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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

(Mark One)

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

For the fiscal year ended May 31, 2010

or

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

For the transition period from
________________to________________

Commission file number 333-119715

CAROLYN RIVER PROJECTS
LTD.(Exact name of registrant as specified in its
charter)

|Nevada                                                               | N/A                                 
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|2640 Tempe Knoll Drive, North Vancouver, BC                          | V6C 1V5                             
|(Address of principal executive offices)                             | (Zip Code)                          

Registrants telephone number, including area code
604.908.0233

Securities registered pursuant to Section 12(b) of the Act:

|None                | N/A                                      
|------------------- | -----------------------------------------
|Title of each class | Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value(Title of
class)

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. 
Yes [ ]
No [x]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act. 
Yes [ ] No [x]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [x] No [ ]

1

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

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[ ]

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

|Large accelerated filer | [ ] | Accelerated filer         | [ ]
|----------------------- | --- | ------------------------- | ---
|Non-accelerated filer   | [ ] | Smaller reporting company | [x]

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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently
completed second fiscal quarter: $1,359,150 based on a price of $0.085 per
share multiplied by 15,990,000 shares held by non-affiliates.

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.
54,990,000 shares of common stock as of August 20, 2010.

2

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PART I

ITEM 1. BUSINESS

This annual report contains
forward-looking statements. Forward-looking statements are projections in
respect of future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as may, should,
intends, expects, plans, anticipates, believes, estimates,
predicts, potential, or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the ability of our
company to accelerate the development of products we are developing, our ability
to out-license such products and our ability to raise sufficient funds for such
development, which may cause our or our industrys actual results, levels of
activity or performance to be materially different from any future results,
levels of activity or performance expressed or implied by these forward-looking
statements. For a further description of risk factors that may affect our
company, please see Item 1A Risk Factors commencing on page 5 of this annual
report.

Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity or performance. Except as
required by applicable law, including the securities laws of the United States,
we do not intend to update any of the forward-looking statements to conform
these statements to actual results.

In this annual report, unless
otherwise specified, all dollar amounts are expressed in United States dollars
and all references to common shares refer to the common shares in our capital
stock.

As used in this annual report,
and unless otherwise indicated, the terms we, us and our mean Carolyn
River Projects Ltd., unless otherwise indicated.

Corporate History

We were incorporated on February 2, 2004 under the laws of the
state of Nevada.

Effective June 15, 2007, we
completed a merger with our subsidiary Parmasters Golf Training Centers, Inc. As
a result, we changed our name from Quorum Ventures, Inc. to Parmasters Golf
Training Centers, Inc.

In addition, effective June 15,
2007, we effected a seven point eight (7.8) for one (1) forward stock split of
our authorized, issued and outstanding common stock. As a result, our authorized
capital increased from 75,000,000 shares of common stock with a par value of
$0.001 to 585,000,000 shares of common stock with a par value of $0.001. Our
issued and outstanding share capital increased from 7,050,000 shares of common
stock to 54,990,000 shares of common stock.

Effective August 24, 2007, we
completed a merger with our subsidiary, Carolyn River Projects Ltd. As a result,
we changed our name from Parmasters Golf Training Centers, Inc. to Carolyn
River Projects Ltd. We changed the name of our company to better reflect the
direction and business of our company.

Our companys first acquisition
occurred on April 1, 2004, when we entered into an agreement with Mr. Glen
Macdonald of Vancouver, British Columbia, whereby he agreed to sell to us a
total of three mineral claims located approximately 44 miles east-northeast of
Yellowknife, Northwest Territories, that have the potential to contain gold and
silver mineralization or deposits. Neither we nor our management have any
relationship or affiliation with Mr. Macdonald. In order to acquire a 90%
interest in these claims, subject to a 2% net smelter returns royalty, we paid
$7,500 to Mr. Macdonald from our cash on hand. These claims lapsed on May 27,
2007.

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Our Current Business

We are an exploration stage
company. We are currently seeking opportunities to acquire prospective or
existing mineral properties or are seeking business opportunities with
established business entities for the merger of a target business with our
company. In certain instances, a target business may wish to become a subsidiary
of us or may wish to contribute assets to us rather than merge. We are currently
in negotiations with several parties to enter into a business opportunity but we
have not entered into any definitive agreements to date and there can be no
assurance that we will be able to enter into any definitive agreements. We
anticipate that any new acquisition or business opportunities by our company
will require additional financing. There can be no assurance, however, that we
will be able to acquire the financing necessary to enable us to pursue our plan
of operation. If our company requires additional financing and we are unable to
acquire such funds, our business may fail.

Management of our company
believes that there are perceived benefits to being a reporting company with a
class of publicly-traded securities. These are commonly thought to include: (i)
the ability to use registered securities to acquire assets or businesses; (ii)
increased visibility in the financial community; (iii) the facilitation of
borrowing from financial institutions; (iv) improved trading efficiency; (v)
stockholder liquidity; (vi) greater ease in subsequently raising capital; (vii)
compensation of key employees through stock options; (viii) enhanced corporate
image; and (ix) a presence in the United States capital market.

We may seek a business
opportunity with entities who have recently commenced operations, or entities
who wish to utilize the public marketplace in order to raise additional capital
in order to expand business development activities, to develop a new product or
service, or for other corporate purposes. We may acquire assets and establish
wholly-owned subsidiaries in various businesses or acquire existing businesses
as subsidiaries.

In implementing a structure for a
particular business acquisition or opportunity, we may become a party to a
merger, consolidation, reorganization, joint venture, or licensing agreement
with another corporation or entity. We may also acquire stock or assets of an
existing business. Upon the consummation of a transaction, it is likely that our
present management will no longer be in control of our company. In addition, it
is likely that our officers and directors will, as part of the terms of the
acquisition transaction, resign and be replaced by one or more new officers and
directors.

As of the date hereof, management
has not entered into any formal written agreements for a business combination or
opportunity. When any such agreement is reached, we intend to disclose such an
agreement by filing a current report on Form 8-K with the SEC.

We anticipate that the selection
of a business opportunity in which to participate will be complex and without
certainty of success. Management believes that there are numerous firms in
various industries seeking the perceived benefits of being a publicly registered
corporation. Business opportunities may be available in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. We can provide no assurance that we will be
able to locate compatible business opportunities.

As an exploration stage company,
we are not able to fund our cash requirements through our current operations.
Historically, we have been able to raise a limited amount of capital through
private placements of our equity stock, but we are uncertain about our continued
ability to raise funds privately. Further, we believe that our company may have
difficulties raising capital until we locate a prospective property through
which we can pursue our plan of operation. If we are unable to secure adequate
capital to continue our acquisition efforts, our shareholders may lose some or
all of their investment and our business may fail.

Competition

We are a company seeking
prospective business opportunities. We compete with other companies for both the
acquisition of prospective businesses and the financing necessary to develop
such businesses.

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Employees

We currently have no employees,
other than our sole officer and director, and we do not expect to hire any
employees in the foreseeable future. We presently conduct our business through
agreements with consultants and arms-length third parties.

Subsidiaries

We do not have any subsidiaries.

Intellectual Property

We do not own, either legally or beneficially, any patent or
trademark.

ITEM 1A. RISK FACTORS

Risks Related to our Business

Much of the information included
in this annual report includes or is based upon estimates, projections or other
forward-looking statements. Such forward looking statements include any
projections or estimates made by us and our management in connection with our
business operations. While these forward-looking statements, and any assumptions
upon which they are based, are made in good faith and reflect our current
judgment regarding the direction of our business, actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein.

Such estimates, projections or
other forward-looking statements involve various risks and uncertainties as
outlined below. We caution the reader that important factors in some cases have
affected and, in the future, could materially affect actual results and cause
actual results to differ materially from the results expressed in any such
estimates, projections or other forward-looking statements. Prospective
investors should consider carefully the risk factors set out below.

Risks Related To Our Financial Condition and Business
Model

Scarcity of and Competition for Business Opportunities and
Combinations

We are, and will continue to be,
an insignificant participant amongst numerous other companies seeking a suitable
business opportunity or business combination. A large number of established and
well-financed entities, including venture capital firms, are actively seeking
suitable business opportunities or business combinations which may also be
desirable target candidates for us. Virtually all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than we do. We are, consequently, at a competitive disadvantage in
identifying possible business opportunities and successfully completing a
business combination. We will also compete with numerous other small public
companies seeking suitable business opportunities or business combinations.

The worldwide macroeconomic downturn may reduce the ability
of our company to obtain the financing necessary to continue our business and
may reduce the number of viable businesses that we may wish to acquire.

In 2008 and 2009, there has been
a downturn in general worldwide economic conditions due to many factors,
including the effects of the subprime lending and general credit market crises,
volatile but generally declining energy costs, slower economic activity,
decreased consumer confidence and commodity prices, reduced corporate profits
and capital spending, adverse business conditions, increased unemployment and
liquidity concerns. In addition, these macroeconomic effects, including the
resulting recession in various countries and slowing of the global economy, will
likely result in decreased business opportunities as potential target companies
face increased financial hardship. Tightening credit and liquidity issues will
also result in increased difficulties for our company to raise capital for our
continued operations and to consummate a business opportunity with a viable
business.

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We have had negative cash flows from operations and if we
are not able to obtain further financing, our business operations may
fail.

We had cash in the amount of
$12,314 and a working capital deficit of $88,486 as of May 31, 2010. We
anticipate that we will require additional financing while we are seeking a
suitable business opportunity or business combination. Further, we anticipate
that we will not have sufficient capital to fund our ongoing operations for the
next twelve months. We may be required to raise additional financing for a
particular business combination or business opportunity. We would likely secure
any additional financing necessary through a private placement of our common
shares.

There can be no assurance that,
if required, any such financing will be available upon terms and conditions
acceptable to us, if at all. Our inability to obtain additional financing in a
sufficient amount when needed and upon terms and conditions acceptable to us
could have a material adverse effect upon our company. We will require further
funds to finance the development of any business opportunity that we acquire.
There can be no assurance that such funds will be available or available on
terms satisfactory to us. If additional funds are raised by issuing equity
securities, further dilution to existing or future shareholders is likely to
result. If adequate funds are not available on acceptable terms when needed, we
may be required to delay, scale back or eliminate the development of any
business opportunity that we acquire. Inadequate funding could also impair our
ability to compete in the marketplace, which may result in the dissolution of
our company.

A decline in the price of our common stock could affect our
ability to raise further working capital and adversely impact our
operations.

A prolonged decline in the price
of our common stock could result in a reduction in the liquidity of our common
stock and a reduction in our ability to raise capital. Because our operations
have been primarily financed through the sale of equity securities, a decline in
the price of our common stock could be especially detrimental to our liquidity
and our continued operations. Any reduction in our ability to raise equity
capital in the future would force us to reallocate funds from other planned uses
and would have a significant negative effect on our business plans and
operations, including our ability to develop new products and continue our
current operations. If our stock price declines, we may not be able to raise
additional capital or generate funds from operations sufficient to meet our
obligations.

We have a limited operating history and if we are not
successful in continuing to grow our business, then we may have to scale back or
even cease our ongoing business operations.

We have a limited operating
history on which to base an evaluation of our business and prospects. Our
prospects must be considered in light of the risks, uncertainties, expenses and
difficulties frequently encountered by companies seeking to acquire or establish
a new business opportunity. Some of these risks and uncertainties relate to our
ability to identify, secure and complete an acquisition of a suitable business
opportunity.

We cannot be sure that we will be
successful in addressing these risks and uncertainties and our failure to do so
could have a materially adverse effect on our financial condition. In addition,
our operating results are dependent to a large degree upon factors outside of
our control. There are no assurances that we will be successful in addressing
these risks, and failure to do so may adversely affect our business.

It is unlikely that we will
generate any or significant revenues while we seek a suitable business
opportunity. Our short and long-term prospects depend upon our ability to select
and secure a suitable business opportunity. In order for us to make a profit, we
will need to successfully acquire a new business opportunity in order to
generate revenues in an amount sufficient to cover any and all future costs and
expenses in connection with any such business opportunity. Even if we become
profitable, we may not sustain or increase our profits on a quarterly or annual
basis in the future.

We will, in all likelihood,
sustain operating expenses without corresponding revenues, at least until we
complete a business combination or acquire a business opportunity. This may
result in our company incurring a net operating loss which will increase
continuously until we complete a business combination or acquire a business opportunity that can generate revenues that result in a net
profit to us. There is no assurance that we will identify a suitable business
opportunity or complete a business combination.

6

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No agreement for business combination or other
transaction/no standards for business combination.

We have no arrangement,
agreement, or understanding with respect to acquiring a business opportunity or
engaging in a business combination with any private entity. There can be no
assurance that we will successfully identify and evaluate suitable business
opportunities or conclude a business combination. There is no assurance that we
will be able to negotiate the acquisition of a business opportunity or a
business combination on terms favorable to us. We have not established a
specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which we will require a target business opportunity
to have achieved, and without which we would not consider a business combination
in any form with such business opportunity. Accordingly, we may enter into a
business combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth or other negative characteristics.

Risks Associated with Our Common Stock

Trading of our stock may be restricted by the SECs penny
stock regulations, which may limit a stockholders ability to buy and sell our
stock.

The SEC has adopted regulations
which generally define penny stock to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC, which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customers
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customers confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

The Financial Industry Regulatory Authority, or FINRA, has
adopted sales practice requirements which may also limit a stockholders ability
to buy and sell our stock.

In addition to the penny stock
rules described above, FINRA has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customers financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may limit your ability to buy and sell our stock and have an adverse effect on
the market for our shares.

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Our common stock is illiquid and the price of our common
stock may be negatively impacted by factors which are unrelated to our
operations.

Our common stock currently trades
on a limited basis on the OTC Bulletin Board. Trading of our stock through the
OTC Bulletin Board is frequently thin and highly volatile. There is no assurance
that a sufficient market will develop in our stock, in which case it could be
difficult for shareholders to sell their stock. The market price of our common
stock could fluctuate substantially due to a variety of factors, including
market perception of our ability to achieve our planned growth, quarterly
operating results of our competitors, trading volume in our common stock,
changes in general conditions in the economy and the financial markets or other
developments affecting our competitors or us. In addition, the stock market is
subject to extreme price and volume fluctuations. This volatility has had a
significant effect on the market price of securities issued by many companies
for reasons unrelated to their operating performance and could have the same
effect on our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES.

Executive Offices

We do not own any real property.
Our principal business offices are located at 2640 Tempe Knoll Drive, North
Vancouver, BC and is currently donated by our president. We believe our current
premises are adequate for our current operations and we do not anticipate that
we will require any additional premises in the foreseeable future. When and if
we require additional space, we intend to move to new premises.

ITEM 3. LEGAL PROCEEDINGS.

We know of no material, active or
pending legal proceedings against our company, nor are we involved as a
plaintiff in any material proceeding or pending litigation. There are no
proceedings in which any of our directors, officers or affiliates, or any
registered or beneficial shareholder of more than five percent of our common
shares, is an adverse party or has a material interest adverse to our interest.

ITEM 4. (REMOVED AND RESERVED)

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PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Securities

Our common shares were quoted for
trading on the OTC Bulletin Board on November 22, 2006 under the symbol QRMV.
On June 14, 2007 our symbol changed to PGFT. On August 24, 2007 our symbol
changed to CRPL. The following quotations obtained from the OTC Bulletin Board
reflect the high and low bid prices for our common stock based on inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions for the periods indicated.

|                  |   | OTC Bulletin Board | 
|----------------- | - | ------------------ | 
|Quarter Ended     |   | High (U.S.$)       | 
|May 31, 2010      | $ | 0.00               | 
|February 28, 2010 | $ | 0.00               | 
|November 30, 2009 | $ | 0.00               | 
|August 31, 2009   | $ | 0.00               | 
|May 31, 2009      | $ | 0.0021             | 
|February 29, 2009 | $ | 0.04               | 
|November 30, 2008 | $ | 0.07               | 
|August 31, 2008   | $ | 0.08               | 

We do not have any common stock subject to outstanding options
or warrants.

Holders of our Common Stock

As of August 20, 2010, there were
14 holders of record of our common stock. As of such date, 54,990,000 common
shares of our company were issued and outstanding.

Empire Stock Transfer is the
registrar and transfer agent for our common shares. Their address is 1859
Whitney Mesa Drive, Henderson, Nevada 89014 (telephone number: 702.818.5898)
..

Dividend Policy

We have not declared or paid any
cash dividends since inception. Although there are no restrictions that limit
our ability to pay dividends on our common shares, we intend to retain future
earnings, if any, for use in the operation and expansion of our business and do
not intend to pay any cash dividends in the foreseeable future.

Securities Authorized for Issuance Under Equity Compensation
Plans

We do not have any equity compensation plans.

Recent Sales of Unregistered Securities

We did not issue any equity
securities that were not registered under the Securities Act during the fiscal
year ended May 31, 2010.

Purchases of Equity Securities by the Issuer and Affiliated
Purchasers

We did not purchase any of our
shares of common stock or other securities during our fiscal year ended May 31,
2010.

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ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION

The following discussion should
be read in conjunction with our audited financial statements and the related
notes that appear elsewhere in this annual report. The following discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below and elsewhere in this annual
report.

Our audited financial statements
are stated in United States dollars and are prepared in accordance with United
States generally accepted accounting principles.

Results of Operations for the Fiscal Years ended May 31,
2010 and May 31, 2009

There were no material changes in
our results of operations as our results of operations were consistent with past
periods. We did not generate or realize any revenues from our business
operations and our expenses were related to complying with our obligations as a
reporting company under the Exchange Act. These expenses consisted primarily of
professional fees relating to the preparation of our financial statements and
completion of our annual report, quarterly reports and current reports filings
with the SEC.

During the year ended May 31,
2010, we incurred expenses of $41,804 compared to $34,275 during the year ended
May 31, 2009. The increase in expenses during the year ended May 31, 2010 was
primarily due to increases in legal expenses, filing expenses and office and
general expenses.

As of May 31, 2010, our company
had cash of $12,314 and a working capital deficit of $88,486. We estimate our
operating expenses and working capital requirements for the next twelve month
period to be as follows:

| | 1. | $15,000 in connection with our company locating,
      evaluating and negotiating potential business opportunities;                                                              
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                  
| | 2. | $30,000 for operating expenses, including professional
      legal and accounting expenses associated with our company being a
      reporting issuer under the Exchange Act; and
| |    |                                                                                                                                                                                  
| | 3. | $10,000 for other expenses, including interest, bank
      charges and transfer agent fees.                                                                                      

We will incur additional expenses
if we are successful in entering into an agreement to acquire a suitable
business opportunity. If we enter into such an agreement, we anticipate that we
will require significant funds to develop the business in addition to any
acquisition costs. It is not possible to estimate such funding requirements
until such time as we enter into a business combination.

Cash Flow Used in Operating Activities

Operating activities used cash of
$48,701 for the year ended May 31, 2010, compared to using cash of $19,778 for
the year ended May 31, 2009. The cash used during the year ended May 31, 2010
was primarily attributable to adjustments with respect to the gain on
forgiveness of debt and changes in non cash working capital items such as
accounts payable and accrued liabilities.

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Cash Flow Provided by Financing Activities

Financing activities provided
cash of $58,750 for the year ended May 31, 2010 compared to providing cash of
$19,010 for the year ended May 31, 2009. The cash provided for the year ended
May 31, 2010 was from advances from a related party and the cash provided for
the year ended May 31, 2009 was from short-term debt.

Liquidity and Capital Resources

We had cash of $12,314 and
current liabilities of $100,800 as of May 31, 2010. We had working capital
deficit of $88,486 as of May 31, 2010.

We will incur additional expenses
if we are successful in entering into an agreement to acquire an interest in a
prospective or existing mineral property or a business opportunity. If we
acquire any property interests, we will require significant funds to develop the
property in addition to any acquisition costs. It is not possible to estimate
such funding requirements until such time as we enter into a definitive
agreement to acquire an interest in a property or enter into a business
combination.

We require a minimum of
approximately $55,000 to proceed with our plan of operation over the next twelve
months, exclusive of any acquisition or development costs. This amount may also
increase if we are required to carry out due diligence investigations in regards
to any prospective property or business opportunity or if the costs of
negotiating the applicable transaction are greater than anticipated. As we had
cash in the amount of $12,314 and a working capital deficit in the amount of
$88,846 as of May 31, 2010, we do not have sufficient working capital to enable
us to carry out our stated plan of operation for the next twelve months. We plan
to complete private placement sales of our common stock in order to raise the
funds necessary to pursue our plan of operation and to fund our working capital
deficit in order to enable us to pay our accounts payable and accrued
liabilities. We currently do not have any arrangements in place for the
completion of any private placement financings and there is no assurance that we
will be successful in completing any private placement financings.

Off-Balance Sheet Arrangements

As of May 31, 2010, our company
had no off-balance sheet arrangements, including outstanding derivative
financial statements, off-balance sheet guarantees, interest rate swap
transactions or foreign currency contracts. Our company does not engage in
trading activities involving non-exchange traded contracts.

Going Concern

Due to the uncertainty of our
ability to meet our current operating and capital expenses, in their report on
our annual financial statements for the year ended May 31, 2010, our independent
auditors included an explanatory paragraph regarding concerns about our ability
to continue as a going concern.

Application of Critical Accounting Policies

Use of Estimates

The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Our company regularly evaluates estimates and assumptions. Our
company bases its estimates and assumptions on current facts, historical
experience and various other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities and the accrual of costs and
expenses that are not readily apparent from other sources. The actual results
experienced by our company may differ materially and adversely from our
companys estimates. To the extent there are material differences between the
estimates and the actual results, future results of operations will be affected.
The most significant estimates with regard to these financial statements relate
to deferred income tax rates and timing of the reversal of income tax
differences.

11

---

Foreign Currency Translation

Foreign denominated monetary
assets and liabilities are translated to their United States dollar equivalents
using foreign exchange rates which prevailed at the balance sheet date. Expenses
are translated at average rates of exchange during the period. Related
translation adjustments are reported as a separate component of stockholders
equity, whereas gains or losses resulting from foreign currency transactions are
included in results of operations.

Earnings (Loss) Per Share

Basic earnings (loss) per share
includes no dilution and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Dilutive earnings per share reflect the potential dilution of securities
that could share in the earnings of our company. Because our company does not
have any potentially dilutive securities, diluted earnings (loss) per share is
equal to basic earnings (loss) per share.

Income Taxes

Deferred income taxes are
provided for tax effects of temporary differences between the tax basis of
assets and liabilities and their reported amounts in the financial statements.
Our company uses the liability method to account for income taxes, which
requires deferred taxes to be recorded at the statutory rate expected to being
in effect when the taxes are paid. Valuation allowances are provided for a
deferred tax asset when it is more likely than not that such asset will not be
realized.

Financial Instruments

The fair value of our companys
financial instruments, consisting of cash, accounts payable and amount due to
related party, is estimated to be equal to their carrying value. It is
managements opinion that our company is not exposed to significant interest,
currency or credit risks arising from these financial instruments.

Recent Accounting Pronouncements

In June 2009, the Financial
Accounting Standards Board (FASB) issued SFAS No. 168, FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles, a replacement of SFAS No. 162 (Statement 168). Statement 168
establishes the FASB Accounting Standards Codification as the source of
authoritative accounting principles recognized by the FASB to be applied in the
preparation of financial statements in conformity with generally accepted
accounting principles. Statement 168 explicitly recognizes rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
federal securities laws as authoritative GAAP for SEC registrants. Statement 168
is effective for financial statements issued for fiscal years and interim
periods ending after September 15, 2009. Our company has adopted Statement 168
for the year ended May 31, 2010. The adoption of FASB 168 had no impact on our
companys financial statements.

Other pronouncements issued by
the FASB or other authoritative accounting standards groups with future
effective dates are either not applicable or are not expected to be significant
to the financial statements of our company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.

Not applicable.

12

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

CAROLYN RIVER PROJECTS LTD.

(A Development Stage Company)

FINANCIAL STATEMENTS

MAY 31, 2010

---



To the Stockholders and Board of Directors of Carolyn River
Projects Ltd.

We have audited the accompanying balance sheets of Carolyn
River Project Ltd. (a development stage company) as of May 31, 2010 and 2009 and
the related statements of operations, cash flows and stockholders deficit for
the years then ended and the period from February 2, 2004 (Inception) to May 31,
2010. 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 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. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in
all material respects, the financial position of Carolyn River Projects Ltd. as
of May 31, 2010 and 2009 and the results of its operations and its cash flows
for the years then ended and the period from February 2, 2004 (Inception) to May
31, 2010 in conformity with accounting principles generally accepted in the
United States of America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company is in the development stage, has not
generated revenues since inception, has incurred losses in developing its
business, and further losses are anticipated. The Company requires additional
funds to meet its obligations and the costs of its operations. These factors
raise substantial doubt about the Companys ability to continue as a going
concern. Managements plans in this regard are described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ DMCL

DALE MATHESON CARR-HILTON LABONTE LLP CHARTERED
ACCOUNTANTS

Vancouver, Canada August 24, 2010



---

|CAROLYN RIVER PROJECTS LTD.  
|-----------------------------
|(A Development Stage Company)
|BALANCE SHEETS               

|                                                                                                                  |   | May 31,  |   |   | May 31,  |  
|----------------------------------------------------------------------------------------------------------------- | - | -------- | - | - | -------- | -
|                                                                                                                  |   | 2010     |   |   | 2009     |  
|                                                                                                                  |   |          |   |   |          |  
|                                                                                                                  |   |          |   |   |          |  
|ASSETS                                                                                                            |   |          |   |   |          |  
|                                                                                                                  |   |          |   |   |          |  
|Current                                                                                                           |   |          |   |   |          |  
|Cash                                                                                                              | $ | 12,314   |   | $ | 2,265    |  
|                                                                                                                  |   |          |   |   |          |  
|                                                                                                                  |   |          |   |   |          |  
|                                                                                                                  |   |          |   |   |          |  
|                                                                                                                  |   |          |   |   |          |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                             |   |          |   |   |          |  
|                                                                                                                  |   |          |   |   |          |  
|Current                                                                                                           |   |          |   |   |          |  
|Accounts payable and accrued
      liabilities                                                                    | $ | 14,250   |   | $ | 22,617   |  
|                                                                                                                  |   |          |   |   |          |  
|Short term debt (Note 3)                                                                                          |   | -        |   |   | 61,546   |  
|Due
      to related party (Note 4)                                                                               |   | 86,550   |   |   | 31,550   |  
|                                                                                                                  |   | 100,800  |   |   | 115,713  |  
|                                                                                                                  |   |          |   |   |          |  
|Stockholders deficit                                                                                             |   |          |   |   |          |  
|Common stock (Note 5)                                                                                             |   |          |   |   |          |  
|Authorized:
      
                  
      585,000,000 common shares, par value $0.001 per share                 |   |          |   |   |          |  
|Issued and
      outstanding:
      
                 
      54,990,000 common shares (May 31, 2009  54,990,000) |   | 30,000   |   |   | 30,000   |  
|Deficit accumulated during the development
      stage                                                            |   | (118,486 | ) |   | (143,448 | )
|                                                                                                                  |   | (88,486  | ) |   | (113,448 | )
|                                                                                                                  |   |          |   |   |          |  
|                                                                                                                  |   |          |   |   |          |  
|                                                                                                                  | $ | 12,314   |   | $ | 2,265    |  

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

---

|CAROLYN RIVER PROJECTS LTD.   
|------------------------------
|(A Development Stage Company) 
|STATEMENTS OF
      OPERATIONS

|                                                                               |   |                    |   |   |                    |   |   | Cumulative from    |  
|------------------------------------------------------------------------------ | - | ------------------ | - | - | ------------------ | - | - | ------------------ | -
|                                                                               |   |                    |   |   |                    |   |   | February 2, 2004   |  
|                                                                               |   |                    |   |   |                    |   |   | (Date of           |  
|                                                                               |   | Year Ended         |   |   | Year Ended         |   |   | Inception) to      |  
|                                                                               |   | May
      31, 2010 |   |   | May
      31, 2009 |   |   | May
      31, 2010 |  
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|Expenses                                                                       |   |                    |   |   |                    |   |   |                    |  
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|Accounting and audit                                                           | $ | 18,783             |   | $ | 17,693             |   | $ | 95,480             |  
|Bank charges and interest                                                      |   | 135                |   |   | 74                 |   |   | 738                |  
|Filing                                                                         |   | 5,456              |   |   | 2,124              |   |   | 15,242             |  
|Interest                                                                       |   | 1,470              |   |   | 4,710              |   |   | 9,202              |  
|Legal                                                                          |   | 11,891             |   |   | 9,174              |   |   | 45,825             |  
|Mineral property costs                                                         |   | -                  |   |   | -                  |   |   | 12,500             |  
|Office and general                                                             |   | 4,069              |   |   | -                  |   |   | 4,665              |  
|Transfer agent fees                                                            |   | -                  |   |   | 500                |   |   | 1,600              |  
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|Loss from operations                                                           |   | (41,804            | ) |   | (34,275            | ) |   | (185,252           | )
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|Other item                                                                     |   |                    |   |   |                    |   |   |                    |  
|Gain on forgiveness of debt (Note 3)                                           |   | 66,766             |   |   | -                  |   |   | 66,766             |  
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|Net income
      (loss)                                                        | $ | 24,962             |   | $ | (34,275            | ) | $ | (118,486           | )
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|Net earnings (loss) per share  basic and
      diluted                        | $ | 0.00               |   | $ | (0.00              | ) |   |                    |  
|                                                                               |   |                    |   |   |                    |   |   |                    |  
|Weighted average number of common shares
      outstanding - basic and diluted |   | 54,990,000         |   |   | 54,990,000         |   |   |                    |  

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

---

|CAROLYN RIVER PROJECTS LTD.   
|------------------------------
|(A Development Stage Company) 
|STATEMENTS OF
      CASH FLOWS

|                                                            |   |                    |   |   |                    |   |   | February 2, 2004   |  
|----------------------------------------------------------- | - | ------------------ | - | - | ------------------ | - | - | ------------------ | -
|                                                            |   | Year Ended         |   |   | Year Ended         |   |   | (Inception) to     |  
|                                                            |   | May
      31, 2010 |   |   | May
      31, 2009 |   |   | May
      31, 2010 |  
|                                                            |   |                    |   |   |                    |   |   |                    |  
|                                                            |   |                    |   |   |                    |   |   |                    |  
|Cash flows from operating activities                        |   |                    |   |   |                    |   |   |                    |  
|Net income (loss)                                           | $ | 24,962             |   | $ | (34,275            | ) | $ | (118,486           | )
|Adjustments to reconcile net loss to net cash
      used in |   |                    |   |   |                    |   |   |                    |  
|operating activities:                                       |   |                    |   |   |                    |   |   |                    |  
|Accrued interest                                            |   | 1,470              |   |   | 4,710              |   |   | 7,980              |  
|Gain on
      forgiveness of debt                           |   | (66,766            | ) |   | -                  |   |   | (66,766            | )
|Changes in non cash working capital items:                  |   |                    |   |   |                    |   |   |                    |  
|Accounts payable and
      accrued liabilities              |   | (8,367             | ) |   | 9,787              |   |   | 14,250             |  
|Net cash used
      in operating activities                 |   | (48,701            | ) |   | (19,778            | ) |   | (163,022           | )
|                                                            |   |                    |   |   |                    |   |   |                    |  
|                                                            |   |                    |   |   |                    |   |   |                    |  
|Cash flows from financing activities                        |   |                    |   |   |                    |   |   |                    |  
|Proceeds from sale and issuance of common
      stock       |   | -                  |   |   | -                  |   |   | 30,000             |  
|Advances from related party                                 |   | 55,000             |   |   | -                  |   |   | 86,550             |  
|Short-term debt                                             |   | 3,750              |   |   | 19,010             |   |   | 58,786             |  
|Net cash provided by financing activities                   |   | 58,750             |   |   | 19,010             |   |   | 175,336            |  
|                                                            |   |                    |   |   |                    |   |   |                    |  
|Net increase (decrease) in cash                             |   | 10,049             |   |   | (768               | ) |   | 12,314             |  
|                                                            |   |                    |   |   |                    |   |   |                    |  
|Cash, beginning                                             |   | 2,265              |   |   | 3,033              |   |   | -                  |  
|                                                            |   |                    |   |   |                    |   |   |                    |  
|Cash, ending                                                | $ | 12,314             |   | $ | 2,265              |   | $ | 12,314             |  
|                                                            |   |                    |   |   |                    |   |   |                    |  
|                                                            |   |                    |   |   |                    |   |   |                    |  
|Supplemental cash flow information                          |   |                    |   |   |                    |   |   |                    |  
|Cash paid for:                                              |   |                    |   |   |                    |   |   |                    |  
|Interest                                                    | $ | -                  |   | $ | -                  |   | $ | 1,222              |  
|Income taxes                                                | $ | -                  |   | $ | -                  |   | $ | -                  |  

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

---

|CAROLYN RIVER PROJECTS LTD.                       
|--------------------------------------------------
|(A Development Stage Company)                     
|STATEMENT OF STOCKHOLDERS DEFICIT                
|February 2, 2004
      (Inception) to May 31, 2010

|                                                                      |  |            |  |   |        |  |   | Deficit     |   |   |          |  
|--------------------------------------------------------------------- |  | ---------- |  | - | ------ |  | - | ----------- | - | - | -------- | -
|                                                                      |  |            |  |   |        |  |   | Accumulated |   |   |          |  
|                                                                      |  | Common     |  |   | Common |  |   | During the  |   |   |          |  
|                                                                      |  | Shares     |  |   | Shares |  |   | Development |   |   |          |  
|                                                                      |  | Number     |  |   | Amount |  |   | Stage       |   |   | Total    |  
|                                                                      |  |            |  |   |        |  |   |             |   |   |          |  
|                                                                      |  |            |  |   |        |  |   |             |   |   |          |  
|Common stock issued for cash at $0.001 per
      share, February 2004 |  | 39,000,000 |  | $ | 5,000  |  | $ | -           |   | $ | 5,000    |  
|Common stock issued for cash at $0.01 per share, March 2004           |  | 15,600,000 |  |   | 20,000 |  |   | -           |   |   | 20,000   |  
|Common stock issued for cash at $0.10 per
      share, April 2004     |  | 390,000    |  |   | 5,000  |  |   | -           |   |   | 5,000    |  
|Net loss                                                              |  | -          |  |   | -      |  |   | (14,547     | ) |   | (14,547  | )
|                                                                      |  |            |  |   |        |  |   |             |   |   |          |  
|Balance, May 31, 2004                                                 |  | 54,990,000 |  |   | 30,000 |  |   | (14,547     | ) |   | 15,453   |  
|Net loss                                                              |  | -          |  |   | -      |  |   | (15,553     | ) |   | (15,553  | )
|Balance, May 31, 2005                                                 |  | 54,990,000 |  |   | 30,000 |  |   | (30,100     | ) |   | (100     | )
|Net loss                                                              |  | -          |  |   | -      |  |   | (22,033     | ) |   | (22,033  | )
|Balance, May 31, 2006                                                 |  | 54,990,000 |  |   | 30,000 |  |   | (52,133     | ) |   | (22,133  | )
|Net loss                                                              |  | -          |  |   | -      |  |   | (18,236     | ) |   | (18,236  | )
|Balance, May 31, 2007                                                 |  | 54,990,000 |  |   | 30,000 |  |   | (70,369     | ) |   | (40,369  | )
|Net loss                                                              |  | -          |  |   | -      |  |   | (38,804     | ) |   | (38,804  | )
|Balance, May 31, 2008                                                 |  | 54,990,000 |  |   | 30,000 |  |   | (109,173    | ) |   | (79,173  | )
|Net loss                                                              |  | -          |  |   | -      |  |   | (34,275     | ) |   | (34,275  | )
|Balance, May 31, 2009                                                 |  | 54,990,000 |  |   | 30,000 |  |   | (143,448    | ) |   | (113,448 | )
|Net income                                                            |  | -          |  |   | -      |  |   | 24,962      |   |   | 24,962   |  
|Balance, May
      31, 2010                                           |  | 54,990,000 |  | $ | 30,000 |  | $ | (118,486    | ) | $ | (88,486  | )

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

---

|CAROLYN RIVER PROJECTS LTD.      
|---------------------------------
|(A Development Stage Company)    
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2010                     

1. NATURE AND CONTINUANCE OF OPERATIONS

The Company was incorporated in the State of Nevada on February
2, 2004. The Companys fiscal year end is May 31.

The Company is a development stage company. It is currently
seeking opportunities to acquire prospective or existing mineral properties or
is seeking business opportunities with established business entities for the
merger of a target business with the Company.

Going Concern

The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As of May 31, 2010, the
Company has not yet achieved profitable operations and has accumulated a deficit
of $118,486. Its ability to continue as a going concern is dependent upon the
ability of the Company to obtain the necessary financing to meet its obligations
and pay its liabilities arising from normal business operations when they come
due. The outcome of these matters cannot be predicted with any certainty at this
time and raise substantial doubt that the Company will be able to continue as a
going concern. These financial statements do not include any adjustments to the
amounts and classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern. Management intends
to obtain additional funding by borrowing funds from its directors and officers,
or a private placement of common stock.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles (GAAP) in the United
States of America and are presented in US dollars.

Foreign Currency Translation

Foreign denominated monetary assets and liabilities are
translated to their United States dollar equivalents using foreign exchange
rates which prevailed at the balance sheet date. Expenses are translated at
average rates of exchange during the period. Related translation adjustments are
reported as a separate component of stockholders equity, whereas gains or
losses resulting from foreign currency transactions are included in results of
operations.

Income Taxes

Deferred income taxes are provided for tax effects of temporary
differences between the tax basis of assets and liabilities and their reported
amounts in the financial statements. The Company uses the liability method to
account for income taxes, which requires deferred taxes to be recorded at the
statutory rate expected to being in effect when the taxes are paid. Valuation
allowances are provided for a deferred tax asset when it is more likely than not
that such asset will not be realized.

---

|CAROLYN RIVER PROJECTS LTD.      
|---------------------------------
|(A Development Stage Company)    
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2010                     

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Contd

Use of Estimates

The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. The Company regularly
evaluates estimates and assumptions. The Company bases its estimates and
assumptions on current facts, historical experience and various other factors
that it believes to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities and the accrual of costs and expenses that are not readily apparent
from other sources. The actual results experienced by the Company may differ
materially and adversely from the Companys estimates. To the extent there are
material differences between the estimates and the actual results, future
results of operations will be affected. The most significant estimates with
regard to these financial statements relate to deferred income tax rates and
timing of the reversal of income tax differences.

Earnings (Loss) Per Share

Basic earnings (loss) per share includes no dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Dilutive earnings
per share reflect the potential dilution of securities that could share in the
earnings of the Company. Because the Company does not have any potentially
dilutive securities, diluted earnings (loss) per share is equal to basic
earnings (loss) per share.

Financial Instruments

The fair value of the Companys financial instruments,
consisting of cash, accounts payable and amount due to related party, is
estimated to be equal to their carrying value. It is managements opinion that
the Company is not exposed to significant interest, currency or credit risks
arising from these financial instruments.

Stock Based Compensation

The Company records compensation expenses in the financial
statements for the share-based payments using the fair value method. The fair
value of share based compensation to directors and employees is determined using
the Black-Scholes option valuation model at the time of grant. Fair value for
common shares issued for goods or services rendered by non-employees are
measured based on the fair value of the goods and services received. Share-based
compensation is expensed with a corresponding increase to t share capital. Upon
the exercise of the stock options, the consideration paid is recorded as an
increase in share capital.

---

|CAROLYN RIVER PROJECTS LTD.      
|---------------------------------
|(A Development Stage Company)    
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2010                     

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Contd

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB)
issued SFAS No. 168, FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles, a replacement of SFAS No. 162
(Statement 168). Statement 168 establishes the FASB Accounting Standards
Codification as the source of authoritative accounting principles recognized by
the FASB to be applied in the preparation of financial statements in conformity
with generally accepted accounting principles. Statement 168 explicitly
recognizes rules and interpretive releases of the Securities and Exchange
Commission (SEC) under federal securities laws as authoritative GAAP for SEC
registrants. Statement 168 is effective for financial statements issued for
fiscal years and interim periods ending after September 15, 2009. The Company
has adopted Statement 168 for the year ended May 31, 2010. The adoption of FASB
168 had no impact on the Companys financial statements.

Other pronouncements issued by the FASB or other authoritative
accounting standards groups with future effective dates are either not
applicable or are not expected to be significant to the financial statements of
the Company.

3. SHORT-TERM DEBT

During the year ended May 31, 2008, the Company arranged a
credit facility for an amount up to $100,000. During the year ended May 31,
2010, the lender forgave principal and interest accrued in the amount of
$66,766. At May 31, 2009the Company owed $61,546 including accrued interest of
$5,220 on this facility. This amount bear interest at 10%, were unsecured and
due on demand.

4. DUE TO RELATED PARTY

The Company has a balance owing to a director in the amount of
$86,550 as at May 31, 2010 (2009: $31,550). The amount is non-interest bearing,
unsecured, with no stated terms of repayment. The related party transactions are
measured at the exchange amount, which represent the amounts agreed to between
the related parties.

5. COMMON STOCK

The total number of common shares authorized that may be issued
by the Company is 585,000,000 shares with a par value of one tenth of one cent
($0.001) per share.

At May 31, 2010 and 2009, there were no outstanding stock
options or warrants.

---

|CAROLYN RIVER PROJECTS LTD.      
|---------------------------------
|(A Development Stage Company)    
|NOTES TO THE FINANCIAL STATEMENTS
|MAY 31, 2010                     

6. INCOME TAXES

The provision for income taxes reported differs from the
amounts computed by applying aggregate income tax rates for the loss before tax
provision are as follows:

|                                                       |   | 2010    |   |   | 2009    |  
|------------------------------------------------------ | - | ------- | - | - | ------- | -
|                                                       |   |         |   |   |         |  
|Income (loss) before income taxes                      | $ | 24,962  |   | $ | (34,275 | )
|Statutory tax rate                                     |   | 35%     |   |   | 35%     |  
|                                                       |   |         |   |   |         |  
|Expected (charge) recovery of income taxes computed at |   |         |   |   |         |  
|standard rates                                         |   | (8,737  | ) |   | 11,996  |  
|Non taxable item                                       |   | 23,368  |   |   | -       |  
|Unrecognized non capital loss utilized                 |   | (14,631 | ) |   | (11,996 | )
|Income tax
      provision                             | $ | -       |   | $ | -       |  

The approximate tax effect of each type of temporary difference
that gives rise to the Companys deferred tax assets and liabilities are as
follows:

|                                                   |   | 2010    |   |   | 2009    |  
|-------------------------------------------------- | - | ------- | - | - | ------- | -
|                                                   |   |         |   |   |         |  
|Components of deferred tax assets and liabilities: |   |         |   |   |         |  
|Non capital loss carry
      forwards              | $ | (64,131 | ) | $ | (49,500 | )
|Less:
      Valuation allowances                   |   | 64,131  |   |   | 49,500  |  
|Net deferred tax asset                             | $ | -       |   | $ | -       |  

The Company has available net operating loss carry forwards of
approximately $118,000 (2009: $143,000) for tax purposes to offset future
taxable income, which expires beginning 2024. The potential deferred tax
benefits of these losses carried-forward have not been reflected in these
financial statements due to the uncertainty regarding their ultimate
realization.

The Company has not filed income tax returns since inception in
the United Stated and Canada. Both taxing authorities prescribe penalties for
failing to file certain tax returns and supplemental disclosures. Upon filing
there could be penalties and interest assessed. Such penalties vary by
jurisdiction and by assessing practices and authorities. As the Company has
incurred losses since inception there would be no known or anticipated exposure
to penalties for income tax liability. However, certain jurisdictions may assess
penalties for failing to file returns and other disclosures and for failing to
file other supplementary information associated with foreign ownership, debt and
equity positions. Inherent uncertainties arise over tax positions taken with
respect to transfer pricing, related party transactions, tax credits, tax based
incentives and stock based transactions. Management has considered the
likelihood and significance of possible penalties associated with its current
and intended filing positions and has determined, based on their assessment,
that such penalties, if any, would not be expected to be material.

F-4

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls
and procedures that are designed to ensure that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms and that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow for timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Our disclosure controls and
procedures were designed to provide reasonable assurance that the controls and
procedures would meet their objectives.

As required by SEC Rule 13a-15,
our management carried out an evaluation, with the participation of our Chief
Executive and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period
covered by this annual report. Based on the foregoing, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective at the reasonable assurance level.

Internal Control over Financial Reporting

Managements Annual Report on Internal Control over
Financial Reporting

Management is responsible for
establishing and maintaining adequate internal control over our financial
reporting. Our companys internal control over financial reporting is designed
to provide reasonable assurance, not absolute assurance, regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles in the United States of America. Internal control over financial
reporting includes those policies and procedures that: (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of our companys assets; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles in the United States of America, and that our companys
receipts and expenditures are being made only in accordance with authorizations
of our management and directors; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of assets that could have a material effect on our financial
statements. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements.

In order to evaluate the
effectiveness of internal control over financial reporting, as required by
Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment,
including testing, using the criteria in Internal Control  Integrated
Framework, issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).

Management has used the framework
set forth in the report entitled Internal Control-Integrated Frameworkpublished by the Committee of Sponsoring Organizations of the Treadway
Commission, known as COSO, to evaluate the effectiveness of our internal control
over financial reporting. Based on this assessment, management has concluded
that our internal control over financial reporting was not effective because
there was a lack of independent directors and a lack of segregation of duties as
of May 31, 2010.

25

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This annual report does not
include an attestation report of our independent registered public accounting
firm regarding internal control over financial reporting. Our managements
report on internal control over financial reporting was not subject to
attestation by our independent registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only managements report in
this annual report.

Changes in Internal Control over Financial Reporting

There has been no change in our
internal controls over financial reporting during our most recent fiscal quarter
that has materially affected, or is reasonably likely to materially affect, our
internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

26

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

Directors and Executive Officers

As at August 20, 2010, our
directors and executive officers, their ages, positions held, and duration of
such, are as follows:

|Name          | Position Held with our
      Company                                                                                | Age | Date First Elected or
      Appointed
|------------- | ------------------------------------------------------------------------------------------------------------------- | --- | -------------------------------------
|Steven Bolton | President, Chief Executive Officer and
      Director       
      Chief Financial Officer, Secretary and Treasurer | 42  | February 2, 2004 December 24, 2009   

Business Experience

The following is a brief account
of the education and business experience of each director and executive officer
during at least the past five years, indicating each persons principal
occupation during the period, and the name and principal business of the
organization by which he was employed.

Steven Bolton  President, Chief Executive Officer, Chief
Financial Officer, Secretary, Treasurer and Director

Mr. Steven Bolton has acted as
our president, chief executive officer, and director since our incorporation on
February 2, 2004 and as our chief financial officer, secretary and treasurer
since December 24, 2009. Mr. Bolton is a graduate of the University of British
Columbia where he earned his Bachelor of Science degree in Zoology in 1990. From
1992 to present, he has been the manager of Speedy Printing Centers, a
commercial printing company located in North Vancouver, British Columbia, and
has been involved in all aspects of its business operations.

Mr. Bolton does not have any
professional training or technical credentials in the exploration, development
and operation of mines.

Mr. Bolton intends to devote
approximately 15% of his time to the business and affairs of our company.

Directorships

Mr. Bolton is not a board
member or officer of any publically traded companies worldwide.

Significant Employees

We have no significant employees
other than our sole officer and director.

Family Relationships

There are no family relationships
among our directors or officers.

Involvement in Certain Legal Proceedings

Our directors, executive officers
and control persons have not been involved in any of the following events during
the past five years:

27

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| | 1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                            
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                
| | 2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offenses);                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                
| | 3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
| |    |                                                                                                                                                                                                                                                                                                                                
| | 4. | being found by a court of competent jurisdiction (in a
      civil action), the SEC or the Commodity Futures Trading Commission to have
      violated a federal or state securities or commodities law, and the
      judgment has not been reversed, suspended, or
vacated.                                                  

Audit Committee

Our board of directors struck an
audit committee on August 20, 2009. As of the date of this annual report, Steve
Bolton, our sole officer and director, is the sole member of the audit
committee. Steve Bolton is not independent as defined by Rule 5605 of the Nasdaq
Listing Rules or National Instrument 52-110 as adopted by the British Columbia
Securities Commission. The audit committee is directed to: review the scope,
cost and results of the independent audit of our books and records; review the
results of the annual audit with management; review the adequacy of our
accounting, financial and operating controls; recommend annually to the board of
directors the selection of the independent registered accountants; consider
proposals made by the independent registered chartered accountants for
consulting work; and report to the board of directors, when so requested, on any
accounting or financial matters. The board of directors adopted its charter for
the audit committee on August 20, 2009.

Audit Committee Financial Expert

Our board of directors has
determined that it does not have an audit committee member that qualifies as an
audit committee financial expert as defined in Item 407(d)(5)(ii) of
Regulation S-K, nor do we have a board member that qualifies as an independent
director as defined by Rule 5605 of the Nasdaq Listing Rules.

Due to our very limited
operations, we believe that our audit committee will be capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting. In addition, we believe that retaining an
independent director who would qualify as an audit committee financial expert
would be overly costly and burdensome and is not warranted in our circumstances
given the early stages of our development and the fact that we have not
generated revenues to date.

Nomination Procedures For Appointment of Directors

As of August 24, 2010, we had not
effected any material changes to the procedures by which our shareholders may
recommend nominees to our board of directors. Our board of directors does not
have a policy with regards to the consideration of any director candidates
recommended by our shareholders. Our board of directors has determined that it
is in the best position to evaluate our companys requirements as well as the
qualifications of each candidate when the board considers a nominee for a
position on our board of directors. If shareholders wish to recommend candidates
directly to our board, they may do so by sending communications to the president
of our company at the address on the cover of this annual report.

Code of Ethics

On August 20, 2009, our companys
board of directors adopted a Code of Ethics and Business Conduct that applies
to, among other persons, our companys president, chief executive officer, chief
financial officer, secretary and treasurer (being our principal executive
officer, principal financial officer and principal accounting officer), as well
as persons performing similar functions. As adopted, our Code of Ethics and
Business Conduct sets forth written standards that are designed to deter
wrongdoing and to promote:

28

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|1. | honest and ethical conduct, including the ethical
      handling of actual or apparent conflicts of interest between personal and
      professional relationships;                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                              
|2. | full, fair, accurate, timely, and understandable
      disclosure in reports and documents that we file with, or submit to, the
      Securities and Exchange Commission and in other public communications made
      by us;
|   |                                                                                                                                                                                                                              
|3. | compliance with applicable governmental laws, rules and
      regulations;                                                                                                                                                   
|   |                                                                                                                                                                                                                              
|4. | the prompt internal reporting of violations of the Code
      of Ethics and Business Conduct to an appropriate person or persons
      identified in the Code of Ethics and Business Conduct; and                            
|   |                                                                                                                                                                                                                              
|5. | accountability for adherence to the Code of Ethics and
      Business Conduct.                                                                                                                                               

Our Code of Ethics and Business
Conduct requires, among other things, that all of our companys personnel shall
be accorded full access to our president, chief executive officer, chief
financial officer, secretary and treasurer with respect to any matter which may
arise relating to the Code of Ethics and Business Conduct. Further, all of our
companys personnel are to be accorded full access to our companys board of
directors if any such matter involves an alleged breach of the Code of Ethics
and Business Conduct by our president, chief executive officer, chief financial
officer, secretary and treasurer.

In addition, our Code of Ethics
and Business Conduct emphasizes that all employees, and particularly managers
and/or supervisors, have a responsibility for maintaining financial integrity
within our company, consistent with generally accepted accounting principles,
and federal, provincial and state securities laws. Any employee who becomes
aware of any incidents involving financial or accounting manipulation or other
irregularities, whether by witnessing the incident or being told of it, must
report it to his or her immediate supervisor or to our companys president,
chief executive officer, chief financial officer, secretary and treasurer. If
the incident involves an alleged breach of the Code of Ethics and Business
Conduct by the president, secretary and treasurer, the incident must be reported
to any member of our board of directors. Any failure to report such
inappropriate or irregular conduct of others is to be treated as a severe
disciplinary matter. It is against our company policy to retaliate against any
individual who reports in good faith the violation or potential violation of our
companys Code of Ethics and Business Conduct.

Our Code of Ethics and Business
Conduct was filed as Exhibit 14.1 to our annual report on Form 10-K filed with
the Securities and Exchange Commission on August 24, 2009. We will provide a
copy of the Code of Ethics and Business Conduct to any person without charge,
upon request. Requests can be sent to: Carolyn River Projects Ltd., of 2640
Tempe Knoll Drive, North Vancouver, British Columbia Canada V6C 1V5.

Section 16(a) Beneficial Ownership Reporting
Compliance

Section 16(a) of the Exchange Act
requires our executive officers and directors, and persons who own more than 10%
of our common stock, to file reports regarding ownership of, and transactions
in, our securities with the SEC and to provide us with copies of those filings.
Based solely on our review of the copies of such forms received by us, or
written representations from certain reporting persons, we believe that during
fiscal year ended May 31, 2010, all filing requirements applicable to our
officers, directors and greater than 10% percent beneficial owners were complied
with, with the exception of the following:

|Name         | Number of Late
    Reports | Number of Transactions Not
    Reported on a Timely Basis | Failure to File
    Requested Forms
|------------ | -------------------------- | --------------------------------------------------------- | -----------------------------------
|Steve Bolton | 2(1)                       | 2(1)                                                      | 2(1)                               

(1) The named director failed to file a Form 3 and Schedule 13D
upon their acquisition of shares of our common stock.

29

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ITEM 11. EXECUTIVE COMPENSATION.

The particulars of compensation paid to the following
persons:

|(a) | our principal executive officer;                                                                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                   
|(b) | each of our two most highly compensated executive
      officers who were serving as executive officers at the end of the year
      ended May 31, 2010; and                                                                      
|    |                                                                                                                                                                                                                                   
|(c) | up to two additional individuals for whom disclosure
      would have been provided under (b) but for the fact that the individual
      was not serving as our executive officer at the end of the year ended May
      31, 2010,

who we will collectively refer to as our named executive
officers of our company for the years ended May 31, 2010 and 2009, are set out
in the following summary compensation table, except that no disclosure is
provided for any named executive officer, other than our principal executive
officer, whose total compensation does not exceed $100,000 for the respective
fiscal year:

Summary Compensation

|SUMMARY COMPENSATION
      TABLE                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------
|Name and
      Principal Position                                                                                                                   
|Steven Bolton       President, Chief Executive Officer,

      Chief Financial
      Officer, Secretary,
      Treasurer
      and
      Director(1)

(1) Mr. Bolton has been our president, chief executive officer
and a director of our company since February 2, 2004 and our chief financial
officer, secretary and treasurer since December 24, 2009.

Compensation Discussion and Analysis

We have not entered into any
employment agreement or consulting agreement with our current directors and
executive officers. There are no arrangements or plans in which we provide
pension, retirement or similar benefits for directors or executive officers. Our
directors and executive officers may receive stock options at the discretion of
our board of directors in the future. We do not have any material bonus or
profit sharing plans pursuant to which cash or non-cash compensation is or may
be paid to our directors or executive officers, except that stock options may be
granted at the discretion of our board of directors from time to time. We have
no plans or arrangements in respect of remuneration received or that may be
received by our executive officers to compensate such officers in the event of
termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control.

Outstanding Equity Awards at Fiscal Year-End

As at May 31, 2010, we had not
adopted any equity compensation plan and no stock, options, or other equity
securities were awarded to our executive officers.

30

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Directors Compensation

We have no formal plan for
compensating our directors for their service in their capacity as directors,
although such directors are expected in the future to receive stock options to
purchase common shares as awarded by our board of directors or (as to future
stock options) a compensation committee which may be established. Directors are
entitled to reimbursement for reasonable travel and other out-of-pocket expenses
incurred in connection with attendance at meetings of our board of directors.
Our board of directors may award special remuneration to any director
undertaking any special services on our behalf other than services ordinarily
required of a director. During the year ended May 31, 2010, no director received
and/or accrued any compensation for their services as a director, including
committee participation and/or special assignments.

Pension and Retirement Plans

Currently, we do not offer any
annuity, pension or retirement benefits to be paid to any of our officers,
directors or employees in the event of retirement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As of August 20, 2010, there were
54,990,000 shares of our common stock outstanding. The following table sets
forth certain information known to us with respect to the beneficial ownership
of our common stock as of that date by (i) each of our directors, (ii) each of
our executive officers, and (iii) all of our directors and executive officers as
a group. Except as set forth in the table below, there is no person known to us
who beneficially owns more than 5% of our common stock.

|Title of Class                                         | Name and Address of Beneficial
      Owner                                   | Amount and Nature of Beneficial
      Ownership | Percentage of
      Class(1)
|------------------------------------------------------ | ---------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------------
|Common Stock                                           | Steve Bolton 2118 Eastern Avenue, Suite 5
      North Vancouver, B.C. Canada | 19,500,000                                      | 35.46%                      
|Directors and Executive Officers as a Group (1 person) |                                                                              | 19,500,000                                      | 35.46%                      
|Common Stock                                           | Bryan Markert 722 East 6th Street North
      Vancouver, B.C. Canada         | 19,500,000                                      | 35.46%                      
|5% Shareholders (1 person)                             |                                                                              | 19,500,00                                       | 35.46%                      

|(1) | Based on 54,990,000 shares of common stock issued and
      outstanding as of August 20, 2010. Beneficial ownership is determined in
      accordance with the rules of the SEC and generally includes voting or
      investment power with respect to securities. Except as otherwise
      indicated, we believe that the beneficial owners of the common stock
      listed above, based on information furnished by such owners, have sole
      investment and voting power with respect to such shares, subject to
      community property laws where applicable.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in Control

We are unaware of any contract or
other arrangement the operation of which may at a subsequent date result in a
change of control of our company.

Equity Compensation Plan Information

Our company does not currently
have a stock option plan or other form of equity plan.

31

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.

Other than as listed below, no
director, officer, principal shareholder holding at least 5% of our common
shares, or any family member thereof, had any material interest, direct or
indirect, in any transaction, or proposed transaction, since the beginning of
our last fiscal year ended May 31, 2010, in which the amount involved in the
transaction exceeded or exceeds the lesser of $120,000 or one percent of the
average of our total assets at year-end for the last three completed fiscal
years.

As at May 31, 2010, an amount of
$86,550 is owing to the sole officer and director of our company. This amount is
unsecured, non-interest bearing and has no specified terms of repayment.

Corporate Governance

Director Independence

We currently act with one
director, Steve Bolton. Mr. Bolton is not an independent director as defined in
Rule 5605 of the Nasdaq Listing Rules.

Audit Committee

Our board of directors struck an
audit committee on August 20, 2009. Currently, Steve Bolton, our sole officer
and director, is the sole member of the audit committee.

Transactions with Independent Directors

Our sole director did not enter
into any transaction, relationship or arrangement during the year ended May 31,
2010 that was considered by our board of directors in determining whether he
maintained his independence in accordance with Rule 5605 of the Nasdaq Listing
Rules.

National Instrument 52-110

We are a reporting issuer in the
Province of British Columbia. National Instrument 52-110 of the Canadian
Securities Administrators requires our company, as a venture issuer, to disclose
annually in our annual report certain information concerning the constitution of
our audit committee and our relationship with our independent auditor. As
defined in National Instrument 52-110, our sole officer and director is not an
independent director. For a description of the education and experience of our
sole audit committee member that is relevant to the performance of his
respective responsibilities as audit committee members, please see the
disclosure under the heading Item 10. Directors, Executive Officers and
Corporate Governance  Business Experience. Our sole audit committee member is
not financially literate, as defined in National Instrument 52-110.

Our audit committee was
responsible for reviewing both interim and annual financial statements for our
company. For the purposes of performing their duties, our audit committee had
the right at all times, to inspect all the books and financial records of our
company and any subsidiaries and to discuss with management and the external
auditors of our company any accounts, records and matters relating to the
financial statements of our company. Our audit committee have met and will meet
periodically with management and annually with the external auditors.

Since the commencement of our
companys most recently completed financial year, our audit committee has not
failed to nominate or compensate an external auditor.

Since the commencement of our
companys most recently completed financial year, our company has not relied on
the exemptions contained in sections 2.4 or 8 of National Instrument 52-110.
Section 2.4 (De Minimis Non-audit Services)provides an exemption from
the requirement that the audit committee must pre-approve all non-audit services
to be provided by the auditor, where the total amount of fees related to the
non-audit services are not expected to exceed 5% of the total fees payable to the auditor
in the fiscal year in which the non-audit services were provided. Section 8
(Exemptions)permits a company to apply to a securities regulatory
authority for an exemption from the requirements of National Instrument 52-110
in whole or in part.

32

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Commensurate with the appointment
of the audit committee on August 20, 2009, the board of directors adopted its
charter for the audit committee, which sets out specific policies and procedures
for the engagement of non-audit services. A copy of our companys Audit
Committee Charter was filed as an exhibit to our annual report filed with the
Securities and Exchange Commission on August 24, 2009.

National Instrument 58-101

We are a reporting issuer in the
Province of British Columbia. National Instrument 58-101 of the Canadian
Securities Administrators requires our company, as a venture issuer, to disclose
annually in our annual report certain information concerning corporate
governance disclosure.

Board of Directors

Our board of directors currently
acts with one member, Steve Bolton. We have determined that Mr. Bolton is not
independent as that term is defined in National Instrument 52-110 due to the
fact that he is our president, chief executive officer, chief financial officer,
secretary and treasurer.

If and when our operations
warrant, we will retain independent directors. At such time, our board of
directors intends to facilitate its exercise of independent supervision over
management by endorsing the guidelines for responsibilities of the board as set
out by regulatory authorities on corporate governance in Canada and the United
States. Our boards primary responsibilities will be to supervise the management
of our company, to establish an appropriate corporate governance system, and to
set a tone of high professional and ethical standards.

The board will also be responsible for:

- selecting and assessing members of the board;
- choosing, assessing and compensating the president, secretary and treasurer
  of our company, approving the compensation of all executive officers and
  ensuring that an orderly management succession plan exists;
- reviewing and approving our companys strategic plan, operating plan,
  capital budget and financial goals, and reviewing its performance against
  those plans;
- adopting a code of conduct and a disclosure policy for our company, and
  monitoring performance against those policies;
- ensuring the integrity of our companys internal control and management
  information systems;
- approving any major changes to our companys capital structure, including
  significant investments or financing arrangements; and
- reviewing and approving any other issues which, in the view of the board or
  management, may require board scrutiny.

33

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Directorships

Our sole director is not
currently a director of any other reporting issuers (or the equivalent in a
foreign jurisdiction).

Orientation and Continuing Education

We have an informal process to
orient and educate new recruits to the board regarding their role on the board,
our committees and our directors, as well as the nature and operations of our
business. This process provides for an orientation with key members of the
management staff, and further provides access to materials necessary to inform
them of the information required to carry out their responsibilities as a board
member. This information includes the most recent board approved budget, the
most recent annual report, the audited financial statements and copies of the
interim quarterly financial statements.

The board does not provide
continuing education for its directors. Each director is responsible to maintain
the skills and knowledge necessary to meet his obligations as director.

Nomination of Directors

The board is responsible for
identifying new director nominees. In identifying candidates for membership on
the board, the board takes into account all factors it considers appropriate,
which may include strength of character, mature judgment, career specialization,
relevant technical skills, diversity and the extent to which the candidate would
fill a present need on the board. As part of the process, the board, together
with management, is responsible for conducting background searches, and is
empowered to retain search firms to assist in the nominations process. Once
candidates have gone through a screening process and met with a number of the
existing directors, they are formally put forward as nominees for approval by
the board.

Assessments

The board intends that individual
director assessments be conducted by other directors, taking into account each
directors contributions at board meetings, service on committees, experience
base, and their general ability to contribute to one or more of our companys
major needs. However, due to our stage of development and our need to deal with
other urgent priorities, the board has not yet implemented such a process of
assessment.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit fees

The aggregate fees billed by Dale
Matheson Carr-Hilton Labonte LLP, Chartered Accountants, for professional
services rendered for the audit of our annual financial statements included in
our annual report on Form 10-K for the fiscal years ended May 31, 2010 and 2009
were $7,000 and $6,500 respectively.

Audit Related Fees

For the fiscal years ended May
31, 2010 and 2009, the aggregate fees billed for assurance and related services
by Dale Matheson Carr-Hilton Labonte LLP, Chartered Accountants, relating to the
performance of the audit of our financial statements which are not reported
under the caption Audit Fees above, was $6,500 and $6,100 respectively.

Tax Fees

For the fiscal years ended May
31, 2010 and 2009, the aggregate fees billed by Dale Matheson Carr-Hilton
Labonte LLP, Chartered Accountants, for other non-audit professional services,
other than those services listed above, totalled $Nil and $Nil respectively.

34

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All Other Fees

We did not incur any other fees,
other than described above, during the years ended May 31, 2010 and 2009.

Our audit committee has adopted a
policy governing the pre-approval by the board of directors of all services,
audit and non-audit, to be provided to our company by our independent auditors.
Under the policy, the board or directors has pre-approved the provision by our
independent auditors of specific audit, audit related, tax and other non-audit
services as being consistent with auditor independence. Requests or applications
to provide services that require the specific pre-approval of the board of
directors must be submitted to the board of directors by the independent
auditors, and the independent auditors must advise the board of directors as to
whether, in the independent auditors view, the request or application is
consistent with the Securities and Exchange Commissions rules on auditor
independence.

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

The board of directors
pre-approves all services provided by our independent auditors. All of the above
services and fees were reviewed and approved by the board of directors either
before or after the respective services were rendered.

The board of directors has
considered the nature and amount of fees billed by Dale Matheson Carr-Hilton
Labonte LLP, Chartered Accountants and believes that the provision of services
for activities unrelated to the audit is compatible with maintaining Dale
Matheson Carr-Hilton Labonte LLP, Chartered Accountants.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

|Exhibit Number | Description of Exhibit                                                                                                                                                                                                              
|-------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            | Articles of Incorporation (incorporated by reference from
      our Form SB-2 Registration Statement, as amended, originally filed on
      October 13, 2005)                                                                       
|3.2            | Bylaws (incorporated by reference from our Form SB-2
      Registration Statement, as amended, originally filed on October 13, 2005)                                                                                                
|3.3            | Articles of Merger filed with the Secretary of State of
      Nevada on May 30, 2007 and which is effective June 11, 2007 (incorporated
      by reference from our Current Report on Form 8-K, filed on June 21, 2007)             
|3.4            | Certificate of Change filed with the Secretary of State
      of Nevada on May 31, 2007 and which is effective June 11, 2007
      (incorporated by reference from our Current Report on Form 8-K, filed on
      June 21, 2007)    
|3.5            | Articles of Merger filed with the Secretary of State of
      Nevada on August 17, 2007 and which is effective August 24, 2007
      (incorporated by reference from our Current Report on Form 8-K, filed on
      August 29, 2007)
|14.1           | Code of Ethics and Business Conduct (incorporated by
      reference from our Annual Report on Form 10- K, filed on August 24, 2009)                                                                                                
|31.1*          | Certification of Principal Executive Officer filed
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                  
|32.1*          | Certification of Principal Executive Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002                                                                   
|99.1           | Audit Committee Charter (incorporated by reference from
  our Annual Report on Form 10-K, filed on August 24, 2009)                                                                                                                 

*Filed herewith

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

CAROLYN RIVER PROJECTS LTD.

By: /s/ Steve
BoltonSteve Bolton 
President, Chief Executive Officer, Chief Financial
Officer, Secretary, Treasurer and Director 
(Principal Executive Officer,
Principal Financial Officer and Principal Accounting Officer) Date:
August 24, 2010

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

By: /s/ Steve
BoltonSteve Bolton President, Chief Executive Officer, Chief Financial
Officer, Secretary, Treasurer and Director (Principal Executive Officer,
Principal Financial Officer and Principal Accounting Officer) Date:
August 24, 2010

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