---

****UNITED
STATES**SECURITIES 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, 2008

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGEACT 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.)
|                                                                     |                                     
|                                                                     |                                     
|1480 Gulf Road, Suite 204                                            |                                     
|Point Roberts, WA                                                    | 98281                               
|(Address of principal executive offices)                             | (Zip Code)                          

(360) 318-3886(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. Yes [X]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). Yes [X]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
  13, 2008, the registrant had 36,226,663 shares of common stock outstanding.

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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, 2008
are not necessarily indicative of the results that can be expected for the year
ending December 31, 2008.

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.

2

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BALSAM VENTURES, INC.(A Development Stage Company)

FINANCIAL STATEMENTS

MARCH 31, 2008

(Unaudited)

(Stated in U.S. Dollars)

---

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

|                                                                                |   | MARCH 31,   |   |   | DECEMBER 31, |  
|------------------------------------------------------------------------------- | - | ----------- | - | - | ------------ | -
|                                                                                |   | 2008        |   |   | 2007         |  
|                                                                                |   | (unaudited) |   |   | (audited)    |  
|                                                                                |   |             |   |   |              |  
|ASSETS                                                                          |   |             |   |   |              |  
|                                                                                |   |             |   |   |              |  
|Current Assets                                                                  |   |             |   |   |              |  
|Cash                                                                            | $ | 454         |   | $ | 165          |  
|Deferred
      tax asset, less valuation allowance of $10,850 (2007 -$490,117 ) |   | -           |   |   | -            |  
|                                                                                |   |             |   |   |              |  
|Total Assets                                                                    | $ | 454         |   | $ | 165          |  
|                                                                                |   |             |   |   |              |  
|LIABILITIES AND STOCKHOLDERS DEFICIENCY                                        |   |             |   |   |              |  
|                                                                                |   |             |   |   |              |  
|Current Liabilities                                                             |   |             |   |   |              |  
|Accounts payable and accrued
      liabilities                                  | $ | 97,085      |   | $ | 83,699       |  
|Accounts payable and accrued liabilities
      related parties (Note 6)        |   | 287,854     |   |   | 272,870      |  
|Loans payable (Note 4 and 5)                                                    |   | 122,944     |   |   | 119,119      |  
|                                                                                |   |             |   |   |              |  
|Total Current Liabilities                                                       |   | 507,883     |   |   | 475,688      |  
|                                                                                |   |             |   |   |              |  
|Commitments and Contractual Obligations(Note 8)                                 |   |             |   |   |              |  
|                                                                                |   |             |   |   |              |  
|Stockholders Deficiency                                                        |   |             |   |   |              |  
|Common Stock (Note 6)                                                           |   |             |   |   |              |  
|Authorized:                                                                     |   |             |   |   |              |  
|100,000,000
      common shares with a par value of $0.001 per share            |   |             |   |   |              |  
|Issued
        and outstanding:                                                 |   |             |   |   |              |  
|March 31, 2008 -36,226,663 common shares                                        |   |             |   |   |              |  
|December 31, 2007 -36,226,663 common shares                                     |   | 36,227      |   |   | 36,227       |  
|Additional paid-in capital                                                      |   | 929,773     |   |   | 929,773      |  
|Deficit accumulated during the development
      stage                          |   | (1,473,429  | ) |   | (1,441,523   | )
|                                                                                |   |             |   |   |              |  
|Total Stockholders Deficiency                                                  |   | (507,429    | ) |   | (475,523     | )
|                                                                                |   |             |   |   |              |  
|Total Liabilities and Stockholders Deficiency                                  | $ | 454         |   | $ | 165          |  

Subsequent Event (Note 10)

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

F-2

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

|                                                     |   |            |   |   |            |   |   | CUMULATIVE  | 
|---------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ----------- | 
|                                                     |   |            |   |   |            |   |   | FROM        | 
|                                                     |   | THREE      |   |   | THREE      |   |   | INCEPTION   | 
|                                                     |   | MONTHS     |   |   | MONTHS     |   |   | (AUGUST 17, | 
|                                                     |   | ENDED      |   |   | ENDED      |   |   | 1999) TO    | 
|                                                     |   | MARCH 31,  |   |   | MARCH 31,  |   |   | MARCH 31,   | 
|                                                     |   | 2008       |   |   | 2007       |   |   | 2008        | 
|                                                     |   |            |   |   |            |   |   |             | 
|EXPENSES                                             |   |            |   |   |            |   |   |             | 
|                                                     |   |            |   |   |            |   |   |             | 
|Accretion of discount on convertible
      notes     | $ | -          |   | $ | -          |   | $ | 260,000     | 
|Bank charges and interest                            |   | 1,395      |   |   | 69         |   |   | 84,501      | 
|Consulting services                                  |   | 15,000     |   |   | 15,000     |   |   | 480,947     | 
|Domain registration                                  |   | -          |   |   | -          |   |   | 436         | 
|Foreign exchange loss (gain)                         |   | (450       | ) |   | 106        |   |   | 2,501       | 
|License and royalty payments                         |   | -          |   |   | 15,000     |   |   | 328,000     | 
|Office and sundry                                    |   | 375        |   |   | 150        |   |   | 15,541      | 
|Professional fees                                    |   | 15,331     |   |   | 875        |   |   | 261,522     | 
|Regulatory                                           |   | -          |   |   | -          |   |   | 15,832      | 
|Stock transfer services                              |   | 255        |   |   | 60         |   |   | 6,375       | 
|Travel                                               |   | -          |   |   | -          |   |   | 9,099       | 
|Write-off of
      developmental costs software      |   | -          |   |   | -          |   |   | 8,675       | 
|                                                     |   | -          |   |   |            |   |   |             | 
|                                                     |   | 31,906     |   |   | 31,260     |   |   | 1,473,429   | 
|                                                     |   |            |   |   |            |   |   |             | 
|Provision for
      income taxes                     |   | -          |   |   | -          |   |   | -           | 
|                                                     |   |            |   |   |            |   |   |             | 
|NET LOSS                                             | $ | 31,906     |   | $ | 31,260     |   | $ | 1,473,429   | 
|                                                     |   |            |   |   |            |   |   |             | 
|                                                     |   |            |   |   |            |   |   |             | 
|BASIC AND DILUTED NET LOSS PER SHARE                 | $ | (0.00      | ) | $ | (0.00      | ) |   |             | 
|                                                     |   |            |   |   |            |   |   |             | 
|                                                     |   |            |   |   |            |   |   |             | 
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |   |            |   |   |            |   |   |             | 
|- BASIC AND DILUTED                                  |   | 36,226,663 |   |   | 36,226,663 |   |   |             | 

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

F-3

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

|                                                                              |   |           |   |   |           |   |   | CUMULATIVE  |  
|----------------------------------------------------------------------------- | - | --------- | - | - | --------- | - | - | ----------- | -
|                                                                              |   |           |   |   |           |   |   | FROM        |  
|                                                                              |   | THREE     |   |   | THREE     |   |   | INCEPTION   |  
|                                                                              |   | MONTHS    |   |   | MONTHS    |   |   | (AUGUST 17, |  
|                                                                              |   | ENDED     |   |   | ENDED     |   |   | 1999) TO    |  
|                                                                              |   | MARCH 31, |   |   | MARCH 31, |   |   | MARCH 31,   |  
|                                                                              |   | 2008      |   |   | 2007      |   |   | 2008        |  
|                                                                              |   |           |   |   |           |   |   |             |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                          |   |           |   |   |           |   |   |             |  
|                                                                              |   |           |   |   |           |   |   |             |  
|Net loss for the period                                                       | $ | (31,906   | ) | $ | (31,260   | ) | $ | (1,473,429  | )
|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:                                    |   |           |   |   |           |   |   |             |  
|Decrease in prepaid expenses                                                  |   | -         |   |   | 50        |   |   | -           |  
|Increase in accounts payable
      and accrued liabilities                    |   | 13,386    |   |   | 29,312    |   |   | 586,686     |  
|Increase in accounts payable and accrued
      liabilitiesrelated parties    |   | 14,984    |   |   | -         |   |   | 92,854      |  
|Increase in accrued interest payable                                          |   | 1,325     |   |   | -         |   |   | 4,743       |  
|                                                                              |   |           |   |   |           |   |   |             |  
|Net cash used in operating activities                                         |   | (2,211    | ) |   | (1,898    | ) |   | (149,471    | )
|                                                                              |   |           |   |   |           |   |   |             |  
|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                          |   | 2,500     |   |   | -         |   |   | 83,600      |  
|                                                                              |   |           |   |   |           |   |   |             |  
|Net
      cash provided by financing activities                               |   | 2,500     |   |   | -         |   |   | 158,600     |  
|                                                                              |   |           |   |   |           |   |   |             |  
|NET INCREASE (DECREASE) IN CASH                                               |   | 289       |   |   | (1,898    | ) |   | 454         |  
|                                                                              |   |           |   |   |           |   |   |             |  
|CASH, BEGINNING OF PERIOD                                                     |   | 165       |   |   | 2,426     |   |   | -           |  
|                                                                              |   |           |   |   |           |   |   |             |  
|CASH, END OF PERIOD                                                           | $ | 454       |   | $ | 528       |   | $ | 454         |  

Supplemental Disclosure with respect to Cash Flows (Note 8)

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

F-4

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|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2008               
|(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 intends to terminate
        the Agreement and is currently negotiating with the Licensor to settle
        its rights under the Agreement (see Note 8). 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, 2008 and for all periods
        presented, have been included. Interim results for the period ended March
        31, 2008 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 $1,473,429 for the period from inception
        (August 17, 1999) to March 31, 2008, and has no revenue. The operations
        of the Company have primarily been funded by the sale of common stock
        and loans payable. Continued operations of the Company are dependent on
        the Companys ability to complete equity financings, obtain additional
        loans or generate profitable operations in the future. Managements
        plan in this regard is to secure additional funds through future equity
        financings and loans payable. Such financings or loans payable may not
        be available or may not be available on reasonable terms to the Company.                                                                                                                                           

F-5

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|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2008               
|(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, 2008 and December
        31, 2007, 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

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|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2008               
|(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, 2008 and 2007, there were no potentially
        dilutive securities outstanding.                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company is a development stage company
        as defined in Statement of Financial Accounting Standards (SFAS)
        7, Accounting and Reporting by Development Stage Enterprises,as it is devoting substantially all of its efforts to establish a
        new business and planned principal operations have not commenced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (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 September 2006, the Financial Accounting
        Standards Board (FASB) issued SFAS No. 157, Fair
        Value Measurements.SFAS No. 157 establishes a framework
        for measuring the fair value of assets and liabilities. This framework
        is intended to provide increased consistency in how fair value determinations
        are made under various existing accounting standards which permit, or
        in some cases require, estimates of fair market value. SFAS No. 157 is
        effective for fiscal years beginning after November 15, 2007, and interim
        periods within those fiscal years. Earlier application is encouraged,
        provided that the reporting entity has not yet issued financial statements
        for that fiscal year, including any financial statements for an interim
        period within that fiscal year.

F-7

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2008               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | (j)                                                           
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | (k)                                                           
|   |                                                               
|   |                                                               

F-8

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2008               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|4. | LOANS PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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. Subsequent to March 31, 2008, the first loan was
        verbally extended and continues to bear interest at 8% per annum, compounded
        annually 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, 2008 and 2007 totalled $1,296 and $0,
        respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Accounts payable and accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | At March 31, 2008 and December 31, 2007, included in
        accounts payable and accrued liabilities  related parties is $8,074
        and $8,090, respectively, owed to a director and officer and $9,000 and
        $9,000, respectively, owed to a former director and officer.                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | At March 31, 2008 and December 31, 2007, included in
        accounts payable and accrued liabilities  related parties is $270,780
        and $255,780 owed to a shareholder for consulting fees and reimbursement
        of expenses. Consulting fees for the three months ended March 31, 2008
        and 2007 were $15,000 and $15,000, respectively.                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Loans payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | During the period ended March 31, 2008, two loans were
        granted from a shareholder for $1,500 and $1,000, respectively. 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, 2008 totalled
        $29.                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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.                                                                                                                                                                                                                                                                                                                                                                            

F-9

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2008               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|6. | 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.                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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.                                                                                                                                                                                                                                                                                                        

F-10

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2008               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|7. | LICENSE AGREEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Pursuant to an exclusive license agreement
        (the Agreement) with NorPac Technologies, Inc (formerly Cool
        Can Technologies, Inc.) (the Licensor), dated November 30,
        2003, the Company acquired the exclusive right and license (the License),
        for a period of 40 years, to use, commercialize and exploit the Licensors
        proprietary trademarks, patents, process information, technical information,
        designs and drawings associated with the Licensors self-chilling
        beverage containers technology (the Cool Can Technology),
        including the right to manufacture, use and sell apparatus and products
        embodying the Technology within the countries comprising the European
        Union and the Peoples Republic of China. The Company also has the
        right to sub-license the right to manufacture, use and sell products embodying
        the Cool Can Technology.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | In consideration for the Agreement, the Company
        agreed to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| | i)   | a sales royalty equal to 2% of gross profits from sales
        of all apparatus and/or commercial goods or products incorporating the
        Cool Can Technology;                                                                                                               
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                   
| | ii)  | a license royalty equal to 5% of revenues received from
        sub-licensing the Cool Can Technology, and;                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                   
| | iii) | a minimum royalty payment of $5,000 per month commencing
        January 15, 2006, which is to be credited toward all royalty payments
        under the Agreement that have been paid by the Company or become payable
        by the Company during the course of the Agreement.

| | On January 14, 2006, the Company
        entered into an agreement (the Extension Agreement) with the
        Licensor, to amend the terms of their Agreement. Under the Extension Agreement,
        the Licensor agreed to extend the date on which the Company is required
        to commence paying the minimum royalty payments to January 15, 2007.                                                                                                                                                                                                                                                       
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | In consideration for the Extension Agreement, the
      Company agreed to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | The Cool Can Technology and patents
        and trademarks of the Licensor included in the Cool Can Technology remain
        the property of the Licensor subject to the terms of the License granted
        under the Agreement. However, the Company has a right of first refusal
        to acquire the intellectual property subject to the Agreement should the
        Licensor seek to dispose of the Cool Can Technology during the Agreement.
        The Agreement supercedes all prior arrangements and agreements between
        the Company and the Licensor in respect of the Cool Can Technology.

F-11

---

|BALSAM VENTURES, INC.        
|-----------------------------
|(A Development Stage Company)
|                             
|NOTES TO FINANCIAL STATEMENTS
|                             
|MARCH 31, 2008               
|(Unaudited)                  
|(Stated in U.S. Dollars)     

|7. | LICENSE AGREEMENT (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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. As a result, the Company has advised the Licensor that it
        intends to terminate the Agreement and is currently negotiating with the
        Licensor to settle its rights under the Agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|8. | 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,    | 
| |                |   | 2008      |  |   | 2007      |  |   | 2008         | 
| |                |   |           |  |   |           |  |   |              | 
| | Cash paid for: |   |           |  |   |           |  |   |              | 
| | Interest       | $ | -         |  | $ | -         |  | $ | 1,110        | 
| | Income taxes   | $ | -         |  | $ | -         |  | $ | -            | 
| |                |   |           |  |   |           |  |   |              | 

|9.  | 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.
|    |                                                                                                                                                                                                                                                                                  
|10. | SUBSEQUENT EVENT                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                  
|    | On April 1, 2008, a loan was granted from a shareholder
        for $3,000. 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.

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the three
month period ended March 31, 2008 and changes in our financial condition from
December 31, 2007. This discussion should be read in conjunction with the
Managements Discussion and Analysis or Plan of Operation included in our Annual
Report on Form 10-K for the year ended December 31, 2007.

PLAN OF OPERATION

Until recently, we were in the business of developing and
marketing a technology for self-chilling beverage containers (the Cool Can
Technology) that we licensed from NorPac Technologies, Inc. (formerly Cool Can
Technologies, Inc.) (NorPac). In 2007, it came to our attention that NorPacs
patents for the Cool Can Technology expired. As a result, our management decided
to abandon the development of the Cool Can Technology. We are currently
negotiating with NorPac to settle our rights under the terms of our license
agreement with NorPac. We are currently in the process of reorganizing our
business and are seeking and evaluating alternative business opportunities.

As a result, we are unable to provide an accurate estimate of
our financial requirements for the next twelve months. However, as at March 31,
2008, we currently have a working capital deficit of $507,429 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
Exchange Act. In addition, if our management is successful in identifying a
suitable business opportunity for us to pursue, we will likely need
significantly more financing in order to pursue the new business opportunity.
Currently, we do not have any financial arrangements in place and there is no
assurance that we will be able to obtain sufficient financing on terms
acceptable to us, if at all.

3

---

RESULTS OF OPERATIONS

First Quarter Summary

|                  |   | Three
      Months Ended |   |   | Three
      Months Ended |   |  | Percentage            | 
|----------------- | - | ------------------------ | - | - | ------------------------ | - |  | --------------------- | 
|                  |   | March 31, 2008           |   |   | March 31, 2007           |   |  | Increase / (Decrease) | 
|Revenue           | $ | -                        |   | $ | -                        |   |  | n/a                   | 
|Expenses          |   | (31,906                  | ) |   | (31,260                  | ) |  | 2.1%                  | 
|Net Income (Loss) | $ | (31,906                  | ) | $ | (31,260                  | ) |  | 2.1%                  | 

Revenue

We did not earn any revenues during the fiscal quarter ended
March 31, 2008 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 operating expenses for the three months ended March 31,
2008 and 2007 consisted of the following:

|                             |   | Three
      Months Ended |   |   | Three
      Months Ended |  |  | Percentage            |  
|---------------------------- | - | ------------------------ | - | - | ------------------------ |  |  | --------------------- | -
|                             |   | March 31, 2008           |   |   | March 31, 2007           |  |  | Increase / (Decrease) |  
|Bank Charges and Interest    | $ | 1,395                    |   | $ | 69                       |  |  | 1,921.7%              |  
|Consulting Services          |   | 15,000                   |   |   | 15,000                   |  |  | n/a                   |  
|Foreign Exchange Loss (Gain) |   | (450                     | ) |   | 106                      |  |  | (524.5%               | )
|License and Royalty Payments |   | -                        |   |   | 15,000                   |  |  | (100%                 | )
|Office and Sundry            |   | 375                      |   |   | 150                      |  |  | 150%                  |  
|Professional Fees            |   | 15,331                   |   |   | 875                      |  |  | 1,652.1%              |  
|Stock Transfer Services      |   | 255                      |   |   | 60                       |  |  | 325%                  |  
|Total Operating Expenses     | $ | 31,906                   |   | $ | 31,260                   |  |  | 2.1%                  |  

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

Professional fees for the three months ended March 31, 2008
represent fees incurred in respect of legal and audit services provided in
connection with meeting our ongoing reporting obligations under the Exchange
Act.

Effective April 1, 2007, we suspended our royalty payments to
NorPac as NorPacs patents for the Cool Can Technology expired. As a result, we
had no expenses relating to the license and royalty payments during the three
months ended March 31, 2008.

4

---

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

|                    |   |                   |   |   |                      |   |  | Percentage            | 
|------------------- | - | ----------------- | - | - | -------------------- | - |  | --------------------- | 
|                    |   | At March 31, 2008 |   |   | At December 31, 2007 |   |  | Increase / (Decrease) | 
|Current Assets      | $ | 454               |   | $ | 165                  |   |  | 175.2%                | 
|Current Liabilities |   | (507,883          | ) |   | (475,688             | ) |  | 6.8%                  | 
|Working Capital     | $ | (507,429          | ) | $ | (475,523             | ) |  | 6.7%                  | 

Cash Flows

|                                              |   | Three Months Ended |   |   | Three Months Ended |  
|--------------------------------------------- | - | ------------------ | - | - | ------------------ | -
|                                              |   | March 31, 2008     |   |   | March 31, 2007     |  
|Cash Flows (Used In) Operating Activities     | $ | (2,211             | ) | $ | (1,898             | )
|Cash Flows (Used in) Investing Activities     |   | -                  |   |   | -                  |  
|Cash Flows From Financing Activities          |   | 2,500              |   |   | -                  |  
|Net Increase (Decrease) In Cash During Period | $ | 289                |   | $ | (1,898             | )

Our working capital deficit increased during the three months
ended March 31, 2008 as we had no sources of revenue during the period and the
fact that our only source of financing during the period came from two
short-term loans from a shareholder totaling $2,500. The loans bear interest at
a rate of 10%, compounded annually and are due on demand.

Subsequent to our three months ended March 31, 2008, we
received a loan from a shareholder of $3,000. The loan bears interest at a rate
of 10%, compounded annual and is due on demand.

Future Financings

From inception to March 31, 2008, we have suffered cumulative
losses in the amount of $1,473,429. We expect to continue to incur substantial
losses as we continue the development of our business. Since our inception, we
have funded operations through common stock issuances, related party loans, and
the support of creditors in order to meet our strategic objectives. Our
management believes that sufficient funding will be available to meet our
business objectives, including anticipated cash needs for working capital, and
are currently evaluating several financing options, including a public offering
of securities. However, there can be no assurance that we will be able to obtain
sufficient funds to continue the development of and, if successful, to commence
the sale of, our products. As a result of the foregoing, our independent
auditors believe there exists substantial doubt about our ability to continue as
a going concern.

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

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

5

---

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

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that 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 audited financial statements for the year ended
December 31, 2007 included in our Annual Report on Form 10-K filed with the SEC
on April 14, 2008.

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, 2008 (the Evaluation

6

---

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 below.

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 this report, we believe that our financial statements contained in
our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 fairly
present our financial condition, results of operations and cash flows in all
material respects.

Material Weaknesses

Management assessed the effectiveness of the Companys internal
control over financial reporting as of Evaluation Date and identified the
following material weaknesses:

Insufficient Resources:We have an inadequate number of
personnel with requisite expertise in the key functional areas of finance and
accounting.

Inadequate Segregation of Duties: We have an inadequate
number of personnel to properly implement control procedures.

Lack of Audit Committee & Outside Directors on the
Companys Board of Directors:We do not have a functioning audit committee
and outside directors on the Companys Board of Directors, resulting in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures.

Changes in internal control over financial reporting

As of the Evaluation Date, there were no changes in our
internal control over financial reporting that occurred during the quarter ended
March 31, 2008 that have materially affected, or that are reasonably likely to
materially affect, our internal control over financial reporting.

7

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

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

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

Our ability to continue as a going concern is dependent upon
our ability to obtain 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

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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, 2007 filed with the SEC on April 14,
2008.

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

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

|Exhibit |                                                                                                                                                                                           
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                    
|3.1     | Articles of Incorporation.(1)                                                                                                                                                             
|3.2     | Bylaws.(1)                                                                                                                                                                                
|10.1    | Exclusive License Agreement dated
      November 30, 2003 with Cool Can Technologies, Inc.(2)                                                                                             
|10.2    | Extension Agreement dated January 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)                                                                                                    
|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.                            

10

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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 13, 2008 | By: | /s/
      John Boschert                         
|      |              |     | JOHN BOSCHERT                                   
|      |              |     | Chief Executive Officer, Chief Financial Officer
|      |              |     | President, Secretary and Treasurer              
|      |              |     | (Principal Executive Officer                    
|      |              |     | and Principal Accounting Officer)               

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