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.



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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:


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  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


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  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.



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         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.



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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.



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  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.



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        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.



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         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.



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        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



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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.



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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



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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


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      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.



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        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



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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