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

_________________

Amendment No. 2
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:  July 29, 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. 2 to Form 8-K filed August 9, 2005 is being filed to include Financial Statements for the six months ended June 30, 2005 and the years ended December 31, 2004 and 2003 for Kubuk International, Inc. and proforma financial statements for Kubuk International, Inc. and Chilco River Holdings Inc. as of June 30, 2005 and for the year ended December 31, 2004. No other changes to the Form 8-K have been made.

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. We filed a Current Report on Form 8-K on August 9, 2005, as amended by Amendment No. 1 to the Current Report on Form 8-K filed on August 11, 2005, announcing the completion of the transaction. The purpose of this Amendment No. 2 on Form 8-K is to amend the Current Report on Form 8-K filed on August 9, 2005, as amended by Amendment No. 1 to the Current Report on Form 8-K filed on August 11, 2005, to include the financial statements and pro forma financial information required by Item 9.01.

Item 9.01.   Financial Statements and Exhibits

  Financial Statements of the Business Acquired

        The unaudited condensed financial statements of Kubuk International, Inc. as of June 30, 2005 and the audited consolidated financial statements of Kubuk International, Inc. as of December 31, 2004 and for the year ended December 31, 2004 are attached hereto as Exhibit 99.11 and Exhibit 99.12, respectively, and are incorporated herein by reference.

  Pro Forma Financial Information

        The unaudited pro forma condensed consolidated financial statements for Chilco River Holding Inc. and Kubuk International, Inc. as of June 30, 2005 and for the year ended December 31, 2004 are attached hereto as Exhibits 99.13 and are incorporated herein by reference.

  Exhibits

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  
99 .10 Financial Statements for the years ended December 31, 2004 and 2003 for Bruce Grupo Diversion S.A.C.*  
99 .11 Unaudited Condensed Financial Statements of Kubuk International, Inc. and subsidiaries as of June 30, 2005  

2

99 .12 Audited Consolidated Financial Statements of Kubuk International, Inc. and subsidiaries for the year ended December 31, 2004  
99 .13 Unaudited Pro Forma Condensed Financial Statements of Chilco River Holdings Inc. and Kubuk International, Inc. as of June 30, 2005 and for the year ended December 31, 2004  

* Incorporated by reference to the Current Report on Form 8-K filed on August 9, 2005.





















3

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:   October 14, 2005
















4

Exhibit Index

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  
99 .10 Financial Statements for the years ended December 31, 2004 and 2003 for Bruce Grupo Diversion S.A.C.*  
99 .11 Unaudited Condensed Financial Statements of Kubuk International, Inc. and subsidiaries as of June 30, 2005  
99 .12 Audited Consolidated Financial Statements of Kubuk International, Inc. and subsidiaries for the year ended December 31, 2004  
99 .13 Unaudited Pro Forma Condensed Financial Statements of Chilco River Holdings Inc. and Kubuk International, Inc. as of June 30, 2005 and for the year ended December 31, 2004  

* Incorporated by reference to the Current Report Form 8-K filed on August 9, 2005




















5


EXHIBIT 99.11

KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2005
(Expressed in US$)



  06/30/05
   
Notes US$
 
       ASSETS

Current assets 		       
  Cash and cash equivalents     547,568  
  Accounts receivable     298,324  
  Inventory   5.   129,304  
  Prepaid expenses     34,310  
 
    Total current assets     1,009,506  
 
Property, plant, and equipment - net   5.   15,780,577  
   
Other intangible assets - net     406  
 
Total assets     16,790,490  
 
       LIABILITIES & SHAREHOLDERS’ EQUITY  

Current liabilities 		 
  Accounts payable     44,813  
  Other current liabilities     133,231  
  Advance from shareholder     9,763  
    Total current liabilities     187,807  
 
Total liabilities     187,807  
 
Shareholders’ equity  
  Common stock, 100,000,000 shares authorized,  
    51,000,400 shares issued and outstanding as of  
    June 30, 2005     16,646,856  
  Accumulted deficits   3.   (44,217 )
  Accumulted Other Comprehensive Income     44  
 
Total shareholders’ equity     16,602,683  
 
Total liabilities and shareholders’ equity       16,790,490  
 




KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2005
(Expressed in US$)



  06/30/05
   
Notes US$
 
Operating revenue     2,661,695  

Cost and expenses 		 
   Operating departments     (817,850 )
   General and administrative expenses     (253,134 )
   Selling and marketing expenses     (261,373 )
 
        Total cost and expenses     (1,332,357 )
 
Operating income     1,329,338  
 

Non-operating incomes (expenses) 		 
  Financial income     62,654  
  Financial loss     (34,969 )
  Other gains or losses     5,076  
 
    Total non-operating income-net     32,762  
 
Income taxes     (407,058 )
 
Net Income     955,042  
 




KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2005
(Expressed in US$)



Notes Common
Stocks
US$ 		Retained
Earnings
US$ 		Accumulated Other
Comprehensive Income
US$ 		Total
US$
 
Balance as of December 31, 2004   3.   12,995,730   6,091,950   (53,647 ) 19,034,032  
 
Net income for the six months ended June 30, 2005       955,042     955,042  
 
Dividend declared and distributed       (2,753,086 )   (2,753,086 )
 
2005 capital infusion-Kubuk Investment SAC   2.   16,475,748       16,475,748  
 
2005 capital infusion-Kubuk Gaming SAC     6,144       6,144  
 
2005 Other comprehensive income     530,153   597,733   53,691   1,181,577  
 
Consolidated goodwill included     4,233,544       4,233,544  
 
Consolidated subsidiary accumulated deficits     (109,135 ) 109,135     --  
 
Net equity of Bruce Groupo Diversion, SAC   2.   (13,251,784 ) (5,044,991 )   (18,296,775 )
   
Balance as of June 30, 2005     20,880,401   (44,217 ) 44   20,836,228  
   




KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2005
(Expressed in US$)



  06/30/05
   
Notes US$
 
Cash flows from operating activities:        
Net income     955,042  
Adjustments to reconcile net income to net cash  
  provided by operating activities:  
  Depreciation     151,000  
Net changes in operating assets and liabilities:  
    Accounts receivable     (380,881 )
    Other receivable     (116,265 )
    Inventories     (83,194 )
    Prepaid expenses     525,951  
    Other assets     310,231  
    Accounts payable     (121,170 )
    Other current liabilities     (56,300 )
 
Net cash provided by operating activities     1,184,415  
 
   
Cash flows from investing activities:  
  Purchase of property, plant, and equipment     (404,983 )
 
    Net cash used in investing activities     (404,983 )
 
   
Cash flows from financing activities:  
  Borrowing from shareholder     (47,989 )
  Decrease in deferred income tax liability     851  
  Dividends paid     (2,753,086 )
  Proceeds from issuance of common stock-Kubuk Investment   1.   1,022,041  
  Proceeds from issuance of common stock-Kubuk Gaming   1.   6,144  
 
    Net cash used by financing activities     (1,772,040 )
 
   
Other Comprehensive income     1,181,575  
   
Net increase/(decrease) in cash and cash equivalents     188,967  
Cash and cash equivalents at the beginning of consolidated period     1,425,999  
 
Cash and cash equivalents at the end of consolidated period     1,614,966  
 
   
Cash balance appropriated for owners of Bruce Groupo  
  Diversion SAC and excluded from cash at the end of period   2.   (1,067,401 )
 
Cash and cash equivalents at the end of period     547,565  
 
Significant Non-cash Transaction:  
    Sale of properties, plant and equipment by Bruce Groupo  
    Diversion SAC to Kubuk Investment SAC   1.   15,453,708  
 




KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005



Preliminary Note

  The accompanying condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In the opinion of management, the accompanying interim financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of June 30, 2005, and our results of operations and cash flows for the six-month periods ended June 30, 2005. The results of operations for the six-month periods ended June 30, 2005 are not necessarily indicative of the results for a full-year period. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Audit for the year ended December 31, 2004.

1.   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 Grupo 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 Grupo for the purpose of transferring these properties to KISAC. Total consideration for all Sale and Purchase Agreements was in the amount of S/. 62,970,744 (approximately $19,163,343 using the exchange rate as of the balance sheet date of the 12/31/04 audited finanicals). 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 only assets that were transferred to KISAC are the assets as listed under “Property, Plant, and Equipment” on the balance sheet. All other assets and liabilities will continue to belong to Bruce Grupo and will subsequently be distributed to its original shareholders. The accounting treatment used by KISAC to record the transfer of the assets followed the guidance for transactions between entities under common control as described in Statements of Financial Accounting Standards (SFAS) 141, Business Combinations. This standard




KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005



  requires that the receiving entity use of the carrying amount of the assets of the transferring entity. Therefore, no fair market value adjustments were made to the transferred assets by Kubuk.

  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.

2.   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.

  The ending balances of assets and liabilities that were belonged to shareholders of Bruce Grupo and were eliminated from the consolidated balance sheet as of June 30, 2005 include the followings:

Cash and cash equivalents   $   1,067,400  
Accounts receivable-net   1,200,874  
Other receivable   320,419  
Inventory   134,507  
Prepaid expenses   337,590  
Other fixed assets   207,491  
Promissory note receivable   15,453,708  
Trade accounts payable   (181,447 )
Other payables   (153,587 )
Long-term debts   (90,181 )
Net assets belonged to Bruce Grupo and eliminated  
from the consolidated balance sheet   $ 18,296,774  




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.

3.   Summary of Significant Differences between accounting principles followed by the Company and U.S. generally accepted accounting principles

  Except for items related to KII, the Company’s financial statements were originally 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.

  The consolidated financial statements presented herein have been restated in accordance with US GAAP.

4.   Information Expressed in U.S. dollars

  Except for items related to KII, the consolidated financial statements were originally stated in the Peruvian currency Nuevos Soles and have been restated in US Dollars using June 30, 2005 spot rate of S/. 3.2550= US$1 and average rate of S/. 3.2755= US$1 for the six-month period ending June 30, 2005.

5.   Significant Accounting Policies

  (a)   Use of Estimates

  The preparation of the Company’s financial statements in conformity with generally accepted accounting principles in the United States requires management of the Company to make certain estimates and assumptions. These




KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005



  estimates and assumptions affect 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 the properties’ estimated useful lives, which range from 5 to 7 years for machinery and equipment and 39 years for building and building improvements. Betterment or improvements to properties are capitalized to properties, plant and equipment accounts. Repairs and maintenance costs are charged to expense accounts.

  Certain long-lived assets of the Company are reviewed at least annually as to whether their carrying values have become impaired in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Management considers assets to be impaired if the carrying value exceeds the undiscounted projected cash flows from operations. If impairment exists, the assets are written down to their fair value or the projected discounted cash flows from related operations.

  (d)   Comprehensive Income

  Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of compre-hensive income. The major components of the Company’s other comprehensive income include foreign currency (Peruvian Nuevo Soles) translation adjustments.

  (e)   Concentration of Credit Risk

  The Company maintains substantially all of its day-to-day operating cash balances with Peruvian commercial banks and financial institutions. The banks or financial




KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005



  institutions may not provide sufficient deposit insurance coverage on the Company’s cash positions.

6.   Properties, Furniture & Equipment

  As of December 31, 2004, properties, furniture and equipment connsisted of the following balances:

2004

Land 		 
$      738,788 		 
Buildings and improvements   15,770,304  
Vehicles   329,317  
Furniture   727,748  
Casino equipment   3,607,900  
Computers   260,600  
Work in-progress   381,385  
Accumulated depreciation   (6,035,465 )

TOTAL 		 
$ 15,780,577 		 

7.   Subsequent Events

  On July 15, 2005, Chilco entered into a Share Exchange Agreement with Kubuk. Kubuk owns and operates, through two wholly-owned subsidiaries, the Bruce Hotel and Casino, located in Lima, Peru. On August 3, 2005, Chilco acquired, by way of reverse acquisition, 100% of the issued and outstanding capital stock of Kubuk in exchange for the issuance of 19,250,000 split-adjusted shares of common stock (the “Exchange Shares”). Under the terms of the Agreement, the former Kubuk shareholders entered into an escrow agreement dated August 3, 2005, under which 8,250,000 Exchange Shares were placed into escrow subject to satisfying certain obligations under the Agreement. The former Kubuk shareholders placed 5,000,000 Exchange Shares into escrow to secure obligations to raise $5,000,000 at a minimum share price of $1.00 per share, 2,000,000 Exchange Shares into escrow to satisfy certain obligations to consultants to Kubuk, and 1,250,000 Exchange Shares in escrow for the purpose of exercising certain co-sale rights granted by Chilco. Directors of Chilco returned, for no consideration, 3,964,000 split-adjusted shares of common stock to the Company for cancellation. Concurrently, Chilco received bridge loans of $100,000.

  On August 3, 2005, Chilco issued 50,000 split-adjusted shares of common stock at a price of $2.00 per share in full satisfaction of the bridge financing.




KUBUK INTERNATIONAL, INC. & SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005



  Following the shares exchange, Chilco continued as the surviving corporation and the separate corporate existence of Kubuk ceased. Prior to the merger, Chilco had no substantial assets, nominal operations and by definition under SEC guidelines is a public shell company. Accordingly, the transaction is treated as a reverse acquisition of a public shell company and has been accounted for as a recapitalization rather than a business combination. The historical financial statements of Kubuk and Bruce Grupo will be the historical statements of new Chilco.





EXHIBIT 99.12

Kubuk International, Inc. and Subsidiaries, formerly Bruce
Grupo Diversion SAC

Report of Independent Registered Public Accounting Firm
and Financial Statements

December 31, 2004





Kubuk International, Inc. and Subsidiaries, formerly Bruce
Grupo Diversion SAC

TABLE OF CONTENTS

Page
 
Report of Independent Registered Public Accounting Firm   1  
 
Consolidated Balance Sheet – December 31, 2004   2  
 
Consolidated Statements of Operations for the Years Ended December 31, 2004 and 2003   3  
 
Consolidated Statement of Stockholders’ Equity for the Years Ended December 31, 2004 and 2003   4  
 
Consolidated Statements of Cash Flows for the Years Ended December 31, 2004 and 2003   5  
 
Notes to Consolidated Financial Statements   6– 14
 
Supplementary Proforma Information – Unaudited   15  




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC

We have audited the accompanying consolidated balance sheet of Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC as of December 31, 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2004 and 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC as of December 31, 2004, and the results of operations and cash flows for the years ended December 31, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America.

Mantyla McReynolds
Salt Lake City, Utah
Oct 7, 2005



Page 1





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion, SAC
Consolidated Balance Sheet
December 31, 2004



 
ASSETS    

Current Assets 		 
     Cash   $   1,404,042  
     Accounts receivable, net of allowance for  
        doubtful accounts of $2,637,984 – Note 4   1,085,427  
     Related Party receivables – Note 10   189,848  
     Inventory   180,618  
     Prepaid expense & other current assets   438,036  
     Deferred income tax-current – Note 9   75,702  
Total Current Assets   3,373,673  
 
Property, furniture & equipment,  
     net of accumulated depreciation of $5,827,266 – Note 5   15,882,775  

Other Assets 		 
     Non Current Deferred Tax Asset – Note 9   544,714  
Total Other Assets   544,714  
TOTAL ASSETS   $ 19,801,162  

LIABILITIES AND STOCKHOLDERS’ EQUITY 		 

Current Liabilities 		 
     Accounts payable   $      287,761  
     Loans payable – Note 6   57,752  
     Accrued expenses and other payables   321,316  
     Current Portion of Long-Term Debt   10,535  
Total Current Liabilities   677,364  

Long-Term Debt 		 
     Note Payable for Foreign Taxes, net of current portion – Note 8   89,330  
Total Long-Term Debt   89,330  

TOTAL LAIBILITIES 		 
766,694 		 

Shareholders’ Equity 		 
      Common stock: no par value, unlimited authorized
     shares, 1,509,400 shares issued and outstanding
  12,721,628  
     Retained earnings   6,371,964  
     Accumulated Foreign Currency Adjustment   (59,124 )
Total Shareholders’ Equity   19,034,468  

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 		  $ 19,809,162  


See accompanying notes to consolidated financial statements



Page 2





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion, SAC
Consolidated Statements of Operations For the Years Ended
December 31, 2004 and 2003



For the Year
Ended
12/31/04 		For the Year
Ended
12/31/03
Revenues      
     Casino   $   7,159,904   $ 7,188,977  
     Rooms   901,351   378,384  
     Food and Beverage   499,556   14,659  
     Entertainment   10,224   50,894  
     Other   2,142,190   1,430,445  
    10,713,225   9,063,359  
     Less:Promotional Allowances   (18,531 ) (18,423 )
Total Revenues   10,694,694   9,044,936  

Operating Expenses 		 
     Operating departments   1,491,522   1,343,122  
     General and administrative   1,414,070   1,079,993  
     Bad debt   309,016   257,950  
     Depreciation   1,006.638   964,877  
Total Operating Expenses   4,221,246   3,645,942  
Income from Operations   6,473,448   5,398,994  

Other Income and Expenses 		 
     Interest income   286,186   332,077  
     Other income/gains   196,584   172,438  
     Other expenses/losses   (135,678 ) (35,587 )
    347,092   468,928  
Income before income tax   6,820,540   5,867,922  
Provision for income tax – Note 9   (2,225,147 ) (1,533,981 )
Net Income   $   4,595,393   $ 4,333,941  

Other Comprehensive Income 		 
     Unrealized gain (loss) on  
      Foreign Currency Translation, net of tax – Note 3   518,944   238,544  
Total Comprehensive Income   $   5,114,337   $ 4,572,485  

Basic and Diluted Earnings Per Share 		 
$            3.39 		 
$          3.03 		 

Weighted Average Shares Outstanding 		 
1,509,400 		 
1,509,400 		 


See accompanying notes to consolidated financial statements



Page 3





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion, SAC
Consolidated Statement of Changes in Stockholders’ Equity For the Years Ended
December 31, 2004 and 2003



Common
Shares 		Common
Stock 		Retained
Earnings 		Accumulated
Foreign Currency
Transaction 		Total
Stockholders’ Equity
Balance as of 12/31/2002   1,509,400   12,721,628   4,892,369   (816,612 ) 16,797,385  

Net Income for the Year 		 
Ended December 31, 2003   --   --   4,333,941   238,544   4,572,485  

Dividend Declared 		 
-- 		 
-- 		 
(2,282,603
)
-- 		 
(2,282,603
)
Balance as of 12/31/2003   1,509,400   12,721,628   6,943,707   (578,068 ) 19,087,267  

Net Income for the Year 		 
Ended December 31, 2004   --   --   4,595,393   518,944   5,114,337  

Divdend Declared 		 
-- 		 
-- 		 
(5,167,136
)
-- 		 
(5,167,136
)
Balance as of 12/31/2004   1,509,400   12,721,628   6,371,964   (59,124 ) 19,034,468  


See accompanying notes to consolidated financial statements



Page 4





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion, SAC
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2004 and 2003



For the Year
Ended
12/31/04 		For the Year
Ended
12/31/03
Cash Flows from Operating Activities      
Net Income   $ 4,595,393   $ 4,333,941  
Adjustments to reconcile net income to cash flows  
  from operating activites  
     Depreciation   1,006,638   964,877  
     (Increase)/Decrease in account balances of:  
     Accounts Receivable   365,369   (1,035,051 )
     Inventory   (27,463 ) 14,215  
     Prepaid expense & other current assets   8,304   62,113  
     Deferred tax assets   (79,470 ) (18,474 )
     Increase/(Decrease) in account balances of:  
     Accounts payable   141,150   (10,732 )
     Accrued expenses and other payables   46,199   (120,506 )
     Foreign Taxes Payable   (71,348 ) (19,253 )
     Loans Payable   45,099   12,653  
Cash Flows from Operating Activities   6,029,871   4,183,783  

Cash Flows Used by Investing Activities 		 
     Cash paid for acquisition of fixed assets   (791,847 ) (1,939,896 )
Cash Used by Investing Activites   (791,847 ) (1,939,896 )

Cash Flows from Financing Activities 		 
     Cash collected from personal loans   29,582   (154,198 )
     Cash repayment for shareholder loans   -- (149,006 )
     Cash paid as dividend   (5,167,136 ) (2,282,603 )
Cash Used in Financing Activities   (5,137,554 ) (2,585,807 )

Other comprehensive income from current year 		 
518,944 		 
238,544 		 
Net Change in cash and cash equivalents   619,414   (103,376 )

Cash and cash equivalents at the beginning of year 		 
784,628 		 
888,004 		 
Cash and cash equivalents at the end of year   $ 1,404,042   $    784,628  

Supplemental Disclosure Information: 		 
     Cash paid during the year for interest   $             --   $             --  
     Cash paid during the year for income taxes   $ 2,145,677   $ 1,515,507  


See accompanying notes to consolidated financial statements



Page 5





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



1.   Business Organization and Reorganization

  Bruce Grupo Diversion SAC (BGD) was formed on March 1, 1996 and registered at the Registry for Legal Persons of Lima, Peru on April 28, 1996. As of the balance sheet date, BGD is the majority owner of a fourteen-story building and a four-story adjacent structure that are operated as a casino and a hotel (the Bruce Hotel/Casino). Bruce Hotel/Casino is located in Lima, Peru and is licensed to operate slot machines, a night club, discothèques, and a restaurant.

  Kubuk International, Inc. (KII) is a California corporation and was incorporated on January 7, 2002. The majority shareholders of KII also control 99% of total voting stock of BDG.

  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, BGD 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 BGD for the purpose of transferring these properties to KISAC. Total consideration for all Sale and Purchase Agreements was in the amount of S/. 62,970,744 (approximately $19,163,343 using the exchange rate as of the balance sheet date). 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 only assets that were transferred to KISAC are the assets as listed under “Property, Furniture, and Equipment” on the balance sheet. All other assets and liabilities will continue to belong to BGD and will subsequently be distributed to its original shareholders. The accounting treatment used by KISAC to record the transfer of the assets followed the guidance for transactions between entities under common control as described in Statements of Financial Accounting Standards (SFAS) 141, Business Combinations. This standard requires that the receiving entity use of the carrying amount of the assets of the transferring entity. Therefore, no fair market value adjustments were made to the transferred assets.

  Consideration for the Sale and Purchase Agreement was given by Tom Liu to BGD in the form of a promissory note, for which KISAC issued Tom Liu shares of its stock valued at the carrying amount of the assets that were transferred.

  The major casino operation of Bruce Hotel/Casino has been temporarily closed for renovation since March 2005. During the renovation, the BGD continued to operate slot machines in the casino until 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


Page 6





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



  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. (See Note 11.)

2.   Significant Accounting Policies

  (a)   Principles of Consolidation

  The financial statements include the accounts of Kubuk International Inc. and the accounts of its wholly owned foreign Peruvian subsidiaries, Kubuk Investments SAC and Kubuk Gaming SAC, formerly Bruce Grupo Diversion SAC. All significant inter-company balances and transactions have been eliminated in consolidation.

  (b)   Use of Estimates

  The preparation of the Company’s financial statements in conformity with generally accepted accounting principles in the United States requires management of the Company to make certain estimates and assumptions. These estimates and assumptions affect 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.

  (c)   Cash and Cash Equivalents

  The Company considers all highly liquid debt instruments purchased with a maturity of three months or less when purchased to be cash equivalents.

  (d)   Accounts Receivable and Credit Risk

  Accounts receivable that potentially subject the Company to concentrations of credit risk consist principally of casino accounts receivable. The Company issues notes receivable to approved casino customers based on their previous experiences with the customers. At December 31, 2004, a substantial portion of the Company’s receivables were due from customers residing in foreign countries. Business or economic conditions or other significant events in these countries could affect the collectibility of such receivables.

Page 7





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



  Trade receivables, including casino and hotel receivables, are typically non-interest bearing and are initially recorded at cost. Accounts are written off when management deems the account to be uncollectible. Recoveries of accounts previously written off are recorded when received. An estimated allowance for doubtful accounts is maintained to reduce the Company’s receivables to their carrying amount, which approximates fair value. The allowance is estimated based on specific review of customer accounts as well as historical collection experience and current economic and business conditions. Management believes that as of December 31, 2004, no significant concentrations of credit risk existed for which an allowance had not already been recorded.

  (e)   Revenue Recognition and Promotional Allowances

  Casino revenue is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs (“casino front money”) and for chips in the customers’ possession (“outstanding chip liability”). Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed.

  Total revenue does not include promotional allowances, the retail amount of rooms, food, and beverage provided gratuitously to customers, which was $18,531 and $18,423 in 2004 and 2003, respectively.

  (f)   Income Taxes

  Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB Statement No. 109, Accounting for Income Taxes. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

  (g)   Basic and Diluted Earnings per Share

  Basic earnings per share of common stock were computed by dividing income available to common stockholders, by the weighted average number of common shares outstanding, net of common stock held in the treasury for the year. As of December 31, 2004, no dilutive securities existed.


Page 8





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



  (h)   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.

  (i)   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 the properties’ estimated useful lives, which range from 5 to 7 years for machinery and equipment and 39 years for building and building improvements. Betterment or improvements to properties are capitalized to properties, plant and equipment accounts. Repairs and maintenance costs are charged to expense accounts.

  Certain long-lived assets of the Company are reviewed at least annually as to whether their carrying values have become impaired in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Management considers assets to be impaired if the carrying value exceeds the undiscounted projected cash flows from operations. If impairment exists, the assets are written down to their fair value or the projected discounted cash flows from related operations. Based on Management’s evaluation, no asset impairment has been considered necessary for the years ended December 31, 2004 and 2003.

  (j)   Concentration of Credit Risk

  The Company maintains substantially all of its day-to-day operating cash balances with Peruvian commercial banks and financial institutions. The banks or financial institutions may not provide sufficient deposit insurance coverage on the Company’s cash positions.

  (k)   Dividends

  The Company accrues for declared dividends which are not yet paid. As of the balance sheet date, there were no dividends which were declared and unpaid. Dividends per common share for the years 2004 and 2003 are $3.42 and $1.51, respectively.

3.   Foreign Currency Transactions

  The Company conducts its gaming business at Bruce Casino in US Dollars. The hotel and other business activities are operated using both US Dollars and the


Page 9





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



  Peruvian Nuevo Soles, which is the functional currency used for the preparation of the financial statements. Accounts balances on the balance sheet are translated into US Dollars equivalents in accordance with Statement of Financial Accounting Standards No. 52, “Foreign Currency Translation”. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss).

4.   Accounts Receivable

  As of December 31, 2004, accounts receivable consisted of the following balances:

Account 2004
Open invoices   $    179,997  
Returned checks   280,414  
Open promissory notes   3,263,000  
Allowance for doubtful accounts   (2,637,984 )
                Total   $ 1,085,427  

5.   Properties, Furniture & Equipment

  As of December 31, 2004, Properties, Furniture and Equipment consisted of the following balances:

Account 2004
Land   $      862,918  
Buildings and improvements   16,058,831  
Vehicles   329,317  
Furniture   727,748  
Casino equipment   3,443,184  
Computers   260,600  
Work in-progress   23,000  
Software   4,443  
Accumulated depreciation   (5,827,266 )
                 Total   $ 15,882,775  


Page 10





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



6.   Loans Payable

  The Company has certain short-term loans that are payable to various third parties. The loans bear zero interest and are payable on demand.

7.   Accrued Expenses and Other Payables

  As of December 31, 2004, Accrued Expenses and Other Payables consisted of the following:

Account 2004
Income tax payable   $       642  
Benefits payable   14,127  
ONP (retirement funds)   198  
Gaming tax payable   85,909  
Municipal fees payable   7,232  
Accrued wages   4,531  
Gratuities payable   36,642  
Payable wages   28,357  
Services percentages   14,501  
Progressive well   59,519  
Outstanding Chips   12,212  
Pre-judicial conciliation   8,345  
Participation in council   11,640  
Casino Front Money   35,111  
Other Accounts Payable   2,350  
Total   $321,316  

8.   Note Payable for Foreign Taxes

  The Company incurred taxes in prior years and entered into a payment plan with its local taxation authority. The note payable bears zero interest and is subject to the following payment schedule.

Year ended December 31, Amount
2005   $10,535  
2006   89,330  
Total   $99,865  


Page 11





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



9.   Income Taxes

  Deferred income tax assets at December 31, 2004 consist of the following temporary differences:

Current Long-term
 
 
Deferred tax asset:      
 Depreciation & Amortization     $544,714  
 
 Allowance for doubtful accounts   $75,702    
 
Deferred tax liabilites:   --   --  
 
Net   $75,702   $544,714  

  The components of the provision for income tax are as follows:

2004 2003
Current Expense:      
 Foreign Taxes   $2,145,677   $1,515,507  
     
Deferred Expense:  
 Foreign Taxes   79,470   18,474  
Total   $2,225,147   $1,533,981  

  Reported income tax expense is reconciled to the amount computed on the basis of income before income taxes at the statutory rate as follows:

2004 2003
Statutory Expense   30.00 % 30.00 %
Effects of:  
 Changes in Deferred Tax Assets and Other   2.20 % -4.38 %
Reported Provision for Income Taxes   32.20 % 25.62 %


Page 12





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



10.   Related Party Transactions

  The Company made advances to its employees, and loans to shareholders and a director. The loans are receivable on demand and bear zero interest. Total related party loans receivable as of December 31, 2004 and 2003 were $189,848 and $219,430, respectively.

11.   Subsequent Events

  Kubuk International, Inc. (KII) is a California corporation and was incorporated on January 7, 2002. The majority shareholders of KII also control 99% of total voting stock of BDG.

  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, BGD 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 BGD for the purpose of transferring these properties to KISAC. Total consideration for all Sale and Purchase Agreements was in the amount of S/. 62,970,744 (approximately $19,163,343 using the exchange rate as of the balance sheet date). 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 only assets that were transferred to KISAC are the assets as listed under “Property, Furniture, and Equipment” on the balance sheet. All other assets and liabilities will continue to belong to BGD and will subsequently be distributed to its original shareholders. The accounting treatment used by KISAC to record the transfer of the assets followed the guidance for transactions between entities under common control as described in FAS 141, Business Combinations. This guidance prescribes the use of the carrying amount of the transferring entity. Therefore, no fair market value adjustments were made to the transferred assets.

  Consideration for the Sale and Purchase Agreement was given by Tom Liu to BGD in the form of a promissory note, for which KISAC issued Tom Liu shares of its stock valued at the carrying amount of the assets that were transferred.

  The major casino operation of Bruce Hotel/Casino has been temporarily closed for renovation since March 2005. During the renovation, the Company 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


Page 13





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion SAC
Notes To The Consolidated Financial Statements
December 31, 2004



  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.

  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.; 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 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.


Page 14





Kubuk International, Inc. and Subsidiaries, formerly Bruce Grupo Diversion, SAC
Supplementary Proforma Information - Unaudited
December 31, 2004



The following unaudited proforma information presents the balance sheet of Kubuk International, Inc. and Subsidiaries, with only the assets of BGD that it will own from May 21, 2005 and forward.

Kubuk International, Inc. and Subsidiaries
Proforma Consolidated Balance Sheet
December 31, 2004



12/31/2004
 
ASSETS    
Property, furniture & equipment,  
     net of accumulated depreciation of $5,827,266   $15,882,775  
 
TOTAL ASSETS   15,882,775  
 

LIABILITIES & STOCKHOLDERS’ EQUITY 		 
Liabilities   --  
Total Stockholders’ Equity   15,882,775  
 
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY   $15,882,775  
 


Page 15






EXHIBIT 99.13

CHILCO RIVER HOLDINGS, INC. AND KUBUK INTERNATIONAL, INC., FORMERLY BRUCE GRUPO DIVERSION SAC

UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited proforma condensed combined financial information gives effect of the terms of the Share Exchange Agreement of Chilco River Holdings, Inc., (“Chilco”) a Nevada corporation and Kubuk International, Inc. (“Kubuk”), a California corporation, formerly Bruce Grupo Diversion SAC (“Bruce Grupo”), a Peruvian company.

Following the shares exchange, Chilco continued as the surviving corporation and the separate corporate existence of Kubuk ceased. Prior to the merger, Chilco had no substantial assets, nominal operations and by definition under SEC guidelines is a public shell company. Accordingly, the transaction is treated as a reverse acquisition of a public shell company and has been accounted for as a recapitalization rather than a business combination. The historical financial statements of Kubuk and Bruce Grupo will be the historical statements of new Chilco. Proforma financial information has been presented to provide full disclosure of the transactions.

The unaudited proforma condensed combined financial statements are based on the historical financial statements of Chilco and Kubuk and Bruce Grupo, under the assumptions and adjustments set forth in the accompanying notes. The unaudited proforma condensed combined balance sheet as of June 30, 2005 gives effect to the merger as if the merger had been consummated on June 30, 2005. The unaudited proforma condensed combined statements of operations for the six months ended June 30, 2005 give effect to the merger as if the merger had been consummated on January 1, 2005. The unaudited proforma condensed combined statements of operations for the year ended December 31, 2004 give effect to the merger as if the merger had been consummated on January 1, 2004.

The unaudited proforma condensed combined financial statements should be read in conjunction with the historical financial statements of Chilco and Kubuk and Bruce Grupo, including the respective notes to those statements. The proforma information is not necessarily indicative of the combined financial position or the results of operations in the future or of the combined financial position or the results of operations which would have been realized had the acquisition been consummated during the periods or as of the dates for which the proforma information is presented.

The unaudited proforma condensed combined financial statements do not give effect to any cost savings that may result from merger and reverse acquisition.





CHILCO RIVER HOLDINGS INC. AND KUBUK INTERNATIONAL INC.
UNAUDITED PROFORMA CONDENSED BALANCE SHEETS
JUNE 30, 2005



Kubuk
US$ 		Chilco
US$ 		Combined Pro Forma
Adjustments 		Pro Forma
Results
 
Current assets            
  Cash and cash equivalents   547,568   40,381   587,949     587,949  
  Accounts receivable   298,324   --   298,324     298,324  
  Inventory   129,304   --   129,304     129,304  
  Prepaid expenses   34,310   87   34,397     34,397  
 
    Total current assets   1,009,506   40,468   1,049,974     1,049,974  
 
Property, plant, and equipment - net   15,780,577   --   15,780,577     15,780,577  
 
Investment  
Other intangible assets - net   406   --   406     406  
 
Total assets   16,790,490   40,468   16,830,958   --   16,830,958  
 
     LIABILITIES & SHAREHOLDERS' EQUITY  
Current liabilities  
  Accounts payable   44,813   2,743   47,556     47,556  
  Other current liabilities   133,231   4,114   137,345     137,345  
  Notes payable   --   50,000   50,000     50,000  
  Advance from shareholder   9,763   --   9,763     9,763  
 
    Total current liabilities   187,807   56,857   244,664   --   244,664  
 
Total liabilities   187,807   56,857   244,664   --   244,664  
 
 
Shareholders' equity  
  Common stock, 100, shares authorized,  
    21,450,000 shares issued and outstanding  
    as of June 30, 2005   16,646,856   6,114   16,652,970   (a) (3,964 ) 21,450  
        (b) (16,646,856 )  
          19,250    
        (c) 50  
  Additional paid-in capital   --   67,936   67,936   (a) 3,964   16,755,283  
        (b) 16,583,433    
        (c) 99,950    
  Donated capital   --   25,500   25,500     25,500  
  Accumulted deficits   (44,217 ) (115,939 ) (160,156 )(b) 44,217   (215,939 )
          (c) (100,000 )  
  Accumulted Other Comprehensive Income   44   --   44   (b) (44 ) --  
 
Total shareholders' equity   16,602,683   (16,389 ) 16,586,294   0   16,586,294  
 
Total liabilities and shareholders' equity   16,790,490   40,468   16,830,958   0   16,830,958  
 




CHILCO RIVER HOLDINGS INC. AND KUBUK INTERNATIONAL INC.
UNAUDITED PROFORMA CONDENSED STATEMENT OF OPERATIONS
(Expressed in US$)



For the Six Months Ending 6/30/05 For the Year Ending 12/31/2004
 
Kubuk
US$ 		Chilco
US$ 		Pro Forma
Adjustment 		Pro Forma
Results 		Kubuk
US$ 		Chilco
US$ 		Pro Forma
Adjustment 		Pro Forma
Results
 
Operating revenue   2,661,695   --     2,661,695   10,694,694   --     10,694,694  

Cost and expenses 		 
   Operating department costs   (817,850 ) (817,850 ) (1,491,522 )     (1,491,522 )
   General and administrative expenses   (253,134 ) (28,510 ) (c) (100,000 ) (381,644 ) (2,729,724 ) (52,345 ) (2,782,069 )
   Selling and marketing expenses   (261,373 ) --   (261,373 ) --       --  
        Total cost and expenses   (1,332,357 ) (28,510 ) (100,000 ) (1,460,867 ) (4,221,246 ) (52,345 ) --   (4,273,591 )
 
 
Operating income   1,329,338   (28,510 ) (100,000 ) 1,200,828   6,473,448   (52,345 ) --   6,421,103  
 
Non-operating incomes (expenses)  
  Financial income   62,654   --     62,654   286,186       286,186  
  Financial and interest expenses   (34,969 ) (724 )   (35,693 ) (135,678 ) (287 ) (135,965 )
  Other gains or losses   5,076   --     5,076   196,584       196,584  
 
    Total non-operating income-net   32,762   (724 ) --   32,038   347,092   (287 )   346,805  
 
Income taxes   (407,058 ) --     (407,058 ) (2,225,147 )     (2,225,147 )
 
Net Income (Loss)   955,042   (29,234 ) (100,000 ) 825,808   4,595,393   (52,632 )   4,542,761  
 
 
 Basic net income(loss) per common share   0.63   (0.00 ) (0.59 ) 0.04   3.04   (0.02 ) (2.82 ) 0.21  
 Diluted net icnome(loss) per common share   0.63   (0.00 ) (0.59 ) 0.04   3.04   (0.02 ) (2.82 ) 0.21  
 Weighted average number of common shares  
 outstanding   1,509,400   6,075,878   13,864,720   21,449,999   1,509,400   3,032,000   16,908,599   21,449,999  




CHILCO RIVER HOLDINGS INC. AND KUBUK INTERNATIONAL INC.
UNAUDITED PROFORMA CONDENSED STATEMENT OF OPERATIONS
(Expressed in US$)



For the Six Months Ending 6/30/05 For the Year Ending 12/31/2004
 
Kubuk
US$ 		Chilco
US$ 		Pro Forma
Adjustment 		Pro Forma
Results 		Kubuk
US$ 		Chilco
US$ 		Pro Forma
Adjustment 		Pro Forma
Results
 
Operating revenue   2,661,695   --     2,661,695   10,694,694   --     10,694,694  

Cost and expenses 		 
   Operating department costs   (817,850 )     (817,850 ) (1,491,522 )     (1,491,522 )
   General and administrative expenses   (253,134 ) (28,510 ) (100,000 ) (381,644 ) (2,729,724 ) (52,345 ) (2,782,069 )
   Selling and marketing expenses   (261,373 ) --   (261,373 ) --       --  
        Total cost and expenses   (1,332,357 ) (28,510 ) (100,000 ) (1,460,867 ) (4,221,246 ) (52,345 ) --   (4,273,591 )
Operating income   1,329,338   (28,510 ) (100,000 ) 1,200,828   6,473,448   (52,345 ) --   6,421,103  

Non-operating incomes (expenses) 		 
  Financial income   62,654   --     62,654   286,186       286,186  
  Financial and interest expenses   (34,969 ) (724 )   (35,693 ) (135,678 ) (287 )   (135,965 )
  Other gains or losses   5,076   --     5,076   196,584       196,584  
    Total non-operating income-net   32,762   (724 ) --   32,038   347,092   (287 )   346,805  
Income taxes   (407,058 ) --     (407,058 ) (2,225,147 )     (2,225,147 )
 
Net Income (Loss)   955,042   (29,234 ) (100,000 ) 825,808   4,595,393   (52,632 )   4,542,761  
 
 Basic net income(loss) per common share   0.63   (0.00 ) (0.59 ) 0.04   3.04   (0.02 ) (2.82 ) 0.21  
 Diluted net icnome(loss) per common share   0.63   (0.00 ) (0.59 ) 0.04   3.04   (0.02 ) (2.82 ) 0.21  
 Weighted average number of common shares  
 outstanding   1,509,400   6,075,878   13,864,720   21,449,999   1,509,400   3,032,000   16,908,599   21,449,999  




CHICO RIVER HOLDINGS, INC. AND KUBUK INTERNATIONAL, INC., FORMERLY BRUCE GRUPO DIVERSION SAC

NOTES TO UNAUDITED PROFORMA CONDENSED

COMBINED FINANCIAL STATEMENTS

NOTE 1 – CHILCO RIVER HOLDINGS, INC.

Chilco River Holdings, Inc. (“Chilco”), a Nevada corporation, was incorporated on May 8, 2003. Chilco has acquired a 100% interest in 16 mineral claim units located n British Columbia. Chilco us an Exploration Stage Company, as defined by Statement if Financial Accounting Standard (“SFAS”) No. 7, “ Accounting and Reporting for Development Stage Enterprises .” Chilco’s principal business prior to the reverse merger, as explained below, was acquisition and exploration of mineral resources.

On July 15, 2005, Chilco entered into a Share Exchange Agreement with Kubuk International Inc. (“Kubuk”), a California corporation. Kubuk owns and operates, through two wholly-owned subsidiaries, the Hotel Cinco Estrallas (known as the “Bruce Hotel and Casino”), located in Lima, Peru. Chilco acquired, by way of reverse acquisition, 100% of the issued and outstanding capital stock of Kubuk in exchange for the issuance of 19,250,000 split-adjusted shares of common stock. Directors of Chilco returned, for no consideration, 3,964,000 split-adjusted shares of common stock to the Company for cancellation.

On May 5, 2005, Chilco issued a note payable for $50,000 in cash proceeds. On May 18, 2005, the Company issued 50,000 split-adjusted shares of common stock to a director of the Company for cash proceeds of $23,000.

NOTE 2 – KUBUK INTERNATIONAL, INC.

Bruce Grupo Diversion SAC (“Bruce Grupo”) was formed on March 1, 1996 and registered at the Registry for Legal Persons of Lima, Peru on April 28, 1996. Bruce Grupo was the majority owner of a fourteen-story building and a four-story adjacent structure that are operated as a casino and a hotel (the Bruce Hotel/Casino). Bruce Hotel/Casino is located in Lima, Peru and is licensed to operate slot machines, a night club, discothèques, and a restaurant.

Kubuk International, Inc. (“KII”) 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 Grupo.

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 Grupo 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 Grupo for the purpose of transferring these properties to KISAC. Total consideration for all Sale and Purchase Agreements was in the amount of S/. 62,970,744 (approximately $19,163,343 using the exchange rate as of the balance sheet date). 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 only assets that were transferred to KISAC are the assets as listed under “Property, Plant, and Equipment” on the balance sheet. All other assets and liabilities will continue to belong to Bruce Grupo and will subsequently be distributed to its original shareholders. The accounting treatment used by KISAC to record the transfer of the assets followed the guidance for transactions between entities under common control as described in Statements of Financial Accounting Standards (SFAS) 141, Business Combinations. This standard requires that the receiving entity use of the carrying amount of the assets of the transferring entity. Therefore, no fair market value adjustments were made to the transferred assets by Kubuk.

The major casino operation of Bruce Hotel/Casino has been temporarily closed for renovation since March 2005. During the renovation, the Bruce Grupo continued to operate slot machines in the casino until 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.

NOTE 3 – RECAPITALIZATION AND SHARE EXCHANGE AGREEMENT

On July 15, 2005, Chilco entered into a Share Exchange Agreement with Kubuk. Kubuk owns and operates, through two wholly-owned subsidiaries, the Bruce Hotel and Casino, located in Lima, Peru. On August 3, 2005, Chilco acquired, by way of reverse acquisition, 100% of the issued and outstanding capital stock of Kubuk in exchange for the issuance of 19,250,000 split-adjusted shares of common stock (the “Exchange Shares”). Under the terms of the Agreement, the former Kubuk shareholders entered into an escrow agreement dated August 3, 2005, under which 8,250,000 Exchange Shares were placed into escrow subject to satisfying certain obligations under the Agreement. The former Kubuk shareholders placed 5,000,000 Exchange Shares into escrow to secure obligations to raise $5,000,000 at a minimum share price of $1.00 per share, 2,000,000 Exchange Shares into escrow to satisfy certain obligations to consultants to Kubuk, and 1,250,000 Exchange Shares in escrow for the purpose of exercising certain co-sale rights granted by Chilco. Directors of Chilco returned, for no consideration, 3,964,000 split-adjusted shares of common stock to the Company for cancellation. Concurrently, Chilco received bridge loans of $100,000.





On August 3, 2005, Chilco issued 50,000 split-adjusted shares of common stock at a price of $2.00 per share in full satisfaction of the bridge financing.

NOTE 4 — PROFORMA ADJUSTMENTS

Proforma adjustments on the attached financial statements include the following:

(a)   $3,964: to record the cancellation of 3,964,000 split-adjusted shares returned by Chilco Directors pursuant to the Share Exchange Agreement

(b)   $16,606,856: to record the issuance of 19,250,000 Chilco shares for a total consideration of $16,606,856 in exchange for 100% of the outstanding common shares of Kubuk

(c)   $100,000: to record the conversion of the $100,000 bridge loan into 50,000 shares of common stock

NOTE 5 – PROFORMA NET INCOME PER COMMON SHARE

Basic net income per common share is computed based on the number shares outstanding, after adjustment for the effects of the recapitalization, as though such shares had been outstanding from the beginning of the periods presented.

Diluted net income per common share is computed based on the number shares outstanding, assuming the dilutive effect of the conversion of the preferred stock into common shares. Chilco has not issued any preferred stock as of June 30, 2005, nor has it issued any preferred stock in connection with the Share Exchange Agreement.