U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB



(Mark One)

(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004



OR



( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to





Commission file number 0-29463



River Capital Group, Inc.

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(Name of small business issuer in its charter)



Delaware                                51-0392750

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(State or other jurisdiction            (IRS Employer Identification No.)

of incorporation or organization)



130 King Street West #3680, Toronto, Ontario,  Canada     M5X 1B1

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(Address of principal executive offices)            (Zip Code)



416-366-2856

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(Issuer's telephone number)



Securities registered under Section 12(b) of the Exchange Act:

None



Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $.001 par value



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 ( ).



Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB ( ).



State issuer's revenues for its most recent fiscal year: $0.



State the aggregate market value of the voting and non-voting common equity held by non-affiliates computer by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days: $3,363,770 as of March 31, 2005



State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:  As of March 31, 2005 the registrant had issued and outstanding 6,226,455 shares of common stock.



DOCUMENTS INCORPORATED BY REFERENCE

None



Transitional Small Business Disclosure Format (check one): Yes ( ) No (X)





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PART I



Item 1.  DESCRIPTION OF BUSINESS



BRIEF OVERVIEW



The Company was a development stage Internet company which had developed and was in the process of refining a network of regional search engines Internet portals to provide the users access to more localized, relevant, and interest-specific information than they could obtain from the more established, large Internet search engine portals and to provide local businesses an opportunity to target these local users.



As of May 2000, it became apparent to management that the economic conditions were such that the Company would be unable to continue down the original business plan path, which it had intended to pursue, and the Company would have to change its focus in order to maximize the value of the common stock and ultimately maximize shareholder value.  The Company was unable to generate enough revenue to meet its day-to-day operating expenses and could not foresee doing so in the long run so it could in fact become a viable operation.  The Company's working capital was limited and it could not raise any further financing under the market conditions, which prevailed at the time.



Because of these circumstances, the Company's development stage Internet business was discontinued and it disposed of certain assets. The Company's plan is to acquire a new viable business.





OUR HISTORY



On July 17, 2000, whOOdoo.com Inc., changed its name to Ballistic Ventures, Inc. (Ballistic) and On June 5, 2004, Ballistic changed its name to River Capital Group, Inc.(the
"Company").  The Company was incorporated in Florida on June 17, 1997, as Permastoprust International, Inc., and changed its name to Greystone Credit Inc. ("Greystone") in June of 1999. On August 4, 1999 Greystone acquired whOOdoo.com, Inc. ("whOOdoo Florida"), a Florida corporation, incorporated on April 9, 1999, in a share exchange. The exchange ratio in the whOOdoo (FL)-whOOdoo exchange was a one for one ratio, and the percentage of ownership that was acquired in the share exchange, by the whOOdoo Florida shareholders, was 59.4%.  At the same time, Greystone changed its state of incorporation to Delaware and its name to whOOdoo.com, Inc.  At the time of the acquisition of whOOdoo Florida, Greystone had no operations or liabilities.  The merger and recapitalization was accounted for as a reverse merger. As a result, the financial statements of the Company, prior to June 1, 2000 are those of whOOdoo Florida.  Collectively River Capital Group, Inc., Ballistic Ventures, Inc., Greystone Credit, Inc. and whOOdoo.com, Inc., are known as "We", "Us", "Our" Or "Company".



Effective May 31, 2000, the Company ceased all activities and operations and became an inactive company.  On that date, Ballistic Ventures, K2 Ventures Ltd. (the "Purchaser"), the former president, and former vice president and certain other stockholders (the "Other Stockholders") entered into an Escrow Agreement (the "Escrow Agreement").  K2 Ventures Ltd. was established to effect the purchase of 11,235,700 shares of common stock, from the former president, the former vice president and the other shareholders of the company. K2 Ventures, Inc., was incorrectly documented as the purchaser in the prior Escrow Agreement dated May 31, 2000, Preliminary Information Statement dated November 26, 2001 and other company filings such as Form 10KSB and 10KSB.



The Escrow Agreement provided that the former president would purchase some of our assets from us for $1.00, the former vice president would release the parties to the Escrow Agreement from any liability or claim he may have against such parties for past or future actions in exchange for our rights known as "Post Offer", and the purchaser would purchase 11,235,700 shares of common stock from the former president, the former vice president and the other shareholders, and assume liabilities for the total purchase price of approximately $89,000.



The total consideration that K2 Ventures Ltd. provided for the purchase of the 11,235,700 shares of common stock was the assumption of the liabilities of the company in the amount of $89,000.



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The Escrow Agreement was consummated in 2002 following the filing of a Form 14C with the Securities and Exchange Commission, and distribution of the Form 14C to the Company's shareholders.



Upon finalizing the Escrow Agreement and after the 4-to-1 reverse stock split on January 21, 2003, K2 Ventures, Inc. was issued a Ballistic Ventures stock Certificate for 2,808,925 shares (11,235,700 shares pre-reverse stock split).  On June 2, 2003, K2 Ventures had the K2 Ventures, Inc. stock certificate cancelled and reissued to K2 Ventures, Ltd.  On September 12, 2003, K2 Ventures Ltd. transferred its holdings of 2,808,925 shares of common stock of Ballistic Ventures, Inc. whereas 1,404,463 shares were transferred to Kashmir Overseas Holdings, Ltd. (1,404,463 shares) and 1,404,462 shares were transferred to Monashee Limited (1,404,462 shares). The transfers were to entities with the same beneficial ownership as K2 Ventures Ltd. and were being transferred without consideration, they were not deemed to be and are accordingly not sales.





BUSINESS DEVELOPMENT



On April 27, 2004, the Company entered into an amended letter of agreement with River Capital Limited ("Limited"), whereby the Company will acquire Limited by issuance of 20,305,820 new common shares of the Company to the stockholders of Limited.  These shares will be reduced by the 1,030,000 shares issued in the latest private placement and the 120,000 issued to Redwood Grove Capital Management LLC.  Limited, with headquarters in Bermuda, has substantial contacts and experience in the reinsurance industry.



As part of the proposed business plan, Limited  has sought registration as a Class 3 insurance company with the Bermuda insurance regulators.  Upon obtaining this authority, Limited will merge with or be acquired by the Company and will commence operations as a provider of insurance and reinsurance products and services.  The Company changed its name to River Capital Group, Inc. on June 5, 2004, pursuant to the adopted business plan.



As of the date of this report Limited has made application to the Bermuda Monetary Authority seeking the incorporation and registration as a Class 3 insurance company of River Reinsurance Limited.  This authorization has not been granted as of the date of this report.  The proposed transaction may be amended to reflect application to other jurisdictions.



Should the Company not complete its intended acquisition of River Capital, the Company will be required to rely on management's skill, experience and judgment, both in regard to selectivity, and in any final decision to pursue another business venture, as well as the form of business combination, should an agreement be reached at some point to acquire or combine.



There would be no particular type of business or industry that the Company would be concentrating on at this time.  The management would look at any potential acquisition that would best serve the interests and maximize shareholder value in the future.  The Company would not confine its search for any particular business or business venture to any geographical area.



Members of the Company's management, through their various business contacts, would search for potential business partners whom they feel are deemed to be likely targets for a business combination with the Company.



Material factors that management would consider before acquiring a business or entering into a business venture would be the strength of the management team of the new business and its corporate governance procedures and policies.  The potential transaction would be evaluated with the intent of maximizing shareholder value in the future.  Any acquisition would likely be financed by the issuance of the Company's stock to the owners of the acquired entity.





OUR OPERATIONS



The Company currently operates out of 130 King Street West, Suite 3680, Ontario, Canada. There are currently no full-time employees.





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ITEM 2.  DESCRIPTION OF PROPERTY



The Company has no property and enjoys the non-exclusive use of office and telephone services of its Secretary.  The registrant neither owns nor leases any real or personal property.





ITEM 3.  LEGAL PROCEEDINGS



None





ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



None





PART II



ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS



MARKET PRICES OF SECURITIES



Our common stock was approved for trading on the "pink sheets" on December 3, 1999 under the symbol "WHOO".  The symbol was changed to "BLLV", after the Company changed its name to Ballistic Ventures, Inc., on July 14, 2000.  As the result of a 4-to-1 reverse stock split that was effective on January 21, 2003, the Company's symbol was changed to "BLTV". On June 8, 2004 the Company's symbol was changed to RCGI after the Company changed its name to River Capital Group, Inc.  The following table sets forth the prices as reported to the Company by the "pink sheets" trading information.  The prices reflected are the High and Low closing bids, for each period as shown below.





HIGH            LOW



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Year 2003 January   1 - March 31             $0.68            $0 .15

Year 2003 April     1 - June 30              $0.15            $0 .15

Year 2003 July      1 - September 30         $0.15            $0 .15

Year 2003 October   1 - December  31         $.15             $ 3.25

Year 2004 January   1 - March 31             $3.25            $1.25

Year 2004 April     1 - June 30              $6.50            $2.10

Year 2004 July      1 - September 30         $5.90            $1 .75

Year 2004 October   1 - December  31         $3.50            $1.15

Year 2005 January   1  March 31             $2.50            $1.35







As of March 31, 2005 there were approximately 525 beneficial holders of our common stock.



The Company has not paid dividends on our stock and it does not anticipate paying any dividends thereon in the foreseeable future.



UNREGISTERED SALES OF EQUITY SECURITIES



During the quarter ended December 31, 2004, the registrant issued 45,000 shares of its common stock as compensation for consulting services to three designees of Redwood Grove Capital Management, LLC.  The registrant 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 registrant.  No underwriters were used.





ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



The following Management's Discussion and Analysis or Plan of Operation is qualified by reference to and should be read in conjunction with, our Financial Statements and the Notes thereto as set forth beginning on page F-1.



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FORWARD-LOOKING STATEMENTS



The Company is including the following cautionary statement in this Form 10-KSB 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 limitations, 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, 2004, 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, locating and merging the Company into a viable operating company and raising sufficient capital. At this point in time it is impossible to state an amount of additional funding which we believe would remove the going concern opinion.



The Company does not have any business operations.  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 will be able to complete an acquisition which will be profitable.  The Company has entered into a letter of agreement for the acquisition of River Capital Limited, but that acquisition is contingent, among other things, upon a Bermuda subsidiary obtaining registration as a Class 3 insurance company with the Bermuda insurance authorities.  Even if such registration is obtained, the Company may not be able to finance the acquisition and additional needs for working capital and operations.  The Company's prospects for the future, rests with the Company's ability to find a viable business venture which can utilize the company.



The Company is proactive in reviewing potential projects that could potentially be a good fit for it.



The Company has changed its fiscal year end from June 30 to December 31.  Accordingly, the following discussion provides information with respect to our results of operations, liquidity, and capital resources on a comparative basis for the years ended December 31, 2004 and June 30, 2003 and the six months ended December 31, 2003 as compared to six months ended December 31, 2002, and should be read in conjunction with the Financial Statements and related notes appearing elsewhere in this report.



YEAR ENDED DECEMBER 31, 2004 COMPARED TO THE YEAR ENDED JUNE 30, 2003



Operational expenses during the years ended December 31, 2004 and June 30, 2003 of $778,928 and $33,455, respectively, consisted primarily of professional fees necessary to complete certain corporate filings with the SEC.  For the year ended December 31, 2004 operational expenses also included a $220,000 charge related to the Company's agreement to satisfy all reasonable expenses incurred to effect the proposed acquisition of River Capital and a non-cash charge of $383,165 relating to the issuance of certain stock and stock options. Accordingly, the Company incurred losses of $778,928 and $40,161 for the years ended December 31, 2004 and June 30, 2003, respectively.



The loss increased the deficit accumulated during the development stage to $1,085,265 at December 31, 2004.



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SIX MONTHS ENDED DECEMBER 31, 2003 COMPARED TO FOR THE SIX MONTHS ENDED DECEMBER 31, 2002



Operational expenses during the six months ended December 31, 2003 and 2002 of $91,490 and $3,863, respectively, consisted primarily of professional fees necessary to complete certain corporate filings with the SEC. For the six months ended December 31, 2003, the operational expenses also included a $31,667 management fee charge related to the Company's agreement to satisfy all reasonable expenses incurred to effect the proposed acquisition of River Capital. Accordingly, the Company incurred losses of $92,070 and $5,213 for the six months ended December 31, 2003 and 2002 fiscal years, respectively.



PLAN OF OPERATION



The Company intends to fund future operations by funds obtained through the private placement of its securities.





LIQUIDITY AND CAPITAL RESOURCES



At December 31, 2004, the Company had working capital of $45,187, as compared to $296,560 at December 31, 2003.



Net cash used in operating activities was $405,210 for the year ended December 31, 2004, as compared to $33,488 for the year ended June 30, 2003.  The primary use of cash from operations in 2004 was to fund operations relating to the pending business transaction with River Capital Limited.



Net cash provided by financing activities was $136,266 for the year ended December 31, 2004, as compared to $33,488 for the year ended June 30, 2003.  In November and December 2003, we sold 760,000 shares of our common stock at $0.50 per share in a private placement.  From January 2004 to June 2004, an additional 270,000 shares were sold for gross proceeds of $135,000.



Our present intentions are to sell debt or equity securities to cover our operating expenses.  There is no guarantee we can raise additional funds in the future.



CRITICAL ACCOUNTING POLICIES



Our accounting policies are fully described in Note 2 of the Notes to the Financial Statements.  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. We believe that the following discussion addresses our Critical Accounting Policies.



Accounting for Contingencies - We accrue 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.  We are a development stage company and our deferred tax assets are not expected to be utilized in the future.  We have provided a full valuation allowance against the assets.



Since the Company is in the development stage and is pursuing a merger with an operating entity, it is unknown what accounting policies it will need to apply.





RECENT ACCOUNTING PRONOUNCEMENTS



In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN 46").  FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if

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the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.  FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003.  For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003.  The adoption of FASB Interpretation No. 46 did not have any impact on the Company's financial position or results of operations.



In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150"). SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.  It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in certain circumstances).  Many of these instruments were previously classified as equity.  Although some of the provisions of this statement are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, "Elements of Financial Statements", the remainder is consistent with FASB's intention to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own shares.  This statement is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003.  The Company does not expect the application of SFAS 150 to have a material effect on its condensed financial statements.  The adoption of SFAS No. 150 did not have any impact on the Company's financial position or results of operations.



In December 2003, the SEC issued Staff Accounting Bulletin No. 104, "Revenue Recognition" (SAB 104"), rescinded the accounting guidance contained in SAB 101,"Revenue Recognition in Financial Statements," and incorporated the body of previously issued guidance related to multiple-element revenue arrangements.  The Company's adoption of SAB 104 did not have any impact on its consolidated financial statements.



In March 2004, the FASB ratified EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments"("EITF 03-1"), but delayed the recognition and measurement provisions of EITF 03-1 in September 2004.  For reporting periods beginning after June 15, 2004, only the disclosure requirements for available-for-sale securities and cost method investments are required.  The adoption of EITF Issue No. 03-1 did not have any impact on the Company's financial position or results of operations.



In July 2004, the FASB issued EITF Issue No. 02-14, "Whether an Investor Should Apply the Equity Method of Accounting to Investments Other than Common Stock" ("EITF 02-14).  EITF 002-14 requires application of the equity method of accounting when an investor is able to exert significant influence over operating and financial policies of an investee through ownership of common stock or in-substance common stock.  EITF 02-14 is effective for reporting periods beginning after September 15, 2004.  The adoption of EITF 02-14 did not have any impact on the Company's financial position or results of operations..



In November 2004, the FASB issued SFAS No. 151, "INVENTORY COSTS  AN AMENDMENT OF ARB NO. 43, CHAPTER 4."  This statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage).  Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . ." This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal."  n addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005.  Management does not believe the adoption of this statement will have any impact on the Company.



In December 2004, the FASB issued SFAS No. 152, which amends FASB statement No. 66, "Accounting for Sales of Real Estate," to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing Transactions."  This statement also amends FASB Statement No. 67, "Accounting for Costs and Initial Rental Operations of Real Estate Projects," to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real

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estate time-sharing transactions.  The accounting for those operations and costs is subject to the guidance in SOP 04-2.  This statement is effective for financial statements for fiscal years beginning after June 15, 2005.  Management believes the adoption of this statement will have no impact on the financial statements of the Company.



In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 153. This statement addresses the measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, "Accounting for Nonmonetary Transactions," is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.  The guidance in that opinion; however, included certain exceptions to that principle.  This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.  A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.  This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued.  Management believes the adoption of this statement will have no impact on the financial statements of the Company.



In December 2004, the FASB issued a revision to SFAS No. 123R, "Accounting for Stock Based Compensations."  This statement supercedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and its related implementation guidance. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments.  This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  This statement does not change the accounting guidance for share based payment transactions with parties other than employees provided in SFAS No. 123.  This statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership Plans." The Company has not yet determined the impact to its financial statements from the adoption of this statement.





ITEM 7.

FINANCIAL STATEMENTS



The financial statements required in this Form 10-KSB are set forth beginning on page F-1





ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
 DISCLOSURE



On February 28, 2005, Sweeney, Gates & Co. resigned as the independent public accountants for River Capital Group, Inc.  The resignation of Sweeney, Gates & Co. was approved by the Board of Directors of the Registrant. Sweeney, Gates & Co. had audited the registrant's balance sheet as of December 31, 2003 and June 30, 2003 and 2002, and the related statements of operations, stockholders' deficit and cash flows for the six months ended December 31, 2003 and for the years ended June 30, 2003 and 2002 and for the period June 1, 2000 (inception) to December 31, 2003.



The audit report of Sweeney, Gates & Co. on the financial statements as of December 31, 2003 and for the six months ended December 31, 2003 and for the period from June 1, 2000 (inception) to December 31, 2003 did not contain any adverse opinion or disclaimer of opinion, or was modified as to audit scope, accounting principles or uncertainty, except for a going concern opinion expressing substantial doubt about the Company's ability to continue as a going concern.



During the two most recent fiscal periods/years ended December 31, 2003 and the subsequent interim period through February 28, 2005, there were no disagreements with Sweeney, Gates & Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of Sweeney, Gates & Co., would have caused it to make reference to the subject matter of the disagreement in connection with its report.  The registrant has requested Sweeney, Gates & Co. to furnish it a letter addressed to the Commission stating whether it agrees with the above

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statements.  A copy of that letter, dated March 1, 2005, was filed as Exhibit 16.1 to a Form 8-K filed March 3, 2005.



There were no other "reportable events" as that term is described in Item 304(a)(1)(iv) of Regulation S-B occurring within the registrant's two most recent fiscal periods/years ended December 31, 2003 and the subsequent interim period ended February 28, 2005.



On March 15, 2005, the registrant engaged De Meo, Young, McGrath of Fort Lauderdale, LLP ("De Meo, Young, McGrath"), as its principal accountant to audit the registrant's financial statements for the year ending December 31, 2004.  The registrant's board of directors has approved the engagement of De Meo, Young, McGrath.



Prior to the engagement of De Meo, Young, McGrath, the registrant had not consulted De Meo, Young, McGrath as to the application of accounting principles to any specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the registrant's financial statements, and no written or oral advice was provided that was an important factor considered by the registrant in reaching a decision as to an accounting, auditing or financial reporting issue.





ITEM 8A. CONTROLS AND PROCEDURES



The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of December 31, 2004 (the
"Evaluation Date"). Such evaluation was conducted under the supervision and with the participation of the Company's Chief Executive Officer ("CEO") and its Chief Financial Officer ("CFO"). Based upon such evaluation, the Company's CEO and CFO have 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.





ITEM 8B. OTHER INFORMATION



None.





PART III



ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE

WITH SECTION 16(a) OF THE EXCHANGE ACT



DIRECTORS AND EXECUTIVE OFFICERS



The following table provides important information concerning our directors, executive officers, and key employees as of March 31, 2005.





NAME                 AGE    POSITION

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Howard Taylor

43

Chief Executive Officer



William P. Dickie    62     Chief Financial Officer, Director, Secretary



Eric Pinkney         42     Director



Mr. Taylor is President of the Registrant and is a Director of a privately held investment company. Mr. Taylor is also a director of Sharps Technologies, a UK private company. Mr. Taylor was previously an Executive with County Natwest Securities, a leading International Investment Bank. He has been a Director with an NASD and SFA broker dealer, experienced in both the London and United States markets. He has held the NASD Series 7, 24 and 63 licenses and is a member of the Securities Institute in the United Kingdom. Mr. Taylor has extensive experience in the sourcing, structuring and execution of a broad range of Private Equity transactions.





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William P. Dickie has been a director of the Company since August 1999.  On September 3, 2003, Mr. Dickie was appointed the secretary and Chief Financial Officer of Ballistic Ventures, Inc.  Since 1983, Mr. Dickie has been vice president of Mid-North Engineering Services, Ltd., a company that provides administrative and consulting services to junior public and private companies ranging from accounting, corporate secretarial and office accommodations to financing, proposals and restructuring.



Eric Pinkney joined our board of director's in May 2000.  Since July 2000, Mr. Pinkney has been providing consulting services to troubled companies, and has worked in Asia, United States and Canada.   From 1994 to July 2000, Mr. Pinkney had been the Chief Financial Officer of FMC Software Inc. (formerly SRG Software Inc.), of Toronto, Canada, a Software Engineering Company, which provided quality systems analysis, design and programming to primarily Fortune 1000 companies. Mr. Pinkney and his partners sold FMC Software to Financial Models Corporation, of Mississauga, Ontario, a publicly traded company listed on the Toronto Stock Exchange in March 1999. Mr. Pinkney holds a B.A. degree from the University of Guelph, majoring in Marketing, and has substantially completed his courses towards The Certified General Accountants program in Ontario.  Mr. Pinkney holds an MBA from Lansbridge University, New Brunswick, Canada and a Masters of Management Degree from The American Graduate School of Management, Nashville, Tennessee. Mr. Pinkney has served on the Board of Directors of several publicly listed companies and currently is a director of Ballistic Ventures, Inc.  In April 2002, Mr. Pinkney stepped down from the position of President and Secretary but remains a director of the Company.



CODE OF ETHICS



We have not yet adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions, since we have been focusing our efforts on obtaining financing for the company.  We expect to adopt a code by June 30, 2005.



SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



Upon our registration under the Securities Exchange Act of 1934 on April 11, 2000, our officers and directors, and persons who own more than 10% of a registered class of our equity securities, were required to file reports of ownership and changes in ownership with the Securities and Exchange Commission pursuant to Section 16(a) of that Act.  The following table sets forth filing activity during the most recently completed fiscal year ended December 31, 2004:



Based solely upon a review of the copies of such forms furnished to us, or written representations that no Form 5 filings were required, we believe that during the fiscal year ended December 31, 2004, there was compliance with all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners except as follows:



REPORTING PERSONDATE REPORT DUEDATE REPORT FILEDHoward TaylorForm 4 due 02/5/045/10/04William DickieForm 4 due 02/5/045/11/04Eric PinkneyForm 4 due 02/5/045/10/04Richard KingForm 4 due 2/5/045/10/04Eric PinkneyForm 4 due 3/15/045/10/04






ITEM 10.  EXECUTIVE COMPENSATION



There is no present program of executive, or director compensation, and no plan of compensation is expected to be adopted or authorized until a suitable project is located and operations are launched, and revenues are achieved.  Companies owned by two directors (Howard Taylor and William Dickie) receive up to $12,000 per month as management and administrative fees for a total of $169,000 for the year ended December 31, 2004.  A total of $51,000 was reimbursed to River Capital Limited for out of pocket expenses incurred on behalf of 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

10



---

key employees and other persons who contribute to the success of the Company.  The Company has reserved 507,645 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.  As of September 30, 2004, options to purchase 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. As part of this plan the Company issued 25,000 options to a consultant. A charge of $23,415 has been recorded in the Company's statement of operations for the year ended December 31, 2004.





11



---

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDER MATTERS



The following table provides certain information as of March 31, 2005 concerning the beneficial ownership of the Company's common stock held by each director; each person known by us to be the beneficial owner of at least 5% of the Company's voting stock; and all executive officers and directors as a group.

----------------------- ---------------------------------------- ------



NAME AND ADDRESS

NUMBER OF COMMON      PERCENTAGE

OF BENEFICIAL OWNER

SHARES

OF OWNERSHIP (1)

--------------



-------------------  -------------------

Kashmir Overseas Holdings, Ltd. (2)                
1,404,463

22.6%

C/O LOM Securities (Bahamas) Limited

Millennium House

East Mall Drive

P.O. Box F 42498-350

Freeport, Grand Bahama



Monashee Limited (3)

1,404,462

22.6%

C/O Waterstreet Corporate Services Limited

27 Reid Street

1st Floor

P.O. Box HM 3051

Hamilton, HM NX

Bermuda



Largo Flight Limited (4)                            
644,625

10.4%

C/O LOM Securities (Cayman) Limited

Buckingham Square

West Bay Road

P.O. Box 30997 SMB

Grand Cayman

Cayman Islands



Longview Equity Funds LP (5)

439,347

7.1%

600 Montgomery Street 44th Floor

San Francisco, CA 94111



Longview Fund L.P. (6)

439,347

7.1%

600 Montgomery Street, 44th Floor

San Francisco, CA 94111



Eric Pinkney (7)

256,075

4.1%

1283 Crossfield Bend

Mississauga, Ontario

L5G 3P5



William P. Dickie (8)                               
126,250

2.0%

100 Adelaide Street West

Suite 1302

Toronto, Ontario

Canada M5H 1S3



Howard Taylor

(7)

50,000

0.8%

48 Par La Ville Rd

Hamilton, HMII

Bermuda



All directors and executive officers

of the Company as a group (3 persons) (9)           
432,325

6.9%



---------------



(1)

This table is based on 6,196,455 shares of Common Stock outstanding as of March 31, 2005.  If a person listed on this table has the right to obtain additional shares of Common Stock within sixty (60) days from March 31, 2005, the additional shares are

12



---

deemed to be outstanding for the purpose of computing the percentage of class owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of any other person.

(2)

Directors of Kashmir Overseas Holdings, Ltd. are Craig Lines and Scott Lines.

(3)

Directors of Monashee Limited are Brian Lines and Scott Lines.

(4)

Directors of Largo Flight Limited are Brian Lines and Scott Lines.

(5)

The investment manager of Longview Equity Funds LP is Redwood Grove Capital Management LLC.

(6)

The general partner of Longview Fund L.P. is Viking Asset Management.

(7)

Includes 50,000 shares issuable upon exercise of stock options issued February 5, 2004.

(8)

Includes 100,000 shares issuable upon exercise of stock options issued February 5, 2004.

(9)

Includes 200,000 shares issuable upon exercise of stock options issued February 5, 2004.



EQUITY COMPENSATION PLANS



At December 31, 2004, our equity compensation plans were as follows:



Plan categoryNumber of securities to be issued upon exercise of outstanding options, warrants and rightsWeighted average exercise price of outstanding options, warrants and rightsNumber of securities remaining available for future issuanceEquity compensation plans approved by security holders275,000$2.00232,645Equity compensation plans not approved by security holders-0----0-Total275,000$2.00232,645






ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.



The Company had received advances from an overdraft demand loan from Lines Overseas Management Limited.  As of July 1, 2002 Lines Overseas Management Limited elected to contribute the unpaid principal and interest of $94,852 to capital. In addition the advances during the six months ended December 31, 2003 of $3,048 and advances during the year ended June 30, 2003 of $33,488 were also contributed to capital. These advances were used to pay the operating expenses of the Company.  At December 31, 2004 and 2003, the Company owed $0 and $8,124, respectively to Lines Overseas Management Limited.



On August 12, 2002, Ballistic Ventures Board of Directors approved of engaging LOM Capital Limited to reorganize the company and provide corporate finance services as directed by the Board of Directors.  To-date, LOM Capital Limited has not charged Ballistic Ventures for services provided. LOM Capital Limited is an entity affiliated with the majority shareholder of the Company.



Mr. Pinkney had entered into a verbal agreement with K2 Ventures, that in return for no direct executive compensation, he was allowed to purchase from K2 Ventures 200,000 (pre-reverse stock split) common shares of the company at a future point in time at $0.15 per share.  This verbal agreement was terminated on April 28, 2003 whereby Ballistic Ventures, Inc. granted Mr. Pinkney the right to acquire up to 50,000 Ballistic common shares exercisable only if Ballistic Ventures, Inc. issues new shares via a financing offering, with an exercise price of US$0.40 per share.  However on September 17, 2003, Mr. Pinkney surrendered and terminated the options per the April 28, 2003 agreement and any other compensation agreed upon or inferred.  Also the Board of Directors of Ballistic Ventures,

13



---

Inc. acknowledged and accepted that a major shareholder of Ballistic Ventures, Inc. has granted 186,075 Ballistic Ventures common shares to Mr. Pinkney as a gift to compensate for the renouncement of the above-mentioned options.



On September 12, 2003, K2 Ventures Ltd. transferred its holdings of 2,808,925 shares of common stock of Ballistic Ventures, Inc. whereas 1,404,463 shares were transferred to Kashmir Overseas Holdings, Ltd. and 1,404,462 shares were transferred to Monashee Limited. The transfers were to entities with the same beneficial ownership as K2 Ventures Ltd. and are being transferred without consideration and are accordingly not sales.



Companies owned by two directors (Howard Taylor and William Dickie) receive up to $12,000 per month as management and administrative fees for a total of $169,000 for the year ended December 31, 2004.  In addition, a total of approximately $63,000 was reimbursed to River Capital Limited, officers and other entities controlled by officers for out of pocket expenses incurred on behalf of the Company.





ITEM 13. EXHIBITS



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)

10.1

Stock Option Plan adopted May 3, 2004

16.1

Letter from Sweeney, Gates & Co. (3)

31.1



Rule 13a-14(a) Certification of Principal Executive Officer

31.2

Rule 13a-14(a) Certification of Chief Financial Officer

32.1

Section 1350 Certification of Principal Executive Officer

32.2

Section 1350 Certification of Chief Financial Officer

---------------

(1) Incorporated by reference to the exhibits to the registrant's registration statement on Form 10-SB.

(2) Incorporated by reference to the exhibits to the registrant's current report on Form 8-K dated June 5, 2004.

(3) Incorporated by reference to the exhibits to the registrant's current report on Form 8-K dated February 28, 2005.





ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



AUDIT FEES



For the year ended December 31, 2004 our principal accountant will bill $10,000 for the audit of our annual financial statements included in our Form 10-KSB filings. For the year ended December 31, 2004 our former principal accountant billed $10,915 for the review of financial statements included in our Form 10-QSB filings.



For six months ended December 31, 2003 and the fiscal year ended June 30, 2003 our former principal accountant billed 11,483 and $8,181, respectively, for the audit of our annual financial statements and review of financial statements included in our Form 10-QSB filings.



AUDIT-RELATED FEES



There were no fees billed for services reasonably related to the performance of the audit or review of our financial statements outside of those fees disclosed above under
"Audit Fees" for the year ended December 31, 2004, six months ended December 31, 2003 and the fiscal year ended June 30, 2003.



TAX FEES



14



---

For the fiscal year and six months ended December 31, 2004 and 2003, our principal accountant did not render any services for tax compliance, tax advice, and tax planning work.



ALL OTHER FEES



There were no other fees billed by our principal accountants other than those disclosed above for the year and six months ended December 31, 2004 and 2003 or the fiscal year ended June 30, 2003.



PRE-APPROVAL POLICIES AND PROCEDURES



Prior to engaging our accountants to perform a particular service, our board of directors obtains an estimate for the service to be performed.   All of the services described above were approved by the board of directors in accordance with its procedures.





SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





April 15, 2005



River Capital Group, Inc.







By: /s/ William P. Dickie

--------------------------------



William P. Dickie, Secretary and

Chief Financial Officer



In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|Name                                     | Position                                                                                     | Date          
|---------------------------------------- | -------------------------------------------------------------------------------------------- | --------------
|/s/ Howard Taylor

Howard Taylor         | President (Principal Executive
Officer)                                                      | April 15, 2005
|/s/ William P. Dickie

William P. Dickie | Chief Financial Officer, Director and Secretary (Principal Financial and Accounting Officer) | April 15, 2005
|/s/ Eric Pinkney

Eric Pinkney           | Director                                                                                     | April 15, 2005











15



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Exhibit 31.1



RULE 13a-14(a) CERTIFICATION



I, Howard Taylor, certify that:

1.

I have reviewed this annual report on Form 10-KSB of River Capital Group, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.

The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5.

The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.



Date:

April 15, 2005

/s/ Howard Taylor



Howard Taylor

President (Principal Executive

Officer)

16



---

Exhibit 31.2



RULE 13a-14(a) CERTIFICATION



I, William Dickie, certify that:

1.

I have reviewed this annual report on Form 10-KSB of River Capital Group, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the small business issuer as of, and for, the periods presented in this report;

4.

The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5.

The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.



Date:

April 15, 2005

/s/ William P. Dickie



William Dickie

Chief Financial Officer



17



---

Exhibit 32.1



CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of River Capital Group, Inc. (the
"Company") on Form 10- KSB for the period ending December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Richard King, Chairman (Chief Executive Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.





/s/ Howard Taylor



Howard Taylor

President (Chief Executive Officer)

18



---

Exhibit 32.2



CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of River Capital Group, Inc. (the
"Company") on Form 10-KSB for the period ending December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, William Dickie, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.





/s/ William P. Dickie



William P. Dickie

Chief Financial Officer

















19



---



Report
of Independent Registered Public Accounting Firm

The
Board of Directors and Stockholders
River Capital Group, Inc.

We
have audited the accompanying consolidated balance sheets of River Capital
Group, Inc. (the "Company"), a Florida corporation, as of December 31, 2004,
and the related statements of operations, changes in stockholders' equity, and
cash flows for the year ended December 31, 2004. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. 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 assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide 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 River Capital Group, Inc. at
December 31, 2004 and the results of their operations and their cash flows for
the year ended December 31, 2004 in conformity with U.S. generally accepted
accounting principles.

De
Meo, Young, McGrath, CPA

/s/De
Meo, Young, McGrath

Fort
Lauderdale, Florida

April
12 ,2005









---





REPORT
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





To
the board of Directors and

Stockholders

River
Capital Group, Inc.



We
have audited the accompanying balance sheet of River Capital Group, Inc.
(formerly Ballistic Ventures, Inc.), (a development stage company) as of
December 31, 2003, and the related statements of operations, stockholders'
equity (deficit) and cash flows for the six months ended December 31, 2003 and
for the year ended June 30, 2003 and for the period June 1, 2000 (inception) to
December 31, 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 audits in accordance with auditing standards generally accepted in
the United States of America.  Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatements.  An audit 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 audits provide a reasonable basis for our opinions.



In
our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of River Capital Group, Inc., as of
December 31, 2003, and the results of its operations and cash flows for the six
months ended December 31, 2003 and the year ended June 30, 2003 and the period
from June 1, 2000 (inception) to December 31, 2003, in conformity with
accounting principles generally accepted in the United States of America.



The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 3 to the financial
statements, the Company has suffered significant losses during the development
stage that raise substantial doubt about its ability to continue as a going
concern.  Management's plans in regard to these matters are also
described in Note 3.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.





Sweeney,
Gates & Co.



Fort
Lauderdale, Florida

April
28, 2004



---



RIVER
        CAPITAL GROUP, INC.(a
        development stage company)BALANCE
        SHEETDecember
        31, 2004
      
      December
        31, 2003ASSETSCash
      
      
      $
                   95,554
      
      $
                 364,498Due
        from related party
      
      
      963
      
      -Prepaid
        expenses
      
      
      -
      
      -Total
        current assets
      
      
      96,517
      
      364,498Total
        assets
      
      
      $
                   96,517
      
      $
                 364,498LIABILITIES
        AND STOCKHOLDERS' EQUITYAccounts
        payable and accrued expenses
      
      
      $
                   12,445
      
      $
                  59,814Accounts
        payable to related parties
      
      
      38,885
      
      -Loan
        from related party
      
      
      -
      
      8,124Total
        current liabilities
      
      
      51,330
      
      67,938Stockholders'
        equity:Common
        stock, $.001 par value, 50,000,000 sharesauthorized:
        6,196,455 and 5,836,455 shares issued andoutstanding
        in 2004 and 2003, respectively
      
      
      6,196
      
      5,836Additional
        paid-in capital
      
      
      1,124,256
      
      606,451Subscription
        receivable
      
      
      -
      
      (9,390)Deficit
        accumulated during development stage
      
      
      (1,085,265)
      
      (306,337)Total
        stockholders' equity
      
      
      45,187
      
      296,560Total
        liabilities and stockholders' equity
      
      
      $
                   96,517
      
      $
                 364,498The
        accompanying notes are an integral part of these financial statements.F-2




---



RIVER
        CAPITAL GROUP, INC.(a
        development stage company)STATEMENTS
        OF OPERATIONSFor
        the year
      
      For
        the six
      
      For
        the year
      
      June
        1, 2000ended
      
      months
        ended
      
      ended
      
      (inception)
        toDecember
        31,
      
      December
        31,
      
      June
        30,
      
      December
        31,2004
      
      2003
      
      2003
      
      2004Revenue
      
      $
                             -
      
      $
                             -
      
      $
                             -
      
      $
                             -Total
        revenue
      
      -
      
      -
      
      -
      
      -Expenses:Selling
        general and administrative
      
      778,928
      
      91,490
      
      33,455
      
      973,073Impairment
        of goodwill
      
      -
      
      -
      
      -
      
      97,997Total
        operating expenses
      
      778,928
      
      91,490
      
      33,455
      
      1,071,070Total
        operating loss
      
      (778,928)
      
      (91,490)
      
      (33,455)
      
      (1,071,070)Other
        income (expense):Miscellaneous
        income
      
      -
      
      -
      
      -
      
      2,298Interest
        expense
      
      -
      
      (580)
      
      (6,706)
      
      (16,493)-
      
      (580)
      
      (6,706)
      
      (14,195)Net
        loss
      
      $
                (778,928)
      
      $
                  (92,070)
      
      $
                  (40,161)
      
      $
             (1,085,265)Net
        loss per share - basic and diluted
      
      $
                      (0.13)
      
      $
                      (0.02)
      
      $
                      (0.01)Weighted
        average shares outstanding
      
      6,060,606
      
      5,101,318
      
      5,076,455The
        accompanying notes are an integral part of these financial statements.F-3




---



RIVER
        CAPITAL GROUP, INC.(a
        development stage company)STATEMENT
        OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)DeficitaccumulatedAdditional
      
      Stock
      
      duringCommon
        Stock
      
      paid-in
      
      Subscription
      
      developmentShares
      
      Amount
      
      capital
      
      Receivable
      
      stage
      
      TotalBalance,
        June 1, 2000
      
      $
              4,943,642
      
      $
                     4,943
      
      $
                   14,830
      
      $
                            -
      
      $
                             -
      
      $
                   19,773Exercise
        of warrants
      
      132,813
      
      133
      
      52,992
      
      -
      
      -
      
      53,125Net
        loss for the year ended June 30, 2000
      
      -
      
      -
      
      -
      
      -
      
      (103,140)
      
      (103,140)Balance,
        June 30, 2000
      
      5,076,455
      
      5,076
      
      67,822
      
      -
      
      (103,140)
      
      (30,242)Net
        loss for the year ended June 20, 2001
      
      -
      
      -
      
      -
      
      -
      
      (31,848)
      
      (31,848)Balance
        July 1, 2001
      
      5,076,455
      
      5,076
      
      67,822
      
      -
      
      (134,988)
      
      (62,090)Net
        loss for the year ended June 30, 2002
      
      -
      
      -
      
      -
      
      -
      
      (39,118)
      
      (39,118)Balance,
        June 30, 2002
      
      5,076,455
      
      5,076
      
      67,822
      
      -
      
      (174,106)
      
      (101,208)Contribution
        of related party note payable
      
      -
      
      -
      
      128,341
      
      -
      
      -
      
      128,341Net
        loss for the year ended June 30, 2003
      
      -
      
      -
      
      -
      
      -
      
      (40,161)
      
      (40,161)Balance,
        June 30, 2003
      
      5,076,455
      
      5,076
      
      196,163
      
      -
      
      (214,267)
      
      (13,028)Contribution
        of related party note payable
      
      -
      
      -
      
      3,048
      
      -
      
      -
      
      3,048Stock
        given for compenstation
      
      -
      
      -
      
      28,000
      
      -
      
      -
      
      28,000Net
        loss for the period ended December 31, 2003
      -
      
      -
      
      -
      
      -
      
      (92,070)
      
      (92,070)Issuance
        of common stock
      
      760,000
      
      760
      
      379,240
      
      (9,390)
      
      -
      
      370,610Balance,
        December 31, 2003
      
      5,836,455
      
      5,836
      
      606,451
      
      (9,390)
      
      (306,337)
      
      296,560Issuance
        of common stock
      
      270,000
      
      270
      
      134,730
      
      9,390
      
      -
      
      144,390


Options
        issued for service
      
      -
      
      -
      
      23,415
      
      -
      
      -
      
      23,415Issuance
        of common stock for services
      
      90,000
      
      90
      
      359,660
      
      -
      
      -
      
      359,750Net
        loss for the year ended December 31, 2004
      
      -
      
      -
      
      -
      
      -
      
      (778,928)
      
      (778,928)Balance,
        December 31, 2004
      
      $
              6,196,455
      
      $
                     6,196
      
      $
              1,124,256
      
      $
                            -
      
      $
             (1,085,265)
      
      $
                   45,187The
        accompanying notes are an integral part of these financial statements.F-4


| | 
| | 

---

|RIVER
      CAPITAL GROUP, INC.                        
|-------------------------------------------------------
|(a
      develpment stage company)                     
|STATEMENTS
      OF CASH FLOWS                         
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|Cash
      flows from operating activities:            
|Net
      loss                                         
|Adjustments to reconcile net loss to net               
|cash
      provided (used) by operating activities:    
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|Cash
      flows from financing activities:            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|Supplemental
      disclosure of cash flow information:
|                                                       
|                                                       
|                                                       
|                                                       
|Supplemental
      non-cash financing transactions:    
|                                                       



---



River
Capital Group, Inc.

(a
development stage company)

NOTES
TO FINANCIAL STATEMENTS





1.
BUSINESS AND BASIS OF PRESENTATION





River
Capital Group, Inc.(the "Company") was incorporated in Florida on June
17, 1997 as Greystone Credit, Inc. and merged into whOOdoo.com, Inc. a Delaware
corporation and on July 17, 2000 renamed Ballistic Ventures, Inc and then on
June 5, 2004 was renamed River Capital Group, Inc.  After ceasing active
operations on June 1, 2000, the Company re-entered into the development stage
and now operates with the purpose of merging with another company. On April 27,
2004, the Company entered into an amended letter of agreement with River Capital
Limited ("Limited"), whereby the Company will acquire Limited by issuance of
20,185,820 new common shares of the Company to the stockholders of Limited.
These shares will be reduced by the 1,030,000 shares issued in the latest
private placement. Limited, with headquarters in Bermuda, has substantial
contacts and experience in the reinsurance industry. As part of the proposed
business plan, Limited has sought registration as a Class 3 insurance company
with the Bermuda insurance regulators.  Upon obtaining this authority,
Limited will merge with or be acquired by the Company and will commence
operations as a provider of insurance and reinsurance products and services.
Goodwill associated with the prior operations of $97,997 was written off on June
1, 2000.





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





CASH
AND CASH EQUIVALENTS - The Company considers all unrestricted deposits and
highly liquid investments, readily convertible to known amounts, with an
original maturity of three months or less, to be cash equivalents.





IMPAIRMENT
OF LONG-LIVED ASSETS - The Company evaluates the recoverability of its property
and equipment and other assets in accordance with Statement of Financial
Accounting Standards Board No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets".  SFAS 144 requires recognition of
impairment of long-lived assets in the event the net book value of such assets
exceeds the estimated future undiscounted cash flows attributable to such assets
or the business to which such assets relate. SFAS 144 excludes goodwill and
intangible assets.  When an asset exceeds its expected operating cash flow,
it is considered to be impaired and is written down to fair value, which is
determined based on either discounted future cash flows or appraised values. As
a result of a sale in 2000, an impairment expense was recognized during the 2000
year and goodwill relating to the impaired asset was written off.





INCOME
TAX - Income tax assets and liabilities are computed annually for temporary
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future,
based upon enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. A valuation allowance is
recognized if, based on the weight of available evidence, it is more likely than
not that some portion or all of the deferred tax asset will not be realized.
Income tax expense is the tax payable or refundable for the period, plus or
minus the change during the period in deferred tax assets and liabilities.





USE
OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.





FAIR
VALUE OF FINANCIAL INSTRUMENTS - The fair value of the Company's financial
instruments such as accounts payable and loans payable approximate their



---

carrying
value.





INCOME
(LOSS) PER SHARE - The Company accounts for earnings per share according to SFAS
No. 128, "Earnings per Share" . SFAS 128 requires presentation of
basic and diluted earnings or loss per share. Earnings or loss per share is
computed by dividing net income or loss by the weighted average number of shares
outstanding during the period. For all periods presented, warrants and options
were excluded from the computation of net loss per share because inclusion would
be anti-dilutive.



RECENT
ACCOUNTING PRONOUNCEMENTS -



In
January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN
46"). FIN 46 requires certain variable interest entities to be consolidated
by the primary beneficiary of the entity if the equity investors in the entity
do not have the characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective immediately for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or acquired prior
to February 1, 2003, the provisions of FIN 46 must be applied for the first
interim or annual period beginning after June 15, 2003. The adoption of FASB
Interpretation No. 46 did not have any impact on the Company's financial
position or results of operations.



In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" ("SFAS
150"). SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in certain circumstances). Many of
these instruments were previously classified as equity. Although some of the
provisions of this statement are consistent with the current definition of
liabilities in FASB Concepts Statement No. 6, "Elements of Financial
Statements", the remainder are consistent with FASB's intention to revise
that definition to encompass certain obligations that a reporting entity can or
must settle by issuing its own shares. This statement is effective for financial
instruments entered into or modified after May 31, 2003 and otherwise is
effective at the beginning of the first interim period beg the application of
SFAS 150 to have a material effect on its condensed financial statements. The
adoption of SFAS No. 150 did not have any impact on the Company's financial
position or results of operations.





In
December 2003, the SEC issued Staff Accounting Bulletin No. 104, "Revenue
Recognition" (SAB 104"), rescinded the accounting guidance contained
in SAB 101, "Revenue Recognition in Financial Statements," and
incorporated the body of previously issued guidance related to multiple-element
revenue arrangements. The Company's adoption of SAB 104 did not have any impact
on its financial statements.



In
March 2004, the FASB ratified EITF Issue No. 03-1, "The Meaning of
Other-Than-Temporary Impairment and its Application to Certain
Investments"("EITF 03-1"), but delayed the recognition and
measurement provisions of EITF 03-1 in September 2004. For reporting periods
beginning after June 15, 2004, only the disclosure requirements for
available-for-sale securities and cost method investments are required. The
adoption of EITF Issue No. 03-1 did not have any impact on the Company's
financial position or results of operations.





In
July 2004, the FASB issued EITF Issue No. 02-14, "Whether an Investor
Should Apply the Equity Method of Accounting to Investments Other than Common
Stock" ("EITF 02-14). EITF 002-14 requires application of the equity
method of accounting when an investor is able to exert significant influence
over operating and financial policies of an investee through ownership of common
stock or in-substance common stock. EITF 02-14 is effective for reporting
periods beginning after September 15, 2004. The adoption of EITF 02-14 did not
have any impact on the Company's financial position or results of operations..



In
December 2004, the FASB issued SFAS No. 152, which amends FASB



---

statement
No. 66, "Accounting for Sales of Real Estate," to reference the
financial accounting and reporting guidance for real estate time-sharing
transactions that is provided in AICPA Statement of Position (SOP) 04-2,
"Accounting for Real Estate Time-Sharing Transactions." This statement
also amends FASB Statement No. 67, "Accounting for Costs and Initial Rental
Operations of Real Estate Projects," to state that the guidance for (a)
incidental operations and (b) costs incurred to sell real estate projects does
not apply to real estate time-sharing transactions. The accounting for those
operations and costs is subject to the guidance in SOP 04-2. This statement is
effective for financial statements for fiscal years beginning after June 15,
2005. Management believes the adoption of this statement will have no impact on
the financial statements of the Company.



In
December 2004, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 153. This statement addresses the
measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No.
29, "Accounting for Nonmonetary Transactions," is based on the
principle that exchanges of nonmonetary assets should be measured based on the
fair value of the assets exchanged. The guidance in that opinion; however,
included certain exceptions to that principle. This statement amends Opinion 29
to eliminate the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. A nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. This statement is effective
for financial statements for fiscal years beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges incurred during fiscal
years beginning after the date of this statement is issued. Management believes
the adoption of this statement will have no impact on the financial statements
of the Company.



In
December 2004, the FASB issued a revision to SFAS No. 123R, "Accounting for
Stock Based Compensations." This statement supercedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and its related
implementation guidance. This statement establishes standards for the accounting
for transactions in which an entity exchanges its equity instruments for goods
or services. It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity's equity instruments or that may be settled by the issuance of
those equity instruments. This statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. This statement does not change the accounting guidance for share
based payment transactions with parties other than employees provided in SFAS
No. 123. This statement does not address the accounting for employee share
ownership plans, which are subject to AICPA Statement of Position 93-6,
"Employers' Accounting for Employee Stock Ownership Plans." The
Company has not yet determined the impact to its financial statements from the
adoption of this statement.





3.
GOING CONCERN





The
Company was a development stage entity through December 31, 2004. 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.





On
May 31, 2000, the Company discontinued all operations. As of December 31, 2004,
the Company had a deficit accumulated during the development stage of
$1,085,265. During the year ended December 31, 2004 the company suffered a loss
of $778,928. 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 merge with a
viable operating company.  The Company's continued existence is dependent
upon management funding operations and merging the Company into a viable
operating company and raising sufficient capital.  The financial statements
do not include any adjustments that might result from the outcome of

this
uncertainty.







---

4.
CHANGE IN FISCAL YEAR





Effective
December 31, 2003 the Company changed its fiscal year from June 30 to December
31.  The unaudited information for the prior comparable period for the six
months ended December 31, 2002 is as follows:









Net
sales

$    -

Costs
and expenses

(3,863)

Operating
loss

(3,863)

Other
expense

(1,350)

Net
loss

(5,213)

Basic
and diluted loss

per
share:$

(.00)







5.
DUE TO RELATED PARTY





The
Company received advances from an overdraft demand loan from Lines Overseas
Management Limited, a related party. At July 1, 2003, Lines Overseas Management
Limited elected to contribute the unpaid principal and interest of loans
totaling $131,389 to capital.



At
December 31, 2004 and 2003 the Company owed Lines Overseas Management Limited $0
and $8,124, respectively.





6.
STOCKHOLDERS' EQUITY





On
June 2, 2000, 132,813 warrants for common stock were exercised and the Company
received proceeds of $53,125.





On
January 21, 2003, the Company declared a 4-to-1 reverse stock split. The number
of shares issued after the split was 5,076,455 (20,305,398 before the split).
The effect of the split has been retroactively reflected in prior years. All
references to the number of shares outstanding and the per share amounts in the
financial statements and related notes have been restated to reflect the split
for all periods presented.





On
April 28, 2003 the Company granted to a former officer and present director the
right to acquire up to 50,000 common shares exercisable only if the Company
issued new shares via a financing offering, with an exercise price of $0.40 per
share.  On September 17, 2003, the former officer surrendered and
terminated the options. The Company's Board of Directors acknowledged and
accepted that a major shareholder of the Company granted 187,000 common shares
to the former officer as a gift to compensate for the renouncement of the
above-mentioned options, valued at $28,000.





In
November and December of 2003, the Company sold in a private placement 760,000
shares of common stock for $.50 per share for gross proceeds of $380,000. From
January 2004 to June 2004, an additional 270,000 shares were sold for $.50 per
share for gross proceeds of $135,000.



During
the year ended December 31, 2004 the Company issued 90,000 shares of its common
stock to designees of Redwood Grove Capital Management, LLC ("Redwood"), as
payment for consulting services. Such services are to be provided from July 1,
2004 to and including February 28, 2005. The payment is pursuant to an agreement
to issue a total of 120,000 shares of common stock over the eight-month period.
A charge of $359,750 for the fair market value of the 90,000 shares has been
recorded in the Company's statement of operations for the year ended December
31, 2004.





---



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 507,645 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.  As of December 31, 2004,
options to purchase 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. As part of this plan the Company issued 25,000 options to a consultant.
A charge of $23,415 has been recorded in the Company's statement of operations
for the year ended December 31, 2004.



The
Company accounts 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:



Year ended

Six Months





December 31, 2004          
December 31, 2003

Net
(loss) applicable to Common stockholder:

As
reported

$(778,928)

$(91,490)

Stock-based
employee compensation expense related to stock options

determined
under fair value method

(167,422)

-

Amounts
charged to expense

23,415

-



Pro
forma according to SFAS 123

$(922,935)

$(91,490)



Net
income applicable to common

Stockholder
per share:

As
reported

$(0.13)

$(0.02)



Pro
forma according to SFAS 123

$(0.14)

$(0.02)









7.
INCOME TAXES





The
Company had available at December 31, 2004 net operating loss carry forwards for
federal and state tax purposes of approximately $1,050,000, which could be
applied against taxable income in subsequent years through 2025. The deferred
tax asset for net operating losses was approximately $266,000 and $113,000 as of
December 31, 2004 and 2003, 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 year and
sixmonths ended December 31, 2004 and 2003 and the year ended June 30, 2003 are



---

approximately as follows:

|                                                    |  | Year              |  |  | Six
      months  |  |                  |         | 
|--------------------------------------------------- |  | ----------------- |  |  | ----------------- |  | ---------------- | ------- | 
|                                                    |  | ended             |  |  | ended             |  | Year
      ended |        
|                                                    |  | December
      31 |  |  | December
      31 |  | June
      30,   |        
|                                                    |  |                   |  |  |                   |  |                  |         | 
|                                                    |  | 2004              |  |  | 2003              |  |                  | 2003    | 
|                                                    |  |                   |  |  |                   |  |                  |         | 
|                                                    |  |                   |  |  |                   |  |                  |         | 
|Income tax loss
      at federal statutory tax rate |  | -34.00%           |  |  | -34.00%           |  |                  | -34.00% | 
|                                                    |  |                   |  |  |                   |  |                  |         | 
|State tax, net
      of federal benefit             |  | -3.63%            |  |  | -3.63%            |  |                  | -3.63%  | 
|                                                    |  |                   |  |  |                   |  |                  |         | 
|Valuation
      allowance                           |  | 37.63%            |  |  | 37.63%            |  |                  | 37.63%  | 
|                                                    |  |                   |  |  |                   |  |                  |         | 
|Provision for
      taxes                           |  | -                 |  |  | -                 |  |                  | -       | 
|                                                    |  |                   |  |  |                   |  |                  |         | 
|                                                    |  |                   |  |  |                   |  |                  |         | 

|                                              |  | Year     | Six months |            |        
|--------------------------------------------- |  | -------- | ---------- | ---------- | -------
|                                              |  | ended    | ended      | Year ended
|                                              |  | 31-Dec   | 31-Dec     | June 30,  
|                                              |  |          |            |            |        
|                                              |  | 2004     | 2003       | 2003      
|                                              |  |          |            |            |        
|                                              |  |          |            |            |        
|Income tax loss at federal statutory tax rate |  | (264,836 | (31,304    |            | (13,655
|                                              |  |          |            |            |        
|State tax, net of federal benefit             |  | (28,275  | (3,342     |            | (1,458 
|                                              |  |          |            |            |        
|Valuation allowance                           |  | 293,111  | 34,646     |            | 15,113 
|                                              |  |          |            |            |        
|Provision for taxes                           |  | -        | -          |            | -      



|                                                        |   |                   |  |   |                   |  |                |          | 
|------------------------------------------------------- | - | ----------------- |  | - | ----------------- |  | -------------- | -------- | 
|The
      Company's deferred tax assets are as follows: |   |                   |  |   |                   |  |               
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   | December
      31 |  |   | December
      31 |  | June
      30, |         
|                                                        |   | 2004              |  |   | 2003              |  |                | 2003     | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|Net Operating
      Loss                                | $ | 367,500           |  | $ | 113,000           |  | $              | 81,000   | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|Valuation
      allowance                               |   | (367,500)         |  |   | (113,000)         |  |                | (81,000) | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|Net deferred tax
      assets                           | $ | -                 |  | $ | -                 |  | $              | -        | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   |                   |  |   |                   |  |                |          | 
|                                                        |   |                   |  |   |                   |  |                |          | 



8.RELATED
PARTY TRANSACTION





On
April 27, 2004, the Company entered into an amended letter of agreement with
River Capital Limited ("Limited"), whereby Limited will be acquired by the
Company by issuance of 20,185,820 new common shares of the Company to the
stockholders of Limited. (See Note 8). Pursuant to the letter of intent relating
to this transaction, the funds raised in the private placement will be at the
disposal of Limited to satisfy all reasonable expenditures pursuant to the
merger. The Company is providing up to $20,000 a month to cover these expenses.
 Companies owned by two officers and directors receive up to $12,000 per
month as management and administrative fees for a total of $169,000 for the year
ended December 31, 2004.  In addition, a total of approximately $63,000 was
reimbursed to River Capital Limited, officers and other entities controlled by
officers for out of pocket expenses incurred on behalf of the Company. A total
of $38,885 is due at December 31, 2004 to the officers and other entities
controlled by officers in connection with this transaction





9.PENDING
TRANSACTION





On
April 27, 2004, the Company entered into an amended letter of agreement with
River Capital Limited ("Limited"), whereby Limited will be acquired by the
Company by issuance of 20,185,820 new common shares of the Company to the
stockholders of Limited. These shares will be reduced by the 1,030,000 shares
issued in the latest private placement and the 120,000 issued to Redwood.
Limited, with headquarters in Bermuda, has substantial contacts and experience
in the reinsurance industry.



As
part of the proposed business plan, Limited  has sought registration as a
Class 3 insurance company with the Bermuda insurance regulators.  Upon
obtaining this authority, Limited will merge with or be acquired by the Company
and will commence operations as a provider of insurance and reinsurance products
and services.  The Company changed its name to River Capital Group, Inc. on
June 5, 2004,  pursuant to the adopted business plan.

---



As
of the date of this report Limited has made application to the Bermuda Monetary
Authority seeking the incorporation and registration as a Class 3 insurance
company of River Reinsurance Limited. This authorization has not been granted as
of the date of this report. The proposed transaction may be amended to reflect
application to other jurisdictions.



Pursuant
to the letter of intent relating to this transaction, the funds raised in the
private placement will be at the disposal of Limited to satisfy all reasonable
expenditures pursuant to the merger. The Company is providing up to $20,000 a
month to cover these expenses.  For the year ended December 31, 2004 a
total of $169,000 has been expensed.





10.COMMITMENTS AND CONTINGENCIES



From time to time, we 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 our financial position, results of operations, or liquidity.