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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended March 31, 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 [   ]  
  No [X]

State the number of shares outstanding of each of the issuers
  classes of common equity, as of the latest practicable date: As of May 10,
  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

MARCH 31, 2007(Unaudited)

(Stated in U.S. Dollars)







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BALSAM VENTURES, INC.(A Development Stage Company)

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

|                                                 |   | March 31,  |   |   | December 31, |  
|------------------------------------------------ | - | ---------- | - | - | ------------ | -
|                                                 |   | 2007       |   |   | 2006         |  
|                                                 |   |            |   |   |              |  
|ASSETS                                           |   |            |   |   |              |  
|                                                 |   |            |   |   |              |  
|Current                                          |   |            |   |   |              |  
|Cash                                             | $ | 528        |   | $ | 2,426        |  
|Prepaid expenses                                 |   | -          |   |   | 50           |  
|                                                 |   |            |   |   |              |  
|                                                 |   | 528        |   |   | 2,476        |  
|                                                 |   |            |   |   |              |  
|LIABILITIES                                      |   |            |   |   |              |  
|                                                 |   |            |   |   |              |  
|Current                                          |   |            |   |   |              |  
|Accounts payable and accrued liabilities         | $ | 305,641    |   | $ | 276,329      |  
|Loans payable (Note 3)                           |   | 89,601     |   |   | 89,601       |  
|                                                 |   | 395,242    |   |   | 365,930      |  
|                                                 |   |            |   |   |              |  
|Commitments And Contractual Obligations(Note 5)  |   |            |   |   |              |  
|                                                 |   |            |   |   |              |  
|STOCKHOLDERS DEFICIENCY                         |   |            |   |   |              |  
|                                                 |   |            |   |   |              |  
|Share Capital                                    |   |            |   |   |              |  
|Authorized:                                      |   |            |   |   |              |  
|100,000,000 common voting stock, par value with  |   |            |   |   |              |  
|$0.001 per share                                 |   |            |   |   |              |  
|                                                 |   |            |   |   |              |  
|Issued and outstanding:                          |   |            |   |   |              |  
|36,226,663 common stock at March 31, 2007        |   |            |   |   |              |  
|36,226,663 common stock at December 31, 2006     |   | 36,227     |   |   | 36,227       |  
|                                                 |   |            |   |   |              |  
|Additional paid-in
      capital                 |   | 929,773    |   |   | 929,773      |  
|                                                 |   |            |   |   |              |  
|Deficit Accumulated During The Development Stage |   | (1,360,714 | ) |   | (1,329,454   | )
|                                                 |   | (394,714   | ) |   | (363,454     | )
|                                                 |   |            |   |   |              |  
|                                                 | $ | 528        |   | $ | 2,476        |  

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

F-2

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BALSAM VENTURES, INC.(A Development Stage Company)

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

|                                                          |   |                    |   |   |            |   |   | INCEPTION | 
|--------------------------------------------------------- | - | ------------------ | - | - | ---------- | - | - | --------- | 
|                                                          |   |                    |   |   |            |   |   | AUGUST 17 | 
|                                                          |   | THREE MONTHS ENDED |   |   | 1999 TO    |  
|                                                          |   | MARCH 31           |   |   | MARCH 31   |  
|                                                          |   | 2007               |   |   | 2006       |   |   | 2007      | 
|                                                          |   |                    |   |   |            |   |   |           | 
|Expenses                                                  |   |                    |   |   |            |   |   |           | 
|Accretion of discount on convertible
      notes (Note 4) | $ | -                  |   | $ | 10,355     |   | $ | 260,000   | 
|Bank charges and
      interest                           |   | 69                 |   |   | 6,531      |   |   | 79,542    | 
|Consulting services                                       |   | 15,000             |   |   | 15,000     |   |   | 420,947   | 
|Domain registration                                       |   | -                  |   |   | -          |   |   | 436       | 
|Foreign exchange loss                                     |   | 106                |   |   | 15         |   |   | 1,234     | 
|License and royalty
      payments                        |   | 15,000             |   |   | 50,000     |   |   | 328,000   | 
|Office and sundry                                         |   | 150                |   |   | 949        |   |   | 14,233    | 
|Professional fees                                         |   | 875                |   |   | 4,117      |   |   | 219,319   | 
|Regulatory                                                |   | -                  |   |   | 149        |   |   | 13,234    | 
|Stock transfer services                                   |   | 60                 |   |   | 20         |   |   | 5,995     | 
|Travel                                                    |   | -                  |   |   | -          |   |   | 9,099     | 
|Write off of developmental costs
      software           |   | -                  |   |   | -          |   |   | 8,675     | 
|                                                          |   |                    |   |   |            |   |   |           | 
|Net Loss For The Period                                   | $ | 31,260             |   | $ | 87,136     |   | $ | 1,360,714 | 
|                                                          |   |                    |   |   |            |   |   |           | 
|                                                          |   |                    |   |   |            |   |   |           | 
|                                                          |   |                    |   |   |            |   |   |           | 
|Net Loss Per Share, basic and diluted                     | $ | (0.00              | ) | $ | (0.00      | ) |   |           | 
|                                                          |   |                    |   |   |            |   |   |           | 
|                                                          |   |                    |   |   |            |   |   |           | 
|Weighted Average
      Number of Shares Outstanding       |   | 36,226,663         |   |   | 25,922,222 |   |   |           | 

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)

|                                                           |   |                    |   |   |           |   |   | INCEPTION  |  
|---------------------------------------------------------- | - | ------------------ | - | - | --------- | - | - | ---------- | -
|                                                           |   |                    |   |   |           |   |   | AUGUST 17  |  
|                                                           |   | THREE MONTHS ENDED |   |   | 1999 TO   |  
|                                                           |   | MARCH 31           |   |   | MARCH 31, |  
|                                                           |   | 2007               |   |   | 2006      |   |   | 2007       |  
|                                                           |   |                    |   |   |           |   |   |            |  
|Cash Provided By (Used In):                                |   |                    |   |   |           |   |   |            |  
|Operating Activities                                       |   |                    |   |   |           |   |   |            |  
|Net loss
      for the period                              | $ | (31,260            | ) | $ | (87,136   | ) | $ | (1,360,714 | )
|Items not involving cash:                                  |   |                    |   |   |           |   |   |            |  
|Write off of software development costs                    |   | -                  |   |   | -         |   |   | 8,675      |  
|Interest accrued on convertible notes payable              |   | -                  |   |   | 6,411     |   |   | 78,000     |  
|Shares issued to extend license agreement                  |   | -                  |   |   | 30,000    |   |   | 293,000    |  
|Accretion of discount on convertible debentures            |   | -                  |   |   | 10,355    |   |   | 260,000    |  
|Changes in
      non-cash operating working capital:       |   |                    |   |   |           |   |   |            |  
|Change in prepaid expenses                                 |   | 50                 |   |   | -         |   |   | -          |  
|Change in accounts payable and accrued liabilities         |   | 29,312             |   |   | 40,036    |   |   | 600,242    |  
|                                                           |   | (1,898             | ) |   | (334      | ) |   | (120,797   | )
|                                                           |   |                    |   |   |           |   |   |            |  
|Investing Activity                                         |   |                    |   |   |           |   |   |            |  
|Software development costs                                 |   | -                  |   |   | -         |   |   | (8,675     | )
|                                                           |   |                    |   |   |           |   |   |            |  
|Financing Activities                                       |   |                    |   |   |           |   |   |            |  
|Issuance of common stock                                   |   | -                  |   |   | -         |   |   | 75,000     |  
|Proceeds from loans payable                                |   | -                  |   |   | -         |   |   | 55,000     |  
|                                                           |   | -                  |   |   | -         |   |   | 130,000    |  
|                                                           |   |                    |   |   |           |   |   |            |  
|Increase (Decrease) in Cash                                |   | (1,898             | ) |   | (334      | ) |   | 528        |  
|                                                           |   |                    |   |   |           |   |   |            |  
|Cash, Beginning
      of Period                            |   | 2,426              |   |   | 1,700     |   |   | -          |  
|                                                           |   |                    |   |   |           |   |   |            |  
|Cash, End of Period                                        | $ | 528                |   | $ | 1,366     |   | $ | 528        |  
|                                                           |   |                    |   |   |           |   |   |            |  
|                                                           |   |                    |   |   |           |   |   |            |  
|                                                           |   |                    |   |   |           |   |   |            |  
|Supplemental Disclosure of Cash Flow Information           |   |                    |   |   |           |   |   |            |  
|Interest paid                                              | $ | -                  |   | $ | 44        |   | $ | 1,110      |  
|Income taxes paid                                          | $ | -                  |   | $ | -         |   | $ | -          |  
|                                                           |   |                    |   |   |           |   |   |            |  
|                                                           |   |                    |   |   |           |   |   |            |  
|Non-Cash Financing and Investing Activities
      (Note 7) |   |                    |   |   |           |   |   |            |  

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

MARCH 31, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|1. | BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The unaudited financial information furnished
        herein reflects all adjustments, which in the opinion of management are
        necessary to fairly state the financial position and results of operations
        of Balsam Ventures Inc. (the Company) for the periods presented.
        The unaudited financial information should be read in conjunction with
        the Companys audited financial statements and notes thereto included
        in the Companys Form 10-KSB for the fiscal year ended December 31,
        2006. The Company assumes that the users of the interim financial information
        herein have read or have access to the audited financial statements for
        the preceding fiscal year and that the adequacy of additional disclosure
        needed for a fair presentation may be determined in that context. Accordingly,
        footnote disclosure, which would substantially duplicate the disclosure
        contained in the Companys Form 10-KSB for the fiscal year ended
        December 31, 2006, has been omitted. The results of operations for the
        three- month period ended March 31, 2007 are not necessarily indicative
        of results for the entire year ending December 31, 2007.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | NATURE OF BUSINESS AND ABILITY TO CONTINUE
        OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-5

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BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|2. | NATURE OF BUSINESS AND ABILITY TO CONTINUE
        OPERATIONS (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | LOANS PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Loans payable consists of several loans granted
        from third party companies totaling $89,601. The loans are non-interesting
        bearing, unsecured and are due on demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4  | 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
        months ended March 31, 2006 was $10,355. The remaining discount on the
        convertible debentures as of December 31, 2006 was $Nil,
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | During the three months ended March 31, 2006,
        $6,411 of interest expense was accrued and charged to the statement of
        operations. No cash payments of interest were made during the respective
        period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-6

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BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|4  | CONVERTIBLE NOTES PAYABLE (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5. | COMMITMENTS AND CONTRACTUAL OBLIGATIONS
         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 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 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-7

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BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|5. | COMMITMENTS AND CONTRACTUAL OBLIGATIONS  LICENSE
        AGREEMENT (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Technology and patents and trademarks of the Licensor
        included in the 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 Technology
        during the Agreement. The Agreement supercedes all prior arrangements
        and agreements between the Company and the Licensor in respect of the
        Technology
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | During the three months ended March 31, 2007, the Company
        accrued royalty fees of $15,000. On April 19, 2007, the Company paid the
        $15,000 in royalty fees to the Licensor under the terms of the Agreement
        and Extension Agreement.                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Licensor suspended all research and development
        activities on the Technology in November 2002 due to a lack of funds.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Due to the costs involved in applying for and receiving
        extensions from the U.S. Patent and Trademark Office and the uncertainty
        relating to the successful commercialization of the technology, the Licensor
        ceased filing for trademark extensions in September 2001. It believes
        that it will be able to re-institute ownership of the trademarks, or the
        equivalent thereof, when product development is completed.                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Amounts paid to related parties were based on exchange
        amounts which represented the amounts agreed upon by the related parties.
        Amounts paid or payable to related parties not disclosed elsewhere include
        the following:                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As at March 31, 2007, accounts payable includes $8,025
        (December 31, 2006 - $7,636) due to a director and officer and $9,000
        (December 31, 2006 - $9,000) due to a former director and officer.                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|7. | NON-CASH FINANCING AND INVESTING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | During the year ended December 31, 2006, the Company
        reclassified a total of $34,601 from accounts payable to loans payable
        to better reflect the nature of the transactions.                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | During the year ended December 31, 2006, the Company
        issued 8,666,663 common shares, with a value of $260,000 on conversion
        of convertible notes payable                                                                                                                                                                                                                                                                                                                                                                                                      

F-8

---

BALSAM VENTURES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2007(Unaudited) 
  (Stated in U.S. Dollars)

|7. | NON-CASH FINANCING AND INVESTING ACTIVITIES (Continued)                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | During the year ended December 31, 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.                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | During the year ended December 31, 2006, the Company
        issued 500,000 common shares, with a value of $30,000, as consideration
        for the extension of a license.                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | During the year ended December 31, 2004, the Company
        issued 5,000,000 common shares, with a value of $200,000, as consideration
        for a license.                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | During the year ended December 31, 2003, the Company
        issued 300,000 common shares, with a value of $63,000 to initiate and
        extend the arrangement for a chilling beverage container technology.                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In October 2003, the Company settled $260,000 of accounts
        payable by the issue of convertible notes.                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|8. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On April 19, 2007, a loan was granted from a third party
        company for $60,000. The loan bears interest at 8% and is due April 19,
        2008.                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On May 10, 2007, the Company approved an offering of
        4,000,000 units at a price of $0.025 per unit, with each unit consisting
        of one share of the Companys common stock and one share purchase
        warrant. Each warrant entitles the holder to purchase an additional share
        of the Companys common stock at a price of $0.05 per share and expires
        two years from the date of issuance of the units.

F-9

---

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 the 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 (SEC),
particularly our Annual Reports on Form 10-KSB 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 are in the business of developing and marketing a patented,
unique, proprietary technology for self-chilling beverage containers (the Cool
Can Technology) that we have licensed from NorPac Technologies, Inc. (formerly
Cool Can Technologies, Inc.) (NorPac). Our license from NorPac allows us to
sublicense and manufacture self-chilling beverage containers based upon the Cool
Can Technology. Our business plan is to develop and commercialize the Cool Can
Technology within those regions to which we have obtained an exclusive license
from NorPac, being those countries comprising the European Union and the
Peoples Republic of China (the Exclusive Region). However, there is no
assurance that we will be able to do so.

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the three
month period ended March 31, 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.

RECENT CORPORATE DEVELOPMENTS

We experienced the following significant corporate developments
since the completion of our fiscal year ended December 31, 2006:

|1. | On April 19, 2007, we entered into a loan agreement with
      Black Pointe Holdings Inc. (Black Pointe), pursuant to which we borrowed
      $60,000 from Black Pointe. The loan extends for a period of one year,
      matures on April 19, 2008, and accrues interest at a rate of 8% per annum.
      The loan is unsecured.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                    
|2. | On May 10, 2007, our Board of Directors approved a
      private placement offering of up to 4,000,000 units (the Units) at a
      price of $0.025 per Unit under the terms of the verbal agreement we
      reached with BIG K.G. in 2003, with the exception that BIG K.G. will not
      receive                             

3

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a finders fee or commission in connection with this offering. Each Unit
      consists of a share of our common stock and a share purchase warrant, with
      each share purchase warrant entitling the holder thereof to purchase an
      additional share of our common stock at an issue price of $0.05 per share
      for a period of two years from the date of issuance. The offering will be
      made to persons who are not U.S. Persons as defined in Regulation
      S of the Securities Act of 1933. Although we have formally approved this
      offering, there are no assurances that we will complete the sale of any
      or all of the securities offered.


PLAN OF OPERATION

Our plan of operation for the next twelve months will involve
the following:

|(1) | We plan to continue to seek sub-licensing agreements to
      finance approximately $300,000 for the development of the Cool Can
      Technology. In 2006, we entered into discussions with a German brewery and
      packaging company to sublicense the Cool Can Technology. Negotiations with
      the Germany brewery company have ceased and we intend to seek out other
      sublicensing arrangements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Regardless of whether or not we are able to secure
      sublicensing agreements, we plan to proceed with product development and
      the production of samples of self-chilling beverage container modules.
      This phase of development will include the following elements and will
      take approximately nine months once financing is in place:                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|(2) | We anticipate spending approximately $20,000 on
      professional fees over the next twelve months in complying with our
      reporting obligations under the Securities Exchange Act of 1934.                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|(3) | We anticipate spending approximately $140,000 on general
      overhead expenses, including office expenses and consulting
  fees.                                                                                                                                                                                                                                                                               

Subject to our obtaining adequate financing, we anticipate that
we will be spending approximately $460,000 over the next twelve-month period
pursuing our stated plan of operation. Of these anticipated expenditures, we
anticipate that $230,000 will be spent on our plan of operation over the next
six months. However, our ability to complete the above plan of operation is
dependent upon our obtaining substantial financing as our present cash reserves
are not sufficient for us to carry out the above plan of operation. We are
currently attempting to arrange for financing through sub-licensing arrangements
that would enable us to proceed with our plan of operation.

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

4

---

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 finders fee or commission
in connection with this offering. Although we have approved the above offering
and our verbal agreement with BIG remains in place, there is a substantial doubt
that we will complete the sale of the remaining 36,000,000 units originally
agreed to. In addition, there is no assurance that we will complete the sale of
any or all of the 4,000,000 securities formally offered by us.

Our actual expenditures and business plan may differ from the
one stated above. Our board of directors may decide not to pursue this plan. In
addition, we may modify the plan based on available financing.

RESULTS OF OPERATIONS

Three Months Summary

|                  | Three Months Ended March 31
|----------------- | ---------------------------
|                  |                            
|                  | 2007                       
|Revenue           | $-                         
|Expenses          | (31,260)                   
|Net Income (Loss) | $(31,260)                  

Revenue

We did not earn any revenues during the three months ended
March 31, 2007. We do not anticipate earning revenues until we are successful
completing the development and commercialization of the Cool Can Technology, of
which there is no assurance. We are presently in the development stage and we
can provide no assurance that we will be successful in earning revenues from the
Cool Can Technology even if we achieve the financing necessary to develop this
technology.

Expenses

Our expenses for the three months periods ended March 31, 2007
and 2006 consisted of the following:

|                                           | Three Months Ended March 31
|------------------------------------------ | ---------------------------
|                                           |                            
|                                           | 2007                       
|Accretion of Discount on Convertible Notes | $-                         
|Bank Charges and Interest                  | 69                         
|Consulting Services                        | 15,000                     
|Foreign Exchange Loss                      | 106                        
|License and Royalty Payments               | 15,000                     

5

---

|Office and Sundry        | 150     | 949     | (84.2)%
|------------------------ | ------- | ------- | -------
|Professional Fees        | 875     | 4,117   | (78.7)%
|Regulatory               | -       | 149     | (100)% 
|Stock Transfer Services  | 60      | 20      | 200%   
|Total Operating Expenses | $31,260 | $87,136 | (64.1)%

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 three months ended March 31, 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 March 31, 2007, we were required
to commence the minimum royalty payments of $5,000 per month (the Minimum
Royalty Payments) under our license agreement dated November 30, 2003 (the
License Agreement) with NorPac. On April 19, 2007, we paid $15,000 to NorPac
representing the Minimum Royalty Payments for three months ended March 31, 2007.
The license payment of $50,000 recorded during the three months ended March 31,
2006 represents the consideration paid to NorPac under the extension agreement
dated January 14, 2006 (the Extension Agreement) between NorPac and Balsam.
The consideration paid to NorPac consisted of $20,000 in cash and 500,000 shares
of our common stock with a recorded value of $0.06 per share.

If we are able to proceed with our plan of operation for the
next twelve months, of which there is no assurance, we expect that our overall
expenses will increase significantly.

LIQUIDITY AND FINANCIAL CONDITION

|Working Capital           |                         |                            |                      
|------------------------- | ----------------------- | -------------------------- | ---------------------
|                          |                         |                            | Percentage           
|                          | At
      March 31, 2007 | At
      December 31, 2006 | Increase / (Decrease)
|Current Assets            | $528                    | $2,476                     | (78.7)%              
|Current Liabilities       | (395,242)               | (365,930)                  | 8.0%                 
|Working Capital (Deficit) | $(394,714)              | $(363,454)                 | 8.6%                 

|Cash Flows                                     |                                   |       
|---------------------------------------------- | --------------------------------- | ------
|                                               | Three
      Months Ended March 31
|                                               | 2007                              | 2006  
|Cash Flows From (Used In) Operating Activities | $(1,898)                          | $(334)
|Cash Flows From (Used In) Investing Activities | -                                 | -     
|Cash Flows From (Used In) Financing Activities | -                                 | -     
|Net Increase (Decrease) In Cash During Period  | $(1,898)                          | $(334)

6

---

Our working capital deficit increased during the three months
ended March 31, 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.

Financing Requirements

From inception to March 31, 2007, we have suffered cumulative
losses in the amount of $1,360,714. 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.

We will require additional financing if we are not successful
in earning revenues from the Cool Can Technology. 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 finders fee or commission
in connection with this offering. Although we have approved the above offering
and our verbal agreement with BIG remains in place, there is a substantial doubt
that we will complete the sale of the remaining 36,000,000 units originally
agreed to. In addition, there is no assurance that we will complete the sale of
any or all of the 4,000,000 securities formally offered by us.

Since the completion of the three months ended March 31, 2007,
we received a loan of $60,000 from Black Pointe Holdings Inc. The loan extends
for a period of one year, matures on April 19, 2008, accrues interest at a rate
of 8% per annum, and is unsecured. A portion of the proceeds of the loan were
used to pay the Minimum Royalty Payment to NorPac pursuant to the License
Agreement and Extension Agreement.

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.

7

---

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. Transactions in
foreign currency are translated into U.S. dollars as follows:

| | i)   | monetary items at the exchange rate prevailing at the
      balance sheet date;                       
| | ---- | ------------------------------------------------------------------------------------------------------
| | ii)  | non-monetary items at the historical exchange rate;
      and                                         
| | iii) | revenue and expense items at the average rate in effect
      during the applicable accounting period.

Translation adjustments resulting from this process are
recorded in Stockholders Equity as a component of Accumulated Other
Comprehensive Income (Loss).

Gains and losses arising on translation or settlement of
foreign currency denominated transactions or balances are recorded in the
Statement of Operations.

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 months ended March 31, 2006 was $10,355. The remaining discount on
the convertible debentures as of December 31, 2006 was $Nil.

During the three months ended March 31, 2006, $6,411 of
interest expense was accrued and charged to the statement of operations. No cash
payments of interest were made during the respective periods.

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.

8

---

RISKS AND UNCERTAINTIES

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.

We require additional financing to continue our plan of
operation.

Our plan of operation calls for significant expenses in
connection with the development of the Cool Can Technology and the Cool Can
product. Our current operating funds are insufficient to complete our plan of
operation which will require an estimated $460,000 to be spent over the next 12
months developing and marketing a prototype of the Cool Can product in order to
accomplish our goals. As of March 31, 2007, we had cash of $528. Therefore, we
will need to obtain additional financing in order to complete our prototype
development. We will also require additional financing if the costs of the Cool
Can Technology and Cool Can product development are greater than anticipated.
There is no assurance that actual cash requirements will not exceed our
estimates. In particular, additional capital may be required in the event
that:

| | 1. | we incur unexpected costs in completing the development
      of a prototype or encounter any unexpected technical or other
      difficulties;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                
| | 2. | we incur delays and additional expenses as a result of
      technology failure;                                                               
| |    |                                                                                                                                                
| | 3. | we are unable to create a substantial market for the Cool
      Can product; or                                                                
| |    |                                                                                                                                                
| | 4. | we incur any significant unanticipated
  expenses.                                                                                             

The occurrence of any of the aforementioned events could
adversely affect our ability to meet our plan of operation.

If we are unable to obtain additional financing in the amounts
and on terms deemed acceptable to us, our business and future success may be
adversely affected.

Risks related to the protection of intellectual property
rights.

Ownership of patents granted for the Cool Can Technology
resides with NorPac, who has licensed worldwide exclusivity to make, use and
sell products based on such patent applications to us in

9

---

consideration of license fees and royalties payable to NorPac.
We are relying on the patent applications of NorPac to protect our core
technologies and products from competition. Under the License Agreement between
us and NorPac, we are required to prosecute, within the Exclusive Region, any
possible infringements upon NorPacs patents relating to the Cool Can
Technology.

A portion of NorPacs proprietary technology depends upon
unpatented trade secrets and know-how. Without the patent protection we would be
vulnerable to competition from third parties who could develop competing
products through reverse engineering. Also, without the patent protection,
competitors may independently develop substantially equivalent technology or
otherwise gain access to our trade secrets, know-how or other proprietary
information.

Our product development program may not be successful.

If we complete development of a prototype of the Cool Can
product there is no assurance that the prototype will work as expected. In the
event we successfully develop a prototype, there is no assurance that we will be
able to manufacture the prototype at a reasonable cost. Even if we are able to
manufacture the prototype at a reasonable cost, there is no assurance that the
price of the Cool Can product will not be excessive, precluding the product from
generating sufficient consumer or market acceptance.

If we are unable to achieve market acceptance for our
products, we will be unable to build our business.

To date, we have not entered into any sub-licensing or other
agreements with respect to the Cool Can Technology licensed by us. Our success
will depend on the acceptance of the Cool Can Technology by the beverage
industry, as well as by related businesses and the general public. Achieving
such acceptance will require significant research and development investment.
The Cool Can Technology generally, and the proposed Cool Can product
specifically, may not achieve widespread acceptance by businesses in general, or
by major beverage suppliers, beverage manufacturers or agents thereof, which
could limit our ability to develop and expand our business. The market for
self-chilling beverages is relatively new and is evolving. Our ability to
generate revenue in the future depends on the acceptance by both our customers
and beverage manufacturers in general. The adoption of the Cool Can Technology
could be hindered by the perceived costs of this new technology to consumers and
beverage brand owners. Accordingly, in order to achieve commercial acceptance,
we will have to educate prospective customers, including large, established
beverage manufacturers, about the uses and benefits of the Cool Can Technology.
If these efforts fail, or if the Cool Can Technology does not achieve commercial
acceptance, our business could be harmed.

We have a limited operating history.

We have a relatively short operating history and we are
involved in a rapidly evolving and unpredictable industry. As of March 31, 2007
we had a working capital deficit of $394,714. We will need to generate
significant revenues to achieve profitability, which may not occur. We expect
operating expenses to increase as a result of the further implementation of our
business plan. Even if we achieve profitability, we may be unable to sustain or
increase profitability on a quarterly or annual basis in the future. It is
possible that we will never achieve profitability.

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

10

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support our ongoing activities. As a result, Telford Sadovnick,
PLLC, our independent auditors, has expressed a substantial doubt about our
ability to continue as a going concern.

**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 March 31, 2007 that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.

11

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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.

12

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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.                              
|    |                                                                                                                   

13

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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:
      May 15, 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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