ROUGE RESOURCES LTD.(formerly Gemstar Resources Ltd.)



FINANCIAL STATEMENTS



JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

---



AUDITORS' REPORT

To the Shareholders of Rouge Resources Ltd (formerly
Gemstar Resources Ltd.) (An Exploration Stage Company)

We have audited the balance sheets of Rouge Resources Ltd.
(formerly Gemstar Resources Ltd.) as at January 31, 2008 and 2007, and the
statements of operations and deficit, and cash flows for each of the years ended
January 31, 2008, 2007 and 2006. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally
accepted auditing standards and the 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 financial statements present fairly, in
all material respects, the financial position of the Company as at January 31,
2008 and 2007, and the results of its operations and its cash flows for each of
the years ended January 31, 2008, 2007 and 2006, in accordance with Canadian
generally accepted accounting principles.

|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|                  |                      
|May 28, 2008      | Chartered Accountants

Comments by Auditors for U.S. Readers on Canada  U.S.
Reporting Conflict

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 financial statements. Our report to the
shareholders, dated May 28, 2008 is expressed in accordance with Canadian
reporting standards, which do not permit a reference to such events and
conditions in the auditors report when these are adequately disclosed in the
financial statements.

|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|                  |                      
|May 28, 2008      | Chartered Accountants



---

ROUGE RESOURCES LTD.(formerly
Gemstar Resources Ltd.)

BALANCE SHEETS(Stated in
Canadian Dollars)

|                                                               |   | JANUARY
      31 |  
|-------------------------------------------------------------- | - | ---------------- | -
|                                                               |   | 2008             |  
|                                                               |   |                  |  
|ASSETS                                                         |   |                  |  
|Current                                                        |   |                  |  
|Cash                                                           | $ | 5,999            |  
|GST receivable                                                 |   | 4,064            |  
|                                                               |   | 10,063           |  
|                                                               |   |                  |  
|Credit Card Deposit(Note 3)                                    |   | 6,900            |  
|Mineral Property Interests(Note 4)                             |   | 70,439           |  
|Equipment(Note 5)                                              |   | 2,641            |  
|                                                               |   |                  |  
|                                                               | $ | 90,043           |  
|                                                               |   |                  |  
|LIABILITIES                                                    |   |                  |  
|Current                                                        |   |                  |  
|Accounts
      payable and accrued liabilities                 | $ | 106,078          |  
|Demand loans from related
      parties, including convertible |   |                  |  
|promissory note (Note 6)                                       |   | 1,240,741        |  
|                                                               |   | 1,346,819        |  
|SHAREHOLDERS DEFICIENCY                                       |   |                  |  
|                                                               |   |                  |  
|Share Capital                                                  |   |                  |  
|Authorized:                                                    |   |                  |  
|Unlimited number (2007  10,000,000) common                    |   |                  |  
|shares without par value                                       |   |                  |  
|Issued:                                                        |   |                  |  
|565,171 shares (Note 7)                                        |   | 1,113,471        |  
|                                                               |   |                  |  
|Equity Component Of Convertible Note(Note 6)                   |   | 41,781           |  
|                                                               |   |                  |  
|Contributed Surplus                                            |   | 11,576           |  
|                                                               |   |                  |  
|Deficit Accumulated During The Exploration Stage               |   | (2,423,604       | )
|                                                               |   | (1,256,776       | )
|                                                               |   |                  |  
|                                                               | $ | 90,043           |  

Approved on behalf of the Board of Directors:

|Linda Smith |  | Shannon Krell
|------------- |  | ---------------
|Director      |  | Director       

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

---

ROUGE RESOURCES LTD.(formerly
Gemstar Resources Ltd.)

STATEMENTS OF OPERATIONS AND
DEFICIT(Stated in Canadian Dollars)

|                                      |   | YEARS
      ENDED JANUARY 31 |  
|------------------------------------- | - | ---------------------------- | -
|                                      |   | 2008                         |  
|                                      |   |                              |  
|General And Administration Expenses   |   |                              |  
|Amortization                          | $ | 1,132                        |  
|Accounting
      and audit fees       |   | 32,369                       |  
|Accretion of convertible
      note   |   | 2,331                        |  
|Bad debt
      expense                |   | 858                          |  
|Management fees                       |   | 30,000                       |  
|Office and
      sundry               |   | 33,306                       |  
|Professional fees                     |   | 12,793                       |  
|Transfer
      agent and filing fees  |   | 9,198                        |  
|Travel and promotion                  |   | 34,671                       |  
|                                      |   |                              |  
|Net Loss For The Year                 |   | (156,658                     | )
|                                      |   |                              |  
|Deficit, Beginning Of Year            |   | (2,266,946                   | )
|                                      |   |                              |  
|Deficit, End Of
      Year            | $ | (2,423,604                   | )
|                                      |   |                              |  
|                                      |   |                              |  
|Net Loss Per Share, Basic and diluted | $ | (0.28                        | )
|                                      |   |                              |  
|                                      |   |                              |  
|Weighted Average Number Of Shares     |   |                              |  
|Outstanding, Basic and diluted        |   | 565,171                      |  

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

---

ROUGE RESOURCES LTD.(formerly
Gemstar Resources Ltd.)

STATEMENTS OF CASH FLOWS(Stated in Canadian Dollars)

|                                                    |   | YEARS
      ENDED JANUARY 31 |  
|--------------------------------------------------- | - | ---------------------------- | -
|                                                    |   | 2008                         |  
|                                                    |   |                              |  
|Cash Flows Provided By (Used In):                   |   |                              |  
|                                                    |   |                              |  
|Operating Activities                                |   |                              |  
|Net loss for the year                               | $ | (156,658                     | )
|Items not requiring
      use of cash:              |   |                              |  
|Amortization                                        |   | 1,132                        |  
|Accretion on convertible note                       |   | 2,331                        |  
|                                                    |   | 153,195                      |  
|Changes in non-cash
      working capital items:    |   |                              |  
|GST receivable                                      |   | (4,064                       | )
|Accounts payable and accrued liabilities            |   | (23,253                      | )
|                                                    |   | (180,512                     | )
|                                                    |   |                              |  
|Investing Activities                                |   |                              |  
|Refund of exploration
      advance                 |   | -                            |  
|Investment in mineral properties
      and deferred |   |                              |  
|exploration costs                                   |   | -                            |  
|Purchase of equipment                               |   | (2,662                       | )
|                                                    |   | (2,662                       | )
|                                                    |   |                              |  
|Financing Activities                                |   |                              |  
|Loans from related parties                          |   | 179,517                      |  
|Long-term debt                                      |   | -                            |  
|                                                    |   | 179,517                      |  
|                                                    |   |                              |  
|(Decrease) Increase In Cash                         |   | (3,657                       | )
|                                                    |   |                              |  
|Cash, Beginning Of Year                             |   | 9,656                        |  
|                                                    |   |                              |  
|Cash, End Of Year                                   | $ | 5,999                        |  
|                                                    |   |                              |  
|                                                    |   |                              |  
|Supplemental Cash Flow Information                  |   |                              |  
|Non-cash expenditures investing
      activities   | $ | -                            |  
|Interest paid                                       | $ | -                            |  
|Income taxes paid                                   | $ | -                            |  

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

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian
Dollars)

|1. | NATURE OF OPERATIONS AND GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Rouge Resources Ltd. (formerly Gemstar Resources Ltd.)
      (the Company) was incorporated in British Columbia, on March 31, 1998,
      which was also the date of inception. On October 23, 2007, the Company
      restructured share capital and consolidated the issued shares on a one for
      ten (1:10) basis. Share and per share information in these financial
      statements being presented on a retroactive basis as if the share
      consolidation took place at the beginning of all years
presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company continues to be engaged in the acquisition,
      exploration and development of mineral resource properties and has not
      generated any revenue to date. The deficit has been accumulated during the
      exploration stage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | These financial statements have been prepared in
      accordance with Canadian generally accepted accounting principles
      applicable to a going concern which assumes the Company will realize its
      assets and discharge its liabilities in the normal course of business. As
      at January 31, 2008, the Company had a working capital deficiency of
      $1,336,756 (January 31, 2007 - $1,220,349) and has incurred losses since
      inception of $2,423,604. Further losses are anticipated in the development
      of its business plan and there can be no assurance that the Company will
      be able to achieve or maintain profitability. Management is trying to
      identify sources of additional financing, including loans from related
      parties, to fund third party liabilities and the ongoing development of
      the Companys business plan. There can be no assurance that financing will
      be available as necessary to meet the Companys working capital
      requirements or, if available, that it will be on terms acceptable to the
      Company. These factors raise substantial doubt as to the Companys ability
      to continue as a going concern. Realization values may be substantially
      different from the carrying values shown in these financial statements
      should the Company be unable to continue as a going
  concern.

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES                                                                                                                                                                                 
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                              
|   | These financial statements have been prepared in
      accordance with Canadian generally accepted accounting principles and
      reflect managements consideration of the following significant accounting
      policies:
|   |                                                                                                                                                                                                                              
|   | a)                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                              
|   | b)                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                              

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | b)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | b)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | c)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | d)                                        
|   |                                           
|   |                                           
|   |                                           
|   | e)                                        
|   |                                           
|   |                                           

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | e)                                        
|   |                                           
|   |                                           
|   |                                           
|   | f)                                        
|   |                                           
|   |                                           
|   |                                           
|   | g)                                        
|   |                                           
|   |                                           
|   |                                           
|   | h)                                        
|   |                                           
|   |                                           

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | i)                                        
|   |                                           
|   |                                           
|   |                                           
|   | j)                                        
|   |                                           
|   |                                           
|   |                                           
|   | k)                                        
|   |                                           
|   |                                           

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | l)                                        
|   |                                           
|   |                                           
|   |                                           
|   | m)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|3. | CREDIT CARD DEPOSIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The amount of $6,900 represented a one-year guaranteed
      investment certificate with interest at 3.3% maturing on October 29, 2008
      held by the bank as security for the Companys credit card usage and has
      been classified as a non-current asset.                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4. | MINERAL PROPERTY INTERESTS                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company staked the Dotted Lake Property in the
      Thunder Mining District of the province of Ontario, Canada, in March 2003,
      and holds a 100% interest in the property comprising approximately 375
      hectares. In order to maintain the mineral claim in good standing, the
      Company plans to spend approximately $15,000 in exploration on the
      property by August 11, 2008. As at January 31, 2008, the Company has
      invested the following amounts:

| |                            |   | 2008   |  |   | 2007   | 
| | -------------------------- | - | ------ |  | - | ------ | 
| |                            |   |        |  |   |        | 
| | Mineral properties         |   |        |  |   |        | 
| | Staking                    | $ | 4,206  |  | $ | 4,206  | 
| |                            |   |        |  |   |        | 
| | Deferred exploration costs |   |        |  |   |        | 
| | Geological
      survey    |   | 40,000 |  |   | 40,000 | 
| | Geological consulting fees |   | 26,233 |  |   | 26,233 | 
| |                            |   | 66,233 |  |   | 66,233 | 
| |                            |   |        |  |   |        | 
| |                            | $ | 70,439 |  | $ | 70,439 | 

The Company maintains this property for
future exploration expenditures and has determined there was no asset impairment
as at January 31, 2008 and 2007.

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|5. | EQUIPMENT
|-- | ---------

| |                             |   | 2008   |   |   | 2007   |  
| | --------------------------- | - | ------ | - | - | ------ | -
| | Computer equipment, at cost | $ | 5,970  |   | $ | 3,309  |  
| | Accumulated amortization    |   | (3,329 | ) |   | (2,198 | )
| |                             | $ | 2,641  |   | $ | 1,111  |  

|6. | RELATED PARTY TRANSACTIONS
|-- | --------------------------
|   |                           
|   | a)                        
|   |                           
|   | b)                        
|   |                           
|   | c)                        
|   |                           
|   |                           

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|7. | SHARE CAPITAL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On October 23, 2007, the Company affected a one for ten
      (1:10) share consolidation of its authorized, issued and outstanding share
      capital resulting in all share and per share information in these
      financial statements being presented on a retroactive basis as if the
      share consolidation took place at the beginning of all years presented.
      Accordingly, the issued and outstanding share capital was reduced from
      5,651,714 to 565,171 common shares. After the share consolidation, the
      Company increased its authorized share capital from 10,000,000 common
      shares to an unlimited number without par value.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | There were no other share transactions for the years
      ended January 31, 2008 and 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Stock Option Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Companys Stock Option Plan (the Plan), adopted in
      December 2006, is administered under the following basic terms and
      conditions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | No stock options have been granted and no stock options
      are outstanding at January 31, 2008 and 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|8. | INCOME TAXES                                                                                                          
|-- | ----------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                       
|   | A reconciliation of income taxes at statutory rates to
      the Companys effective income tax expense is as
follows:

| |                                                          |   | 2008    |   |   | 2007    |  
| | -------------------------------------------------------- | - | ------- | - | - | ------- | -
| |                                                          |   |         |   |   |         |  
| | Statutory tax rate                                       |   | 34%     |   |   | 34%     |  
| |                                                          |   |         |   |   |         |  
| | Expected income tax recovery                             | $ | (49,000 | ) | $ | (62,000 | )
| | Non-deductible differences                               |   | 1,000   |   |   | 1,000   |  
| | Future income tax expense (benefit)
      resulting from |   |         |   |   |         |  
| | change in tax rate                                       |   | (61,000 | ) |   | -       |  
| | Unrecognized tax losses and change in
      valuation    |   |         |   |   |         |  
| | allowance                                                |   | 109,000 |   |   | 61,000  |  
| |                                                          |   |         |   |   |         |  
| | Income tax provision                                     | $ | -       |   | $ | -       |  

Future tax assets (liabilities) of the
Company were as follows:

| |                                             |   | 2008     |   |   | 2007     |  
| | ------------------------------------------- | - | -------- | - | - | -------- | -
| |                                             |   |          |   |   |          |  
| | Non-capital losses carried-forward          | $ | 251,000  |   | $ | 288,000  |  
| | Capital assets                              |   | 1,000    |   |   | 1,000    |  
| | Mineral properties and deferred exploration |   | 85,000   |   |   | 92,000   |  
| |                                             |   | 337,000  |   |   | 381,000  |  
| | Less: Valuation allowance                   |   | (337,000 | ) |   | (381,000 | )
| |                                             |   |          |   |   |          |  
| | Future tax asset (liability) recognized     | $ | -        |   | $ | -        |  

As at December 31, 2007, the Company
has incurred non-capital losses carried forward totalling $921,000 which expire
from 2009 to 2028 as follows:

2009
    $
    69,0002010
    $
    62,0002014
    $
    68,0002015
    $
    84,0002026
    $
    132,0002027
    $
    354,0002028
    $
    152,000


---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|8.  | INCOME TAXES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | A valuation allowance has been recorded to reduce the net
      benefit recorded in the financial statements related to these future tax
      assets. The valuation allowance was deemed necessary as a result of the
      uncertainty associated with the ultimate realization of these tax
      assets                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|9.  | SEGMENTED INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | As at January 31, 2008 and 2007, the Company operated in
      one reportable operating segment being the exploration of mineral
      resources in one geographic segment being Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | These financial statements have been prepared in
      accordance with Canadian generally accepted accounting principles
      (Canadian GAAP) which differ in certain respects from those principles
      that the Company would have followed had its financial statements been
      prepared in accordance with accounting principles generally accepted in
      the United States (US GAAP). The material differences between Canadian
      and US GAAP, which affected the Companys financial statements, are
      described and quantified below.                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Mineral Properties and Deferred Exploration
  Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Under Canadian GAAP, companies have the option to
      capitalize exploration expenditures on prospective properties until such
      time as it is determined that further work is not warranted, at which
      point capitalized costs would be written off. Under US GAAP, mineral
      property acquisition costs are capitalized and exploration costs are
      expensed as incurred until such time as economic reserves are quantified.
      The Company has considered the guidance per EITF 04-2 and has determined
      that capitalization of mineral property acquisition costs is inappropriate
      at the current stage of the Companys mineral property exploration
      activities under US GAAP.

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|10. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)(Continued)                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Mineral Properties and Deferred Exploration Costs
      (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | At this stage, the Company has not yet identified
      economically recoverable reserves on any of its interests. Accordingly,
      under US GAAP, all exploration costs incurred are expensed.                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Equity component of convertible note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Under Canadian GAAP, companies allocate the proceeds of
      issuance between the convertible debt and the embedded conversion feature
      based on their relative fair values. Under US GAAP, the Company has
      considered the guidance per FAS 133 and EITF 00-27 and has determined the
      entire proceeds of the convertible note should be disclosed as a liability
      since the embedded conversion feature has no intrinsic value and
      accordingly does not meet the requirements of an equity
  component.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | a)        Effect on
      Balance Sheets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| |                                                         |   | 2008       |   |   | 2007       |  
| | ------------------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                                         |   |            |   |   |            |  
| | Mineral properties and deferred exploration
      costs |   |            |   |   |            |  
| | Per Canadian GAAP                                       | $ | 70,439     |   | $ | 70,439     |  
| | Deferred
      exploration costs written off            |   | (66,233    | ) |   | (66,233    | )
| | Per US GAAP                                             | $ | 4,206      |   | $ | 4,206      |  
| |                                                         |   |            |   |   |            |  
| | Liabilities                                             |   |            |   |   |            |  
| | Per Canadian GAAP                                       | $ | 1,346,819  |   |   | 1,230,005  |  
| | Reversal of equity
      portion of note                |   | 41,781     |   |   | 11,576     |  
| | Per US GAAP                                             |   | 1,388,600  |   |   | 1,241,581  |  
| |                                                         |   |            |   |   |            |  
| | Shareholders deficiency                                |   |            |   |   |            |  
| | Per Canadian GAAP                                       | $ | (1,256,776 | ) | $ | (1,141,899 | )
| | Deferred
      exploration costs written off            |   | (66,233    | ) |   | (66,233    | )
| | Reversal of equity
      portion of note                |   | (41,781    | ) |   | (11,576    | )
| | Per US GAAP                                             | $ | (1,364,790 | ) | $ | (1,219,708 | )

---

**ROUGE RESOURCES LTD.
  (formerly Gemstar Resources Ltd.)**

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian Dollars)

|10. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)(Continued)
|--- | ------------------------------------------------------------------------------------------------------------------------

| | b) | Effect on Statements of Operations and
  Deficit
| | -- | ------------------------------------------------

| |                                              |   | 2008     |   |   | 2007     |   |   | 2006     |  
| | -------------------------------------------- | - | -------- | - | - | -------- | - | - | -------- | -
| |                                              |   |          |   |   |          |   |   |          |  
| | Net loss for the year                        |   |          |   |   |          |   |   |          |  
| | Per Canadian GAAP                            | $ | (156,658 | ) | $ | (182,422 | ) | $ | (138,379 | )
| | Deferred
      exploration costs written off |   | -        |   |   | -        |   |   | (66,233  | )
| | Per US GAAP                                  | $ | (156,658 | ) | $ | (182,422 | ) | $ | (204,612 | )
| |                                              |   |          |   |   |          |   |   |          |  
| | Net loss per common share, basic and         |   |          |   |   |          |   |   |          |  
| | diluted                                      |   |          |   |   |          |   |   |          |  
| | Per Canadian GAAP                            | $ | (0.28    | ) | $ | (0.32    | ) | $ | (0.24    | )
| | Deferred exploration
      costs written off |   | -        |   |   | -        |   |   | (0.12    | )
| | Per US GAAP                                  | $ | (0.28    | ) | $ | (0.32    | ) | $ | (0.36    | )

| | c) | Effect on Statements of Cash
Flows
| | -- | ----------------------------------

| |                                               |   | 2008     |   |   | 2007     |   |   | 2006     |  
| | --------------------------------------------- | - | -------- | - | - | -------- | - | - | -------- | -
| |                                               |   |          |   |   |          |   |   |          |  
| | Cash flows provided by (used in):             |   |          |   |   |          |   |   |          |  
| | Operating activities                          |   |          |   |   |          |   |   |          |  
| | Per Canadian GAAP                             | $ | (180,512 | ) | $ | (165,415 | ) | $ | (167,696 | )
| | Deferred exploration
      costs written off  |   | -        |   |   | -        |   |   | (26,233  | )
| | Per US GAAP                                   | $ | (180,512 | ) | $ | (165,415 | ) | $ | (193,929 | )
| |                                               |   |          |   |   |          |   |   |          |  
| | Investing activities                          |   |          |   |   |          |   |   |          |  
| | Per Canadian GAAP                             | $ | (2,662   | ) | $ | -        |   | $ | 84,111   |  
| | Deferred
      exploration costs reclassified |   |          |   |   |          |   |   |          |  
| | to operating activities                       |   | -        |   |   | -        |   |   | 26,233   |  
| | Per US GAAP                                   | $ | (2,662   | ) | $ | -        |   | $ | 110,344  |  

---

ROUGE RESOURCES LTD.(formerly Gemstar Resources
Ltd.)

NOTES TO FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007(Stated in Canadian
Dollars)

|10. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)(Continued)
|--- | ------------------------------------------------------------------------------------------------------------------------

| | d) | Recent United States Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | In February 2007, the FASB issued SFAS No. 159, The Fair
      Value Option for Financial Assets and Financial Liabilities. This
      statement permits entities to choose to measure many financial assets and
      financial liabilities at fair value. Unrealized gains and losses on items
      for which the fair value option has been elected are reported in earnings.
      SFAS No. 159 is effective for fiscal years beginning after November 15,
      2007. The Company does not expect the implementation of SFAS No. 108 will
      have any material impact on its financial position and results of
      operations.                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    | In December 2007, the FASB issued SFAS No. 160,
      Non-controlling Interests in Consolidated Financial Statements. This
      Statement amends ARB 51 to establish accounting and reporting standards
      for the non-controlling (minority) interest in a subsidiary and for the
      deconsolidation of a subsidiary. It clarifies that a non-controlling
      interest in a subsidiary is an ownership interest in the consolidated
      entity that should be reported as equity in the consolidated financial
      statements. The Company does not expect the implementation of SFAS No. 160
      will have any material impact on its financial position and results of
      operations.

---