---

| | Rainchief Energy Inc.             | 
| | --------------------------------- | 
| |                                   | 
| | December 31, 2009 and 2008        | 
| | (Expressed in Canadian Dollars)   | 
| |                                   | 
| | Consolidated Financial Statements | 

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

---

|Managements
      Responsibility for Financial Reporting
|---------------------------------------------------------

These consolidated financial statements have been prepared by
and are the responsibility of the management of the Company. The consolidated
financial statements have been prepared in accordance with accounting principles
generally accepted in Canada, using managements best estimates and judgments
based on currently available information. When alternative accounting methods
exist, management has chosen those it considers most appropriate in the
circumstances.

The Company maintains an appropriate system of internal
controls to provide reasonable assurance that financial information is accurate
and reliable and that the Companys assets are appropriately accounted for and
adequately safeguarded.

The Companys independent auditors, Watson Dauphinee &
Masuch, Chartered Accountants, were appointed by the shareholders to conduct an
audit in accordance with generally accepted auditing standards in Canada and the
Public Company Accounting Oversight Board (United States), and their report
follows.

Bradley J. MoynesBradley J.
MoynesPresident and Chief Executive Officer

J. Robert MoynesJ. Robert Moynes
Vice-President

F-2

---

|Auditors Report
|----------------

To the Shareholders of:RAINCHIEF ENERGY INC.

We have audited the Consolidated Balance Sheets of Rainchief
Energy Inc.as at December 31, 2009 and 2008 and the Consolidated Statements
of Operations and Deficit, Comprehensive Loss, and Cash Flows for the years
ended December 31, 2009, 2008 and 2007. These consolidated financial statements
are the responsibility of the Companys management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with Canadian generally
accepted auditing standards and standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
December 31, 2009 and 2008 and the results of its operations and its cash flows
for the years ended December 31, 2009, 2008 and 2007 in accordance with Canadian
generally accepted accounting principles.

Watson Dauphinee & MasuchChartered
Accountants

Vancouver, B.C., Canada June 04, 2010

F-3

---

|Comments by
      Auditors for U.S. Readers on Canada-U.S. Reporting Difference
|-------------------------------------------------------------------------------

In the United States, reporting standards for auditors require
the addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by conditions and events that cast
substantial doubt on the Companys ability to continue as a going concern, such
as those described in Note 1 to the consolidated financial statements. Our
report to the shareholders dated June 04, 2010 is expressed in accordance with
Canadian reporting standards which do not permit a reference to such events and
conditions in the auditors report when they are adequately disclosed in the
consolidated financial statements.

Watson Dauphinee & MasuchChartered
Accountants

Vancouver, B.C., Canada June 04, 2010

F-4

---

|RAINCHIEF ENERGY INC.                
|-------------------------------------
|                                     
|Consolidated Balance Sheets          
|As at December 31, 2009 and 2008     
|(Expressed in
      Canadian Dollars)

|                                         |  | 2009       |   |  | 2008       |  
|---------------------------------------- |  | ---------- | - |  | ---------- | -
|                                         |  | $          |   |  | $          |  
|ASSETS                                   |  |            |   |  |            |  
|CURRENT                                  |  |            |   |  |            |  
|Cash                                     |  | -          |   |  | 563        |  
|Accounts Receivable                      |  | -          |   |  | 11,050     |  
|GST Recoverable                          |  | 13,843     |   |  | 3,113      |  
|Inventory                                |  | -          |   |  | 19,479     |  
|                                         |  |            |   |  |            |  
|                                         |  | 13,843     |   |  | 34,205     |  
|                                         |  |            |   |  |            |  
|Property and Equipment (Note 4)          |  | 441        |   |  | 1,139      |  
|Oil and Gas Interests (Note 5)           |  | -          |   |  | 1          |  
|                                         |  |            |   |  |            |  
|                                         |  | 14,284     |   |  | 35,345     |  
|                                         |  |            |   |  |            |  
|LIABILITIES                              |  |            |   |  |            |  
|CURRENT                                  |  |            |   |  |            |  
|Bank Indebtedness                        |  | 10,986     |   |  | -          |  
|Accounts Payable and Accrued Liabilities |  | 179,633    |   |  | 281,840    |  
|Due to Related Parties (Note 9)          |  | 91,810     |   |  | 33,590     |  
|                                         |  |            |   |  |            |  
|                                         |  | 282,429    |   |  | 315,430    |  
|                                         |  |            |   |  |            |  
|SHAREHOLDERS' DEFICIENCY                 |  |            |   |  |            |  
|Share Capital (Note 7(b))                |  | 2,241,445  |   |  | 2,031,174  |  
|Share Subscription Advance (Note 12(b))  |  | 5,384      |   |  | -          |  
|Contributed Surplus (Note 7(d))          |  | 366,788    |   |  | 90,478     |  
|Accumulated Other Comprehensive Income   |  | -          |   |  | -          |  
|Deficit                                  |  | (2,881,762 | ) |  | (2,401,737 | )
|                                         |  |            |   |  |            |  
|                                         |  | (268,145   | ) |  | (280,085   | )
|                                         |  |            |   |  |            |  
|                                         |  | 14,284     |   |  | 35,345     |  

Nature and Continuance of Operations (Note 1) Segmented
Information (Note 10) Subsequent Events (Note 12)

|Approved on Behalf of the Board: |  |                           
|-------------------------------- |  | --------------------------
|                                 |  |                           
|Bradley J.
      Moynes        |  | J.
      Robert Moynes  
|Bradley J. Moynes, Director      |  | J. Robert Moynes, Director

F-5

---

|RAINCHIEF ENERGY INC.                            
|-------------------------------------------------
|                                                 
|Consolidated Statements of Operations and Deficit
|As at December 31, 2009, 2008 and 2007           
|(Expressed in
      Canadian Dollars)            

|                                                                   |  | 2009       |   |  | 2008       |   |  | 2007       |  
|------------------------------------------------------------------ |  | ---------- | - |  | ---------- | - |  | ---------- | -
|                                                                   |  | $          |   |  | $          |   |  | $          |  
|                                                                   |  |            |   |  |            |   |  |            |  
|SALES                                                              |  | 3,838      |   |  | 14,767     |   |  | 3,965      |  
|                                                                   |  |            |   |  |            |   |  |            |  
|COST OF SALES                                                      |  | 3,241      |   |  | 43,351     |   |  | 2,965      |  
|                                                                   |  |            |   |  |            |   |  |            |  
|GROSS PROFIT                                                       |  | 597        |   |  | (28,584    | ) |  | 1,000      |  
|                                                                   |  |            |   |  |            |   |  |            |  
|EXPENSES                                                           |  |            |   |  |            |   |  |            |  
|Accounting, Audit and Legal                                        |  | 51,226     |   |  | 90,084     |   |  | 50,108     |  
|Advertising and Promotion                                          |  | 1,816      |   |  | 38,560     |   |  | 51,174     |  
|Amortization                                                       |  | 227        |   |  | 519        |   |  | 362        |  
|Bad Debt (Note 9)                                                  |  | 71,000     |   |  | -          |   |  | -          |  
|Consulting and Investor Relations (Note 7(d))                      |  | 174,191    |   |  | 103,162    |   |  | 255,656    |  
|Filing and Transfer Agent Fees                                     |  | 14,095     |   |  | 3,128      |   |  | 1,741      |  
|Interest and Bank Charges                                          |  | 3,378      |   |  | 2,905      |   |  | 20,138     |  
|Management Fees (Note 9)                                           |  | 125,515    |   |  | 129,279    |   |  | 129,425    |  
|Office and Telephone                                               |  | 10,047     |   |  | 10,189     |   |  | 11,293     |  
|Office and Warehouse Rent                                          |  | 11,221     |   |  | 15,865     |   |  | 15,415     |  
|Stock-Based Compensation (Note 7(d))                               |  | 194,281    |   |  | -          |   |  | -          |  
|Travel and Automobile                                              |  | 3,027      |   |  | 13,931     |   |  | 8,839      |  
|                                                                   |  |            |   |  |            |   |  |            |  
|                                                                   |  | 660,024    |   |  | 407,622    |   |  | 544,151    |  
|                                                                   |  |            |   |  |            |   |  |            |  
|LOSS BEFORE OTHER ITEMS                                            |  | (659,427   | ) |  | (436,206   | ) |  | (543,151   | )
|Foreign Exchange Gain (Loss)                                       |  | 20,315     |   |  | (30,773    | ) |  | 31,803     |  
|Net Gain on Sale of Subsidiaries (Note 3)                          |  | 222,555    |   |  | -          |   |  | -          |  
|Net Gain (Loss) on Settlement of Debts (Note
      7(b)(ii),(iii)) |  | -          |   |  | 21,505     |   |  | (13,432    | )
|Loss on Sale of Oil and Gas Interests (Note
      5(b))            |  | (2,718     | ) |  | -          |   |  | -          |  
|Write-Down Oil and Gas Interests (Note 5(a))                       |  | -          |   |  | (40,499    | ) |  | -          |  
|Contingent Loss on Legal Claim (Note 6)                            |  | (60,750    | ) |  | -          |   |  | -          |  
|                                                                   |  |            |   |  |            |   |  |            |  
|NET LOSS FOR THE YEAR                                              |  | (480,025   | ) |  | (485,973   | ) |  | (524,780   | )
|                                                                   |  |            |   |  |            |   |  |            |  
|Deficit, Beginning of the Year                                     |  | (2,401,737 | ) |  | (1,915,764 | ) |  | (1,390,984 | )
|                                                                   |  |            |   |  |            |   |  |            |  
|DEFICIT, END OF THE YEAR                                           |  | (2,881,762 | ) |  | (2,401,737 | ) |  | (1,915,764 | )
|                                                                   |  |            |   |  |            |   |  |            |  
|WEIGHTED AVERAGE NUMBER OF SHARES
      OUTSTANDING                |  | 24,958,429 |   |  | 18,045,628 |   |  | 13,882,702 |  
|                                                                   |  |            |   |  |            |   |  |            |  
|BASIC AND DILUTED LOSS PER SHARE                                   |  | (0.02      | ) |  | (0.03      | ) |  | (0.04      | )

F-6

---

|RAINCHIEF ENERGY INC.                        
|---------------------------------------------
|                                             
|Consolidated Statements of Comprehensive Loss
|As at December 31, 2009, 2008 and 2007       
|(Expressed in
      Canadian Dollars)        

|                                        |  | 2009     |   |  | 2008     |   |  | 2007     |  
|--------------------------------------- |  | -------- | - |  | -------- | - |  | -------- | -
|                                        |  | $        |   |  | $        |   |  | $        |  
|NET LOSS FOR THE YEAR                   |  | (480,025 | ) |  | (485,973 | ) |  | (524,780 | )
|                                        |  |          |   |  |          |   |  |          |  
|Other Comprehensive Income for the Year |  | -        |   |  | -        |   |  | -        |  
|                                        |  |          |   |  |          |   |  |          |  
|COMPREHENSIVE LOSS FOR THE YEAR         |  | (480,025 | ) |  | (485,973 | ) |  | (524,780 | )

F-7

---

|RAINCHIEF ENERGY INC.                 
|--------------------------------------
|                                      
|Consolidated Statements of Cash Flows 
|As at December 31, 2009, 2008 and 2007
|(Expressed in
      Canadian Dollars) 

|                                               |  | 2009     |   |  | 2008     |   |  | 2007     |  
|---------------------------------------------- |  | -------- | - |  | -------- | - |  | -------- | -
|                                               |  | $        |   |  | $        |   |  | $        |  
|CASH PROVIDED BY (USED IN):                    |  |          |   |  |          |   |  |          |  
|                                               |  |          |   |  |          |   |  |          |  
|OPERATING ACTIVITIES                           |  |          |   |  |          |   |  |          |  
|Net Loss for the Year                          |  | (480,025 | ) |  | (485,973 | ) |  | (524,780 | )
|Non-Cash Items                                 |  |          |   |  |          |   |  |          |  
|Amortization                                   |  | 227      |   |  | 519      |   |  | 362      |  
|Bad Debt                                       |  | 71,000   |   |  | -        |   |  | -        |  
|Consulting and Investor
      Relations        |  | 82,029   |   |  | 68,548   |   |  | 266,400  |  
|Stock-Based Compensation                       |  | 194,281  |   |  | -        |   |  | -        |  
|Unrealized Foreign
      Exchange (Gain) Loss  |  | -        |   |  | 754      |   |  | (19,212  | )
|Net (Gain) on Sale of Subsidiaries             |  | (222,555 | ) |  | -        |   |  | -        |  
|Net (Gain) Loss on
      Settlement of Debts   |  | -        |   |  | (21,505  | ) |  | 13,432   |  
|Loss on Sale of Oil and Gas Interests          |  | 2,718    |   |  | -        |   |  | -        |  
|Write-Down of Oil and
      Gas Property       |  | -        |   |  | 40,499   |   |  | -        |  
|                                               |  |          |   |  |          |   |  |          |  
|                                               |  | (352,325 | ) |  | (397,158 | ) |  | (263,798 | )
|Changes in Non-Cash Working Capital Accounts   |  |          |   |  |          |   |  |          |  
|Accounts Receivable                            |  | 9,699    |   |  | (11,050  | ) |  | -        |  
|GST Recoverable                                |  | (11,548  | ) |  | 10,734   |   |  | 2,020    |  
|Inventory                                      |  | 9,844    |   |  | 38,456   |   |  | 6,124    |  
|Prepaid Expenses                               |  | -        |   |  | -        |   |  | 270      |  
|Accounts Payable and
      Accrued Liabilities |  | 45,926   |   |  | 67,682   |   |  | 21,898   |  
|                                               |  |          |   |  |          |   |  |          |  
|                                               |  | (298,404 | ) |  | (291,336 | ) |  | (233,486 | )
|                                               |  |          |   |  |          |   |  |          |  
|FINANCING ACTIVITIES                           |  |          |   |  |          |   |  |          |  
|Shares Issued for Cash, Net of Issuance Costs  |  | 210,271  |   |  | 169,247  |   |  | 109,684  |  
|Shares Subscription Advance                    |  | 5,384    |   |  | -        |   |  | -        |  
|Advances from Related Parties                  |  | 64,199   |   |  | 145,838  |   |  | 107,833  |  
|Net Proceeds from Promissory Note              |  | 7,784    |   |  | -        |   |  | -        |  
|                                               |  |          |   |  |          |   |  |          |  
|                                               |  | 287,638  |   |  | 315,085  |   |  | 217,517  |  
|                                               |  |          |   |  |          |   |  |          |  
|INVESTING ACTIVITIES                           |  |          |   |  |          |   |  |          |  
|Acquisition of Oil and Gas Interests           |  | (10,501  | ) |  | (30,500  | ) |  | -        |  
|Proceed on Sale of Subsidiaries                |  | 10,001   |   |  | -        |   |  | -        |  
|Cash Disposed of on Sale of Subsidiaries       |  | (283     | ) |  | -        |   |  | -        |  
|                                               |  |          |   |  |          |   |  |          |  
|                                               |  | (783     | ) |  | (30,500  | ) |  | -        |  
|                                               |  |          |   |  |          |   |  |          |  
|DECREASE IN CASH                               |  | (11,549  | ) |  | (6,751   | ) |  | (15,969  | )
|                                               |  |          |   |  |          |   |  |          |  
|Cash, Beginning of the Year                    |  | 563      |   |  | 7,314    |   |  | 23,283   |  
|                                               |  |          |   |  |          |   |  |          |  
|(BANK INDEBTEDNESS) CASH, END OF THE YEAR      |  | (10,986  | ) |  | 563      |   |  | 7,314    |  

Supplemental Cash Flow Information (Note 8)

F-8

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 1  NATURE AND CONTINUANCE OF OPERATIONS

Rainchief Energy Inc. (the Company) was incorporated on
December 28, 2000 under the Company Act of the Province of British Columbia,
Canada. The Company changed its name from Black Diamond Brands Corporation to
Rainchief Energy Inc. on November 21, 2008. The Company has no active operations
and is currently analyzing project opportunities.

The Company carried its oil and gas exploration, and wine and
spirit distribution operations through its wholly-owned subsidiaries. During the
year ended December 31, 2009, the Company disposed of its interests in these
subsidiaries (Note 3).

While these consolidated financial statements have been
prepared on the assumption that the Company is a going concern and will be able
to realize its assets and discharge its liabilities in the normal course of
business, certain events and conditions cast substantial doubt on this
assumption. The Company continues to incur significant operating losses and has
no current source of revenue. As at December 31, 2009, the Company has a
consolidated deficit of $2,881,762 and a working capital deficiency of $268,586.

The Companys ability to continue operations is uncertain and
is dependent upon generating profitable operating, maintaining current financing
obligations and obtaining new sources of financing. The outcome of these matters
cannot be predicted at this time. Although the Company has arranged private
placements of units raising gross proceeds of US$182,200 in 2010 (Note 12(b))
and has been successful in obtaining financing in the past, there is no
assurance that the Company will be successful with future financing ventures in
light of the current tight global credit market.

These consolidated financial statements do not reflect any
adjustments to the amounts and classifications of assets and liabilities, which
would be necessary should the Company be unable to continue operations.

NOTE 2  SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements are prepared using
Canadian Generally Accepted Accounting Principles (CDN GAAP). The significant
accounting policies followed by the Company and its subsidiaries are summarized
below:

|a) | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The consolidated financial statements include the
      accounts of the Company, and its wholly-owned subsidiaries, Black Diamond
      Importers Inc., Liberty Valley Wines LLC and Point Grey Energy Inc. up to
      the date of disposal of these subsidiaries (Note 3). All intercompany
      transactions and balances have been eliminated.                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The wine and spirit distribution and oil and gas
      exploration activities of these subsidiaries comprised the Companys
      principal business operations, and therefore have not been presented as a
      disposal of an operating segment of the Company or as discontinued
      operations pursuant to Emerging Issues Committee (EIC) 161 on discontinued
      operations of the CICA Handbook. The financial results of the Companys
      reporting segments have been presented in Note 10.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|b) | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Inventory consists of liquor products and is valued at
      the lower of cost and net realizable value. Cost of sales is determined on
      a weighted average cost basis. Warehousing, shipping and related costs are
      excluded from cost of sales, and are expensed as
  incurred.                                                                                                                                                                                                                 

F-9

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 2  SIGNIFICANT ACCOUNTING POLICIES (Continued)

|c) | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Property and equipment are recorded at cost. Amortization
      is calculated using the following methods and annual rates, except in the
      year of acquisition when one-half the rate is used:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Computer Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Furniture and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|d) | Oil and Gas Interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company follows the full cost method of accounting
      for its oil and gas operations whereby all costs related to the
      acquisition of, exploration for and development of oil and gas interests
      are capitalized on a property-by-property basis. Such costs include land
      acquisition costs, geological and geophysical costs, drilling and other
      costs related to exploration and development activities and do not
      necessarily reflect present or future values. All other general and
      administrative costs including interest are expensed. Proceeds from the
      disposal of oil and gas interests are applied against the capitalized
      costs of the related property.                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Upon commencement of production, capitalized costs are
      depleted using the unit-of-production method, based on estimated probable
      and proven oil and gas reserves determined by independent
  engineers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company annually applies a ceiling test to
      capitalized costs, net of accumulated depletion and depreciation, to
      ensure they do not exceed the estimated undiscounted value of future net
      revenues from proven oil and gas reserves, based on year-end prices and
      costs, adjusted for estimated future general and administrative expenses,
      abandonment and site restoration costs, financing costs and income taxes.
      If the carrying value of the oil and gas interests is not recoverable, an
      impairment loss is recognized to the extent that the carrying value
      exceeds the discounted future net cash flows of its reserves.                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|e) | Asset Retirement Obligation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company records legal obligations associated with the
      retirement of long-lived assets, including site restoration and closure
      costs associated with the abandonment of oil and gas properties, in the
      period in which it is incurred if a reasonable estimate of fair value can
      be made. The liabilities are determined using the net present value of the
      cash flows required to settle the obligations. A corresponding amount is
      capitalized to the related asset. Asset retirement costs are charged to
      earnings in a manner consistent with the depreciation, depletion and
      amortization of the underlying assets. Liabilities are accreted over time
      for changes in fair value through charges to operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | As at December 31, 2009 and 2008, the Company has no
      material asset retirement obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|f) | Share Capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company records proceeds from share issuances net of
      commissions and issuance costs. Shares issued for other than cash
      consideration are valued at the quoted price on the Over-the-Counter
      Bulletin Board in the United States based on the earliest of: (i) the date
      the shares are issued, and (ii) the date the agreement to issue the shares
      is reached.                                                                                                                                                                                                                                                                                                                                                                              

F-10

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 2  SIGNIFICANT ACCOUNTING POLICIES (Continued)

|g) | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Employee stock options and other types of stock-based
      compensation are accounted for using the fair value based method. The
      Company estimates the fair value using the Black-Scholes option-pricing
      model. The fair value of an option is estimated on the date of grant and
      expensed over the vesting period. The fair value of a brokers warrant is
      determined on the date of grant and recorded as share issuance costs.
      Consideration received on the exercise of stock options or brokers
      warrants is recorded as share capital and the related contributed surplus
      amount is transferred to share capital.                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|h) | Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Basic loss per share is calculated using the weighted
      average number of common shares outstanding during the year. Diluted loss
      per share is the same as basic loss per share as the issuance of shares on
      the exercise of stock options and share purchase warrants is
      anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|i) | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Revenue is recognized upon shipment of wine products and
      when collection is reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|j) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company uses the asset and liability method of
      accounting for income taxes, whereby future income tax assets and
      liabilities are recognized based on temporary differences between the
      financial statement carrying amounts of assets and liabilities, and their
      respective tax bases. Future income tax assets and liabilities are
      measured using substantively enacted tax rates expected to apply to
      taxable income in the years in which the differences are expected to
      reverse. Future income tax assets, including the benefit of income tax
      losses available for carry-forward, are only recognized to the extent that
      it is more likely than not that the Company will realize those
    assets.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|k) | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Transactions in foreign currencies are translated to
      Canadian dollars at the rates in effect on the transaction date. Exchange
      gains or losses arising on translation or settlement of foreign currency
      denominated monetary items are charged to earnings in the period they
      arise.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The accounts of integrated foreign operations, which are
      recorded in United States dollars, have been translated into Canadian
      dollars using the temporal method as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | 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                      

Foreign exchange gains and losses from
the translation of foreign operations are reflected in the statement of
operations for the current year.

F-11

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 2  SIGNIFICANT ACCOUNTING POLICIES (Continued)

|l) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company classifies its financial instruments into one
      of the following balance sheet categories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Accordingly, the Company has classified its financial
      instruments as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|m) | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Comprehensive income is the change in net assets from
      transactions related to non-shareholder sources. The Company presents
      gains and losses which would otherwise be recorded as part of net earnings
      in other comprehensive income until it is considered appropriate to
      recognize them into net earnings. The Company presents comprehensive
      income and its components in a separate financial statement that is
      displayed with the same prominence as other financial statements. The
      Company has no transactions in other comprehensive income for the years
      ended December 31, 2009 and 2008.                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|n) | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The preparation of financial statements in conformity
      with CDN GAAP requires management to make estimates and assumptions that
      affect the reported amounts of assets and liabilities and disclosures of
      contingent assets and liabilities as at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting period. Significant areas requiring the use of management
      estimates include the assessment of recoverability of oil and gas
      interests and property and equipment, the determination of the
      amortization period of property and equipment, determination of the
      depletion period of oil and gas interests, the estimated amount of accrued
      liabilities, the realization of future tax assets, the determination of
      the fair value of shares issued for debt and services and fair value of
      warrants issued for services. Actual results could differ from those
      estimates.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|o) | Comparative Figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Certain comparative figures have been reclassified to
      conform to the presentation adopted for the current year. These
      reclassifications have no effect on the consolidated net loss for the
      years ended December 31, 2009, 2008 and 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-12

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

|p) | Adoption of New Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | During the year ended December 31, 2009, the Company
      adopted the following new presentation and disclosure standards issued by
      the Canadian Institute of Chartered Accountants (CICA) on a prospective
      basis. There was no material impact on the Companys consolidated
      financial statements as a result of the adoption of these new
      standards.                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|q) | Future Accounting Change International
      Financial Reporting Standards (IFRS)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In February 2008, the CICA announced that CDN GAAP for
      publicly accountable enterprises will be replaced by IFRS for fiscal years
      beginning on or after January 01, 2011. Companies will be required to
      provide IFRS comparative information for the previous fiscal year.
      Accordingly, the conversion from CDN GAAP to IFRS will be applicable to
      the Companys reporting for the first quarter ended March 31, 2011, with
      restatement of comparative information presented. The financial reporting
      impact of the transition to IFRS on the Companys consolidated financial
      statements cannot be reasonably estimated at this
time.

NOTE 3  SALE OF SUBSIDIARIES

On September 30, 2009, the Company disposed of its interests in
Black Diamond Importers Inc. (BDI) and Liberty Valley Wines LLC (LVW) to a
Director of the Company for $10,000. These subsidiaries were in the business of
distributing wine and spirit products in the Province of British Columbia,
Canada and in the United States.

On December 30, 2009, the Company disposed of its interests in
Point Grey Energy Inc. (PGE) to a Director of the Company for nominal
consideration. The subsidiary was engaged in the acquisition, exploration,
development and production of oil and gas interests in the Province of Alberta,
Canada.

The operations of these former subsidiaries comprised the
Companys principal business operations, and therefore have not been segregated
and presented as a disposal of an operating segment of the Company or as
discontinued operations.

F-13

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 3  SALE OF SUBSIDIARIES (Continued)

The Company recorded a net gain on the sale of these
subsidiaries in 2009 as follows:

|                                         |  | BDI     |  |  | LVW    |  |  | PGE   |  |  | Total   | 
|---------------------------------------- |  | ------- |  |  | ------ |  |  | ----- |  |  | ------- | 
|                                         |  | $       |  |  | $      |  |  | $     |  |  | $       | 
|Consideration                            |  | 5,000   |  |  | 5,000  |  |  | 1     |  |  | 10,001  | 
|Net Liabilities of Subsidiaries Disposed |  | 197,057 |  |  | 10,543 |  |  | 4,954 |  |  | 212,554 | 
|                                         |  |         |  |  |        |  |  |       |  |  |         | 
|Gain on Sale of Subsidiaries             |  | 202,057 |  |  | 15,543 |  |  | 4,955 |  |  | 222,555 | 

The consolidated carrying amounts of the assets and liabilities
of BDI and LVW as of September 30, 2009 and PGE as of December 30, 2009
were:

|Assets                 |  |        |  |  |       |  |  |   |  |  |        | 
|---------------------- |  | ------ |  |  | ----- |  |  | - |  |  | ------ | 
|Current                |  |        |  |  |       |  |  |   |  |  |        | 
|Cash                   |  | 566    |  |  | -     |  |  | - |  |  | 566    | 
|Accounts Receivable    |  | 1,350  |  |  | -     |  |  | - |  |  | 1,350  | 
|GST Recoverable        |  | 818    |  |  | -     |  |  | - |  |  | 818    | 
|Inventory              |  | 9,635  |  |  | -     |  |  | - |  |  | 9,635  | 
|                       |  |        |  |  |       |  |  |   |  |  |        | 
|                       |  | 12,369 |  |  | -     |  |  | - |  |  | 12,369 | 
|Due from Related Party |  | -      |  |  | 9,421 |  |  | - |  |  | 9,421  | 
|Property and Equipment |  | 470    |  |  | -     |  |  | - |  |  | 470    | 
|Oil and Gas Interests  |  | -      |  |  | -     |  |  | 1 |  |  | 1      | 
|                       |  |        |  |  |       |  |  |   |  |  |        | 
|                       |  | 12,839 |  |  | 9,421 |  |  | 1 |  |  | 22,261 | 

Liabilities

|Current                                  |  |          |   |  |         |   |  |        |   |  |          |  
|---------------------------------------- |  | -------- | - |  | ------- | - |  | ------ | - |  | -------- | -
|Accounts Payable and Accrued Liabilities |  | 128,168  |   |  | 19,964  |   |  | -      |   |  | 148,132  |  
|Due to Related Parties                   |  | 81,728   |   |  | -       |   |  | 4,955  |   |  | 86,683   |  
|                                         |  |          |   |  |         |   |  |        |   |  |          |  
|                                         |  | 209,896  |   |  | 19,964  |   |  | 4,955  |   |  | 234,815  |  
|                                         |  |          |   |  |         |   |  |        |   |  |          |  
|Net (Liabilities)                        |  | (197,057 | ) |  | (10,543 | ) |  | (4,954 | ) |  | (212,554 | )

NOTE 4  PROPERTY AND EQUIPMENT

|                        |  |       |  |  | Accumulated  |  |  | Net Book | 
|----------------------- |  | ----- |  |  | ------------ |  |  | -------- | 
|                        |  | Cost  |  |  | Amortization |  |  | Value    | 
|                        |  | $     |  |  | $            |  |  | $        | 
|2009                    |  |       |  |  |              |  |  |          | 
|Computer Equipment      |  | 3,890 |  |  | 3,699        |  |  | 191      | 
|Furniture and Equipment |  | 1,656 |  |  | 1,406        |  |  | 250      | 
|                        |  |       |  |  |              |  |  |          | 
|                        |  | 5,546 |  |  | 5,105        |  |  | 441      | 

F-14

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 4  PROPERTY AND EQUIPMENT (Continued)

|                        |  |       |  |  | Accumulated  |  |  | Net Book | 
|----------------------- |  | ----- |  |  | ------------ |  |  | -------- | 
|                        |  | Cost  |  |  | Amortization |  |  | Value    | 
|                        |  | $     |  |  | $            |  |  | $        | 
|2008                    |  |       |  |  |              |  |  |          | 
|Computer Equipment      |  | 3,890 |  |  | 3,617        |  |  | 273      | 
|Furniture and Equipment |  | 2,935 |  |  | 2,069        |  |  | 866      | 
|                        |  |       |  |  |              |  |  |          | 
|                        |  | 6,825 |  |  | 5,686        |  |  | 1,139    | 

NOTE 5  OIL AND GAS INTERESTS

|a) | Montag Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On November 14, 2008, the Company through its
      wholly-owned subsidiary, PGE, entered into a purchase agreement to acquire
      a 10% working interest in certain oil and gas interests in a property
      located in the Province of Alberta, Canada (the Montag Property) for a
      total purchase price of $40,500, payable as follows: $30,500
      non-refundable cash paid to the vendor and an additional consideration of
      $10,000 paid to the solicitor of the vendor in satisfaction of a debt owed
      by the vendor to the solicitor.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The vendor is involved in a legal action with the
      underlying owner and operator of the Montag Property with respect to the
      vendors entitlement to a working interest in the property. The Companys
      interest in the Montag Property was wholly derived from its purchase
      agreement with the vendor. On December 31, 2008, the Company wrote down
      the Montag Property to a nominal amount and recorded a writedown of
      $40,499 due to the uncertainty surrounding the ownership of the working
      interest.                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|b) | Peace River Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On July 08, 2009 the Company acquired a five-year
      petroleum and natural gas lease in the Peace River area of Alberta, Canada
      for total consideration of $10,501. The Company subsequently disposed of
      its interest in the property to an arms length party on December 30, 2009
      for settlement of the outstanding principal and interest totalling $7,783
      of a short-term promissory note. Accordingly, the Company recorded a loss
      of $2,718 on the disposition of the lease.                                                

NOTE 6  LEGAL CLAIM

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 three years. The Company paid US$30,000 in
consideration for prior uses of the copyrighted photographs and agreed to pay a
minimum royalty of US$22,500 per year. Pursuant to the licensing agreement, the
royalty payments were secured by the personal guarantees of the President and
Vice-President of the Company.

In March 2009, 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 was US$50,625, representing
the guaranteed royalty payments payable for the remaining term of the agreement.
As at December 31, 2009, the Company has recorded a provision of $60,750
(US$50,625) for this contingent liability.

The outcome of the legal claim is uncertain, and management is
of the opinion that the claim has no merit and seeks to recover all costs.

F-15

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 7  SHARE CAPITAL

|a) | Authorized Capital                                      
|-- | --------------------------------------------------------
|   |                                                         
|   | Unlimited number of common shares without par
    value.
|   |                                                         
|b) | Issued and Outstanding Common
  Shares                  

| |                                                             |  | Number of     |  |   | Amount    | 
| | ----------------------------------------------------------- |  | ------------- |  | - | --------- | 
| |                                                             |  | Common Shares |  | $ |           | 
| | Balance, December 31, 2007                                  |  | 17,418,852    |  |   | 1,567,600 | 
| | Shares Issued for Cash, Net of Share Issue Costs (i)        |  | 1,250,000     |  |   | 166,678   | 
| | Shares Issued for Debt                                      |  |               |  |   |           | 
| | Promissory Note
      Payable to Arms Length Party (ii)    |  | 150,000       |  |   | 17,664    | 
| | Amounts Owed to Related Parties (iii)                       |  | 5,000,000     |  |   | 279,232   | 
| | Balance, December 31, 2008                                  |  | 23,818,852    |  |   | 2,031,174 | 
| | Shares Issued for Cash, Net of Share Issue
      Costs (iv) |  | 4,020,000     |  |   | 210,271   | 
| | Balance, December 31, 2009                                  |  | 27,838,852    |  |   | 2,241,445 | 

| | (i)   | 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 7(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.                                                                                                                                                                                 
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (ii)  | On November 14, 2008, the Company issued 150,000 common
      shares with a fair value of $17,664 and 150,000 share purchase warrants
      with a fair value of $9,961 (Note 7(d)) in settlement of the outstanding
      principal and interest of $19,737 (US$15,000) of a promissory note. One
      warrant entitles the holder to purchase one additional common share of the
      Company exercisable at a price of US$0.15 per share until November 01,
      2009. The Company recorded a loss of $7,888 on settlement of
  debt.                               
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (iii) | In December 2008, the Company issued 3,000,000 common
      shares with a fair value of $167,539 to the President of the Company and
      2,000,000 common shares with a fair value of $111,693 to the
      Vice-President of the Company to settle outstanding debts of $185,175
      (US$150,000) and $123,450 (US$100,000) respectively. The Company recorded
      a gain of $29,393 on settlement of these debts.                                                                                                                                                 

F-16

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 7  SHARE CAPITAL (Continued)

|b) | Issued and Outstanding Common Shares
      (Continued)                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                   
|   | (iv)                                                                                                                              
|   |                                                                                                                                   
|   |                                                                                                                                   
|   |                                                                                                                                   
|   |                                                                                                                                   
|   |                                                                                                                                   
|c) | Share Purchase Warrants                                                                                                           
|   |                                                                                                                                   
|   | The Company has the following warrants outstanding which
      expire on various dates between March 27, 2010 and June 30,
  2014:

| |                                                      |  |            |   |  | Weighted Average |  
| | ---------------------------------------------------- |  | ---------- | - |  | ---------------- | -
| |                                                      |  | Number of  |   |  | Exercise Price   |  
| |                                                      |  | Warrants   |   |  | US$              |  
| |                                                      |  |            |   |  |                  |  
| | Balance, December 31, 2007                           |  | 1,220,000  |   |  | 0.34             |  
| | Issued During the Year                               |  |            |   |  |                  |  
| | Private Placements
      (Note 7(b)(i))              |  | 1,250,000  |   |  | 0.23             |  
| | Finders Fees (Note 7(b)(i))                         |  | 100,000    |   |  | 0.25             |  
| | Consulting and Investor
      Relations Service (i)  |  | 1,300,000  |   |  | 0.11             |  
| | Promissory Note Payable (Note 7(b
      )(ii))       |  | 150,000    |   |  | 0.15             |  
| | Expired During the Year                              |  | (1,220,000 | ) |  | 0.34             |  
| |                                                      |  |            |   |  |                  |  
| | Balance, December 31, 2008                           |  | 2,800,000  |   |  | 0.17             |  
| | Issued During the Year                               |  |            |   |  |                  |  
| | Private Placements
      (Note 7(b)(iv))             |  | 4,020,000  |   |  | 0.10             |  
| | Consulting and Investor Relations
      Service (ii) |  | 1,700,000  |   |  | 0.08             |  
| | Management Service
      (iii)                       |  | 1,500,000  |   |  | 0.08             |  
| | Expired During the Year                              |  | (2,300,000 | ) |  | (0.19            | )
| |                                                      |  |            |   |  |                  |  
| | Balance, December 31, 2009                           |  | 7,720,000  |   |  | 0.09             |  

| | (i)   | During the year ended December 31, 2008, the Company
      issued a total of 1,300,000 warrants with a total fair value of $68,548
      (Note 7(d)) for investor relations and consulting services. Each warrant
      is exercisable into one common share at a price between US$0.07 and
      US$0.20 per share. 800,000 warrants expired during the year ended December
      31, 2009.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                             
| | (ii)  | During the year ended December 31, 2009, the Company
      issued a total of 1,700,000 warrants with a total fair value of $82,029
      (Note 7(d)) for investor relations and consulting services. Each warrant
      is exercisable into one common share at US$0.08 per share and expires on
      June 30, 2014.                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                             
| | (iii) | During the year ended December 31, 2009, the Company
      issued a total of 1,500,000 warrants with a total fair value of $194,281
      (Note 7(d)) to Directors and Officers of the Company. Each warrant is
      exercisable into one common share at a price of US$0.08 per share and
      expires on June 30, 2014.                                                                 

F-17

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 7  SHARE CAPITAL (Continued)

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

| |                                                                     |  | 2009    |  |  | 2008   | 
| | ------------------------------------------------------------------- |  | ------- |  |  | ------ | 
| |                                                                     |  | $       |  |  | $      | 
| |                                                                     |  |         |  |  |        | 
| | Balance, Beginning of the Year                                      |  | 90,478  |  |  | 9,400  | 
| | Warrants Issued to Broker                                           |  | -       |  |  | 2,569  | 
| | Warrants Issued for Debt Settlement                                 |  | -       |  |  | 9,961  | 
| | Warrants Issued for Consulting and Investor Relations
      Service |  | 82,029  |  |  | 68,548 | 
| | Warrants Issued to Directors and Officers                           |  | 194,281 |  |  | -      | 
| |                                                                     |  |         |  |  |        | 
| | Balance, End of the Year                                            |  | 366,788 |  |  | 90,478 | 

The weighted average unit fair value of
warrants issued during the year ended December 31, 2009 was $0.09 (2008  $0.05)
.. The fair value of these warrants was estimated on the grant date utilizing the
Black-Scholes pricing model with the following assumptions:

| | Risk-Free Annual Interest Rate  |  | 2.6%          |  |  | 0.8%  2.4%       | 
| | ------------------------------- |  | ------------- |  |  | ----------------- | 
| | Expected Annual Dividend Yield  |  | 0%            |  |  | 0%                | 
| | Expected Stock Price Volatility |  | 179%          |  |  | 146%  179%       | 
| | Expected Life of Warrant        |  | 5
      years |  |  | 1  2
      years | 

Option pricing models require the input
of highly subjective assumptions. Changes in the subjective input assumptions
can materially affect the fair value estimate, and therefore the existing models
may not necessarily provide a single reliable measure of the fair value of the
warrants issued.

NOTE 8  SUPPLEMENTAL CASH FLOW INFORMATION

|   |                                                 |  |  | 2009  |  |  | 2008    |  |  | 2007    | 
|-- | ----------------------------------------------- |  |  | ----- |  |  | ------- |  |  | ------- | 
|   |                                                 |  |  | $     |  |  | $       |  |  | $       | 
|a) | Significant Non-Cash Financing
      Activities |  |  |       |  |  |         |  |  |         | 
|   | Shares Issued for Settlement of:                |  |  |       |  |  |         |  |  |         | 
|   | Accounts Payable                                |  |  | -     |  |  | -       |  |  | 129,450 | 
|   | Promissory Note Payable                         |  |  | -     |  |  | 17,664  |  |  | 303,124 | 
|   | Amounts Owed to Related Parties                 |  |  | -     |  |  | 279,232 |  |  | -       | 
|   |                                                 |  |  | -     |  |  | 296,896 |  |  | 432,574 | 
|   |                                                 |  |  |       |  |  |         |  |  |         | 
|b) | Other Information                               |  |  |       |  |  |         |  |  |         | 
|   | Interest Paid                                   |  |  | 1,787 |  |  | 1,115   |  |  | 14,354  | 

F-18

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 9  RELATED PARTIES TRANSACTIONS

In addition to those transactions disclosed elsewhere in these
consolidated financial statements, the Company has the following related party
balances and transactions.

Balances due from (to) related parties are unsecured,
non-interest bearing and have no specific terms of repayment. The Company had
the following amounts due from (to) related parties as at December 31, 2009 and
2008:

|                                                            |  | 2009    |   |  | 2008    |  
|----------------------------------------------------------- |  | ------- | - |  | ------- | -
|                                                            |  | $       |   |  | $       |  
|                                                            |  |         |   |  |         |  
|Due (to) from Directors and Officers                        |  | (81,896 | ) |  | 4,353   |  
|Due to Companies with Common Directors and Officers         |  | (4,414  | ) |  | (37,943 | )
|Due to a Person Related to the Directors
      and Officers |  | (5,500  | ) |  | -       |  
|                                                            |  |         |   |  |         |  
|                                                            |  | (91,810 | ) |  | (33,590 | )

The Company had the following transactions with related parties
for the years ended December 31, 2009, 2008 and 2007:

|                                                                                                                                            |  | 2009    |  |  | 2008    |  |  | 2007    | 
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------- |  |  | ------- |  |  | ------- | 
|                                                                                                                                            |  | $       |  |  | $       |  |  | $       | 
|Management fees charged by Officers of the
      Company for management, administration, supervision and company
      development services |  | 125,515 |  |  | 129,279 |  |  | 129,425 | 
|                                                                                                                                            |  |         |  |  |         |  |  |         | 
|Interest accrued to a person related to the
      Directors and Officers of the Company for cash advanced                                   |  | -       |  |  | -       |  |  | 17,990  | 
|                                                                                                                                            |  |         |  |  |         |  |  |         | 
|Bad debt on amount owed by a former
      subsidiary                                                                                        |  | 71,000  |  |  | -       |  |  | -       | 

All related party transactions were in the normal course of
operations and were measured at the exchange value, which represented the fair
value established and agreed to by the related parties.

NOTE 10  SEGMENTED INFORMATION

Prior to the sale of its operating subsidiaries in 2009 (Note
3), the Company had operations in two business segments: oil and gas exploration
in the Province of Alberta, Canada, and wine and spirit distribution in the
Province of British Columbia, Canada and the United States.

|                     |   |        |  |  |             |   |  | Oil and Gas  |  |  | Wine and Spirit |  |  |       |  |  |         |  
|-------------------- | - | ------ |  |  | ----------- | - |  | ------------ |  |  | --------------- |  |  | ----- |  |  | ------- | -
|                     |   | Total  |  |  | Exploration |   |  | Distribution |  |  | Corporate       | 
|                     |   | 2009   |  |  | 2008        |   |  | 2009         |  |  | 2008            |  |  | 2009  |  |  | 2008    |  
|                     | $ | $      |  |  | $           |   |  | $            |  |  | $               |  |  | $     |  |  | $       |  
|Sales                |   | 3,838  |  |  | 14,767      |   |  | -            |  |  | -               |  |  | 3,838 |  |  | 14,767  |  
|Gross Profit (Loss)  |   | 597    |  |  | (28,584     | ) |  | -            |  |  | -               |  |  | 597   |  |  | (28,584 | )
|Amortization         |   | 227    |  |  | 519         |   |  | -            |  |  | -               |  |  | 83    |  |  | 197     |  
|Total Assets         |   | 14,284 |  |  | 35,345      |   |  | -            |  |  | 51              |  |  | -     |  |  | 34,585  |  
|Capital Expenditures |   | 10,501 |  |  | 30,500      |   |  | 10,501       |  |  | 30,500          |  |  | -     |  |  | -       |  

F-19

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 11  INCOME TAXES

|a) | Provision for Income Taxes                                                     
|-- | -------------------------------------------------------------------------------
|   |                                                                                
|   | A reconciliation of income taxes at the statutory tax
      rate is as follows:

| |                                                        |   | 2009     |   |   | 2008     |   |   | 2007     |  
| | ------------------------------------------------------ | - | -------- | - | - | -------- | - | - | -------- | -
| | Combined Federal and Provincial Income Tax
      Rates |   | 13.50%   |   |   | 14.92%   |   |   | 17.62%   |  
| |                                                        | $ |          |   | $ |          |   | $ |          |  
| | Loss before income taxes                               |   | (480,025 | ) |   | (485,973 | ) |   | (524,780 | )
| |                                                        |   |          |   |   |          |   |   |          |  
| | Expected Income Tax Recovery                           |   | (64,803  | ) |   | (72,495  | ) |   | (92,467  | )
| | Permanent Differences                                  |   | (2,223   | ) |   | 488      |   |   | (1,883   | )
| | Change in Valuation Allowance                          |   | 62,163   |   |   | (43,707  | ) |   | 89,809   |  
| | Effect of Change in Tax Rates                          |   | 243      |   |   | 79,308   |   |   | -        |  
| | Expiration of Non-Capital Losses and Other             |   | 4,620    |   |   | 36,406   |   |   | 4,541    |  
| | Income Tax Expense (Recovery)                          |   | -        |   |   | -        |   |   | -        |  

|b) | Future Income Taxes                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                  
|   | The tax effects of significant temporary differences that
      give rise to future income tax assets as at December 31, 2009 and 2008
      are:

| | Future Income Tax Assets:              |  |          |   |  |          |  
| | -------------------------------------- |  | -------- | - |  | -------- | -
| | Non-Capital Losses
      Carry-Forward |  | 337,526  |   |  | 273,732  |  
| | Share Issuance Costs                   |  | 6,306    |   |  | 8,042    |  
| | Property and Equipment                 |  | 197      |   |  | 275      |  
| | Capital Losses                         |  | 183      |   |  | -        |  
| | Valuation Allowance                    |  | (344,212 | ) |  | (282,049 | )
| |                                        |  |          |   |  |          |  
| | Net Future Income Tax Assets           |  | -        |   |  | -        |  

As at December 31, 2009, the Company
has non-capital losses of approximately $2,500,200 which may be applied to
reduce taxable income of future years. The non-capital losses expire as
follows:

| | 2010 |  | 36,000    | 
| | ---- |  | --------- | 
| | 2014 |  | 24,200    | 
| | 2015 |  | 86,300    | 
| | 2026 |  | 313,100   | 
| | 2027 |  | 515,300   | 
| | 2028 |  | 367,400   | 
| | 2029 |  | 1,157,900 | 
| |      |  |           | 
| |      |  | 2,500,200 | 

Future tax benefits which may arise as
a result of these losses have not been recognized in these financial statements
and have been offset by a valuation allowance.

F-20

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 12  SUBSEQUENT EVENTS

|a) | Share Consolidation                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On March 22, 2010, the Company consolidated its share
      capital in the ratio of 1 new common share for 10 common shares
    held.                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|b) | Private Placements                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In March 2010, the Company issued 50,000
      post-consolidated common shares at a price of US$0.10 per share. The gross
      proceeds of $5,384 (US$5,000) were received by the Company during the year
      ended December 31, 2009.                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|   | During March and April 2010, the Company received gross
      proceeds of US$182,200 in a private placement of 9,110,000 units at
      US$0.02 per unit. One unit comprises of one post-consolidation common
      share and one share purchase warrant. Each warrant is exercisable into one
      common share at a price of US$0.02 per share for a period of one
    year.                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|c) | Debt Settlement                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On March 02, 2010, certain related parties assigned debts
      owed by the Company to them totalling US$97,710 to other arms length
      parties (Assigned Creditors) for a nominal consideration of $10. These
      Assigned Creditors agreed to accept 15,000,000 post-consolidation common
      shares of the Company at a price of US$0.006514 per share in settlement of
      these debts.

NOTE 13  FINANCIAL INSTRUMENTS

The Companys financial instruments are exposed to certain
financial risks:

|a) | Fair Values                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The carrying values of cash, bank indebtedness, accounts
      receivable, accounts payable and accrued liabilities, and amounts due to
      and from related parties approximate their fair value as at the balance
      sheet date.                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|b) | Liquidity Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Liquidity risk refers to the risk that an entity will
      encounter difficulty meeting obligations associated with financial
      liabilities. The Company is dependent upon on the availability of credit
      from its suppliers and its ability to generate sufficient funds from
      equity and debt financing to meet current and future obligations. There
      can be no assurance that such financing will be available on terms
      acceptable to the Company.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|c) | Credit Risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Credit risk is the risk of loss associated with a counter
      partys inability to fulfill its payment obligations. Management considers
      that risks related to credit are not significant to the Company at this
      time.                                                                                                                                                                                                                                            

F-21

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 13  FINANCIAL INSTRUMENTS (Continued)

|d) | Interest rate risk                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Interest rate risk is the risk that the fair value or
      future cash flows of a financial instrument will fluctuate because of
      changes in market interest rates. Management considers that risks related
      to interest are not significant to the Company at this time. Amounts owed
      from and to related parties are non-interest bearing.                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|e) | Foreign Exchange Risk                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company operates in Canada and the United States and
      some of its material expenditures are payable in U.S. dollars. The Company
      is therefore subject to currency exchange risk arising from the degree of
      volatility of changes in exchange rates between the Canadian dollar and
      the U.S. dollar. The Company does not use derivative instruments to reduce
      its exposure to foreign currency risk.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | As at December 31, 2009, the Company had the following
      financial instruments in U.S. dollars:                                                                                                                                                                                                                                                                                                                                  

US$Bank Indebtedness
    
    10,554Accounts Payable and Accrued Liabilities
    
    80,59891,152


NOTE 14  CAPITAL MANAGEMENT

The Companys objective for managing its capital structure is
to safeguard the Companys ability to continue as a going concern and to ensure
it has the financial capacity, liquidity and flexibility to fund its ongoing
operations and capital expenditures including investment in resource properties
it has or may acquire.

The Company manages its share capital as capital, which as at
December 31, 2009 totalled $2,241,445 (2008  $2,031,174). At this time the
Companys access to the debt market is limited and it relies on equity issuances
and the support of shareholders to fund its investments in capital assets and
resource properties. The Company monitors capital to maintain a sufficient
working capital position to fund annualized administrative expenses and capital
investments.

As at December 31, 2009 the Company had a working capital
deficiency of $268,586. The Company will issue shares and may from time to time
adjust its capital spending to maintain or adjust the capital structure. There
can be no assurance that the Company will be able to obtain debt or equity
capital in the case of operating cash deficits.

The Companys share capital is not subject to external
restrictions. The Company has not paid or declared any dividends since the date
of incorporation, nor are any contemplated in the foreseeable future. There were
no changes in the Companys approach to capital management during the year ended
December 31, 2009.

F-22

---

|RAINCHIEF ENERGY INC.                         
|----------------------------------------------
|                                              
|Notes to the Consolidated Financial Statements
|December 31, 2009 and 2008                    
|(Expressed in
      Canadian Dollars)         

NOTE 15  DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

The Company prepares its consolidated financial statements in
accordance with accounting principles generally accepted in Canada which would
not differ in all material respects from those principles that the Company would
have followed had its consolidated financial statements been prepared in
accordance with accounting principles generally accepted in the United States
and from practices prescribed by the United States Securities and Exchange
Commission. Accordingly, there were no reported differences for the Company for
the years ended December 31, 2009, 2008 and 2007 which would require
reconciliation from CDN GAAP to US GAAP.

|a) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company uses the asset and liability method to
      account for income taxes pursuant to Section 3465 of the Canadian CICA
      Handbook which is substantially consistent with the Statement of Financial
      Accounting Standards (SFAS) No. 109 Accounting for Income
  Taxes.                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | As described in Note 11, the Company has future income
      tax assets related to its Canadian operations calculated at the
      substantively enacted rates in Canada at December 31, 2009, 2008 and 2007.
      For US GAAP purposes, SFAS No. 109 requires deferred tax assets to be
      measured at only enacted tax rates. These assets would have been reduced
      to $Nil by a valuation allowance, which is consistent with the accounting
      treatment under CDN GAAP. Accordingly, there is no difference in the
      consolidated financial position or results of operations reported under
      CDN GAAP and US GAAP for the years ended December 31, 2009, 2008 and
      2007.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|b) | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Companys policy for accounting for stock-based
      compensation awards under CDN GAAP is disclosed in Note 2(g). For US GAAP
      purposes, the Company uses the fair value method of accounting for
      stock-based compensation, a treatment consistent with the accounting
      treatment used for CDN GAAP, under SFAS No. 123R Accounting for
      Stock-Based Compensation. Accordingly, there is no difference in the
      consolidated financial statements under CDN GAAP or US GAAP for the years
      ended December 31, 2009, 2008 and 2007.                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|c) | Recent United States Accounting
    Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In June 2009, the Financial Accounting Standards Board
      (FASB) released The FASB Accounting Standards Codification. The FASB
      Accounting Standards Codification (ASC) will become the source of
      authoritative U.S. generally accepted accounting principles recognized by
      the FASB to be applied to nongovernmental entities. The ASC will supersede
      all then existing non-SEC accounting and reporting standards. SFAS No. 168
      is effective for financial statements issued for interim and annual
      periods ending after September 15, 2009. The adoption of the ASC did not
      result in material changes to the consolidated financial
  statements.   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In January 2010, the FASB issued Accounting Standards
      Update No. 2010-02 Accounting and Reporting for Decreases in Ownership of
      a Subsidiary  a Scope Clarification. The Update addresses the scope of
      the existing guidance in ASC 810.10 and expands the disclosure guidelines
      related to a deconsolidation or derecognition as a result of a decrease in
      ownership. The Update is effective retrospectively to January 01, 2009.
      The adoption of the Update did not result in material changes to the
      consolidated financial statements.                                                                                                                

F-23

---