UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(x) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2006
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____ to ______
Commission file number 0-29463
RIVER CAPITAL GROUP, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware
--------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
51-0392750
---------------------------------
(IRS Employer Identification No.)
Suite 312 7 Reid Street, Hamilton Bermuda HM11
---------------------------------------------------
(Address of principal executive offices)
441-296-6006
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes (X) No ( )
Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)
Yes ( ) No (X)
Number of shares outstanding of the registrant's class of common stock as of
August 7, 2006 was 26,452,275.
Transitional Small Business Disclosure Format (check one): Yes ( ) No (X)
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Balance Sheet at
June 30, 2006 (unaudited) 3
Statements of Operations
for the Six and Three Months ended June 30, 2006
and 2005 (unaudited) 4
Statements of Cash Flows for
for the Six Months ended June 30, 2006
and 2005 (unaudited) 5
Selected Notes to the Financial
Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan of Operation 10
Item 3. Controls and Procedures 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 12
Item 3. Defaults Upon Senior Securities. 13
Item 4. Submission of Matters to a Vote of Security Holders. 13
Item 5. Other Information. 13
Item 6. Exhibits. 13
SIGNATURES
2
RIVER CAPITAL GROUP, INC. AND SUBSIDIARY
Balance Sheet
(unaudited)
June 30, 2006
--------------------
ASSETS
Cash $ 434,325
--------------------
Total current assets 434,325
--------------------
Total assets $ 434,325
====================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable and accrued expenses $ 83,863
Accounts payable to related parties 135,000
Convertible notes 195,335
--------------------
Total current liabilities 414,198
--------------------
Stockholders' deficit:
Common stock, $.001 par value, 50,000,000 shares
authorized: 26,432,275 shares issued and outstanding 26,432
Additional paid-in capital 1,940,015
Accumulated deficit (1,946,320)
--------------------
Total stockholders' deficit 20,127
--------------------
Total liablities and stockholders' deficit $ 434,325
====================
The accompanying notes are an integral part of these financial statements.
3
RIVER CAPITAL GROUP, INC. AND SUBSIDIARY
STATEMENTS OF OPERATIONS
(UNAUDITED)
For the six For the six For the three For the three
months ended months ended months ended months ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
--------------- --------------- --------------- ---------------
Revenue $ - $ - $ - $ -
--------------- --------------- --------------- ---------------
Total revenue - - - -
--------------- --------------- --------------- ---------------
Expenses:
Selling general and administrative 434,852 221,384 301,550 82,413
--------------- --------------- --------------- ---------------
Total operating expenses 434,852 221,384 301,550 82,413
--------------- --------------- --------------- ---------------
Total operating loss (434,852) (221,384) (301,550) (82,413)
--------------- --------------- --------------- ---------------
Other income (expense):
Miscellaneous income - 62 - 40
Interest expense (29,550) (3,273) (19,730) (3,109)
--------------- --------------- --------------- ---------------
(29,550) (3,211) (19,730) (3,069)
--------------- --------------- --------------- ---------------
Net loss $ (464,402) $ (224,595) $ (321,280) $ (85,482)
=============== =============== =============== ===============
Net loss per share - basic and diluted $ (0.02) $ (0.04) $ (0.01) $ (0.01)
=============== =============== =============== ===============
Weighted average shares outstanding 25,693,108 6,230,697 25,985,053 6,246,455
=============== =============== =============== ===============
The accompanying notes are an integral part of these financial statements.
4
RIVER CAPITAL GROUP, INC. AND SUBSIDIARY
Statements of Cash Flows
(unaudited)
For the six For the six
months ended months ended
June 30, June 30,
2006 2005
----------------- ------------------
Cash flows from operating activities:
Net loss $ (464,402) $ (224,595)
----------------- ------------------
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Stock given for compensation 256,250 89,950
Discount on convertible notes 21,550 1,940
Changes in operating assets and liabilities:
(Increase) decrease in due from related party - 963
Increase (decrease) in accounts payable 48,819 8,219
Increase (decrease) in accounts payable to related parties 11,107 42,521
----------------- ------------------
Total adjustments 337,726 143,593
----------------- ------------------
Net cash used by operations (126,676) (81,002)
----------------- ------------------
Cash flows from financing activities:
Proceeds from convertible notes 300,000 200,000
----------------- ------------------
Net cash provided by financing activities $ 300,000 $ 200,000
----------------- ------------------
Net increase (decrease) in cash 173,324 118,998
Cash at beginning of period 261,001 95,554
----------------- ------------------
Cash at end of period $ 434,325 $ 214,552
================= ==================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ - $ -
================= ==================
Income taxes $ - $ -
================= ==================
The accompanying notes are an integral part of these financial statements.
5
RIVER CAPITAL GROUP, INC. AND SUBSIDIARY
SELECTED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2006
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions of Form 10-QSB and
Item 310 of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. The
preparation requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Actual results may
differ from these estimates. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six-month period
ended June 30, 2006 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2006.
For further information, refer to the financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB for the year ended
December 31, 2005 as filed with the Securities and Exchange Commission.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of all
liabilities in the normal course of business.
As of June 30, 2006, the Company had an accumulated deficit of $1,946,320.
During the six months ended June 30, 2006 the company suffered a loss of
$464,402. These factors raise substantial doubt about the Company's ability to
continue as a going concern.
Management's plan to alleviate this going concern issue is to raise capital and
commence the business operations of the newly acquired insurance company. The
Company's continued existence is dependent upon management funding operations
and raising sufficient capital. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 3 - ACQUISITION OF RIVER CAPITAL HOLDINGS LIMITED
On December 30, 2005, River Capital Group, Inc., a Delaware corporation ("River
Group") and River Capital Holdings Limited, a Barbados corporation ("River
Holdings") reached a share exchange agreement pursuant to which River Holdings
transferred 100% of the capital stock of River Holdings in exchange for
19,135,820 shares of common stock, $0.001 par value per share, of River Group
("River Group Common Stock"). Due to the amount of shares issued, upon
completion of the Share Exchange, River Holdings and its shareholders had voting
control of River Group.
NOTE 4 - DUE TO RELATED PARTY
A company owned by a director received management and administrative fees
totaling $65,000 and $65,000 for the six months ended June 30, 2006 and 2005,
respectively. An additional $18,945 and $25,637 was received as reimbursement of
direct out of pocket travel and other expenses for the six months ended June 30,
2006 and 2005, respectively. A total of $135,000 was due to the related party as
of June 30, 2006.
NOTE 5 - CONVERTIBLE NOTES AND WARRANTS
On May 23, 2005, the Company entered into a Subscription Agreement with several
accredited investors (the "Subscribers") pursuant to which the Company agreed to
sell, and the Subscribers agreed to purchase in the
6
aggregate, up to $200,000 principal amount of convertible notes and five-year
warrants to purchase 400,000 shares of common stock at $0.75 per share. A total
of $23,280 was ascribed to the warrants, valued at estimated fair market value
at the date of the warrants issuance. On May 31, 2006 a modification to the
agreement was entered into whereby the due date of the notes was extended to May
23, 2007 and the five-year warrants were repriced at $0.35 per share. The
repricing resulted in a further discount to the notes of $142,206 (the ascribed
value of the warrants valued at estimated fair market value of the Company's
common stock at the date of the warrants repricing). The resulting discount to
the convertible notes will be amortized to interest expense over the remaining
life of the convertible notes (one year).
On June 30, 2006, the Company issued an additional $300,000 principal amount of
convertible notes and five-year warrants to purchase 525,000 shares of common
stock at $0.35 per share. In connection with this transaction, 20,000 shares of
the Company's common stock were issued in payment of legal services rendered.
A total of $174,309 was ascribed to the warrants, valued at estimated fair
market value at the date of the warrants issuance. The resulting discount to the
convertible notes will be amortized to interest expense over the remaining life
of the convertible notes (one year).
The convertible notes are secured by a security interest in all of the assets of
River Capital. The convertible notes include the following terms:
Interest at the greater of (i) the prime rate plus 4% per annum or
(ii) 10%, payable quarterly beginning August 1, 2005;
Term of one year, but the note may be prepaid at 110% of the
principal only if an insurance license shall have been granted to River
Reinsurance Limited and River Reinsurance Limited shall have become a
subsidiary of River Capital;
Convertible at any time by the holders into shares of River Capital
common stock at a price equal to $0.50; and
Anti-dilution protections. River Capital has granted a one-time
demand registration right to register the resale of the shares issuable
upon conversion of the notes and the shares issuable upon exercise of
the warrants.
NOTE 6 - STOCKHOLDERS' EQUITY
During the three months ended June 30, 2006, the Company issued 1,000,000 shares
of its common stock as compensation for consulting services. A charge of
$250,000 was recorded for the three months ended June 30, 2006, valued at fair
market value, in connection with this transaction. The Company relied upon the
exemption from registration contained in Section 4(2), as the recipients were
deemed to be sophisticated with regard to an investment in the Company.
In May 2004, the stockholders of the Company adopted a Stock Option Plan (the
"Plan"). Under the Plan, stock options may be granted at an exercise price not
less than the fair market value of the Company's common stock at the date of
grant. Options may be granted to key employees and other persons who contribute
to the success of the Company. The Company has reserved 2,540,728 shares of
common stock for the Plan. This number automatically shall be adjusted annually
at the beginning of the Company's fiscal year to a number equal to 10% of the
number of shares of the Company issued and outstanding at the end of the
Company's last completed fiscal year. During the six months ended June 30, 2006,
the Company did not issue any employee stock options nor did any employee stock
options vest. As of June 30, 2006, options to purchase:
(i) 275,000 shares at a price of $2.00 per share had been granted
pursuant to the Plan. The options are exercisable through February 5, 2009; and
(ii) 350,000 shares at a price of $0.50 per share had been granted
pursuant to the Plan. The options are exercisable through October 31, 2007.
7
The Company had accounted for its employee stock option plans under the
intrinsic value method, in accordance with the provisions of Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations. Compensation expense related to the
granting of employee stock options is recorded over the vesting period only if,
on the date of grant, the fair value of the underlying stock exceeds the
option's exercise price. The Company has adopted the disclosure-only
requirements of SFAS No. 123, "Accounting For Stock-Based Compensation," which
allows entities to continue to apply the provisions of APB No. 25 for
transactions with employees and provide pro forma net loss and pro forma loss
per share disclosures for employee stock grants made as if the fair value based
method of accounting in SFAS No. 123 had been applied to these transactions.
In December 2002, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 148 "Accounting for
Stock-Based Compensation-Transition and Disclosure" which amends SFAS No. 123
"Accounting for Stock-Based Compensation."
Had the Company determined compensation expense of employee stock options based
on the estimated fair value of the stock options at the grant date, consistent
with the guidelines of SFAS 123, its net loss would have been increased to the
pro forma amount indicated below:
Six months ended Six months ended
June 30, 2006 June 30, 2005
---------------- ----------------
Net (loss):
As reported $(464,402) $(224,595)
Stock--based employee compensation expense
related to stock options determined under fair
value method - -
Amounts charged to expense - -
---------- ----------
Pro forma according to SFAS 123 $(464,402) $(224,595)
========== ==========
Net income applicable to common
Stockholder per share:
As reported $ (0.02) $ (0.04)
========== ==========
Pro forma according to SFAS 123 $ (0.02) $ (0.04)
========== ==========
NOTE 7 - INCOME TAXES
The Company had available at June 30, 2006 net operating loss carryforwards for
federal and state tax purposes of approximately $1,946,000, which could be
applied against taxable income in subsequent years through 2026. The deferred
tax asset for net operating losses was approximately $661,000 and $445,000 as of
June 30, 2006 and 2005, respectively, and a full valuation allowance was
recorded since realization is uncertain.
Reconciliation of the differences between income taxes computed at the federal
and state statutory tax rates and the provision for income taxes for the six
months ended June 30, 2006 and 2005 are approximately as follows:
Six Months Six Months
ended ended
June 30 June 30
2006 2005
---- ----
Income tax loss at federal statutory tax rate -34.00% -34.00%
State tax, net of federal benefit -3.63% -3.63%
Valuation allowance 37.63% 37.63%
----------------------------
Provision for taxes - -
============================
8
The Company's deferred tax assets are as follows:
June 30 June 30
2006 2005
---- ----
Net Operating Loss $ 661,000 $ 445,000
Valuation allowance (661,000) (445,000)
-------------------------------
Net deferred tax assets $ - $ -
===============================
NOTE 8 - COMMITMENTS AND CONTINGENCIES
From time to time, the Company may be involved in various claims and legal
actions arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the Company's financial position, results of operations, or
liquidity.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD-LOOKING STATEMENTS AND INFORMATION
The Company is including the following cautionary statement in this Form 10-QSB
for any forward-looking statements made by, or on behalf of, the Company.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, expectations, future events or performance and underlying
assumptions and other statements which are other than statements of historical
facts. Certain statements contained herein are forward-looking statements and,
accordingly, involve risks and uncertainties which could cause actual results or
outcomes to differ materially from those expressed in the forward-looking
statements. The Company's expectations, beliefs and projections are expressed in
good faith and are believed by the Company to have a reasonable basis, including
without limitation, management's examination of historical operating trends,
data contained in the Company's records and other data available from third
parties, but there can be no assurance that management's expectations, beliefs
or projections will result or be achieved or accomplished.
INTRODUCTION
For the year ended December 31, 2005, the Company's auditors, in Note 3 of the
Financial Statements, have noted that there is substantial doubt about the
Company's ability to continue as a going concern. The Company's existence is
dependent upon management funding operations and raising sufficient capital. At
this point in time it is impossible to state an amount of additional funding
which the Company believes would remove the going concern opinion.
The Company has yet to receive revenues from the reinsurance business. The
Company has neither a history of earnings nor has it paid dividends. The Company
is unlikely to realize earnings or pay dividends in the immediate or foreseeable
future.
There is no assurance that the Company's acquisition will be profitable. The
Company may not be able to obtain additional funds needed for working capital
and operations.
The following discussion provides information with respect to our results of
operations, liquidity, and capital resources on a comparative basis for the six
months ended June 30, 2006 and 2005, respectively, and should be read in
conjunction with the Financial Statements and related notes appearing elsewhere
in this report.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2005
RESULTS OF OPERATIONS
Operational expenses during the six months ended June 30, 2006 and 2005 of
$434,852 and $221,384, respectively, consisted primarily of reasonable expenses
incurred to effect the acquisition of, and subsequent management of River
Holdings and professional fees necessary to complete certain corporate filings
with the SEC. For the six months ended June 30, 2006 and 2005, operational
expenses included professional fees of $38,579 and $23,960, respectively. For
the six months ended June 30, 2006 and 2005 operational expenses included
charges of $98,224 and $96,629, respectively, for reasonable expenses incurred
to effect the acquisition and subsequent management of River Holdings and
non-cash charges of $256,250 and $89,950, respectively, relating to the issuance
of certain stock and stock options. Interest expense in connection with the
$500,000 principal amount of convertible notes and five-year warrants to
purchase 925,000 shares of common stock at $0.35 per share amounted to $29,550
and $3,273 for the six months ended June 30, 2006 and 2005, respectively.
Accordingly, the Company incurred losses of $464,402 and $224,595 for the six
months ended June 30, 2006 and 2005, respectively.
THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2005
RESULTS OF OPERATIONS
Operational expenses during the three months ended June 30, 2006 and 2005 of
$301,550 and $82,413, respectively, consisted primarily of reasonable expenses
incurred to effect the acquisition of, and subsequent management of River
Holdings and professional fees necessary to complete certain corporate filings
with the SEC. For the three
10
months ended June 30, 2006 and 2005, operational expenses included professional
fees of $5,241 and $18,116, respectively. For the three months ended June 30,
2006 and 2005 operational expenses included charges of $17,457 and $47,460,
respectively, for reasonable expenses incurred to effect the acquisition and
subsequent management of River Holdings and non-cash charges of $250,000 and
$5,200, respectively, relating to the issuance of certain stock and stock
options. Interest expense in connection with the $500,000 principal amount of
convertible notes and five-year warrants to purchase 925,000 shares of common
stock at $0.35 per share amounted to $19,730 and $3,109 for the three months
ended June 30, 2006 and 2005, respectively. Accordingly, the Company incurred
losses of $321,280 and $85,482 for the three months ended June 30, 2006 and
2005, respectively.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2006, the Company had working capital of $20,127, as compared to a
working capital deficit of $88,236 at December 31, 2005.
Net cash used in operating activities was $126,676 for the six months ended June
30, 2006, as compared to $81,002 for the six months ended June 30, 2005. The
primary use of cash from operations in 2006 was to fund operations relating to
the business transaction with River Capital Limited.
Our present intentions are to sell debt or equity securities to cover our
operating expenses. There is no guarantee the Company can raise additional funds
in the future.
PLAN OF OPERATION
The Company's primary strategy is to establish and grow a core reinsurance
business based on the development and acquisition of solid insurance and
reinsurance assets and businesses. The Company has no plans for capital
expenditures for the next twelve months.
To provide the cash necessary to support this growth plan for the next twelve
months and to maintain the Company's service readiness requires an ongoing
financial commitment for $10,000,000. The Company intends to raise additional
capital through the sale of equity or debt securities in the public market or
through private placements. The Company may also seek debt capital through
banking institutions or through the use of other instruments. The addition of
any capital to the Company for use as allowable capital for the purposes of
writing insurance or reinsurance business may require the approval of the
Barbados Supervisor of Insurance. There is no assurance the Company will be able
to raise such capital.
CRITICAL ACCOUNTING POLICIES
Our accounting policies are fully described in Note 2 of the Notes to the
Financial Statements of our Form 10-KSB. As discussed in Note 2, the preparation
of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and
assumptions about future events that affect the amounts reported in the
financial statements and accompanying notes. Future events and their effects
cannot be determined with absolute certainty. Therefore, the determination of
estimates requires the exercise of judgment. Actual results inevitably will
differ from those estimates, and such difference may be material to our
financial statements. The Company believes that the following discussion
addresses its Critical Accounting Policies.
Accounting for Contingencies - The Company accrues for contingencies in
accordance with Statement of Accounting Standards ("SFAS") No. 5, "Accounting
for Contingencies," when it is probable that a liability or loss has been
incurred and the amount can be reasonably estimated. Contingencies by their
nature relate to uncertainties that require our exercise of judgment both in
assessing whether or not a liability or loss has been incurred and estimating
the amount of probable loss.
We account for income taxes in accordance with SFAS No.109. The Company has
provided a full valuation allowance against the assets.
We account for option issues according to FASB Statement No. 123R, "Share-Based
Payment, an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R
requires companies to recognize in the statement of
11
operations the grant-date fair value of stock options and other equity-based
compensation issued to employees beginning January 1, 2006. During the six
months ended June 30, 2006, the Company did not issue any employee stock options
nor did any employee stock options vest.
ITEM 3. CONTROLS AND PROCEDURES.
The Company has evaluated the effectiveness of the design and operation of its
disclosure controls and procedures as of June 30, 2006 (the "Evaluation Date").
Such evaluation was conducted under the supervision and with the participation
of the Company's Chief Executive Officer ("CEO")/Chief Financial Officer
("CFO"). Based upon such evaluation, the Company's CEO/CFO concluded that, as of
the Evaluation Date, the Company's disclosure controls and procedures were
effective. There have been no significant changes in the Company's internal
controls over financial reporting that occurred during the Company's most recent
fiscal quarter, that have materially affected, or are reasonably likely to
materially affect, the Company's internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On May 31, 2005, River Capital Group, Inc. ("River Capital") entered into a
subscription agreement (the "Subscription Agreement") with several accredited
investors (the "Subscribers") pursuant to which River Capital agreed to sell,
and the Subscribers agreed to purchase in the aggregate, up to $200,000
principal amount of convertible notes and five-year warrants to purchase 400,000
shares of common stock at $0.75 per share.
On June 7, 2005, River Capital filed Form 8-K disclosing the execution of the
Subscription Agreement and the Subscription Agreement was attached as Exhibit
10.1 to that filing.
On May 31, 2006, River Capital and the Subscribers executed a Modification and
Amendment Agreement to the Subscription Agreement (the "Amended Agreement"),
whereby the parties extended the maturity date of the notes through May 23, 2007
and reduced the per share exercise price to acquire a warrant share from $0.75
to $0.35.
On June 5, 2006, River Capital filed Form 8-K disclosing the execution of the
Modification and Amendment Agreement to the Subscription Agreement and was
attached as Exhibit 10.1 to that filing.
On June 30, 2006, River Capital and the Subscribers executed a Modification,
Waiver and Amendment Agreement to the Subscription Agreement (the "Second
Amended Agreement"), whereby the Subscribers increased their purchase price by
$300,000 and River Capital issued new notes with revised issue and expiration
dates at an annual interest rate equal to the greater of (i) four percent (4%)
above the prime rate as announced from time to time in the Wall Street Journal,
and (ii) ten percent (10%). Additionally River Capital has the right to prepay
the principal amount of the notes by paying the Subscribers 110% of the amount
of principal to be prepaid together with interest.
On July 7, 2006, River Capital filed Form 8-K disclosing the execution of the
Subscription Agreement and the Modification, Waiver and Amendment Agreement to
the Subscription Agreement (the "Second Amended Agreement") was attached as
Exhibit 10.1 to that filing.
During the three months ended June 30, 2006, the Company issued 1,000,000 shares
of its common stock as compensation for consulting services. A charge of
$250,000 was recorded for the three months ended June 30, 2006, valued at fair
market value, in connection with this transaction. The Company relied upon the
exemption from registration contained in Section 4(2), as the recipients were
deemed to be sophisticated with regard to an investment in the Company.
12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS.
(a) Exhibits. The following are exhibits to this report:
- --------------------------------------------------------------------------------
Number Description
- --------------------------------------------------------------------------------
3.1 Form of Certificate of Incorporation of Ballistic Ventures, Inc. (1)
- --------------------------------------------------------------------------------
3.2 Certificate of Amendment to the Certificate of Incorporation (2)
- --------------------------------------------------------------------------------
31.1 Rule 13a-14(a) Certification of Principal Executive Officer/ Chief
Financial Officer
- --------------------------------------------------------------------------------
32.1 Section 1350 Certification of Principal Executive Officer/ Chief
Financial Officer
- --------------------------------------------------------------------------------
- ---------------
(1) Incorporated by reference to the exhibits to the registrant's registration
statement on Form 10-SB filed on February 11, 2000.
(2) Incorporated by reference to the exhibits to the registrant's current report
on Form 8-K dated June 5, 2004 and filed on June 7, 2004.
13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RIVER CAPITAL GROUP, INC.
Date: August 14, 2006 By: /s/ HOWARD TAYLOR
--------------------------------------
Howard Taylor President
(Chief Executive Officer and
Chief Financial Officer)
14