---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to ________

COMMISSION FILE NUMBER000-32011

BALSAM VENTURES,
INC.(Exact name of registrant as specified in its
charter)

|NEVADA                                                               | 52-2219056                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|                                                                     |                                     
|Suite 410-103 East Holly Street, National Bank
      Building        |                                     
|Bellingham, WA                                                       | 98225                               
|(Address of principal executive offices)                             | (Zip Code)                          

(360) 306-1133(Registrant's telephone number,
including area code)

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

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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.[X]Yes[ ]No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files.[
]Yes[ ]No

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [ ]                                                   | Accelerated filer [ ]       
|----------------------------------------------------------------------------- | ----------------------------
|Non-accelerated filer [ ] (Do not check if a smaller
      reporting company) | Smaller reporting company[X]

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

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date: As of
May 12, 2009, the Registrant had 30,681,663 shares of common stock
outstanding.

---

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the three months ended March 31, 2009
are not necessarily indicative of the results that can be expected for the year
ending December 31, 2009.

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

---

BALSAM VENTURES, INC.(A Development Stage Company)

FINANCIAL STATEMENTS

MARCH 31, 2009

(Unaudited)

(Stated in U.S. Dollars)

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|BALANCE SHEETS               
|(Stated in U.S. Dollars)     

|                                                                                 |   |                            |   | MARCH 31,   |            |   | DECEMBER 31, | 
|-------------------------------------------------------------------------------- | - | -------------------------- | - | ----------- | ---------- | - | ------------ | 
|                                                                                 |   |                            |   | 2009        |            |   | 2008         | 
|                                                                                 |   |                            |   | (unaudited) |            |   |              | 
|                                                                                 |   |                            |   |             |            |   |              | 
|ASSETS                                                                           |   |                            |   |             |            |   |              | 
|                                                                                 |   |                            |   |             |            |   |              | 
|Current Assets                                                                   |   |                            |   |             |            |   |              | 
|Cash                                                                             |   |                            | $ | 43          |            | $ | 2            | 
|Deferred tax asset, less valuation allowance of $533,497 (2008 -$526,098
      ) |   | -                          |   |             | -          |  
|                                                                                 |   |                            |   |             |            |   |              | 
|Total Assets                                                                     |   |                            | $ | 43          |            | $ | 2            | 
|                                                                                 |   |                            |   |             |            |   |              | 
|LIABILITIES AND STOCKHOLDERS DEFICIENCY                                         |   |                            |   |             |            |  
|                                                                                 |   |                            |   |             |            |   |              | 
|Current Liabilities                                                              |   |                            |   |             |            |   |              | 
|Accounts payable
      and accrued liabilities                                   | $ | 123,285                    |   | $           | 118,867    |  
|Accounts payable and accrued
      liabilities related parties (Note 6)         |   | 338,773                    |   |             | 323,785    |  
|Loans payable (Note 5 and 6)                                                     |   | 141,097                    |   |             | 138,699    |  
|                                                                                 |   |                            |   |             |            |   |              | 
|Total Current Liabilities                                                        |   |                            |   | 603,155     |            |   | 581,351      | 
|                                                                                 |   |                            |   |             |            |   |              | 
|Commitments and Contractual Obligations(Note 8)                                  |   |                            |   |             |            |  
|                                                                                 |   |                            |   |             |            |   |              | 
|Stockholders Deficiency                                                         |   |                            |   |             |            |   |              | 
|Common Stock (Note 7)                                                            |   |                            |   |             |            |   |              | 
|Authorized:                                                                      |   |                            |   |             |            |   |              | 
|100,000,000 common shares with a par value of $0.001 per share                   |   |                            |   |             |            |  
|Issued and outstanding:                                                          |   |                            |   |             |            |   |              | 
|March 31, 2009                                                                   |   | - 30,681,663 common shares |   |             |            |   |              | 
|December 31, 2008                                                                |   | - 30,681,663 common shares |   | 30,682      |            |   | 30,682       | 
|Additional paid-in capital                                                       |   |                            |   | 935,318     |            |   | 935,318      | 
|Deficit accumulated during the development stage                                 |   | (1,569,112                 | ) |             | (1,547,349 | )
|                                                                                 |   |                            |   |             |            |   |              | 
|Total Stockholders Deficiency                                                   |   | (603,112                   | ) |             | (581,349   | )
|                                                                                 |   |                            |   |             |            |   |              | 
|Total Liabilities and Stockholders Deficiency                                   | $ | 43                         |   | $           | 2          |  

Subsequent Event (Note 11)

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

F-2

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|STATEMENTS OF OPERATIONS     
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|                                                           |   |            |   |   |            |   |   | CUMULATIVE                     |  
|---------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ------------------------------ | -
|                                                           |   |            |   |   |            |   |   | FROM                           |  
|                                                           |   | THREE      |   |   | THREE      |   |   | INCEPTION                      |  
|                                                           |   | MONTHS     |   |   | MONTHS     |   |   | (AUGUST 17,                    |  
|                                                           |   | ENDED      |   |   | ENDED      |   |   | ********1999**)
      TO****** |  
|                                                           |   | MARCH 31,  |   |   | MARCH 31,  |   |   | MARCH 31,                      |  
|                                                           |   | 2009       |   |   | 2008       |   |   | 2009                           |  
|                                                           |   |            |   |   |            |   |   |                                |  
|EXPENSES                                                   |   |            |   |   |            |   |   |                                |  
|                                                           |   |            |   |   |            |   |   |                                |  
|Accretion of discount on convertible notes                 | $ | -          |   | $ | -          |   | $ | 260,000                        |  
|Bank charges and interest                                  |   | 1,785      |   |   | 1,395      |   |   | 91,513                         |  
|Consulting services                                        |   | 15,000     |   |   | 15,000     |   |   | 531,947                        |  
|Domain registration                                        |   | -          |   |   | -          |   |   | 436                            |  
|Foreign exchange gain                                      |   | (735       | ) |   | (450       | ) |   | (1,808                         | )
|License and royalty payments                               |   | -          |   |   | -          |   |   | 328,000                        |  
|Office and sundry                                          |   | 5          |   |   | 375        |   |   | 16,694                         |  
|Professional fees                                          |   | 5,585      |   |   | 15,331     |   |   | 298,685                        |  
|Regulatory                                                 |   | 98         |   |   | -          |   |   | 18,357                         |  
|Stock transfer services                                    |   | 25         |   |   | 255        |   |   | 6,880                          |  
|Travel                                                     |   | -          |   |   | -          |   |   | 9,733                          |  
|Write-off of software development costs                    |   | -          |   |   | -          |   |   | 8,675                          |  
|                                                           |   | 21,763     |   |   | 31,906     |   |   | 1,569,112                      |  
|                                                           |   |            |   |   |            |   |   |                                |  
|Provision for income taxes                                 |   | -          |   |   | -          |   |   | -                              |  
|                                                           |   |            |   |   |            |   |   |                                |  
|NET LOSS                                                   | $ | 21,763     |   | $ | 31,906     |   | $ | 1,569,112                      |  
|                                                           |   |            |   |   |            |   |   |                                |  
|                                                           |   |            |   |   |            |   |   |                                |  
|BASIC AND DILUTED NET LOSS PER SHARE                       | $ | (0.00      | ) | $ | (0.00      | ) |   |                                |  
|                                                           |   |            |   |   |            |   |   |                                |  
|                                                           |   |            |   |   |            |   |   |                                |  
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES
      OUTSTANDING |   |            |   |   |            |   |   |                                |  
|-BASIC AND DILUTED                                         |   | 30,681,663 |   |   | 36,226,663 |   |   |                                |  

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

F-3

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|STATEMENTS OF CASH FLOWS     
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|                                                                              |   |           |   |   |           |   |   | CUMULATIVE       |  
|----------------------------------------------------------------------------- | - | --------- | - | - | --------- | - | - | ---------------- | -
|                                                                              |   |           |   |   |           |   |   | FROM             |  
|                                                                              |   | THREE     |   |   | THREE     |   |   | INCEPTION        |  
|                                                                              |   | MONTHS    |   |   | MONTHS    |   |   | (AUGUST 17,      |  
|                                                                              |   | ENDED     |   |   | ENDED     |   |   | ****1999**) TO** |  
|                                                                              |   | MARCH 31, |   |   | MARCH 31, |   |   | MARCH 31,        |  
|                                                                              |   | 2009      |   |   | 2008      |   |   | 2009             |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                          |   |           |   |   |           |   |   |                  |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|Net loss for the period                                                       | $ | (21,763   | ) | $ | (31,906   | ) | $ | (1,569,112       | )
|Adjustments to reconcile net loss to cash used in operating
      activities: |   |           |   |   |           |   |   |                  |  
|Write off of software
      development costs                                 |   | -         |   |   | -         |   |   | 8,675            |  
|Interest accrued on convertible notes
      payable                           |   | -         |   |   | -         |   |   | 78,000           |  
|Shares issued to extend
      license agreement                               |   | -         |   |   | -         |   |   | 293,000          |  
|Accretion of discount on convertible debentures                               |   | -         |   |   | -         |   |   | 260,000          |  
|Changes in non-cash working capital
      items:                              |   |           |   |   |           |   |   |                  |  
|Increase in accounts payable and accrued
      liabilities                    |   | 4,418     |   |   | 13,386    |   |   | 612,886          |  
|Increase in accounts payable
      and accrued liabilitiesrelated parties    |   | 14,988    |   |   | 14,984    |   |   | 143,773          |  
|Increase in accrued interest payable                                          |   | 1,723     |   |   | 1,325     |   |   | 11,496           |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|Net cash used in operating activities                                         |   | (634      | ) |   | (2,211    | ) |   | (161,282         | )
|                                                                              |   |           |   |   |           |   |   |                  |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                          |   |           |   |   |           |   |   |                  |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|Software development costs                                                    |   | -         |   |   | -         |   |   | (8,675           | )
|                                                                              |   |           |   |   |           |   |   |                  |  
|Net cash used in investing activities                                         |   | -         |   |   | -         |   |   | (8,675           | )
|                                                                              |   |           |   |   |           |   |   |                  |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                          |   |           |   |   |           |   |   |                  |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|Issuance of common stock for cash                                             |   | -         |   |   | -         |   |   | 75,000           |  
|Proceeds from loans payable, net of repayments                                |   | 675       |   |   | 2,500     |   |   | 95,000           |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|Net cash provided by financing activities                                     |   | 675       |   |   | 2,500     |   |   | 170,000          |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|NET INCREASE IN CASH                                                          |   | 41        |   |   | 289       |   |   | 43               |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|CASH, BEGINNING OF PERIOD                                                     |   | 2         |   |   | 165       |   |   | -                |  
|                                                                              |   |           |   |   |           |   |   |                  |  
|CASH, END OF PERIOD                                                           | $ | 43        |   | $ | 454       |   | $ | 43               |  

Supplemental Disclosure with respect to Cash Flows (Note 9)

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

F-4

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2009               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|1. | HISTORY AND ORGANIZATION OF THE COMPANY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Balsam Ventures, Inc. (the Company) was
        incorporated on August 17, 1999 in the State of Nevada. The Company was
        in the business of developing and marketing a patented, proprietary technology
        for self-chilling beverage containers (the Cool Can Technology)
        that it had licensed in 2004 until it was advised that the patents for
        the Cool Can Technology had expired. The Company settled its rights under
        the Agreement (see Note 8) in exchange for (1) the surrender for cancellation
        of the remaining 5,545,000 shares of common stock of the Company which
        were issued to the Licensor under the Agreement and still held by the
        Licensor and (2) the assignment of indebtedness owed to the Licensor of
        approximately $612,000 plus accrued interest to the Company (see Note
        4). The Company is in the process of reorganizing the Companys business
        and is seeking and evaluating alternative business opportunities.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company is considered to be in the development stage.
        The accompanying financial statements represent those of a development
        stage enterprise and therefore, are subject to the usual business risks
        of development stage companies. The Company has not yet generated any
        revenue from operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These financial statements have been prepared in conformity
        with generally accepted accounting principles in the United States of
        America for interim financial information. The accompanying financial
        statements do not include all information and footnote disclosures required
        for an annual set of financial statements prepared under United States
        of America generally accepted accounting principles. In the opinion of
        management, all adjustments (consisting solely of normal recurring accruals)
        considered necessary for a fair presentation of financial position, results
        of operations and cash flows as at March 31, 2009 and for all periods
        presented, have been included. Interim results for the period ended March
        31, 2009 are not necessarily indicative of the results that may be expected
        for the fiscal year as a whole.                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These financial statements have been prepared with the
        on-going assumption that the Company will be able to realize its assets
        and discharge its liabilities in the normal course of business. However,
        certain conditions noted below raise substantial doubt about the Companys
        ability to continue as a going concern. These financial statements do
        not include any adjustments to the amounts and classifications of assets
        and liabilities that might be necessary should the Company be unable to
        continue as a going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | As shown in the accompanying financial statements, the
        Company has incurred a net loss of $1,569,112 for the period from inception
        (August 17, 1999) to March 31, 2009, and has no revenue. The operations
        of the Company have primarily been funded by the sale of common stock
        and loans payable. Continued operations of the Company are dependent on
        the Companys ability to complete equity financings, obtain additional
        loans or generate profitable operations in the future. Managements
        plan in this regard is to secure additional funds through future equity
        financings and loans payable. Such financings or loans payable may not
        be available or may not be available on reasonable terms to the Company.                                                                                                                                                                                                                                    

F-5

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2009               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The financial statements of the Company have
        been prepared in accordance with generally accepted accounting principles
        in the United States of America and are stated in U.S. dollars. The significant
        accounting policies adopted by the Company are as follows:                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The preparation of financial statements in
        conformity with generally accepted accounting principles in the United
        States requires management to make estimates and assumptions that affect
        the reported amount of assets and liabilities and the disclosure of contingent
        assets and liabilities at the date of the financial statements and the
        reported amount of revenues and expenses during the reporting period.
        Actual results could differ from these estimates.                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The functional currency of the Company is
        the U.S. dollar. Accordingly, monetary assets and liabilities denominated
        in a foreign currency are translated at the exchange rate in effect at
        the balance sheet date while non-monetary assets and liabilities are translated
        at historical rates. Revenue and expense items denominated in a foreign
        currency are translated at exchange rates prevailing when such items are
        recognized in the statement of operations. Exchange gains and losses arising
        on translation of foreign currency items are included in the statement
        of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company considers cash held at banks and
        all highly liquid investments with original maturities of three months
        or less to be cash and cash equivalents. At March 31, 2009 and December
        31, 2008, the Company had no cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | A deferred tax asset or liability is recorded
        for all temporary differences between financial and tax reporting and
        net operating loss carryforwards. Deferred tax expenses (benefit) result
        from the net change during the period of deferred tax assets and liabilities.                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Deferred tax assets are reduced by a valuation
        allowance when, in the opinion of management, it is more likely than not
        that some portion or all of the deferred tax assets will not be realized.
        Deferred tax assets and liabilities are adjusted for the effects of changes
        in tax laws and rates on the date of enactment.                                                                                                                                                                                                                                                                                                 

F-6

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2009               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company's financial instruments consist
        of cash, accounts payable and accrued liabilities, accounts payable and
        accrued liabilities related parties and loans payable. Unless otherwise
        noted, it is management's opinion that the Company is not exposed to significant
        interest, currency or credit risks arising from these financial instruments.
        The fair value of these financial instruments approximates their carrying
        values, unless otherwise noted.                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Basic net loss per share is computed by dividing
        the net loss for the period by the weighted average number of shares of
        common stock outstanding during the period. Diluted earnings per share
        takes into consideration shares of common stock outstanding (computed
        under basic earnings per share) and potentially dilutive shares of common
        stock. As of March 31, 2009 and 2008, there were no potentially dilutive
        securities outstanding.                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company is a development stage company
        as defined in Statement of Financial Accounting Standards (SFAS)
        No. 7, Accounting and Reporting by Development Stage Enterprises,as it is devoting substantially all of its efforts to establish a
        new business and planned principal operations have not commenced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (h)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Cash is the only financial instrument that
        potentially subjects the Company to concentration of credit risk. The
        Company maintains cash in bank accounts that, at times, may exceed federally
        insured limits. The Company has not experienced any losses in such accounts
        and believes it is not exposed to any significant risks on its cash in
        bank accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In May 2008, the FASB issued SFAS No. 162,
        The Hierarchy of Generally Accepted Accounting Principles.
        SFAS No. 162 identifies the sources of accounting principles and the framework
        for selecting the principles used in the preparation of financial statements
        of nongovernmental entities that are presented in conformity with GAAP.
        This statement shall be effective 60 days following the Securities and
        Exchange Commissions approval of the Public Company Accounting Oversight
        Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity
        With Generally Accepted Accounting Principles. The Company does not believe
        that implementation of this standard will have a material impact on its
        financial position, results of operations or cash flows.

F-7

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2009               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | In June 2008, the FASB issued FSP No. EITF
        03-6-1, Determining Whether Instruments Granted in Share-Based
        Payment Transactions Are Participating Securities. FSP EITF
        03-6-1 states that unvested share-based payment awards that contain nonforfeitable
        rights to dividends or dividend equivalents (whether paid or unpaid) are
        participating securities and shall be included in the computation of earnings
        per share pursuant to the two-class method. FSP EITF 03-6-1 is effective
        for fiscal years beginning after December 15, 2008. The Company does not
        believe that implementation of this standard will have a material impact
        on its financial position, results of operations or cash flows.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (j)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Certain amounts reported in the prior periods
        have been reclassified to conform to the current periods presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4. | LOANS RECEIVABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On June 30, 2008, the Company settled its
        rights under the Agreement (see Note 8) whereby the licensor assigned
        loans receivable totalling $612,000 plus accrued interest to the Company.
        Management determined that the fair value of the loans was in doubt due
        the uncertainty of the collectibility of the loans and as a result, did
        not record the assignment of the loans receivable on its books.                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|5. | LOANS PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | During the year ended December 31, 2008, several
        loans were granted from a third party company totalling $6,925. During
        the three months ended March 31, 2009, an additional $675 was granted
        from the same party. The loans bear interest at 10% per annum, compounded
        annually and are due on demand. Interest expense accrued for the three
        months ended March 31, 2009 and 2008 totalled $176 and $0, respectively.                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | During the year ended December 31, 2007, two
        loans were granted from a third party company for $60,000 and $4,100,
        respectively. The first loan bears interest at 8% per annum, compounded
        annually and was due April 19, 2008. On April 19, 2008, the first loan
        was verbally extended with the same terms and is due on demand. The second
        loan bears interest at 10%, compounded annually and is due on demand.
        Interest expense accrued for the three months ended March 31, 2009 and
        2008 totalled $1,389 and $1,296, respectively.                                                                                                                                                                                    

F-8

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2009               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|6. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Accounts payable and accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | At March 31, 2009 and December 31, 2008, included in
        accounts payable and accrued liabilities  related parties is $7,993
        and $8,005, respectively, owed to a director and officer.                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | At March 31, 2009 and December 31, 2008, included in
        accounts payable and accrued liabilities  related parties is $330,780
        and $315,780, respectively, owed to a shareholder for consulting fees
        and reimbursement of expenses. Consulting fees for the three months ended
        March 31, 2009 and 2008 were $15,000 and $15,000, respectively.                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Loans payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | During the year ended December 31, 2008, several loans
        were granted from a shareholder totalling $6,300. The loans bear interest
        at 10% per annum, compounded annually and are due on demand. Interest
        expense accrued for the three months ended March 31, 2009 and 2008 totalled
        $158 and $29, respectively.                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | During the period ended December 31, 2006, a series
        of loans totalling $46,601 were granted from a shareholder. During the
        year ended December 31, 2007, an additional $5,000 was granted. The loans
        are non-interest bearing, unsecured and due on demand.                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7. | COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Companys articles of incorporation allow it
        to issue up to 100,000,000 shares of common stock, par value $0.001. Effective
        April 3, 2002 the Company effected a stock split of its common stock by
        issuing two new shares for every one old share. Except as otherwise stated
        to the contrary in these financial statements, all references to shares
        and prices per share have been adjusted to give retroactive effect to
        the stock split.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On August 17, 1999, the Company issued 10,000,000 shares
        of its common stock at $0.0005 per share in a private placement transaction.                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On October 29, 1999, the Company issued 10,000,000 shares
        of its common stock at $0.005 per share in a private placement transaction.                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On December 24, 1999, the Company issued 200,000 shares
        of its common stock at $0.10 per share in a private placement transaction.                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On November 18, 2003, the Company issued 300,000 shares
        of its common stock with a value of $63,000 to initiate and extend the
        arrangement for a chilling beverage container technology.                                                                                                                                                                                                                                                                                         

F-9

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2009               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|7. | COMMON STOCK (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On May 18, 2004, the Company issued 5,000,000
        shares of its common stock with a value of $200,000, as consideration
        for a license.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On January 14, 2006, the Company issued 500,000
        shares of its common stock with a value of $30,000, as consideration for
        the extension of a license.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On October 1, 2006, the Company issued 8,666,663
        common shares, with a value of $260,000 on conversion of convertible notes
        payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On October 1, 2006, the Company issued 1,560,000
        common shares, with a value of $78,000 for settlement of accrued interest
        payable on $260,000 convertible notes payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | On June 30, 2008, the Company cancelled 5,545,000
        common shares surrendered when it settled its rights under the Agreement
        (see Note 8) which were issued to the Licensor under the Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|8. | LICENSE AGREEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Pursuant to an exclusive license agreement
        (the Agreement) with NorPac Technologies, Inc (formerly Cool
        Can Technologies, Inc.) (the Licensor), dated November 30,
        2003, the Company acquired the exclusive right and license (the License),
        for a period of 40 years, to use, commercialize and exploit the Licensors
        proprietary trademarks, patents, process information, technical information,
        designs and drawings associated with the Licensors self-chilling
        beverage containers technology (the Cool Can Technology),
        including the right to manufacture, use and sell apparatus and products
        embodying the Technology within the countries comprising the European
        Union and the Peoples Republic of China. The Company also had the
        right to sub-license the right to manufacture, use and sell products embodying
        the Cool Can Technology.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In consideration for the Agreement, the Company
        agreed to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

F-10

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2009               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|8. | LICENSE AGREEMENT (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On January 14, 2006, the Company entered into
        an agreement (the Extension Agreement) with the Licensor,
        to amend the terms of their Agreement. Under the Extension Agreement,
        the Licensor agreed to extend the date on which the Company is required
        to commence paying the minimum royalty payments to January 15, 2007.                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | In consideration for the Extension Agreement,
        the Company agreed to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Cool Can Technology and patents and trademarks
        of the Licensor included in the Cool Can Technology remain the property
        of the Licensor subject to the terms of the License granted under the
        Agreement. However, the Company has a right of first refusal to acquire
        the intellectual property subject to the Agreement should the Licensor
        seek to dispose of the Cool Can Technology during the Agreement. The Agreement
        supercedes all prior arrangements and agreements between the Company and
        the Licensor in respect of the Cool Can Technology.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | During the period ended March 31, 2007, the
        Company paid royalty fees of $15,000. In June 2007, the Licensor notified
        the Company that its intellectual property rights to the Cool Can Technology
        had possibly expired. As a result, the Company suspended the minimum royalty
        payments required under the Agreement effective April 1, 2007.                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company has been advised that the patents
        for the Cool Can Technology have, in fact expired. On June 30, 2008, the
        Company settled its rights under Agreement in exchange for (1) the surrender
        for cancellation of the remaining 5,545,000 shares of common stock of
        the Company which were issued to the Licensor under the Agreement and
        still held by the Licensor and (2) the assignment of indebtedness owed
        to the Licensor of approximately $612,000 plus accrued interest to the
        Company.                                                     

F-11

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2009               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|9. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
|-- | --------------------------------------------------

| |                |   |           |  |   |           |  |   | CUMULATIVE   | 
| | -------------- | - | --------- |  | - | --------- |  | - | ------------ | 
| |                |   |           |  |   |           |  |   | FROM         | 
| |                |   | THREE     |  |   | THREE     |  |   | INCEPTION    | 
| |                |   | MONTHS    |  |   | MONTHS    |  |   | (AUGUST 17,  | 
| |                |   | ENDED     |  |   | ENDED     |  |   | **1999) TO** | 
| |                |   | MARCH 31, |  |   | MARCH 31, |  |   | MARCH 31,    | 
| |                |   | 2009      |  |   | 2008      |  |   | 2009         | 
| |                |   |           |  |   |           |  |   |              | 
| | Cash paid for: |   |           |  |   |           |  |   |              | 
| | Interest       | $ | -         |  | $ | -         |  | $ | 1,112        | 
| | Income taxes   | $ | -         |  | $ | -         |  | $ | -            | 
| |                |   |           |  |   |           |  |   |              | 

Non-cash transaction:

Investing and financing activities that
  do not have an impact on current cash flows are excluded from the statement
  of cash flows.

|10. | SEGMENT INFORMATION                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                  
|    | The Companys business is considered as operating
        in one segment based upon the Companys organization structure, the
        way in which the operation is managed and evaluated, the availability
        of separate financial results and materiality considerations.
|    |                                                                                                                                                                                                                                                                                  
|11. | SUBSEQUENT EVENT                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                  
|    | On April 8, 2009, a loan was granted from a third party
        company totaling $6,500. The loan bears interest at 10%, compounded annually
        and is due on demand.                                                                                                       

F-12

---

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statement Regarding Forward-Looking
Statements

Certain statements contained in this Quarterly Report on Form
10-Q 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 caption, "Part II
- Item 1A. Risk Factors, and elsewhere in this Quarterly Report. We advise you
to carefully review the reports and documents we file from time to time with the
United States Securities and Exchange Commission (the SEC), particularly our
periodic reports filed with the SEC pursuant to the Securities Exchange Act of
1934 (the Exchange Act).

INTRODUCTION

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

We currently have no business or assets. We are in the process
of reorganizing our business and are seeking and evaluating alternative business
opportunities. Our ability to seek out and acquire an alternative business
opportunity is subject to our obtaining additional financing, of which there is
no assurance.

We were previously in the business of developing a technology
for self-chilling beverage containers (the Cool Can Technology) that was
licensed by Norpac Technologies, Inc. (Norpac). However, Norpacs patents over
the Cool Can Technology expired. As a result, on June 30, 2008, we entered into
a Release Agreement with NorPac Technologies, Inc. (NorPac), pursuant to which
we released NorPac from any legal claims and liabilities in connection with a
license agreement dated November 30, 2003, and as amended on January 12, 2006,
(collectively, the Release) between us and NorPac. In exchange for our
releasing NorPac from its obligations under the License Agreement, NorPac:

|(a) | surrendered for cancellation the remaining 5,545,000
      shares of our common stock which had been issued to NorPac under terms of
      the License Agreement and still owned by NorPac; and                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                 
|(b) | assigned to us an indebtedness owed to NorPac of
      approximately $612,000 plus accrued interest. Readers are cautioned that
      there is substantial doubt that we will be able to collect any or all of
      this assigned indebtedness.

PLAN OF OPERATION

We are currently in the process of reorganizing our business
and are seeking and evaluating alternative business opportunities. As a result,
we are unable to provide an accurate estimate of our financial requirements for
the next twelve months. However, as at March 31, 2009, we currently have a
working capital deficit of $603,112 and will need substantial financing in the
near term in order to meet our current obligations as they become due and to
meet our ongoing reporting obligations under the Securities and Exchange Act
(the Exchange Act). In addition, if our management is successful in
identifying a suitable business opportunity for us to pursue, we will likely
need significantly more

3

---

financing in order to pursue the new business opportunity.
Currently, we do not have any financial arrangements in place and there is no
assurance that we will be able to obtain sufficient financing on terms
acceptable to us, if at all.

RESULTS OF OPERATIONS

Three Months Summary

|                  |   |                             |   |   | Percentage 
      Increase / (Decrease) |  
|----------------- | - | --------------------------- | - | - | --------------------------------------- | -
|                  |   | Three Months Ended March 31 |   |   |                                        
|                  |   | 2009                        |   |   | 2008                                    |  
|Revenue           | $ | -                           |   | $ | -                                       |  
|Expenses          |   | (21,763                     | ) |   | (31,906                                 | )
|Net Income (Loss) | $ | (21,763                     | ) | $ | (31,906                                 | )

Revenue

We have not earned any revenues to date and we do not
anticipate earning revenues in the near future. We are a development stage
company and presently have only nominal operations.

Expenses

Our expenses for the quarterly periods ended March 31, 2009 and
2008 consisted of the following:

|                             |   |                             |   |   | Percentage 
    Increase / (Decrease) |  
|---------------------------- | - | --------------------------- | - | - | ------------------------------------- | -
|                             |   | Three Months Ended March 31 |   |   |                                      
|                             |   | 2009                        |   |   | 2008                                  |  
|Bank Charges and Interest    | $ | 1,785                       |   | $ | 1,395                                 |  
|Consulting Services          |   | 15,000                      |   |   | 15,000                                |  
|Foreign Exchange Loss (Gain) |   | (735                        | ) |   | (450                                  | )
|Office and Sundry            |   | 5                           |   |   | 375                                   |  
|Professional Fees            |   | 5,585                       |   |   | 15,331                                |  
|Regulatory                   |   | 98                          |   |   | -                                     |  
|Stock Transfer Services      |   | 25                          |   |   | 255                                   |  
|Total Operating Expenses     | $ | 21,763                      |   | $ | 31,906                                |  

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 periods presented represent fees
incurred in respect of legal and audit services provided in connection with
meeting our ongoing reporting obligations under the Exchange Act.

4

---

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

|                          |   |                                |   |   | Percentage 
      Increase / (Decrease) |  
|------------------------- | - | ------------------------------ | - | - | --------------------------------------- | -
|                          |   | At
      March 31, 
      2009 |   |   | At
      December 31,
      2008        |  
|Current Assets            | $ | 43                             |   | $ | 2                                       |  
|Current Liabilities       |   | (603,155                       | ) |   | (581,351                                | )
|Working Capital (Deficit) | $ | (603,112                       | ) | $ | (581,349                                | )

Cash Flows

|                                              |   | Three Months Ended |   |   | Three Months Ended |  
|--------------------------------------------- | - | ------------------ | - | - | ------------------ | -
|                                              |   | March 31, 2009     |   |   | March 31, 2008     |  
|Cash Flows (Used In) Operating Activities     | $ | (634               | ) | $ | (2,211             | )
|Cash Flows (Used in) Investing Activities     |   | -                  |   |   | -                  |  
|Cash Flows From Financing Activities          |   | 675                |   |   | 2,500              |  
|Net Increase (Decrease) In Cash During Period | $ | 41                 |   | $ | 289                |  

Our working capital deficit increased during the three months
ended March 31, 2009 primarily as a result of an increase in accounts payable
due to a lack of capital to meet our ongoing expenditures. During the three
months ended March 31, 2009, we received loans totaling $675. The loans bear
interest at a rate of 10%, compounded annually and are due on demand. Subsequent
to the three months ended March 31, 2009, we received a loan of $6,500 from a
third party company. The loan bears interest at a rate of 10%, compounded
annually and is due on demand.

Future Financings

From inception to March 31, 2009, we have suffered cumulative
losses in the amount of $1,569,112. 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. 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.

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 the verbal agreement, each unit to be issued
under the proposed Private Placement was to consist of one share of 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 was
to receive a commission of $100,000 for services provided in connection with the
proposed Private Placement. In 2007, we formally approved an offering of
4,000,000 units under the terms of the verbal agreement with BIG. However, on
November 12, 2008, we decided to terminate this offering and our agreement with
BIG due to BIGs inability to find placees for the Private Placement.

We do not have any financing agreement in place, and 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

5

---

the form of sales of additional shares of our common stock
which may result in dilution to our current shareholders.

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 is
material to stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires our management
to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
disclosed in the notes to our financial statements included with this Quarterly
Report.

Foreign Currency Translation

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.

Not Applicable.

ITEM 4T. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of March 31, 2009 (the Evaluation Date). This evaluation was
carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective as of the Evaluation Date
as a result of the material weaknesses in internal control over financial
reporting discussed in our Annual Report on Form 10-K for the year ended
December 31, 2008 (the 2008 Annual Report).

6

---

Disclosure controls and procedures are those controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in the 2008 Annual Report, we believe that our financial statements
contained in our Quarterly Report on Form 10-Q for the quarter ended March 31,
2009 fairly present our financial condition, results of operations and cash
flows in all material respects.

Changes in internal control over financial reporting

There were no changes in our internal control over financial
reporting that occurred during quarter ended March 31, 2009 that have materially
affected, or that are reasonably likely to materially affect, our internal
control over financial reporting.

7

---

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operation.

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

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

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

We have suffered recurring losses and net cash outflows since
our inception and we expect to continue to incur substantial losses as we
continue our business operations.

Our ability to continue as a going concern is dependent upon
our ability to obtain alternative business opportunities and financing,
restructure our debt, and reduce our costs. We are currently in the process of
identifying business opportunities, 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 business opportunities, 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 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

8

---

support our ongoing activities. As a result, Davidson &
Company LLP, Chartered Accountants, our independent auditors, expressed a
substantial doubt about our ability to continue as a going concern in their
audit report on our financial statements contained in our Annual Report on Form
10-K for the year ended December 31, 2009 filed with the SEC on April 14,
2009.

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

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

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

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the broker's or dealer's duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             
|   |                                                                                                                                                                                                                                          
|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.                                                                              

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

9

---

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

|Exhibit |  |                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                          
|3.1     |  | Articles of Incorporation.(1)                                                                                                                                                                   
|3.2     |  | Bylaws.(1)                                                                                                                                                                                      
|10.1    |  | Exclusive License Agreement dated
      November 30, 2003 with NorPac Technologies, Inc. (formerly Cool Can Technologies,
      Inc.)(2)                                                        
|10.2    |  | Extension Agreement dated January 16, 2006 with
      NorPac Technologies, Inc.(4)                                                                                                              
|10.3    |  | Loan Agreement dated April 19,
      2007 between Balsam Ventures, Inc. and Black Pointe Holdings Inc.(5)                                                                                       
|10.4    |  | Promissory Note executed by Balsam Ventures, Inc.
      dated as of April 19, 2007.(5)                                                                                                          
|10.5    |  | Release Agreement dated June 30,
      2008 between Balsam Ventures, Inc. and NorPac Technologies, Inc.(7)                                                                                      
|14.1    |  | Code of Ethics.(3)                                                                                                                                                                              
|16.1    |  | Letter of Telford Sadovnick, PLLC.(6)                                                                                                                                                           
|31.1    |  | Certification of Chief
      Executive Officer and Chief Financial Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.                                                     
|32.1    |  | Certification
      of Chief 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) | Previously filed as an Exhibit to our Form SB-2
      Registration Statement originally filed with the SEC on March 30,
    2000.
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(2) | Previously filed as an Exhibit to our Current Report on
      Form 8-K filed on January 9, 2004.                                 
|(3) | Previously filed as an Exhibit to our Annual Report on
      Form 10-KSB on May 17, 2005.                                        
|(4) | Previously filed as an Exhibit to our Current Report on
      Form 8-K filed on January 19, 2006.                                
|(5) | Previously filed as an Exhibit to our Current Report on
      Form 8-K filed on April 23, 2007.                                  
|(6) | Previously filed as an Exhibit to our Current Report on
      Form 8-K filed on November 2, 2007.                                
|(7) | Previously filed as an Exhibit to our Current Report on
      Form 8-K filed on July 7, 2008.                                    

10

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|      |                    |     | BALSAM VENTURES, INC.                                 
|----- | ------------------ | --- | ------------------------------------------------------
|      |                    |     |                                                       
|      |                    |     |                                                       
|      |                    |     |                                                       
|Date: | May
      14, 2009 | By: | /s/
      John Boschert                               
|      |                    |     | JOHN BOSCHERT                                         
|      |                    |     | Chief Executive Officer, Chief Financial
      Officer
|      |                    |     | President, Secretary and Treasurer                    
|      |                    |     | (Principal Executive Officer                          
|      |                    |     | and Principal Accounting Officer)                     

---