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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Mark One)

[X]Quarterly Report Under Section 13 Or 15(d) Of The
Securities Exchange Act Of 1934

For the quarterly period ended September 30, 2007

[   ] Transition Report Under Section 13 Or 15(d) Of
  The Exchange Act

For the transition period from ________ to ________

COMMISSION FILE NUMBER**000-32011**

BALSAM VENTURES, INC.(Exact name of small business issuer as specified in its
charter)

|NEVADA                                           | 52-2219056                       
|------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of incorporation or | (IRS Employer Identification No.)
|organization)                                    |                                  

1480 Gulf Road, Suite 204 Point Roberts, WA 98281(Address of principal executive offices)

(360) 305-5012(Issuer's telephone number)

Not Applicable(Former name, former address
and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X]No [   ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the 
  Exchange Act). Yes [ X ]   No [   ]

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date: As of
November 5, 2007, the Registrant had 36,226,663 shares of common stock,
$0.001 par value per share, outstanding.

Transitional Small Business Disclosure Format (Check one): Yes
[   ]   No [X]

1

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PART I - FINANCIAL INFORMATION



ITEM
1.                    
FINANCIAL STATEMENTS.





2

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BALSAM VENTURES, INC.(A Development Stage Company)

FINANCIAL STATEMENTS

September 30, 2007

(Unaudited)

(Stated in U.S. Dollars)

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BALSAM VENTURES, INC.(A Development Stage Company)

BALANCE SHEET(Unaudited) 
  (Stated in U.S. Dollars)

|                                                                         |   | SEPTEMBER 30, |  
|------------------------------------------------------------------------ | - | ------------- | -
|                                                                         |   | 2007          |  
|                                                                         |   |               |  
|ASSETS                                                                   |   |               |  
|                                                                         |   |               |  
|Current Assets                                                           |   |               |  
|Cash                                                                     | $ | 147           |  
|Deferred tax asset, less valuation allowance
      of $479,297           |   | -             |  
|                                                                         |   |               |  
|Total Assets                                                             | $ | 147           |  
|                                                                         |   |               |  
|LIABILITIES AND STOCKHOLDERS DEFICIENCY                                 |   |               |  
|                                                                         |   |               |  
|Current Liabilities                                                      |   |               |  
|Accounts payable and accrued liabilities                                 | $ | 312,895       |  
|Accounts payable and accrued
      liabilities related parties (Note 7) |   | 17,088        |  
|Loans
      payable (Note 4 and 7)                                       |   | 113,863       |  
|                                                                         |   |               |  
|Total Current Liabilities                                                |   | 443,846       |  
|                                                                         |   |               |  
|Commitments and Contractual Obligations(Note 6)                          |   |               |  
|                                                                         |   |               |  
|Stockholders Deficiency                                                 |   |               |  
|Common Stock (Note 8)                                                    |   |               |  
|Authorized:                                                              |   |               |  
|100,000,000 common shares with a par value of $0.001 per share           |   |               |  
|Issued and outstanding:                                                  |   |               |  
|36,226,663 common shares                                                 |   | 36,227        |  
|Additional paid-in capital                                               |   | 929,773       |  
|Deficit accumulated during the development
      stage                   |   | (1,409,699    | )
|                                                                         |   |               |  
|Total Stockholders Deficiency                                           |   | (443,699      | )
|                                                                         |   |               |  
|Total Liabilities and Stockholders Deficiency                           | $ | 147           |  

The accompanying notes are an integral part of these consolidated
  financial statements.

F-2

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BALSAM VENTURES, INC.(A Development Stage Company)

STATEMENTS OF OPERATIONS(Unaudited) 
  (Stated in U.S. Dollars)

CUMULATIVEAMOUNTSFROMTHREE
      
      
      THREE
      
      
      NINE
      
      
      NINE
      
      
      INCEPTIONMONTHS
      
      
      MONTHS
      
      
      MONTHS
      
      
      MONTHS
      
      
      (AUGUST 17,ENDED
      
      
      ENDED
      
      
      ENDED
      
      
      ENDED
      
      
      **1999**) TO**SEPTEMBER 30,**
      
      
      SEPTEMBER 30,
      
      
      SEPTEMBER 30,
      
      
      SEPTEMBER 30,
      
      
      SEPTEMBER 30,2007
      
      
      2006
      
      
      2007
      
      
      2006
      
      
      2007EXPENSESAccretion of discount onconvertible notes (Note 5)
      $
      -
      
      $
      200,985
      
      $
      -
      
      $
      256,960
      
      $
      260,000Bank charges and interest
      
      1,262
      
      
      6,643
      
      
      2,436
      
      
      19,720
      
      
      81,909Consulting services
      
      15,000
      
      
      15,000
      
      
      45,000
      
      
      45,000
      
      
      450,947Domain registration
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      436Foreign exchange loss
      
      913
      
      
      38
      
      
      1,807
      
      
      272
      
      
      2,935License and royalty payments
      
      -
      
      
      -
      
      
      15,000
      
      
      50,000
      
      
      328,000Office and sundry
      
      436
      
      
      724
      
      
      1,201
      
      
      1,981
      
      
      15,284Professional fees
      
      3,217
      
      
      5,582
      
      
      12,743
      
      
      23,517
      
      
      231,187Regulatory
      
      660
      
      
      552
      
      
      1,898
      
      
      1,894
      
      
      15,132Stock transfer services
      
      25
      
      
      25
      
      
      160
      
      
      185
      
      
      6,095Travel
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      9,099Write-off of developmentalcosts software
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      8,675LOSS BEFORE INCOME TAXES
      
      21,513
      
      
      229,549
      
      
      80,245
      
      
      399,529
      
      
      1,409,699Provision for income taxes
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -NET LOSS
      $
      21,513
      
      $
      229,549
      
      $
      80,245
      
      $
      399,529
      
      $
      1,406,699BASIC AND DILUTED NETLOSS PER SHARE
      $
      (0.00
      )
      $
      (0.01
      )
      $
      (0.00
      )
      $
      (0.02
      )WEIGHTED AVERAGENUMBER OF COMMONSHARES OUTSTANDING
      
      36,226,663
      
      
      26,000,000
      
      
      36,226,663
      
      
      25,976,190


The accompanying notes are an integral part of these financial
  statements.

F-3

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BALSAM VENTURES, INC.(A Development Stage Company)

STATEMENTS OF CASH FLOWS(Unaudited) 
  (Stated in U.S. Dollars)

|                                                                              |   |               |   |   |               |   |   | CUMULATIVE    |  
|----------------------------------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | ------------- | -
|                                                                              |   |               |   |   |               |   |   | AMOUNTS       |  
|                                                                              |   |               |   |   |               |   |   | FROM          |  
|                                                                              |   | NINE          |   |   | NINE          |   |   | INCEPTION     |  
|                                                                              |   | MONTHS        |   |   | MONTHS        |   |   | (AUGUST 17,   |  
|                                                                              |   | ENDED         |   |   | ENDED         |   |   | **1999**) TO  |  
|                                                                              |   | SEPTEMBER 30, |   |   | SEPTEMBER 30, |   |   | SEPTEMBER 30, |  
|                                                                              |   | 2007          |   |   | 2006          |   |   | 2007          |  
|                                                                              |   |               |   |   |               |   |   |               |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                          |   |               |   |   |               |   |   |               |  
|                                                                              |   |               |   |   |               |   |   |               |  
|Net loss for the period                                                       | $ | (80,245       | ) | $ | (399,529      | ) | $ | (1,409,699    | )
|Adjustments to reconcile net loss to cash used in operating
      activities: |   |               |   |   |               |   |   |               |  
|Write off of software
      development costs                                 |   |               |   |   | -             |   |   | 8,675         |  
|Interest accrued on convertible
      notes payable                           |   | -             |   |   | 19,446        |   |   | 78,000        |  
|Shares issued to
      extend license agreement                               |   | -             |   |   | 30,000        |   |   | 293,000       |  
|Accretion of discount on convertible
      debentures                         |   | -             |   |   | 256,960       |   |   | 260,000       |  
|Changes in non-cash working capital
      items:                              |   |               |   |   |               |   |   |               |  
|Decrease in prepaid expenses                                                  |   | 50            |   |   | -             |   |   | -             |  
|Increase in accounts
      payable and accrued liabilities                    |   | 53,588        |   |   | 91,848        |   |   | 607,496       |  
|Increase in accounts payable and
      accrued liabilitiesrelated parties    |   | 66            |   |   | 16            |   |   | 17,088        |  
|Increase in accrued interest payable                                          |   | 2,262         |   |   | -             |   |   | 2,262         |  
|                                                                              |   |               |   |   |               |   |   |               |  
|Net cash used in operating activities                                         |   | (24,279       | ) |   | (1,259        | ) |   | (143,178      | )
|                                                                              |   |               |   |   |               |   |   |               |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                          |   |               |   |   |               |   |   |               |  
|                                                                              |   |               |   |   |               |   |   |               |  
|Software development costs                                                    |   | -             |   |   | -             |   |   | (8,675        | )
|                                                                              |   |               |   |   |               |   |   |               |  
|Net cash used in investing activities                                         |   | -             |   |   | -             |   |   | (8,675        | )
|                                                                              |   |               |   |   |               |   |   |               |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                          |   |               |   |   |               |   |   |               |  
|                                                                              |   |               |   |   |               |   |   |               |  
|Issuance of common
      stock for cash                                       |   | -             |   |   | -             |   |   | 75,000        |  
|Proceeds from loans payable                                                   |   | 22,000        |   |   | -             |   |   | 77,000        |  
|                                                                              |   |               |   |   |               |   |   |               |  
|Net cash provided by financing activities                                     |   | 22,000        |   |   | -             |   |   | 152,000       |  
|                                                                              |   |               |   |   |               |   |   |               |  
|NET INCREASE (DECREASE) IN CASH                                               |   | (2,279        | ) |   | (1,259        | ) |   | 147           |  
|                                                                              |   |               |   |   |               |   |   |               |  
|CASH, BEGINNING OF PERIOD                                                     |   | 2,426         |   |   | 1,700         |   |   | -             |  
|                                                                              |   |               |   |   |               |   |   |               |  
|CASH, END OF PERIOD                                                           | $ | 147           |   |   | 441           |   | $ | 147           |  
|                                                                              |   |               |   |   |               |   |   |               |  
|Supplemental Disclosure with respect to Cash Flows (Note
      9)             |   |               |   |   |               |   |   |               |  

The accompanying notes are an integral part of these financial
  statements.

F-4

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BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|1. | HISTORY AND ORGANIZATION OF THE COMPANY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Balsam Ventures, Inc. (the Company) was
        incorporated on August 17, 1999 in the State of Nevada. The Company was
        in the business of developing and marketing a patented, proprietary technology
        for self-chilling beverage containers (the Cool Can Technology)
        that it had licensed in 2004. Subsequent to September 30, 2007, the Company
        was advised that the patents for the Cool Can Technology had expired.
        The Company has advised the Licensor that it intends to terminate the
        Agreement and is currently negotiating with the Licensor to settle its
        rights under the Agreement ( see Note 5).                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company is considered to be in the development stage.
        The accompanying financial statements represent those of a development
        stage enterprise and therefore, are subject to the usual business risks
        of development stage companies. The Company has not yet generated any
        revenue from operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These financial statements have been prepared in conformity
        with generally accepted accounting principles in the United States of
        America for interim financial information. The accompanying financial
        statements do not include all information and footnote disclosures required
        for an annual set of financial statements prepared under United States
        of America generally accepted accounting principles. In the opinion of
        management, all adjustments (consisting solely of normal recurring accruals)
        considered necessary for a fair presentation of financial position, results
        of operations and cash flows as at September 30, 2007 and for all periods
        presented, have been included. Interim results for the period ended September
        30, 2007 are not necessarily indicative of the results that may be expected
        for the fiscal year as a whole.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | These financial statements have been prepared with the
        on-going assumption that the Company will be able to realize its assets
        and discharge its liabilities in the normal course of business. However,
        certain conditions noted below raise substantial doubt about the Companys
        ability to continue as a going concern. These financial statements do
        not include any adjustments to the amounts and classifications of assets
        and liabilities that might be necessary should the Company be unable to
        continue as a going concern.                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | As shown in the accompanying financial statements, the
        Company has incurred a net loss of $1,406,699 for the period from inception
        (August 17, 1999) to September 30, 2007, and has no revenue. The operations
        of the Company have primarily been funded by the sale of common stock
        and loans payable. Continued operations of the Company are dependent on
        the Companys ability to complete equity financings, obtain additional
        loans or generate profitable operations in the future. Managements
        plan in this regard is to secure additional funds through future equity
        financings and loans payable. Such financings or loans payable may not
        be available or may not be available on reasonable terms to the Company.                                                                                                                                               

F-5

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BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The financial statements of the Company have been prepared
        in accordance with generally accepted accounting principles in the United
        States of America and are stated in U.S. dollars. The significant accounting
        policies adopted by the Company are as follows:                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (a)    
        Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The preparation of financial statements in
        conformity with generally accepted accounting principles in the United
        States requires management to make estimates and assumptions that affect
        the reported amount of assets and liabilities and the disclosure of contingent
        assets and liabilities at the date of the financial statements and the
        reported amount of revenues and expenses during the reporting period.
        Actual results could differ from these estimates.                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (b)     
        Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The functional currency of the Company is
        the U.S. dollar. Accordingly, monetary assets and liabilities denominated
        in a foreign currency are translated at the exchange rate in effect at
        the balance sheet date while non-monetary assets and liabilities are translated
        at historical rates. Revenue and expense items denominated in a foreign
        currency are translated at exchange rates prevailing when such items are
        recognized in the statement of operations. Exchange gains and losses arising
        on translation of foreign currency items are included in the statement
        of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (c) Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company considers cash held at banks
        and all highly liquid investments with original maturities of three months
        or less to be cash and cash equivalents. At September 30, 2007, the Company
        had no cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (d) Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | A deferred tax asset or liability is recorded
        for all temporary differences between financial and tax reporting and
        net operating loss carryforwards. Deferred tax expenses (benefit) result
        from the net change during the period of deferred tax assets and liabilities.                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Deferred tax assets are reduced by a valuation
        allowance when, in the opinion of management, it is more likely than not
        that some portion or all of the deferred tax assets will not be realized.
        Deferred tax assets and liabilities are adjusted for the effects of changes
        in tax laws and rates on the date of enactment.                                                                                                                                                                                                                                                                                                 

F-6

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BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (e) Fair
      value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company's financial instruments consist of cash,
        accounts payable and accrued liabilities, accounts payable and accrued
        liabilities related parties and loans payable. Unless otherwise
        noted, it is management's opinion that the Company is not exposed to significant
        interest, currency or credit risks arising from these financial instruments.
        The fair value of these financial instruments approximates their carrying
        values, unless otherwise noted.                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (f)      Convertible
      notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company accounts for convertible notes payable in
        accordance with the provisions of the Emerging Issues Task Force (EITF)
        Release No. 98-5 and 00-27, whereby, any embedded beneficial conversion
        features present in convertible securities are valued separately at issuance.
        The embedded beneficial conversion feature is recognized and measured
        by allocating a portion of the proceeds equal to the intrinsic value of
        that feature to additional paid-in capital. That amount is calculated
        at the commitment date as the difference between the effective conversion
        price and the fair value of the common stock or other securities into
        which the security is convertible, multiplied by the number of shares
        into which the security is convertible
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In circumstances where the intrinsic value of the beneficial
        conversion feature is greater than the proceeds allocated to the convertible
        instrument, the amount of the discount assigned to the beneficial conversion
        feature is limited to the amount of the proceeds allocated to the convertible
        instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | For convertible instruments that have a stated redemption
        date (such as term debt), the discount resulting from recording a beneficial
        conversion option should be accreted from the date of issuance to the
        stated redemption date of the convertible instrument.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In the event of early conversion or default, the remaining
        discount is recognized as interest expense during the period in which
        such early conversion or default occurs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (g)      Net loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Basic net loss per share is computed by dividing the
        net loss for the period by the weighted average number of shares of common
        stock outstanding during the period. Diluted earnings per share takes
        into consideration shares of common stock outstanding (computed under
        basic earnings per share) and potentially dilutive shares of common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-7

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BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (h)      Development
      stage                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company is a development stage company as defined
        in Statement of Financial Accounting Standards (SFAS) 7, Accounting
        and Reporting by Development Stage Enterprises,as it is devoting
        substantially all of its efforts to establish a new business and planned
        principal operations have not commenced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (i)      Concentration
      of credit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Cash is the only financial instrument that potentially
        subjects the Company to concentration of credit risk. The Company maintains
        cash in bank accounts that, at times, may exceed federally insured limits.
        The Company has not experienced any losses in such accounts and believes
        it is not exposed to any significant risks on its cash in bank accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (j)      Recent
      accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In February 2007, the FASB issued SFAS No. 159, The
        Fair Value Option for Financial Assets and Financial Liabilities 
        Including an Amendment of FASB Statement No. 115. This statement
        permits entities to choose to measure many financial instruments and certain
        other items at fair value. Most of the provisions of SFAS No. 159 apply
        only to entities that elect the fair value option. However, the amendment
        to SFAS No. 115 Accounting for Certain Investments in Debt and
        Equity Securities applies to all entities with available-for-sale
        and trading securities. SFAS No. 159 is effective as of the beginning
        of an entitys first fiscal year that begins after November 15, 2007.
        Early adoption is permitted as of the beginning of a fiscal year that
        begins on or before November 15, 2007, provided the entity also elects
        to apply the provision of SFAS No. 157, Fair Value Measurements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company does not expect that the adoption of this
        new accounting pronouncement will have a significant effect on its financial
        statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (k)      Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Certain amounts reported in the prior periods have been
        reclassified to conform to the current periods presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-8

---

BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|4. | LOANS PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the nine months ended September 30, 2007, a loan
        was granted from a third party company for $60,000. The loan bears interest
        at 8% per annum, compounded annually, and is due April 19, 2008. Interest
        expense accrued for the three and nine months ended September 30, 2007
        totalled $1,210 and $2,262, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the year ended December 31, 2006, a series of
        loans totalling $43,000 were granted from two third party companies The
        loans were non-interest bearing, unsecured and due on demand. During the
        nine months ended September 30, 2007, the loans were repaid in full.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5. | CONVERTIBLE NOTES PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the year ended December 2003, the Company issued
        convertible notes, maturing October 1, 2006, aggregating $260,000 and
        bearing interest of 10% per annum. The notes are convertible into common
        shares at the lesser of $0.03 per share or 50% of the average trading
        price of the Companys common shares for the ten trading days prior
        to conversion. The Company may, at its option, elect to pay a portion
        of the interest by issuing common stock.                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In applying the provisions of Emerging Issues Task Force
        Release Nos. 98-5 and 00-27, the Company recorded a discount on the convertible
        debentures in the amount of $260,000. This discount is being accreted
        to interest expense using the interest method over the life of the notes
        (three years). As the effective interest rate, which is determined by
        dividing the actual interest rate on the convertible debentures by the
        discounted debt amount, approaches infinity, the interest expense to be
        recorded approximates the future cash payments. Interest expense recorded
        relating to the accretion of the discount for the three and nine months
        ended September 30, 2006 was $200,985 and $256,960, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the three and nine months ended September 30,
        2006, $6,553 and $19,446, respectively, of interest expense was accrued
        and charged to the statement of operations. No cash payments of interest
        were made during the respective period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | At October 1, 2006, $260,000 of convertible notes payable
        were converted to common stock at $0.03 per common share and $78,000 of
        accrued interest payable on these convertible notes was settled by issuing
        common stock at $0.05 per common share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-9

---

BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|6. | LICENSE AGREEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Pursuant to an exclusive license agreement
        (the Agreement) with NorPac Technologies, Inc (formerly Cool
        Can Technologies, Inc.) (the Licensor), dated November 30,
        2003, the Company acquired the exclusive right and license (the License),
        for a period of 40 years, to use, commercialize and exploit the Licensors
        proprietary trademarks, patents, process information, technical information,
        designs and drawings associated with the Licensors self-chilling
        beverage containers technology (the Cool Can Technology),
        including the right to manufacture, use and sell apparatus and products
        embodying the Technology within the countries comprising the European
        Union and the Peoples Republic of China. The Company also has the
        right to sub-license the right to manufacture, use and sell products embodying
        the Cool Can Technology.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In consideration for the Agreement, the Company
        agreed to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On January 14, 2006, the Company entered into
        an agreement (the Extension Agreement) with the Licensor,
        to amend the terms of their Agreement. Under the Extension Agreement,
        the Licensor agreed to extend the date on which the Company is required
        to commence paying the minimum royalty payments to January 15, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In consideration for the Extension Agreement,
        the Company agreed to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Cool Can Technology and patents and trademarks
        of the Licensor included in the Cool Can Technology remain the property
        of the Licensor subject to the terms of the License granted under the
        Agreement. However, the Company has a right of first refusal to acquire
        the intellectual property subject to the Agreement should the Licensor
        seek to dispose of the Cool Can Technology during the Agreement. The Agreement
        supercedes all prior arrangements and agreements between the Company and
        the Licensor in respect of the Cool Can Technology.                                                                                                                                                                                                                                                                                                                                              

F-10

---

BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|6. | LICENSE AGREEMENT (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | During the three months ended September 30, 2007 and
        2006, the Company paid royalty fees of $0 and $0, respectively. During
        the nine months ended September 30, 2007 and 2006, the Company paid royalty
        fees of $15,000 and $50,000, respectively. In June 2007, the Licensor
        notified the Company that its intellectual property rights to the Cool
        Can Technology had possibly expired. As a result, the Company suspended
        the minimum royalty payments required under the Agreement effective April
        1, 2007. Subsequent to September 30, 2007, the Company was advised that
        the patents for the Cool Can Technology had expired. The Company has advised
        the Licensor that it intends to terminate the Agreement and is currently
        negotiating with the Licensor to settle its rights under the Agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|7. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Accounts payable and accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

At September 30, 2007, included in accounts
  payable and accrued liabilities related parties is $8,088 owed to a director
  and officer and $9,000 owed to a former director and officer.

Loans payable

During the period ended December 31,
  2006, a series of loans totalling $46,601 were granted from a third party company
  who is now a shareholder. During the nine months ended September 30, 2007, an
  additional $5,000 was granted. The loans are non-interest bearing, unsecured
  and due on demand.

|8. | COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Companys articles of incorporation allow it
        to issue up to 100,000,000 shares of common stock, par value $0.001. Effective
        April 3, 2002 the Company effected a stock split of its common stock by
        issuing two new shares for every one old share. Except as otherwise stated
        to the contrary in these financial statements, all references to shares
        and prices per share have been adjusted to give retroactive effect to
        the stock split.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On August 17, 1999, the Company issued 10,000,000 shares
        of its common stock at $0.0005 per share in a private placement transaction.                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On October 29, 1999, the Company issued 10,000,000 shares
        of its common stock at $0.005 per share in a private placement transaction.                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On December 24, 1999, the Company issued 200,000 shares
        of its common stock at $0.10 per share in a private placement transaction.                                                                                                                                                                                                                                                                                                                                                       

F-11

---

BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|8. | COMMON STOCK (continued)                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                         
|   | On September 2, 2002, the Company issued 300,000 shares
        of its common stock with a value of $63,000 to initiate and extend the
        arrangement for a chilling beverage container technology.
|   |                                                                                                                                                                                                         
|   | On November 30, 2003, the Company issued 5,000,000 shares
        of its common stock with a value of $200,000, as consideration for a license.                                                         
|   |                                                                                                                                                                                                         
|   | On January 14, 2006, the Company issued 500,000 shares
        of its common stock with a value of with a value of $30,000, as consideration
        for the extension of a license.                    
|   |                                                                                                                                                                                                         
|   | On October 1, 2006, the Company issued 8,666,663 common
        shares, with a value of $260,000 on conversion of convertible notes payable                                                             
|   |                                                                                                                                                                                                         
|   | On October 1, 2006, the Company issued 1,560,000 common
        shares, with a value of $78,000 for settlement of accrued interest payable
        on $260,000 convertible notes payable.               
|   |                                                                                                                                                                                                         
|9. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS                                                                                                                                                      

| |                |   |               |  |   |               |  |   | CUMULATIVE    |     
| | -------------- | - | ------------- |  | - | ------------- |  | - | ------------- | ----
| |                |   |               |  |   |               |  |   | AMOUNTS       |     
| |                |   |               |  |   |               |  |   | FROM          |     
| |                |   | NINE          |  |   | NINE          |  |   | INCEPTION     |     
| |                |   | MONTHS        |  |   | MONTHS        |  |   | (AUGUST 17,   |     
| |                |   | ENDED         |  |   | ENDED         |  |   | 1999) TO      | ****
| |                |   | SEPTEMBER 30, |  |   | SEPTEMBER 30, |  |   | SEPTEMBER 30, |     
| |                |   | 2007          |  |   | 2006          |  |   | 2007          |     
| |                |   |               |  |   |               |  |   |               |     
| | Cash paid for: |   |               |  |   |               |  |   |               |     
| | Interest       | $ | -             |  | $ | 44            |  | $ | 1,110         |     
| | Income taxes   | $ | -             |  | $ | -             |  | $ | -             |     

During the nine months ended September
  30, 2006, the Company issued 500,000 common shares, with a value of $30,000,
  as consideration for the extension of a license.

F-12

---

ITEM
2.                    
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report
constitute "forward-looking statements". These statements, identified by words
such as plan, "anticipate," "believe," "estimate," "should," "expect" and
similar expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under this Item 2 "Management's Discussion
and Analysis or Plan of Operation" and elsewhere in this Quarterly Report. We do
not intend to update the forward-looking information to reflect actual results
or changes in the factors affecting such forward-looking information. We advise
you to carefully review the reports and documents we file from time to time with
the Securities and Exchange Commission (the SEC), particularly our Annual
Reports on Form 10-KSB, our Quarterly Reports on Form 10-QSB and our Current
Reports on Form 8-K.

As used in this Quarterly Report, the terms "we," "us," "our,"
  and Balsam mean Balsam Ventures, Inc. unless otherwise indicated.
  All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise
  stated.

INTRODUCTION

We were incorporated on August 17, 1999 under the laws of the
State of Nevada.

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the nine
month period ended September 30, 2007 and changes in our financial condition
from December 31, 2006. This discussion should be read in conjunction with the
Managements Discussion and Analysis or Plan of Operation included in our Annual
Report on Form 10-KSB for the year ended December 31, 2006.

PLAN OF OPERATION

Until recently, we were in the business of developing and
marketing a patented, unique, proprietary technology for self-chilling beverage
containers (the Cool Can Technology) that we licensed from NorPac
Technologies, Inc. (formerly Cool Can Technologies, Inc.) (NorPac). However,
it has come to our attention that NorPacs patents for the Cool Can Technology
have expired. As a result, our management has decided to abandon the development
of the Cool Can Technology. We are currently negotiating with NorPac to settle
our rights under the terms of our license agreement with NorPac. We are
currently in the process of reorganizing our business and are seeking and
evaluating alternative business opportunities.

As a result, we are unable to provide an accurate estimate of
  our financial requirements for the next twelve months. However, we currently
  have a working capital deficit of $443,699 and will need substantial financing
  in the near term in order to meet our current obligations as they become due
  and to meet our ongoing reporting obligations under the Securities Exchange
  Act of 1934 (the Exchange Act). In addition, if our management is
  successful in identifying a suitable business opportunity for us to pursue,
  we will likely need significantly more financing in order to pursue the new
  business opportunity. Currently, we do not have any financial arrangements in
  place and there is no assurance that we will be able to obtain sufficient financing
  on terms acceptable to us, if at all.

3

---

RESULTS OF OPERATIONS

Third Quarter and Nine Months Summary

Third Quarter Ended September 30
    
    Nine Months Ended September 30Percentage
    
    
    
    PercentageIncrease /
    
    
    
    Increase /2007
    2006
    (Decrease)
    
    2007
    2006
    (Decrease)Revenue
    $Nil
    $Nil
    n/a
    
    $Nil
    $Nil
    n/aExpenses
    (21,513)
    (229,549)
    (90.6)%
    
    (80,245)
    (399,529)
    (79.9)%Net Income (Loss)
    $(21,513)
    $(229,549)
    (90.6)%
    
    $(80,245)
    $(399,529)
    (79.9)%


Revenue

We did not earn any revenues during the nine months ended
September 30, 2007 and we do not anticipate earning revenues in the near future.
We are a development stage company and presently have only nominal operations.

Expenses

Our expenses for the three and nine months ended September 30,
2007 and 2006 consisted of the following:

Third
        Quarter Ended September 30
      
      Nine Months Ended September 30Percentage
      
      
      
      Percentage2007
      2006
      Inc.
        / (Dec.)
      
      2007
      2006
      Inc.
        / (Dec.)Accretion of Discount on Convertible Notes
      $Nil
      $200,985
      (100)%
      
      $Nil
      $256,960
      (100)%Bank Charges and Interest
      1,262
      6,643
      (81.0)%
      
      2,436
      19,720
      (87.6)%Consulting Services
      15,000
      15,000
      n/a
      
      45,000
      45,000
      n/aForeign Exchange Loss
      913
      38
      2,302.6%
      
      1,807
      272
      564.3%License and Royalty Payments
      Nil
      Nil
      n/a
      
      15,000
      50,000
      (70.0)%Office and Sundry
      436
      724
      (39.8)%
      
      1,201
      1,981
      (39.4)%Professional Fees
      3,217
      5,582
      (42.4)%
      
      12,743
      23,517
      (45.8)%Regulatory
      660
      552
      19.6%
      
      1,898
      1,894
      0.2%Stock Transfer Services
      25
      25
      n/a
      
      160
      185
      (13.5)%Total Operating Expenses
      $21,513
      $229,549
      (90.6)%
      
      $80,245
      $399,529
      (79.9)%


4

---

Consulting fees accrued during the period were incurred with
respect to general administrative and accounting work performed in connection
with our business activities and in connection with meeting our regulatory
filings.

Professional fees for the nine months ended September 30, 2007
represented fees incurred in respect of legal and audit services provided in
connection with meeting our ongoing reporting obligations under the Securities
Exchange Act of 1934 (the Exchange Act).

During the three months ended September 30, 2007 we did not accrue
  any amounts in respect of the minimum royalty payments payable to NorPac under
  the terms of our license agreement with them. We have suspended our royalty
  payments to NorPac, effective April 1, 2007 as NorPacs patents for the
  Cool Can Technology have expired.

LIQUIDITY AND FINANCIAL CONDITION

|Working Capital           |                             |                            |                      
|------------------------- | --------------------------- | -------------------------- | ---------------------
|                          |                             |                            | Percentage           
|                          | At
      September 30, 2007 | At
      December 31, 2006 | Increase / (Decrease)
|Current Assets            | $147                        | $2,476                     | (94.1)%              
|Current Liabilities       | (443,846)                   | (365,930)                  | 21.3%                
|Working Capital (Deficit) | $(443,699)                  | $(363,454)                 | 22.1%                

|Cash Flows                                           |                                |         
|---------------------------------------------------- | ------------------------------ | --------
|                                                     | Nine Months Ended September 30
|                                                     | 2007                           | 2006    
|Cash Flows From (Used In)
      Operating Activities | $(24,279)                      | $(1,259)
|Cash Flows From (Used In) Investing
      Activities | Nil                            | Nil     
|Cash Flows From (Used In)
      Financing Activities | 22,000                         | Nil     
|Net Increase (Decrease) In Cash During Period        | $(2,279)                       | $(1,259)

Our working capital deficit increased during the nine months
ended September 30, 2007 because of the fact that we had no sources of revenue
during the period and the fact that our only financing during the period came
from short term loans totaling $65,000. Of the loans received, $60,000 bears
interest at a rate of 8% per annum, compounded annually, and is due on April 28,
2008. $5,000 is non-interest bearing and due on demand.

Financing Requirements

From inception to September 30, 2007, we have suffered cumulative
  losses in the amount of $1,406,699. We expect to continue to incur substantial
  losses as we continue the development of our business. Since our inception,
  we have funded operations through common stock issuances, related party loans,
  and the support of creditors in order to meet our strategic objectives. Our
  management believes that sufficient funding will be available to meet our business
  objectives, including anticipated cash needs for working capital, and are currently
  evaluating several financing options, including a public offering of securities.
  However, there can be no assurance that we will be able to obtain sufficient
  funds to continue the development of and, if successful, to commence the sale
  of, our products. As a result of the foregoing, our independent auditors believe
  there exists substantial doubt about our ability to continue as a going concern.

5

---

There is no assurance that we will be able to obtain additional
financing if and when required. We anticipate that additional financing may come
in the form of sales of additional shares of our common stock which may result
in dilution to our current shareholders.

At the end of our fiscal year ended December 31, 2003, we
reached a verbal agreement with BIG K.G. (BIG), a German company, pursuant to
which BIG agreed to act as our agent for the purpose of locating European
placees for a proposed private placement of 40,000,000 units at a price of
$0.025 per unit for total potential proceeds of $1,000,000 (the Private
Placement). Under the terms of our verbal agreement, each unit to be issued
under the proposed Private Placement will consist of one share in our common
stock and one share purchase warrant entitling the warrant holder to purchase
one additional share of our common stock at a price of $0.05 per share. BIG is
to receive a commission of $100,000 for services provided in connection with the
proposed Private Placement.

On May 10, 2007, we formally approved an offering of 4,000,000
units under the terms of our verbal agreement with BIG, for total expected
proceeds of $100,000. However, BIG will not receive a finders fee or commission
in connection with this offering. As of the date of filing of this Quarterly
Report, we had not yet completed the sale of any units under our agreement with
BIG. As disclosed above, we are no longer pursuing the development of the Cool
Can Technology. As a result, although our agreement with BIG remains in place,
and the formal offering of the above securities remains outstanding, there is a
substantial doubt that we will be able to complete the sale of any of the
securities offered.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires our management
to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure 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.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operation.

Foreign Currency Translation

Our functional currency is the U.S. dollar. Accordingly,
monetary assets and liabilities denominated in a foreign currency are translated
at the exchange rate in effect at the balance sheet date while non-monetary
assets and liabilities are translated at historical rates. Revenue and expense
items denominated in a foreign currency are translated at exchange rates
prevailing when such items are recognized in the statement of operations.
Exchange gains and losses arising on translation of foreign currency items are
included in the statement of operations.

6

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Convertible Notes Payable

During the year ended December 2003, we issued convertible
notes, maturing October 1, 2006, aggregating $260,000 and bearing interest of
10% per annum. The notes are convertible into common shares at the lesser of
$0.03 per share or 50% of the average trading price of our common shares for the
ten trading days prior to conversion. We may, at our option, elect to pay a
portion of the interest by issuing common stock.

In applying the provisions of Emerging Issues Task Force
Release No. 98-5 and 00-27, we recorded a discount on the convertible debentures
in the amount of $260,000. This discount is being accreted to interest expense
using the interest method over the life of the notes (three years). As the
effective interest rate, which is determined by dividing the actual interest
rate on the convertible debentures by the discounted debt amount, approaches
infinity, the interest expense to be recorded approximates the future cash
payments. Interest expense recorded relating to the accretion of the discount
for the three and nine months ended September 30, 2006 was $200,985 and
$256,960, respectively. The remaining discount on the convertible debentures as
of December 31, 2006 was $Nil.

During the three and nine months ended September 30, 2006,
$6,553 and $19,846, respectively, of interest expense was accrued and charged to
the statement of operations. No cash payments of interest were made during the
respective periods.

RISKS AND UNCERTAINTIES

We Do Not Have Any Business Operations Or Any Significant
Assets. We Have Not Identified Any Alternative Business Opportunities. Our Plan
Of Operation For The Next Twelve Months Will Consist Solely Of Seeking Suitable
Business Opportunities.

We are in the process of reorganizing our business and are
seeking alternative business opportunities. We have not yet identified any
suitable business opportunities and there is no assurance that we will be able
to do so in the future. Even if we are able to identify suitable business
opportunities, there are no assurances that we will be able to acquire an
interest in those opportunities or that we will have the resources to pursue
such opportunities. As such, an investment in our shares at this time would be
highly speculative.

We may not be able to continue our business as a going
concern.

We have suffered recurring losses and net cash outflows since
our inception and we expect to continue to incur substantial losses to complete
the development of our business.

Our ability to continue as a going concern is dependent upon
  our ability to obtain additional financing, restructure our debt, and reduce
  our costs. We are currently in the process of identifying sources of additional
  financing, negotiating changes to our debt structure and evaluating our strategic
  options. However, there are no assurances that these plans can be accomplished
  on satisfactory terms, or at all, or that they will provide sufficient cash
  to fund our operations, pay the principal of, and interest on, our indebtedness,
  fund our other liquidity needs or permit us to refinance our indebtedness. Our
  inability to obtain additional financing, restructure our indebtedness, or reduce
  our costs would have a material adverse effect on our financial condition, results
  of operations and ability to satisfy our obligations, and may result in our
  pursuing a restructuring of our indebtedness either on a consensual basis or
  under the provisions of bankruptcy legislation, or liquidating our business
  and operations. Further, our inability to obtain additional financing or restructure
  our indebtedness, or our pursuing a restructuring of our indebtedness either
  on a consensual basis or under the provisions of bankruptcy legislation, may
  result in our stockholders losing all or a material portion of their investment
  in our securities.

7

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We have yet to earn revenues, and, because our ability to
  sustain new operations is dependent on our ability to raise financing, our accountants
  have expressed a substantial doubt about our ability to continue as a going
  concern.

Since our inception, we have suffered recurring losses and net
cash out flows from our activities. To date, we have funded our activities
through issuances of our common stock, related party loans and the support of
creditors. There are no assurances that we will be able to obtain financing
sufficient to support our ongoing activities. As a result, Telford Sadovnick,
PLLC, our former independent auditors, expressed a substantial doubt about our
ability to continue as a going concern in our Annual Report on Form 10-KSB for
the year ended December 31, 2006.

Because our stock is a penny stock, stockholders will be
more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation
system.

Because our securities constitute "penny stocks" within the
meaning of the rules, the rules apply to us and to our securities. The rules may
further affect the ability of owners of shares to sell our securities in any
market that might develop for them. As long as the quotation price of our common
stock is less than $5.00 per share, the common stock will be subject to Rule
15g-9 under the Exchange Act. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk
disclosure document prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the broker's or dealer's duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             

8

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|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that, prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock.

ITEM
3.                    
CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer,
we have evaluated the effectiveness of our disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of the end of the period covered by
this report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that these disclosure controls and procedures
are effective.

There were no changes in our internal control over financial
reporting during the quarter ended September 30, 2007 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

9

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PART II - OTHER INFORMATION

ITEM
1.                    
LEGAL PROCEEDINGS.

None.

ITEM
2.                    
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM
3.                    
DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM
5.                    
OTHER INFORMATION.

None.

ITEM
6.                    
EXHIBITS.

|Exhibit |  |                                                                                                                                                                                                           
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                           
|3.1     |  | Articles of Incorporation.(1)                                                                                                                                                                             
|        |  |                                                                                                                                                                                                           
|3.2     |  | Bylaws.(1)                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                           
|10.1    |  | Exclusive License
        Agreement dated November 30, 2003 with Cool Can Technologies, Inc.(2)                                                                                                           
|        |  |                                                                                                                                                                                                           
|10.2    |  | Extension Agreement
        dated January 14, 2006 with NorPac Technologies, Inc.(3)                                                                                                                      
|        |  |                                                                                                                                                                                                           
|10.3    |  | Loan Agreement
        dated April 19, 2007 between Balsam Ventures, Inc. and Black Pointe Holdings
        Inc.(4)                                                                                       
|        |  |                                                                                                                                                                                                           
|10.4    |  | Promissory Note
        executed by Balsam Ventures, Inc. dated as of April 19, 2007.(3)                                                                                                                  
|        |  |                                                                                                                                                                                                           
|31.1    |  | Certification
        of Principal Executive Officer and Chief Financial Officer pursuant to
        Section 302 of the Sarbanes-Oxley Act of 2002.                                                       
|        |  |                                                                                                                                                                                                           
|32.1    |  | Certification
        of Principal Executive Officer and Chief Financial Officer pursuant to
        18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.

|(1) | Filed as an Exhibit to our Form SB-2 Registration
      Statement originally filed with the SEC on March 30, 2000.
|--- | ------------------------------------------------------------------------------------------------------------------
|(2) | Filed as an Exhibit to our Current Report on Form 8-K
      filed on January 9, 2004.                             
|(3) | Filed as an Exhibit to our Current Report on Form 8-K
      filed on January 19, 2006.                            
|(4) | Filed as an Exhibit to our Current Report on Form 8-K
      filed on April 23, 2007.                              
|    |                                                                                                                   

10

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SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



BALSAM VENTURES, INC.Date:
      November 18, 2007
      By:
      /s/ John BoschertJOHN BOSCHERTChief Executive Officer, Chief Financial Officer,President, Secretary and Treasurer(Principal Executive Officer andPrincipal Financial Officer)


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