Palace, Casino La Hacienda, Casino Stellaris, Casino Sheraton, Casino Los Delfines, Casino Miraflores. Bruce Casino is the second largest casino, and the only one with 100% ownership to the hotel and restaurants and other installations.

Marketing

Latin America is the home to over 525 million people and is growing at an average of 1.42% per year. Latin America is also becoming a key potential tourism destination for business and leisure travelers, which is benefiting its local growing gaming markets. Latin America’s travel & tourism industry is expected to generate 2.6 per cent of GDP and experienced a total 2.6 per cent real growth in 2003, and 5.4 per cent in 2004. The entire Latin America’s gaming industry is estimated to have an effective gambling turnover exceeding $40 billion. We will target at attracting tourists to Latin America through a campaign in cooperation with the Ministry of External Commerce and Tourism.

In Peru, we estimate that land based casinos is a more than $2.5 billion per year industry. We believe that there are over 50,000 gaming machines and 180 gaming tables in Peru. The Bruce Hotel & Casino attracts customers to its casino by designing and implementing marketing and promotional

programs for local residents, tourists and visitors. We place significant emphasis on attracting local residents and seek to maintain a strong local identity by engaging in promotion, primarily by direct mailing and posting flyers, from time to time.

Approximately 70% of our hotel guests are visitors from the People’s Republic of China. We target tourist from the People’s Republic of China through marketing programs, including special rate programs for travel agents and promoters. With a population of 1.3 billion people, China boasts some 20 million people with million-dollar fortunes and 100 million wealthy citizens with money to travel, according to Argentina’s trade group Feghra. The number of Chinese tourists could rise to 100 million in 2020, according to the World Tourism Organization.

In the year 2002 all Chinese citizens with a government issued work passport could fly to the Republic of Peru without any additional Visa requirements. This ease of travel prompted a tremendous number of visitors to the Republic of Peru from the People’s Republic of China and provided a high level of occupancy and high casino gaming revenues for the Bruce Hotel & Casino.

In 2003 the government of the People’s Republic of China ceased issuing work passports to its citizens and in doing so made it a requirement to secure a visa to travel to the Republic of Peru. The visa requirement significantly curtailed the number of travelers from the People’s Republic of China to the Republic of Peru and the financial results of the Bruce Hotel and Casino suffered from reduced hotel occupancy and reduced casino gaming revenues.

In November 2004, China included Peru on its Approved Destination Status list. This means that Chinese are able to travel more easily as part of organized group and that Peruvian travel agents can advertise and promote tourism inside China. We anticipate that the number of Chinese citizens visiting the Bruce Hotel and Casino will increase as Chinese citizens take advantage of the easing of travel restrictions to the Republic of Peru.

Approximately 4,800 Chinese tourists visit Peru every year. We believe that the number should rise to 25,000 in 2005 with Peru’s inclusion on the official list. We believe that by 2006, Peru could reach some 100,000 Chinese tourists a year. There are currently no direct flights between Peru and China, but Chinese airlines hope to launch direct flights in 2005 through a code-sharing arrangement with South American airlines.

Employees and Labor Relations

As of August 1, 2005, we had 124 full time employees. Prior to temporary closure of the casino for renovation, the Bruce Hotel & Casino employed approximately 170 full time employees.

None of the Bruce Hotel & Casino employees are members of a union. We are not a party to any collective bargaining agreement. We are subject to certain federal and local safety and health, employment and environmental laws, regulations and ordinances that apply to non-gaming businesses generally. Individual workers choose one of two alternative social security and pension plans. Under both, the employer pays 9% of the worker’s monthly wage for social security (health benefits). We have not made, and do not anticipate making, material expenditures with respect to such regulations.

We believe that the Bruce Hotel & Casino has good relationships with its employees.

REPUBLIC OF PERU

Government

The Toledo administration has continued to suffer political setbacks. In response to this, on February 25, 2005, President Toledo announced a change in the composition of the cabinet. Carlos Gamarra was replaced by Eduardo Salhuana as Justice Minister; Javier Neves was replaced by Juan Sheput as Labour Minister; Alfonso Velasquez was replaced by David Lemor as Production Minister; and Alvaro Quijandria was replaced by Manuel Manrique as Agriculture Minister.

The Economy

Peru’s gross domestic product, or GDP, grew by 4.8% during 2004, compared to 4.0% in 2003. All sectors experienced positive growth rates with the exception of agriculture, which was negatively affected by a severe drought in the northern coast of Peru that mainly affected rice and sugar cane production.

Fishing grew by 30.5% in 2004, recovering from the decrease in 2003 of 12.5%, while non-primary manufacturing grew by 7.2%, followed by 4.8% in wholesale and retail trade, 4.7% in construction and other services and 4.6% in electricity and water.

The Peruvian economy has generally been growing since July 2001, as shown in the following table of monthly GDP growth rates from January 2001 to March 2005.

Gross Domestic Product Growth
(percentage change from corresponding month of previous year, at constant 1994 prices)

	2001		2002		2003		2004		2005

January	(2	.4)	5	.4	5	.4	3	.5	5	.4
February	(3	.1)	2	.6	5	.8	5	.0	6	.7
March	(5	.8)	1	.1	6	.1	5	.9	4	.0
April	1	.1	9	.1	3	.2	3	.4	6	.4
May	(1	.1)	5	.2	1	.7	3	.6
June	(3	.5)	4	.8	6	.7	2	.6
July	1	.1	4	.7	3	.5	3	.7
August	1	.4	3	.7	2	.9	5	.9
September	2	.2	8	.1	3	.3	4	.7
October	3	.6	3	.6	4	.9	2	.3
November	3	.0	6	.2	1	.0	8	.7
December	6	.5	4	.2	3	.6	8	.7

_________________

(1)

Preliminary data.

Source: Instituto Nacional de Estadistica en Informatica, or INEI.

In April 2005, GDP increased by 6.4%, as compared to the GDP in April 2004, which grew 3.4% as compared to the GDP in April 2003. This rise in GDP growth was largely a result of growth in the non-primary sector, mainly the non-primary manufacturing and construction sectors, which increased 9.3% and 10.6%, respectively, between May 2004 and April 2005.

According to preliminary figures, during the first quarter of 2005, Peru’s GDP expanded by 5.4%, as compared to 4.8% in the first quarter of 2004, following an increase of 6.6% during the fourth quarter of

2004. Growth in the first quarter of 2005 continued to be driven by the external sector as real exports grew by 19.9%, and domestic demand, which grew by 4.4%, also had an increasingly important role. Exports continued to grow for both traditional and non-traditional products.

Traditional exports that increased included zinc, copper, molybdenum, fishmeal and coffee, offsetting reduced exports of gold. Non-traditional exports grew 25%, led by textiles, especially knitted garments for the United States market, chemicals, agriculture and livestock and fish products.

Private investment has been growing since the third quarter of 2002 due to a stable macroeconomic environment, allowing firms to enlarge production capacity to respond to increasing levels of domestic consumption. During the first quarter of 2005, private investment grew by 7.7% and private consumption increased by 4.0% as compared to an increase of 3.1% in the same period in 2004, national income grew 6.8% and employment grew 3.9%.

On the supply side, the most dynamic sector was non-primary manufacturing, followed by services, electricity and water and agriculture, as shown in the next table.

The following table sets forth the distribution of GDP in the Peruvian economy, indicating for each sector its annual growth rate for the periods indicated, in each case as compared to the corresponding period in the previous year.

Gross Domestic Product by Sector
(percentage change from corresponding previous period, at constant 1994 prices)

	For the twelve months ended December 31,				For the three months ended March 31,

	2003		2004 ⁽¹⁾		2004 ⁽¹⁾		2005 ⁽¹⁾

Primary production:
Agriculture and livestock(2)	2	.1	(1	.1)	2	.0	3	.0
Fishing	(12	.5)	30	.5	18	.9	1	.3
Mining and hydrocarbons(3)	6	.8	5	.4	12	.9	0	.8

Total primary
production	3	.5	2	.5	7	.1	1	.9
Secondary production:
Manufacturing	2	.4	6	.7	5	.2	4	.9
Primary	(1	.8)	4	.6	1	.8	(3	.3)
Non-Primary	3	.6	7	.2	5	.4	6	.7
Construction	4	.2	4	.7	7	.0	2	.8
Electricity and water	4	.9	4	.6	4	.9	3	.5

Total secondary
production	3	.1	6	.0	5	.6	4	.3
Services:
Wholesale and retail trade	3	.2	4	.8	3	.4	5	.6
Other services ⁽⁴⁾	4	.6	4	.7	4	.5	6	.8

Total services	4	.2	4	.7	4	.2	6	.5


Total GDP		4	.0	4	.8	4	.8	5	.4

_________________

(1)	Preliminary data.

(2)	Includes forestry.

(3)	Includes non-metallic mining.

(4)	Includes taxes on products and import duties.

Source: INEI and Central Bank (Banco Centrale de Reserva del Peru).

RISK FACTORS

Readers should carefully consider the risks and uncertainties described below before deciding whether to invest in shares of our common stock.

Our failure to successfully address the risks and uncertainties described below would have a material adverse effect on our business, financial condition and/or results of operations, and the trading price of our common stock may decline and investors may lose all or part of their investment. We cannot assure you that we will successfully address these risks or other unknown risks that may affect our business.

All of our revenues and income are expected to be derived from the Bruce Hotel and Casino .

We anticipate that all of our revenue and income, if any, will be derived from the operations of the Bruce Hotel & Casino. We have no other source of operating revenue. We anticipate that results of operations at the Bruce Hotel & Casino will be lower than historical periods because the gaming casino has been closed for remodeling since March 2005 and is not expected to reopen until the fourth quarter of 2005.

We have no experience in the hospitality industry .

Prior to our acquisition of Kubuk we were in the business of exploring mineral properties. We have no prior experience in the hospitality or gaming industry. We will rely on the experience and expertise of Tom Liu, our new Chief Executive Officer, and our newly appointed board of directors in the management of the Bruce Hotel & Casino. Mr. Liu has limited experience in managing a public company.

We are subject to extensive regulation from gaming authorities that could adversely affect us.

As owners and operators of gaming facilities, we are subject to extensive regulation. Governmental authorities require us and our subsidiaries to demonstrate suitability to obtain and retain various licenses and require that we have registrations, permits and approvals to conduct gaming operations. The regulatory authorities in Peru may limit, condition, suspend or revoke a license to conduct gaming operations or prevent us from owning the securities of any of our gaming subsidiaries. We may also be deemed responsible for the acts and conduct of our employees. Substantial fines or forfeiture of assets for violations of gaming laws or regulations may be levied against us, our subsidiaries and the persons involved. The suspension or revocation of any of our licenses or the levy on us or our subsidiaries of a substantial fine would have a material adverse effect on our business.

To date, the Bruce Hotel & Casino has demonstrated suitability to obtain and have obtained all governmental licenses, registrations, permits and approvals necessary for us to operate our existing gaming facilities. However, like all gaming operators, we must periodically apply to renew our gaming license. We cannot assure you that we will be able to obtain such renewals. In addition, if we expand our gaming operations as planned to increase the number of tables and slot machines, we will have to meet suitability requirements and obtain additional licenses, registrations, permits and approvals from gaming and non-gaming authorities. Accordingly, the regulation and timing of installation and operation of gaming tables and machines may be delayed or restricted.

The availability and cost of financing could have an adverse effect on business.

We intend to finance our current and future expansion and renovation projects primarily with cash flow from operations and equity or debt financings. If we are unable to finance our current or future expansion projects, we will have to adopt one or more alternatives, such as reducing or delaying planned expansion, development and renovation projects as well as capital expenditures, selling assets, securing debt financing, or obtaining additional equity financing or joint venture partners. These sources of funds may not be sufficient to finance our expansion, and other financing may not be available on acceptable terms, in a timely manner or at all. If we are unable to secure additional financing, we could be forced to limit or suspend expansion, development and renovation projects, which may adversely affect our business, financial condition and results of operations.

Potential Changes in Regulatory Environment.

From time to time, legislators and special interest groups have proposed legislation that would expand, restrict or prevent gaming operations. In addition, from time to time, certain anti-gaming groups may propose referenda that, if adopted, would limit our ability to continue to operate in those jurisdictions in which such referenda are adopted. Any expansion of gaming or restriction on or prohibition of our gaming operations could have a material adverse effect on our operating results.

We are subject to the possibility of an increase in gaming taxes, which would increase our costs .

Taxing authorities raise a significant amount of revenue through taxes and fees on gaming activities. We believe that the prospect of significant revenue is one of the primary reasons that jurisdictions permit legalized gaming. As a result, gaming companies are typically subject to significant taxes and fees in addition to normal federal and local income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our operations. From time to time, federal and local legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. In addition, poor economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes. It is not possible to determine with certainty the likelihood of changes in tax laws or in the administration of such laws. Such changes, if adopted, could have a material adverse effect on our business, financial condition and results of operations.

We are subject to non-gaming regulation that could adversely affect us.

We are subject to a variety of other local rules and regulations, including zoning, environmental, construction and land-use laws and regulations governing the serving of alcoholic beverages. We must maintain a hotel license to operate our hotel and a liquor license to serve alcoholic beverages. The loss of

these licenses would have a material adverse impact on our revenues and results of operations. Penalties can be imposed against us if we fail to comply with these regulations. The imposition of a substantial penalty or the loss of service of a gaming facility for a significant period of time would have a material adverse affect on our business.

We intend to make substantial investments in renovating, expanding and improving the Bruce Hotel & Casino.

We intend to raise approximately $25 million to fund the expansion, renovation and modernization of the Bruce Hotel & Casino. The gaming casino in the Bruce Hotel & Casino has been closed since March 2005 for remodeling and renovation, the first stage of our renovation project. We estimate that we will be required to raise approximately $5 million to complete the renovation and reopen the gaming casino. Our ability to generate sufficient revenue to earn a profit is dependent on our ability to raise the necessary funds to complete the renovation and to open our casino. We are in the process of seeking capital to complete the renovation, but have no firm commitments at this time.

Our ability to benefit from our investments will depend on many factors, including:

•

our ability to successfully complete the renovations;

•

our ability to successfully integrate the expanded operations;

•

our ability to attract and retain competent management and employees;

•

our ability to secure the licenses, permits and approvals; and

•

the availability of adequate financing on acceptable terms.

Many of these factors are beyond our control. Therefore, we cannot be sure that we will be able to recover our investments in the expansion, renovation and modernization of the Bruce Hotel & Casino.

We may experience construction delays during our expansion project.

We currently are engaged in a substantial renovation project to improve our gaming casino. We also are evaluating other expansion opportunities at the Bruce Hotel & Casino. The anticipated costs and construction periods are based upon budgets, conceptual design documents and construction schedule estimates prepared by us in consultation with our architects and contractors.

Construction projects entail significant risks, which can substantially increase costs or delay completion of a project. Such risks include shortages of materials or skilled labor, unforeseen engineering, environmental or geological problems, work stoppages, weather interference and unanticipated cost increases. Most of these factors are beyond our control. In addition, difficulties or delays in obtaining any of the requisite licenses, permits or authorizations from regulatory authorities can increase the cost or delay the completion of an expansion or development. Significant budget overruns or delays with respect to expansion and development projects could adversely affect our results of operations.

If our key personnel leave us, our business will be significantly adversely affected.

Our continued success will depend, among other things, on the efforts and skills of a few key executive officers and the experience of our property managers as well as our ability to attract and retain additional highly qualified personnel with gaming industry experience and qualifications to obtain the requisite licenses. We do not maintain “key man” life insurance for any of our employees. There is no assurance that we would be able to attract and hire suitable replacements for any of our key employees. We need qualified executives, managers and skilled employees with gaming industry experience to continue to successfully operate our business. We believe a shortage of skilled labor in the gaming industry may make it increasingly difficult and expensive to attract and retain qualified employees. We expect that increased competition in the gaming industry will intensify this problem.

Inclement weather and other conditions could seriously disrupt our business, financial condition and results of operations.

Our business is seasonal and inclement weather conditions could affect the number of visitors to our hotel and casino. Our facilities are subject to risks including loss of service due to casualty, mechanical failure, extended or extraordinary maintenance, flood, hurricane or other severe weather.

Reduced patronage and the loss of service for any period of time could adversely affect our results of operations. We do not maintain business interruption insurance to compensate us if our hotel and casino experience a closure.

Access to a number of our facilities may also be affected by road conditions, such as construction and traffic.

Energy and fuel price increases may adversely affect our costs of operations and our revenues

Our casino properties use significant amounts of electricity, natural gas and other forms of energy. While no shortages of energy have been experienced, substantial increases in the cost of electricity in the Peru will negatively affect our results of operations. In addition, energy and fuel price increases in cities that constitute a significant source of customers for our properties could result in a decline in disposable income of potential customers and a corresponding decrease in visitation to our properties, which would negatively impact our revenues. The extent of the impact is subject to the magnitude and duration of the energy and fuel price increases, but this impact could be material.

A downturn in general economic conditions may adversely affect our results of operations.

Our business operations are subject to changes in international, national and local economic conditions, including changes in the economy related to future security alerts in connection with threatened or actual terrorist attacks in the United States, Spain and London, and related to the war with Iraq, which may affect our customers’ willingness to travel. A recession or downturn in the general economy, or in a region constituting a significant source of customers for our properties, could result in fewer customers visiting our properties, which would adversely affect our results of operations.

Our success depends on visitors from the People’s Republic of China and changes to regulations related to tourism may adversely affect our results of operations.

Approximately 70% of the guests at the Bruce Hotel & Casino during the year ended December 31, 2004, were tourist from the People’s Republic of China. We target tourist from the People’s Republic of China through our marketing programs. In 2003 the government of the People’s Republic of China ceased issuing work passports to its citizens and in doing so made it a requirement to secure a visa to travel to the Republic of Peru. The visa requirement significantly curtailed the number of travelers from

the People’s Republic of China to the Republic of Peru and the financial results of the Bruce Hotel and Casino suffered from reduced hotel occupancy and reduced casino gaming revenues. In 2004, the Chinese government signed an agreement with the Republic of Peru adding Peru to its list of Approved Destination Status, permitting Chinese to travel more easily in Peru in organized group. If the Chinese government should change this policy and restrict travel to the Republic of Peru or the Republic of Peru should impose restrictions on entry, these changes would likely have a material adverse affect on our results of operations.

Our results of operations are subject to foreign currency exchange fluctuations between the U.S. dollar and nuevo sol (PEN), the currency of Peru.

Our functional currency is the U.S. dollar. All of our expected revenue and expenses from the operation of the Bruce Hotel & Casino are expected to be in nuevo sol (PEN), the currency of Peru. Recently, the value of the U.S. dollar has declined compared to the PEN, and we expect that the exchange rate will fluctuate in the future. As a result, we may experience losses or declines in our gross profit margins as a result of fluctuations in the foreign currency exchange rates. At the present time, we do not hedge our foreign currency exchange risks.

Risks Related to Peru

Our ownership of Peruvian companies and operation involves certain considerations not typically associated with ownership of U.S. companies, including those discussed below, and therefore should be considered more speculative than investment in the U.S..

Political and economic situation has historically been unstable

During the past several decades, Peru has had a history of political instability that included military coups d’ tat and different governmental regimes with changing policies. Past governments have frequently played an interventionist role in the nation’s economy and social structure. Among other things, past governments have imposed controls on prices, exchange rates, local and foreign investment and international trade, have restricted the ability of companies to dismiss employees and have expropriated private sector assets.

Following the resignation of the former president, Alberto Fujimori (1990-2000), after revelations of corruption, the president of Congress, Valentin Paniagua, became interim president in November 2000. In 2001 Mr Paniagua oversaw free and fair presidential and congressional elections, and transferred power to the newly elected president, Alejandro Toledo of Peru Posible, on July 28, 2005. Since 2001, under President Toledo, Peru has pursued an ambitious program to re-establish democracy, following a decade of increasingly authoritarian rule and rampant corruption under the former Fujimori government, and is promoting a market-based economy that will benefit all citizens. Toledo is also devolving more power to the provinces. A weak congressional position and extremely low levels of popularity since 2002 have ensured that Mr Toledo’s position as president has been fragile throughout, and his leadership of government ineffectual at times.

Inflation as measured by the Lima consumer price index has decreased from 7,650% in 1990 to 39.5% in 1993 to 1.79% in the period from January to May 2005, which is lower than the inflation rate for the same period in the previous year (3.18%). Peru’s gross domestic product, or GDP, grew by 4.8% during 2004, compared to 4.0% in 2003. In April 2005, GDP increased by 6.4%, as compared to the GDP in April 2004, which grew 3.4% as compared to the GDP in April 2003. This rise in GDP growth was largely a result of growth in the non-primary sector, mainly the non-primary manufacturing and construction sectors, which increased 9.3% and 10.6%, respectively, between May 2004 and April 2005.

Notwithstanding the progress achieved in restructuring Peru’s political institutions and revitalizing the economy, there can be no assurance that President Toledo’s government, or any successor government, can sustain the progress achieved. In addition, it is possible that Toledo’s support could be eroded as a result of certain effects of current programs. For example, privatizations may result in layoffs due to the reduction in the work force of privatized companies. As in the case of all foreign investments, our investments in Peru could in the future be adversely affected by increases in taxes or by political, economic or diplomatic developments.

Our business and the tourism industry may be subject to terrorism and other threats

Peru experienced significant terrorist activity in the 1980s and early 1990s, during which period anti-government groups escalated their acts of violence against the government, the private sector and Peruvian residents. The Company’s operations have not been directly affected by the terrorist activity.

There has been substantial progress in suppressing terrorist activity since 1990, in part as a result of the arrest of the leaders and approximately 2,000 members of the two principal terrorist groups. Notwithstanding the success achieved during Fujimori’s regime, Peru during President Toledo’s rule has been swamped with a wave of social protests coupled with an increase in domestic guerilla terrorism activities. In June 2003, President Toledo was forced to declare a state of emergency to handle these issues. There can be no assurance that the progress achieved in combating terrorist activity can be sustained.

Currency fluctuations may have a negative impact on our results of operations

Our income in Peru is denominated in Nuevos Soles, and substantially all of our income from casino and gaming operation will be received or realized in Nuevos Soles. However, we will be required to compute and distribute our income in U.S. dollars, and the computation of income will be made on the date of our receipt at the currency exchange rate in effect on that date. Accordingly, changes in the value of the Nuevo Sol against the U.S. dollar will result in corresponding changes in the U.S. dollar value of our assets denominated in Nuevos Soles and will change the U.S. dollar value of income and gains derived in Nuevos Soles. It is possible that the value of the Nuevo Sol could fall relative to the U.S. dollar between receipt of income and our distributions or date of accounting. In addition, assuming new proceeds are raised from future offerings, if the value of the Nuevo Sol falls relative to the U.S. dollar between the time we incurs expenses in U.S. dollars (i.e., contracting for capital improvements or purchase of equipment) and the time expenses are paid, the amount of Nuevos Soles required to be converted into U.S. dollars in order to pay expenses will be greater than the equivalent amount in Nuevos Soles of such expenses at the time they were incurred.

In September 1991, the Nuevo Sol replaced the inti as the official currency of Peru. In February 1985, the inti had replaced the original Sol. Between 1978 and 1985, the Sol was gradually devalued through a crawling-peg system of mini-devaluations. Multiple exchange rates were utilized in the late 1980s in an attempt to favor manufacturing exports but were abandoned in 1990 in favor of a single-rate system.

The following table shows the nuevo sol/U.S. dollar exchange rate for the dates and periods indicated.

Exchange Rates (S/. per US$)
	Exchange Rates ⁽¹⁾ (S/. per US$)

	End or period		Average

	3	.44	3	.45
2001
2002	3	.51	3	.52
2003	3	.46	3	.48
2004	3	.29	3	.41
2005
January	3	.26	3	.27 ⁽²⁾
February	3	.26	3	.26(2)
March	3	.26	3	.26 ⁽²⁾
April	3	.26	3	.26 ⁽²⁾
May	3	.26	3	.26 ⁽²⁾

_________________

(1)

Official rates offered by banks.

(2)

Average from the first day of the month indicated to the end of the month indicated.

Source: Peru Central Bank.

The Central Bank of Peru has a history of adopting a policy of non-intervention in the exchange rate market, however, Since 2003, the Central Bank has conducted regular interventions in the foreign exchange market in order to reduce volatility in the value of Peru's currency against the U.S. dollar and to meet the demand for Nuevo Soles caused by pension funds and commercial banks restructuring their portfolio to include more assets denominated in Nuevo Soles as compared to foreign currency. The reduced volatility has enabled the Central Bank to increase its international reserves.

Peru has been subject to high levels of inflation in the past

Peru historically has experienced very substantial, and in some periods extremely high and variable, rates of inflation. Annual inflation, as measured by consumer price index ("CPI), averaged 29.2% during the 1970s, accelerated in the 1980s and reached 7,500% in 1990. The economic and monetary program that the government implemented during the early 1990s achieved a drastic reduction in inflation. CPI during 2003 demonstrated relative stability, with an average inflation rate of 2.3%, as compared to 0.2% for 2002 and 2.0% for 2001. This record has served to foster confidence in the stability of the Peruvian currency.

The consumer price index, or CPI, increased 3.5% during 2004. This rise in prices reflected supply shocks, including significant increases in the international prices of petroleum, wheat and soya oil as well as in the prices of some domestic foodstuffs such as rice and sugar, caused by the drought in the northern coast of Peru and restrictions of imports; these factors together account for 2.5 percentage points of annual inflation. These factors were partially attenuated by an appreciation of Peru's currency. In the period from January to May 2005, the annual inflation rate was 1.79%, lower than the inflation rate for the same period in the previous year (3.18%).

Inflation and rapid changes in inflation rates have had and may continue to have significant effects both on the Peruvian economy and on the Peruvian securities and foreign exchange markets. There can be no assurance that the government's economic and monetary reform measures will be any more successful than previous programs in reducing inflation in the long term.

Since we operate our primary business in Peru, we may be adversely affected by high inflation levels.

Exchange controls implemented by Peru may affect our ability to exchange Nuevo Sol for U.S. dollars

Prior to 1991, Peru exercised control over the foreign exchange markets by imposing multiple exchange rates and placing restrictions on the possession and use of foreign currencies. In 1991, the Fujimori administration eliminated all foreign exchange controls and the exchange rates were unified. Currently, foreign exchange rates are determined by market conditions, with regular operations by the Central Bank in the foreign exchange market in order to reduce volatility in the value of Peru's currency against the U.S. dollar. There can be no guarantee, however, that limits on our ability to remit profits will not be imposed in the future. Furthermore, if Peru were to reinstitute exchange control and if we were to issue promissory notes to raise or borrow funds, our ability to service debt could be adversely affected. There can be no assurance that the Peruvian government will continue its current policy of permitting currency transfers and conversions without restriction.

Availability of information on our competitors in Peru

Although Peruvian generally accepted accounting, auditing and financial reporting standards and practices are similar in some respects to those employed in the United States, they are not equivalent and differ significantly in certain fundamental areas, most notably the treatment of inflation accounting. Moreover, equity research and public information on businesses and individuals is not as common in Peru as it is in the United States. As a consequence, fewer research reports are available on Peruvian hospitality and gaming operation than on similar U.S. operation.

Enforceability of judgments under Peruvian law may be difficult

Substantially all of our assets are located in Peru and are held by the subsidiaries in Peru. In the event that investors were to obtain a judgment in the United States against us, Kubuk International Inc., Kubuk Investment SAC or Kubuk Gaming SAC and seek to enforce such judgment in Peru, the investor's ability to enforce the judgment in Peru would be subject to Peruvian laws regarding enforcement of foreign judgments. In general, Peruvian law provides that a judgment of a competent court outside of Peru would be recognized and could be enforced against the assets of the debtor in Peru, subject to the following statutory limitations set forth in the Peruvian civil code: (i) the judgment must not resolve matters for which exclusive jurisdiction of Peruvian courts applies (i.e., disputes relating to real estate located in Peru); (ii) the competence of the foreign court which issued the judgment must be recognized by Peruvian conflict of laws rules; (iii) the party against whom the judgment was obtained must have been properly served in connection with the foreign proceedings; (iv) the judgment of the foreign court must be a final judgment, not subject to any further appeal; (v) no pending proceedings may exist in Peru among the same parties and on the same subject; (vi) the judgment by the foreign court cannot be in violation of public policy; and (vii) the foreign court must grant reciprocal treatment to judgments issued by Peruvian courts. Moreover, there can be no assurance that a judgment rendered against us in the United States in a bankruptcy-related action would be enforceable against the assets of our subsidiaries in Peru or that a Peruvian court would not assert jurisdiction in a bankruptcy proceeding.

Risks Related to Securities

New legislation, including the Sarbanes-Oxley Act of 2002, may make it difficult for us to retain or attract officers and directors.

We may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the recent and currently proposed changes in the rules and regulations which govern publicly-held companies. Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the Securities and Exchange Commission

that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles.

While we believe we have adequate internal control over financial reporting, we are required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002. Any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on the price of our shares of common stock.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we expect that beginning with our annual report on Form 10-KSB for the fiscal year ended December 31, 2006, we will be required to furnish a report by management on our internal control over financial reporting. Such report will contain among other matters, an assessment of the effectiveness of our internal control over financial reporting, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by our management. Such report must also contain a statement that our auditors have issued an attestation report on our management's assessment of such internal controls. Public Company Accounting Oversight Board Auditing Standard No. 2 provides the professional standards and related performance guidance for auditors to attest to, and report on, our management's assessment of the effectiveness of internal control over financial reporting under Section 404.

While we believe our internal control over financial reporting is effective, we are still compiling the system and processing documentation and performing the evaluation needed to comply with Section 404, which is both costly and challenging. We cannot be certain that we will be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that such internal control is effective. If we are unable to assert that our internal control over financial reporting is effective as of December 31, 2006 (or if our auditors are unable to attest that our management's report is fairly stated or they are unable to express an opinion on the effectiveness of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on our stock price.

Failure to comply with the new rules may make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage and/or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors, or as executive officers.

You may lose your entire investment in our shares.

An investment in our common stock is highly speculative and may result in the loss of your entire investment. Only investors who are experienced investors in high risk investments and who can afford to lose their entire investment should consider an investment in us.

There is only a limited trading market for our securities.

Our common stock is quoted for trading on the National Association of Securities Dealers over-the-counter bulletin board, and there is currently only a limited trading market for our common stock. There can be no assurance that an active market will develop or be sustained. The lack of an active

public market for our common stock could have a material adverse effect on the price and liquidity of the common shares.

Our officers and directors beneficially own approximately 65.7% of our issued and outstanding common stock, which may limit your ability to influence corporate matters.

As of July 31, 2005, Tom Liu, our Chief Executive Officer, beneficially owned 7,213,439 shares of our common stock (approximately 33.6%); David Liu, Tom Liu's father, beneficially owned 4,823,121 shares of our common stock (approximately 22.4%); Guo Xiu Yan, Tom Liu's mother, owned 1,807,913 shares of common stock (approximately 8.43%); and our other officers and directors, collectively, as a group, beneficially owned 5,405,525 shares of our common stock (approximately 25.19%). These shareholders could control the outcome of any corporate transaction or other matter submitted to our shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and also could prevent or cause a change in control. The interests of these shareholders may conflict with the interests of our other shareholders.

Third parties may be discouraged from making a tender offer or bid to acquire us because of this concentration of ownership.

Broker-dealers may be discouraged from effecting transactions in our common shares because they are considered a penny stock and are subject to the penny stock rules.

Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a "penny stock." Subject to certain exceptions, a penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. Our shares are considered penny stock. The additional sales practice and disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.

A broker-dealer selling penny stock to anyone other than an established customer or "accredited investor," generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the United States Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.

Trading on the OTC Bulletin Board may be sporadic because it is not a stock exchange, and stockholders may have difficulty reselling their shares.

Our common stock is quoted on the OTC Bulletin Board. Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with the company's operations or business prospects. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like AMEX.

Accordingly, you may have difficulty reselling any of the stock you purchase.

In the event that your investment in our shares is for the purpose of deriving dividend income or in expectation of an increase in market price of our shares from the declaration and payment of dividends, your investment will be compromised because we do not intend to pay dividends.

We have never paid a dividend to our shareholders, and we intend to retain our cash for the continued development of our business. We do not intend to pay cash dividends on our common stock in the foreseeable future. As a result, your return on investment will be solely determined by your ability to sell your shares in a secondary market.

DESCRIPTION OF PROPERTY

Kubuk Investment SAC owns all of the real property used in the operation of the Bruce Hotel & Casino. The real property consists of two parcels:

300 square meter parcel : Edificio Bolognesi 171 , according to the Public Record in presence of the Notary Public, Oscar Leyton Zarate, dated November 26, 1996, registered in File number 1646871 (Ficha numero 164871, Asiento 1-c) of the Public Buildings Registry of Lima.

900 square meter parcel : Edificio Bolognesi 191 , according to the Public Record in the presence of Notary Public, Fidel D'jalma Torres Zevallos, dated August 7, 1996, registered in File numbers 1119538 to 1119540; 1119553 to 1119563;1119546 to 1119552; 1119882, 1119542, 1119564 to 1119566, 1119595 to 111602, 1119591 to 1119594; 1119543, 1119544 and 1119603 of the Public Buildings Registry of Lima.

The Bruce Hotel & Casino is housed in two buildings: one seven-story building with approximately 1950 square meters and one fourteen-story building with approximately 7,250 square meters that are physically connected and have been configured for use as a hotel, casino and office space. The property also includes a parking garage for 20 cars. There is plenty of off-street parking.

Kubuk owns all of the fixtures, improvements, systems, furniture, gaming machines and gaming tables and the other contents currently used in the business of the Bruce Hotel & Casino.

We do not own any real property for investment purposes.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth information as of August 5, 2005 regarding the ownership of our common stock by:

•

each person who is known by us to own more than 5% of our shares of common stock; and

•

each named executive officer, each director and all of our directors and executive officers as a group.

The number of shares beneficially owned and the percentage of shares beneficially owned are based on 21,450,000 shares of common stock outstanding as of August 5, 2005.

Beneficial ownership is determined in accordance with the rules and regulations of the Securities and Exchange Commission. Shares subject to options that are exercisable within 60 days following July 31, 2005 are deemed to be outstanding and beneficially owned by the optionee for the purpose of computing share and percentage ownership of that optionee but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. Except as indicated in the footnotes to this table, and as affected by applicable community property laws, all persons listed have sole voting and investment power for all shares shown as beneficially owned by them.

Name and Address of Beneficial Owner		Prior to Share Exchange			After giving effect to the Share Exchange
Officers, Directors and Principal Stockholders


Name/Position	Address	Number of Shares ⁽¹⁾⁽²⁾	Percentage of issued and outstanding		Number of Shares ⁽¹⁾		Percentage of issued and outstanding

Officers and Directors

Tom Yu Liu,	16027 Arrow Hwy Suite D	--	--		7213439	⁽⁴⁾⁽⁵⁾	33.62	%
Chairman and Chief	Irwindale, CA 91706
Executive Officer

Gavin Roy, ⁽⁶⁾	595 Howe Street, Suite 206	3,650,000	59.21	%	86,000	(6)	--
Treasurer & Director	Vancouver, B.C, V6C 2T5

Wai Yung Lau,	16027 Arrow Hwy Suite D	--	--		2762826	⁽⁴⁾⁽⁷⁾	12.88	%
Director	Irwindale, CA 91706

Yong Yang	16027 Arrow Hwy Suite D	--	--		240245	⁽⁴⁾⁽⁸⁾	1.12	%
Director	Irwindale, CA 91706

Jack Xu,	16027 Arrow Hwy Suite D	--	--		240245	⁽⁴⁾⁽⁹⁾	1.12	%
Director	Irwindale, CA 91706

Sean Sullivan, ⁽¹⁰⁾	Unit 300, the Graceway	--	--		1,200,000	⁽¹⁰⁾	5.59	%
Director	House, Provindanciale, Turks & Caico British West Indies

David Wong Liu	16027 Arrow Hwy Suite D	--	--		4823121	^(4)(11)	22.49	%
Irwindale, CA 91706

5% Shareholders

Lee Kuen Cheung	16027 Arrow Hwy Suite D	--	--		1561598	^(4)(12)	7.28	%
Irwindale, CA 91706

Guoxiu Yan	16027 Arrow Hwy Suite D	--	--		1807913	^(4)(13)	8.43	%
Irwindale, CA 91706

Officers and Directors as		4,050,000	65.70	%	10,302,510		48.03	%
a Group (6 persons) ⁽⁷⁾

_________________

(1)

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Unless otherwise indicated, the persons named in this table have sole voting and sole investment control with respect to all shares beneficially owned. Figures shown are on a non-diluted basis.

⁽²⁾

Based on 6,164,000 shares of the Registrant’s common stock issued and outstanding immediately prior to the Share Exchange.

⁽³⁾

Based on 21,450,000 shares of the Registrant’s common stock issued and outstanding immediately following the Share Exchange.

⁽⁴⁾

The number of shares and the percentage of issued and outstanding shares held by each of the listed shareholders is subject to adjustment based on the number of shares placed into escrow and subject to cancellation. The Kubuk Shareholders received 0.3749970588 Exchange Shares for each share of Kubuk common stock tendered. The Kubuk Shareholders placed a total of 5,000,000 Exchange Shares into escrow to secure certain obligations by the Registrant and the Principal Shares to raise $5,000,000 at a minimum share price of $1.00 per share. The Kubuk Shareholders placed a total of 2,000,000 Exchange Shares into escrow to satisfy certain obligations to consultants to Kubuk. The Kubuk Shareholders have voting power over these shares pending release from escrow. The shares are to be released to consultants of Kubuk upon the satisfaction of certain conditions or cancelled if the conditions are not satisfied. The Principal Shareholders of Kubuk, Tom Liu and David Liu, contributed a total of 1,250,000 Exchange Shares into escrow for the purposes of exercising certain co-sale rights granted by the Registrant to the Shareholder Principals.

⁽⁵⁾

Includes 3,372,186 shares of common stock held in escrow pursuant to escrow arrangements entered into in connection with our acquisition of Kubuk International Inc.

⁽⁶⁾

⁽⁷⁾

Includes 1,004,664 shares of common stock held in escrow pursuant to escrow arrangements entered into in connection with our acquisition of Kubuk International Inc.

⁽⁸⁾

Includes 87,362 shares of common stock held in escrow pursuant to escrow arrangements entered into in connection with our acquisition of Kubuk International Inc.

⁽⁹⁾

Includes 87,362 shares of common stock held in escrow pursuant to escrow arrangements entered into in connection with our acquisition of Kubuk International Inc.

⁽¹⁰⁾

Mr. Sullivan served as a consultant to Kubuk International Inc. prior to the Share Exchange and has the right to acquire up to 1,200,000 shares of common stock from escrow upon the satisfaction of certain conditions, including the successful completion of a financing transaction to raise $5,000,000. As of July 31, 2005, the conditions have not been satisfied.

⁽¹¹⁾

Includes 2,254,744 shares of common stock held in escrow pursuant to escrow arrangements entered into in connection with our acquisition of Kubuk International Inc.

⁽¹²⁾

Includes 567,854 shares of common stock held in escrow pursuant to escrow arrangements entered into in connection with our acquisition of Kubuk International Inc.

⁽¹³⁾

Includes 657,423 shares of common stock held in escrow pursuant to escrow arrangements entered into in connection with our acquisition of Kubuk International Inc.

⁽¹⁴⁾

Includes shares of common stock held in escrow pursuant to escrow arrangements entered into in connection with our acquisition of Kubuk International Inc. and excludes 1,200,000 shares, which may be released from escrow to Mr. Sullivan under the Consulting Agreement.

We have no knowledge of any arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in our control.

We are not, to the best of our knowledge, directly or indirectly owned or controlled by another corporation or foreign government.

DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

Directors and Executive Officers

The Registrant’s directors hold office until the next annual meeting of the stockholders and the election and qualification of their successors. Officers are elected annually by the Board of Directors and serve at the direction of the Board.

The following table and information that follows sets forth the names, ages and positions of the directors and officers of the Registrant:

Name and Municipality of Residence	Current Office	Principal Occupation	Director Since	Age
Tom Liu	Director, Chief	Chief Executive Officer of the	August 3, 2005	25
	Executive Officer and Chief Financial Office	corporation; General Manager for Kubuk Investment S.A.C. and Kubuk Gaming S.A.C.
Gavin Roy	Director	Principal of Magellan Management Limited	May 10, 2005	39
Wai Yung Lau	Director	Chief Financial Officer of Bruce Group	August 3, 2005	42
		International, Hong Kong
Jack Xu	Director	Consultant to Kubuk Investment	August 3, 2005	56
Yong Yang	Director	General Manager for Canada Higher	August 3, 2005	43
		Investment Co. Ltd.
Sean Sullivan	Director	Managing Director of TCI Global Limited	August 3, 2005	42

The following is a description of the business background of the directors and executive officers of the Registrant.

Tom Liu

Tom Liu has been with Bruce Grupo Diversion since 1998. Mr. Liu is fluent in four languages, English, Spanish, Cantonese, and Mandarin. He was appointed as the Casino Vault Manager in 1998, and worked closely with the gaming commission in casino’s daily results. By 2000, he was promoted to Casino Floor Manager, where he worked directly with the casino floor operations and assisted in marketing and promotions. Mr. Liu now serves as the General Manager for Kubuk Investment S.A.C. and Kubuk Gaming S.A.C.

Gavin Roy

Mr. Roy has extensive experience in the financial services business. Mr. Roy is currently the principal of Magellan Management Company, a venture capital firm in Vancouver, British Columbia. Prior to forming Magellan Management in 2005, Mr. Roy’s principal occupation during the past five years has been as an

investment advisor with Canaccord Capital Corporation, Octagon Capital Corporation, and Global Securities Corporation. Mr. Roy has been a registrant in Canada with the British Columbia, Alberta, Saskatchewan and Ontario securities commissions. Mr. Roy is the founding shareholder of Chilco River Holdings Inc.

Wai Yung Lau

Wai Yung Lau is presently the Chief Financial Officer of Bruce Grupo Hong Kong Limited and has expertise in financial practices. She was the Chief Financial Officer of WuJin Construction Co., Chengdu, China, a construction company involved in many projects in Chengdu, China, such as the ChengDu Technology Tower and SiChuan Lung Quan Resort. In 2003, Mrs. Lau moved to Hong Kong, and served the Chief Financial Officer of Bruce Group International, Hong Kong. In 2004, Mrs. Lau was employed by ING Insurance Group, where she was an advisor in investments, life insurance and finance.

Yong Yang

Yong Yang received his bachelor degree in finance from the Northwest University of Business in 1989. Soon after graduation, Mr. Yang was appointed General Manager of NanChong Securities Exchange Company. During his term, Mr. Yang helped two state owned companies going public in the Chinese stock exchange. From 1994 to 1999, Mr. Yang joined HuaXia Securities, Chengdu branch, and severed as General Manager. Mr. Yang practiced investment banking and acquisitions of other companies. Mr. Yang then joined the New Light Technology Investment Company as the President of the company. The company engaged in retro-reflecting material development and production, now the company product owns the majority market in SiChuan, China. Mr. Yang immigrated to Canada in July of 2000, and now severs as General Manager for Canada Higher Investment Co. LTD.

Jack Xu

Jack Xu studied in the School of Business of HaErBin, China and received degrees in business administration and finance. From 1982 to 1995, Mr. Xu helped establish SiChuan Investment Bank, and appointed as vice president, during his term, he specialized in bonds, securities, and investment banking. Mr. Xu then severed as President of the SiChuan JiaLin Investment in Hong Kong from 1995 to 2000, where he provided advice on investment banking, stock analysts and mergers and acquisitions. Mr. Xu has been working with Kubuk Investment since 2001.

Sean Sullivan

Mr. Sullivan is presently the Managing Director of TCI Global Investments Ltd., a Turks and Caico Islands company he co-founded in 2004 to provide financing and investment banking services. Mr. Sullivan also co-founded Apollo Development Corp. in 2004 to acquire and develop beachfront property in the Turks and Caicos Islands. He was a Private Client Advisor at Temple Securities, Ltd. from 2001 to 2004, during which he oversaw the management of High Net Worth client accounts. While at Temple, Mr. Sullivan developed several proprietary programs for the financing and funding of various real estate development and business projects. In addition, in 2002, Mr. Sullivan formed Marlin International Venture Capital as the Managing Director to assemble a consortium of investors that acquired a controlling stake in VEM AktienBank, a leading investment Bank located in Munich, Germany.

Committees of the Board of Directors

Our Board of Directors has established four board committees: an Audit Committee, a Compensation Committee and a Corporate Governance and Nominating Committee.

The information below sets out the current members of each of Registrant’s board committees and summarizes the functions of each of the committees in accordance with their mandates.

Audit Committee

We have no standing audit committee. Our Board of Directors performs the function of an audit committee. None of the members of our board of directors satisfies the criteria for an audit committee financial expert under Item 401(e) of Regulation S-B of the rules of the Securities and Exchange Commission. Due to our relatively small size, the relatively small number of financial transactions during the proceeding fiscal year and the fact that we have negative working capital at this time we have been unable to secure the services of an audit committee financial expert. Only Sean Sullivan would be considered independent as defined by American Stock Exchange listing standards.

Our board of directors will meet with our management and our external auditors to review matters affecting financial reporting, the system of internal accounting and financial controls and procedures and the audit procedures and audit plans. Our board of directors will review our significant financial risks, will be involved in the appointment of senior financial executives and will annually review our insurance coverage and any off-balance sheet transactions.

Our board of directors will monitor our audit and the preparation of financial statements and all financial disclosure contained in our SEC filings. Our board of directors will appoint our external auditors, monitor their qualifications and independence and determine the appropriate level of their remuneration. The external auditors report directly to the board of directors. Our board of directors has the authority to terminate our external auditor’s engagement and approve in advance any services to be provided by the external auditors which are not related to the audit.

Compensation

We have no Compensation Committee. Our board of directors is responsible for considering and authorizing terms of employment and compensation of executive officers and providing advice on compensation structures in the various jurisdictions in which we operate. In addition, our board of directors reviews both our overall salary objectives and significant modifications made to employee benefit plans, including those applicable to executive officers, and proposes any awards of stock options.

Corporate Governance and Nominating

We have no Corporate Governance and Nominating Committee due to our small size.

Our board of directors is responsible for developing our approach to corporate governance issues.

Code of Ethics

We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct, to provide full, fair, accurate, timely and understandable disclosure in public reports, to comply with applicable laws, to ensure prompt internal report of code violations, and to provide accountability for adherence to the code.

Corporate Cease Trade Orders and Bankruptcies

Except as disclosed in this prospectus, none of our directors or officers is, or has been within the ten years before the date of this prospectus, a director or officer of any other company that, while such person was acting in that capacity, was the subject of a cease trade or similar order, or an order that denied the company access to any statutory exemptions under applicable securities legislation, for a period of more than 30 consecutive days, or was declared bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangements or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that.

Penalties and Sanctions

None of our directors or officers has been subject to any penalties or sanctions imposed by a court relating to any securities legislation or by any securities regulatory authority or has entered into a settlement agreement with a any securities regulatory authority or been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Personal Bankruptcies

None of our directors or officers has, within the ten years before the date of this report, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangements or compromises with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director of officer.

Conflicts of Interest

To our knowledge, and other than as disclosed in this report, there are no known existing or potential conflicts of interest among us, our promoters, directors and officers, or other members of management, or of any proposed director, officer or other member of management as a result of their outside business interests except that certain of the directors and officers serve as directors and officers of other companies, and therefore it is possible that a conflict may arise between their duties to us and their duties as a director or officer of such other companies.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth compensation paid to each of the individuals who served as our Chief Executive Officer and our other most highly compensated executive officers (the “named executives officers”) for the fiscal years ended December 31, 2004 and 2003. The determination as to which executive officers were most highly compensated was made with reference to the amounts required to be disclosed under the “Salary” and “Bonus” columns in the table.

		Annual Compensation			Long Term Compensation
					Awards		Payouts
Name and Principal Position	Fiscal Year	Salary ($)	Bonus ($)	Other Annual Compensation ($)	Common Shares Under Option/SARs Granted (#)	Restricted Shares or Restricted Share Units ($)	Long-Term Incentive Plan Payouts ($)	All Other Compensation ($)
Tom Liu(1)	2004	$60,000	--	--	--	--	--	--
Chairman & CEO
Brent Krause(2)	2003	$60,000	--	--	--	--	--	--
President	2004	--		--	--	--	--	--
Gavin Roy(3)	2003	--	--	--	--	--	--	--
Treasurer	2004	--	--	--	--	--	--	--

_________________

(1)

Reflects compensation paid to Tom Liu by Kubuk International SAC prior to the acquisition.

(2)

Mr. Krause resigned as our President and as a director on August 3, 2005.

(3)

Mr. Roy was appointed as our secretary and a director on May 10, 2005.

Director and Officer Stock Option/Stock Appreciation Rights (“SARs”) Grants

We have never granted any stock options or stock appreciation rights.

Aggregated Option/SAR Exercises in Last Fiscal Year- and Fiscal Year-End Option/SAR Values

We have never granted any stock options or stock appreciation rights.

Long Term Incentive Plan Awards

No long-term incentive awards have been made by us to date.

Defined Benefit or Actuarial Plan Disclosure

We do not provide retirement benefits for the directors or officers.

Compensation of Directors

We had no arrangements pursuant to which our officers and directors are compensated by us for their services in their capacity as directors or officers, or for committee participation, involvement in special assignments or for services as consultant or experts during the most recently completed financial year.

Our former President, Robert Krause, provided us with management services and office premises. The management services were valued at $500 per month and the office premises were valued at $500 per month. During the year ended December 31, 2004, donated services of $6,000 (2003 — $4,000) and

donated rent expense of $6,000 (2003 — $4,000) were charged to operations. Mr. Krause resigned as our President and director effective on August 3, 2005.

Our officers and directors may be reimbursed for any out-of-pocket expenses incurred by them on our behalf.

Employment Contracts and Termination of Employment and Change-In-Control Arrangements

None

Additional Information with Respect to Compensation Committee Interlocks and Insider Participation in Compensation Decisions

None.

Board Compensation Committee Report on Executive Compensation

The primary objectives of our executive compensation program are to enable us to attract, motivate and retain outstanding individuals and to align their success with that of our shareholders through the achievement of strategic corporate objectives and creation of shareholder value. The level of compensation paid to an individual is based on the individual’s overall experience, responsibility and performance. Our executive compensation program consists of a base salary, performance bonuses and stock options. Our board of directors approves all compensation to our executive officers.

Equity Compensation Plan Information

Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(c)


Equity compensation plans approved by	n/a	n/a	n/a
security holders

Equity compensation plans not approved by	n/a	n/a	n/a
security holder

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Our former President, Robert Krause, provided us with management services and office premises. The management services are valued at $500 per month and the office premises are valued at $500 per month. During the year ended December 31, 2004, donated services of $6,000 (2003 — $4,000) and donated rent expense of $6,000 (2003 — $4,000) were charged to operations.

We acquired all of the issued and outstanding common stock of Kubuk International Inc. in a share exchange transaction. We appointed five new directors to our Board of Directors: Tom Liu, Wai Yung Lau, Nan Zheng Zhang, Yong Yang and Sean Sullivan. After Closing, our Board of Directors consists of six members, the newly appointed board members and Gavin Roy. Tom Liu was appointed as

our Chairman of the Board of Directors and Chief Executive Officer effective immediately upon Closing of the Share Exchange.

DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 100,000,000 shares of common stock, with a par value of $0.001 per share. As at August 3, 2005, there were 21,450,000 shares of our common stock issued and outstanding.

Common Stock

Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy. Holders of our common stock representing 33-1/3% of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors.

The holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available therefor. Upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.

In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash).

Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles that require our management to make estimates and assumptions that affect reported amounts and related disclosures. Management identifies critical accounting estimates as:

•

those that require the use of assumptions about matters that are inherently and highly uncertain at the time the estimates are made;

•

those estimates where, had we chosen different estimates or assumptions, the resulting differences would have had a material impact on our financial condition, changes in financial condition or results of operations; and

•

those estimates that, if they were to change from period to period, likely would result in a material impact on our financial condition, changes in financial condition or results of operations.

Based upon management’s discussion of the development and selection of these critical accounting estimates with our Board of Directors, we believe the following accounting estimates involve a higher degree of judgment and complexity.

Goodwill and Other Intangible Assets

Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”), requires that goodwill and intangible assets with indefinite useful lives be tested for impairment annually or more frequently if an event occurs or circumstances change that may reduce the fair value of the company’s goodwill and intangible assets below its carrying value. For properties with goodwill and/or other intangible assets with indefinite lives, this test requires the comparison of the implied fair value of each property to carrying value. The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions and represent our best estimates of the cash flows expected to result from the use of the assets and their eventual disposition. Changes in estimates or application of alternative assumptions and definitions could produce significantly different results.

Property and Equipment

We capitalize the cost of property and equipment. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. We depreciate property and equipment on a straight-line basis over their estimated useful lives. The estimated useful lives are based on the nature of the assets as well as our current operating strategy. Future events such as property expansions, new competition and new regulations could result in a change in the manner in which we are using certain assets requiring a change in the estimated useful lives of such assets. We evaluate long-lived assets for impairment using Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. In assessing the recoverability of the carrying value of property and equipment, we make assumptions regarding future cash flows and other factors. If these estimates or the related assumptions change in the future, we may be required to record impairment loss for these assets. Such an impairment loss would be recognized as a non-cash component of operating income.

Significant Accounting Policies

Foreign currency transaction

The majority of the transactions of Kubuk International, Inc. and subsidiaries and Bruce Groupo Diversion S.A.C. are denominated in Nuevo sol, with very few transactions denominated in US dollars. For those transactions denominated in Nuevo sol, Bruce Groupo Diversion S.A.C. records sales, costs, income and expenses at the spot exchange rate in effect on the date of transaction. Receivables and payables derived from such transactions are translated to the U.S. dollars, using spot exchange rate at the end of the period on the balance sheet. Translation gains and losses are charged or credited to income during the year and unrealized gains or losses are recorded as other income or loss at the end of the period.

Foreign currency translation

The results of the Peruvian business operations of Kubuk International, Inc. and subsidiaries and Bruce Groupo Diversion S.A.C. are translated to U.S. dollars using the current rate method. Assets and liabilities are translated at the year end at spot exchange rate, revenue and expenses at average exchange rates and equity transactions at historical exchange rates. Exchange differences arising from translation measurements at different balance sheet dates are recorded as a component of other cumulative comprehensive gains or losses.

Comprehensive income

We have adopted the provisions of SFAS No. 130, “ Reporting Comprehensive Income. ” SFAS No. 130 establishes a standard for reporting and displaying comprehensive income and its components within the financial statements. Comprehensive income includes charges and credits to equity that are not the result of transactions with the shareholders. Other cumulative comprehensive income represents foreign currency items associated with the transactions of Bruce Groupo Diversion S.A.C. and the spun-off Peruvian subsidiaries.

Results of Operations

The analysis of results of operations for the interim period of year 2005 for this Form 8-K filing is made solely based on the unaudited 2005 interim consolidated financial statements of Kubuk International, Inc. and subsidiaries, including Kubuk Investment S.A.C., Kubuk Gaming, S.A.C., and a de facto subsidiary Bruce Groupo Diversion, S.A.C, which is not owned by Kubuk International, Inc. but is consolidated because it is controlled by essentially the same equity shareholder group that controls Kubuk International, Inc. as of June 30, 2005. The analysis of years 2004 and 2003 results of operations are based on the audited financial statements of Bruce Groupo Diversion, S.A.C. These 2004 and 2003 financial statements were audited by independent certified public accountants in the Republic of Peru and were expressed in Nuevo Sol (S/.), the Peruvian currency.

All of the financial statements cited in the discussion and analysis of results of operations are prepared in conformity of the generally accepted accounting principles of the Republic of Peru, which in some respects materially differ from the generally accepted accounting principles of the United States of America. The translation of Nuevo Sol amounts to the U.S. Dollar equivalents is solely for the convenience of the readers of the Form 8-K and is not intended as an attempt to convert the bases of presentation of these financial statements from the generally accepted accounting principles of Peru to the generally accepted accounting principles of the United States of America.

Six Month Periods Ending June 30, 2004 and 2005

Because the gambling casino portion of Bruce Hotel & Casino has been closed for renovation since March 2005, total operating revenue in the first six months of year 2005 decreased significantly compared to the same period in the previous year. According to the unaudited consolidated statement of operations of Kubuk Investment, Inc. (which took over the operation of the properties of Bruce Hotel & Casino in May 2005 from Bruce Groupo Diversion, S.A.C.) for the six months ended June 30, 2005, net revenue was in the amount of S/. 8,718410, or $2,680,039, which is derived mainly from rental of hotel rooms and restaurant sales. Net income was in the amount of S/. 3,128,234, or $961,619. As a result of the temporary closure of the casino, financial results of hotel and restaurant businesses appear to have been negatively affected. We will deem the hotel and casino as both are not in full operation and will not focus on any analysis of operation of Bruce Hotel and Casino for the six-month period ending June 30, 2005

relative to the same period from the previous year. Alternatively, we will focus on the comparison of the results of operation of Bruce Hotel and Casino for the year ending December 31, 2004 and for the year ending December 31, 2003.

Fiscal Years Ending December 31, 2004 and 2003

Bruce Groupo Diversion S.A.C. (Bruce Groupo)‘s 2004 net revenue increased by S/.3,324,090, or $1,561,835 over the previous year. The increase represents a 15.79% surge in revenue over year 2003. Year 2004 cost of sales as a percentage of sales is 76.28% and remains consistent with that of the previous year in 2003. Gross profit in 2004 was increased compared to year 2003, accordingly. The increased gross profit in 2004 approximates 15.16% of the net revenue in year 2003.

Selling, general and administrative expenses in year 2004 were largely consistent with the level of expenditures in year 2003. Operating income for year 2004 was higher than operating income for year 2003 by S/. 2,365,455, or by 10.67% of the 2003 operating income.

Provision for income tax for tax year 2004 was substantially higher than income tax provided for tax year 2003, thanks to the increase in tax base caused by increased gambling revenue. Income tax expense for the years ended December 31, 2003 and 2004 were S/. 5,727,868 and S/. 7,526,456, respectively. The increase in year 2004 equals 31.4% of 2003 income tax expense.

Because of higher tax burden, net income after tax of Bruce Groupo for 2004 increased only S/. 226,666 compared to year 2003.

In spite of the improved financial and business operations of Bruce Groupo during year 2004, the company was still recovering from a period of lackluster occupancy rates at the hotel and declining tourist visits at the casino. Prior to year 2003, tourists from the Peoples Republic of China, where gambling is officially banned, could travel to the Republic of Peru freely without visa so long as they held working passports issued by the government of the Peoples Republic of China. The Chinese government changed this policy in 2003 and severely limited the number of Chinese tourists traveling to Peruvian destinations such as Bruce Hotel and Casino. Because Bruce Groupo generally derived more than 70% of its revenue from patrons coming from the Peoples Republic of China, the change of visa requirement had a negative impact on Bruce Groupo’s results of operation and financial position.

Bruce Groupo, as a legal entity, is not a subsidiary of Kubuk International, Inc. The intention of the shareholders of Bruce Groupo is to dissolve this company shortly after Kubuk Investment S.A.C. and Kubuk Gaming S.A.C. assume the business operations of Bruce Hotel and Casino.

Liquidity and Capital Resources

As of date of merger, Bruce Groupo’s capital requirements have been mainly funded by cash flows from operations. Bruce Groupo does not rely on financing from banks or other financial institutions.

Cash Flows from Operating Activities

Cash flows from operating activities provided cash inflow in the amount of S/. 21,846,420 and S/. 16,323,426 during fiscal years ended December 31, 2004 and 2003, respectively. Trends in operating cash flows tend to follow trends in operating income, excluding non-cash charges, since the casino and hotel businesses are primarily cash-based. Cash flow from operations in 2004 increased from 2003 by S/. 5,522,994 due to higher operating income offset by higher tax payments. As part of the down trend in

2003 as a result of declining number of Chinese visitors, cash flow from operations in 2003 decreased from 2002 by S/. 6,488,232.

At December 31, 2004 and 2003, Bruce Groupo held cash and cash equivalents of S/. 3,306,128 and S/. 2,771,476, or $1,007,659 and $800,311, respectively.

Cash generated by the consolidated group of Kubuk International, Inc. and subsidiaries and Bruce Groupo for the six-month period ending June 30, 2005 was S/. 5,371,376, of which S/. 2,295,674 and S/. 1,657,275 were generated from collections of current and past-due accounts receivables. Cash balance, including currencies in Nuevo Sol and US Dollars, of Kubuk International, Inc. and subsidiaries as of June 30, 2005 was S/. 1,782,321, or $547,885.

Cash Flows Used by Investing Activities

Capital expenditures in 2004 were decreased over 2003 due to completion of several expansion projects under which additional land was acquired for building improvement. Cash outflow spent on 2003 capital improvement projects totaled S/. 7,374,440, or $2,129,495.

For the six-month period ending June 30, 2005, Kubuk Investment S.A.C. has incurred S/. 1,258,000 in renovation of casino and acquisition of operating properties.

Cash Flows Used by Financing Activities

Bruce Groupo, as a private company, historically declared and paid dividends. During years 2004 and 2003, S/. 17,335,065 and S/. 8,627,109, or $5,283,470 and $2,491,224 of cash were used to pay dividends, respectively. The cash dividends payments represent 79.35% and 52.85% of total cash flows generated by operating activities in the current years in 2004 and 2003, respectively.

For the six-month period ending June 30, 2005, Bruce Groupo has declared and paid cash dividends to its owners in the amount of S/. 9,017,733. In order to pay for the casino renovation, including acquisition of new gaming machineries, and operating expenses during the renovation period, shareholders of Kubuk Investment S.A.C. and Kubuk Gaming S.A.C. have contributed S/. 2,922,040 and S/. 20,000 of cash to the companies as of June 30, 2005.

On May 21, 2005, essentially all of the hotel and casino business assets, excluding cash, account receivables and liabilities, that were previously owned and operated by Bruce Groupo were transferred to Kubuk Investment S.A.C.

MARKET FOR REGISTRANT’S COMMON EQUITY RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the Over-the-Counter Bulletin Board (OTCBB) of the National Association of Securities Dealers, Inc. under the symbol “CRVH.” Quotation on the OTCBB began March 16, 2005. The market for shares in our common stock is limited because only a small number of our outstanding shares are available for trading in the public market. Our trading price has ranged from $0.05 to $3.25 from March 16, 2005 through August 5, 2005. On August 3, 2005, the last sale price for our common stock on the OTCBB was $2.50. OTCBB quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Number of Record Holders

As of July 31, 2005 there were 18 record holders of our common stock.

Dividends

We have not declared or paid any cash dividend on our common stock.

Submission of Matters to a Vote of Security Holders

We have not submitted any matters to a vote of our shareholders during the year ended December 31, 2004 or during the current year ending December 31, 2005.

LEGAL PROCEEDINGS

Neither we nor any of our property are currently subject to any material legal proceedings or other regulatory proceedings.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees billed for the period from May 8, 2003 (date of incorporation) to December 31, 2003 and for the year ended December 31, 2004 for services rendered by our principal accountant, Manning Elliott, for our audit of annual financial statements and review of financial statements included in our Form 10-QSBs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal periods was:

Year	Fees


2003	Nil

2004	$9,675	*

*	This figure includes estimated audit fees of $3,000.

(2)

Audit-Related Fees

The aggregate fees billed for the period from May 8, 2003 (date of incorporation) to December 31, 2003 and for the year ended December 31, 2004 for assurance and related services by our principal accountant, Manning Elliot, that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:

Year		Fees


2003		Nil

2004		Nil

(3)

Tax Fees

The aggregate fees billed for the period from May 8, 2003 (date of incorporation) to December 31, 2003 and for the year ended December 31, 2004 for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:

Year		Fees


2003		Nil

2004		Nil

(4)

All Other Fees

The aggregate fees billed for the period from May 8, 2003 (date of incorporation) to December 31, 2003 and for the year ended December 31, 2004 for the products and services provided rendered by the principal accountant, other than the services reported in paragraphs (1), (2) and (3) was:

Year		Fees


2003		Nil

2004		Nil

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

The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent year that were attributed to work performed by person other than the principal accountant’s full time, permanent employees was 0%.

RECENT SALES OF UNREGISTERED EQUITY SECURITIES

We did not issue any unregistered equity securities during the year ended December 31, 2005.

Subsequent to December 31, 2004, we issued unregistered equity securities the following transactions:

On May 18, 2005, we issued 50,000 shares of common stock at $0.465 per share in a private transaction not involving a public offering to one non-U.S. person in an off-shore transaction pursuant to an exemption from registration available under Regulation S of the United States Securities Act of 1933, as amended.

On July 11, 2005 at 5:00 p.m. (Eastern Standard Time)(Record Date), we effected a 2 for 1 forward stock split of our issued and outstanding shares of common stock, par value $0.001, by way of share dividend payable upon surrender of certificates pursuant to Section 78.215 of the Nevada General Registrant Law. The share dividend is payable upon surrender of the outstanding share certificates. Shareholders are required to surrender their existing share certificates representing shares of common stock issued before the Record Date by tendering the such share certificates to our transfer agent. Upon surrender of the outstanding share certificates representing the issued and outstanding shares of common stock held by shareholders on the Record Date, our transfer agent will issue new share certificates giving effect to the share dividend so that each one share of common stock of the Registrant issued and outstanding prior to the Record Date shall represent two post-split shares of our common stock. No sale requiring registration under the Securities Act of 1933, as amended, was made in connection with the stock dividend.

On August 3, 2005, the Registrant completed the acquisition of Kubuk International Inc. in accordance with the terms of the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the Registrant acquired all of the outstanding capital stock and other equity interests of Kubuk from the Shareholders by issuing 19,250,000 shares of common stock, $0.001 par value, as consideration on the terms and subject to the conditions set forth in the Share Exchange Agreement. The shares of common stock were issued to Tom Liu, David Liu, Lee Kuen Cheung, Wai Yung Lau, Zheng Liu, Yizhi Zeng, Luisa Wong, Jack Xu, Yong Yang and Guoxiu Yan in a private transaction not involving a public offering pursuant to an exemption from registration available under Section 4(2) of the Securities Act of 1933, as amended.

On August 3, 2005, the Registrant issued 50,000 shares of common stock, $0.001 par value, to one non-U.S. person outside the United States. The shares were issued in satisfaction of certain bridge loans in the principal amount of $100,000 at a price of $2.00 per share. The shares were issued in an off-shore transaction pursuant to an exemption from registration available under Regulation S of the Securities Act of 1933, as amended.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Pursuant to our articles of incorporation and by-laws, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

Regarding indemnification for liabilities arising under the Securities Act of 1933 which may be permitted to directors or officers pursuant to the foregoing provisions, we are 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.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of the Registrant

Under the terms of the Share Exchange Agreement, the Registrant, KUBUK and the Shareholders agreed that the Registrant would satisfy certain debt obligations prior to the closing of the Share Exchange. The Registrant borrowed certain funds from lenders (the “ Lenders ”) pursuant to bridge loans in the amount of $100,000 (the “Bridge Loans ”) to satisfy certain current liabilities due immediately prior to Closing. The Lenders and the Registrant agreed to convert the Bridge Loans into shares of common stock of the Registrant at $2.00 per share.

The Registrant and the Lenders entered into stock subscription agreements under which the Registrant issued 50,000 shares of common stock to the Lender in full satisfaction of the Bridge Loans.

Item 3.02. Unregistered Sales of Equity Securities

Item 5.01. Changes in Control

On August 3, 2005, the Registrant completed the acquisition of Kubuk International Inc. in accordance with the terms of the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the Registrant acquired all of the outstanding capital stock and other equity interests of Kubuk from the Shareholders by issuing 19,250,000 shares of common stock, $0.001 par value, as consideration on the terms and subject to the conditions set forth in the Share Exchange Agreement. See, “Item 1.01 Entry into a Material Definitive Agreement” for a description of the terms of the Share Exchange.

The Registrant issued shares of common stock to the Shareholders of Kubuk as follows:

				Total Exchange Consideration


Name	Total Exchange Consideration ⁽¹⁾	Percent of Issued and Outstanding		Shares Issued at Closing	Shareholder Escrow Shares ⁽²⁾	Rightholder Escrow Shares ⁽³⁾		Financing Escrow Shares ⁽⁴⁾

Tom Yu Liu	7213439	33.69	%	3841253	1873621	749448		749118

David Wong Liu	4823121	22.43	%	2568377	1252759	501104	500882	500882

Lee Kuen Cheung	1561598	7.28	%	993744	405609	162245		0

Wai Yung Lau	2762826	12.88	%	1758162	717617	287047		0

Zheng Liu	240245	1.12	%	152883	62402	24960		0

Yizhi Zeng	120122	0.56	%	76441	31201	12480		0

Luisa Hong Wong	240245	1.12	%	152883	62402	24960		0

Jack Xu	240245	1.12	%	152883	62402	24960		0

Yong Yang	240245	1.12	%	152883	62402	24960		0

Guoxiu Yan	1807913	8.43	%	1150490	469587	187836		0

TOTAL:	192499998	89.74	%	10999999	5000000	1999991		1249996

Based on 21,450,000 shares of the Registrant's common stock issued and outstanding immediately following the Share Exchange. The percentage of issued and outstanding shares held by each of the listed shareholders is subject to adjustment based on the number of shares placed into escrow and subject to cancellation. See "Item 1.01 Entry into a Material Definitive Agreement" for a description of the terms of the Share Exchange and escrow arrangements.

(1)

The Shareholders received 0.3749970588 Exchange Shares for each share of Kubuk common stock tendered.

(2)

The Shareholders placed a total of 5,000,000 Exchange Shares into escrow to secure certain obligations by the Registrant and the Principal Shares to raise $5,000,000 at a minimum share price of $1.00 per share.

(3)

The Shareholders placed a total of 2,000,000 Exchange Shares into escrow to satisfy certain obligations to consultants to Kubuk. The Shareholders have voting power over these shares pending release from escrow. The shares are to be released to consultants of Kubuk upon the satisfaction of certain conditions or cancelled if the conditions are not satisfied.

(4)

The Principal Shareholders contributed a total of 1,250,000 Exchange Shares into escrow for the purposes of exercising certain co-sale rights granted by the Registrant to the Shareholder Principals.

Immediately prior to the closing of the Share Exchange, the Registrant had 2,200,000 shares of common stock issued and outstanding. After closing of the Share Exchange, the Registrant had 21,450,000 shares of common stock issued and outstanding. The Shareholders beneficially owned 89.74% of the issued and outstanding common stock of the Registrant immediately upon closing of the Share Exchange.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

Immediately upon closing of the Share Exchange, Robert Krause resigned as President and director of the Registrant effective August 3, 2005. There was no disagreement between Mr. Krause and the Registrant relating to the Registrant’s operations, policies or practices. The Registrant has provided Mr. Krause with a copy of this disclosure in response to Item 5.02, and the opportunity for Mr. Krause to

furnish the Registrant with a letter stating whether he agrees with the statements made in response to this Item 5.02. The Registrant will furnish a copy of any letter received from Mr. Krause in response to this Item 5.02 disclosure by amendment to this Form 8-K.

Tom Liu was appointed as the Registrant’s Chairman and Chief Executive Officer effective August 3, 2005. Mr. Liu was appointed under the terms of the Share Exchange Agreement.

The Registrant appointed five new directors to its Board of Directors: Tom Liu, Wai Yung Lau, Nan Zheng Zhang, Yong Yang and Sean Sullivan, effective August 3, 2005. The new directors were appointed under the terms of the Share Exchange Agreement. Effective August 3, 2005, the officers and directors of the Registrant are as follows:

Name	Current Office	Principal Occupation	Director Since	Age
Tom Liu	Director, Chief	Chief Executive Officer of the	August 3, 2005	25
	Executive Officer and Chief Financial Office	corporation; General Manager for Kubuk Investment S.A.C. and Kubuk Gaming S.A.C.
Gavin Roy	Director	Principal of Magellan Management Limited	May 10, 2005	39
Wai Yung Lau	Director	Chief Financial Officer of Bruce Group	August 3, 2005	42
		International, Hong Kong
Jack Xu	Director	Consultant to Kubuk Investment	August 3, 2005	56
Yong Yang	Director	General Manager for Canada Higher	August 3, 2005	43
		Investment Co. Ltd.
Sean Sullivan	Director	Managing Director of TCI Global Limited	August 3, 2005	42

The following is a description of the business background of the directors and executive officers of the Registrant.

Tom Liu

Gavin Roy

Securities Corporation. Mr. Roy has been a registrant in Canada with the British Columbia, Alberta, Saskatchewan and Ontario securities commissions. Mr. Roy is the founding shareholder of Chilco River Holdings Inc.

Wai Yung Lau

Wai Yung Lau is presently the Chief Financial Officer of Bruce Grupo Limited, Hong Kong. Ms. Lau has expertise in financial practices. She was the Chief Financial Officer of WuJin Construction Co., Chengdu, China, a construction company involved in many projects in Chengdu, China, such as the ChengDu Technology Tower and SiChuan Lung Quan Resort. In 2003, Mrs. Lau moved to Hong Kong, and served the Chief Financial Officer of Bruce Group International, Hong Kong. In 2004, Mrs. Lau was employed by ING Insurance Group, where she was an advisor in investments, life insurance and finance.

Yong Yang

Jack Xu

Sean Sullivan

There are no family relationships among the directors and executive officers, except set forth below. Wai Yung Lau is Tom Liu’s aunt.

There are no formal employment agreements entered with any officer or director.

Each of the newly appointed directors were appointed under the term of the Share Exchange Agreement. Tom Liu is President and was a principal shareholder of Kubuk International Inc. Tom Liu, Wai Yung Lau, Jack Xu and Yong Yan were shareholders of Kubuk International Inc. Sean Sullivan is a consultant to Kubuk International Inc.

Item 8.01. Other Events

Item 9.01. Financial Statements and Exhibits

Financial Statements of the Business Acquired

It is impractical to provide the required financial statements for Kubuk International Inc. at the date of the filing of this Form 8-K. The required financial statements will be provided as soon as practicable but not later than seventy-one days after the date on which this Form 8-K must be filed.

Pro Forma Financial Information

It is impractical to provide the required pro forma financial information at the date of the filing of this Form 8-K. The required pro forma financial information will be provided as soon as practicable but not later than seventy-one days after the date on which this Form 8-K must be filed.

Exhibits

Exhibit Number		Description
99.1		Share Exchange Agreement dated July 15, 2005
99.2		Escrow Agreement dated August 3, 2005
99.3		Contribution Agreement dated July 26, 2005
99.4		Stock Purchase Agreement dated July 26, 2005
99.5		Gaming License
99.6		Slot Machine License
99.7		Hotel License
99.8		Appraisal
99.9		Interim Financial Statements for the six month period ended June 30, 2005 of Kubuk International, Inc.
99.10		Financial Statements for the years ended December 31, 2004 and 2003 for Bruce Grupo Diversion S.A.C.

SIGNATURES

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

CHILCO RIVER HOLDINGS INC.
(Registrant)

By:   /s/ Tom Liu
       Tom Liu
       Chief Executive Officer and Chief Financial Officer

Dated: August 8, 2005

EXHIBIT 99.1

SHARE EXCHANGE AGREEMENT

among

Tom Liu, David Liu, Lee Kuen Cheung, Wai Yung Lau, Zheng Liu, Yizhi
Zeng, Luisa Wong, Jack Xu, Yong Yang and Guoxiu Yan

and

KUBUK International, Inc.,
a California corporation

and

Chilco River Holdings Inc.,
a Nevada corporation

made as of

July 15, 2005


I. Definitions		2

II. Purchase of Shares and Closing		8
2.1 Share Exchange		8
2.2 Exchange Consideration		8
2.3 Exchange Share Escrows		8
2.4 The Closing		9
2.5 Shareholders Representative		13
2.6 Chilco Common Stock		14
2.7 Further Assurances		14
2.8 Tax-Free Reorganization		15
III. Representations and Warranties of Shareholders		15
3.1 Title to Shares		15
3.2 Incorporation; Power and Authority		15
3.3 Valid and Binding Agreement		15
3.4 No Breach; Consents		15
3.5 Brokerage		16
3.6 Investment		16

IV. Representations and Warranties Regarding the Company		16
4.1 Incorporation; Power and Authority		16
4.2 Valid and Binding Agreement		17
4.3 No Breach; Consents		17
4.4 Capitalization		17
4.5 Subsidiaries		18
4.6 Financial Statements		18
4.7 Absence of Undisclosed Liabilities		19
4.8 Books and Records		19
4.9 Absence of Certain Developments		19
4.10 Property		21
4.11 Accounts Receivable		22
4.12 Inventory		22
4.13 Tax Matters		23
4.14 Intellectual Property Rights		24
4.15 Material Contracts		25
4.16 Litigation		27
4.17 Insurance		27
4.18 Compliance with Laws; Governmental Authorizations		27
4.19 Environmental Matters		28
4.20 Employees		30
4.21 Employee Benefits		30
4.22 Affiliate Transactions		31
4.23 Brokerage		31
4.24 Availability of Documents		31
4.25 Solvency		31



4.26 Disclosure		32
V. Representations and Warranties of Chilco		32
5.1 Incorporation; Power and Authority		32
5.3 Valid and Binding Agreement		33
5.4 No Breach; Consents		33
5.5 Brokerage		33
5.6 Investment Intent		33
5.7 Chilco Common Stock		33
5.8 SEC Filings; Financial Statements		33
5.9 Certain Tax Matters		34
5.10 Undisclosed Liabilities		34
5.11 Interim Changes		34

VI. Agreements of Shareholders and Chilco		36
6.1 Company Conduct of the Business		36
6.2 Company Notice of Developments		37
6.3 Company Audited Financial Statements		37
6.4 Shareholder Post-Closing Access		37
6.5 Shareholder Litigation Support		37
6.6 Shareholder Release of Claims		38
6.7 Chilco Listing		38
6.8 Chilco Employee Matters		38
6.9 Chilco Tax Matters		38

VII. Conditions to Closing		38
7.1 Conditions to Chilco’s Obligations		38
7.2 Conditions to Shareholders#146; Obligations		39

VIII. Post Closing Covenants and Escrow Releases		40
8.1 Financing Transaction		40
8.2 Subsequent Financing		40
8.3 Escrow Release for Below Minimum Price Offering		40
8.4 Co-Sale of Shareholder Principal Securities		42
8.5 Escrow Release to Rightholders		42

IX. Indemnification		43
9.1 Indemnification by Shareholder Principals		43
9.2 Indemnification by Chilco Principals		44
9.3 Indemnification in Case of Strict Liability or
Indemnitee Negligence		45

X. General		46
10.1 Press Releases and Announcements		46
10.2 Expenses		46
10.3 Amendment and Waiver		46
10.4 Notices		47
10.5 Assignment		48
10.6 No Third-Party Beneficiaries		48
10.7 Severability		48
10.8 Complete Agreement		48

iii


10.9 Schedules		49
10.10 Signatures; Counterparts		49
10.11 Governing Law		49
10.12 pecific Performance		49
10.13 Jurisdiction		50
10.14 Waiver of Jury Trial		50
10.15 Construction		50
10.16 Time of Essence		51

Signatures

Exhibit A — Form of Escrow Agreement
Exhibit B — Allocation of Exchange Consideration among Shareholders and Rightholder Escrow Distributions
Exhibit C — Form of Opinion of Counsel for Shareholders
Exhibit D — Form of Opinion of Peruvian Counsel for the Company
Exhibit E — Form of FIRPTA Certificate

SHARE EXCHANGE AGREEMENT

This SHARE EXCHANGE AGREEMENT ( this “ Agreement ”) among Chilco River Holdings Inc., a Nevada corporation (“ Chilco ”); KUBUK International, Inc., a California corporation (the “ Company ”); Tom Liu, David Liu, Lee Kuen Cheung, Wai Yung Lau, Zheng Liu, Yizhi Zeng, Luisa Wong, Jack Xu, Yong Yang and Guoxiu Yan (“ Shareholders ”); and Tom Liu as Shareholders Representative (“ Shareholders Representative ”) is made as of July 15, 2005.

Recitals

WHEREAS , the Shareholders own all of the outstanding capital stock of the Company;

WHEREAS , the Company has the right to own and operate, through two wholly owned subsidiaries, the Hotel Cinco Estrellas in Lima, Peru (the “ Bruce Hotel and Casino ”), and on the Closing Date will own all right, title and interest in all property, real, personal or mixed, tangible and intangible, of every kind and description, that relate to, have been developed for use in connection with, arise from the conduct of, are used or held for use in connection with or are necessary for the conduct of the business as conducted or proposed to be conducted in connection with the Bruce Hotel and Casino (the “ Business ”);

WHEREAS , the Shareholders desire to transfer, and Chilco desires to acquire or cause one or more of its affiliates to acquire, all of the outstanding capital stock and other equity interests of the Company, including the Consultant Rights, and to otherwise retire all other outstanding equity interests of the Company by issuing 19,250,000 shares of Chilco Common Stock as consideration on the terms and subject to the conditions set forth in this Agreement;

WHEREAS , Chilco intends to secure financing in the amount of US$5,000,000 in one or more transactions to close as soon as practicable after the Closing Date on terms acceptable to Chilco and the Shareholders (the “Financing Transaction ”), and to raise an additional US$20,000,000;

WHEREAS , one or more shareholders of Chilco (the “ Contributing Shareholders ”) will agree, prior to Closing, to contribute shares of Chilco’s common stock to Chilco as an additional capital contribution (the “Capital Contribution Shares ”), and Chilco has agreed to accept such Capital Contribution Shares as an additional capital contribution and to cause the Capital Contribution Shares to be cancelled so that there will be 2,200,000 shares of Chilco Common Stock issued and outstanding immediately prior to Closing and without giving effect to the Financing Transaction;

WHEREAS , Nefilim Associates, LLC, a Massachusetts limited liability company, T Morgan LLC, a Delaware limited liability company, and Sean Sullivan (the “ Rightholders ”) hold certain rights to receive capital stock of the Company or an entity acquired by the Company (collectively, the “ Consultant Rights ”) upon satisfaction of certain conditions under the terms of Consulting Agreements dated May 9, 2005 with respect to Sean Sullivan, May 19, 2005 with

respect to Nefilim Associates, LLC and June 1, 2005 with respect to T Morgan LLC (collectively, the “ Consultant Agreements ”);

WHEREAS , all other outstanding equity interests of the Company will be canceled or redeemed immediately prior to the Closing Date; and

WHEREAS , Chilco and Shareholders desire that (i) Chilco’s acquisition of all of the outstanding capital stock of the Company, solely in exchange for voting stock of Chilco, is intended to represent a reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and (ii) this Agreement is intended to represent a “plan of reorganization” with respect to such reorganization;

NOW, THEREFORE , in consideration of the mutual representations, warranties and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

I. Definitions

Certain terms not defined in this Article I are defined in Article II.

“ Admitted Claim ” has the meaning set forth in Section 9.1(b).

“ Affiliate ” has the meaning set forth in Rule 12b-2 under the Exchange Act.

“ Agreement ” has the meaning set forth in the first paragraph of this Agreement.

“ Ancillary Agreements ” means the Escrow Agreement in the form of Exhibit A, and any other agreement that the Parties may mutually agree are necessary or desirable in connection with the Closing.

“ Annual Financial Statements ” has the meaning set forth in Section 4.6.

“ Bruce Grupo Appraisal ” has the meaning set forth in Section 2.4(c)(i)(P).

“ Bruce Grupo Financial Statements ” has the meaning set forth in Section 2.4(c)(i)(O).

“ Capital Contribution Shares ” has the meaning set forth in the recitals of this Agreement.

“ Capital Lease ” means a lease on which the Company is a lessee that is a capital lease as determined in accordance with GAAP.

“ Chilco ” has the meaning set forth in the first paragraph of this Agreement.

“ Chilco Claim ” has the meaning set forth in Section 9.1(b).

“ Chilco Common Stock ” means shares of common stock, par value $0.001 per share, of Chilco.

“ Chilco Losses ” has the meaning set forth in Section 9.1(a).

“ Chilco Material Adverse Effect ” means any change, effect, event or condition, individually or in the aggregate, that has had, or, with the passage of time, could have, a material adverse effect on the business, assets, properties, condition (financial or otherwise), results of operations, prospects or customer, supplier or employee relationships of Chilco, taken as a whole.

“ Chilco Principals ” means Gavin Roy and Robert Krause.

“ Chilco SEC Reports ” has the meaning set forth in Section 5.8(a).

“Consulting Agreements” has the meaning set forth in the recitals of this Agreement.

“Consultant Rights” has the meaning set forth in the recitals of this Agreement.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Company ” has the meaning set forth in the recitals of this Agreement.

“ Consent ” means any authorization, consent, approval, filing, waiver, exemption or other action by or notice to any Person.

“ Contract ” means a contract, agreement, lease, commitment or binding understanding, whether oral or written, that is in effect as of the date of this Agreement or any time after the date of this Agreement.

“ Disclosure Schedule ” means the schedule delivered by Shareholders to Chilco on or prior to the date of this Agreement.

“ Encumbrance ” means any charge, claim, community property interest, easement, covenant, condition, equitable interest, lien, option, pledge, security interest, right of first refusal or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“ Financing Transaction ” has the meaning set forth in the recitals of this Agreement.

“ GAAP ” means United States generally accepted accounting principles, as in effect from time to time.

“ Governmental Authorization ” means any approval, consent, license, permit, waiver, registration or other authorization issued, granted, given, made available or otherwise required by any Governmental Entity or pursuant to Law.

“ Governmental Entity ” means any federal, state, local, foreign, international or multinational entity or authority exercising executive, legislative, judicial, regulatory, administrative or taxing functions of or pertaining to government.

“ Governmental Order ” means any judgment, injunction, writ, order, ruling, award or decree by any Governmental Entity or arbitrator.

“ Insider ” means (i) a shareholder, officer, director or employee of the Company or any Subsidiary, (ii) any Member of the Immediate Family of any shareholder, officer, director or employee of the Company or any Subsidiary or (iii) any entity in which any of the Persons described in clause (i) or (ii) owns any beneficial interest (other than less than one percent of the outstanding shares of capital stock of any corporation whose stock is listed on a national securities exchange or publicly traded on The NASDAQ National Market).

“ Intellectual Property Rights ” means (i) rights in patents, patent applications and patentable subject matter, whether or not the subject of an application, (ii) rights in trademarks, service marks, trade names, trade dress and other designators of origin, registered or unregistered, (iii) rights in copyrightable subject matter or protectable designs, registered or unregistered, (iv) trade secrets, (v) rights in internet domain names, uniform resource locators and e-mail addresses, (vi) rights in semiconductor topographies (mask works), registered or unregistered, (vii) know-how and (viii) all other intellectual and industrial property rights of every kind and nature and however designated, whether arising by operation of Law, Contract, license or otherwise.

“ IRS ” means the United States Internal Revenue Service.

“ Knowledge of any Shareholder ” means the knowledge of any Shareholder or any director or officer of the Company or any knowledge that would have been acquired by any such Person upon appropriate reasonable inquiry and investigation.

“ Last Fiscal Year End ” has the meaning set forth in Section 4.6.

“ Latest Balance Sheet ” has the meaning set forth in Section 4.6.

“ Latest Balance Sheet Date ” has the meaning set forth in Section 4.6.

“ Latest Financial Statements ” has the meaning set forth in Section 4.6.

“ Law ” means any constitution, law, ordinance, principle of common law, regulation, statute or treaty of any Governmental Entity.

“ Liability ” means any liability or obligation whether accrued, absolute, contingent, unliquidated or otherwise, whether due or to become due, whether known or unknown, and regardless of when asserted.

“ Licensed-In Intellectual Property Rights ” means Third-Party Intellectual Property Rights used or held for use by the Company or any Subsidiary with the permission of the owner.

“ Litigation ” means any claim, action, arbitration, mediation, audit, hearing, investigation, proceeding, litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity or arbitrator or mediator.

“ Loss ” means any Litigation, Governmental Order, complaint, claim, demand, damage, deficiency, penalty, fine, cost, amount paid in settlement, liability, obligation, Tax, Encumbrance, loss, expense or fee, including court costs and attorneys’ fees and expenses.

“ Material Adverse Effect ” means any change, effect, event or condition, individually or in the aggregate, that has had, or, with the passage of time, could have, a material adverse effect on the business, assets, properties, condition (financial or otherwise), results of operations, prospects or customer, supplier or employee relationships of the Company and its Subsidiaries, taken as a whole.

“ Material Contracts ” has the meaning set forth in Section 4.15(a).

“ Member of the Immediate Family ” of a Person means a spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law, and brother- or sister-in-law of such Person.

“ Off-the-Shelf Software ” means Software that is widely commercially available for a price of less than $1,000 for any number of users or less than $1,000 per seat, PC, CPU or user.

“ Ordinary Course of Business ” means the ordinary course of business of the Company and the Subsidiaries consistent with past custom and practice (including with respect to quantity and frequency) as it has been conducted since the Last Fiscal Year End.

“ Organizational Documents ” means (i) the articles or certificate of incorporation and the bylaws of a corporation, (ii) the partnership agreement and any statement of partnership of a general partnership, (iii) the limited partnership agreement and the certificate of limited partnership of a limited partnership, (iv) the limited liability company agreement and articles or certificate of formation of a limited liability company, (v) any charter or similar document adopted or filed in connection with the creation, formation or organization of a Person and (vi) any amendment to any of the foregoing.

“ Owned Intellectual Property Rights ” means Intellectual Property Rights owned by the Company or any Subsidiary.

“ Owned Real Property ” has the meaning set forth in Section 4.10(b).

“ Permitted Encumbrances ” means (i) Encumbrances for Taxes and other governmental charges and assessments (except assessments for public improvements levied, pending or deferred against the Owned Real Property) that are not yet due and payable or which are being contested in good faith by appropriate proceedings (provided required payments have been made in connection with any such contest), (ii) Encumbrances of carriers, warehousemen, mechanics’ and materialmen and other like Encumbrances arising in the Ordinary Course of Business (provided lien statements have not been filed as of the Closing Date), (iii) easements, rights of way and restrictions, zoning ordinances and other similar Encumbrances affecting the Real

Property and which do not unreasonably restrict the use thereof or Chilco’s proposed use thereof in the Ordinary Course of Business, (iv) statutory Encumbrances in favor of lessors arising in connection with any leased property leased to the Company or any Subsidiary, (v) Encumbrances reflected in the Latest Financial Statements or arising under Material Contracts and (vi) Encumbrances that will be removed prior to or in connection with the Closing.

“ Person ” means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, Governmental Entity or other entity.

“ Plan ” means every plan, fund, contract, program and arrangement (whether written or not) for the benefit of present or former employees, including those intended to provide (i) medical, surgical, health care, hospitalization, dental, vision, workers’ compensation, life insurance, death, disability, legal services, severance, sickness or accident benefits, (ii) pension, profit sharing, stock bonus, retirement, supplemental retirement or deferred compensation benefits or (iii) salary continuation, unemployment, supplemental unemployment, severance, termination pay, change-in-control, vacation or holiday benefits.

“ Property ” has the meaning set forth in Section 4.19(a)(iv).

“ Registered Intellectual Property Rights ” means Intellectual Property Rights that are the subject of a pending application or an issued patent, trademark, copyright, design right or other similar registration formalizing exclusive rights.

“ Remedies Exception , ” when used with respect to any Person, means except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

“ Return ” means any return, declaration, report, estimate, information return and statement pertaining to any Taxes.

“ Rightholders ” has the meaning set forth in the recitals of this Agreement.

“ SEC ” means the United States Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

“ Shareholders ” has the meaning set forth in the first paragraph of this Agreement.

“ Shareholders Losses ” has the meaning set forth in Section 9.2(a).

“ Shareholder Principals ” means Tom Liu and David Liu.

“ Shareholders Representative ” has the meaning set forth in the first paragraph of this Agreement.

“ Software ” means computer programs or data in computerized form, whether in object code, source code or other form.

“ Subsidiary ” means any Person in which any ownership interest is owned, directly or indirectly, by another Person. When used without reference to a particular entity, Subsidiary means a Subsidiary of the Company.

“ Tax Affiliate ” means each of the Company and the Subsidiaries and any other Person that is or was a member of an affiliated, combined or unitary group of which the Company or any Subsidiary is or was a member.

“ Taxes ” means all taxes, charges, fees, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, social security, unemployment, excise, estimated, severance, stamp, occupation, property or other taxes, customs duties, fees, assessments or charges of any kind whatsoever, including all interest and penalties thereon, and additions to tax or additional amounts imposed by any Governmental Entity upon the Company or any Tax Affiliate.

“ Third-Party Environmental Claim ” has the meaning set forth in Section 4.19(a)(vii).

“ Third-Party Intellectual Property Rights ” means Intellectual Property Rights in which a Person other than the Company or a Subsidiary has any ownership interest.

“ Treasury Regulations ” means the rules and regulations under the Code.

The following terms not defined above are defined in the sections of Article II indicated below:

Term	Defined

Closing	2	.4(a)
Closing Date	2	.4(a)
Company Common Stock	2	.1
Escrow Agent	2	.3
Escrow Agreement	2	.3
Escrow Fund	2	.3
Financing Escrow Fund	2	.3
Financing Escrow Shares	2	.3
Exchange Consideration	2	.2
Shares	2	.1
Rightholder Escrow Fund	2	.3
Rightholder Escrow Shares	2	.3
Shareholder Escrow Fund	2	.3
Shareholder Escrow Shares	2	.3

II. Purchase of Shares and Closing

2.1 Share Exchange . At the Closing and on the terms and subject to the conditions set forth in this Agreement, Shareholders agree to transfer to Chilco, and Chilco agrees to acquire all of the issued and outstanding shares (the “ Shares ”) of common stock of the Company (“ Company Common Stock ”) from the Shareholders. Each Shareholder waives any co-sale rights, rights of first refusal or similar rights that such Shareholder may have relating to Chilco’s transfer of the Shares, whether conferred by the Company’s Organizational Documents, by Contract or otherwise.

2.2 Exchange Consideration .

(a) The aggregate consideration (the “ Exchange Consideration ”) issued in exchange for the Shares is 19,250,000 shares of Chilco Common Stock (the “ Exchange Shares ”).

(b) The Shareholders shall exchange 51,000,400 Shares for 19,250,000 Exchange Shares. Each Share shall be exchanged for 0.3749970588 Exchange Shares. No fractional shares shall be issued. Each Shareholder shall exchange his, her or its Shares for the number of Exchange Shares listed under the heading “Total Exchange Shares” opposite such Shareholder’s name on Schedule 2.2 , subject to adjustment under Section 8.3 of this Agreement.

2.3 Exchange Share Escrows .

(a) Five Million (5,000,000) shares of Chilco Common Stock (the “ Shareholder Escrow Shares ”) will be withheld from the Exchange Shares and deposited by Chilco with Wasserman, Comden, Casselman & Pearson, LLP, as escrow agent (the “ Escrow Agent ”), to be held in escrow (the “ Shareholder Escrow Fund ”) pursuant to the terms of the Escrow Agreement, in the form attached as Exhibit A (the “ Escrow Agreement ”), among the Company, Chilco, Shareholders Representative, on behalf of Shareholders, and the Shareholder Principals, and the Escrow Agent. The Escrow Agent shall hold for the benefit of each Shareholder the number of Shareholder Escrow Shares listed under the heading “Shareholder Escrow Shares” opposite such Shareholder’s name on Schedule 2.2 of Exhibit B . The Escrow Shares will be held by the Escrow Agent for payment pursuant to Section 8.3 of this Agreement.

(b) One Million Two Hundred Fifty Thousand (1,250,000) shares of Chilco Common Stock (the “Financing Escrow Shares ”) will be withheld from the Exchange Shares issuable to the Shareholder Principals and deposited by Chilco with the Escrow Agent, to be held in escrow (the “ Financing Escrow Fund ”) pursuant to the terms of the Escrow Agreement. The Escrow Agent shall hold for the benefit of each Shareholder Principal the number of Financing Escrow Shares listed under the heading “Financing Escrow Shares” opposite such Shareholder’s name on Schedule 2.2 of Exhibit B . The Escrow Shares will be held by the Escrow Agent for payment pursuant to Section 8.4 of this Agreement.

(c) Two Million (2,000,000) shares of Chilco Common Stock (the “ Rightholder Escrow Shares ”) will be withheld from the Exchange Shares issuable to the Shareholders in the amounts set forth on Schedule 2.2 of Exhibit B and deposited by Chilco with the Escrow Agent, will be deposited by Chilco with the Escrow Agent, to be held in escrow (the “ Rightholder

Escrow Fund ”) pursuant to the terms of the Escrow Agreement. The Escrow Agent shall hold for the benefit of the Parties and release the Rightholder Escrow Shares to the Rightholders in the number of Rightholder Escrow Shares listed under the heading “Rightholder Escrow Shares” opposite such Rightholder’s name on Schedule 2.3(c) of Exhibit B pursuant to and in satisfaction of the conditions set forth in Section 8.5 of this Agreement or to Chilco if such conditions are not satisfied.

2.4 The Closing .

(a) The closing of the transactions contemplated by this Agreement (the “ Closing ”) will take place at the offices of Dorsey & Whitney LLP at 1420 Fifth Avenue, Suite 3400, Seattle, Washington 98101, at 9:00 a.m. (Seattle time) as soon as reasonably possible following satisfaction of the conditions set forth in Article VII (the “ Closing Date ”), but no later than July 31, 2005, or at such other place and on such other date as may be mutually agreed by Chilco and Shareholders Representative, in which case Closing Date means the date so agreed. The Closing will be effective as of the close of business on the Closing Date.

(b) Immediately prior to the Closing, the Company and the Shareholders will cause all outstanding options to purchase capital stock of the Company (“ Company Options ”) to be canceled and all outstanding warrants to purchase capital stock of the Company (“ Company Warrants ”) to be redeemed.

(i) Shareholders and the Company, as applicable, will deliver to Chilco:

(A) certificates representing all of the Shares, free and clear of all Encumbrances, duly endorsed or accompanied by duly executed stock powers;

(B) a certificate of an appropriate officer of the Company dated the Closing Date in a form satisfactory to Chilco, certifying that (a) no Litigation is pending or threatened (i) challenging or seeking to prevent or delay consummation of any of the transactions contemplated by this Agreement, (ii) asserting the illegality of or seeking to render unenforceable any material provision of this Agreement or any of the Ancillary Agreements, (iii) seeking to prohibit direct or indirect ownership, combination or operation by Chilco of any portion of the business or assets of the Company or any Subsidiary, or to compel Chilco or any of its Subsidiaries or the Company or any Subsidiary to dispose of, or to hold separately, or to make any change in any portion of the business or assets of Chilco or its Subsidiaries or of the Company or its Subsidiaries, as a result of the transactions contemplated by this Agreement, or incur any burden, (iv) seeking to require direct or indirect transfer or sale by Chilco of, or to impose material limitations on the ability of Chilco to exercise full rights of ownership of, any of the Shares or (v) imposing or seeking to impose material damages or sanctions directly arising out of the transactions contemplated by this Agreement on Chilco or the Company or any of their respective officers or directors; (b) the Company’s representations and warranties are true, accurate and correct as of the

Closing Date, (c) the Company has complied with and performed the agreements contained in this Agreement, and (d) all conditions to Closing of the Company have been satisfied;

(C) a certificate of the Shareholders Representative dated the Closing Date in a form satisfactory to Chilco, certifying that the Shareholders’ representations and warranties are true, accurate and correct as of the Closing Date, (c) the Shareholders have complied with and performed the agreements contained in this Agreement, and (d) all conditions to Closing of the Shareholders have been satisfied;

(D) a Disclosure Schedule, prepared as though this Agreement has been dated as of the Closing Date, a good faith draft of which will have been submitted to Chilco no later than three (3) business days prior to the Closing Date;

(E) the text of the resolutions adopted by the board of directors (or similar body) of any Shareholder that is not a natural Person and the Company authorizing the execution, delivery and performance of this Agreement, certified by an appropriate officer of such Shareholder;

(F) the minute books, stock or equity records, corporate seal and other materials related to the corporate administration of the Company or any Subsidiary;

(G) each Ancillary Agreement, including the Escrow Agreement, fully executed and completed to which any of the Shareholder Representative, Shareholder and/or the Company is a party, duly executed by each Shareholder;

(H) all Required Consents duly executed by all appropriate parties;

(I) any other instruments of transfer reasonably requested by Chilco, duly executed by the Shareholders and/or the Rightholders;

(J) a closing balance sheet as of the Closing Date and evidence of payment or cancellation of all long-term indebtedness of the Company and all Subsidiaries;

(K) executed copies of all agreements, instruments, certificates and other documents necessary or appropriate, in the opinion of Chilco’s counsel, to release any and all Encumbrances against the assets of the Company or any Subsidiary, other than Permitted Encumbrances;

(L) evidence that Chilco will have each Governmental Authorization required to operate the Business;

(M) the Company’s Latest Balance Sheet and the Latest Financial Statements and the Company’s unaudited financial statements for the years ended December 31, 2003 and 2004;

(N) audited financial statements of Bruce Grupo Diversion S.A.C. for the years ended December 31, 2003 and 2004, prepared in accordance with Peruvian generally accepted accounting principles (the “ Bruce Grupo Financial Statements ”);

(O) Appraisal Report for Property located at Jirón Francisco Bolognesi Number 191-171, District of Miraflores, Province and Department of Lima dated June 1, 2004 (the “ Bruce Grupo Appraisal ” );

(P) Chilco will have received from counsel for Shareholders and the Company a written opinion, dated the Closing Date, addressed to Chilco and satisfactory to Chilco’s counsel, in the form set forth in Exhibit C ;

(Q) Chilco will have received from reputable Peruvian counsel for Shareholders and the Company a written opinion addressed to Chilco and satisfactory to Chilco’s counsel, opining as to the matters set forth in Exhibit D as they relate to Peruvian law and advising that the Company and its direct subsidiaries have all necessary power, authority, licenses and permits necessary to own, lease and operate the Business as conducted and proposed to be conducted;

(R) evidence that the Company has received releases of all Encumbrances on the Real Property, other than Permitted Encumbrances, including releases of each mortgage of record and reconveyances of each deed of trust with respect to each parcel of real property included in the Real Property;

(S) certificates dated as of a date not earlier than the third business day prior to the Closing as to the good standing of the Company executed by the appropriate officials of the State of California and each jurisdiction in which the Company is licensed or qualified to do business as a foreign corporation as specified in Schedule 4.1 ;

(T) Those key employees of the Company identified on Schedule 2.4(c)(i)(U) , or substitutes therefor who shall be acceptable to Chilco, in its sole discretion, shall have accepted employment with Chilco with such employment to commence on and as of the Closing Date;

(U) a FIRPTA certificate in the form of Exhibit E , duly executed by the Shareholders for purposes of satisfying Chilco’s obligations under Treasury Regulations Section 1.1445-2; and

(V) such other certificates, documents and instruments that Chilco reasonably requests for the purpose of (1) evidencing the accuracy of Shareholders’ representations and warranties, (2) evidencing the performance and compliance by Shareholders with the agreements contained in this Agreement, or (3) otherwise facilitating the consummation of the transactions contemplated by this Agreement.

All actions to be taken by the Shareholders or the Company in connection with consummation of the transactions contemplated by this Agreement and all certificates, opinions, instruments and other documents required to effect the transactions contemplated by this Agreement will be in form and substance satisfactory to Chilco and Chilco’s counsel.

(ii) Chilco will deliver to Shareholders:

(A) certificates representing (1) the Exchange Shares less the Shareholder Escrow Shares and the Financing Escrow Shares, as applicable, in the name of each Shareholder as set forth under the heading “Shares Issued at Closing” on Schedule 2.2 of Exhibit B ; (2) certificates representing the Shareholder Escrow Shares to be deposited in Escrow (allocated among Shareholders as set forth under the heading “Financing Escrow Shares” on Schedule 2.2 of Exhibit B ); (3) certificates representing the Rightholder Escrow Shares to be deposited in Escrow (allocated among Shareholders as set forth under the heading “Rightholder Escrow Shares” on Schedule 2.2 of Exhibit B ); and (4) certificates representing the Financing Escrow Shares to be deposited in the Escrow (allocated between the Shareholder Principals as set forth under the heading “Financing Escrow Shares” on Schedule 2.2 of Exhibit B ). No fraction of a share of Chilco Common Stock will be issued at Closing, but in lieu thereof, fractional Shares (after aggregating all fractional shares of Chilco Common Stock to be received by such holder) will be rounded down to the nearest whole Exchange Share;

(B) a certificate of an appropriate officer of Chilco dated the Closing Date in a form satisfactory to the Company certifying that (a) no Litigation is pending or threatened challenging or seeking to prevent or delay consummation of any of the transactions contemplated by this Agreement; (b) Chilco’s representations and warranties are true, accurate and correct as of the Closing Date, (c) Chilco has complied with and performed the agreements contained in this Agreement, and (d) all conditions to Closing of Chilco have been satisfied;

(C) the text of the resolutions adopted by the board of directors of Chilco authorizing the execution, delivery and performance of this Agreement including the issuance of Chilco Common Stock, certified by an appropriate officer of Chilco;

(D) the Escrow Agreement, duly executed by Chilco, the Shareholder Representative and the Escrow Agent; and

(E) evidence that the Contributing Shareholders have tendered for cancellation the Capital Contribution Shares and that there will be 2,200,000 shares of Chilco Common Stock issued and outstanding immediately prior to Closing, without giving effect to the Financing Transaction.

(d) All items delivered by the parties at the Closing will be deemed to have been delivered simultaneously, and no items will be deemed delivered or waived until all have been delivered.

(e) Notwithstanding any investigation made by or on behalf of any of the parties to this Agreement or the results of any such investigation and notwithstanding the fact of, or the participation of such party in, the Closing, the representations, warranties and agreements in this Agreement will survive the Closing.

2.5 Shareholders Representative .

(a) Shareholders appoint Tom Liu (or any Person appointed as a successor Shareholders Representative pursuant to Section 2.5(b)) as their representative and agent under this Agreement and the Escrow Agreement.

(b) Until all obligations under this Agreement have been discharged (including all indemnification obligations under Article X), the Shareholders (as a single group voting based on the total number of Exchange Shares issuable under this Agreement) who, immediately prior to the Closing, are entitled to receive more than 50% of the Exchange Consideration, may, from time to time upon written notice to Shareholders Representative and Chilco, remove Shareholders Representative or appoint a new Shareholders Representative upon the death, incapacity, resignation or removal of Shareholders Representative. If, after the death, incapacity, resignation or removal of Shareholders Representative, a successor Shareholders Representative has not been appointed by the Shareholders within 15 business days after a request by Chilco, Chilco will have the right to appoint a Shareholders Representative to fill any vacancy so created by written notice of such appointment to Shareholders.

(c) Shareholders authorize Shareholders Representative to take any action and to make and deliver any certificate, notice, consent or instrument required or permitted to be made or delivered under this Agreement or under the documents referred to in this Agreement, to waive any requirements of this Agreement or to enter into one or more amendments or supplements to this Agreement that Shareholders Representative determines in Shareholders Representative’s sole and absolute discretion to be necessary, appropriate or advisable, which authority includes the execution and delivery of the Escrow Agreement on behalf of Shareholders and any amendments or supplements thereto and the performance of all obligations thereunder, including authority to collect and pay funds and dispute, settle, compromise and make all claims. The authority of Shareholders Representative includes the right to hire or retain, at the sole expense of Shareholders, such counsel, investment bankers, accountants, representatives and other professional advisors as Shareholders Representative determines in Shareholders Representative sole and absolute discretion to be necessary, appropriate or advisable in order to perform this Agreement and the Escrow Agreement. Any party will have the right to rely upon any action taken by Shareholders Representative, and to act in accordance with such action without independent investigation.

(d) Chilco will have no liability to any Shareholder or otherwise arising out of the acts or omissions of Shareholders Representative or any disputes among Shareholders or with Shareholders Representative. Chilco may rely entirely on its dealings with, and notices to and

from, Shareholders Representative to satisfy any obligations it might have under this Agreement, the Escrow Agreement or any other agreement referred to in this Agreement or otherwise to Shareholders.

(e) Shareholders Representative accepts the appointment made by this Section 2.5(e) and agrees to abide by the provisions of this Section 2.5(e).

2.6 Chilco Common Stock . Each certificate representing the Exchange Shares will be imprinted with a legend substantially in the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF A CURRENT AND EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT WITH RESPECT TO SUCH SHARES, OR AN OPINION SATISFACTORY TO THE ISSUER AND ITS COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT .

Each holder desiring to transfer Exchange Shares first must furnish Chilco with (i) a written opinion reasonably satisfactory to Chilco in form and substance from counsel reasonably satisfactory to Chilco by reason of experience to the effect that the holder may transfer such Chilco Common Stock as desired without registration under the Securities Act and (ii) a written undertaking executed by the desired transferee reasonably satisfactory to Chilco in form and substance agreeing to be bound by the restrictions on transfer contained herein.

2.7 Further Assurances . On and after the Closing Date, Shareholders will take all appropriate action and execute any documents, instruments or conveyances of any kind that may be reasonably requested by Chilco to carry out any of the provisions of this Agreement. Effective upon the Closing, Shareholders appoint Chilco, in its name, place and stead, to take all actions and to do such things as may be necessary or appropriate to carry out any of the provisions of this Agreement.

2.8 Tax-Free Reorganization .

The acquisition contemplated by this Agreement is intended to be a reorganization within the meaning of Section 368(a)(1)(B) of the Code and this Agreement is intended to be a “plan of reorganization” within the meaning of the Regulations promulgated under Section 368 of the Code. Each party to this Agreement agrees to treat this acquisition as a reorganization within the meaning of Section 368(a)(1)(B) of the Code and agrees to treat this Agreement as a “plan of reorganization” within the meaning of the Tax Regulations under Section 368 of the Code, unless and until there is a determination, within the meaning of Section 1313 of the Code, that such treatment is not correct.

III. Representations and Warranties of Shareholders

Each Shareholder, jointly and severally, represents and warrants to Chilco that, except as described in the Disclosure Schedule, as of the date of this Agreement and as of the Closing Date

(as though made then and as though the Closing Date were substituted for the date of this Agreement) as to each Shareholder:

3.1 Title to Shares . Such Shareholder owns, of record and beneficially, the number of Shares listed under the heading “Number of Kubuk Shares” opposite such Shareholder’s name on Schedule 3.1 , free and clear of any Encumbrance. At Closing, Chilco will obtain good and valid title to such Shares, of record and beneficially, free and clear of any Encumbrance other than an Encumbrance created by Chilco.

3.2 Incorporation; Power and Authority . If such Shareholder is not a natural Person, it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Such Shareholder has all necessary power and authority to execute, deliver and perform this Agreement and the Ancillary Agreements to which it will become a party.

3.3 Valid and Binding Agreement . If such Shareholder is not a natural Person, the execution, delivery and performance of this Agreement and the Ancillary Agreements to which it will become a party by such Shareholder has been duly and validly authorized by all necessary corporate or equivalent action. This Agreement has been duly executed and delivered by such Shareholder and constitutes the valid and binding obligation of such Shareholder, enforceable against it in accordance with its terms, subject to the Remedies Exception. Each Ancillary Agreement to which such Shareholder will become a party, when executed and delivered by or on behalf of such Shareholder will constitute the valid and binding obligation of such Shareholder enforceable against such Shareholder in accordance with its terms, subject to the Remedies Exception.

3.4 No Breach; Consents . The execution, delivery and performance of this Agreement and the Ancillary Agreements to which the Shareholders will become a party by such Shareholder will not (a) contravene any provision of the Organizational Documents, if any, of such Shareholder; (b) violate or conflict with any Law, Governmental Order or Governmental Authorization; (c) conflict with, result in any breach of any of the provisions of, constitute a default (or any event that would, with the passage of time or the giving of notice or both, constitute a default) under, result in a violation of, increase the burdens under, result in the termination, amendment, suspension, modification, abandonment or acceleration of payment (or any right to terminate) or require a Consent under any Contract or Governmental Authorization that is either binding upon or enforceable against such Shareholder or any Governmental Authorization that is held by the Company; (d) result in the creation of any Encumbrance upon the Shares held by such Shareholder; or (e) require any Governmental Authorization.

3.5 Brokerage . No Person will be entitled to receive any brokerage commission, finder’s fee, fee for financial advisory services or similar compensation in connection with the transactions contemplated by this Agreement based on any Contract made by or on behalf of such Shareholder for which Chilco or the Company is or could become liable or obligated.

3.6 Investment . Each Shareholder (a) understands that the shares of Chilco Common Stock have not been, and will not be, registered under the Securities Act or under any state securities laws, are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering and will contain a legend restricting transfer; (b) is

acquiring the shares of Chilco Common Stock solely for its own account for investment purposes, and not with a view to the distribution thereof; (c) is a sophisticated investor with knowledge and experience in business and financial matters; (d) has received certain information concerning Chilco and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the shares of Chilco Common Stock; (e) is able to bear the economic risk and lack of liquidity inherent in holding Chilco Common Stock; and (f) is an “ Accredited Investor ” as that term is defined under Rule 501 of the Securities Act.

IV. Representations and Warranties Regarding the Company

Shareholder Principals, jointly and severally, represent and warrant to Chilco that, except as described in the Disclosure Schedule, as of the date of this Agreement (except as otherwise provided) and as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement):

4.1 Incorporation; Power and Authority .

(a) Each of the Company and the Subsidiaries is a legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and has all necessary power and authority necessary to own, lease and operate its assets and to carry on its business as conducted and proposed to be conducted. Each of the Company and the Subsidiaries is duly qualified to do business as a foreign corporation in each jurisdiction in which the nature of its business or its ownership of property requires it to be so qualified. Schedule 4.1 lists, for each of the Company and the Subsidiaries, the jurisdiction of its organization, its form as a legal entity and each jurisdiction in which it is so qualified. The Company has all necessary power and authority to execute, deliver and perform this Agreement and the Ancillary Agreements to which it will become a party. Each of the Company and the Subsidiaries is in full compliance with all provisions of its Organizational Documents.

(b) As of the Closing Date, the Company, directly or indirectly, owns and operates the Bruce Hotel and Casino, and owns all right, title and interest in all property, real, personal or mixed, tangible and intangible, of every kind and description, that relate to, have been developed for use in connection with, arise from the conduct of, are used or held for use in connection with or are necessary for the conduct of the business as conducted or proposed to be conducted in connection with the Bruce Hotel and Casino. As of the Closing Date, the Company, directly or indirectly, owns all right, title and interest in all property described in the Bruce Grupo Appraisal.

4.2 Valid and Binding Agreement . The execution, delivery and performance of this Agreement and the Ancillary Agreements to which it will become a party by the Company have been duly and validly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms, subject to the Remedies Exception.

4.3 No Breach; Consents . The execution, delivery and performance of this Agreement and the Ancillary Agreements to which the Company will become a party will not (a) contravene

any provision of the Organizational Documents of the Company or any Subsidiary; (b) violate or conflict with any Law, Governmental Order or Governmental Authorization; (c) conflict with, result in any breach of any of the provisions of, constitute a default (or any event that would, with the passage of time or the giving of notice or both, constitute a default) under, result in a violation of, increase the burdens under, result in the termination, amendment, suspension, modification, abandonment or acceleration of payment (or any right to terminate) or require a Consent under any Contract that is either binding upon or enforceable against the Company or any Subsidiary or any Governmental Authorization that is held by the Company or any Subsidiary; (d) result in the creation of any Encumbrance upon the Company or any Subsidiary or any of the assets of the Company or any Subsidiary; or (e) require any Governmental Authorization.

4.4 Capitalization . The authorized capital stock of the Company consists solely of 100,000,000 shares of Company Common Stock, of which 51,000,400 shares are issued and outstanding, none of which are held in treasury. Schedule 4.4 lists the names and addresses of each record holder of the issued and outstanding Company Common Stock, the number of shares held by each such holder and the share certificate numbers, repurchase or redemption rights for such shares in favor of the Company, the vesting schedule and forfeiture provisions for any of such shares that are “restricted stock,” and the extent to which vesting will or may be accelerated by the transactions contemplated by this Agreement and any limitations on the ability of the holder of such capital stock to vote or dispose of such shares. All issued and outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid and nonassessable, free of preemptive rights or any other third party rights and in certificated form, and have been offered, sold and issued by the Company in compliance with applicable securities and corporate Laws, Contracts applicable to the Company and the Company’s Organizational Documents and in compliance with any preemptive rights, rights of first refusal or similar rights. The rights and privileges of the Company Common Stock are set forth in the Company’s Organizational Documents or otherwise provided by Law. There is no option, warrant, call, subscription, convertible security, right (including preemptive right) or Contracts of any character to which the Company is a party or by which it is bound obligating the Company to issue, exchange, transfer, sell, repurchase, redeem or otherwise acquire any shares of capital stock of the Company or obligating the Company to grant, extend, accelerate the vesting of or enter into any such option, warrant, call, subscription, convertible security, right or Contract. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Company. Except as contemplated by this Agreement, there are no registration rights agreements, no voting trust, proxy or other Contract and no restrictions on transfer with respect to any capital stock of the Company.

4.5 Subsidiaries . Except as listed on Schedule 4.5 , neither the Company nor any Subsidiary owns any Subsidiary. For each of the Company’s Subsidiaries, Schedule 4.5 shows the equity interests owned by the Company or any Subsidiary, the names of the Persons owning such equity interests and the percentage of the outstanding equity interests so owned, in each case as of the Closing Date. All issued and outstanding equity interests of each Subsidiary of the Company are duly authorized, validly issued, fully paid and nonassessable, free of preemptive rights or any other third party right, free and clear of all Encumbrances, and in certificated form and have been offered, sold and issued by such Subsidiary in compliance with applicable securities and corporate Laws, Contracts applicable to such Subsidiary and such Subsidiary’s

Organizational Documents and in compliance with any preemptive rights, rights of first refusal or similar rights. There is no option, warrant, call, subscription, convertible security, right (including preemptive rights) or Contract of any character to which the Company or any Subsidiary is a party or by which it is bound obligating any Subsidiary of the Company or the Company to issue, exchange, transfer, sell, repurchase, redeem or otherwise acquire any equity interest of such Subsidiary or obligating the Company or such Subsidiary to grant, extend, accelerate the vesting of or enter into any such option, warrant, call, subscription, convertible security, right or Contract.

4.6 Financial Statements .

(a) The unaudited consolidated balance sheet as of June 30, 2005 (“ Latest Balance Sheet Date ”) of the Company and its consolidated Subsidiaries (the “ Latest Balance Sheet ”) and the unaudited consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its consolidated Subsidiaries for the six-month period then ended (such statements and the Latest Balance Sheet, the “ Latest Financial Statements ”) are based upon the books and records of the Company and the Subsidiaries, have been prepared in accordance with generally accepted accounting principles in the United States consistently applied during the periods indicated and present fairly the financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries on a consolidated basis at the dates and for the periods indicated, except that the Latest Financial Statements may not contain all notes and are subject to year-end adjustments, none of which are material.

(b) The Company and the Subsidiaries are the successors to Bruce Grupo Diversion S.A.C. for accounting purposes. The Bruce Grupo Financial Statements contain an accurate consolidated balance sheet as of December 31, 2004 (the “ Last Fiscal Year End ”) and accurate consolidated statements of income, changes in shareholders’ equity and cash flows for the years ended December 31, 2004 and 2003 (collectively with the notes thereto, the “ Annual Financial Statements ”). The Bruce Grupo Financial Statements are based upon the books and records of Bruce Grupo Diversion S.A.C., have been prepared in accordance with Peruvian generally accepted accounting principles consistently applied during the periods indicated and present fairly the financial position, results of operations and cash flows of Bruce Grupo Diversion S.A.C. on a consolidated basis at the dates and for the periods indicated.

4.7 Absence of Undisclosed Liabilities . Except as reflected or expressly reserved against in the Latest Balance Sheet, neither the Company nor any Subsidiary has any material Liability, contingent or otherwise, except (a) a Liability that has arisen after the date of the Latest Balance Sheet in the Ordinary Course of Business or (b) obligations under any Contract listed on a Schedule to this Agreement or under a Contract not required to be listed on such a Schedule.

4.8 Books and Records . The books of account of the Company and the Subsidiaries are complete and correct. Each transaction is properly and accurately recorded on the books and records of the Company or a Subsidiary, and each document upon which entries in the Company’s or a Subsidiary’s books and records are based is complete and accurate in all respects. The minute books and stock or equity records of each of the Company and the Subsidiaries, all of which have been made available to Chilco, are complete and correct. The minute books of each of the Company and the Subsidiaries contain accurate records of all

meetings held and actions taken by the holders of stock or equity interests, the boards of directors and committees of the boards of directors or other governing body of each of the Company and the Subsidiaries, and no meeting of any such holders, boards of directors or other governing body or committees has been held for which minutes are not contained in such minute books. At the Closing, all such books and records will be in the possession of the Company.

4.9 Absence of Certain Developments . Since the Last Fiscal Year End, there has not been any Material Adverse Effect and:

(a) neither the Company nor any Subsidiary has sold, leased, licensed, transferred or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business;

(b) neither the Company nor any Subsidiary has entered into any Contract (or series of related Contracts) outside the Ordinary Course of Business;

(c) no party (including the Company or any Subsidiary) has accelerated, suspended, terminated, modified or canceled any Contract to which the Company or any Subsidiary is a party or by which any of them is bound that would have been a Material Contract at the time of any such action;

(d) no Encumbrance has been imposed on any assets of the Company or any Subsidiary except Permitted Encumbrances;

(e) neither the Company nor any Subsidiary has made any capital expenditure (or series of related capital expenditures) outside the Ordinary Course of Business;

(f) neither the Company nor any Subsidiary has made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans and acquisitions) either involving more than $25,000 or outside the Ordinary Course of Business or acquired (by merger, exchange, consolidation, acquisition of stock or assets or otherwise) any Person;

(g) neither the Company nor any Subsidiary has issued any note, bond or other debt security or created, incurred, assumed or guaranteed any indebtedness for borrowed money (including advances on existing credit facilities) or Capital Lease either involving more than $10,000 individually or $50,000;

(h) neither the Company nor any Subsidiary has delayed, postponed or accelerated the payment of accounts payable or other Liability or the receipt of any accounts receivable, in each case outside the Ordinary Course of Business;

(i) neither the Company nor any Subsidiary has canceled, compromised, waived or released any right or claim (or series of related rights or claims) outside the Ordinary Course of Business;

(j) except incidental to the sale of products or services, neither the Company nor any Subsidiary has granted any license or sublicense of any rights under or with respect to any Intellectual Property Rights;

(k) there has been no change made or authorized in the Organizational Documents of the Company or any Subsidiary;

(l) neither the Company nor any Subsidiary has issued, sold or otherwise disposed of any of its capital stock or equity interests, or granted any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital stock;

(m) neither the Company nor any Subsidiary has declared, set aside or paid any dividend or made any distribution with respect to its capital stock or equity interests (whether in cash or in kind) or redeemed, purchased or otherwise acquired any of its capital stock or split, combined or reclassified any outstanding shares of its capital stock;

(n) neither the Company nor any Subsidiary has experienced any damage, destruction or loss (whether or not covered by insurance) to its property;

(o) neither the Company nor any Subsidiary has entered into any employment or collective bargaining agreement, written or oral, or modified the terms of any such existing agreement;

(p) neither the Company nor any Subsidiary has granted any increase in the base compensation or made any other change in employment terms of any of its directors, officers or employees outside the Ordinary Course of Business;

(q) neither the Company nor any Subsidiary has adopted, amended, modified or terminated any Plan (or taken any such action with respect to any Plan);

(r) neither the Company nor any Subsidiary has discharged or satisfied any Encumbrance or paid any liability, in each case with a value in excess of $25,000 individually or $100,000 in the aggregate, other than current liabilities paid in the Ordinary Course of Business;

(s) neither the Company nor any Subsidiary has disclosed to any Person other than Chilco and authorized representatives of Chilco any proprietary confidential information, other than pursuant to a confidentiality agreement prohibiting the use or further disclosure of such information, which agreement is listed on Schedule 4.9 and is in full force and effect;

(t) neither the Company nor any Subsidiary has made any change in accounting principles or practices from those utilized in the preparation of the Annual Financial Statements; and

(u) neither the Company nor any Subsidiary has committed to take any of the actions described in this Section 4.9.

4.10 Property .

(a) As of the Closing Date, the real properties owned by the Company or any Subsidiary or demised by the leases listed on Schedule 4.10 constitute all of the real property owned, leased (whether or not occupied and including any leases assigned or leased premises sublet for which the Company remains liable), used or occupied by the Company or any Subsidiary.

(b) As of the Closing Date, the Company or a Subsidiary owns good and marketable title to each parcel of real property identified on Schedule 4.10 as being owned by the Company or a Subsidiary (the “ Owned Real Property ”), free and clear of all Encumbrances, except for Encumbrances listed on Schedule 4.10 .

(c) The zoning for each parcel of Real Property permits the existing improvements and the continuation of the business being conducted thereon as a conforming use. Neither the Company nor any Subsidiary is in violation of any applicable zoning ordinance or other Law relating to the Real Property, and neither the Company nor any Subsidiary has received any notice of any such violation or the existence of any condemnation or other proceeding with respect to any of the Real Property.

(d) As of the Closing Date, each of the Company and the Subsidiaries has good and marketable title to, or a valid leasehold interest in, the buildings, machinery, equipment and other tangible assets and properties used by it, located on its premises or shown in the Latest Balance Sheet or acquired after the date thereof, free and clear of all Encumbrances, except for Encumbrances listed on Schedule 4.10 and properties and assets disposed of in the Ordinary Course of Business since the date of the Latest Balance Sheet.

(e) As of the Closing Date, the buildings, improvements, building systems, machinery, equipment and other tangible assets and properties used in the conduct of the business of each of the Company and the Subsidiaries are in good condition and repair, ordinary wear and tear excepted, and are usable in the Ordinary Course of Business. As of the Closing Date, each of the Company and the Subsidiaries owns, or leases under valid leases, all buildings, machinery, equipment and other tangible assets and properties necessary for the conduct of its respective business as conducted and as proposed to be conducted.

(f) The fixed asset listing attached as Schedule 4.10(f) includes all buildings, machinery, equipment and other tangible assets and properties of the Company and its Subsidiaries as of the Closing Date.

(g) As of the Closing Date, the Company owns or leases all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate the Company’s business in the manner operated by the Company.

4.11 Accounts Receivable . All notes and accounts receivable of each of the Company and the Subsidiaries are reflected properly on their books of account, are valid, have arisen from bona fide transactions in the Ordinary Course of Business, are subject to no setoff or counterclaim, and are current and collectible. Such notes and accounts receivable will be collected in accordance with their terms (none of which is beyond 60 days) at their recorded

amounts, subject only to the reserve for bad debts on the face of the Latest Balance Sheet as adjusted in the Company’s books of account for the passage of time through the Closing Date in the Ordinary Course of Business.

4.12 Inventory . The inventory of raw materials, work in process, supplies and finished goods of each of the Company and the Subsidiaries consists of items of a quality and quantity usable and, with respect to finished goods only, salable at normal profit levels, in each case, in the Ordinary Course of Business. The inventory of finished goods is not slow-moving (as determined in accordance with past practices), obsolete, damaged or defective, subject only to any reserve for inventory on the face of the Latest Balance Sheet as adjusted in the Company’s books of account for the passage of time through the Closing Date in the Ordinary Course of Business and is merchantable and fit for its particular use. Each of the Company and the Subsidiaries has on hand or has ordered and expects timely delivery of such quantities of raw materials and supplies and has on hand such quantities of work in process and finished goods as are reasonably required (and are not in excess) to fill current orders on hand in a timely manner and to maintain the manufacture and shipment of products at its normal level of operations.

4.13 Tax Matters .

(a) Each of the Company and any Tax Affiliate has (i) timely filed (or has had timely filed on its behalf) each Return required to be filed or sent by it in respect of any Taxes or required to be filed or sent by it by any Governmental Entity, each of which was correctly completed and accurately reflected any liability for Taxes of the Company and any Tax Affiliate covered by such Return, (ii) timely and properly paid (or had paid on its behalf) all Taxes due and payable for all Tax periods or portions thereof whether or not shown on such Returns, (iii) established in the Company’s books of account, in accordance with applicable generally accepted accounting principles and consistent with past practices, adequate reserves for the payment of any Taxes not then due and payable and (iv) complied with all applicable Laws relating to the withholding of Taxes and the payment thereof.

(b) Each of the Company and any Tax Affiliate has made (or caused to be made on its behalf) all estimated tax payments required to have been made to avoid any underpayment penalties.

(c) There are no Encumbrances for Taxes upon any assets of the Company or any Tax Affiliate, except Encumbrances for Taxes not yet due.

(d) Neither the Company nor any Tax Affiliate has requested any extension of time within which to file any Return, which Return has not since been filed.

(e) No deficiency for any Taxes has been proposed, asserted or assessed against the Company or any Tax Affiliate that has not been resolved and paid in full. No waiver, extension or comparable consent given by the Company or any Tax Affiliate regarding the application of the statute of limitations with respect to any Taxes or any Return is outstanding, nor is any request for any such waiver or consent pending. There has been no Tax audit or other administrative proceeding or court proceeding with regard to any Taxes or any Return for any Tax year subsequent to the year ended December 31, 2004, nor is any such Tax audit or other

proceeding pending, nor has there been any notice to the Company or any Tax Affiliate by any Governmental Entity regarding any such Tax, audit or other proceeding, or, to the Knowledge of any Shareholder Principal, is any such Tax audit or other proceeding threatened with regard to any Taxes or Returns. There are no outstanding subpoenas or requests for information with respect to any of the Returns of the Company or any Tax Affiliate. Neither the Company nor any Tax Affiliate has entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision under any other Law.

(f) To the Knowledge of any Shareholder, no additional Taxes will be assessed against the Company or any Tax Affiliate for any Tax period or portion thereof ending on or prior to the Closing Date, and there are no unresolved questions, claims or disputes concerning the liability for Taxes of the Company or any Tax Affiliate that would exceed the estimated reserves established on its books of account.

(g) Schedule 4.13 lists all federal, state, local and foreign income Returns filed with respect to the Company or any Tax Affiliate for taxable periods ended on or after December 31, 2004, indicates those Returns that have been audited and indicates those Returns that currently are the subject of audit.

(h) Neither the Company nor any Tax Affiliate has any liability for Taxes in a jurisdiction where it does not file a Return, nor has the Company or any Tax Affiliate received notice from a taxing authority in such a jurisdiction that it is or may be subject to taxation by that jurisdiction.

4.14 Intellectual Property Rights .

(a) Schedule 4.14(a)(i) lists and describes all Owned Intellectual Property Rights that are Registered Intellectual Property Rights and all other material Owned Intellectual Property Rights. Schedule 4.14(a)(ii) lists all Contracts relating to Licensed-In Intellectual Property Rights other than Software and describes the Intellectual Property Rights covered by such Contracts; to the extent there is no written Contract covering a Licensed-In Intellectual Property Right, Schedule 4.14(a)(ii) lists the licensor and describes the Intellectual Property Rights so licensed. Schedule 4.14(a)(iii) lists all Contracts relating to Licensed-In Intellectual Property Rights that are Software other than Off-the-Shelf Software and describes the Intellectual Property Rights covered thereby; to the extent there is no written Contract covering any Software, Schedule 4.14(a)(iii) lists the licensor and describes the Software so licensed. Schedule 4.14(a)(iv) lists and describes all materials otherwise protectable under Intellectual Property Rights used in the business of the Company or any Subsidiary as conducted or proposed to be conducted that are in the public domain. The Owned Intellectual Property Rights and the Licensed-In Intellectual Property Rights constitute all Intellectual Property Rights necessary for the business of the Company and its Subsidiaries as conducted or proposed to be conducted.

(b) The Company owns all right, title and interest in the Owned Intellectual Property Rights free and clear of all Encumbrances (including royalty or other payments), except for those licenses of the Owned Intellectual Property Rights to Persons, payments for use of the Owned Intellectual Property Rights and other Encumbrances listed on Schedule 4.14(b). The Company is the official and sole owner of record of all Registered Intellectual Property Rights. No Owned

Intellectual Property Right has been infringed by any Person. The Company or a Subsidiary owns all Intellectual Property Rights developed by its current and former employees and independent contractors during the period of their employment or within the scope of their contracting or consulting relationship, as the case may be, with the Company or any Subsidiary. No employee or former employee or independent contractor of the Company or any Subsidiary has any claim with respect to any Intellectual Property Right of the Company. (c) All Owned Intellectual Property Rights are valid and enforceable, and no Person has asserted that any Owned Intellectual Property Right is invalid or not enforceable. All Owned Intellectual Property Rights that are Registered Intellectual Property Rights are in full force and effect, and all actions required to keep such rights pending or in effect or to provide full available protection, including payment of filing, examination, annuity, and maintenance fees and filing of renewals, statements of use or working, affidavits of incontestability and other similar actions, have been taken, and no such Registered Intellectual Property Right is the subject of any interference, opposition, cancellation, nullity, re-examination or other proceeding placing in question the validity or scope of such rights. All products covered by Owned Intellectual Property Rights or Licensed-In Intellectual Property Rights that are Registered Intellectual Property Rights and all usages of Owned Intellectual Property Rights or Licensed-In Intellectual Property Rights that are Registered Intellectual Property Rights have been marked with the appropriate patent, trademark or other marking required or desirable to maximize available damage awards.

(d) Neither the Company nor any Subsidiary has infringed, misappropriated or otherwise violated any Third-Party Intellectual Property Right, and neither the Company nor any Subsidiary has received any notice of any infringement, misappropriation or violation by the Company or any Subsidiary of any Third-Party Intellectual Property Right. No infringement, misappropriation or violation of any Third-Party Intellectual Property Right has occurred or will occur with respect to products or services sold by the Company or any Subsidiary or with respect to the products or services currently under development or with respect to the conduct of the business of the Company or any Subsidiary as conducted or proposed to be conducted.

(e) All Software that is used by the Company or any Subsidiary or is present at any facility or on any equipment of the Company or any Subsidiary is owned by the Company or a Subsidiary or is subject to a current license agreement that covers all use of the Software in the business of the Company or any Subsidiary as conducted or as proposed to be conducted. Each of the Company and the Subsidiaries has the right to use the Software used in its business as it is being used, without any conflict with the rights of others. Neither the Company nor any Subsidiary is in breach of any license to, or license of, any Software. The Company and its Subsidiaries do not use, rely on or contract with any Person to provide service bureau, outsourcing or other computer processing services to the Company or any Subsidiary, in lieu of or in addition to their respective use of the Software. Following the Closing, each of the Company and the Subsidiaries will have sufficient rights to all necessary Software, to operate its business as it is conducted or as proposed to be conducted.

4.15 Material Contracts .

(a) Schedule 4.15 lists the following Contracts to which the Company or any Subsidiary is a party or subject or by which it is bound (with the Contracts required to be listed on Schedule 4.14 , the “ Material Contracts ”):

(i) each employment, agency, collective bargaining or consulting Contract;

(ii) each Contract (A) with any Insider or (B) between or among any Insiders relating in any way to the Company or any Subsidiary;

(iii) each Contract or group of related Contracts with the same party for the purchase of products or services with a undelivered balance in excess of $100,000;

(iv) each Contract or group of related Contracts with the same party for the sale of products or services with an undelivered balance in excess of $100,000;

(v) each lease of real or personal property with aggregate annual payments in excess of $100,000;

(vi) each Contract for the sale of any capital assets;

(vii) each Contract for capital expenditures in excess of $100,000;

(viii) each Contract relating to the borrowing of money or to mortgaging, pledging or otherwise placing an Encumbrance on any of the assets of the Company or any Subsidiary;

(ix) each written warranty, guaranty or other similar undertaking with respect to contractual performance extended by the Company or any Subsidiary other than in the Ordinary Course of Business;

(x) each Contract relating to any surety bond or letter of credit required to be maintained by the Company or any Subsidiary;

(xi) each Contract that contains or provides for an express undertaking by the Company or any Subsidiary to be responsible for consequential damages in excess of $100,000;

(xii) each Contract concerning a partnership or joint venture;

(xiii) each Contract providing for the development of any products, Software or Intellectual Property Rights or the delivery of any services by, for or with any third party in excess of $100,000;

(xiv) each Contract containing exclusivity, noncompetition or nonsolicitation provisions or that would otherwise prohibit the Company or any Subsidiary from freely engaging in business anywhere in the world or prohibiting the solicitation of the employees or contractors of any other entity;

(xv) each Contract pertaining to confidentiality or non-disclosure;

(xvi) each Contract terminable by any other party upon a change of control of the Company or any Subsidiary or upon the failure of the Company or any Subsidiary to satisfy financial or performance criteria specified in such Contract, which if terminated would have a Material Adverse Effect on the Business;

(xvii) each stock purchase, stock option and stock incentive plan (other than a Plan);

(xviii) each power of attorney that is currently in effect; and

(xix) each other Contract of the Company or any Subsidiary not entered into in the Ordinary Course of Business or that is material to the business, financial condition, results of operations or prospects of the Company and the Subsidiaries taken as a whole.

(b) Each Material Contract is valid and binding, currently in force and enforceable in accordance with its terms, subject to the Remedies Exception. Each of the Company and the Subsidiaries has performed all obligations required to be performed by it in connection with each Material Contract. Neither the Company nor any Subsidiary has received any notice of any claim of default by it under or termination of any Material Contract. Neither the Company nor any Subsidiary has any present expectation or intention of not fully performing any obligation pursuant to any Material Contract, and there is no breach, anticipated breach or default by the Company or a Subsidiary or any other party to any Material Contract.

4.16 Litigation . No Litigation is pending or, to the Knowledge of any Shareholder Principal, threatened against the Company or any Subsidiary and there is no reasonable basis for any Litigation against the Company or any Subsidiary. Neither the Company nor any Subsidiary is subject to any outstanding Governmental Order.

4.17 Insurance . Each of the Company and the Subsidiaries has at all times maintained insurance relating to its business and covering property, fire, casualty, liability, workers’ compensation and all other forms of insurance customarily obtained by businesses in the same industry. Such insurance (i) is in full force and effect, (ii) is sufficient for compliance with all requirements of applicable Law and of any Contract to which the Company or any Subsidiary is subject, (iii) is valid and enforceable, (iv) insures against risks of the kind customarily insured against and in amounts customarily carried by businesses similarly situated and (v) provides adequate insurance coverage for the activities of each of the Company and the Subsidiaries. Schedule 4.17 lists each policy of insurance in effect.

4.18 Compliance with Laws; Governmental Authorizations .

(a) Each of the Company and the Subsidiaries has complied with all applicable Laws and Governmental Orders. Neither the Company nor any Subsidiary is relying on any exemption from or deferral of any Law, Governmental Order or Governmental Authorization that would not be available to Chilco after the Closing.

(b) Each of the Company and the Subsidiaries has in full force and effect all Governmental Authorizations necessary to conduct its business and own and operate its properties. Schedule 4.18(b) lists each Governmental Authorization held by the Company or any Subsidiary. Each of the Company and the Subsidiaries has complied with all Governmental Authorizations applicable to it.

(c) Neither the Company nor any Subsidiary has offered, authorized, promised, made or agreed to make any gifts, payments or transfers of property of any kind (other than incidental gifts of nominal value) in connection with any actual or proposed transaction, except as required or permitted by the Laws of each applicable jurisdiction and in each such case has complied with the U.S. Foreign Corrupt Practices Act.

(d) Neither the Company nor any Subsidiary has ever had a legal obligation to file any form, report, schedule, proxy statement or other document with the SEC, and neither the Company nor any Subsidiary has filed with the SEC any such form, report, schedule, proxy statement or other document.

4.19 Environmental Matters .

(a) As used in this Section 4.19, the following terms have the following meanings:

(i) “ Environmental Costs ” means any and all costs and expenditures, including any fees and expenses of attorneys and of environmental consultants or engineers incurred in connection with investigating, defending, remediating or otherwise responding to any Release of Hazardous Materials, any violation or alleged violation of Environmental Law, any fees, fines, penalties or charges associated with any Governmental Authorization, or any actions necessary to comply with any Environmental Law.

(ii) “ Environmental Law ” means any Law, Governmental Authorization or Governmental Order relating to pollution, contamination, Hazardous Materials or protection of the environment.

(iii) “ Hazardous Materials ” means any dangerous, toxic or hazardous pollutant, contaminant, chemical, waste, material or substance as defined in or governed by any Law relating to such substance or otherwise relating to the environment or human health or safety, including any waste, material, substance, pollutant or contaminant that might cause any injury to human health or safety or to the environment or might subject the owner or operator of the Property to any Environmental Costs or liability under any Environmental Law.

(iv) “ Property ” means real property owned, leased, controlled or occupied by the Company or any Subsidiary at any time.

(v) “ Regulatory Action ” means any Litigation with respect to the Company or any Subsidiary brought or instigated by any Governmental Entity in connection with any Environmental Costs, Release of Hazardous Materials or any Environmental Law.

(vi) “ Release ” means the spilling, leaking, disposing, discharging, emitting, depositing, ejecting, leaching, escaping or any other release or threatened release, however defined, whether intentional or unintentional, of any Hazardous Material.

(vii) “ Third-Party Environmental Claim ” means any Litigation (other than a Regulatory Action) based on negligence, trespass, strict liability, nuisance, toxic tort or any other cause of action or theory relating to any Environmental Costs, Release of Hazardous Materials or any violation of Environmental Law.

(b) No Third-Party Environmental Claim or Regulatory Action is pending or, to the Knowledge of any Shareholder, threatened against the Company or any Subsidiary.

(c) All transfer, transportation or disposal of Hazardous Materials by the Company or any Subsidiary to properties not owned, leased or operated by the Company or any Subsidiary has been in compliance with applicable Environmental Law. The Company has not transported or arranged for the transportation of any Hazardous Materials to any location that is (i) listed on a List, (ii) listed for possible inclusion on any List or (iii) the subject of any Regulatory Action or Third-Party Environmental Claim.

(d) No Property has ever been used as a landfill, dump or other disposal, storage, transfer, handling or treatment area for Hazardous Materials, or as a gasoline service station or a facility for selling, dispensing, storing, transferring, disposing or handling petroleum and/or petroleum products.

(e) There has not been any Release of any Hazardous Material on, under, about, from or in connection with the Property, including the presence of any Hazardous Materials that have come to be located on or under the Property from another location.

(f) The Property at all times has been used and operated in compliance with all applicable Environmental Law.

(g) No expenditure will be required in order for Chilco, the Company or any Subsidiary to comply with any Environmental Law in effect at the time of Closing in connection with the operation or continued operation of the Property in a manner consistent with the present operation thereof.

(h) No Encumbrance has been attached or filed against the Company or any Subsidiary in favor of any Person for (i) any liability under or violation of any applicable Environmental Law, (ii) any Release of Hazardous Materials or (iii) any imposition of Environmental Costs.

4.20 Employees .

(a) Schedule 4.20(a) states the total number of employees of the Company or any Subsidiary as of the date of this Agreement and total number of employees in the aggregate with full-time, part-time and temporary status as of the Closing Date.

(b) To the Knowledge of any Shareholder, no executive employee of the Company and no group of employees of the Company or any Subsidiary has any plans to terminate his, her or their employment. Each of the Company and the Subsidiaries has complied at all times with all applicable Laws relating to employment and employment practices and those relating to the calculation and payment of wages (including overtime pay, maximum hours of work and child labor restrictions), equal employment opportunity (including Laws prohibiting discrimination and/or harassment or requiring accommodation on the basis of race, color, national origin, religion, gender, disability, age, sexual orientation or otherwise), affirmative action and other hiring practices, occupational safety and health, workers’ compensation, unemployment compensation, the payment of social security and other Taxes, and unfair labor practices under the National Labor Relations Act or applicable state law. Neither the Company nor any Subsidiary has any labor relations problem pending or, to the Knowledge of any Shareholder, threatened, and its labor relations are satisfactory. There are no workers’ compensation claims pending against the Company or any Subsidiary, or, to the Knowledge of any Shareholder, any facts that would give rise to such a claim. No employee of the Company or any Subsidiary is subject to any secrecy or noncompetition agreement or any other agreement or restriction of any kind that would impede in any way the ability of such employee to carry out fully all activities of such employee in furtherance of the business of the Company.

(c) No employee of the Company or any Subsidiary is covered by any collective bargaining agreement, and no collective bargaining agreement is being negotiated.

(d) Each of the Company and the Subsidiaries has paid in full to all employees all wages, salaries, bonuses and commissions due and payable to such employees and has fully reserved in its books of account all amounts for wages, salaries, bonuses and commissions due but not yet payable to such employees.

4.21 Employee Benefits .

(a) Schedule 4.21 lists, as of the Closing Date, all Plans by name and provides a brief description identifying (i) the type of Plan, (ii) the funding arrangements for the Plan and (iii) the Company’s obligations under the Plan.

(b) (i) All contributions, premium payments and other payments required to be made in connection with the Plans have been made, (ii) a proper accrual has been made on the books of account of the Company for all contributions, premium payments and other payments due in the current fiscal year, and (iii) the Company is not liable for any accumulated funding deficiency not set forth in Schedule 4.21 and the projected benefit obligations do not exceed the assets of the Plan.

(c) The consummation of the transactions contemplated by this Agreement will not (i) cause any Plan to increase benefits payable to any participant or beneficiary, (ii) entitle any current or former employee of the Company or any Subsidiary to severance pay, unemployment compensation or any other payment, benefit or award or (iii) accelerate or modify the time of payment or vesting, or increase the amount of any benefit, award or compensation due any such employee.

(d) No Litigation is pending with regard to any Plan other than routine uncontested claims for benefits.

4.22 Affiliate Transactions . No Insider has any Contract with the Company or any Subsidiary (other than employment not represented by a written Contract and terminable at will), any loan to or from the Company or any interest in any assets (whether real, personal or mixed, tangible or intangible) used in or pertaining to the business of the Company or any Subsidiary (other than ownership of capital stock of the Company). No Insider has any direct or indirect interest in any competitor, supplier or customer of the Company or any Subsidiary or in any Person from whom or to whom the Company or any Subsidiary leases any property, or in any other Person with whom the Company or any Subsidiary otherwise transacts business of any nature. Schedule 4.22 lists all transactions between the Company or any Subsidiary and each Insider for each of the last three fiscal years and since the Last Fiscal Year End.

4.23 Brokerage . No Person will be entitled to receive any brokerage commission, finder’s fee, fee for financial advisory services or similar compensation in connection with the transactions contemplated by this Agreement based on any Contract made by or on behalf of the Company for which Chilco or the Company is or could become liable or obligated.

4.24 Availability of Documents . Shareholders have delivered to Chilco correct and complete copies of the items referred to in the Disclosure Schedule or in this Agreement (and in the case of any items not in written form, a written description thereof).

4.25 Solvency .

(a) The Company is not insolvent and will not be rendered insolvent by any of the transactions contemplated by this Agreement. As used in this Section 4.25, “insolvent” means that the sum of the debts and other probable Liabilities of the Company exceeds the present fair saleable value of its assets.

(b) Immediately after giving effect to the consummation of the transactions contemplated by this Agreement, (i) the Company will be able to pay its Liabilities as they become due in the usual course of its business; (ii) the Company will not have unreasonably small capital with which to conduct its present or proposed Business; (iii) the Company will have assets (calculated at fair market value) that exceed its Liabilities; (iv) taking into account all pending and threatened litigation, final judgments against the Company in actions for money damages are not reasonably anticipated to be rendered at a time when, or in amounts such that, the Company will be unable to satisfy any such judgments promptly in accordance with their terms (taking into account the maximum probable amount of such judgments in any such actions and the earliest reasonable time at which such judgments might be rendered) as well as all other obligations of the Company; and (v) the cash available to the Company, after taking into account all other anticipated uses of the cash, will be sufficient to pay all such debts and judgments promptly in accordance with their terms.

4.26 Disclosure .

(a) This Agreement, the exhibits, the Disclosure Schedule, the Annual Financial Statements or the Latest Financial Statements do not contain any untrue statement or omit any

material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading.

(b) Except as set forth in this Agreement or the Disclosure Schedule, there is no fact that has specific application to the Company (other than general economic or industry conditions) and that may materially adversely affect the assets, business, prospects, financial condition or results of operations of the Company.

V. Representations and Warranties of Chilco

Chilco represents and warrants to Shareholders that as of the date of this Agreement (except as otherwise provided) and as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement):

5.1 Incorporation; Power and Authority . Chilco is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, with all necessary power and authority to execute, deliver and perform this Agreement and the Ancillary Agreements to which it will become a party. It is a “reporting issuer” under the Exchange Act, that is required to file reports with the Securities and Exchange Commission under Section 13 of the Exchange Act (the “ Chilco SEC Reports ”); it is current in the filing of all required SEC Reports; and the SEC Reports are true and correct in every material respect. Its common stock is quoted on the OTC Bulletin Board of the National Association of Securities Dealers, Inc. under the symbol “CHRH”.

5.2 Capitalization . The authorized capital stock of Chilco consists of 100,000,000 shares of common voting stock, having a par value of $0.001 per share, of which 2,200,000 shares will be issued and outstanding, all fully paid and non-assessable immediate prior to the Closing; except as may be provided herein, there are no outstanding options, warrants or calls pursuant to which any person has the right to purchase any authorized and unissued capital stock of Chilco.

5.3 Valid and Binding Agreement . The execution, delivery and performance of this Agreement and the Ancillary Agreements to which it will become a party by Chilco have been duly and validly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by Chilco and constitutes the valid and binding obligation of Chilco, enforceable against it in accordance with its terms, subject to the Remedies Exception. Each Ancillary Agreement to which Chilco will become a party, when executed and delivered by Chilco, will constitute the valid and binding obligation of Chilco, enforceable against Chilco in accordance with its terms, subject to the Remedies Exception.

5.4 No Breach; Consents . The execution, delivery and performance of this Agreement and the Ancillary Agreements to which it will become a party by Chilco will not (a) contravene any provision of the Organizational Documents of Chilco; (b) violate or conflict with any Law, Governmental Order or Governmental Authority; (c) conflict with, result in any breach of any of the provisions of, constitute a default (or any event that would, with the passage of time or the giving of notice or both, constitute a default) under, result in a violation of, increase the burdens under, result in the termination, amendment, suspension, modification, abandonment or

acceleration of payment (or any right to terminate) or require a Consent, including any Consent under any Contract or Governmental Authorization that is either binding upon or enforceable against Chilco; or (d) require any Governmental Authorization.

5.5 Brokerage . No Person will be entitled to receive any brokerage commission, finder’s fee, fee for financial advisory services or similar compensation in connection with the transactions contemplated by this Agreement based on any Contract made by or on behalf of Chilco for which any Shareholder is or could become liable or obligated.

5.6 Investment Intent . Chilco is acquiring the Shares for its own account for investment purposes, and not with a view to the distribution thereof.

5.7 Chilco Common Stock . The shares of Chilco Common Stock will, when issued and delivered in accordance with this Agreement, be duly authorized, validly issued, fully paid and nonassessable.

5.8 SEC Filings; Financial Statements .

(a) Chilco has filed all Chilco SEC Reports required to be filed by it during the 12 months immediately preceding the date of this Agreement with the SEC. Chilco SEC Reports (i) were prepared in all material respects in accordance with all applicable requirements of the Securities Act and the Exchange Act, as applicable, and (ii) did not, at the time they were filed, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The representation in clause (ii) of the preceding sentence does not apply to any misstatement or omission in any Chilco SEC Report that was superseded by subsequent Chilco SEC Reports.

(b) The audited consolidated financial statements and unaudited consolidated interim financial statements of Chilco and its consolidated Subsidiaries included or incorporated by reference in Chilco SEC Reports have been prepared in accordance with GAAP consistently applied during the periods indicated (except as may otherwise be indicated in the notes) and present fairly the financial position, results of operations and cash flows of Chilco and its consolidated Subsidiaries on a consolidated basis at the respective dates and for the respective periods indicated (except interim financial statements may not contain all notes and are subject to year-end adjustments).

5.9 Certain Tax Matters .

Neither Chilco nor any affiliate has taken or agreed to take any action or knows of any circumstances that (without regard to any action or agreed to be taken by any Shareholder or any affiliate) would prevent the acquisition contemplated by this Agreement from qualifying as a reorganization within the meaning of Section 368(a)(1)(B) of the Code.

5.10 Undisclosed Liabilities .

Chilco has no liabilities of any nature except to the extent reflected or reserved against in its balance sheets, whether accrued, absolute, contingent or otherwise, including, without limitation, tax liabilities and interest due or to become due.

5.11 Interim Changes .

Since the date of its balance sheets, except as set forth in Exhibit F, there have been no (1) changes in financial condition, assets, liabilities or business of Chilco which, in the aggregate, have been materially adverse; (2) damages, destruction or losses of or to property of Chilco, payments of any dividend or other distribution in respect of any class of stock of Chilco, or any direct or indirect redemption, purchase or other acquisition of any class of any such stock; or (3) increases paid or agreed to in the compensation, retirement benefits or other commitments to employees.

5.12 Title to Property . Chilco has good and marketable title to all properties and assets, real and personal, reflected in its balance sheets, and the properties and assets of Chilco are subject to no mortgage, pledge, lien or encumbrance, except for encumbrances for Taxes and other governmental charges and assessments (except assessments for public improvements levied, pending or deferred) that are not yet due and payable or which are being contested in good faith by appropriate proceedings (provided required payments have been made in connection with any such contest), (ii) encumbrances of carriers, warehousemen, mechanics’ and materialmen and other like encumbrances arising in the Ordinary Course of Business (provided lien statements have not been filed as of the Closing Date), (iii) statutory encumbrances in favor of lessors arising in connection with any leased property leased to Chilco, and (iv) encumbrances that will be removed prior to or in connection with the Closing.

5.13 Litigation . There is no litigation or proceeding pending, or to the knowledge of Chilco, threatened, against or relating to Chilco, its properties or business, except as set forth in Schedule 5.13. Further, no officer, director or person who may be deemed to be an affiliate of Chilco is party to any material legal proceeding which could have an adverse effect on the Company (financial or otherwise), and none is party to any action or proceeding wherein any has an interest adverse to Chilco.

5.14 Books and Records . From the date of this Agreement to the Closing, Chilco will (1) give to the Company or its representatives full access during normal business hours to all of its offices, books, records, contracts and other corporate documents and properties so that the Company or its representatives may inspect and audit them; and (2) furnish such information concerning the properties and affairs of Chilco as the Company or its representatives may reasonably request.

5.15 Tax Returns . Chilco has filed all federal and state income or franchise tax returns required to be filed or has received currently effective extensions of the required filing dates.

5.16 Confidentiality . Until the Closing (and thereafter if there is no Closing), Chilco and its representatives will keep confidential any information which they obtain from the Company concerning the properties, assets and business of the Company. If the transactions contemplated by this Agreement are not consummated by July 31, 2005, Chilco will return to the

Company all written matter with respect to the Company obtained by Chilco in connection with the negotiation or consummation of this Agreement.

5.17 Environmental Matters . Chilco has no knowledge of any assertion by any governmental agency or other regulatory authority of any environmental lien, action or proceeding, or of any cause for any such lien, action or proceeding related to the business operations of Chilco. In addition, to the best knowledge of Chilco, there are no substances or conditions which may support a claim or cause of action against Chilco or any of Chilco’ current or former officers, directors, agents or employees, whether by a governmental agency or body, private party or individual, under any Hazardous Materials Regulations. “Hazardous Materials” means any oil or petrochemical products, PCB’s, asbestos, urea formaldehyde, flammable explosives, radioactive materials, solid or hazardous wastes, chemicals, toxic substances or related materials, including, without limitation, any substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under any applicable federal or state laws or regulations. “Hazardous Materials Regulations” means any regulations governing the use, generation, handling, storage, treatment, disposal or release of hazardous materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act and the Federal Water Pollution Control Act.

5.18 Access to Information Regarding the Company . Chilco acknowledge that they have been delivered copies of what has been represented to be documentation containing all material information respecting the Company and its present and contemplated business operations, potential acquisitions, management and other factors; that they have had a reasonable opportunity to review such documentation and discuss it, to the extent desired, with their legal counsel, directors and executive officers; that they have had, to the extent desired, the opportunity to ask questions of and receive responses from the directors and executive officers of the Company, and with the legal and accounting firms of the Company, with respect to such documentation; and that to the extent requested, all questions raised have been answered to their complete satisfaction. Chilco acknowledge that the Company is a high risk early development stage company that is subject to all the attendant risks and uncertainties of similarly situated foreign based hotel and casino businesses.

VI. Agreements of Shareholders and Chilco

6.1 Company Conduct of the Business Shareholders will cause each of the Company and the Subsidiaries to observe the following provisions to and including the Closing Date:

(a) each of the Company and the Subsidiaries will conduct its business only in, and neither the Company nor any Subsidiary will take any action except in, the Ordinary Course of Business and in accordance with applicable Law;

(b) neither the Company nor any Subsidiary will amend or modify any Material Contract or enter into any Contract that would have been a Material Contract if such Contract had been in effect on the date of this Agreement;

(c) each of the Company and the Subsidiaries will (i) use its best efforts to preserve its business organization and goodwill, keep available the services of its officers, employees and consultants and maintain satisfactory relationships with vendors, customers and others having business relationships with it, (ii), subject to applicable Laws, confer on a regular and frequent basis with representatives of Buyer to report operational matters and the general status of ongoing operations as requested by Buyer and (iii) not take any action that would render, or that reasonably may be expected to render, any representation or warranty made by Sellers in this Agreement untrue at the Closing as though then made and as though the Closing Date had been substituted for the date of this Agreement in such representation or warranty;

(d) neither the Company nor any Subsidiary will cancel or terminate its current insurance policies or allow any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse replacement policies providing coverage equal to or greater than the coverage under the canceled, terminated or lapsed policies for substantially similar premiums are in full force and effect.

6.2 Company Notice of Developments . Shareholders will promptly notify Chilco of any emergency or other change in the Ordinary Course of Business of the Company or any Subsidiary or the commencement or threat of Litigation. Shareholders will promptly notify Buyer in writing if any Shareholder should discover that any representation or warranty made by such Shareholder in this Agreement was when made, has subsequently become or will be on the Closing Date untrue in any respect. No disclosure pursuant to this Section 6.2 will be deemed to amend or supplement the Disclosure Schedule or to prevent or cure any inaccuracy, misrepresentation, breach of warranty or breach of agreement.

6.3 Company Audited Financial Statements . Shareholders and the Company, jointly and severally, agree with Chilco that no later than the earlier of (i) 60 days after the Closing Date or (ii) the date that permits the filing of any registration statement required to be filed under the terms of the Financing Transaction, the Company shall deliver consolidated balance sheet of the Company and its consolidated Subsidiaries and the consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its consolidated Subsidiaries as of the date and period as may be required to comply with Chilco’s SEC reporting obligations of the Company and the audited consolidated balance sheet, as of the Last Fiscal Year End and for the each of the prior fiscal year ends, of the Company and its consolidated Subsidiaries and the audited consolidated statements of income, changes in shareholders’ equity and cash flows, including the notes, of the Company and its consolidated Subsidiaries for each of the three years ended on the Last Fiscal Year End (collectively, the “ Audited Financial Statements ”), prepared in accordance with GAAP consistently applied during the periods indicated and present fairly the financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries on a consolidated basis at the respective dates and for the respective periods indicated, and audited by an independent public accountant properly registered and qualified by the United States Public Company Accounting Oversight Board.

6.4 Shareholder Post-Closing Access . After the Closing Date, Shareholders will afford to Chilco, its accountants and counsel, during normal business hours, upon reasonable request, full

access to the books and records of Shareholders pertaining to each of the Company and the Subsidiaries.

6.5 Shareholder Litigation Support . In the event and for so long as Chilco, the Company or any Subsidiary is actively contesting or defending against any Litigation in connection with any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act or transaction existing or occurring on or prior to the Closing Date involving the Company or any Subsidiary, each Shareholder will cooperate in the contest or defense, make available its personnel and provide such testimony and access to its books and records as may be necessary in connection with the contest or defense, at the cost and expense of Chilco (unless and to the extent Chilco is entitled to indemnification therefor under Article IX).

6.6 Shareholder Release of Claims . Shareholders and their successors and assigns waive, release and agree not to bring any claim, demand, cause of action or proceeding, including any cost recovery action, against Chilco under Environmental Law now existing or hereinafter enacted.

6.7 Chilco Listing . Chilco will use its best efforts to cause Chilco Common Stock to remain be eligible for quotation on the NASD Over-the-counter Bulletin Board.

6.8 Chilco Employee Matters . Employees of the Company and its Subsidiaries will continue as employees on the Closing Date, subject to the right to terminate the employment of such employees in accordance with applicable Law.

6.9 Chilco Tax Matters .

None of Chilco or any Shareholder will take any action that (without regard to any action taken or agreed to be taken by any other party or its affiliates) would prevent the acquisition contemplated by this Agreement from qualifying as a reorganization within the meaning of Section 368(a)(1)(B) of the Code.

VII. Conditions to Closing

7.1 Conditions to Chilco’s Obligations . The obligation of Chilco to take the actions required to be taken by it at the Closing is subject to the satisfaction or waiver, in whole or in part, in Chilco’s sole discretion (but no such waiver will waive any rights or remedy otherwise available to Chilco), of each of the following conditions at or prior to the Closing:

(a) Except as would not have a Material Adverse Effect, the representations and warranties set forth in Articles III and IV, after the word or phrase “material” and “Material Adverse Effect” have been removed, will be true and correct at and as of the Closing Date as though then made and as though the Closing Date had been substituted for the date of this Agreement in such representations and warranties, except that any representation or warranty expressly made as of a specified date will only need to have been true on and as of such date (without taking into account any supplemental disclosures after the date of this Agreement by Shareholders or the Company or the discovery of information by Chilco);

(b) The Shareholders will have performed and complied with each of their agreements contained in this Agreement in all material respects;

(c) Each Required Consent will have been obtained and be in full force and effect and such actions as Chilco’s counsel may reasonably require will have been taken in connection therewith;

(d) Chilco will have obtained each Governmental Authorization required to operate the business of the Company in the manner it was operated prior to the Closing Date;

(e) No Material Adverse Effect will have occurred; and

(f) The Company will have delivered each of the agreements, certificates, instruments and other documents that it is obligated to deliver pursuant to Section 2.4(c)(i), and such agreements so delivered will be in full force and effect.

7.2 Conditions to Shareholders’ Obligations . The obligation of Shareholders to take the actions required to be taken by them at the Closing is subject to the satisfaction or waiver, in whole or in part, in the sole discretion of Shareholders’ Representative (but no such waiver will waive any right or remedy otherwise available under this Agreement), of each of the following conditions at or prior to the Closing:

(a) The representations and warranties set forth in Article V will be true and correct in all material respects;

(b) Chilco will have performed and complied with each of its agreements contained in this Agreement in all material respects;

(c) No Law or Governmental Order will have been enacted, entered, enforced, promulgated, issued or deemed applicable to the transactions contemplated by this Agreement by any Governmental Entity that prohibits the Closing;

(d) No Chilco Material Adverse Effect will have occurred;

(e) Chilco will have delivered each of the certificates, instruments and other documents that it is obligated to deliver pursuant to Section 2.4(c)(ii);

(f) The Board of Directors of the Chilco shall be, immediately upon Closing, comprised of six directors, including Tom Liu, Wai Yung Lau, Nan Zheng Zhang, Yong Yang and Sean Sullivan and one director designated by the Chilco’s Board of Directors; and

(g) Tom Liu shall be appointed Chairman of the Board of Directors and Chief Executive Officer of the Chilco effective immediately upon Closing.

VIII. Post Closing Covenants and Escrow Releases

8.1 Financing Transaction . Chilco shall, and each of the Shareholder Principals shall take all reasonable actions to, complete the Financing Transaction as soon as practicable after the Closing Date. The Shareholders and Chilco agree that Chilco shall, and each of the Shareholder Principals shall take all reasonable actions to, obtain the highest price per share of common stock, or any rights, options or warrants to purchase, or securities of any type whatsoever) issued by Chilco in connection with the Financing Transaction or Subsequent Financing Transaction (as defined in Section 8.2) shall be in excess of $1.00 per share (the “ Minimum Share Price ”).

8.2 Subsequent Financing . Chilco shall, and each of the Shareholder Principals shall take all reasonable actions to, complete as soon as practicable after the closing the Financing Transaction and a subsequent financing transaction of an additional $20,000,000 (of which the last $5,000,000 shall be raised to satisfy the co sale rights of the Shareholder Principals under Section 8.4) on or before the third anniversary of the Closing Date (the “ Subsequent Financing Transaction ”).

8.3 Escrow Release for Below Minimum Price Offering .

(a) The Shareholders and Chilco agree that the following are material inducements for Chilco to enter into this Agreement: (i) completing the Financing Transaction at or above the Minimum Share Price and avoiding unanticipated dilution to Chilco’s existing shareholders and (ii) delivery of the Audited Financial Statements pursuant to Section 6.3 .

(b) The Parties agree that the Shareholders shall place that number of Shareholder Escrowed Shares set forth beside such Shareholders name under the heading “Shareholder Escrow Shares” in Schedule 2.2 of Exhibit B attached hereto into the Escrow. The Shareholders authorize the Shareholder Representative to enter into the Escrow Agreement on their behalf, pursuant to which the Shareholder Escrowed Shares shall be returned to Chilco and cancelled in lieu of an obligation to indemnify Chilco for any and all losses, costs, damages, liabilities and expenses, arising out of any breach the covenants set forth in Section 6.3 or 8.1. The Parties agree that it would be difficult to quantify the damages resulting from the breach of the covenants set forth in Sections 6.3 and 8.1, and further agree that it is in the best interest of the Parties to establish in advance the amount and nature of damages to be paid by the Shareholders for breach of such covenants. The liquidated damages shall be payable (on a pro rata basis among the Shareholders) as follows:

(i)

if any shares of common stock (or other securities exercisable or convertible to acquire a share of common stock) are issued by Chilco in connection with the Financing Transaction (or any financing or other transaction beginning on the Closing Date and ending on the closing date of a Financing Transaction) at a price (or exercise or conversion price) below the Minimum Share Price,

then the number of Shareholder Escrowed Shares to be cancelled as liquidated damages and not a penalty for the breach of the covenant set forth in Section 8.1 shall be calculated as follows:

X = (A/B) — A

where: X = Number of Shareholder Escrow Shares Cancelled

A = 5,000,000

B = Purchase Price Per Share

For the purposes of this Agreement, “ Purchase Price Per Share ”shall be determined based on completing the Financing Transaction to raise a minimum of $5,000,000 and is defined as cash consideration received or to be received by Chilco or the fair market value of any property received or to be received by Chilco (as shall be verified by Chilco’s independent accounting firm) for each Chilco Common Share issued or to be issued pursuant to exercise or conversion of any convertible or exchangeable security. For greater certainty and by way of example in Section 8.3(b)(i), if Chilco, under one or more financing arrangements, issues 6,250,000 shares of common stock at $0.80 per share, then the Escrow Agent shall release to Chilco for cancellation an aggregate of 1,250,000 shares of common stock (5,000,000/$0.80 minus 5,000,000 = 1,250,000) as liquidated damages.

(ii)

if the Shareholders breach the covenant set forth in Section 6.3, then 360,000 Escrowed Shares shall be cancelled as liquidated damages and not a penalty for the breach of the covenant.

(c) The Parties agree that the covenants set forth in Sections 6.3 and 8.1 are a material inducement for Chilco to enter into this Agreement and that the cancellation of the Shareholder Escrowed Shares is a reasonable measure of damages, and not a penalty, for breach of the covenants set forth in Section 6.3 or 8.1. The cancellation of the Shareholder Escrowed Shares (under the terms and conditions set forth in the Escrow Agreement) as liquidated damages shall be Chilco’s sole and exclusive remedy for any principal’s breach of the covenants set forth in Sections 6.3 or 8.1 of this Agreement.

(d) The Parties agree that any claim under this Section 8.3 shall be made in accordance with the terms and conditions set forth in the Escrow Agreement. Upon the later of fifteen business (15) days following (i) the date Chilco has closed the Financing Transaction or (ii) the delivery of the Audited Financial Statements under Section 6.3 of this Agreement any Shareholder Escrowed Shares, not otherwise subject to a claim under Section 8.3(b) of this Agreement, shall be released to the Shareholders on a pro rata basis.

8.4 Co-Sale of Shareholder Principal Securities .

(a) Chilco shall use commercially reasonable efforts to permit the Shareholder Principals to offer and sale up to 1,250,000 shares of Chilco Common Stock to investors in one or more private transactions in connection with the Subsequent Financing Transaction; provided that Chilco has first raised $15,000,000 in the Subsequent Financing Transaction for the corporation.

(b) The Parties agree that each of the Shareholder Principals shall place into Escrow that number of Escrowed Shares set forth beside such Shareholder Principal’s name under the heading “Financing Escrow Shares” in Schedule 2.2 of Exhibit B attached hereto. The Shareholder Principals authorize the Shareholder Representative to enter into the Escrow Agreement on their behalf, pursuant to which the Escrow Agent will hold the Finance Escrow Shares until Chilco has raised a total of $15,000,000 in the Subsequent Financing Transaction for the corporation and the Escrow Agent shall release the Finance Escrow Shares under the terms of Section 8.4(c) of this Agreement.

(c) After the Finance Escrowed Shares are eligible for release, Chilco will use commercially reasonable efforts to offer and sell the Finance Escrowed Shares on behalf of the Shareholder Principals (on a pro rata basis among the Shareholder Principals) on the similar terms and conditions as Chilco has offered and sold shares of Chilco Common Stock in the Subsequent Financing Transaction. Chilco will not offer shares of Chilco Common Stock for its own behalf until the Shareholder Principals have sold Finance Escrow Shares for proceeds of $5,000,000 or all of the Finance Escrow Shares are released from Escrow. The Shareholder Principals shall receive all of proceeds from the sale of the Finance Escrow Shares.

(d) The Escrow Agent shall release the Finance Escrow Shares as follows: (i) to the purchasers of Finance Escrow Shares pursuant to Section 8.4(c) and any remaining Finance Escrow Shares to the Shareholder Principals once the Shareholder Principals have sold Finance Escrow Shares for proceeds of $5,000,000; or (ii) to the Shareholder Principals if Chilco has not raised $15,000,000 in the Subsequent Financing Transaction prior to the third anniversary of the Closing Date.

8.5 Escrow Release to Rightholders .

(a) Chilco agrees that the following are material inducements for Chilco to enter into this Agreement: (i) completing the Financing Transaction at or above the Minimum Share Price within thirty (30) days of the Company delivering the Audited Financial Statements to Chilco and (ii) completing the Subsequent Financing Transaction within twelve (12) months of the Closing Date. The Parties acknowledge that the Consultant Rights would have vested, in part, only upon closing of the Financing Transaction, subject to certain redemption and cancellation rights if the Subsequent Financing Transaction is not closed within twelve (12) months of the Closing Date.

(b) The Parties agree that each of the Shareholders shall place into the Escrow that number of Rightholder Escrowed Shares set forth beside such Shareholder’s name under the heading “Rightholder Escrow Shares” in Schedule 2.2 of Exhibit B attached hereto to satisfy the Company’s obligations to the Rightholders under the Consulting

Agreements. The Shareholders authorize the Shareholder Representative to enter into the Escrow Agreement on their behalf, pursuant to which the Escrow Agent will hold the Rightholder Escrow Shares and release the Finance Escrow Shares as follows:

(i) the Escrow Agent shall release the Rightholder Escrow Shares to the Rightholders, in the number set forth beside such Shareholder’s in Schedule 2.3(c) of Exhibit B attached hereto subject to adjustments pursuant to Section 2(d) of this Agreement), if Chilco has raised a total of $5,000,000 in the Financing Transaction for the corporation within thirty (30) days of the Company delivering the Audited Financial Statements to Chilco, subject to a redemption and cancellation right by Chilco with respect to sixty percent (60%) of the Rightholder Escrow Shares released to the Rightholders (in the amounts set forth on Schedule 2.3(c) of Exhibit B ) if Chilco has not raised a total of $5,000,000, $10,000,000, $15,000,000 and $20,000,000 (which amount shall include the proceeds paid to the Shareholder Principals under the co sale rights set forth in Section 8.4), in the Subsequent Financing Transaction for the corporation within six (6) or twelve (12) months from the Closing Date; and

(ii) the Escrow Agent shall release one hundred percent (100%) of the Rightholder Escrow Shares to Chilco for cancellation if Chilco has not raised a total of $5,000,000 in the Financing Transaction for the corporation within thirty days of the Company delivering the Audited Financial Statements to Chilco.

(c) The Shareholders and Chilco agree that the cancellation of the Rightholder Escrow Shares is a reasonable measure of damages, and not a penalty, for the failure of the conditions set forth in Section 8.5(a) of this Agreement. The cancellation of the Rightholder Escrowed Shares (under the terms and conditions set forth in the Escrow Agreement) as liquidated damages shall be Chilco’s sole and exclusive remedy for the failure of the condition set forth in Section 8.5(a) of this Agreement.

IX. Indemnification

9.1 Indemnification by Shareholder Principals .

(a) Shareholder Principals will, jointly and severally, indemnify each of Chilco, the Company and the Subsidiaries (collectively, for purposes of this Article IX only, “ Chilco ”) and hold it harmless against any Loss, whether or not actually incurred prior to the applicable date referred to in Section 9.1(b), arising from, relating to or constituting any breach or inaccuracy in any of the representations and warranties of the Company contained in Article IV of this Agreement or in the Disclosure Schedule or any closing certificate delivered by or on behalf of Shareholders pursuant to this Agreement (any such breach or inaccuracy to be determined without regard to any qualification for “materiality,” “in all material respects” or similar

qualification) or any breach of any of the agreements of the Company contained in this Agreement (collectively, “ Chilco Losses ”).

(b) If Chilco has a claim for indemnification under this Section 9.1, Chilco will deliver to Shareholders Representative one or more written notices of Chilco Losses (each a “ Chilco Claim ”), prior to the period expiring on the later of: (i) the three month anniversary of the Closing Date or (ii) three months following delivery of the Audited Financial Statement pursuant to Section 6.3 of this Agreement. Shareholder Principals will have no liability under this Section 9.1 unless the written notices required by the preceding sentence are given by the date specified. Any Chilco Claim will state in reasonable detail the basis for such Chilco Losses to the extent then known by Chilco and the nature of Chilco Loss for which indemnification is sought, and it may state the amount of Chilco Loss claimed. If such Chilco Claim (or an amended Chilco Claim) states the amount of Chilco Loss claimed and Shareholders Representative notifies Chilco that Shareholders Representative does not dispute the claim described in such notice or fails to notify Chilco within 20 business days after delivery of such notice by Chilco whether Shareholders disputes the claim described in such notice, Chilco Loss in the amount specified in Chilco’s notice will be admitted by Shareholders (an “ Admitted Claim ”), and Shareholders will pay the amount of such Chilco Loss to Chilco. If Shareholders Representative has timely disputed the liability of Shareholders with respect to a Chilco Claim (or an amended Chilco Claim) stating the amount of an Chilco Loss claimed, Shareholders Representative and Chilco will proceed in good faith to negotiate a resolution of such dispute. If a claim for indemnification has not been resolved within 30 days after delivery of the Shareholders Representative’s notice, Chilco may seek judicial recourse. If a Chilco Claim does not state the amount of Chilco Loss claimed, such omission will not preclude Chilco from recovering from Shareholders the amount of Chilco Loss described in such Chilco Claim if any such amount is subsequently provided in an amended Chilco Claim. In order to assert its right to indemnification under this Article X, Chilco will not be required to provide any notice except as provided in this Section 9.1(b).

(c) Shareholders will pay the amount of any Chilco Loss to Chilco within 10 days following the determination of Shareholders’ liability for and the amount of a Chilco Loss (whether such determination is made pursuant to the procedures set forth in this Section 9.1, by agreement between Chilco and Shareholders Representative, by arbitration award or by final adjudication).

9.2 Indemnification by Chilco Principals .

(a) Chilco Principals will jointly and severally indemnify Shareholders and hold them harmless against any Loss, whether or not actually incurred prior to the date referred to in Section 9.2(b), arising from, relating to or constituting (i) any breach or inaccuracy in any of the representations and warranties of Chilco contained in this Agreement or in any certificate delivered by or on behalf of Chilco pursuant to this Agreement (any such breach or inaccuracy to be determined without regard to any qualification as to “materiality,” “in all material respects” or similar qualification) or (ii) any breach of any of the agreements of Chilco contained in this Agreement (“ Shareholders Losses ”).

(b) If Shareholders have a claim for indemnification under this Section 9.2, Shareholders will deliver to Chilco one or more written notices of Shareholders Losses prior to the last day of the period expiring on the later of: (i) the three month anniversary of the Closing Date or (ii) three months following delivery of the Audited Financial Statement pursuant to Section 6.3 of this Agreement. Chilco will have no liability under this Section 9.2 unless the written notices required by the preceding sentence are given in a timely manner. Any written notice will state in reasonable detail the basis for such Shareholders Losses to the extent then known by Shareholders and the nature of Shareholders Losses for which indemnification is sought, and it may state the amount of Shareholders Losses claimed. If such written notice (or an amended notice) states the amount of Shareholders Losses claimed and Chilco notifies Shareholders that Chilco does not dispute the claim described in such notice or fails to notify Shareholders within 20 business days after delivery of such notice by Shareholders whether Chilco disputes the claim described in such notice, Shareholders Losses in the amount specified in Shareholders’ notice will be admitted by Chilco, and Chilco will pay the amount of such Shareholders Losses to Shareholders. If Chilco has timely disputed its liability with respect to such claim, Chilco and Shareholders Representative will proceed in good faith to negotiate a resolution of such dispute. If a claim for indemnification has not been resolved within 30 days after delivery of Chilco’s notice, the Shareholders may seek judicial recourse. If a written notice does not state the amount of Shareholders Losses claimed, such omission will not preclude Shareholders from recovering from Chilco the amount of Shareholders Losses with respect to the claim described in such notice if any such amount is promptly provided once determined. In order to assert its right to indemnification under this Article X, Shareholders will not be required to provide any notice except as provided in this Section 9.2.

(c) Chilco will pay the amount of any Shareholders Losses to Shareholders within 10 days following the determination of Chilco’s liability for and the amount of the Shareholders Losses (whether such determination is made pursuant to the procedures set forth in this Section 9.2, by agreement between Shareholders and Chilco, by arbitration award or by final adjudication).

9.3 Indemnification in Case of Strict Liability or Indemnitee Negligence . THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE IX WILL BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LAWS (INCLUDING ANY PAST, PRESENT OR FUTURE BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LAW) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.

X. General

10.1 Press Releases and Announcements . Any public announcement, including any announcement to employees, customers, suppliers or others having dealings with the Company

or any Subsidiary, or similar publicity with respect to this Agreement or the transactions contemplated by this Agreement, will be issued, if at all, at such time and in such manner as Chilco determines and approves. Chilco will have the right to be present for any in-person announcement by the Company. Unless consented to by Chilco or required by Law, Shareholders will keep, and Shareholders will cause each of the Company and the Subsidiaries to keep, this Agreement and the transactions contemplated by this Agreement confidential.

10.2 Expenses . Except as otherwise expressly provided for in this Agreement, Shareholders, on the one hand, and Chilco, on the other hand, will each pay all expenses incurred by each of them (and, in the case of Shareholders, the expenses incurred by the Company and Shareholders Representative) in connection with the transactions contemplated by this Agreement, including legal, accounting, investment banking and consulting fees and expenses incurred in negotiating, executing and delivering this Agreement and the other agreements, exhibits, documents and instruments contemplated by this Agreement (whether the transactions contemplated by this Agreement are consummated or not). Shareholders agree that neither the Company nor any Subsidiary has borne or will bear any of Shareholders’ expenses in connection with the transactions contemplated by this Agreement. Shareholders will pay all amounts payable to the title insurer in respect of the title commitments, copies of exceptions and title policies, including premiums (including premiums for endorsements), search fees and closing fees, and amounts payable to surveyors. Shareholders will pay the fees and expenses of the escrow agent under the Escrow Agreement.

10.3 Amendment and Waiver . This Agreement may not be amended, a provision of this Agreement or any default, misrepresentation or breach of warranty or agreement under this Agreement may not be waived, and a consent may not be rendered, except in a writing executed by the party against which such action is sought to be enforced. Neither the failure nor any delay by any Person in exercising any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. In addition, no course of dealing between or among any Persons having any interest in this Agreement will be deemed effective to modify or amend any part of this Agreement or any rights or obligations of any Person under or by reason of this Agreement. The rights and remedies of the parties to this Agreement are cumulative and not alternative.

10.4 Notices . All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given (i) when delivered if personally delivered by hand (with written confirmation of receipt), (ii) when received if sent by a nationally recognized overnight courier service (receipt requested), (iii) five business days after being mailed, if sent by first class mail, return receipt requested, or (iv) when receipt is acknowledged by an affirmative act of the party receiving notice, if sent by facsimile, telecopy or other electronic transmission device (provided that such an acknowledgement does not include an acknowledgment generated automatically by a facsimile or telecopy machine or other electronic transmission device). Notices, demands and communications to each of Chilco, Company, Shareholders and Shareholders Representative will, unless another address is specified in writing, be sent to the respective addresses indicated below:

If to Chilco:

Chilco River Holdings Inc.
c/o Kenneth Sam, Esq.
Dorsey & Whitney LLP
1420 Fifth Avenue, Suite 3400
Seattle, WA 98101
Attn: Gavin Roy
Facsimile No. 206-903-8820

With a copy to:

Dorsey & Whitney LLP
1420 Fifth Avenue, Suite 3400
Seattle, WA 98101
Attn: Kenneth Sam, Esq.
Facsimile No. 206-903-8820

If to Shareholders or Shareholders Representative:

Tom Liu
c/o Wasserman Comden Casselman & Pearson, LLP
801 S. Garfield Avenue
Alhambra, California 91801
Attn: Tim Chang, Esq.
Facsimile No. 626-308-9538

With a copy to:

Wasserman Comden Casselman & Pearson, LLP
801 S. Garfield Avenue
Alhambra, California 91801
Attn: Tim Chang, Esq.
Facsimile No. 626-308-9538

If to Company:

KUBUK International, Inc.
Attn: Tom Liu
157 Ponderosa Street
La Puente, California 91471
Facsimile No. ___________________

10.5 Assignment . Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party to this Agreement without the prior written consent of the other parties to this Agreement, except that Chilco may assign any of its rights under this Agreement to one or more Subsidiaries of Chilco, so long as Chilco remains responsible for the performance of all of its obligations under this Agreement. Subject to the foregoing, this Agreement and all of the provisions of this Agreement will be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and permitted assigns.

10.6 No Third-Party Beneficiaries . Nothing expressed or referred to in this Agreement confers any rights or remedies upon any Person that is not a party or permitted assign of a party to this Agreement.

10.7 Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

10.8 Complete Agreement . This Agreement and, when executed and delivered, the Ancillary Agreements contain the complete agreement between the parties and supersede any prior understandings, agreements or representations by or between the parties, written or oral. Shareholders acknowledge that Chilco has made no representations, warranties, agreements, undertakings or promises except for those expressly set forth in this Agreement or in agreements referred to herein that survive the execution and delivery of this Agreement.

10.9 Schedules . The Disclosure Schedule contains a series of schedules corresponding to the sections contained in Articles III and IV. Nothing in the Disclosure Schedule is deemed adequate to disclose an exception to a representation or warranty made in this Agreement unless the Disclosure Schedule identifies in the corresponding schedule the exception with particularity and describes the relevant facts in detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item is not deemed adequate to disclose an exception to a representation or warranty unless the representation or warranty relates solely to the existence of the document or other item itself. The schedules in the Disclosure Schedule relate only to the representations and warranties in the section and subsection of this Agreement to which they correspond and not to any other representation or warranty in this Agreement. In the event of any inconsistency between the statements in this Agreement and statements in the Disclosure Schedule, the statements in this Agreement will control and the statements in the Disclosure Schedule will be disregarded.

10.10 Signatures; Counterparts . This Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument. A facsimile signature will be considered an original signature.

10.11 Governing Law . THE DOMESTIC LAW, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, OF THE STATE OF CALIFORNIA WILL GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS AGREEMENT.

10.12 Specific Performance . Each of the parties acknowledges and agrees that the subject matter of this Agreement, including the business, assets and properties of the Company and the Subsidiaries, is unique, that the other parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached, and that the remedies at law would not be adequate to compensate such other parties not in default or in breach. Accordingly, each of the parties agrees that the other parties will be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions of this Agreement in addition to any other remedy to which they may be entitled, at law or in equity (without any requirement that Chilco provide any bond or other security). The parties waive any defense that a remedy at law is adequate and any requirement to post bond or provide similar security in connection with actions instituted for injunctive relief or specific performance of this Agreement.

10.13 Jurisdiction . Subject to the procedures specified in Article II, each of the parties submits to the exclusive jurisdiction of any state or federal court sitting in Los Angeles, California, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each of the parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect to any such action or proceeding. The parties agree that either or both of them may file a copy of this paragraph with any court as written evidence of the knowing, voluntary and bargained agreement between the parties irrevocably to waive any objections to venue or to convenience of forum.

10.14 Waiver of Jury Trial . EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES SUCH WAIVER VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS

AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 10.14 .

10.15 Construction . The parties and their respective counsel have participated jointly in the negotiation and drafting of this Agreement. In addition, each of the parties acknowledges that it is sophisticated and has been advised by experienced counsel and, to the extent it deemed necessary, other advisors in connection with the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. The parties intend that each representation, warranty and agreement contained in this Agreement will have independent significance. If any party has breached any representation, warranty or agreement in any respect, the fact that there exists another representation, warranty or agreement relating to the same subject matter (regardless of the relative levels of specificity) that the party has not breached will not detract from or mitigate the fact that the party is in breach of the first representation, warranty or agreement. Any reference to any Law will be deemed to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The headings preceding the text of articles and sections included in this Agreement and the headings to the schedules and exhibits are for convenience only and are not be deemed part of this Agreement or given effect in interpreting this Agreement. References to sections, articles, schedules or exhibits are to the sections, articles, schedules and exhibits contained in, referred to or attached to this Agreement, unless otherwise specified. The word “including” means “including without limitation.” A statement that an action has not occurred in the past means that it is also not presently occurring. When any party may take any permissive action, including the granting of a consent, the waiver of any provision of this Agreement or otherwise, whether to take such action is in its sole and absolute discretion. The use of the masculine, feminine or neuter gender or the singular or plural form of words will not limit any provisions of this Agreement. A statement that an item is listed, disclosed or described means that it is correctly listed, disclosed or described, and a statement that a copy of an item has been delivered means a true and correct copy of the item has been delivered.

10.16 Time of Essence . With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

IN WITNESS WHEREOF , Chilco, Shareholders and Shareholders Representative have executed this Share Exchange Agreement as of the date first above written.

CHILCO:

Chilco River Holdings Inc.

By:
Name:
Title:

SHAREHOLDERS REPRESENTATIVE:

Name:

COMPANY:

KUBUK International, Inc.

By:
Name:
Title:

SHAREHOLDERS:

Tom Liu

______________________________

David Liu

______________________________

Lee Kuen Cheung

______________________________

Wai Yung Lau

______________________________

Zheng Liu

______________________________

Yizhi Zeng

______________________________

Luisa Wong

______________________________

Jack Xu

______________________________

Yong Yang

______________________________

Guoxiu Yan

______________________________

CONSENT OF SPOUSES:

CONSENT OF SPOUSE

The undersigned is the spouse of a Shareholder (as such term is defined therein) in the foregoing Share Exchange Agreement (the “ Agreement ”) dated as of July 15, 2005. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed thereto in the Agreement.

I hereby acknowledge that I have carefully reviewed the Agreement and such other documents as I have deemed appropriate. I have had an opportunity to consult with legal counsel and have discussed the contents of the Agreement with legal counsel. I understand fully the transactions described in the Agreement, and I hereby approve of and consent to all such transactions. I am aware that by the provisions of the Agreement, my spouse agrees, among other things, to exchange securities in Kubuk for shares (the “ Common Shares ”) of common stock of Chilco, and to escrow a portion of such Common Shares under the terms of an Escrow Agreement, including my community property interests therein, if any, in accordance with the Agreement. I hereby agree, on behalf of myself and all persons who may claim on my behalf, that upon any legal separation from or dissolution of my marriage to my present spouse, or upon the death of my spouse, neither I nor anyone claiming on my behalf will seek to partition my or my spouse’s community property interest in the Kubuk shares or in the Common Shares and that in any such event I shall be entitled only to the value of my interest in such Common Shares, if any, and that I shall have no claim or right to Common Shares themselves.

EXECUTED this 15th day of July, 2005.

______________________________________

EXHIBIT 99.2

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (“ Agreement ”) is made and entered into effective on July ____, 2005 (the “Effective Date ”) by and among:

Chilco River Holdings Inc. , a Nevada corporation (“ Chilco ”),

Tom Liu, David Liu, Lee Kuen Cheung, Wai Yung Lau, Zheng Liu, Yizhi Zeng, Luisa Wong, Jack Xu, Yong Yang, and Guoxiu Yan (“ Shareholders ”);

Tom Liu as Shareholders’ representative (“ Shareholders’ Representative ”);

Tom Liu and David Liu (as “ Principal Shareholders ”);

KUBUK International, Inc. , a California corporation (“ KUBUK ”); and

Wasserman, Comden, Casselman & Pearson, LLP , a California limited liability partnership (the “ Escrow Agent ”).

Collectively, Chilco, the Shareholders, the Principal Shareholders, the Shareholders’ Representative, KUBUK and the Escrow Agent are sometimes hereinafter referred to collectively as the “ Parties .”

RECITALS

WHEREAS , the Shareholders own all of the issued and outstanding shares of capital stock of KUBUK;

WHEREAS , concurrently with the execution and delivery of this Agreement, the Parties have entered into a Share Exchange Agreement (the “ Share Exchange Agreement ”) pursuant to which Chilco will acquire all of the issued and outstanding shares of KUBUK in exchange for a total of 19,250,000 shares of common stock of Chilco (“Common Shares ”), $0.001 par value, (the “ Share Exchange ”);

WHEREAS , Nefilim Associates, LLC, a Massachusetts limited liability company, T Morgan LLC, a Delaware limited liability company, and Sean Sullivan (the “ Rightholders ”) hold certain rights to receive capital stock of the Company or an entity acquired by the Company (collectively, the “ Consultant Rights ”) under the terms of Consulting Agreements dated May 9, 2005 with respect to Sean Sullivan, May 19, 2005 with respect to Nefilim Associates, LLC and June 1, 2005 with respect to T Morgan LLC (collectively, the “ Consultant Agreements ”);

WHEREAS , under the terms of the Share Exchange Agreement, the Parties have agreed that (a) 5,000,000 Common Shares issuable to the Shareholders in the Share Exchange (the “ Shareholder Escrow Shares ”); (b) 1,250,000 Common Shares issuable to the Principal Shareholders in the Share Exchange (the “ Financing Escrow Shares ”) and (c) 2,000,000 Common Shares issuable to the Shareholders in the Share Exchange (to

satisfy KUBUK’s obligations under the Consulting Agreements) (the “ Rightholder Escrow Shares ”) are to be deposited into escrow under the terms of this Agreement;

WHEREAS , under Section 2.3 of the Share Exchange Agreement, each of the Shareholders and each of the Principal Shareholders has agreed to enter into this Agreement, and the execution and delivery of this Agreement is a condition to closing the Share Exchange;

WHEREAS , in connection with the Share Exchange, (a) the Shareholders have made certain representations, warranties and covenants in the Share Exchange Agreement to Chilco related to, among other things, (i) the delivery of audited financial statements of KUBUK and its subsidiaries pursuant to Section 6.3 of the Share Exchange Agreement (the “ Financial Statements “) and (ii) the completion of the Financing Transaction (as defined in the Share Exchange Agreement) to raise a minimum of $5,000,000 at a price per Common Share (or conversion or exercise price of any convertible security) in excess of $1.00 per share (the “ Minimum Share Price ”); and (b) Escrow Agent will hold the Shareholder Escrow Shares until certain conditions are satisfied related to the Financing Transaction and the delivery of the audited financial statements of KUBUK and its subsidiaries pursuant to Section 6.3 of the Share Exchange Agreement and release the Shareholder Escrow Shares under the terms of Section 8.3(b), (c) or (d), as applicable, of the Share Exchange Agreement and this Agreement;

WHEREAS , in connection with the Share Exchange, the Parties have agreed that (a)(i) Chilco shall, and each of the Principal Shareholders shall take all reasonable actions to, complete the Financing Transaction as soon as practicable after the closing and a subsequent financing transaction of an additional $20,000,000 on or before the third anniversary of the Closing Date (the “ Subsequent Financing Transaction ”); and (ii) the Principal Shareholders shall be granted co-sale rights pursuant to which Chilco shall use commercially reasonable efforts to permit the Principal Shareholders offer and sale up to 1,250,000 shares of Chilco Common Stock to investors in one or more private transactions to raise up to $5,000,000 in connection with the Subsequent Financing Transaction; provided that Chilco has first raised $15,000,000 in the Subsequent Financing Transaction for the corporation and (b) the Escrow Agent will hold the Finance Escrow Shares until Chilco has raised a total of $15,000,000 in the Subsequent Financing Transaction for the corporation and the Escrow Agent shall release the Finance Escrow Shares under the terms of Section 8.4(d) of the Share Exchange Agreement and this Agreement;

WHEREAS , the Parties (a) acknowledge that the Consultant Rights under the Consulting Agreements would have vested, in part, only upon closing of the Financing Transaction and (b) agree that the Escrow Agent shall release the Rightholder Escrow Shares under the terms of Section 8.5(b) of the Share Exchange Agreement and this Agreement;

WHEREAS , the board of directors of Chilco has determined that it is in the best interest of Chilco and its shareholders to complete the Share Exchange and to cancel

Shareholder Escrow Shares and/or the Rightholder Escrow Shares under the terms and conditions set forth in this Agreement, if any;

Capitalized terms not defined herein shall have the meanings set forth in the Share Exchange Agreement.

NOW, THEREFORE, in consideration of the premises and of the covenants and agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

Escrow .

(a) Each of the Shareholders agrees, in lieu of any obligation to indemnify Chilco for any breach of covenants Section 6.3 or 8.1 of the Share Exchange Agreement:

(i)

upon execution of this Agreement, to authorize Chilco to deliver to the Escrow Agent for deposit into the Escrow the Shareholder Escrow Shares, (an aggregate of 5,000,000 Common Shares in the number set forth beside such Shareholder’s name on Schedule A attached hereto subject to adjustments pursuant to Section 2(d) of this Agreement) to be issued to the Shareholders in the Share Exchange (the “ Shareholder Escrow ”);

(ii)

thereafter, to authorize Chilco to deliver to the Escrow Agent for deposit into the Escrow any cash and non-cash dividends and other property at any time received or otherwise distributed on, in respect of, or in exchange for, any or all of the foregoing, all securities hereafter issued in substitution for any of the foregoing, all certificates and instruments representing or evidencing such securities, all cash and non-cash proceeds of all of the foregoing property and all rights, titles, interest, privileges and preferences appertaining or incident to the Shareholder Escrowed Shares (each, a “ Shareholder Distribution, ” and together with the Escrowed Shares, the “ Shareholder Escrow Property ”);

(iii)

subject to Section 4(h) below, to tender for cancellation such Shareholder’s pro rata amount (based upon such Shareholder’s proportionate share of the Shareholder Escrowed Shares) of the total number of Shareholder Escrowed Shares and a pro rata percentage of any Shareholder Distribution (if any) to Chilco, as liquidated damages, and not a penalty, for breach of the covenants set forth in Section 6.3 or 8.1 of the Share Exchange Agreement as follows:

(A)

if any shares of common stock (or other securities exercisable or convertible to acquire a share of common stock) are issued by Chilco in connection with the

Financing Transaction (or any financing or other transaction beginning on the Closing Date and ending on the closing date of a Financing Transaction) at a price (or exercise or conversion price) below the Minimum Share Price, then the number of Shareholder Escrowed Shares to be cancelled as liquidated damages and not a penalty for the breach of the covenant set forth in Section 8.1 of the Share Exchange Agreement shall be calculated as follows:

X = (A/B) – A

where: X =

Number of Shareholder Escrowed
Shares Cancelled

A =

5,000,000

B =

Purchase Price Per Share

For the purposes of this Agreement, “ Purchase Price Per Share ” shall be determined based on completing the Financing Transaction to raise a minimum of $5,000,000 and is defined as cash consideration received or to be received by Chilco or the fair market value of any property received or to be received by Chilco (as shall be verified by Chilco’s independent accounting firm) for each Chilco Common Share issued or to be issued pursuant to exercise or conversion of any convertible or exchangeable security. For greater certainty and by way of example in Section 1(a)(iii)(A), if Chilco, under one or more financing arrangements, issues 6,250,000 shares of common stock at $0.80 per share, then the Escrow Agent shall release to Chilco for cancellation an aggregate of 1,250,000 shares of common stock (5,000,000/$0.80 minus 5,000,000 = 1,250,000) as liquidated damages.

(B)

if the Shareholders breach the covenant set forth in Section 6.3 of the Share Exchange Agreement related to the delivery of the Audited Financial Statements, then 360,000 Escrowed Shares shall be cancelled as liquidated damages and not a penalty for the breach of the covenant.

(b) The Parties agree that:

(i)

Chilco shall use commercially reasonable efforts to permit the Principal Shareholders offer and sale up to 1,250,000 shares of Chilco Common Stock to investors in one or more private transactions in connection with the Subsequent Financing

Transaction; provided that Chilco has first raised $15,000,000 in the Subsequent Financing Transaction for the corporation; and

(ii)

the Principal Shareholders shall place the Financing Escrow Shares (an aggregate of 1,250,000 Common Shares in the number set forth beside such Shareholder Principal’s name on Schedule A attached hereto subject to adjustments pursuant to Section 2(d) of this Agreement)(the “ Financing Escrow ”) to facilitate such efforts and in lieu of any obligation to indemnify Chilco for any breach of the covenant Section 8.2 of the Share Exchange Agreement, if any.

(iii)

thereafter, to authorize Chilco to deliver to the Escrow Agent for deposit into the Financing Escrow any cash and non-cash dividends and other property at any time received or otherwise distributed on, in respect of, or in exchange for, any or all of the foregoing, all securities hereafter issued in substitution for any of the foregoing, all certificates and instruments representing or evidencing such securities, all cash and non-cash proceeds of all of the foregoing property and all rights, titles, interest, privileges and preferences appertaining or incident to the Financing Escrowed Shares (each, a “ Principal Distribution, ” and together with the Financing Escrowed Shares, the “ Financing Escrow Property ”);

(iv)

subject to Section 4(h) below, the Escrow Agent will hold the Finance Escrow Shares until Chilco has raised a total of $15,000,000 in the Subsequent Financing Transaction for the corporation and the Escrow Agent shall release the Finance Escrow Shares (on a pro rata basis) as follows:

(A)

the purchasers of Finance Escrow Shares who have purchased Finance Escrow Shares for proceeds of $5,000,000 or all of the Finance Escrow Shares under the terms set forth in Section 8.4(c) of the Share Exchange Agreement against payment for such shares and any remaining Finance Escrow Shares to the Principal Shareholders once the Principal Shareholders have sold Finance Escrow Shares for proceeds of $5,000,000; or

(B)

to the Shareholders if Chilco has not raised $15,000,000 in the Subsequent Financing Transaction prior to the third anniversary of the Closing Date.

(i)

the Consultant Rights under the Consulting Agreements would have vested, in part, only upon closing of the Financing Transaction, subject to certain redemption and cancellation rights if the Subsequent Financing Transaction is not closed within twelve (12) months of the Closing Date;

(ii)

to authorize Chilco to deliver to the Escrow Agent for deposit into the Escrow the Rightholder Escrowed Shares, (an aggregate of 5,000,000 Common Shares in the number set forth beside such Shareholder’s name on Schedule A attached hereto, subject to adjustments pursuant to Section 2(d) of this Agreement) in connection with the Share Exchange (the “ Rightholder Escrow ”);

(iii)

thereafter, to authorize Chilco to deliver to the Escrow Agent for deposit into the Rightholder Escrow any cash and non-cash dividends and other property at any time received or otherwise distributed on, in respect of, or in exchange for, any or all of the foregoing, all securities hereafter issued in substitution for any of the foregoing, all certificates and instruments representing or evidencing such securities, all cash and non-cash proceeds of all of the foregoing property and all rights, titles, interest, privileges and preferences appertaining or incident to the Rightholder Escrowed Shares (each, a “ Rightholder Distribution, ” and together with the Rightholder Escrowed Shares, the “ Rightholder Escrow Property ”);

(iv)

subject to Section 4(h) below, Escrow Agent will hold the Rightholder Escrow Shares and release the Rightholder Escrow Shares as follows:

(A)

the Escrow Agent shall release the Rightholder Escrow Shares to the Rightholders (in the number set forth beside such Shareholder’s name on Schedule B attached hereto subject to adjustments pursuant to Section 2(d) of this Agreement), if Chilco has raised a total of $5,000,000 in the Financing Transaction for the corporation within thirty (30) days of the Company delivering the Audited Financial Statements to Chilco pursuant to Section 6.3 of the Share Exchange Agreement, subject to a redemption and cancellation right by Chilco with respect to sixty percent (60%) of the Rightholder Escrow Shares released to the Rightholders (in the amounts set forth on Schedule 2.3(c) of Exhibit B ) if Chilco has not raised a total of $5,000,000, $10,000,000, $15,000,000 and $20,000,000 (which amount shall include the proceeds paid to the Shareholder

Principals under the co sale rights set forth in Section 8.4), in the Subsequent Financing Transaction within six (6) or twelve (12) months from the Closing Date (as set forth on Schedule 2.3(c) of Exhibit B ); and

(B)

the Escrow Agent shall release one hundred percent (100%) of the Rightholder Escrow Shares to Chilco for cancellation if Chilco has not raised a total of $5,000,000 in the Financing Transaction for the corporation within thirty (30) days of the Company delivering the Audited Financial Statements to Chilco pursuant to Section 6.3 of the Share Exchange Agreement.

(d) Chilco agrees to accept for cancellation any of the Common Shares to be cancelled pursuant to Section 1(a)(iii)(A) or Section 1(c)(4) of this Agreement, subject to the procedures and the adjustments set forth in Section 4 this Agreement.

Escrow Deposit and Term .

(a) Deposit of Escrow Property . Each of the Parties agrees and acknowledges that (i) concurrent with the execution and delivery of this Agreement, Chilco shall deliver certificates to the Escrow Agent representing (A) the Shareholder Escrow Shares; (B) the Financing Escrow Shares; and (C) the Rightholder Escrow Shares, respectively, in the amounts set forth beside the Shareholders’, the Principal Shareholders’ and the Rightholders’ names on Schedule A and (ii) thereafter, Chilco shall be authorized and shall deliver to the Escrow Agent for deposit into the Shareholder Escrow, the Principal Escrow or Rightholder Escrow any Shareholder Distribution, Principal Distribution or Rightholder Distribution, as applicable.

(b) Delivery Receipt . Upon each deposit of Escrow Property, the Escrow Agent shall acknowledge receipt of stock certificates or other instruments representing the Shareholder Escrow Shares, the Financing Escrow Shares, the Rightholder Escrow Shares and any Shareholder Distribution, Principal Distribution or Rightholder Distribution, as applicable. The Escrow Agent shall hold the Shareholder Escrow Property, the Financing Escrow Property and the Rightholder Escrow Property and shall administer the same in accordance with the terms of this Agreement.

(c) Escrow Term . The Escrow shall commence on the date of this Agreement and continue until terminated in accordance with Section 4(g) hereof.

(d) Adjustments . In the event of any change in Shareholder Escrow Shares, the Financing Escrow Shares and/or the Rightholder Escrow Shares by reason of a stock dividend, split-up, subdivision, consolidation, recapitalization, combination, exchange of shares, or similar transaction or any other extraordinary change in the corporate or capital structure of Chilco (including the declaration or payment of an extraordinary dividend of cash, securities or other property), the type and number of shares or securities to be contributed to the Company by the Shareholders and the Principal Shareholders,

respectively, shall be adjusted appropriately, and proper provision shall be made in the agreements governing such transaction, including but not limited to a stock power, so that Chilco shall receive upon such distribution the number and class of shares and/or other securities and/or cash and/or property that Chilco would have received in respect of Shareholder Escrow Shares, the Financing Escrow Shares and/or the Rightholder Escrow Shares if the distribution had been made immediately prior to such event, or the record date therefor, as applicable, and to the fullest extent Chilco would have been entitled to receive such securities, cash or other property.

Shareholders’ Representative.

(a) Each of the Shareholders and the Principal Shareholders hereby appoints the Shareholders’ Representative as his, her or its representative and true and lawful attorney-in-fact with full power, in his name and on his behalf, to act according to the terms of this Agreement in the Shareholders’ Representative’s absolute discretion, and in general to do all things and to perform all acts including, without limitation, executing and delivering all agreements, certificates, receipts, instructions and other instruments contemplated by or deemed advisable in connection with this Agreement. Notwithstanding the foregoing, the Shareholders’ Representative shall inform each Shareholder and Principal Shareholder, as applicable, of all notices received, and of all actions, decisions, notices and exercises of any rights, power or authority proposed to be done, given or taken by him in connection with the Escrow. The Shareholders’ Representative shall not be liable for any act done or omitted hereunder as agent for the Shareholders and the Principal Shareholders, as applicable, while acting in good faith and in the exercise of reasonable judgment and any act done or omitted pursuant to the advice of counsel shall be conclusive evidence of such good faith. The Shareholders and the Principal Shareholders shall severally indemnify the Shareholders’ Representative and hold Shareholders’ Representative harmless against any loss, liability or expense incurred without gross negligence or bad faith on the part of the Shareholders’ Representative and arising out of or in connection with the acceptance or administration of his duties hereunder.

(b) The Shareholders, the Principal Shareholders, Chilco, KUBUK and the Escrow Agent shall be entitled to rely upon any communication or writing given or executed by the Shareholders’ Representative. All communications or writings to be sent to the Shareholders and the Principal Shareholders, as applicable, pursuant to this Agreement may be addressed to the Shareholders’ Representative, and any communication or writing so sent shall be deemed notice to all of the Shareholders and the Principal Shareholders hereunder.

Transfers from Escrow.

(a) Chilco shall immediately provide written notification to the Shareholders’ Representative and the Escrow Agent:

(i)

on the date Chilco has completed the Financing Transaction, which notice shall provide the (A) Purchase Price Per Share; (B) a

calculation of the liquidated damages, if any, payable from the Shareholder Escrow under Section 1(a)(iii)(A) of this Agreement; (C) a statement whether: (1) Rightholder Escrow Shares are to be released to the Rightholders pursuant to Section 1(c)(iv)(A) of this Agreement, if applicable or (2) a statement whether Rightholder Escrow Shares are to be released to Chilco as liquidated damages pursuant to Section 1(c)(iv)(B) of this Agreement, if applicable;

(ii)

on the date Chilco has received the Audited Financial Statements, which notice shall state whether liquidated damages are due in connection with the delivery of such Audited Financial Statements under Section 6.3 of the Share Exchange Agreement; or

(iii)

on the date Chilco has arranged the sale of Finance Escrow Shares on behalf of the Principal Shareholders under the terms set forth in Section 8.4(c) of the Share Exchange Agreement, which notice shall provide (A) the names of the purchasers, (B) the number of shares purchased by such purchasers, (C) the purchase price per share, (D) the total consideration paid by each purchaser, (E) instructions for tendering the Finance Escrow Shares for transfer and (F) against payment for such shares payable to the Principal Shareholders on a pro rata basis.

(b) Chilco shall, by giving written notice under Section 4(a)(i) or 4(a)(ii) to the Shareholders’ Representative and the Escrow Agent (a “ Claim Notice ”), make a claim against (i) the Shareholder Escrow Property with respect to claims for (A) any amounts claimed under Section 1(a)(iii)(A) of this Agreement, no later than fifteen business (15) days following the date Chilco has closed the Financing Transaction or (B) any claim under Section 1(a)(iii)(B) at any time prior to the Shareholder Escrow Termination Date set forth in Section 4(g) (each such claim a “ Shareholder Damages Claim ”); or (ii) the Rightholder Escrow Property with respect to claims for any amounts claimed under Section 1(c)(iv)(B) of this Agreement, no later than fifteen business (15) days following the date Chilco has closed the Financing Transaction or thirty (30) days after receipt of KUBUK’s Audited Financial Statements (a “ Rightholder Damages Claim ”). Such Claim Notice shall contain such facts and information as are then reasonably available and the specific basis for the Shareholder Damages Claim or Rightholder Damages Claim, as applicable. In the event that Chilco fails to give a Claim Notice to the Shareholders’ Representative and the Escrow Agent in accordance with this Section 4(b), the Escrow Agent shall promptly transfer the Shareholder Escrow Property to the Shareholders or Rightholder Escrow Property to Chilco upon termination of the escrow as set forth in Section 4(g).

(c) In the event that the Shareholders’ Representative, after receiving a Claim Notice, shall give written notice to Chilco and the Escrow Agent that it objects on behalf of the Shareholders to the Shareholder Damages Claim or a Rightholder Damages Claims in respect of said claim(s) within seven (7) days following the date on which the Claim Notice regarding such claim(s) is delivered to the Shareholders’ Representative, then the

Shareholders’ Representative and Chilco shall endeavor to settle and reach a compromise regarding the claims subject to the Claim Notice. The Shareholders’ Representative and Chilco shall promptly provide the Escrow Agent notice of any settlement and compromise regarding the claims subject to the Claim Notice, and the Escrow Agent shall promptly transfer to Chilco for cancellation that number of Shareholder Escrow Shares or Rightholder Escrow Shares, as applicable, or other property from the Shareholder Escrow Property or the Rightholder Escrow Property, as applicable (to the extent sufficient therefor) as directed by such settlement and compromise.

(d) If the Shareholder Representative and Chilco are unable to settle and reach a compromise regarding the claims within five (5) days , then Chilco shall cause its public accounting firm to calculate the amount of the Damages Claim based on Chilco’s books and records and the provisions of the Share Exchange Agreement, as applicable, for Shareholder Damages Claims or Rightholder Damages Claims under this Agreement. The determination of Chilco’s public accounting firm shall be in writing and such determination shall be final and binding on the Parties. Chilco shall immediately provide the Shareholders’ Representative and the Escrow Agent notice of the written determination by the auditors and the Escrow Agent shall promptly transfer to Chilco that number of Shareholder Escrow Shares or Rightholder Escrow Shares, as applicable, or other property from the Shareholder Escrow Property or the Rightholder Escrow Property, as applicable (to the extent sufficient therefor), as directed in such determination.

(e) In the event that the Shareholders’ Representative fails to give written notice to Chilco and the Escrow Agent that it objects on behalf of the Shareholders or the Principal Shareholders, as applicable, to the Claim Notice in respect of said claim(s) within seven (7) days following the date on which the Shareholders’ Representative receives the Claim Notice regarding such claim(s), at the end of such period, the Escrow Agent shall promptly transfer to Chilco that number of Shareholder Escrow Shares or Rightholder Escrow Shares, as applicable, or other property from the Shareholder Escrow Propertyor the Rightholder Escrow Property, as applicable (to the extent sufficient therefor) as directed by such Claim Notice.

(f) The Shareholder Escrow Property transferred under any Shareholder Damages Claim shall be drawn from each Shareholder on a pro rata basis (based upon such Shareholder’s proportionate share of the Escrow Property), rounded up to the nearest whole share.

(g) The Shareholder Escrow, the Rightholder Escrow and the Financing Escrow shall have the following termination dates:

(i)

On the later of fifteen business (15) days following (A) the date Chilco has closed the Financing Transaction or (B) the delivery of the Audited Financial Statements under Section 6.3 of the Share Exchange Agreement (the “ Shareholder Escrow Termination Date ”), the remaining Shareholder Escrow Property, if any, shall be transferred to the Shareholders in accordance with their

respective interests if (1) all Shareholder Escrow Property has not previously been transferred to Chilco in accordance with any of Sections 4(b), (c), (d) or (e) hereof or (2) no Claim Notice has been given by Chilco in accordance with Section 4(b) hereof; provided however , that if Chilco has made any claim against the Shareholder Escrow Property to which the Shareholders’ Representative has timely objected and which remains outstanding as of the Shareholder Escrow Termination Date, then no Escrow Property shall be transferred to the Shareholders until such time as any such claim has been resolved in accordance with the provisions of Section 4(d); provided, however , that if the amount of the claim is not disputed by Chilco, and if such amount is less than the balance then remaining of the Shareholder Escrow Property, then the balance of the Shareholder Escrow Property not subject to such claim shall be transferred as provided in the first sentence of this Section 4(g).

(ii)

T hirty business (30) days following the third anniversary of the Closing Date.

(iii)

The Rightholder Escrow shall terminate upon the release of all of the Rightholder Escrow Property in accordance with the provisions of Section 1(c).

(h) Notwithstanding the other provisions of this Section 4, the Escrow Agent shall release and distribute:

(i)

the Shareholder Escrow Property to (A) Chilco pursuant to any written instructions executed by all of the Shareholders Representative, (B) to the Shareholders pursuant to any written instructions executed by Chilco or (C) in accordance with any non-appealable order or decree by a court of competent jurisdiction to do so; and

(ii)

the Financing Escrow Property to (A) Chilco pursuant to any written instructions executed by all of the Principal Shareholders, (B) to the Principal Shareholders pursuant to any written instructions executed by Chilco or (C) in accordance with any non-appealable order or decree by a court of competent jurisdiction to do so.

(iii)

the Rightholder Escrow Property to (A) the Rightholders pursuant to any written instructions executed by Chilco and the Shareholders or (B) in accordance with any non-appealable order or decree by a court of competent jurisdiction to do so

(i) The Escrow Agent may deliver the certificates representing the Shareholder Escrow Property, the Financing Escrow Property or Rightholder Escrow Property, as applicable, to Chilco, with appropriate instructions, whenever necessary to effectuate a cancellation of the Shareholder Escrow Shares or the Rightholder Escrow Shares, as applicable, in accordance with the terms hereof to the address set forth below.

Dividends; Voting .

(a) Dividends . Any dividends declared and paid, and any distributions made with respect to, the Shareholder Escrow Shares, the Financing Escrow Shares or the Rightholder Escrow Shares, as applicable, shall be delivered to the Escrow Agent and shall be held and transferred by the Escrow Agent in the same manner that the Shareholder Escrow Shares, the Financing Escrow Shares or the Rightholder Escrow Shares, as applicable, are held and transferred hereunder. All such dividends and distributions made in shares of the common stock of Chilco shall be deemed to be Shareholder Escrow Shares, Financing Escrow Shares or Rightholder Escrow Shares, as applicable (allocated on the basis of the pro rata interest represented by such Shareholder Escrow Shares, the Financing Escrow Shares or the Rightholder Escrow Shares, as applicable), for any and all purposes hereunder.

(b) Voting . Each of the Shareholders and the Principal Shareholders, as applicable, shall be entitled to vote the Shareholder Escrow Shares, the Financing Escrow Shares or the Rightholder Escrow Shares, as applicable, held by the Escrow Agent as its nominee in accordance with its interests therein on all matters submitted to a vote of the stockholders of Chilco during the term of this Agreement but shall not be entitled to exercise any investment or dispositive powers over the Shareholder Escrow Shares, the Financing Escrow Shares or the Rightholder Escrow Shares, as applicable.

Fees of Escrow Agent.

(a) Ordinary Escrow Service Fees . Chilco shall pay the Escrow Agent, as acceptance fee for its services hereunder: (a) a $1,000 non-refundable start-up fee, payable upon the Escrow Agent’s execution of this Agreement; and (b) upon the Escrow Agent’s demand, a $200 escrow processing fee for each receipt and disbursement of Shareholder Escrow Shares, the Financing Escrow Shares or the Rightholder Escrow Shares, as applicable, and funds, if any. The acceptance fee will cover the first year of the Escrow. Thereafter, an annual administrative fee in the amount of $800 will be payable on each anniversary date of this Agreement. The Escrow Agent will also be entitled to reimbursement for extraordinary expenses incurred in performance of its duties hereunder. Chilco and KUBUK shall each pay one-half of the acceptance fee. After the Closing of the Share Exchange Agreement, all fees and expenses accrued hereunder shall be paid and/or reimbursed by Chilco which shall be entitled to reimbursement of one-half of such fees and expenses from the Shareholders Principals.

(b) Extraordinary Service Fees . If the conditions of this Agreement are not promptly fulfilled, or if Escrow Agent renders any service not provided for in this Agreement at the request of any Party or any Party requests a substantial modification of

its terms, or if any controversy arises, or if the Escrow Agent is made a party to, or intervenes in, any litigation pertaining to the Escrow or its subject matter (each case, an “Extraordinary Service ”), then the Escrow Agent shall be reasonably compensated for such Extraordinary Services and reimbursed for all costs, reasonable attorney’s fees, including allocated costs of in-house counsel, and expenses occasioned by such default, delay, controversy or litigation, and the Escrow Agent shall have the right to retain all documents and/or other things of value, including, without limitation, the Shareholder Escrow Property, the Financing Escrow Property, and the Rightholder Escrow Property, at any time held by the Escrow Agent in the Escrow until such compensation, fees, costs, and expenses are paid. Each of Chilco, the Shareholders and the Principal Shareholders, jointly and severally, promise to pay to Escrow Agent these sums in connection with Extraordinary Services upon demand by Escrow Agent, which sums shall be borne by Chilco after Closing. Chilco will then be entitled to reimbursement of one-half from the Principal Shareholders.

Rights and Duties of the Escrow Agent.

(a) The Escrow Agent shall have no implied duties and no obligation to take any action hereunder except for any action specifically provided by this Agreement to be taken by the Escrow Agent. The Escrow Agent shall have no responsibility or obligation of any kind in connection with this Agreement or the Shareholder Escrow Shares, the Financing Escrow Shares or the Rightholder Escrow Shares, as applicable, and shall not be required to deliver the same or any part thereof or take any action with respect to any matters that might arise in connection therewith, other than to receive, hold, and make delivery of any Common Shares or property as herein provided or by reason of any non-appealable order of a court of competent jurisdiction. The Escrow Agent shall not be liable to any party for any action taken or omitted to be taken hereunder or in connection herewith except for its own gross negligence or willful misconduct or breach of the specific provisions of this Agreement. The Escrow Agent may execute any of its duties hereunder by or through employees, agents and attorneys-in-fact.

(b) Chilco, the Shareholders’ Representative, the Shareholders and the Principal Shareholders hereby agree to jointly and severally indemnify, hold harmless and defend the Escrow Agent and its directors, officers, agents, partners, Of-Counsels and employees (collectively, the “ Indemnitees ”) from and against any and all claims, liabilities, losses, damages, fines, penalties and expenses, including out-of-pocket and incidental expenses and legal fees and expenses (“ Losses ”), that may be imposed on, incurred by or asserted against, the Indemnitees or any of them for following any instructions or other directions upon which they are authorized to rely pursuant to the terms of this Agreement. In addition to and not in limitation of the immediately preceding sentence, Chilco, the Shareholders’ Representative, the Shareholders and the Principal Shareholders also agree to indemnify and hold the Indemnitees and each of them harmless from and against any and all Losses that may be imposed on, incurred by or asserted against the Indemnitees or any of them in connection with or arising out of the Escrow Agent’s performance under this Agreement, provided the Indemnitees have not acted with gross negligence or engaged in willful misconduct. The provisions of this

Section 7(b) shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent for any reason.

(c) The Escrow Agent shall have the right to resign after first having given Chilco and the Shareholders’ Representative notice in writing of its intent to resign at least thirty (30) days in advance. At the expiration of such thirty (30) days, the Escrow Agent shall deliver the remaining Shareholder Escrow Property, Financing Escrow Property or Rightholder Escrow Property, as applicable, to a successor Escrow Agent designated in writing by Chilco and the Shareholders’ Representative. If Chilco and the Shareholders’ Representative fail to designate a successor to the Escrow Agent within such time, the Escrow Agent shall, at the expense of Chilco and the Shareholders or the Principal Shareholders, as applicable, institute a bill of interpleader as contemplated by Section 7(e)(ii) hereof. Any corporation or association into which the Escrow Agent in its individual capacity may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion or consolidation to which the Escrow Agent in its individual capacity shall be a party, or any corporation or association to which all or substantially all the corporate trust business of the Escrow Agent in its individual capacity may be sold or otherwise transferred, shall be the Escrow Agent under this Agreement without further act.

(d) The Escrow Agent shall be entitled to rely upon the accuracy, act in reliance upon the contents and assume the genuineness of any notice which is given to the Escrow Agent in proper form pursuant to this Agreement and reasonably believed by it to be genuine and correct and to have been signed or sent by the proper person, without the necessity of the Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not be obligated to investigate or in any way determine whether the Investors are entitled to indemnification under the Share Exchange Agreement or the proper amount of any such indemnification. The Escrow Agent shall not be responsible for the validity or sufficiency of this Agreement. In all questions arising under the Escrow Agreement, the Escrow Agent may rely on the advice of counsel, and for anything done, omitted or suffered in good faith by the Escrow Agent based on such advice the Escrow Agent shall not be liable to anyone.

(e) Should any controversy arise between or among Chilco, the Shareholders’ Representative, the Shareholders, the Principal Shareholders and/or any other person, firm or entity with respect to this Agreement, the Shareholder Escrow Property, the Financing Escrow Property, the Rightholder Escrow Property or any part thereof, or the right of any party or other person to receive the such property, or should Chilco and the Shareholders’ Representative fail to designate another Escrow Agent as provided in Section 7(c) hereof, or if the Escrow Agent should be in doubt as to what action to take, the Escrow Agent shall have the right (but not the obligation) to (i) withhold delivery of the Shareholder Escrow Property, the Financing Escrow Property and the

Rightholder Escrow Property, as applicable, until the controversy is resolved and/or (ii) institute a bill of interpleader in any court of competent jurisdiction to determine the rights of the parties hereto (the right of the Escrow Agent to institute such bill of interpleader shall not, however, be deemed to modify the manner in which Escrow Agent is entitled to make transfers from the Shareholder Escrow Property, the Financing Escrow Property and the Rightholder Escrow Property, as applicable, as hereinabove set forth other than to tender the such property into the possession and control of such court).

Legal Counsel.

(a) The Escrow Agent may consult with its counsel or other counsel satisfactory to it with respect to any question relating to its duties or responsibilities hereunder or otherwise in connection herewith and shall not be liable for any reasonable action taken, suffered or omitted by the Escrow Agent in good faith upon the advice of such counsel. Each of Chilco, the Shareholders’ Representative, the Shareholders and the Principal Shareholders acknowledge and agree that Escrow Agent is acting as legal counsel to the Shareholders and the Principal Shareholders in connection with this Agreement and related transactions and will continue to represent the Shareholders and the Principal Shareholders in connection with this Agreement and related transactions. Each of Chilco, the Shareholders, the Principal Shareholders and the Shareholders’ Representative, for itself and on behalf of all Investors, hereby waives any conflict of interest that may exist as a result of Escrow Agent providing such legal services the Shareholders and Principal Shareholders and hereby waives any right to cause a substitute Escrow Agent to be appointed solely as a result of such conflict of interest.

(b) Each Party acknowledges that it has been advised by the other and the Escrow Agent to seek independent legal and financial (including tax) advice with respect to this Agreement and that it has not relied on the other party for any advice, whether legal or otherwise, with respect to this Agreement. Specifically, each of the Parties has had the opportunity, and has been strongly advised, to consult with its counsel or other counsel satisfactory to it with respect to any question relating to its duties or responsibilities hereunder. Each of the Shareholders and the Principal Shareholders understands that entering into this Agreement has or may have material legal and tax consequences on such Shareholder or Shareholder Principal, and Chilco has not given any opinion or representation with respect to the legal or tax consequences to the Shareholders or Shareholder Principals.

(c) Each party shall be responsible for its legal expenses incurred by it, in connection with the transactions contemplated by this Agreement.

Miscellaneous.

(a) Time Periods . For purposes of computing time periods hereunder, all references to “days” shall mean regular business days of the Escrow Agent. Whenever under the terms hereof the time for giving a notice or performing an act falls upon a Saturday, Sunday or bank holiday, such time shall be extended to the Escrow Agent’s next business day.

(b) Further Assurances . The parties will sign and deliver all further documents and instruments and do all things that may, either before or after the signing of this Agreement, be reasonably required to carry out the full intent and meaning of this Agreement.

(c) Severability . If one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

(d) Survival of Indemnification . Notwithstanding termination of this Agreement, the provisions of Sections 7 and 8(a) shall remain in full force and effect for so long as the Escrow Agent may have any liability.

(e) Waiver .

(i) No failure on the part of any party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

(ii) No party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

(f) Notices . All notices and other communications hereunder shall be in writing (including wire, telefax or similar writing) and shall be delivered, addressed or telefaxed as follows:

If to Chilco:

Chilco River Holdings Inc., Attn: Gavin Roy
c/o Dorsey & Whitney LLP
1420 Fifth Avenue, Suite 3400
Seattle, WA 98101

With a required copy to:

Dorsey & Whitney LLP
1420 Fifth Ave., Suite 3400
Seattle, WA 98101
Attn: Kenneth Sam, Esq.

If to KUBUK, the Shareholders’ Representative, the Shareholders and the Principal Shareholders:

Tom Liu
c/o Wasserman, Comden, Casselman & Pearson, LLP
801 South Garfield Avenue, Suite 328
Alhambra, California 91801
Attn: Tim T. Chang, Esq.

With a required copy to:

Wasserman, Comden, Casselman & Pearson, LLP
801 South Garfield Avenue, Suite 328
Alhambra, California 91801
Attn: Tim T. Chang, Esq.

If to the Escrow Agent:

Wasserman, Comden, Casselman & Pearson, LLP
801 South Garfield Avenue, Suite 328
Alhambra, California 91801
Attn: Tim T. Chang, Esq.

Each such notice, request or other communication shall be given by hand delivery, by nationally recognized courier service or by telefax, receipt confirmed. Each such notice, request or communication shall be effective (i) if delivered by hand or by nationally recognized courier service, when delivered at the address specified in this Section 9(f) (or in accordance with the latest unrevoked written direction from such party); (ii) if given by telefax, when such telefax is transmitted to the telefax number specified in this Section 9(f) (or in accordance with the latest unrevoked written direction from such party), and the appropriate confirmation is received.

(g) Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be deemed one and the same agreement.

(h) Amendment . This Agreement may not be amended or modified except by a written agreement signed by each of the parties hereto.

(i) Governing Law . This Agreement shall be construed, enforced, and administered in accordance with the laws of the State of California, without giving effect to any provision thereof that would compel the application of the substantive laws of any other jurisdiction.

(j) Construction; Defined Terms . This Agreement shall be interpreted neutrally and no construction against the drafter shall be permitted. All defined terms

used herein shall have the meanings herein defined or, if not defined herein, shall have the meanings ascribed to such terms in the Share Exchange Agreement.

(k) Entire Agreement . This Agreement, together with the Share Exchange Agreement, constitutes the entire agreement and understanding among Chilco, the Shareholders, the Shareholders’ Representative, the Principal Shareholders, the Rightholders and the Escrow Agent and supersedes any prior agreement and understanding relating to the subject matter of this Agreement. Any capitalized term not otherwise defined herein shall have the same meaning ascribed to such term in the Share Exchange Agreement.

* * *

IN WITNESS WHEREOF, this Escrow Agreement has been executed by the parties as of the date first above written.

CHILCO:

Chilco River Holdings Inc.

By:
Name:
Title:

SHAREHOLDERS REPRESENTATIVE:

Name:

COMPANY:

KUBUK International, Inc.

By:
Name:
Title:

CONSENT OF SPOUSES:

CONSENT OF SPOUSE

EXECUTED this 15th day of July, 2005.

___________________________________________

EXHIBIT 99.3

CONTRIBUTION AGREEMENT

Chilco River Holdings Inc.

This Contribution Agreement (the “ Agreement ”) is effective as of July 26, 2005, by and between Gavin Roy (“ Shareholder ”), and Chilco River Holdings Inc., a Nevada corporation (“ Company ”).

WHEREAS:

A.	Shareholder currently holds in excess of 3,564,000 shares of the Company’s issued and outstanding shares of common stock, par value $0.001 (“ *Common Shares* ”);

B.	Shareholder is a founding shareholder, officer and director of the Company, and acquired substantially all of his Common Shares for nominal consideration (the “ *Consideration* ”);

The Company’s board of directors has approved the terms of a Share Exchange Agreement (the “ Share Exchange Agreement ”) with the shareholders of KUBUK International, Inc., a California corporation (“ KUBUK ”), to acquire all of the issued and outstanding shares of KUBUK for 19,250,000 Common Shares;

KUBUK owns and operates, through two wholly-owned subsidiaries, the Hotel Cinco Estrellas in Lima, Peru (the “ Bruce Hotel and Casino ”), and owns all right, title and interest in all property, real, personal or mixed, tangible and intangible, of every kind and description, that relate to, have been developed for use in connection with, arise from the conduct of, are used or held for use in connection with or are necessary for the conduct of the business as conducted or proposed to be conducted in connection with the Bruce Hotel and Casino (the “ Business ”);

Under the terms of the Share Exchange Agreement, the Company has agreed to cause one or more of its shareholders to contribute, as capital contributions, Common Shares to the Company so that immediately prior to the Share Exchange, there will be 2,200,000 Common Shares issued and outstanding, and upon the closing of the Share Exchange there will be 21,450,000 Common Shares issued and outstanding;

F.	The Company and Shareholder have determined that it is in the best interest of the Company, its shareholders and Shareholder that the Shareholder make a capital contribution of 3,564,000 Common Shares to the Company; and

G.	Shareholder desires to contribute to the Company 3,564,000 Common Shares as an additional capital contribution to the Company and the Company desires to accept such contribution under the terms and conditions set forth below;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Contribution . Shareholder hereby agrees to contribute 3,564,000 Common Shares to the Company as an additional capital contribution and the Company hereby agrees to accept such contribution by the Shareholder and to reflect such capital contribution on the books and records of the Company. Shareholder hereby delivers a certificate(s) representing Common Shares, of which 3,564,000 Common Shares will be cancelled by the Company and Shareholder will receive without charge a new certificate in respect of the balance of the Common Shares not so contributed.

2.	Governing Law . This Agreement shall be construed and enforced in accordance with the federal laws of the United States and the internal laws of the State of Nevada, without regard to the conflicts of law rules of such state.

3.	Construction . Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa.

4.	Headings . The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provisions hereof.

Severability . If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of this Agreement and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law.

Heirs, Successors and Assigns . Each of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors and assigns.

7.	Creditors . None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company.

Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement via facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

-2-

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the day first written above.

CHILCO RIVER HOLDINGS INC.

By:
         Robert Krause, President

SHAREHOLDER


Gavin Roy

-3-

EXHIBIT 99.4

SUBSCRIPTION AGREEMENT

Chilco River Holdings Inc.

This Subscription Agreement (the “ Agreement ”) is effective as of July 26, 2005, by and between the undersigned subscriber (“ Subscriber ”), and Chilco River Holdings Inc., a Nevada corporation (“ Company ”).

WHEREAS:

The Subscriber is the holder of Promissory Notes in the aggregate principal amount of $100,000 (individually, a “Promissory Note” and collectively, the “Promissory Notes”).

The Company would like to satisfy its obligations under the Promissory Notes by issuing the Subscriber 50,000 shares of Common Stock, with a par value of $0.001 (the “Common Share”), in full satisfaction of aggregate principal amount and accrued interest.

The Subscriber desires to convert the Promissory Note into 50,000 Common Shares in full and complete satisfaction of the debt and obligations of the Company under the Promissory Note.

The Company is offering the Securities pursuant to an exemption from registration promulgated under Regulation S of the Securities Act of 1933, as amended (the “Securities Act”); and

The Subscriber and any such beneficial purchaser is a non-resident of the United States and is not a U.S. Person, as the terms “United States” and “U.S. Person” are as defined in Regulation S made under the Securities Act.

NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the mutual covenants and agreements herein contained, the receipt of which is acknowledged, the parties covenant and agree with each other as follows:

SUBSCRIPTION

1.1

The Company is offering Fifty Thousand (50,000) shares of Common Stock, with a par value of $0.001 to the Subscriber in full satisfaction and complete satisfaction of the Company’s obligations under the Promissory Notes in the aggregate principal amount of $100,000. By signing this Agreement, the Subscriber acknowledges that the Company is relying on the accuracy and completeness of the representations contained in this Agreement in complying with its obligations under applicable securities laws.

1.2

The Subscriber hereby irrevocably subscribes for and agrees to purchase from the Company, Fifty Thousand (50,000) shares of Common Stock in full satisfaction and complete satisfaction of the Company’s obligations under the Promissory Notes. The Subscriber hereby tenders the Promissory Notes as consideration for Fifty Thousand (50,000) shares of Common Stock.

REPRESENTATIONS, WARRANTIES, AND COVENANTS

2.1

The Subscriber makes the following representations and warranties to the Company:

(a)

The Subscriber is purchasing the Common Shares for its own account or for the account of one or more persons for investment purposes only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Common Shares issued in connection with the purchase in the United States or to U.S. persons; provided, however, that the Purchaser may sell or otherwise dispose of any of the Common Shares pursuant to

registration thereof pursuant to the Securities Act and any applicable state securities laws or under an exemption from such registration requirements.

(b)

The Subscriber recognizes that investment in the Securities involves substantial risks and has taken full cognizance of and understands all of the risks related to the purchase of the Securities, including without limitation those set forth in the Company’s reports on Form 10-KSB and 10-QSB filed pursuant to the Securities Exchange Act of 1934, as amended (collectively, the “Reports”).

(c)

In making the Subscriber’s decision to invest in the Common Shares, the Subscriber has carefully reviewed and is familiar with the Company’s Reports, and the related disclosure filed by the Company with the SEC, and the Subscriber has relied on the information contained therein and the documents and materials delivered therewith, and on the Subscriber’s own independent investigations and/or those of the Subscriber’s own professional tax and other advisors. The Subscriber and the Subscriber’s advisors (including the Subscriber’s representative, if any) have been given the opportunity to obtain information and to examine all documents relating to the Company, and to ask questions of and to receive answers from the officers of the Company concerning the Company, the officers and directors, and the terms and conditions of this investment, and to obtain any additional information, to the extent the Company possesses that information or could acquire it without unreasonable effort or expense, to verify the accuracy of any information previously furnished. All questions have been answered to the full satisfaction of the Subscriber, and all information and documents, records and books pertaining to this investment that the Subscriber has requested have been made available to the Subscriber.

(d)

The Subscriber believes that it, either alone or with the assistance of its advisor(s) (including the Subscriber’s representative, if any), has such knowledge and experience in financial and business matters that the Subscriber is capable of reading and interpreting disclosure materials, such as the Reports and the Company’s financial statements, and of evaluating the merits and risks of the prospective investment in the Securities. The Subscriber has obtained sufficient information to evaluate the merits and risks of an investment in the Company and has the net worth to undertake those risks.

(e)

The Subscriber has obtained, to the extent the Subscriber deems necessary, the Subscriber’s own personal, professional advice with respect to the risks inherent in the investment in the Company and the suitability of the investment in the Securities in light of the Subscriber’s financial condition and investment needs.

(f)

The Subscriber believes that investment in the Securities is suitable for the Subscriber based on the Subscriber’s investment objectives and financial needs, and the Subscriber has adequate means for providing for the Subscriber’s current financial needs and personal contingencies and has no need for liquidity of investment with respect to the Securities.

(g)

The Subscriber is able to (i) hold the Common Shares for an indefinite period of time, (ii) bear the economic risk of the Subscriber’s investment, and (iii) withstand a complete loss of the investment.

(h)

The Subscriber has not purchased the Securities as a result of any form of general solicitation or general advertising, including advertisements, articles, notices, or other communications published in any newspaper, magazine, or similar media, or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

(i)

The Subscriber, and if applicable, each person for whose account it is purchasing the Common Shares:

(i)

is not a “U.S. Person,” as that term is defined by Rule 902 of Regulation S (the definition of which includes, but is not limited to, an individual resident in the

United States and an estate or trust of which any executor or administrator or trustee, respectively, is a U.S. Person and any partnership or corporation organized or incorporated under the laws of the United States);

(ii)

was not in the United States when its buy order was made to the Company, and the Subscriber did not execute or deliver this Agreement in the United States;

(iii)

acknowledges that no offers to sell the Units were made by any person to the Subscriber while the Subscriber was in the United States;

(iv)

acknowledges that the Common Shares are not being acquired, directly or indirectly, for the account or benefit of a U.S. Person or a person in the United States;

(v)

acknowledges that the Common Shares have not been registered under the Securities Act, and the Subscriber undertakes and agrees that it will not offer or sell the Common Shares unless such Common Shares are sold in accordance with Regulation S under the Securities Act, the Common Shares are registered under the Securities Act and the securities laws of all applicable states of the United States, or such Common Shares are sold pursuant to an available exemption from such registration requirements. The Subscriber understands that the Company has no obligation or present intention of filing a registration statement under the Securities Act in respect of the Common Shares.

(j)

The Subscriber understands that the Common Shares may not be offered, sold, transferred, pledged, or hypothecated to any person in the absence of registration under the Securities Act or an opinion of counsel satisfactory to the Company that registration is not required. The Subscriber understands that the Company does not plan, and is under no obligation to provide for, registration of the Common Shares in the future. Accordingly, any subsequent sale of part or all of the Subscriber’s interest in the Common Shares will be permissible only if an exemption from the applicable registration provisions of federal and state law is available at the time of the proposed disposition. Even if an exemption is available, the assignability and transfer of the Securities is subject to limitations imposed by this Agreement.

(k)

The Subscriber further understands that a legend in substantially the following form will be placed on all documents evidencing the Common Shares and that similar notations may be made on the Company records as a means of preventing the disposition of the Common Shares other than in accordance with this Agreement and applicable law:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL, OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. ”

(l)

If a partnership, trust, corporation, or other entity: (i) the Subscriber has the power and authority to sign and comply with the terms of this Agreement and the person signing this Agreement on its behalf has the necessary power to do so; (ii) the Subscriber’s principal place of business and principal office are located within the jurisdiction set forth in its address below.

(m)

The Subscriber understands and agrees that there may be material tax consequences to the Subscriber of an acquisition or disposition of the Securities. The Company gives no opinion and makes no representation with respect to the tax consequences to the Subscriber under United States, state, local or foreign tax law of the Subscriber’s acquisition or disposition of the Securities.

(n)

The Subscriber confirms that neither the officers of the Company nor any of its affiliates or agents have made any representations or warranties or statements, except as explicitly set forth in this Agreement, concerning the Subscriber’s investment in the Common Shares, including but not limited to any representations or warranties concerning tax consequences that may arise in connection with the Subscriber’s investment in the Securities or the anticipated financial results of the operations of the Company.

2.2

The Subscriber agrees as follows:

(a)

If the Subscriber decides to offer, sell or otherwise transfer any of the Common Shares, it will not offer, sell or otherwise transfer any of such securities directly or indirectly, unless:

(i)

the sale is to the Company;

(ii)

the sale is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the Securities Act and in compliance with applicable local laws and regulations;

(iii)

the sale is made in compliance with the exemption from the registration requirements under the Securities Act provided by Rule 144 or Rule 144A thereunder, if available, and in accordance with any applicable state securities or “Blue Sky” laws; or

(iv)

the securities are sold in a transaction that does not require registration under the Securities Act or any applicable U.S. state laws and regulations governing the offer and sale of securities; and

with respect to subparagraphs (iii) and (iv) hereof, it has prior to such sale furnished to the Company an opinion of counsel reasonably satisfactory to the Company.

(b)

The Subscriber agrees not to engage in any hedging transactions or other transactions that have the effect of transferring the economic risk of ownership of the Common Shares unless such transactions comply with the requirements of the Securities Act.

CLOSING

3.1

The Company will deliver a treasury order (the “ Treasury Order ”) to its transfer agent sufficient to cause the transfer agent to issue to the Subscriber a share certificate or certificates representing the Common Shares as provided for below by the Subscriber.

GENERAL

4.1

For the purposes of this Agreement, time is of the essence. The parties will sign and deliver all further documents and instruments and do all things that may, either before or after the signing of this Agreement, be reasonably required to carry out the full intent and meaning of this Agreement.

4.2

This Agreement may not be assigned by either party hereto.

4.3

This Agreement may be signed by the parties in as many counterparts as may be deemed necessary, each of which so signed will be deemed to be an original, and all counterparts together will constitute one and the same instrument. A copy of this Agreement transmitted by facsimile will be treated and relied on for all purposes by any person as an originally signed copy.

IN WITNESS WHEREOF the parties have signed this Agreement as of the Effective Date.

Chilco River Holdings Inc.
Per:

Robert Krause, President
Authorized Signatory

TO BE COMPLETED BY THE SUBSCRIBER

A. Registration Instructions The name and address of the person in whose name the Securities are to be registered is as follows (if the name and address is the same as was inserted in paragraph A above, then insert “N/A”):

Name (please print or type): ______________________________

Address ____________________________________________

B. Delivery Instructions. The name and address of the person to whom the certificates representing the Subscriber’s Securities referred to in paragraph A above are to be delivered is as follows (if the name and address is the same as was inserted in paragraph A above, then insert “N/A”):

Name (please print or type): ______________________________

Address ____________________________________________

C. Subscription Amount:

Subscription Funds: US$100,000

Number of Common Shares: 50,000 Common Shares.

TO BE COMPLETED AND SIGNED BY THE SUBSCRIBER:

___________________________________________
Name of the Subscriber – use the name inserted in paragraph A above.

___________________________________________
Signature of Subscriber

___________________________________________
Title (if applicable)

EXHIBIT 99.5

[National Emblem of the Republic of Peru]

IT IS A TRUE COPY OF ITS
ORIGINAL
20 JULY 2005
[Illegible]
MARLENE VILLANUEVA

Directorial Resolution

No. 060-MINCETUR/VMT/DNT
Lima, July 01, 2005

Examined: Case No. 001483-2005-MINCETUR, filed by KUBUK GAMING S.A.C. requesting the Authorization to Exploit Casino Games at the facilities of the five-star-hotel by the name of “BRUCE HOTEL”, located at Jr. Francisco Bolognesi No. 171, Distrito de Miraflores, Province and Departament of Lima; Legal Report No. 125-2005-MINCETUR/VMT/DNT/DE-JCMT/g.z; Financial and Economical Report 001-2005- MINCETUR/VMT/DNT/DE-JCMT/LAT and Technical Report No. – 073-2005- MINCETUR/VMT/DNT/DE-JCMT /LAT-a.b.;

[illegible]

LEGAL
COUNSEL

WHEREAS:

That on the 29 ^th of April, 2005, RUBUK GAMING S.A.C., requests the authorization to exploit casino games installed in the facilities five-star-hotel by the name of “BRUCE HOTEL”, located at Jr. Francisco Bolognesi No. 171, Distrito de Miraflores, Province and Departament of Lima;

[illegible]

TECHNICAL
COUNSEL

That Law No. 27153, modified by Law No. 27796: “The law that regulates the exploitation of casino games and slot machines” grants upon the National Office of Tourism the administrative powers of authorization related to the application of such law, providing in clause a) of article 25 ^th that it is the duty of the National Office of Tourism to issue and revoke authorizations to exploit casino games;

[illegible]

EXECUTIVE
DIRECTORS

That, upon evaluating the files of case No. 001483-2005-MINCETUR, it is found that the requesting company has fulfilled the requirements to obtain the Express Authorization required by Law No. 27153, as modified by Law No. 27796, in its Rulebook, approved by Supreme Decree No. 001-2005-MINCETUR;

That through Supreme Resolution 188-99-MINCETUR, the districts authorized for the exploitation of casino games are established, the district of MIRAFLORES, Province of Lima, Department of Lima, is established as the authorized district for the exploitation of Casino Games;

That through Directorial Resolutions No. 199-99-MINCETUR/VMT/DNT, No. 200-99- MINCETUR/VMT/DNT, No. 202-99-MINCETUR/VMT/DNT, and No. 204-99- MINCETUR/VMT/DNT, No. 205-99-MINCETUR/VMT/DNT, and No. 206-99- MINCETUR/VMT/DNT are authorized and registered the following casino games: Black Jack, Roulette, Pal Gow Poker, Punto y Banca , Craps, and Caribbean Poker, respectively.

According to Law No. 27153, modified by Law No. 27796, the Supreme Decree No. 001-2005-MINCETUR, and Supreme Decree No. 02-94-JUS;

IT IS RESOLVED:

Article One . To authorize KUBUK GAMING S.A.C. the exploitation of casino games at the facilities at the five-star-hotel by the name of “BRUCE HOTEL” , located at Jr. Francisco Bolognea No. 171, Distrito de Miraflores, Province of Lima and Departament of Lima.

Article Two . This authorization empowers KUBUK GAMING S.A.C. to exploit the following casino games duly authorized and registered by the National Office Tourism:

Name of the Casino Games		Registry No.


Black Jack		JC0001

Roulette American Style		JC0002

Roulette French Style		JC0002

Pal Gow Poker		JC0004

Punto y Banca		JC0006

Midi Punto y Banca		JC0006

Mini Punto y Banca		JC0006

Craps		JC0007

Caribbean Poker		[illegible]

Article Three . This authorization empowers KUBUK GAMING S.A.C. to install in its casino games room 21 (twenty-one) casino game tables according to the following description:

Name of the Casino Games		Table No.


Black Jack		06

Roulette American Style		02

Roulette French Style		02

Pal Gow Poker		02

Punto y Banca		01

Midi Punto y Banca		02

Mini Punto y Banca		02

Craps		01

Caribbean Poker		03

Article Four . The term for the validity of the authorization granted upon KUBUK GAMING S.A.C. runs for five years starting the moment the Resolution is published.

Article Five . This Resolution will become valid on the day of publication.

[illegible]

Miguel Antonio Zamora Salas
National Director of Tourism

IT IS A TRUE COPY OF ITS ORIGINAL
20 JULY 2005
[Illegible]
MARLENE VILLANUEVA
[Illegible]

EXHIBIT 99.6

[National Emblem of the Republic of Peru]

IT IS A TRUE COPY OF ITS
ORIGINAL
20 JULY 2005
[Illegible]
MARLENE VILLANUEVA

Directorial Resolution

No. 145-MINCETUR/VMT/DNT
Lima, July 01, 2005

Examined: Case No. 003237-2005-MINCETUR, filed by KUBUK GAMING S.A.C. requesting the Authorization to Exploit Slot Machines at the facilities of the five-star-hotel by the name of “BRUCE HOTEL”, located at Jr. Francisco Bolognesi No. 171, District of Miraflores, Province and Departament of Lima; Legal Report No. 182-2005-MINCETUR/VMT/DNT/DE-JCMT/g.z; Financial and Economical Report 001-2005-MINCETUR/VMT/DNT/DE-JCMT/LAT and Technical Report No. 078-2005-MINCETUR/VMT/DNT/DE-JCMT /LAT-a.b.;

[illegible]

LEGAL
COUNSEL

WHEREAS:

That on the 29 ^th of April, 2005, RUBUK GAMING S.A.C., requests the authorization to exploit Slot Machines installed in the facilities of the five-star-hotel by the name of “BRUCE HOTEL”, located at Jr. Francisco Bolognesi No. 171, District of Miraflores, Province and Departament of Lima;

[illegible]

TECHNICAL
COUNSEL

That Law No. 27153, modified by Law No. 27796: “The law that regulates the exploitation of casino games and slot machines” grants upon the National Office of Tourism the administrative powers of authorization related to the application of such law, providing in clause a) of article 25 ^th that it is a power of the National Office of Tourism to issue and revoke authorizations to exploit Slot Machines;

[illegible]

EXECUTIVE
DIRECTOR

That, according to Supreme Decree No. 009-2002-MINCETUR, the National Office of Tourism is empowered to authorize the exploitation of Slot Machines or “read-only readings”not corresponding to game models and programs authorized and registered until September 27, 2005.

That, upon evaluating the files of case No. 003237-2005-MINCETUR, it is found that the requesting company has fulfilled the requirements to obtain the Express Authorization required by Law No. 27153, as modified by Law No. 27796, in its Rulebook, approved by Supreme Decree No. 001-2005-MINCETUR;

That according to Law No. 27796, Law No. 27232, Supreme Decree No. 001-2002-MINCETUR, Supreme Decree No. 009-2002-MINCETUR, and the Supreme Decree No. 02-94-JUS:

IT IS RESOLVED:

Article One . To authorize KUBUK GAMING S.A.C. the exploitation of Slot Machines games at the facilities at the five-star-hotel by the name of "BRUCE HOTEL" , located at Jr. Francisco Bolognea No. 171, District of Miraflores, Province of Lima, and Departament of Lima.

Article Two . This authorization empowers KUBUK GAMING S.A.C. to install and exploit in its game room, 212 (two hundred and twelve) slot machines and 93 (ninety-three) “read-only” of game programs, with characteristics described, respectively, in Annex 1 and Annex 2, attached to this Resolution, memories are unable to be transferred to a business different to the ones expressly authorized for.

Article Three . The models of the slot machines and those “read-only” of game programs not authorized or registered by the National Office of Tourism, can only be exploited until September 27, 2005, and when such deadline arrives and the authorization has not been acquired, they will have to be removed or replaced, under warning of sanctions to be imposed as established by Law No. 27153, modified by Law No. 27796.

Article Four . The term for the validity of the authorization granted upon KUBUK GAMING S.A.C. runs from the moment the Resolution is enacted until April 27, 2009.

Article Five . This Resolution will become valid on its day of publication.

[illegible]

Miguel Antonio Zamora Salas
National Director of Tourism

IT IS A TRUE COPY OF ITS ORIGINAL
20 JULY 2005
[Illegible]
MARLENE VILLANUEVA
[Illegible]

EXHIBIT 99.7

TRANSLATION OF DOCUMENTS INTO ENGLISH
HELEN S. RUIZ INTERPRETING AND TRANSLATING SERVICE
14730 BEACH BLVD., STE. 224, LA MIRADA, CA 90638

(714) 522-7440 -------------- (714) 522.4041 FAX

Seal of the Republic of Peru

MINISTRY OF EXTERNAL OF COMMERCE AND TOURISM
ASSISTANT MINISTRY OF TOURISM
NATIONAL OFFICE OF TOURISM DEVELOPMENT

EXPIRATION DATE SEP. 16-09 REGISTRATION NO. 187
According to Supreme Decree No. 023-2001-ITINCI

CERTIFIES

THAT THE BUSINESS BRUCE HOTEL

LOCATED AT:                        CALLE BOLOGNESI No. 171-[illegible]

DISTRITO MIRAFLORES                PROVINCE: LIMA            DEPARTMENT: LIMA

CLASSIFIED AS:                     HOTEL                     CATEGORY: FIVE-STAR

Business name: BRUCE GRUPO DIVERSION, S.A.C.                 RUC: 203[illegible]

LEGAL DOMICILE: CALLE BOLOGNESI No. 181

DISTRICT: MIRAFLORES PROVINCE: LIMA DEPARTMENT: LIMA

Lima, February 16, [illegible]

[illegible]
JORGE CHAVEZ RODRIGUEZ
NATIONAL DIRECTOR OF TOURISM DEVELOPMENT

NOTE: THIS CERTIFICATE IS NON-TRANSFERABLE AND MUST BE PLACED AT A
VISIBLE PLACE IN THE BUSINESS.

Every change of address, business name, [illegible] and category, must be informed to the National Office of Tourism Development.

Rend Flores, Translator State of California Judiciary Interpreter Cert. No.300304

EXHIBT 99.8

[Translated]

Ysabel Solis Padilla
Arquitect
CAP 3689

Appraisal Report for Property located at Jiron Francisco Bolognesi Number 191-171, District of Miraflores, Province and Department of Lima

[ Photo of property in question]

Owner:                     Bruce Grupo Diversion S.A.
Client:                    Bruce Grupo Diversion S.A.
Location:                  Jiron Francisco Bolognesi Number 191-171, District of
                           Miraflores, Province and Department of Lima
Appraisal Date:            June 1, 2004
Commercial Value:          $19,259,737.00  (U.S. Dollars)
Appraiser:                 Arquitect Ysabel Solis Padilla
                           CAP 3689
                           REPEV # 176
                           Certified Appraiser, registered in the S.B. y S.
                           (offical organization) Authorization to practice
                           is current

(Letterhead of Solis Padilla)

APPRAISAL OF PROPERTY LOCATED AT JIRON FRANCISCO BOLOGNESI NUMBER 191-171,
DISTRICT OF MIRAFLORES, PROVINCE AND DEPARTMENT OF LIMA

1. GENERAL INFORMATION:
1.1 INSTRUCTIONS RECEIVED AND PURPOSE OF THE APPRAISAL The object of the appraisal is to determine the commercial market value of the property in accordance with that laid out in the R.G.T.R.M. #370-85-VC-9300. (official registration number) We received instructions from the owners of Bruce Grupo Diversion S.A. to appraise the property owned by Bruce Grupo Diversion S.A., located at Jiron Francisco Bolognesi # 171-191, in Miraflores, for the purpose of determining its commercial value.

1.2 PROPERTY LOCATION
Jiron Francisco Bolognesi # 171-191 in the Miraflores District, Province and Department of Lima.

1.3 DESCRIPTION AND DISTRIBUTION OF PROPERTY Description: The property in question is comprised of 2 legally inscribed buildings (in separate registries) of 7 and of 14 floors respectively, and which are physically connected and have been conditioned to be used as office space, casino and hotel (Hotel Cinco Estrellas). There are three entrances, the main one on Bolognesi 191, a secondary entrance on Berlin and the third through the parking garage, which they also own.
DISTRIBUTION:
FIRST FLOOR: Main entrance, entrance hall, main access stairs to the second floor and basement, lobby, luggage storage room, hall elevators, reception, bar 1, secondary entrance on Berlin, private entrance, hallway 1 and fire escape (stairs) 1 and fire escape stairs 2, freightlift.
Entering through the hall entrance on the left we have: slot machine parlor 1, men's bathroom (3 sinks, 3 toilets and 3 urinals), women's bathroom (3 sinks and 3 toilets), slots cashier 1, then going more to the left we find a snack bar area with tables and a kitchen snack bar.
Towards the back with access to hallway 1 and parking garage we have: Reception area for personnel, systems chief's office, switchboard office, pump room, private mens bathroom and dressing rooms (3 sinks, 2 urinals, 2 toilets, 3 showers), private womens bathroom and dressing rooms (3 sinks, 2 toilets and 3 showers), election substation.
BASEMENT 1: hall space, Reception area for Sauna, hall elevators, changing rooms, zone for hydromassages and water wells/baths, half bathroom, shower area, dry sauna, steam sauna , relaxation room, bar 4, hallway, 10 massage rooms, 1 storage room, women's hairdresser, pedicure area, 3/4 bathroom, service hall, access stairs to 1st floor, pump room 1, pump room 2, storage 2, storage 3, hall space, freightlift, laundryroom and access to basement 2.

SUB-BASEMENT: BOILERROOM AND TANKS.
SECOND FLOOR: hall space, access stairs to 3rd floor, floor to the left, large casino area, bar 2, men's bathroom (3 sinks, 2 urinals, 2 toilets), women's room (2 sinks and 4 toilets), bar 3, freight elevator, fire escape stairs 1, fire escape stairs 2, Casino Cashier 2 and Slots parlor 2.
To the left entering through the casino we have a vestibule-hall area, access stairs 3 to the 3rd floor, hall space 1, half bathroom, dealers lounge, cleaning storage room, women dealers' bathroom ( 3 sinks, 2 toilets, 2 showers), men dealer's bathroom (2 sinks, 2 urinals, 2 toilets and 2 showers), office of casino management with 1/2 bath, elevator 2, cleaning storeroom and casino video room.
THIRD FLOOR: hall reception area, bar 5, "western dining" dining room, "oriental dining" dining room, hall bathrooms, mens (3 sinks, 2 urinals, 3 toilets), women's bathroom (3 sinks, 3 toilets), Tables parlor 2, hall area, women's bathroom (2 sinks, 1 toilet), men's bathroom (2 sinks, 2 urinals, 2 toilets), storage, private Karaoke room 1, private Karaoke room 2, oriental food bar/area, pastry/dessert area, dishwashing area, service hallways, private dining room, mens dressing/bathrooms (2 urinals, 2 toiilets), half bath, chef's office for "Western Dining".
Towards the left we have, hall/vestibule space, stairs 2 with access to the 4th floor, elevator and conference room.
FOURTH FLOOR: Hotel area: elevators,
hallway space/distribution, fire escape 1, fire esscape 2, 6 rooms (3 standard, 3 double) with full bath and dressing rooms, cleaning room and freight lift. Administrative area: hall/vestibule area, access stairs to the 5th fl., elevator, to the right, secretary's office, office of legal aid (lawyer's office), office of maintenance,safety/security and logistics, assistant management office with private bathroom , men's bathroom (1/2 bath), women's bathroom (1/2 bath); to the left are the offices for slots and casino with livingroom and bedroom.
FIFTH FLOOR: Hotel area, elevators, main hall area, fire escape 1, fire escape 2, 6 rooms (3 standard, 3 double) with full bath and dressing rooms, cleaning room and freight lift.
Administrative area: hall-vestibule, access stairs to 6th fl., elevator, to the right, secretary's office, men's bathroom (1/2), women's bathroom (1/2), meeting rooms, hallway, accounting office1, accounting office 2, human resources, Assistant management office with bedroom and bathroom, office of management. SIXTH FLOOR: Hotel area, elevators, main hall area, fire escape 1, fire escape 2, 6 rooms (3 standard, 3 double) with full bath and dressing rooms, cleaning room and freight lift. Administrative area: hall-vestibule area, access stairs to the 7th floor, elevator, to the right, office of management secretary, meeting rooms, management office with 1/2 bath, office of general management with livingroom, bedroom, full bath and sauna.
SEVENTH FLOOR: Hotel area, elevators, main hall area, fire escape 1, fire escape 2, 5 rooms (2 standard, 3 doubles) with full bath and dressing rooms,, Suite (livingroom, bedroom with dressing room and full bath), cleaning room and freight lift. Administrative area: hall-vestibule area, to the left: boardroom with kitchenet and bathroom (sink, urinal and toilet); to the right, storage, 3/4 bathroom, 4 bedrooms and space for bedroom and bathroom.

EIGHTH FLOOR: Hotel area, elevators, main hall area, fire escape 1, fire escape 2, 5 rooms (2 standard, 3 doubles) with full bath and dressing rooms,, Suite (livingroom, bedroom with dressing room and full bath), cleaning closet and freight lift.
NINTH FLOOR: hotel area: elevators, hallway space, fire escape 1, fire escape 2, 5 rooms (2 stands.,1double) with full bath and dressing rooms, 2 suites (livingroom, bedroom with dressing room and full bath), cleaning closet and freight lift.
TENTH FLOOR: hotel area: elevators, hallway space, fire escape 1, fire escape 2, 4 rooms (3 stands.,1double) with full bath and dressing rooms, 2 suites (livingroom, bedroom with dressing room and full bath), cleaning closet and freight lift.
ELEVENTH FLOOR: hotel area: elevators, hallway space, fire escape 1, fire escape 2, 4 rooms (3 stands.,1double) with full bath and dressing rooms, 2 suites (livingroom, bedroom with dressing room and full bath), cleaning closet and freight lift.
TWELFTH FLOOR: hotel area: elevators, hallway space, fire escape 1, fire escape 2, 6 rooms (2 stands.,4 double) with full bath and dressing rooms, 2 suites (livingroom, bedroom with dressing room and full bath), cleaning closet and freight lift.
THIRTEENTH FLOOR: hotel area: elevators, hallway space, fire escape 1, fire escape 2, "Minister's Room" (living and dining rooms, kitchenet, bedroom with full bath and dressing room), "Presidential Room" (first level: living and dining rooms, full bath, 1/2 bath, kitchen, bedroom with closet and full bath; second level: main bedroom with closet, dressing room, gym, full bath), cleaning closet, storage 1 and storage 2.
Rooftop: bedroom, storage, elevator machine/motor room, pump and cistern rooms.
1.4 DATE OF VALUE ASSIGNMENT
June 1, 1999
1.5 REPORT OF WORK CARRIED OUT The appraisal was carried out without delays and was authorized for an visual walk-through inspection.
1.6 REACH AND LIMITATIONS OF THE WORK The appraisal is for the purpose of finding out its commercial value.
1.7 INSURANCE POLICIES
Unknown

II- VERIFICATIONS CARRIED OUT.
2.1 URBAN INFRASTRUCTURE OF SURROUNDING AREAS The surrounding area in which the property is located boasts finished works of urban infrastructure, such as asphalt roads, concrete sidewalks, city water and sewage, public electricity and garbage collection as well as phone lines. There are also other commercial properties located in the zone. The structuralization area is urban. The zoning is commercial.
2.2 BOUNDERIES AND PERIMETER MEASUREMENTS:
According to the deeds
2.3 Areas:

BOLOGNESI 171:

Land/lot area                   300.00 M(2)             (according to deeds)
Construction area 1st floor     263.16 M(2)             (self-appraisal)
Construction area 2nd floor     263.80 M(2)             (self-appraisal)
Construction area 3rd floor     226.04 M(2)             (self-appraisal)
Construction area 4th floor     250.48 M(2)             (self-appraisal)
Construction area 5th floor     237.87 M(2)             (self-appraisal)
Construction area 6th floor     237.87 M(2)             (self-appraisal)
Construction area 7th floor     80.56 M(2)              (self-appraisal)
Construction area 7th floor-
  add on                        157.31 M(2)             (according to plans)

BOLOGNESI 191:
Land/lot area                   900.00 M(2)             (according to deeds)
Construction area basement      507.32 M(2)             (according to plans)
Construction area sub-basement  131.14 M(2)             (according to plans)
Construction area 1st floor     981.20 M(2)             (according to plans)
Construction area 2nd floor     973.06 M(2)             (according to plans)
Construction area 3rd floor     667.30 M(2)             (according to plans)
Construction area 4th-
  14th floors                   3,926.96 M(2)           (according to plans)
Add-on area of Construction
  14th fl.                      70.58 M(2)              (according to plans)

2.4 STRUCTURE:

BOLOGNESI 171
o Steeled concrete foundation (poured cement with steel)
o Steeled concrete columns, beams, stairwells
o Steeled concrete light horizontal roofing with metal siding covered with sheets of Ethernit for 7th floor add-on
o Walls made of brick o Finished wall and ceiling textured of cement and sand mix
o Imported hardware locks/knobs etc.
o Washable latex wall and ceiling paint; enamel paint on wrought iron.
o Built-in triphasic Electrical instalations
o Built-in drains, sanitary fixtures as well as hot/cold water systems.

1st & 2nd Floors
o Imported marble floors in the Snack Bar and Kitchen Snack Bar areas; ceramic (porcelainized) tiles in Reception-personnel areas; carpet in office of systems chief, switchboard; porcelainized tiles in personnel bathrooms (mens and womens); polished cement in Electrical substation.
o Acoustic false drop ceiling tile
o Porcelainized ceramic baseboards en mens and womens changing rooms.
o Wood moulding.

o Wood doors (hollow drum) painted "al duco" inside; two-sided metal sheet doors in the electrical substation.
o Dome shaped polarized, tempered glass walls/counters in Snack bar/table areas.

3rd Floor
o Imported carpet flooring in the private table rooms; porcelainized bathrooms
o Acustic false drop ceiling
o Ceramic porcelainized baseboards in mens and womens bathrooms
o Wood moulding
o framed hollow drum doors painted on the inside "al duco"

4th to 7th Floors
o Carpeted floors in offices; bathrooms with "celima brand" fixtures
o Acustic false drop ceiling
o "Celima brand" moulding [Celima is a Peruvian fixture company]
o Wood moulding
o framed hollow drum doors painted on the inside "al duco"

THE PROPERTY ALSO BOASTS:
o Steeled concrete stairs finished with sand/paint
o Bar made of wood covered in sheets of marble, upholstered in leather; above brass wine glass racks
o Operational elevator for 12
o Well, pump equipment and elevated tank

Bolognesi 191
o Steeled concrete foundation
o Steeled concrete columns, beams, stairwells
o Steeled concrete light horizontal roofing with metal siding covered with sheets of Ethernit for 14th floor add-on
o Walls made of brick
o Finished wall and ceiling textured of cement and sand mix
o Imported hardware locks/knobs etc.
o Washable latex wall and ceiling paint; enamel paint on wrought iron. o Built-in triphase Electrical instalations
o Built-in drains, sanitary fixtures as well as hot/cold water systems.

Basement- Sub-basement
o Imported marble floors in vestibule area, hairdressers, pedicure areas; carpeting in the lounge area and in the lounge, hallway, massage rooms, supply room; imported floor tiles in the dressing rooms, the bath areas and service vestibule; porcelainized flooring in the steam sauna; polished cement flooring in pump room, storages, laundry and sub-basement space.

o False drop-down acustic ceiling in bath and shower area
o Imported tile, porcelainized and "celima brand" moulding
o Wood moulding
o Paneled and decorated doors (hollow drum)
o Imported, glazed, white sanitary fixtures
o Imported faucets and spigots
o Bar made of exotic wood with wood table and brass wineglass rack
o Dry sauna of Oregon pine.

1st-2nd Floors

o Imported marble tiles in the front hallway of first floor and bathrooms; imported carpeting in the slots areas 1 and 2 and casino floor
o False drop-down acustic ceiling made of exotic wood covered in goldleaf, on another level there is indirect lighting and imported crystal chandeliers in the main areas of the casino floor and slots areas 1 and 2; exotic painted wood "al duco" at various levels for indirect lighting and crystal chandeliers in lobby.
o Imported marble veneer columns and walls in lobby and slots parlor 1 and 2; on casino floor there are imported marble, exotic wood, mirrors and walls (upholstered and covered with imported material)
o Marble baseboards in bathrooms.
o Wood moulding
o Imported white glazed sanitary fixtures.
o Imported faucets.
o Sink counter done in custom imported marble and terracota. o Banister of bronze tubing in the casino mirador (lookout).
o Bar made of wood covered in sheets of marble, upholstered in leather; above brass wine glass racks

3rd Floor

o Imported carpeting in Dining room of "Oriental Dining", conference room and private Karaoke room; Imported marble in dining room of "Oriental Dining"; porcelainized tiles in bathrooms, and "celima" fixtures in kitchens.
o False drop-down ceiling made of exotic wood painted "al duco" at various levels for indirect lighting in the "Western Dining" area; exotic wood and mirrors, with goldleaf borders/edges at various levels for indirect lighting with imported crystal chandeliers in the main area and in the "Oriental Dining" area; acustic tiles in the conference room.

o Exotic wood veneer with upholstery fabric in the "Oriental Dining" area and in the private Karaoke room.
o Baseboards made of colored "mayolica" (terracota tiles) in the "Western and Oriental" areas.
o Framed lined, paneled doors o Framed wood partitions with decorative glass in entrance to dining area.
o Sanitary fixtures, imported white glazed.
o Imported faucets
o Custom built sink coutertops made of imported marble and terracota.
o Bell extractor fans made of sheets of stainless steel.
o 3 tub dishwashing sink of stainless steel in the dishwasher area.
o Wooden bar covered in sheets of marble and upholstered in leather with tubed, brass wine racks overhead.

4th -14th Floors
o High traffic carpet in hallways and in rooms; imported marble in livingroom and bathrooms of the Presidential Suite and in the bathroom of Minister's Suite; imported tiled floors in bathrooms of the rooms.
o Exotic wood veneer and imported wallpaper in hallways and in the open areas of the Minister's and Presidental Suites. o Wood and marble moulding o Framed lined and paneled doors.
o Black anonized aluminium windows with clear tempered glass in rooms.
o Imported door hardware
o Imported white and colored glazed sanitary fixtures; well with hydromassage sistem in the Ministers and Presidential Suites.
o Imported faucets.
o Sinks and countertops of imported marble slabs and custom terracotta.
o Kitchen pantries made of wood with formica table in Presidential Suite.
o Wood closets with hangers/racks, drawers and room safe.
o Wood stairs with wood steps and banister in Presidential Suite.

THE PROPERTY ALSO BOASTS:
o Custom built brickwork portico with imported marble overlay in entrance ways.
o Stained glass perimeter of double height that ends in a dome, of tempered reflecting glass on the first floor.
o Steeled concrete staircase, overlaid in mable, with bronze tube railings/banisters, complete with imported glass appliques, in the access ways to the basement, 2nd and 3rd floors.
o 2 fire escapes of built concrete covered in "terrazo" (sand-paint texturing), with railings and wrought iron banisters.
o Elevators
a) 02 elevators, "SCHINDLER" brand, for hotel guests with 14 stops.
b) Freight elevator "PACIFICO" brand, 14 stops for exclusive use of hotel personnel and service. -Steam system: 02 steam-generated boilers of 30 bhps, "FULTON" brand from the USA, with 1035 pounds per hour of steam production, and pressure up to 125 psis, fed by liquid gas (GLP). Also with condensation tanks and steam-fed piping installations, fuel and gas exhaust...electric control panel, thermal insulation, supports..etc. -Hot water system: 02 boilers (steam/water) made in Peru, of the vertical type, producing 1,500 ll/h of hot water, standing .9 meters X 1.8 meters tall. Built of stainless steel sheets ASTM A 283-C, 1/4 inch thickness y covered in fiberglass. 02 electric pumps, "HIDROSTAL" brand, for hot water circulation (3.4 HP 220V / 3 0/60 Hz. Electric panel, temperature accessories, feeding pipe for steam, water, drainage, electric etc.. -Water Treatment System: Twin softener with twin columns of 24" 0 X 1.80 m high. Built out of 1/4" stainless steel sheets with soldered seams, made in Peru and equipped with automatic control valve, "ECONOMINDER" brand ( 1 1/2" 0 with resin and salt tank). Piping instalation for feeding and discharging cationic resin etc.. -Petroleum Liquid Gas System: 500 gals. GLP storage tanks, one horizontal measuring 1.04m X 1.50m cylindrical length with semispheric lids of 1/4" thickness and body of 5/16". Built out of ASTM E 24 sheets. Built within legal requirements of ASME section VIII for test pressure of 375 psi and design pressure of 250 psi, equipped with all its valves. Networks of piping for fill and return of GLP, for distribution of GLP to the restaurant areas and boiler areas. The pipes are galvanized steel, SCH 80, with pressure regulators along the different feeding points and its respective shut-off valves. Metal supports throughout all the piping network as well as being painted yellow.

-Sauna and Steam Chamber Systems:
a) sauna chamber built entirely of Oregon Pine with air / heat exchange, temperature control to graduate to 70 degrees C. Thermal door with doble pane peep window and wood frame (2" X 8"), special lighting. Approximate dimensions: 2.4 ml. X 2.2 ml. X 2.1 ml. high. Made in Peru.
b) Steam chamber built out of brick and covered in white"mayolica" (porcelain-like coating). With direct steam injection, with domed roof made of acrylic. Made in Peru.
c) 02 Spanish showers. Peruvian. d) 03 general/shared showers. Peruvian.
e) 02 pools with halogen lighting, stainless steel railing (
2ml. x 3 ml. x 1.8 ml.)
f) Hot water spa up to 40 degrees C with recirculation of water and water jets....7.5 cubic meter capacity. Covered in blue "mayolica" with halogen central overhead light. Steam heating equipment of 20 Kw...including tests and installation. Peruvian.
g) Recirculating electric water pump in Spa with filter.
(Jacuzzi brand)
h) Electric pump for water jets (Jacuzzi brand)
i) Electric pump for water recirculation of swimming pool with filter (Jacuzzi).
j) Electric panel for pump control. Peruvian.

-Fire Alarm System
a) 02 Electric pumps, WEG, 25 HP, 300 GPM, activated my elec. motor SIEMENS, 25 HP 220/440 V. F Class insulation, 3530 RPM with IP54 protection, feed and distribution tubing of 4" seamless steel ASTM -A- 53, from the siamese valve up to the pump room entrance; 6" for vertical mount and 4" for the connection between the elevated tank and the purge valve, 14th floor. Series # 9821452 and 9821451.
b) 14 built-in fire boxes with two 1 1/2" valves and 100' long nylon hose, with NST washer and combo stream/fog whistle; 2 1/2" valve for exclusive use by the Fire Department. The fire box doors are made of double paned glass and their frames of galvanized steel sheets, with cover door and respective keys. Chromed siamese (twin) valve, 4" x 2 1/2 X 2 1/2" with its respective steel fireproofed hatch of 4" of 600 psi just like the fireproofed check valve.
c) 33 extinguishers KIDDE, carbon gas, 5 lbs. USA
d) 08 extinguishers KIDDE, pressurized water, 2.5 gallons, imported.
e) 21 PSQ extinguishers, 12 kgs. of nominal capacity. Peruvian.

f) 19 PSQ extinguishers, 6 kgs. of nominal capacity. Peruvian.
g) 02 rolling PDQ extinguishers, 25 kgs, nominal capacity.

Peruvian.

System of Constant Pressure and Variable Speed Pumps:
a) 03 vertical, multi-step centrifuge electric pumps, inline "SALMSON", 7.5 HP motor, 220V of 60 Hz, for a waterflow of 1.1 to 4.2 l/sec. And an ADT of 65m. with suction and discharge, 11/2" including the following accessories:

01 VLT frecuency regulator
01 VLA 31 control
01 MBS 33 pressure sensor
01 handmeter for discharge, range from 0-100 psi.

b) Structural steel base with suction and discharge manifold, 4", with set of 1 1/2" valves
c) 01 control panel and pump start switch with control instruments. Series of pumps # 98040424;98040425;98040426.
d) Soft water storage tank, ASTM 283 A steel, hot galvanized, with 3/8" sheeting. 3.2 m tall x 1.0 m in diameter, 800 gallon capacity.
e) Diafragm tank, 1.2 m tall x 0.7 m in diameter to work with air pressure at 70 psi....made of 1/8" galvanized sheeting.
USA.

Cold Water System Pumps

a) 02 electric pumps, HIDROSTAL, to pump from raised tank of the hotel with triphase electric motor, 8.6 HP, 3450 RPM, 220/60 Hz., coupled in monoblock with 2' suction and 1 1/2" discharge with electric WEG motor. The pumps' technical characteristics as follows:
-4 liter/second flow, ADT of 60 meters; automatic level control, ASEVER brand and a 2" standing valve. -electrical panel, alternator, equipped with direct startes, contacts, relay switches, fuses, manual/automatic starters. Series #97120523 and 97010165.
b) 02 electric pumps, PEDROLLO brand, to pump to raissed tank of the administrative bldg. (a 7 floor bldg.), with triphase elec. motor, 3 HP, 3450 RPM, 220/60 Hz., coupled in monoblock with 1 1/2" suction and 1 1/2" discharge, with electric motor, SIEMENS. The pumps' technical characteristics as follows:
- 4 liter/second flow. 30 meters of ADT; automatic level control, ASEVER brand, and 11/2" standing valve.
- Electric control panel, alternator equiped with direct starters, contacts, relays, fuses, selector for manual/ automatic start.

O DOUBLE SUMP PUMP EQUIPMENT:

Electric pump for sump wells 1 and 2:

04 electric immersible pumps HIDROSTAL brand, with Microsmaster monophase control (2.7 HP, 220 volts, to discharge residual water towards the outside Sedapal drain.
For alternate and / or simultaneous functioning of the electric pumps For a flow of 5 L/second, ADT of 9 meters, 3500 RPMs.
With 2" suction and discharge and built-in level controls, sieries # 98010354 to 98010357.
2 electrical control panels for the electric pumps to protect the 2.7 HP motor.
O HYDROPNEUMATIC SYSTEM FOR 10TH TO 13TH FLOORS:
02 elec. pumps for pumping (HIDROSTAL) for water levels 10 - 13 with triphase elec. motor, 3.4 HP, 3450 RPM, 220/60 Hz, coupled on monoblock with suction and 11/2" discharge, with WEG elec. motor. The technical characteristics of the pump are as follow:
- 4 L/sec. flow, 35 meter ADT, automatic level control, ASEVER.
- Elec. control panel, alternator equiped with directo starters, contacts, relays, fuses, sector for manual or automatic start. Series # F56HJO198 and F56HJO197.
- Hydropneumatic galvanized steel tank, 1.8m high x 0.9 m diameter, 150 gallon capacity, equiped with air charger, presostat and handmeter for pressure control.
O CENTRAL AIR CONDITIONING SYSTEM:
a) CARRIER brand cold water cooling equipment of the Chiller reciprocating type, with air cooler condensator through 6 vents..cooling capacity- 90 ton. Elec. feed 220 v/ 3 ph 60 Hz, series #4797F10307.
b) 25 fan coil CARRIER air conditioning units, 1,200 CFM, 240 VAC- 1 ph -60 Hz.
c) 9 fan coil CARRIER air conditioning units, 800 CFM, 240 VAC- 1 ph -60 Hz.
d) 4 fan coil CARRIER air conditioning units, 400 CFM, 240 VAC- 1 ph -60 Hz.
e) 1 CARRIER air conditioning unit, 3,000 CFM, 3 HP, 240 VAC- 3 ph -60 Hz.
f) 10 HP TACO brand electric pump and flow of 240 GPH that works with electrical feed, 220 VAC -3ph -60 Hz.
g) Electric control panel, alternator equipped with with direct starters, contacts, relays, fuses, manual/autom. start selector switch for 10 HP pumps.
h) Ductwork and other annexes:

-ductwork for feed and return, fiberglass, 1" thick, covered in aluminium foil, in accordance with ASHRAE bylaws. -grates or vents, made of aluminium and painted.
-System of cold water tubing and accessories made of SCH 40 black iron with polystyrene, 1" thickness in accordance with ASHRAE bylaws.
O HEATING AND AIRCONDITIONING SYSTEMS IN ROOMS:
a) 66 split a/c and heating units, HUALING brand, with 1.22 Kw evaporator, operated with remote control, built into wall. Elec. feed 220V/ 1 /50-60 Hz. 5.9 Amps. y flow of 546 cubic meters/hr. Chinese.
b) 03 split a/c and heating units, HUALING brand, with 1.1 Kw evaporator, operated with remote control, built into wall. Elec. feed 220V/ 1 /50-60 Hz. 5.9 Amps. y flow of 486 cubic meters/hr. Chinese.
c) 03 split a/c and heating units, HUALING brand, with 2.2 Kw evaporator, operated with remote control, built into wall. Elec. feed 220V/ 1 /50-60 Hz. 5.9 Amps. y flow of 856 cubic meters/hr. Chinese.
O BASEMENT AIR EXTRACTION SYSTEM:
a) centrifuge extractor, MAGNETEK, 6,000 CFM., aluminium, .85m. in diameter, triphase 5 HP elec. motor. Series # 9-890768.
b) Duct of galvanized sheeting with interior insulation, 1" DUCTLINE y suction grates made of aluminium.
O AIR EXTRACTORS IN PUBLIC RESTROOMS AND ROOMS:
a) 80 extractors of the centrifuge type 220 v, 1/8 HP. o
O ELECTROGENIC GROUP SYSTEM:
a) Electrogenic Group, CARTERPILLAR [SIC], 200 KVA, 220V/440V, cos 0.86 with 4 speed diesel engine, 160 HP and 1800 RPM.
b) Auxiliary equipment:
- 1" acustic panels
- Duct for extraction of gas exhaust, 6" x 20 m.
- Storage tank for diesel, 300 gallon capacity, vertical, 1.60m x 0.65 m x 1.2m. Made from steel sheeting ASTM-A-283 with 1/8" thickness.With connections for fill, return, ventillation, distribution and purging etc.. all with solderable couplets, steel SCH 40. Peruvian; finished off with anti-rust paint on the exterior.

FIRE ALARM SYSTEMS:

Comprised of the following equipment:
-Contro panel, model MS920, FIRE LITE -Fire Announcer (keyboard) with LCD screen, model FL-LCD40, FIRE LITE -99 photoelectric smoke detectors
-223 temperature detectors
-35 strobe lights with sound alert -5 manual buttons (alarm buttons)

-13 standard manual alarm buttons
-81 directional monitor modules
-Transformer 220 vac/110 vac, 150 W -02 batteries, 12 VDC/12AH to activate in event of electrical failure -24 bobbins, 500 type, #16 cable for fire.

O CENTRAL TELEPHONE SYSTEM- PANASONIC -digital control unit -02 expansion units, 14 slots -04 line trunk cards -10 cards for lines of 08 ports -10 cards for simple annexations -Card for operator's console -Remote maintenance card -03 battery adapters -8 port, 512 mailbox voice processor -02 multifunction phones with screens -69 phones with "message awaiting" signal -95 regular phones -64 General Electric "gondola" (cradle) type phones -SISAT system of telephonic administration -05 fax machines for regular paper -Ferroresonant voltage stabilizor, 500 VA -System for grounding, electrostatic screen -Equipment installations in general -Structured cable for computer networking, annexes.

O KITCHEN EXTRACTION SYSTEMS
a)bell extractor for oriental cooking with stainless steel grill, 16 calibre, with 45 degree incline towards the front. 4.5m x 1m x 0.90 m.
b)Centrifuge extractor, 7,500 CFM. Triphasic electric motor with elec. feet 220 V/ 3 /60 Hz. Extraction duct made of galvanized sheeting, 1/27" thick. (12.5m long), lighting and aluminium filters.
c)Bell extractor for international cooking made of stainless steel sheeting, 16 calibre,with 45 deg. incline towards the front. 3.5 ml x 1 ml.
x 0.70 ml. tall.
d)Centrifuge extractor, 4,000 CFM. Triphasic elec. motor with elec. feed, 220 V/3 /60 Hz.
e)Extraction duct made of galvanized sheeting, 1/27" thick (8.5m. long), lighting and aluminium filters.

O TELEMUSIC SYSTEM AMPLIFIER MAINFRAME -05 amplifiers ASAJI model 1062 -03 pedestal microphones SHURE -142 speakers LOWELL, 5", 15 watts, USA

O CLOSED CIRCUIT TV SYSTEM -Closed circuit surveillance system for casino floor and slot areas. Comprised of the following:
For the casino:
-05 monitors, PANASONIC, 27" console -04 monitors, PANASONIC, 14"
-04 multiplexors, SENSORMATIC
-45 VHS, PANASONIC for up to 6 hour recording -04 VHS, PANASONIC for up to 24 hr. recording -Multiplexor 16, SENSORMATIC.
For the hotel:
-05 monitors, PANASONIC, 19"
-02 monitors, PANASONIC, 13"
-03 Multiplexors 9, SENSORMATIC.

-02 Multiplexors 16, SENSORMATIC.
-furniture for the monitors
-cabling and camera installation on ceiling of open areas throughout the casino floor and slot areas.

O ELECTRICAL SYSTEM
a)Cable installation, half tension 10 KV from substation.
b)Substation:
Arrival Cell: made up of head, inside terminal, section fuse, tripolar air power, 12 KV, operation with charge, fuses hand control and automatic,simultaneous 3 polar disconnect. Opening unipolar sections without pole-activating charge.
Transformer Cell: Bars of electrolitic copper, bar carrying insulators, triphasic transformer, 800 KVA R?T 10 KV / 230 KV. Tpas 100% - +2.5% -+5% connection DY 5, Vcc 4.5%
c) General Panel: equiped with interrupter Cutler Hamer. Network analizers que visulaize all electric parameters: f, V, l, Hz, KW, KVAR, KW-H, etc. en maximum and minimum values. Emergency Panel: Equiped with interruptors Cutler Hammer - Westinghouse. Automatic Transfer: Intelligent control, Cutler-Hammer LD-65 interruptors, tension regulators, automatic battery chargers. Condenser Automatic Bank: Equiped with 10 stages of 30 Kvar, 300 Kvar, automatic regulator of reactive energy, connection 1:2, 2:2 for 12 stages. ICAR brand antiexplosion condensors. Distribution panels: there are a total of 50 distribution panels. 12 electric control panels, alterante equipment with direct starters, contacts, relays, fuses, and selector for auto/manual start.
d)Installation of panels and feed cable for panels and subpanels.

O DECORATIVE LIGHTING SYSTEM AND PUBLIC LIGHTING SIGNAGE.
a) Decorative lighting on glass frontispice of Hotel, comprised of 365 m of linear lighting, containing protective tivolis and translucid tubing of a rectangular design...boasts a programable sequencing device from right to left, left to right and also of the entire lighting veins, constantly repeating the programming.
b) Public signage on the exterior, 7.5 m x 1.55 m; 5.0 m x 1.70 m and 4.0 m x 1.1 m. of an attractive design and in whose construction stands out shiny gold aluminium for the upper and lower borders.
c) Lighted decoration composed of Tivolis in sequential movement installed on the gold aluminium borders with the following texts:
"BRUCE HOTEL", "BRUCE SLOT MACHINES" AND "BRUCE CASINO", all of which carry the Bruce logo. The background of the screen is green.

O LAUNDRY SYSTEMS:
a) Automatic centrifuge washer for hot/cold water with a 20 kg. dry clothes capacity, with a 420 RPM speed in centrifugal extraction. Uses current:220 V/3 /60 Hz. Chinese.
b) Dryer with a 18 to 20 kg. capacity per load. Steam heating with an interchange of 3.8 BHP/hour. With manual time and temperature control. Takes 220/3/60 current. Chinese.
c) Flat ironing calender with a 64 to 96 lbs. capacity of dry clothes/hour. Uses steam heating with stainless steel cylinders...110" long x 121" wide. uses 220 V/3/60 Hz. Chinese.
d) Universal press with steam iron, specially used for ironing with water, with a production capacity of 30 to 40 pieces/hour. Steam heat and compressed air and water feed. Chinese.
e) Dry cleaning machine, automatic, capacity up to 18 kg. of dry clothes. With solvent-recovering steel filter, with refrigeration unit and heat recycling. 3 solvent tanks, high capacity distillers, water separators. Control for low cooling water level. With safety tray for the recovery of solvent for steam heat. Uses 220V/3/60 Hz. Chinese.
f) Manequin for dry cleaning. Allows for ironing of sportscoats, uniforms, jackets etc. Reciprocating air compressor (2 stages), 5 HP, 1715 RPM and a capacity to 175 cubic feet/minute. Vertical tank, 60 gallon capacity, elec. feed, 220V/3/60 Hz. Chinese.
g) Reciprocating air compressor in two stages, 5 HP motor, 1715 RPM cap. to 175 psig, 15 cubic feet/minute. With vertical tank, cap. 60 gallons, elec. feed 220V/3/60 Hz. INGERSOLL RAND, USA.

O KITCHEN AND RESTAURANT EQUIPMENT For international cooking:
a) 02 vertical refrigerated food storage units, TRUE brand, 12 cu.ft., with 1/3 HP compressor, elec. feed 220V/60 Hz. Stainless steel. Series #11997927-11997928.
b) Coffee urn, AMERICAN brand, elec. 110/220 V. 3 gal. capacity.
c) 3-speed Dough mixer, UNIVEX, 0.5 HP motor 208/230 V 60 Hz, mixing bowl and stainless steel blades/wands. Flat white pedestal. 240 v/60 Hz. Series # M000117.
d) Ice maker, SCOTSMAN, stainless steel, with HP motor [SIC]. Elec. feed 110/220 V can produce 1,000 cubes per hour. Series # 121671-12B.
e) Electric Toaster, TOASTMASTER, 2.1 Kw, elec. feed 220 V, 8.8 Amp. 60 Hz. Series # 013410398.
f) Convection oven, IMPERIAL, with fan motor, .88 KW and GLP consumption of 70,000 BTU/hour. Elec. feed 110V, 8 amps, 60 Hz. Stainless steel, 120V/60 Hz. Series # 07144198.
g) Bain Marie Equipment, HACO, stainless, elec. 240 V/60 Hz and 450 watts. Siries # 8544499807.
h) Dish washer, CMA/DISHMACHINE, with wash production of 800 plates/hr., stainless, cold and hot water feeds, 110 v. Series 129343.
i) 02 garbage disposals, WATE KING with elec. motor, 0.5 HP, 110/220 V/3/6o Hz. Series # 98-03-00180-3.
j) Gas operated French fryer IMPERIAL, 110,000 BTU/hr. with 2 compartment wells and baskets, all in stainless steel.
k) Frier/Grill, peruvian brand NOVA GAS, 1.2 m wide X .45 m. deep x 1.2
m. tall.
l) Stove with 6 burners, IMPERIAL, with built-in oven, with LP (liquid propane gas)
m) 02 Expresso coffee makers, GRINDMASTER.
n) Hot water urn, TENGFEL, stainless, elec. 220V/60 Hz. from 3 and 0.4 kw. with 10 liter capacity.
o) Carpet shampooer, ELECTROLUX, 2,000 watts, 220V/60 Hz., blue. Series #970491974.
p) 02 vertical refrigerators, TRUE brand, 13 cubic ft. cap. 1,058 watts..220V/60 Hz. Series # 11806281. From the "Oriental Cooking" Kitchen:
a) 4 burner stove with ovenproofing and water feed, dual LPG (liq. propane gas) fuel/oil, between 25-30 psi (half pressure) fuel work pressure. 200,000 BTU/hr.
b) 2 burner stoves with ovenproofing and feed, water, fuel, dual LPG (liq. propane gas) for pressure fuel work between 25-30 psi (half pressure), 100 BTU/hr.
c) Food storage unit, stainless, 1.8 ml. x 1.6 ml. x .07 ml.

d) Industrial stove, NOVA GAS, porcelainized iron, 3 ovens that work with LPG, Peruvian.
e) Food storage unit, TRUE, vertical with glass doors, 12 cubic ft. cap., 110 V. with compressor (1/3 HP).
f) Electric deli meat slicer, OMAS brand, 130/270 watts, 220 V, series # A3506
g) Microwave, WHIRPOOL [SIC], 1 cu. ft. white, series # 429711-000958. 220 v/60 Hz.
h) Horizontal food storage unit, DUREX, 12 cu. ft, 220 V/60 Hz. Cream color. Series # FJ-47526.
i) Freezer, DAHAI brand, stainless, 0.9 Kw. 220V/60 Hz. 1.80 m. x 0.85 m
x 2.02 m high. From Other Hotel Areas:
a) 2 horizontal refrigerators, TRUE, 12 cu. ft, elec. 220V/60 Hz, white. 1058 watts., series # 11806281, 11806280.
b) Microwave, DAEWOO, 1 cu.ft., white, series # KJXEA0436, 220v/60 Hz, 0.9 Kw.
c) 02 Expresso coffee makers., ESPRESSIMO brand, 1,700 watts, 120V/60 Hz, series #312634TF, 312636TF.
d) Expresso coffee maker AMERICAN METAL WARE, 7.5/5.5 Kw, 120 V/60 Hz, 29/25 amp. series # 103488.

O CLEANING EQUIPMENT
a) 05 vacuum cleaners, LUX PROFESIONAL, 1,100/1,200 watts, 220V/50-60 Hz. Series,# 80400076, 80400073,8040077,8040091
b) Carpet dryer, ELECTROLUX, series# 952301143. Monophase 220V/60 Hz. 1.8 amps.
c)Floor polishing machines, LUX PROFESIONAL, white and red, elec. 220V/60 Hz. monophase, series# 970692682.
d)Electric hand dryers, GLOBAL DRYER in public bathrooms,, 220V/60 Hz. 0 amp. white, for wall mount.

2.5 AGE AND STATE OF CONSERVATION:
The buildings with street number assignments of 171 and 191 have recently been remodeled, and of which, the appraiser estimates an age of 2 years; finding them in a very good state of conservation.
2.6 DEPRECIATION:
In compliance with the (Peruvian Tax Code) Reglamento General de Tasaciones del Peru, tabla numero 2.4.03 (Edificios), there is a 0.00% corresponding depreciation, the adjustment factor being 1.00 for the unit value of the building.
2.7 REGISTRATION:
The buildings in question, Edificio Bolognesi 171, according to the Public Record in presence of the Notary Public, Oscar Leyton Zarate, dated November 26, 1996, belong to BRUCE GRUPO DIVERSION S.A. - BRUGRUDIV S.A.; and whose domain is duely registered in File number 1646871 (Ficha numero 164871, Asiento 1-c) of the Public Buildings Registry of Lima.

The building known as Edificio Bolognesi 191, according to the Public Record in the presence of Notary Public, Fidel D'jalma Torres Zevallos, dated August 7, 1996, belongs to BRUCE GRUPO DIVERSION S.A. - BRUGRUDIV S.A.; and whose domain is duely registered in File numbers 1119538 to 1119540; 1119553 to 1119563;1119546 to 1119552; 1119882, 1119542, 1119564 to 1119566, 1119595 to 111602, 1119591 to 1119594; 1119543, 1119544 and 1119603 of the Public Buildings Registry of Lima.
2.8 BACKTAXES:
None known.
2.9 LEANS:
None known.

III. APPLIED METHODOLOGY
3.1 BASIS FOR ITS DEVELOPMENT A field visit as well as a property inspection visit, took place around the property area in order to determine the commercial purchase and sale price of properties with similar characteristics.
3.2 DESCRIPTION OF METHODOLOGY USED The appraisal was carried out in accordance with that stipulated in the by-laws of the R.G.T. R.M. number 370-85-VC-9300, applying the direct appraisal method.
3.3 INVESTIGATION OF COMMERCIAL VALUE OF REFERENCE PROPERTIES

LOCATION                       DISTANCE TO            UNIT PRICE               REFERENCE
                               PROPERTY
Jiron Bolognesi Cdra*. 1        - meters             US $ 1500/m(2)             Database
Jiron Berlin Cdra*. 5-6         - meters             US $ 1200/m(2)             CTTP
Av. Pardo 6-7                  50.0 meters           US $ 1800/ m(2)            Houses & lots

*cuadra=block

CONCLUSION
It is noted that the market tendency to date for the location and type of property demands a higher price; the surroundings are adequate to date for high sectors. The appraisal of lots, considering that many potential buyers have not expressed interest as of yet, allows us to reasonably determine the price at US $ 1,500.00/ m(2) for said property.
3.4 ANALISIS OF THE BEST AND MOST INTENSE USE OF THE PROPERTY As a casino-hotel.
3.5 SUPPORT The analysis that was carried out on the property in question leads us to indicate that the referenced appreciations are the most reasonable for determining its value.

IV. CALCULATIONS MADE

4.1 Repositioning Value of the Property (VR)
a. Lot Value (VT) From the analysis of commercial value for the building market, in terms of purchase and sale of properties that are similar in question of location and urban surroundings, we deem the commercial unit value to be US $ 1,500 / m(2); therefore:
Edificio Bolognesi 171:

VT a = 300.00 m(2) x US $ 1,500/ m(2)

VT a = US $ 450,000

Edificio Bolognesi 191:

VT b = 900.00 m(2) x US $ 1,500/ m(2)

VT b = US $ 1,350,000
b. Construction Value (VE) According to the characteristics described in the property, and referring to current building costs; we consider the following as the commercial unit value:

VE = Area of construction X Depreciated Commercial Unit Value EDIFICIO BOLOGNESI 171 (VE a) 1st floor:
VE1 = 300.00 m(2) x US $ 1,400 / m(2) VE1 = US $ 420,000
2nd floor:
VE2 = 263.80 m(2) x US $ 1,100 / m(2) VE2 = US $ 290,180
3rd floor:
VE3 = 226.04 m(2) x US $ 1,500 / m(2) VE3 = US $ 339,060
4th - 6th floors:
VE4 = 726.22 m(2) x US $ 800 / m(2) VE4 = US $ 580,976
7th floor:
VE5 = 80.26 m(2) x US $ 450 / m(2) VE5 = US $ 36,117
7th floor addition:
VE6 = 157.31 m(2) x US $ 280 / m(2) VE6 = US S$ 44,046.80

Edificio Bolognesi 171:
VE a = VE1 + VE2 + VE3 + VE4 + VE5 + VE6
VE a = US $ 1,710,379.80

EDIFICIO BOLOGNESI 191 (VE b)

Basement - Sub-Basement:

VE1       =        638.46 m(2)               x        US $ 605 / m(2)
VE1       =        386,268.30
1st Floor:
VE2       =        981.20 m(2)               x        US $ 1,800 / m(2)
VE2       =        US $ 1,766,160

2nd floor:
VE3 = 973.06 m(2) x US $ 1,800 / m(2) VE3 = US $ 1,751,508
3rd floor:
VE4 = 667.30 m(2) x US $ 1,600 / m(2) VE4 = US $ 1,067,680
4th-14th floors:
VE5 = 3,926.96 m(2) x US $ 1,500 / m(2) VE5 = US $ 5,890,440
14th floor addition:
VE6 = 70.58 m(2) x US $ 429 / m(2) VE6 + US $ 30,278.82

Edificio Bolognesi 191:
VE b = VE1 + VE2 + VE3 + VE4 + VE5 + VE6
VE b = US $ 10,892,335.12

d- Value of Complementary Property Construction (VOC):
Edificio Bolognesi 171 (VOC a):
Cistern and raised tank:
VOC1 = Estimate
VOC1 = US $ 6,000
Elevator:
VOC2 = Estimate
VOC2 = US $ 51, 430
Curved Screen/partition double height on 1st floor:
VOC3 = Estimate
VOC3 = US $ 225,000

VOC a = VOC1 + VOC2 + VOC3
VOC a = US $ 6,000 + US $ 51,430 + US $ 225,000 VOC a = US $ 282,430

Edificio Bolognesi 191 (VOCb):

Double height partition on 1st floor:

VOC1 = Estimate
VOC1 = US $ 1,275,000
2 Elevators:
VOC2 = Estimate
VOC2 = US $ 117,000
Freight Elevator/lift:
VOC3 = Estimate
VOC3 = US $ 158,000
Electrical Installation:
VOC4 = 630.00 Kw. x US $ 150 / Kw. VOC4 = US $ 94,500 Steam System:
VOC5 = Estimate
VOC5 = US $S 127,775
Hot Water System:
VOC6 = Estimate
VOC6 = US $ 54,539
Water Treatment System:
VOC7 = Estimate
VOC7 = US $ 26, 050
Liquid Gas System:
VOC8 = Estimate
VOC8 = US S$ 30,148
Sauna and Steam Chamber System:
VOC9 = Estimate
VOC9 = US $ 33,320
Fire Prevention System:
VOC10 = Estimate
VOC10 = US $ 49,400
System of Pressure and Variable Speed Pumps:
VOC11 = Estimate
VOC11 = US $50,950
Cold Water Pump System:
VOC12 = Estimate
VOC12 = US $ 10,106
Double Sump Pump Equipment:
VOC13 = Estimate
VOC13 = US $ 5,790
Hydropneumatic System:
VOC14 = Estimate

VOC14 = US $ 5,074
Central Air System:
VOC15 = Estimate
VOC15 = US $ 203,591
Room Air Conditioning and Heating Systems:
VOC16 = Estimate
VOC16 = US $ 73, 380
Basement Air Extraction System:
VOC17 = Estimate
VOC17 = US $ 12, 382
Air Extractors for Public Bathrooms and Rooms:
VOC18 = Estimate
VOC18 = US $6, 400
Electrogenic Group System:
VOC19 = Estimate
VOC19 = US $ 35, 235
Fire Alarm System:
VOC20 = Estimate
VOC20 = US $53, 100
Central Telephone System:
VOC21 = Estimate
VOC21 = US $106,000
Kitchen Extraction Systems:
VOC22 = Estimate
VOC22 = US $13,186
Telemusic System:
VOC23 = Estimate
VOC23 = US $19,144 [error in labling this item. NOT VOC23 and VOC24 per original document). From this point on, the original subnumbers will be off by one. Closed Circuit TV - CCTV:
VOC24 = Estimate
VOC24 = US $ 476, 407
Electrical System:
VOC25 = Estimate

VOC25 = US $ 274, 611
Decorative Lighting system and Public lighting Signage:
VOC26 = Estimate
VOC26= Us $ 124,343
Laundry System:
VOC27 = Estimate
VOC27 = US $ 206,958
Kitchen and Restaurant Equipment:
VOC28 = Estimate

VOC28 = US $ 78,969
Cleaning Equipment:
VOC29 = Estimate
VOC29 = US $ 4,085

VOC b = VOC1 .......... + VOC29 (Original in Spanish says "VOC30" due to misnumbering) VOC b = US $ 4, 574, 592

c- Value of Property Repositioning (VR):

Edificio Bolognesi 171:
VRa       =        VTa              +        VEa              +        VOCa
VRa       =    US $ 450,000         +   US $ 1,710,379.80          US $ 282, 430
VRa       =    US $ 2,442,809.80

Edificio Bolognesi 191:
VRb       =       VTb               +        VEb               +       VOCb
VRb       =    US $ 1,350,000       +    US $ 10,892,335,12    +       US $ 4, 574, 592
VRb       =    US $ 16, 816, 927.12

4.2 COMMERCIAL PROPERTY VALUE (VC)

In accordance to the price study of the surroundings, the appraiser considers that the value of calculated repositioning adequately reflects the commercial market value to date that said property has; therefore:

Edificio Bolognesi 171
VCa = US $ 2,442,810
(Two Million Four Hundred Forty Two Thousand Eight Hundred Ten US Dollars)

US $ 1.00 = S/. 3.38  (soles)

Edificio Bolognesi 191
VCb = US $ 16, 816, 927
(Sixteen  million,  Eight Hundred Sixteen  Thousand Nine Hundred Twenty Seven US
Dollars)
US $ 1.00 = S/. 3.38  (soles)


VC = VCa                     +               VCb
VC =  US $ 2,442,810         +         US $ 16, 816, 927
VC =  US $ 19,259,737
(Nineteen Million, Two Hundred Fifty Nine Thousand Seven Hundred Thirty Seven US
Dollars) US $ 1.00 = S/. 3.38 (soles)

V. - INTEGRAL OPINION OF THE EVALUATING APPRAISER
5.1. - The appraisal has taken place with independence of criteria, applying current norms. 5.2.- Life Term of the Appraisal: Unless market value conditions or unforeseen circumstances vary, the appraisal will be in effect for 180 days. 5.3.- Recommendations: Maintain proper upkeep of property so as it stays in very good condition.

VI. SUPPORTING DOCUMENTATION The minimum amount of legal documentation was needed. The information on pricing was gathered in the field as well as from Specialized Journals, and was cross checked with our databases. We availed ourselves to the information contained in the journal "1/2 de Construccion", CTTP data bases, and articles from the daily journal `El Comercio" on the evolution of the building property market.

Lima, June 1, 2004

[Illegible signature]
Arquitect Ysabel Solis Padilla
CAP 3689
REPEV # 176
Registered Appraiser in the S.B. y S
Current Term Valid

Photograph of property in question

OUTSIDE VIEW - CASINO BUILDING - HOTEL

EXHIBIT 99.9

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2005

		06/30/05

ASSETS	Notes	S/.	US$

			(Note 4)
Current assets
Cash and cash equivalents		1,782,321	547,885
Accounts receivable		970,980	298,479
Inventory	5.	420,886	129,380
Prepaid expenses		111,678	34,330

Total current assets		3,285,865	1,010,075

Property, plant, and equipment - net	5.	63,744,259	19,594,985

Goodwill - net	5.	1,361,978	418,672

Other intangible assets - net		1,322	406

Total assets		68,393,424	21,024,138

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2005

		06/30/05

LIABILITIES & SHAREHOLDERS’ EQUITY	Notes	S/.		US$

				(Note 4)
Current liabilities
Accounts payable		145,867		44,839
Other current liabilities		433,668		133,310
Advance from shareholder		31,758		9,763

Total current liabilities		611,293		187,911


Total liabilities		611,293		187,911


Shareholders’ equity
Common stock, 100,000,000 shares authorized,
51,000,400 shares issued and outstanding as of
June 30, 2005		67,925,830		20,880,400
Accumulted deficits	3.	(143,699	)	(44,173	)

Total shareholders’ equity		67,782,131		20,836,227


Total liabilities and shareholders’ equity		68,393,424		21,024,138

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2005

		06/30/05

ASSETS	Notes	S/.		US$

				(Note 4)

Operating revenue		8,718,410		2,680,039
Cost of sales		(2,678,876	)	(823,486	)

Gross profit		6,039,534		1,856,553

Cost and expenses
General and administrative expenses		(829,144	)	(254,879	)
Selling and marketing expenses		(856,100	)	(263,165	)

Total cost and expenses		(1,685,244	)	(518,044	)


Operating income		4,354,290		1,338,509

Non-operating incomes (expenses)
Financial income		205,224		63,086
Financial loss		(114,540	)	(35,210	)
Other gains or losses		16,564		5,092

Total non-operating income-net		107,248		32,968

Income taxes		(1,333,304	)	(409,857	)

Net Income		3,128,234		961,619

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2005

		Common Stocks		Retained Earnings		Total

	Notes	S/.		S/.		S/.		US$

Balance as of December 31, 2004	3.	44,128,095		43,080,338		87,208,433		26,807,872

Net income for the six months ended June 30, 2005				3,128,234		3,128,234		961,619

Dividend declared and distributed				(9,017,733	)	(9,017,733	)	(2,772,051	)

2005 capital infusion-Kubuk Investment SAC	2.	65,905,547		65,905,547		20,259,365

2005 capital infusion-Kubuk Gaming SAC		20,000		20,000		6,148

Consolidated goodwill included		1,361,978		1,361,978		418,672

Consolidated subsidiary accumulated deficits		(355,233	)	355,233		--		--

Net equity of Bruce Groupo Diversion, SAC	2.	(43,134,557	)	(37,689,771	)	(80,824,328	)	(24,845,398	)

Balance as of June 30, 2005		67,925,830		(143,699	)	67,782,131		20,836,227

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2005

		06/30/05

	Notes	S/.		US$

				(Note 4)
Cash flows from operating activities:
Net income		3,128,234		961,619
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		491,504		151,088
Net changes in operating assets and liabilities:
Accounts receivable		2,295,674		705,690
Other receivable		(1,038,697	)	(319,295	)
Inventories		(265,196	)	(81,521	)
Prepaid expenses		(104,330	)	(32,071	)
Other assets		1,657,275		509,446
Accounts payable		(409,793	)	(125,970	)
Other current liabilities		(383,295	)	(117,825	)

Net cash provided by operating activities		5,371,376		1,651,161


Cash flows from investing activities:
Purchase of property, plant, and equipment		(1,258,229	)	(386,780	)

Net cash used in investing activities		(1,258,229	)	(386,780	)


Cash flows from financing activities:
Borrowing from shareholder		31,758		9,763
Dividends paid		(9,017,733	)	(2,772,051	)
Proceeds from issuance of common stock-Kubuk Investment	1.	2,922,040		898,235
Proceeds from issuance of common stock-Kubuk Gaming	1.	20,000		6,148

Net cash used by financing activities		(6,043,935	)	(1,857,905	)
		--		--

Net increase/(decrease) in cash and cash equivalents		(1,930,788	)	(593,524	)
Cash and cash equivalents at the beginning of consolidated period		7,187,497		228,974

Cash and cash equivalents at the end of consolidated period		5,256,709		(364,550	)


Cash balance appropriated for owners of Bruce Groupo
Diversion SAC and excluded from cash at the end of period	2.	(3,474,388	)	(1,068,027	)

Cash and cash equivalents at the end of period		1,782,321		547,885


Significant Non-cash Transaction:
Sale of properties, plant and equipment by Bruce Groupo
Diversion SAC to Kubuk Investment SAC	1.	62,983,507		19,361,130

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005

Business Organization and Reorganization

Kubuk International, Inc. (KII, or the Company) is a California corporation and was incorporated on January 7, 2002. The majority shareholders of KII also control 99% of total voting stock of Bruce Groupo Diversion, S.A.C. (Bruce Groupo), a Peruvian company that operated a hotel and casino (Bruce Hotel/Casino) in Lima, Peru from 1997 to May 21, 2005.

Kubuk Investment S.A.C. (KISAC) was formed in year 2001 by the majority shareholders of KII in Peru. KII’s majority shareholders also formed Kubuk Gaming S.A.C. (KGSAC) in year 2005 in Peru.

Starting on August 4, 2001, Bruce Groupo and KISAC entered into a series of sale and purchase agreements (Sale and Purchase Agreements) of the hotel assets and certain casino properties owned and operated by Bruce Groupo for purpose of transferring these properties to KISAC. Total consideration for all Sale and Purchase Agreements was in the amount of S/. 62,970,744. On May 21, 2005, all assets subject to the scope of the sale and purchase agreements were transferred to and received by KISAC, which then commenced to carry on the hotel lodging businesses of Bruce Hotel/Casino.

The major casino operation of Bruce Hotel/Casino has been temporarily closed for renovation since March 2005. During the renovation, Bruce Groupo continued to operate slot machines in the casino till July 1, 2005, when MINCETUR, the gaming authority of Peru, issued gaming licenses to KGSAC. KGSAC then took over the slot machine operations and will conduct all other gaming activities of Bruce Hotel/Casino when the renovation project is completed at the end of year 2005.

On June 15, 2005, KII and the shareholders of KISAC and KGSAC entered into an Agreement and Plan of Reorganization (the Reorganization Agreement), under which KII issued 50,920,000 shares of common stock to the shareholders of KISAC and KGSAC in exchange for their entire ownership holdings of KISAC and KGSAC. As of June 30, 2005, both KISAC and KGSAC were 100% owned by KII.

Principles of Consolidation

The consolidated financial statements are prepared to include the accounts of KII, Bruce Groupo, KISAC and KGSAC as of and for the six-month period ending June 30, 2005. All significant inter-company balances and transactions during the six-month period and the balances of assets, liabilities and owners’ equity of Bruce Groupo as of June 30, 2005 have been eliminated.

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005

Bruce Groupo, which is a member of the consolidated group because of common ownership control, is not a subsidiary of KII.

Summary of Significant Differences between accounting principles followed by the Company and U.S. generally accepted accounting principles

The Company’s financial statements have been prepared in accordance with Peruvian GAAP, which differ in certain respects from U.S. GAAP.

Peruvian GAAP – Peruvian GAAP require the restatement of assets and liabilities into constant Peruvian Nuevos Soles as of the date of the last financial statements presented. All non-monetary assets and liabilities and income statement amounts have been restated to reflect changes in the Peruvian wholesale price index, from the date the assets were acquired or the liabilities were incurred to the year-end. The purchasing power gain (loss) included in income (loss) reflects the effect of Peruvian inflation on the monetary liabilities of the Company during the year.

U.S. GAAP – Under U.S. GAAP, account balances and transactions are stated in the units of currency of the period when the transactions are originated. This accounting model is commonly known as the historical cost basis of accounting. The US GAAP reconciliation of net income and shareholder’s equity does not reflect as a difference the effect of the general price level restatement.

Information Expressed in U.S. dollars

The consolidated financial statements are stated in the Peruvian currency Nuevos Soles. This report contains translations of certain Nuevo Sol amounts into Dollars at specified rates solely for the convenience of the reader and has been made at the rate of S/. 3.253= US$1, the approximate exchange rate at June 30, 2005. No representation is made that the Noevo Sol amounts could have been, or could be, converted into United States Dollars at that or any other rate.

Significant Accounting Policies

(a)

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in Peru requires management of the Company to make certain estimates and assumptions. These estimates and assumptions affect

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005

the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

(b)

Inventories

Inventories are presented at adjusted cost or market value, whichever is lower. Cost is established based on either the last-in, first out assumption or, in certain cases, specific identification method.

(c)

Properties, Plant and Equipment

Properties, plant and equipment are stated at the adjusted cost or market value, whichever is lower. Depreciation is calculated based on straight-line method over estimated useful life of the property. Betterment or improvements to properties are capitalized to properties, plant and equipment accounts. Repairs and maintenance costs are charged to expense accounts.

(d)

Goodwill

The Company records the consideration paid in excess of fair value of net assets acquired in the reorganization with KISAC and KGSAC as goodwill. Goodwill is amortized using straight-line method over 20 years.

EXHIBIT 99.10

TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH



	Bruce Grupo Diversion S.A.C.
	Financial Statements to the year
	that Ended on December 31, 2002



	Bruce Grupo Diversion S.A.C.
	Financial Statements to the year
	that Ended on December 31, 2003

Rene Flores
Certification of the State of California #300304
Page 1 of 26

TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

Bruce Grupo Diversion S.A.C.

Cash Flow Statement
For the year ended on December 31, 2003
Expressed in Nuevos Soles

CONCILIATION OF NET PROFITS WITH NET
CASH OBTAINED FROM OPERATION
ACTIVITIES



	2002	2003

Net profit	24,800,792	16,525,324

Adjustments to profits
Depreciation	2,111,554	2,392,423
Intangible amortization	753,676	753,676
Reduction adjustment on game taxes	2,600,742	0
Payment of dividends	-15,657,224	-8,224,127
Results of exposure to inflation	-885,715	155,766
Others	0	517,714
Decrease (Increase) of assets
Commercial accounts receivable	-535,200	-523,610
Other accounts receivable	-337,964	-774,854
Long term accounts receivable	-5,152,178	-3,109,868
At hand	66,188	72,896
Payments in advance	-22,086	-19,867
Increase (decrease) in liabilities
Commercial accounts payable	-288,598	-56,544
Payable taxes	-1,379,758	-25,027
Payable wages	-63,549	-113,153
Other accounts payable	489,756	-305,682
Social benefits	-108,495	-184,561

Net cash obtained from operation activities	6,391,947	7,336,812

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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

BRUCE GRUPO DIVERSION S.A.C.

Cash Flow Statement
For the year that ended on December 31, 2003
Expressed in Nuevos Soles



OPERATION ACTIVITIES	2002	2003
Collection from clients	47,103,176	32,233,134
Other cash collections related to activities	357,911	999,114
Payments for providers	-2,460,473	-2,354,410
Payments for workers and third parties	-2,011,438	-1,587,328
Payments of taxes	-12,442,649	-8,706,731
Payments of dividends	-15,657,224	-8,224,127
Financial income	1,183,581	1,686,868
Financial expenses	-588,820	-1,054,186
Income from current party in long term account payable	-5,152,178	-2,281,129
Other cash payments related to activities	-3,939,939	-3,374,393

Net cash obtained operation activities	6,391,947	7,336,812

INVESTMENT OPERATIONS
Purchases of Properties, machinery, and equipment	-4,007,999	-7,029,972
Purchases of intangibles	-780,436
Net Cash obtained (used in) in investments activities	-4,788,435	-7,029,972

FINANCING ACTIVITIES
Income from loan to shareholders	-508,202	-554,765
Payments to long term debt	-1,779,152	-130,962
Net cash obtained (used in) in financing activities	-2,287,354	-685,727

NET CASH INCREASE (DECREASE)	-683.842	-378,887

RESULTS OF THE EXPOSURE TO INFLATION CAUSED BY CASH	885,715	-155,766

CASH AT HAND AT YEAR'S START	3,104,255	3,306,129

CASH AT HAND AT YEAR'S END	3,306,128	2,771,476

Rene Flores
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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

BRUCE GRUPO DIVERSION S.A.C.

Profits and Losses Statement
Per Function
For the year that ended on December 31, 2003
Expressed in Nuevos Soles



	2002	2003

Net sales	47,492,061	32,654,920
Cost of sales	-9,321,307	-7,608,705

Gross profit	38,170,754	25,046,215

Management expenses	-1,646,865	-1,711,615
Expenses of sales	-2,983,314	-2,376.947

Operation profits	33,540,575	20,957,653

Financial Income	1,183,581	1,686.868
Financial Expenses	-588,820	-1,054,186
Net, diverse	408,652	551,068
REI from term	885,715	-155,766

Profits before participations and taxes	35,429,703	21,985,637

Income tax	-10,628,911	-5,460,313

NET PROFIT	24,800,792	16,525,324

Profit per common stock	16.43	10.95

Rene Flores
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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

BRUCE GRUPO DIVERSION S.A.C.

General Balances
For the year ended on December 31, 2003
Expressed in Nuevos Soles



Assets	Notes	2002	2003
Banks		3,306,129	2,771,476
Commercial accounts receivable	4	7,935,031	10,739,770
Other accounts receivable	5	1,323,061	2,067,915
Supplies		623,135	550,239
Expenses paid for in advance	6	1,005,877	1,025.744
Current Assets Subtotal		14,193,233	17,155,144

Assets Not Current
Properties, machinery, and equipment (Net)	7	54,847,840	59,485,389
Other Assets (Net)	8	8,449.791	8,007,140
Not Current Assets Subtotal		63,297,631	67,492,529

Total Assets		77,490,864	84,647,673

Current Liabilities
Commercial accounts payable		585,804	529,260
Diverse accounts payable		1,472.,943	1,070,826
Current Liabilities Subtotal		2,058,747	1,600,086

Not Current Liabilities
Long term accounts payable	9	709,124	578,162,
Shareholders loan		554,765
No Current Liabilities Subtotal		1,263,889	578,162

Patrimony
Social capital	10	41,119,693	41,119,693
Accrued results		8,247,743	24,824,408
Term results	11	24,800,792	16,525,324
Patrimony Subtotal		74,168,228	82,469,425

Liabilities and Patrimony Total		77,490,864	84,647,673

Rene Flores
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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

Bruce Grupo Diversion S.A.C.

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED ON DECEMBER 31, 2003

CONSTITUTION AND FINANCIAL ACTIVITY

Before the “Notario Publico” from Lima, Dr. Fidel D’Jaima Torres Cevallos, the company was constituted on March 1, 1996; it was registered at the Registry for Legal Persons of Lima, registry No. 12470, on April 28, 1996, with the object of recreational activities such as casinos, slot machines, night club, discothèques, snack bar , restaurant (Chifa), and inn keeper, being this a list of names not a limit, since in accord with the General Board it could perform other activities allowed by the law, being its main financial activities: CASINO, SLOT MACHINES, AND INN KEEPER.

ACCOUNTING PRINCIPLES AND PRACTICES

The important accounting principles and practices applied for the registration of the operations and the preparation of the financial statements were as follows:

Base for the Preparation of the Financial Statements:

According to accounting principles in Peru, financial statements based on historical values are adjusted to reflect the effect on the variations of the acquisitive value of the Peruvian currency ( Nuevos Sol S/. ), utilizing factor adjustments derived from the Wholesale Price Index at the National Level (IPM). The methodology used for the adjustments corresponds to the one approved by Resolutions No. 2 and 3 of the Normative Council for Accounting according with said methodology:

•

The non-monetary assets and liabilities, the patrimonial accounts, and the accounts for the profits and losses statement are adjusted. The limits of re-expression are considered only for the applicable cases.

•

The monetary assets and liabilities are not adjusted because they are presented in nuevos soles of acquisitive value at the date of the general balance. Balances in foreign currency are not adjusted because they are expressed in nuevos soles at the exchange rate at the closing date.

•

The effect on the variations on the acquisitive value of the Peruvian currency over monetary assets and liabilities kept during the term, determines the result due to exposure to inflation, which is carried over to results.

Supplies

Supplies are presented with an adjusted cost or market value, whichever is less. The cost is determined establishing the age of the supplies according to the latest purchases; or that of diverse supplies, identifying its specific cost.

Properties, machinery, and equipment

Properties, machinery, and equipment are presented at the adjusted cost, not exceeding market value, minus the accrued depreciation. Depreciation is calculated with the straight-line method in relation to the estimated useful life of the goods. Renovations and improvements costs are charged to properties, machinery, and equipment; costs of renovations and

Rene Flores
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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

improvements are charged to Properties, machinery, and equipment; maintenance and repairs costs are charged to expenses. In case of sales and other dispositions, the costs of goods and their accrued depreciation are eliminated and profits or losses are carried over to results.

Compensation for length of services

Compensation for length of services (CTS) is calculated according to pertinent legal provisions and deposited every semester at the banking institution chosen by the worker.

Profit per share

The profit per common share is calculated dividing the net profit for the fiscal term by the pondered average of the number of common shares circulating during the term. The pondered average utilized for the calculations, taking the current number of subscribed shares, as follows:



	2002	2003

Common shares	1,509,400	1,509,400
Profit per share	16.43	10.95

FOREIGN CURRENCY

Balances in foreign currency at the end of the fiscal term are expressed in nuevos soles at the exchange rate in offer and demand at the date, besides the use of the pondered exchange rate for Sunat use , S/. 3.466 purchase and S/. 3.467 sale, for the year 2003, respectively and are summarized as follows:



	2003

Assets	308,740
Liabilities	(29,262)
Net	279,478

COMMERCIAL ACCOUNTS RECEIVABLE

This section comprises:



	2003

Open invoices	542,820
Returned checks	1,071,186
Other commercial accounts receivable	75,319
Open promissory notes (net)	9,050,444
TOTAL	S/. 10,739,770

OTHER ACCOUNTS RECEIVABLE

This section comprises:

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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH



	2003

Deposits in guarantee	1,688
Personnel loans	781.086
IGV (Fiscal Credit)	544,758
Casino taxes	29,191
Payments in advance to providers	704, 571
Other accounts receivable	6,621
TOTAL	S/. 2,067,915

EXPENSES PAID FOR IN ADVANCE

This section comprises:



	2003

Insurance paid in advance	17,695
Other differed charges	34,564
Deferred income tax (50%	971,729
Income tax, payments into account	1,757
TOTAL	S/. 1,025,744

PROPERTIES, MACHINERY, AND EQUIPMENT

This section comprises:

Balances as of December 31, 2003


		Accrued	Net balance at
	COST	depreciation	12/31/2002

Land	2,660,065	0	2,660,065
Buildings and other	53,650,084	6,296,757	47,353,328
Transportation units	1,160,659	641,912	518,747
Furniture and accouterments	2,698,884	879,849	1,819,035
Diverse equipment	12,123,444	5,350,093	6,773,350
Computing equipment	538,263	182,153	356,110
In-progress works	4,753	0	4,753
TOTAL	S/. 72,836,154	13,350,765	59,485,389

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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

OTHER ASSETS

This section comprises:

Balances as of December 31, 2003



		Accrued	Net balance
	COST	amortization

Pre-operation expenses	3,768,378	3,768,378	0
Hotel software	13,917	0	13,917
Receivable promissory notes (net)	6,758,772	0	6,758,772
Deferred income tax	971,729	0	971,729
Casino tax (credit)	262,722	0	262,722
TOTAL	S/. 11,775,518	3,768,378	8,007,140

LONG TERM DEBT

Related to the financed balance of Sunat development, for S/. 578,162:

CAPITAL

1,509,400 common shares @ S/ represent the capital, 23.50 in nominal value each, subscribed and paid for, the total shareholders are not domiciled.

As of December 31, 2003, the shares corresponding to the balance originated by the re-issuance of capital are pending.

According to the pertinent legal provisions.

Distribution of dividends of cash and of shares issued, show an over-rate of 4.1%.

ACCRUED RESULTS AND RESERVES

Profits as of December 31, 2003, were S/. 16,525,324.

According to the norms of the General Law of Partnerships, a minimum of 10% of the profits of each term must be kept as Legal Reserve, deducted from the income tax, until it reaches 20% of the capital, to compensate losses or it can be capitalized, and there is an obligation to replace it in both cases.

FISCAL SITUATION

Sworn statements of income tax for 2003 are pending of review on the part of the fiscal management.

Lima, Peru, February 5, 2005

Rene Flores
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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

EMBLEM

College of Public Accountants of Lima

The Dean of the College of Public Accountants of Lima, in regard to:

The Board Directors in session on 05/02/2001 accorded incorporate

Edgar Alexander Arias Reategui

as an Active Member.

Therefore: This Diploma is issued to be recognized as an authorization to practice the profession according to
Law No. 13253.

Issued in Lima, on July 20, 2001



[ILLEGIBLE]	[ILLEGIBLE]
JULIO CESAR TRUJILLO MEZA	ANGEL AUGUSTO FEIJOO ROMERO
DEAN	DIRECTOR-SECRETARY

No. 28339

Rene Flores
Certification of the State of California #300304
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TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

EMBLEM College of Public Accountants of Lima
AV. AREQUIPA 998 Y ALEJANDRO TIRADO 181 - SANTA BEATRIZ - LIMA
TELF: 417-500 - FAX: 433-3171 - APARTADO POSTAL 14-0-356 - LIMA 14 - PERU

0008189

8189

Acknowledgement of Authorization

The subscribing Dean and the Director Secretary of the College of Public Accountants of Lima, state that according to the archives of this institution it has been verified that:

ARIAS REATEGUI EDGAR ALEXANDER
REGISTRATION: 28339
DATE OF ISSUANCE: 5/2/2001

Authorize as of today to practice the professional functions granted by Law No. 13253, and according to the Statute and the Internal Rule Book of this School, this acknowledgement is issued to the requester for the effects and uses that may see fit. This acknowledgement is valid until 3/31/2005.

Lima, February 9, 2005



[ILLEGIBLE]	[ILLEGIBLE]
Angel Roberto Salazar Frisancho	Juan Carlos Orellano Antunez
Dean	Director Secretary



	Bruce Grupo Diversion S.A.C.
	Financial Statements to the year
	that Ended on December 31, 2002
	and Report of the Independent
	Auditors

Rene Flores
Certification of the State of California #300304
Page 1 of 26

TRANSLATION OF ACCOUNTING REPORTS FROM SPANISH

[Logo]
Doig
Levano
Carvajal & Associated, Civil Partnership
Accountants & Auditors

REPORT OF THE INDEPENDENT AUDITORS
To the Shareholders of
Bruce Grupo Diversion S.A.C.

We have audited the attached General Statements of Bruce Grupo Diversion S.A.C. as of December 31, 2004 and the respective earnings and losses statements, changes in the net patrimony, and the cash flow for the year ending on that date, adjusted to reflect the effects of variations of the acquisitive value of the Peruvian currency.

The preparation of said financial statements is the responsibility of the General Management of Bruce Grupo Diversion, S.A.C. Our responsibility is limited to issue an opinion on the reasonability of the balances reflected on financial statements based on the audit we prepared.

Our audit wa

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

Amendment No. 1 to FORM 8-K

CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

RISK FACTORS

Risks Related to Peru

DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

Tom Liu

Gavin Roy

Wai Yung Lau

Yong Yang

Jack Xu

Sean Sullivan

Committees of the Board of Directors

EXECUTIVE COMPENSATION

Aggregated Option/SAR Exercises in Last Fiscal Year- and Fiscal Year-End Option/SAR Values

Long Term Incentive Plan Awards

Defined Benefit or Actuarial Plan Disclosure

Compensation of Directors

Employment Contracts and Termination of Employment and Change-In-Control Arrangements

Additional Information with Respect to Compensation Committee Interlocks and Insider Participation in Compensation Decisions

Board Compensation Committee Report on Executive Compensation

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

DESCRIPTION OF SECURITIES

Common Stock

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Estimates

Significant Accounting Policies

Results of Operations

Liquidity and Capital Resources

Market Information

Number of Record Holders

Dividends

Submission of Matters to a Vote of Security Holders

LEGAL PROCEEDINGS

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

PRINCIPAL ACCOUNTANT FEES AND SERVICES

RECENT SALES OF UNREGISTERED EQUITY SECURITIES

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Item 3.02. Unregistered Sales of Equity Securities

Tom Liu

Gavin Roy

Wai Yung Lau

Yong Yang

Jack Xu

Sean Sullivan

Item 8.01. Other Events

Item 9.01. Financial Statements and Exhibits

SIGNATURES

Table of Contents

SHARE EXCHANGE AGREEMENT

Recitals

I. Definitions

III. Representations and Warranties of Shareholders

IV. Representations and Warranties Regarding the Company

V. Representations and Warranties of Chilco

VI. Agreements of Shareholders and Chilco

VII. Conditions to Closing

VIII. Post Closing Covenants and Escrow Releases

IX. Indemnification

X. General

ESCROW AGREEMENT

RECITALS

SUBSCRIPTION AGREEMENT

Chilco River Holdings Inc.

WHEREAS:

TO BE COMPLETED BY THE SUBSCRIBER

C. Subscription Amount:

TO BE COMPLETED AND SIGNED BY THE SUBSCRIBER:

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2005

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2005

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2005

Bruce Grupo Diversion S.A.C.

CONCILIATION OF NET PROFITS WITH NET CASH OBTAINED FROM OPERATION ACTIVITIES

BRUCE GRUPO DIVERSION S.A.C.

BRUCE GRUPO DIVERSION S.A.C.

BRUCE GRUPO DIVERSION S.A.C.

Base for the Preparation of the Financial Statements:

Supplies

Properties, machinery, and equipment

Compensation for length of services

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Amendment No. 1
to

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005

CONCILIATION OF NET PROFITS WITH NET
CASH OBTAINED FROM OPERATION
ACTIVITIES

ARIAS REATEGUI EDGAR ALEXANDER
REGISTRATION: 28339
DATE OF ISSUANCE: 5/2/2001