----

 

|   |                                                           | Page   |
|--------|----------------------------------------------------------------|--------|
|   |                                                           |   |
|   | Management’s      Responsibility for Financial Reporting | 2      |
|   | Auditors’      Report                                    | 3      |
|   | Comments      by Auditors for U.S. Readers on Canada-          | 4      |
|   | U.S.      Reporting Difference                                 |   |
|   | Consolidated      Balance Sheets                               | 5      |
|   | Consolidated      Statements of Operations and Deficit         | 6      |
|   | Consolidated      Statements of Comprehensive Loss             | 7      |
|   | Consolidated      Statements of Cash Flows                     | 8      |
|   | Notes      to the Consolidated Financial Statements            | 9      |

----

 

----

|                                       |
|--------------------------------------------|
| “Bradley J.      Moynes”       |
| Bradley      J. Moynes                     |
| President      and Chief Executive Officer |
|                                       |

|                              |
|-----------------------------------|
| “J. Robert    Moynes” |
| J.      Robert Moynes   |
| Vice-President                    |
|                              |

----

----

----

----

----

| RAINCHIEF ENERGY INC.                                        |   |   |       |    |   |   |
|--------------------------------------------------------------|--------|--------|------------|---------|--------|--------|
| (Formerly      Black Diamond Brands Corporation)             |   |   |       |    |   |   |
| Consolidated      Balance Sheets                             |   |   |       |    |   |   |
| (Expressed      in Canadian Dollars)                         |   |   |       |    |   |   |
|                                                         |   | 2008   |       |    | 2007   |   |
| ASSETS                                                       |   | $      |       |    |   | $      |   |   |
|                                                         |   |   |       |    |   |   |   |   |
| CURRENT                                                      |   |   |       |    |   |   |   |   |
| Cash                                                         |   |   | 23         |    |   |   | 5,593 |   |
| GST      Recoverable                                         |   |   | 150        |    |   |   | 11,049 |   |
| Current      Assets of Discontinued Operations (Note 3)      |   |   | 34,032     |    |   |   | 63,220 |   |
|                                                         |   |   | 34,205     |    |   |   | 79,862 |   |
| Due      from Related Parties (Note 7(a),(b))                |   |   | 5,900      |    |   |   | 6,900 |   |
| Property      and Equipment (Note 4)                         |   |   | 586        |    |   |   | 780 |   |
| Oil      and Gas Interests (Note 5)                          |   |   | 1          |    |   |   | - |   |
| Non-Current      Assets of Discontinued Operations (Note 3)  |   |   | 24,045     |    |   |   | 24,771 |   |
|                                                         |   |   | 64,737     |    |   |   | 112,313 |   |
|                                                         |   |   |       |    |   |   |   |   |
| LIABILITIES                                                  |   |   |       |    |   |   |   |   |
| CURRENT                                                      |   |   |       |    |   |   |   |   |
| Accounts      Payable and Accrued Liabilities                |   |   | 153,944    |    |   |   | 109,959 |   |
| Due      to Related Parties (Note 7(c),(d),(e))              |   |   | 24,999     |    |   |   | 184,841 |   |
| Current      Liabilities of Discontinued Operations (Note 3) |   |   | 165,879    |    |   |   | 156,277 |   |
|                                                         |   |   | 344,822    |    |   |   | 451,077 |   |
| SHAREHOLDERS'      DEFICIENCY                                |   |   |       |    |   |   |   |   |
| Share      Capital (Note 8(b))                               |   |   | 2,031,174  |    |   |   | 1,567,600 |   |
| Contributed      Surplus (Note 8(d))                         |   |   | 90,478     |    |   |   | 9,400 |   |
| Accumulated      Other Comprehensive Income                  |   |   | -          |    |   |   | - |   |
| Deficit                                                      |   |   | (2,401,737 | )  |   |   | (1,915,764 | )  |
|                                                         |   |   | (280,085   | )  |   |   | (338,764 | )  |
| Nature      and Continuance of Operations (Note 1)      |   |   | 64,737     |    |   |   | 112,313 |   |
| Commitments      (Note 11)                              |   |   |       |    |   |   |   |   |
| Subsequent      Events (Note 13)                        |   |   |       |    |   |   |   |   |
|                                                         |   |   |       |    |   |   |   |   |

| Approved      on Behalf of the Board:  |
|---------------------------------------------|

|                                 |   |                                |   |
|--------------------------------------|--------|-------------------------------------|--------|
| “Bradley      J. Moynes” |   | “J.      Robert Moynes” |   |
| Bradley      J. Moynes, Director     |   | J.      Robert Moynes, Director     |   |

----

| RAINCHIEF ENERGY INC.                                                                        |
|---------------------------------------------------------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)                                             |
| Consolidated Statements of Operations and      Deficit                                       |
| As      at December 31, 2008, 2007 and 2006  (Expressed in Canadian      Dollars)  |

|                                                     |   | 2008   |       |    | 2007   |   |       | 2006    |   |
|----------------------------------------------------------|--------|--------|------------|---------|--------|--------|------------|---------|--------|
|                                                     |   | $      |       |    |   | $      |       |    |   | $ |   |   |
| EXPENSES                                                 |   |   |       |    |   |   |       |    |   |   |   |   |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| Accounting,      Audit and Legal                         |   |   | 86,716     |    |   |   | 44,697     |    |   |   | 69,560 |   |
| Amortization                                             |   |   | 197        |    |   |   | 264        |    |   |   | 360 |   |
| Consulting      Fees                                     |   |   | 103,162    |    |   |   | 266,400    |    |   |   | 33,116 |   |
| Filing      and Transfer Agent Fees                      |   |   | 3,128      |    |   |   | 1,741      |    |   |   | 1,138 |   |
| Interest      and Bank Charges                           |   |   | 643        |    |   |   | 243        |    |   |   | 317 |   |
| Management      Fees (Note 9)                            |   |   | 129,279    |    |   |   | 129,425    |    |   |   | 136,116 |   |
| Office      and Telephone                                |   |   | 120        |    |   |   | 1,442      |    |   |   | 268 |   |
| Office      Rent                                         |   |   | 12,000     |    |   |   | 12,303     |    |   |   | 14,099 |   |
| Travel                                                   |   |   | 9,314      |    |   |   | -          |    |   |   | 1,142 |   |
|                                                     |   |   | 344,559    |    |   |   | 456,515    |    |   |   | 256,116 |   |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| LOSS      BEFORE OTHER ITEMS AND DISCONTINUED OPERATIONS |   |   | (344,559   | )       |   |   | (456,515   | )  |   |   | -256,116 |   |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| Foreign      Exchange (Loss) Gain                        |   |   | (7,597     | )       |   |   | 15,933     |    |   |   | -6,664 |   |
| Net      Gain (Loss) on Settlement of Debts              |   |   | 21,505     |    |   |   | (13,432    | )       |   |   | - |   |
| Write-Down      Oil and Gas Interests (Note 5)           |   |   | (40,499    | )       |   |   | -          |    |   |   | - |   |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| LOSS      FROM CONTINUING OPERATIONS                     |   |   | (371,150   | )       |   |   | (454,014   | )  |   |   | (262,780 | )  |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| LOSS      FROM DISCONTINUED OPERATIONS (NOTE 3)          |   |   | (114,823   | )       |   |   | (70,766    | )       |   |   | (177,892 | ) |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| NET      LOSS FOR THE YEAR                               |   |   | (485,973   | )       |   |   | (524,780   | )  |   |   | (440,672 | ) |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| Deficit,      Beginning of the Year                      |   |   | (1,915,764 | )       |   |   | (1,390,984 | )  |   |   | (950,312 | )  |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| DEFICIT,      END OF THE YEAR                            |   |   | (2,401,737 | )       |   |   | (1,915,764 | )  |   |   | (1,390,984 | )  |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF SHARES OUTSTANDING  |   |   | 18,045,628 |    |   |   | 13,882,702 |    |   |   | 12,109,393 |   |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| BASIC      LOSS PER SHARE                                |   |   |       |    |   |   |       |    |   |   |   |   |
|                                                     |   |   |       |    |   |   |       |    |   |   |   |   |
| Continuing      Operations                               |   |   | (0.02      | )       |   |   | (0.04      | )  |   |   | (0.02 | )  |
| Discontinued      Operations                             |   |   | (0.01      | )  |   |   | 0          |    |   |   | (0.01 | ) |

----

| RAINCHIEF ENERGY INC.                              |
|----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)   |
| Consolidated      Statements of Comprehensive Loss |
| As      at December 31, 2008, 2007 and 2006        |
| (Expressed      in Canadian Dollars)               |

|                                         |   | 2008   |     |   | 2007   |   |     | 2006    |   |
|----------------------------------------------|--------|--------|----------|--------|--------|--------|----------|---------|--------|
|                                         |   |   | $        |   |   |   |     | $  |   |   | $ |   |
| NET      LOSS FOR THE YEAR                   |   |   | (485,973 | )      |   |   | (524,780 | )       |   |   | (440,672 | ) |
|                                         |   |   |     |   |   |   |     |    |   |   |   |   |
| Other      Comprehensive Income for the Year |   |   | -        |   |   |   | -        |    |   |   | - |   |
| COMPREHENSIVE      LOSS FOR THE YEAR         |   |   | (485,973 | )      |   |   | (524,780 | )       |   |   | (440,672 | ) |

----

| RAINCHIEF      ENERGY INC.                                      |
|-----------------------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)                |
| Consolidated      Statements of Cash Flows                      |
| As      at December 31, 2008, 2007 and 2006                     |
| (Expressed      in Canadian Dollars)                            |
|                                                            |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                            |   |   | $ |   |   |   | $ |   |   |   | $ |   |
| CASH      PROVIDED BY (USED IN):                                |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      ACTIVITIES                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Loss from Continuing Operations                        |   |   | (371,150 | ) |   |   | (454,014 | ) |   |   | (262,780 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-Cash      Items                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                                                    |   |   | 197 |   |   |   | 264 |   |   |   | 360 |   |
| Consulting      Fees (Note 8(b)(iii), (c))                      |   |   | 68,548 |   |   |   | 266,400 |   |   |   | 8,571 |   |
| Unrealized      Foreign Exchange (Gain) Loss                    |   |   | - |   |   |   | (18,225 | ) |   |   | - |   |
| (Gain)      Loss on Settlement of Debts                         |   |   | (21,505 | ) |   |   | 13,432 |   |   |   | - |   |
| Write-Down      Oil and Gas Property                            |   |   | 40,499 |   |   |   | - |   |   |   | - |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Change      in Non-Cash Working Capital Accounts (Note 10(a))   |   |   | 44,884 |   |   |   | 53,572 |   |   |   | 8,737 |   |
| Cash      Used in Operating Activities of Continuing Operations |   |   | (238,527 | ) |   |   | (138,571 | ) |   |   | (245,112 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITIES                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares      Issued for Cash, Net of Issuance Costs              |   |   | 169,247 |   |   |   | 109,684 |   |   |   | 427,003 |   |
| Advances      from Related Parties                              |   |   | 149,785 |   |   |   | 104,591 |   |   |   | 20,458 |   |
|                                                            |   |   | 319,032 |   |   |   | 214,275 |   |   |   | 447,461 |   |
| INVESTING      ACTIVITY                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Acquisition      of Oil and Gas Interests                       |   |   | (30,500 | ) |   |   | - |   |   |   | - |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| NET      CASH PROVIDED BY CONTINUING OPERATIONS                 |   |   | 50,005 |   |   |   | 75,704 |   |   |   | 202,349 |   |
| NET      CASH USED IN DISCONTINUED OPERATIONS(NOTE      3)      |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Activities                                       |   |   | (52,809 | ) |   |   | (94,916 | ) |   |   | (194,503 | ) |
| Financing      Activity                                         |   |   | (3,947 | ) |   |   | 3,243 |   |   |   | (4,910 | ) |
|                                                            |   |   | (56,756 | ) |   |   | (91,673 | ) |   |   | (199,413 | ) |
| NET      (DECREASE) INCREASE IN CASH                            |   |   | (6,751 | ) |   |   | (15,969 | ) |   |   | 2,936 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash,      Beginning of the Year                                |   |   | 7,314 |   |   |   | 23,283 |   |   |   | 20,347 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH,      END OF THE YEAR                                      |   |   | 563 |   |   |   | 7,314 |   |   |   | 23,283 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH      IS COMPRISED OF:                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing      Operations                                      |   |   | 23 |   |   |   | 5,593 |   |   |   | 12,112 |   |
| Discontinued      Operations (Note 3)                           |   |   | 540 |   |   |   | 1,721 |   |   |   | 11,171 |   |
|                                                            |   |   | 563 |   |   |   | 7,314 |   |   |   | 23,283 |   |
| Supplemental      Cash Flow Information (Note 10)               |   |   |   |   |   |   |   |   |   |   |   |   |

----

RAINCHIEF ENERGY INC.

----

| a) | Basis      of Presentation |
|----|----------------------------|

----

RAINCHIEF ENERGY INC.

----

| b) | Inventory |
|----|-----------|

| c) | Property      and Equipment |
|----|-----------------------------|

|   | Computer      Equipment    |   | 30% Per Annum,      Declining Balance Basis |
|--------|-------------------------------------------|--------|---------------------------------------------|
|   | Furniture and      Equipment              |   | 20% Per Annum,      Declining Balance Basis |

| d) | Oil      and Gas Interests |
|----|----------------------------|

| e) | Asset      Retirement Obligation |
|----|----------------------------------|

----

RAINCHIEF ENERGY INC.

----

| f) | Share      Capital and Stock-BasedCompensation |
|----|------------------------------------------------|

| g) | Income      Taxes |
|----|-------------------|

| h) | Loss      Per Share |
|----|---------------------|

| i) | Revenue      Recognition |
|----|--------------------------|

| j) | Foreign      Currency Translation |
|----|-----------------------------------|

| ●  | Monetary Assets and      Liabilities     |   | At      the exchange rate prevailing at the balance sheet date |
|---------------|------------------------------------------|--------|----------------------------------------------------------------|
| ●       | Non-Monetary Assets      and Liabilities |   | At historical      exchange rates                              |
| ●       | Revenue and Expense      Items           |   | At the average      exchange rate for the year       |

----

RAINCHIEF ENERGY INC.

----

| k) | Use      of Estimates |
|----|-----------------------|

| l) | Comparative      Figures |
|----|--------------------------|

| m) | Adoption      of New Accounting Policies |
|----|------------------------------------------|

| (i) | Comprehensive      Income |
|-----|---------------------------|

----

RAINCHIEF ENERGY INC.

----

| m) | Adoption      of New Accounting Policies(Continued) |
|----|-----------------------------------------------------|

| (ii) | Financial      Instruments |
|------|----------------------------|

|  | •       Held-for-trading financial assets and liabilities that are      initially measured at fair value and where subsequent changes in fair      value are recognized in the statement of  operations; |
|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | •       Available-for-sale financial assets that are initially measured at      fair value and where subsequent changes in fair value are recorded in      other comprehensive income until the investment is derecognized or      impaired at which time the amounts would be transferred to and recorded in      net income; and |
|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | •       Held-to-maturity investments, loans and receivables, or other      financial liabilities are initially measured at cost and where subsequent      changes in cost are amortized utilizing the effective interest rate      method. |
|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | •  Cash is      classified as held-for-trading and accordingly carried at its fair      value; |
|--|-----------------------------------------------------------------------------------------------------------|

|  | •  Accounts      receivable and amounts due from related parties are classified as loans      and receivables, and accordingly carried at their amortized costs;      and |
|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | •  Accounts      payable and accrued liabilities and amounts due to related parties are      classified as other financial liabilities and accordingly carried at their      amortized cost. |
|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii) | Hedging |
|-------|---------|

| (iv) | Capital      Disclosure |
|------|-------------------------|

----

RAINCHIEF ENERGY INC.

----

| m) | Adoption      of New Accounting Policies(Continued) |
|----|-----------------------------------------------------|

| (v) | Inventories |
|-----|-------------|

| (vi) | Going      Concern |
|------|--------------------|

| n) | Future      Accounting changes |
|----|--------------------------------|

|  | (i) | Goodwill      and Intangible Assets |
|--|-----|-------------------------------------|

|  | (ii) | International      Financial Reporting Standards(“IFRS”) |
|--|------|----------------------------------------------------------------------|

----

RAINCHIEF ENERGY INC.

----

| The      net liabilities of the discontinued operations are as    follows: |   | 2008   |     |   | 2008   |   |
|----------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                                       |   |   |     |   |   |   |
|                                                                       |   | $      |     |   |   | $      |   |   |
| ASSETS                                                                     |   |   |     |   |   |   |   |   |
| CURRENT                                                                    |   |   |     |   |   |   |   |   |
| Cash                                                                       |   |   | 540      |   |   |   | 1,721 |   |
| Accounts      Receivable                                                   |   |   | 11,050   |   |   |   | - |   |
| GST      Recoverable                                                       |   |   | 2,963    |   |   |   | 2,798 |   |
| Inventory                                                                  |   |   | 19,479   |   |   |   | 58,701 |   |
|                                                                       |   |   | 34,032   |   |   |   | 63,220 |   |
| Due      from Related Parties (Note 7)                                     |   |   | 23,492   |   |   |   | 23,896 |   |
| Property      and Equipment (Note 4)                                       |   |   | 553      |   |   |   | 875 |   |
|                                                                       |   |   | 58,077   |   |   |   | 87,991 |   |
| LIABILITIES                                                                |   |   |     |   |   |   |   |   |
| CURRENT                                                                    |   |   |     |   |   |   |   |   |
| Accounts      Payable and Accrued Liabilities                              |   |   | 127,895  |   |   |   | 94,198 |   |
| Due      to Related Parties (Note 7)                                       |   |   | 37,984   |   |   |   | 42,342 |   |
| Promissory      Note Payable (Note 6)                                      |   |   | -        |   |   |   | 19,737 |   |
|                                                                       |   |   | 165,879  |   |   |   | 156,277 |   |
| NET      LIABILITIES                                                       |   |   | (107,802 | )      |   |   | (68,286 | ) |

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| NOTE      3 – DISCONTINUED OPERATIONS (Continued)     |   |   |     |   |   |   |    |   |   |
|-------------------------------------------------------------|--------|--------|----------|--------|--------|--------|---------|--------|--------|
| The      results of discontinued operations are as follows: |   | 2008   |     |   | 2007   |   |    | 2006   |   |
|                                                        |   |   |     |   |   |   |    |   |   |
|                                                        |   | $      |     |   |   | $      |    |   |   | $ |   |   |
| SALES                                                       |   |   | 14,767   |   |   |   | 3,965   |   |   |   | 5,105 |   |
|                                                        |   |   |     |   |   |   |    |   |   |   |   |   |
| COST      OF SALES                                          |   |   | 43,351   |   |   |   | 2,965   |   |   |   | 1,901 |   |
|                                                        |   |   |     |   |   |   |    |   |   |   |   |   |
| GROSS      (LOSS) PROFIT                                    |   |   | (28,584  | )      |   |   | 1,000   |   |   |   | 3,204 |   |
|                                                        |   |   |     |   |   |   |    |   |   |   |   |   |
| EXPENSES                                                    |   |   |     |   |   |   |    |   |   |   |   |   |
|                                                        |   |   |     |   |   |   |    |   |   |   |   |   |
| Accounting,      Audit and Legal                            |   |   | 3,368    |   |   |   | 5,411   |   |   |   | 28,553 |   |
| Advertising      and Promotion                              |   |   | 38,560   |   |   |   | 51,175  |   |   |   | 53,345 |   |
| Amortization                                                |   |   | 322      |   |   |   | 97      |   |   |   | 108 |   |
| Automobile                                                  |   |   | 3,407    |   |   |   | 4,582   |   |   |   | 5,883 |   |
| Consulting      Fees (Recovery)                             |   |   | -        |   |   |   | (10,744 | )      |   |   | 19,838 |   |
| Distributor      Fees                                       |   |   | 519      |   |   |   | 432     |   |   |   | 11,253 |   |
| Interest      and Bank Charges                              |   |   | 2,262    |   |   |   | 19,895  |   |   |   | 28,099 |   |
| Office      and Telephone                                   |   |   | 8,772    |   |   |   | 9,419   |   |   |   | 11,939 |   |
| Travel                                                      |   |   | 1,210    |   |   |   | 4,257   |   |   |   | 14,690 |   |
| Warehouse      Fees                                         |   |   | 3,865    |   |   |   | 3,112   |   |   |   | 5,518 |   |
|                                                        |   |   | 62,285   |   |   |   | 87,636  |   |   |   | 179,226 |   |
| LOSS      BEFORE OTHER ITEMS                                |   |   | (90,869  | )      |   |   | (86,636 | )      |   |   | (176,022 | ) |
|                                                        |   |   |     |   |   |   |    |   |   |   |   |   |
| Foreign      Exchange (Loss) Gain                           |   |   | (23,188  | )      |   |   | 15,870  |   |   |   | (1,870 | ) |
| Inventory      Write-Down                                   |   |   | (766     | )      |   |   | -       |   |   |   | - |   |
|                                                        |   |   |     |   |   |   |    |   |   |   |   |   |
| LOSS      FROM DISCONTINUED OPERATIONS                      |   |   | (114,823 | )      |   |   | (70,766 | )      |   |   | (177,892 | ) |

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| The      changes in cash flows of discontinued operations are as      follows: |   |   |    |   |   |   |   |   |   |
|--------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
|                                                                           |   | 2008   |    |   | 2007   |   |   | 2006   |   |
|                                                                           |   | $      |    |   |   | $      |   |   |   | $ |   |   |
| CASH      PROVIDED BY (USED IN):                                               |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                                           |   |   |    |   |   |   |   |   |   |   |   |   |
| OPERATING      ACTIVITIES                                                      |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                                           |   |   |    |   |   |   |   |   |   |   |   |   |
| Net      Loss from Discontinued Operations                                     |   |   | (114823 | )      |   |   | (70766 | )      |   |   | (177892 | ) |
| Non-Cash      Items                                                            |   |   |    |   |   |   |   |   |   |   |   |   |
| Amortization                                                                   |   |   | 322     |   |   |   | 97     |   |   |   | 108 |   |
| Interest      and Bank Charges                                                 |   |   | -       |   |   |   | -      |   |   |   | 8882 |   |
| Unrealized      Foreign Exchange (Gain) Loss                                   |   |   | (12     | )      |   |   | (988   | )      |   |   | 3786 |   |
| Inventory      Write-Down                                                      |   |   | 766     |   |   |   | -      |   |   |   | - |   |
|                                                                           |   |   | (113747 | )      |   |   | (71657 | )      |   |   | (165116 | ) |
| Change      in Non-Cash Working Capital Accounts                               |   |   |    |   |   |   |   |   |   |   |   |   |
| Accounts      Receivable                                                       |   |   | (11050  | )      |   |   | -      |   |   |   | 6148 |   |
| GST      Recoverable                                                           |   |   | (165    | )      |   |   | 291    |   |   |   | (4250 | ) |
| Inventory                                                                      |   |   | 38456   |   |   |   | 6124   |   |   |   | (49709 | ) |
| Prepaid      Expense                                                           |   |   | -       |   |   |   | 271    |   |   |   | - |   |
| Accounts      Payable and Accrued Liabilities                                  |   |   | 33697   |   |   |   | (29945 | )      |   |   | 18424 |   |
|                                                                           |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                                           |   |   | (52809  | )      |   |   | (94916 | )      |   |   | (194503 | ) |
|                                                                           |   |   |    |   |   |   |   |   |   |   |   |   |
| FINANCING      ACTIVITY                                                        |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                                           |   |   |    |   |   |   |   |   |   |   |   |   |
| Advances      from Related Parties                                             |   |   | (3947   | )      |   |   | 3243   |   |   |   | (4910 | ) |
|                                                                           |   |   |    |   |   |   |   |   |   |   |   |   |
| NET      CASH USED IN DISCONTINUED OPERATIONS                                  |   |   | (56756  | )      |   |   | (91673 | )      |   |   | (199413 | ) |

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |
| NOTE 4 – PROPERTY AND      EQUIPMENT     |

|                         |   |   |   |   |         |   |   |          |   |
|------------------------------|--------|--------|--------|--------|--------------|--------|--------|---------------|--------|
|                         |   |   |   |   | Accumulated  |   |   | Net      Book |   |
|                         |   | Cost   |   |   | Amortization |   |   | Value         |   |
| CONTINUING      OPERATIONS   |   | $      |   |   |         | $      |   |          |   | $ |   |   |
|                         |   |   |   |   |         |   |   |          |   |   |   |   |
| 2008                         |   |   |   |   |         |   |   |          |   |   |   |   |
| Computer      Equipment      |   |   | 3890   |   |         |   | 3617   |          |   |   | 273 |   |
| Furniture      and Equipment |   |   | 1656   |   |         |   | 1343   |          |   |   | 313 |   |
|                         |   |   | 5546   |   |         |   | 4960   |          |   |   | 586 |   |
| 2007                         |   |   |   |   |         |   |   |          |   |   |   |   |
| Computer      Equipment      |   |   | 3890   |   |         |   | 3339   |          |   |   | 551 |   |
| Furniture      and Equipment |   |   | 1656   |   |         |   | 1427   |          |   |   | 229 |   |
|                         |   |   | 5546   |   |         |   | 4766   |          |   |   | 780 |   |
| DISCONTINUED      OPERATIONS |   |   |   |   |         |   |   |          |   |   |   |   |
|                         |   |   |   |   |         |   |   |          |   |   |   |   |
| 2008                         |   |   |   |   |         |   |   |          |   |   |   |   |
| Furniture      and Equipment |   |   | 1279   |   |         |   | 726    |          |   |   | 553 |   |
| 2007                         |   |   |   |   |         |   |   |          |   |   |   |   |
| Furniture      and Equipment |   |   | 1279   |   |         |   | 404    |          |   |   | 875 |   |

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |
|                                                |   |   |   |
| NOTE      6 – PROMISSORY NOTES PAYABLE        |   |   |   |

|                         |   |   | 2008  |   |   |   | 2007  |   |
|------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|
|                         |   |   | $          |   |   |   | $          |   |
| Promissory      Note Payable |   |   | -          |   |   |   | 19,737     |   |

|     | CONTINUING      OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |    |   |   |   |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| a)       | Due      from a company controlled by a Director and Officer of the      Company                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 5,900   |   |   |   | 5,900 |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |    |   |   |   |   |   |
| b)       | Due      from a person related to the Officers and Directors of the      Company                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | -       |   |   |   | 1,000 |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |    |   |   |   |   |   |
| c)  | Due  (to)  a  company  controlled  by  a  person  related  to      the      Directors and   Officers   of   the   Company.      The   amount is unsecured,  non-interest  bearing  and  are  due  on  December  31,      2008. |   |   | -6,842  |   |   |   | -14,842 |   |
| d)       | Due      (to) an Officer and Director of the Company                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | -17,193 |   |   |   | -93,528 |   |
| e)       | Due      (to) an Officer and Director of the Company                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | -964    |   |   |   | -76,471 |   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | -19,099 |   |   |   | -177,941 |   |

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|--------|--------------|
|                                                                                                                                                                                                                                                                                                                                  |   | 2008               |       |   | 2007   |         |
| DISCONTINUED      OPERATIONS                                                                                                                                                                                                                                                                                                          |   |               | $          |   |   |         | $ |   |
| Due      from a company controlled by a Director and Officer of the      Company                                                                                                                                                                                                                                                      |   |               | 982        |   |   |         | 982 |   |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
| Due      from an Officer and Director  of the Company                                                                                                                                                                                                                                                                       |   |               | 21,414     |   |   |         | 22,914 |   |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
| Due      from (to) an Officer and Director  of theCompany                                                                                                                                                                                                                                                                   |   |               | 1,096      |   |   |         | (4,358 | ) |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
| Due (to) a company controlled by a person related to the      Directors and Officers of the Company.       The amount is      unsecured, non-interest bearing and are due on December 31,      2008 |   |               | (37,984    | )      |   |         | (32,200 | ) |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
| Due (to) a person related to the Officers and Directors of the      Company                                                                                                                                                                                               |   |               | -          |   |   |         | (5,784 | ) |
|                                                                                                                                                                                                                                                                                                                                  |   |               | (14,492    | )      |   |         | (18,446 | ) |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
| NOTE      8 – SHARE CAPITAL                                                                                                                                                                                                                                                                                                |   |               |       |   |   |         |   |   |
| Authorized                                                                                                                                                                                                                                                                                                                            |   |               |       |   |   |         |   |   |
| Unlimited      number of common shares without par value.                                                                                                                                                                                                                                                                             |   |               |       |   |   |         |   |   |
| Issued and      Outstanding                                                                                                                                                                                                                                                                                                      |   |               |       |   |   |         |   |   |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
|                                                                                                                                                                                                                                                                                                                                  |   | Number      of     |       |   |   | Amount  |   |
|                                                                                                                                                                                                                                                                                                                                  |   | Common      Shares |       |   |   | $            |   |
| Balance,      December 31, 2006                                                                                                                                                                                                                                                                                                       |   |               | 13,577,223 |   |   |         | 1,025,342 |   |
| Issued      During the Year                                                                                                                                                                                                                                                                                                           |   |               |       |   |   |         |   |   |
| For      Cash – Private Placements, Net of Issuance Costs (i)                                                                                                                                                                                                                                                                   |   |               | 500,000    |   |   |         | 109,684 |   |
| For      Debt                                                                                                                                                                                                                                                                                                                         |   |               |       |   |   |         |   |   |
| Promissory      Note Payable to Related Party (ii)                                                                                                                                                                                                                                                                                    |   |               | 2,141,629  |   |   |         | 277,234 |   |
| Promissory      Note Payable to Arm’s Length Party (Note 6)                                                                                                                                                                                                                                                                     |   |               | 200,000    |   |   |         | 25,890 |   |
| For      Accounts Payable (iii)                                                                                                                                                                                                                                                                                                       |   |               | 1,000,000  |   |   |         | 129,450 |   |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
| Balance,      December 31, 2007                                                                                                                                                                                                                                                                                                       |   |               | 17,418,852 |   |   |         | 1,567,600 |   |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
| Issued      During the Year                                                                                                                                                                                                                                                                                                           |   |               |       |   |   |         |   |   |
| For      Cash – Private Placements, Net of Issuance Costs (iv)                                                                                                                                                                                                                                                                  |   |               | 1,250,000  |   |   |         | 166,678 |   |
| For      Debt                                                                                                                                                                                                                                                                                                                         |   |               |       |   |   |         |   |   |
| Promissory      Note Payable to Arm’s Length Party (Note 6)                                                                                                                                                                                                                                                                     |   |               | 150,000    |   |   |         | 17,664 |   |
| Amounts      Owed to Related Parties (Note 7)                                                                                                                                                                                                                                                                                         |   |               | 5,000,000  |   |   |         | 279,232 |   |
|                                                                                                                                                                                                                                                                                                                                  |   |               |       |   |   |         |   |   |
| Balance,      December 31, 2008                                                                                                                                                                                                                                                                                                       |   |               | 23,818,852 |   |   |         | 2,031,174 |   |

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| b) | Issued      and Outstanding (Continued) |
|----|-----------------------------------------|

|  | (i) | On      May 23, 2007, the Company completed a brokered private placement of      500,000 units at a price of US$0.225 per unit, raising gross proceeds of      $121,871 (US$112,500). One unit consists of one common share and one share      purchase warrant. Each warrant is exercisable into one common share at a      price of US$0.40 per share until May 31, 2008. The Company paid finders’      fees in the amount of $12,187(US$11,250). |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | On      December 21, 2007 the Company settled the outstanding promissory note      payable to a person related to Officers and Directors of the Company in      the amount of $149,914 by issuing 2,141,629 common shares with a fair      value of $277,234. The Company recorded a loss of $127,320 on settlement      of this debt. |
|--|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iii) | Pursuant      to a consulting agreement dated June 18, 2007 with an arm’s length party,      the Company agreed to pay consulting fees of $266,400 (US$250,000) for      investor relations services. On December 21, 2007, the Company issued      1,000,000 common shares with a fair value of $129,450 for settlement of      outstanding investor relations fees in the amount of $248,175, and      recorded a gain on settlement of debt in the amount of      $118,725. |
|--|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iv) | On      July 09, 2008, the Company completed a brokered private placement of      1,000,000 units at a price of US$0.15 per unit, raising gross proceeds of      $153,810 (US$150,000). One unit consists of one common share and one share      purchase warrant. Each warrant is exercisable into one common share at a      price of US$0.25 per share for a period of one year. The Company paid      finders’ fees in the amount of $15,381 (US$15,000) and issued 100,000      share purchase warrants with a fair value of $2,569 (Note 8(d)) to the      finder. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   | On      November 14, 2008, the Company completed a non-brokered private placement      of 200,000 units at a price of US$0.10 per unit, raising gross proceeds of      $24,708 (US$20,000). One unit consists of one common share and one share      purchase warrant. Each warrant is exercisable into one common share at a      price of US$0.15 per share for a period of one  year. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   | On      December 19, 2008, the Company completed a non-brokered private placement      of 50,000 units at a price of US$0.10 per unit, raising gross proceeds of      $6,110 (US$5,000). One unit consists of one common share and one share      purchase warrant. Each warrant is exercisable into one common share at a      price of US$0.15 per share for a period of one  year. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| c) | Share      Purchase Warrants |
|----|------------------------------|

|                                                              |   |           |       |   | Weighted      Average |   |
|-------------------------------------------------------------------|--------|----------------|------------|--------|-----------------------|--------|
|                                                              |   |           |       |   | Exercise      Price   |   |
|                                                              |   | Number      of |       |   | Per      Share        |   |
|                                                              |   | Warrants       |       |   | US$                   |   |
| Balance,      December 31, 2006                                   |   |           | 3,678,443  |   |                  |   | 0.30 |   |
|                                                              |   |           |       |   |                  |   |   |   |
| Issued      During the Year                                       |   |           |       |   |                  |   |   |   |
| Private      Placement (Note 8(b)(i))                             |   |           | 500,000    |   |                  |   | 0.40 |   |
|                                                              |   |           |       |   |                  |   |   |   |
| Expired      During the Year                                      |   |           | (2,958,443 | )      |                  |   | 0.30 |   |
|                                                              |   |           |       |   |                  |   |   |   |
| Balance,      December 31, 2007                                   |   |           | 1,220,000  |   |                  |   | 0.34 |   |
|                                                              |   |           |       |   |                  |   |   |   |
| Issued      During the Period                                     |   |           |       |   |                  |   |   |   |
| Private      Placement (Note 8(b)(iv))                            |   |           | 1,250,000  |   |                  |   | 0.23 |   |
| Finder’s      Fees (Note 8(b)(iv))                          |   |           | 100,000    |   |                  |   | 0.25 |   |
| Consulting      Fees (i)                                          |   |           | 1,300,000  |   |                  |   | 0.11 |   |
| Promissory      Note Payable to Arm’s Length Party (Note 6) |   |           | 150,000    |   |                  |   | 0.15 |   |
|                                                              |   |           |       |   |                  |   |   |   |
| Expired      During the Period                                    |   |           | (1,220,000 | )      |                  |   | 0.34 |   |
|                                                              |   |           |       |   |                  |   |   |   |
| Balance,      December 31, 2008                                   |   |           | 2,800,000  |   |                  |   | 0.17 |   |

|   | (i)   During  the  year  ended  December  31,  2008,  the  Company  issued  a  total  of  1,300,000  share  purchase  warrants  with  a  total  fair  value  of  $68,548  (Note  8(d))  for  investor  relations  and  consulting      services. Each warrant is exercisable into one share common share at a      price      between  US$0.07  and  US$0.20  per  share.    These  warrants  expire  between  November  05,  2009  and  October      31, 2010. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c) | Contributed      Surplus and Stock BasedCompensation |
|----|------------------------------------------------------|

|                                                            | 2008   | 2007   |
|-----------------------------------------------------------------|--------|--------|
|                                                            | $      | $      |
| Balance,      Beginning of the Year                             | 9,400  | 9,400  |
|                                                            |   |   |
| Fair      Value of Broker’s Warrants (Note 8(b)(iv))      | 2,569  | -      |
| Fair      Value of Warrants Issued for Consulting Fees          | 68,548 | -      |
| (Note      8(c)(i))                                             |   |   |
| Fair      Value of Warrants Issued for Debt Settlement (Note 6) | 9,961  | -      |
|                                                            |   |   |
| Balance,      End of the Year                                   | 90,478 | 9,400  |

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| d) | Contributed      Surplus and Stock-Based Compensation(Continued) |
|----|------------------------------------------------------------------|

| Risk-Free      Annual Interest Rate  | 0.8%      - 2.4%  |
|--------------------------------------|-------------------|
| Expected      Annual Dividend Yield  | 0%                |
| Expected      Stock Price Volatility | 146%      - 179%  |
| Expected      Life of Option         | 1      to 2 years |

|   |                                                                                                                                                                                                                                                                                                                                                         |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|   |                                                                                                                                                                                                                                                                                                                                                         |   | $      |    |   |   | $      |    |   |   | $ |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| a)     | Management  fees  charged  by  the  President  and  the      Vice-President  of  the  Company  (also  Directors)  for      management,      administration, supervision and company development      services (Note 11(a)) |   |   | 129,279 |   |   |   | 129,425 |   |   |   | 136,116 |   |
|   |                                                                                                                                                                                                                                                                                                                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| b)     | Consulting  fees  charged  by  a  company  controlled  by      the      former Chief Financial Officer of the Company for management      and administration services                                                                                                                  |   |   | -       |   |   |   | -       |   |   |   | 33,116 |   |
|   |                                                                                                                                                                                                                                                                                                                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| c)     | Interest      accrued to a person related to the Officers and Directors      of the Company for cash advanced                                                                                                                                                                                                                                                |   |   | -       |   |   |   | 17,990  |   |   |   | 17,965 |   |

----

| RAINCHIEF ENERGY INC.                                  |
|--------------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)       |
| Notes      to the Consolidated Financial Statements    |
| December      31, 2008 and 2007                        |
| (Expressed      in Canadian Dollars)                   |
| NOTE      10 – SUPPLEMENTAL CASH FLOWINFORMATION |

|     |                                             |   | 2008   |    |   | 2007   |   |    | 2006   |   |
|----------|--------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|     |                                             |   | $      |    |   |   | $      |    |   |   | $ |   |   |
| a)       | Change      in Non-Cash Working Capital Accounts |   |   |    |   |   |   |    |   |   |   |   |   |
|     |                                             |   |   |    |   |   |   |    |   |   |   |   |   |
|     | GST      Recoverable                             |   |   | 10,899  |   |   |   | 1,729   |   |   |   | -7,346 |   |
|     | Accounts      Payable and Accrued Liabilities    |   |   | 33,985  |   |   |   | 51,843  |   |   |   | 16,083 |   |
|     |                                             |   |   |    |   |   |   |    |   |   |   |   |   |
|     |                                             |   |   | 44,884  |   |   |   | 53,572  |   |   |   | 8,737 |   |
| b)       | Significant      Non-Cash Financing Activities   |   |   |    |   |   |   |    |   |   |   |   |   |
|     |                                             |   |   |    |   |   |   |    |   |   |   |   |   |
|     | Shares      Issued for Settlement of:            |   |   |    |   |   |   |    |   |   |   |   |   |
|     | Accounts      Payable                            |   |   | -       |   |   |   | 129,450 |   |   |   | 8,541 |   |
|     | Promissory      Note Payable                     |   |   | 17,664  |   |   |   | 303,124 |   |   |   | - |   |
|     | Amounts      Owed to Related Parties             |   |   | 279,232 |   |   |   | -       |   |   |   | - |   |
|     |                                             |   |   |    |   |   |   |    |   |   |   |   |   |
|     |                                             |   |   | 296,896 |   |   |   | 432,574 |   |   |   | 8,541 |   |
| c)  | Other      Information                           |   |   |    |   |   |   |    |   |   |   |   |   |
|     |                                             |   |   |    |   |   |   |    |   |   |   |   |   |
|     | Interest      Paid                               |   |   | 1,115   |   |   |   | 14,354  |   |   |   | 18,379 |   |
|     |                                             |   |   |    |   |   |   |    |   |   |   |   |   |

| a) | On      January 01, 2007, the Company entered into management agreements with the      President and the Vice-President of the Company for general management and      operational services for combined management fees of US$120,000 per annum.      On January 01, 2008, the agreements were renewed for a term of 10      years. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b) | In      April 2008, the Company entered into a licensing agreement with an arm’s      length party for the exclusive right to use copyrighted photographs on the      Company’s privately labeled wine bottles and for advertising and      promotional use for a term of 3years. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Pursuant      to the agreement, the Company paid a fee of US$30,000 in consideration for      prior uses of the copyrighted photographs. The Company also agreed to pay      a minimum royalty of US$22,500 per year to be applied against a royalty of      US$1.00 per case of certain wine products sold by the Company. During the      year ended December 31, 2008, the Company recorded royalty payments      totalling $16,891 (US$16,875) (2007 - $30,000) in advertising and      marketing expense. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Subsequent      to year-end, the Company was served a Notice of Termination of the      licensing agreement citing breach by the Company as a result of its      default on the royalty payment due on January 01, 2009 for the first      quarter of 2009. The total amount of claim against the Company is      US$50,625 which represents the guaranteed royalty payments payable for the      remaining term of the agreement. Management is pursuing a resolution to      the dispute. Pursuant to the licensing agreement, the royalty payments are      secured by the personal guarantees of the President and Vice-President of      the Company. The Company will accrue this contingent liability in the      first quarter of 2009. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| NOTE      12 – INCOME TAXES |   |   |   |
|-----------------------------------|--------|--------|--------|

| Provision      for Income Taxes                                                     |   |   |     |   |   |   |     |   |   |
|-------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
| A      reconciliation of income taxes at the statutory tax rate is as      follows: |   |   |     |   |   |   |     |
|                                                                                |   | 2008   |     |   | 2007   |   |     | 2006   |   |
|                                                                                |   |   |     |   |   |   |     |   |   |   |   |   |
| Combined      Federal and Provincial Income Tax Rates                               |   |   | 14.92    | %      |   |   | 17.62    | %      |   |   | 17.62 | % |
|                                                                                |   |   |     |   |   |   |     |   |   |   |   |   |
|                                                                                |   |   | $        |   |   |   | $        |   |   |   | $ |   |
| Loss      before income taxes                                                       |   |   | (485,973 | )      |   |   | (524,780 | )      |   |   | (440,672 | ) |
|                                                                                |   |   |     |   |   |   |     |   |   |   |   |   |
| Expected      Income Tax Recovery                                                   |   |   | (72,495  | )      |   |   | (92,467  | )      |   |   | (77,646 | ) |
| Permanent      Differences                                                          |   |   | 488      |   |   |   | (1,883   | )      |   |   | (13,579 | ) |
| Change      in Valuation Allowance                                                  |   |   | (43,707  | )      |   |   | 89,809   |   |   |   | 62,383 |   |
| Effect      of Change in Tax Rates                                                  |   |   | 79,308   |   |   |   | -        |   |   |   | - |   |
| Expiration      of Non-Capital Losses and Other                                     |   |   | 36,406   |   |   |   | 4,541    |   |   |   | 28,842 |   |
| Income      Tax Expense (Recovery)                                                  |   |   | -        |   |   |   | -        |   |   |   | - |   |

| b) | Future      Income Taxes |
|----|--------------------------|

| Future      Income Tax Assets:        |   |   |     |   |   |   |
|---------------------------------------|--------|--------|----------|--------|--------|--------|
|                                  |   |   |     |   |   |   |
| Non-Capital      Losses Carry-Forward |   |   | 273,732  |   |   |   | 312,484 |   |
| Share      Issuance Costs             |   |   | 8,042    |   |   |   | 13,004 |   |
| Property      and Equipment           |   |   | 275      |   |   |   | 268 |   |
|                                  |   |   |     |   |   |   |   |   |
| Valuation      Allowance              |   |   | (282,049 | )      |   |   | (325,756 | ) |
|                                  |   |   |     |   |   |   |   |   |
| Net      Future Income Tax Assets     |   |   | -        |   |   |   | - |   |

| 2009   | 186,000   |
|--------|-----------|
| 2010   | 36,000    |
| 2014   | 116,000   |
| 2015   | 279,000   |
| 2026   | 410,000   |
| 2027   | 540,000   |
| 2028   | 458,000   |
|   | 2,025,000 |

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| a) | In      March 2009, the Company was served with a Notice of Termination in      connection with a licensing agreement for the exclusive right to use      certain copyrighted photographs. The amount of claim against the Company      is US$50,625 (Note 11(b)). |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b) | As      at the auditors’ report date, the Company has received subscription      proceeds totalling $59,000 in connection to a private placement of      1,180,000 units at US$0.05 per unit. Each unit is comprised of one common      share and one share purchase warrant. Each warrant is exercisable into one      common share at US$0.10 for a period of one  year. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| a) | Fair      Values |
|----|------------------|

| b) | Liquidity      Risk |
|----|---------------------|

| c) | Foreign      Exchange Risk |
|----|----------------------------|

|                                          |   | US$    |    |
|-----------------------------------------------|--------|--------|---------|
| Cash                                          |   |   | 38      |   |
| Accounts      Receivable                      |   |   | 8,345   |   |
| Accounts      Payable and Accrued Liabilities |   |   | 117,031 |   |

| d) | Commodity      Price Risk |
|----|---------------------------|

| e) | Credit      Risks |
|----|-------------------|

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| a) | Income      Taxes |
|----|-------------------|

----

| RAINCHIEF ENERGY INC.                               |
|-----------------------------------------------------|
| (Formerly      Black Diamond Brands Corporation)    |
| Notes      to the Consolidated Financial Statements |
| December      31, 2008 and 2007                     |
| (Expressed      in Canadian Dollars)                |

| b) | Stock-Based      Compensation |
|----|-------------------------------|

| c) | Recent      United States AccountingPronouncements |
|----|----------------------------------------------------|

|  | (i) | Fair      Value Measurements |
|--|-----|------------------------------|

|  | (ii) | Fair      Value Option for Financial Assets and Financial  Liabilities |
|--|------|------------------------------------------------------------------------|