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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, D.C. 20549

FORM 10-KSB

(Mark One)

**x**   Annual
  Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange Act Of 1934
  For the fiscal year ended December 31, 2003

** ̈**   Transition
  Report Under Section 13 Or 15(D) Of The Securities Exchange Act Of 1934
  For the transition period from _____ to _____

COMMISSION FILE NUMBER 000-32011

BALSAM VENTURES, INC. 
  (Name of small business issuer in its charter)

|NEVADA                                                         | 52-2219056                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
|                                                               |                                     
|SUITE 208, 20 EAST FOOTHILL BOULEVARD                          |                                     
|ARCADIA, CALIFORNIA                                            | 91006                               
|(Address of principal executive offices)                       | (Zip Code)                          

(626) 574-2911Issuer's telephone number

Securities registered under Section 12(b) of the Exchange Act:
  NONE.

Securities registered under Section 12(g) of the Exchange Act:
  COMMON STOCK, PAR VALUE $0.001 PER SHARE

Check whether the issuer (1) filed all reports required to
  be filed by Section 13 or 15(d) of the Exchange Act during the past 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
  ** ̈**

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B is not contained in this form, and no disclosure
  will 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-KSB or any amendment to this Form 10-KSB. ** ̈**

State issuer's revenues for its most recent fiscal year NIL.

As of April 12, 2004, the aggregate market value of the voting
  and non-voting common equity held by non- affiliates is $1,077,300, based on
  an average of the bid price of $0.09 and ask price of $0.12 of the common stock
  on April 12, 2004.

As of April 12, 2004, the Registrant had 20,500,000
  common stock with a par value of $0.001 outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: NONE

Transitional Small Business Disclosure Format (check one):
  Yes ** ̈**     No   
  **x**

Page 1 of 17

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BALSAM VENTURES, INC.
  ANNUAL REPORT ON FORM 10-KSB

INDEX

|         |                                                                                                                        | PAGE
|-------- | ---------------------------------------------------------------------------------------------------------------------- | ----
|PART I   |                                                                                                                        |     
|         |                                                                                                                        |     
|Item 1.  | Description Of Business.                                                                                               | 3   
|         |                                                                                                                        |     
|Item 2.  | Description Of Property.                                                                                               | 5   
|         |                                                                                                                        |     
|Item 3.  | Legal Proceedings.                                                                                                     | 5   
|         |                                                                                                                        |     
|Item 4.  | Submission Of Matters To A Vote Of Security Holders.                                                                   | 5   
|         |                                                                                                                        |     
|PART II  |                                                                                                                        |     
|         |                                                                                                                        |     
|Item 5.  | Market For Common Equity And Related Stockholder Matters.                                                              | 6   
|         |                                                                                                                        |     
|Item 6.  | Management's Discussion And Analysis Or Plan Of Operation.                                                             | 8   
|         |                                                                                                                        |     
|Item 7.  | Financial Statements.                                                                                                  | 9   
|         |                                                                                                                        |     
|Item 8.  | Changes In And Disagreements With Accountants On Accounting
      And Financial Disclosure.                            | 10  
|         |                                                                                                                        |     
|Item 8A  | Controls and Procedures.                                                                                               | 10  
|         |                                                                                                                        |     
|PART III |                                                                                                                        |     
|         |                                                                                                                        |     
|Item 9.  | Directors, Executive Officers, Promoters And Control
      Persons; Compliance With Section 16(A) Of The Exchange Act. | 11  
|         |                                                                                                                        |     
|Item 10. | Executive Compensation                                                                                                 | 12  
|         |                                                                                                                        |     
|Item 11. | Security Ownership Of Certain Beneficial Owners And
      Management.                                                  | 13  
|         |                                                                                                                        |     
|Item 12. | Certain Relationships And Related Transactions                                                                         | 14  
|         |                                                                                                                        |     
|Item 13. | Exhibits And Reports On Form 8-K.                                                                                      | 15  
|         |                                                                                                                        |     
|Item 14. | Principal Accountant Fees and Services                                                                                 | 16  

Page 2 of 17

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PART I

ITEM 1.          
  DESCRIPTION OF BUSINESS.

FORWARD LOOKING STATEMENTS

The information in this discussion contains forward-looking
  statements within the meaning of Section 27A of the Securities Act of 1933,
  as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
  These forward-looking statements involve risks and uncertainties, including
  statements regarding the Company's capital needs, business strategy and expectations.
  Any statements contained herein that are not statements of historical facts
  may be deemed to be forward-looking statements. In some cases, you can identify
  forward-looking statements by terminology such as "may", "will", "should", "expect",
  "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential"
  or "continue", the negative of such terms or other comparable terminology. Actual
  events or results may differ materially. In evaluating these statements, you
  should consider various factors, including the risks described below, and, from
  time to time, in other reports the Company files with the SEC. These factors
  may cause the Company's actual results to differ materially from any forward-looking
  statement. The Company disclaims any obligation to publicly update these statements,
  or disclose any difference between its actual results and those reflected in
  these statements. The information constitutes forward-looking statements within
  the meaning of the Private Securities Litigation Reform Act of 1995.

OVERVIEW

We were incorporated on August 17, 1999 under the laws of
  the state of Nevada.

In accordance with our original business plan, we developed
  a free Internet web site at "www.usacitizenship.net" to provide a reliable source
  of information on immigration into the United States. Our original business
  plan was to draw users to our web site so that we could sell and generate revenues
  from the sale of web site advertisements. We believed that an Internet web site
  that offered free information on the process of immigrating into the United
  States would attract substantial usage. We believed that if we were successful
  in attracting people to our web site, we would be able to generate revenues
  from advertisers who are interested in the demographics of our web site users.

We completed the development of our web site and it became
  operational. We did not achieve sales of advertising on our web site. We have
  not earned any revenue to date.

As discussed below, on June 6, 2002, we entered into an exclusive
  licensing agreement (the Original License Agreement) with Cool Can
  Technologies, Inc., ("Cool Can"). We ceased development of our web site business
  in order to concentrate on development of the technology licensed from Cool
  Can and the web site is not currently operational. As discussed below, on November
  30, 2003, we entered into a new exclusive licensing agreement with Cool Can
  which cancelled and replaced the Original License Agreement.

License of Cool Can Technology

On June 6, 2002, we entered into an exclusive licensing agreement
  which was amended on September 2, 2002 (the "Original License Agreement") with
  Cool Can Technologies, Inc. ("Cool Can"), pursuant to which we were granted
  the exclusive worldwide right and license, for a period of 40 years, to enjoy,
  commercialize and exploit Cool Can's proprietary Instacool self-chilling beverage
  container technology (the "Technology"). As part of the consideration that we
  agreed to pay pursuant to the Original License Agreement, we issued 300,000
  shares of our common stock to Cool Can. However, we were in default of the Original
  License Agreement because we had failed to pay a $200,000 license fee. On June
  5, 2003, we reached an agreement with Cool Can that provided us until November
  30, 2003 to remedy the default or lose our rights under the License Agreement.

On November 30, 2003, we entered into a new license agreement
  with Cool Can (the License Agreement) which grants us the exclusive
  right and license, for a period of 40 years, to enjoy, commercialize and exploit
  the Technology in countries comprising the European Union and the Peoples Republic
  of China (the Exclusive Regions). The License Agreement cancels
  and replaces the Original License Agreement and terminates all of our obligations
  under the Original License Agreement. Under the License Agreement, we have the
  right, within the Exclusive Region, to manufacture, use and sell apparatus and
  products embodying the Technology and grant sub-licenses of our right to manufacture,
  use and sell products embodying the Technology. The License Agreement further
  provides us with a right of first refusal with respect to any transfers, sales
  or assignments of

Page 3 of 17

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the Technology by Cool Can, including patents, trademarks
  or other intellectual property rights. We also have a right of first refusal
  with respect to any licensing rights for countries which are not a party to
  the North American Free Trade Agreement and are outside of the Exclusive Region.
  The consideration we agreed to pay to Cool Can pursuant to the License Agreement
  is as follows:

| | 1. | We agreed to issue 5,000,000 shares
        of our common stock to Cool Can (which shares have not yet been issued);
        and                                                                                                                                                                                                               
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                
| | 2. | We agreed to pay ongoing royalties to
        Cool Can equal to 2% of gross profits from sales of products or 5% of
        gross licensing revenues. Notwithstanding that there may be no gross profits
        or gross licensing revenues, we agreed to pay minimum royalty payments
        of $5,000 per month beginning January 15, 2006.

Cool Can's proposed product is referred to as the "InstaCool"
  product and consists of a module for insertion in an aluminum beverage container
  that incorporates a cartridge of liquid carbon dioxide ("CO2") that is held
  in place by a cartridge holder. The module consists of proprietary technology
  for which Cool Can has been granted patent protection. The module would be inserted
  in an aluminum beverage container during an automated canning process. Containers
  incorporating the InstaCool product would be identified and sold as self-chilling
  beverage containers. To start the chilling process, a consumer would pull the
  tab off the container as with a regular non-chilling beverage container. When
  the tab on the lid of the beverage container is pulled by the consumer, a valve
  mechanism within the container releases the compressed liquid CO2. The escaping
  CO2 forms into small particles of frozen snow at extremely cold temperatures
  and rapidly imparts a chilling action to the beverage. The targeted result is
  that the consumer may purchase a beverage at room temperature and enjoy it cold
  without having to purchase it from a cooler or purchase ice to cool the beverage.

SIGNIFICANT EMPLOYEES

We have no significant employees other than the officers and
  directors of the Company.

RESEARCH AND DEVELOPMENT

We have incurred no research and development expenditures
  during the fiscal year ended December 31, 2003.

INTELLECTUAL PROPERTY

We do not own, either legally or beneficially, any patent
  or trademark. Subject to the License Agreement, the patents, trademarks and
  other intellectual property rights which make up the Technology remain the property
  of Cool Can. However, under the terms of the License Agreement we have a right
  of first refusal to acquire those patents, trademarks or other intellectual
  property rights should Cool Can seek to dispose of the Technology during the
  term of the License Agreement. Under the License Agreement, we are required
  to prosecute, within the Exclusive Region, any possible infringements upon Cool
  Cans patents or trademarks relating to the Technology.

SUBSIDIARIES

We do not have any subsidiaries.

Page 4 of 17

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ITEM 2.          
  DESCRIPTION OF PROPERTY.

We have no real property holdings and, at this time, we have
  no agreements to acquire any properties. We do not lease any real property.

ITEM 3.          
  LEGAL PROCEEDINGS.

We are not a party to any legal proceedings and, to our knowledge,
  no such proceedings are pending, threatened or contemplated.

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

No matters were submitted to our security holders during the
  fourth quarter of our fiscal year ending December 31, 2003.

Page 5 of 17

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PART II

ITEM 5.          
  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common shares are quoted on the OTC Bulletin Board under
  the symbol BLSV.

The following table indicates the high and low bid prices
  of the common shares during the periods indicated:

|                                 |   | 2003 |  |   | 2002
|-------------------------------- | - | ---- |  | - | ----
|                                 |   |      |  |   |     
|                                 |   | High |  |   | Low 
|                                 |   |      |  |   |     
|First Quarter ended March 31     | $ | 0.05 |  | $ | 0.02
|Second Quarter ended June 30     | $ | 0.08 |  | $ | 0.01
|Third Quarter ended September 30 | $ | 0.08 |  | $ | 0.03
|Fourth Quarter ended December 31 | $ | 0.05 |  | $ | 0.03

The range of high and low price quotes of our common stock
  as set out in the table above are as quoted on the over-the-counter bulletin
  board. The market quotations provided reflect inter-dealer prices, without retail
  mark-up, mark-down or commission and may not represent actual transactions.

PENNY STOCK RULES

The Securities Exchange Commission has adopted rules that
  regulate broker-dealer practices in connection with transactions in penny stocks.
  Penny stocks are generally equity securities with a price of less than $5.00,
  other than securities registered on certain national securities exchanges or
  quoted on the Nasdaq system, provided that current price and volume information
  with respect to transactions in such securities is provided by the exchange
  or system. The penny stock rules require a broker-dealer, prior to a transaction
  in a penny stock not otherwise exempt from those rules, to deliver a standardized
  risk disclosure document prepared by the Commission, which: (a) contains a description
  of the nature and level of risk in the market for penny stocks in both public
  offerings and secondary trading; (b) contains a description of the broker's
  or dealer's duties to the customer and of the rights and remedies available
  to the customer with respect to a violation of such duties or other requirements
  of Securities laws; (c) contains a brief, clear, narrative description of a
  dealer market, including bid and ask prices for penny stocks and significance
  of the spread between the bid and ask price; (d) contains a toll-free telephone
  number for inquiries on disciplinary actions; (e) defines significant terms
  in the disclosure document or in the conduct of trading in penny stocks; and
  (f) contains such other information and in such form as the Commission shall
  require by rule or regulation. The broker-dealer also must, prior to effecting
  any transaction in a penny stock, provide the customer with: (a) bid and offer
  quotations for the penny stock; (b) the compensation of the broker-dealer and
  its salesperson in the transaction; (c) the number of shares to which such bid
  and ask prices apply, or other comparable information relating to the depth
  and liquidity of the market for such stock; and (d) monthly account statements
  showing the market value of each penny stock held in the customer's account.
  In addition, the penny stock rules require that, prior to a transaction in a
  penny stock that is not otherwise exempt from those rules, the broker-dealer
  must: (a) make a special written determination that the penny stock is a suitable
  investment for the purchaser and (b) receive from the purchaser his or her written
  acknowledgement of receipt of the determination and a written agreement to the
  transaction.

These disclosure requirements may have the effect of reducing
  the trading activity in the secondary market for our stock and therefore stockholders
  may have difficulty selling those securities.

REGISTERED HOLDERS OF OUR COMMON STOCK

As of April 12, 2003, there were approximately 7 registered
  holders of record of our common stock. We believe that a large number of stockholders
  hold stock on deposit with their brokers or investment bankers registered in
  the name of stock depositories.

Page 6 of 17

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DIVIDENDS

We have neither declared nor paid any cash dividends on our
  capital stock since our inception and do not contemplated paying cash dividends
  in the foreseeable future. It is anticipated that earnings, if any, will be
  retained for the operation of our business. Our board of directors will determine
  future dividend declarations and payments, if any, in light of the then-current
  conditions they deem relevant and in accordance with the Nevada Revised Statutes.

There are no restrictions in our articles of incorporation
  or in our bylaws which prevent us from declaring dividends. The Nevada Revised
  Statutes, however, do prohibit us from declaring dividends where, after giving
  effect to the distribution of a dividend:

| | (a) | We would not be able to pay our debts
        as they become due in the usual course of business; or                                                                                                                                           
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                
| | (b) | Our total assets would be less than
        the sum of our total liabilities plus the amount that would be needed
        to satisfy the rights of shareholders who have preferential rights superior
        to those receiving distributions.

RECENT SALES OF UNREGISTERED SECURITIES

On October 1, 2003, we issued to 12 of our creditors a total
  of $260,000 of 10% convertible notes due October 1, 2006 (the Convertible
  Notes). The Convertible Notes are convertible into shares of our common
  stock at the option of the holder on the basis of the lesser of $0.03 per share
  or 50% of our average trading price for the 10 trading days prior to conversion.
  We issued 11 of the Convertible Notes pursuant to Regulation S of the Securities
  Act of 1933 on the basis that each of these 11 holders of the Convertible Notes
  are non-U.S. persons as defined under Regulation S. One (1) additional Convertible
  Note was issued pursuant to the exemption to registration contained in section
  4(2) of the Securities Act of 1933 on the basis that this issuance of a Convertible
  Note was not made pursuant to a public offering.

On November 18, 2003, we issued 300,000 shares of our common
  stock to Cool Can Technologies, Inc. (Cool Can) as part of the consideration
  that we owed to Cool Can pursuant to the Original License Agreement as discussed
  above. These shares were issued at a price of $0.21 per share, the closing price
  of our common stock on September 2, 2002, the amendment date of the Original
  License Agreement. The issuance of these shares in our common stock were issued
  pursuant to the exemption to registration contained in Section 4(2) of the Securities
  Act of 1933.

As discussed above, on November 30, 2003, we entered into
  a new exclusive licensing agreement with Cool Can. As part of the consideration
  for those licensing rights, we agreed to issue to Cool Can 5,000,000 shares
  in our common stock. These shares in our common stock have not yet been issued
  to Cool Can, but will be issued as of November 30, 2003 at a price of $0.05
  per share, the closing price of our common stock on that date. The issuance
  of these shares in our common stock will be made pursuant to the exemption to
  registration contained in section 4(2) of the Securities Act of 1933.

We have reached a verbal agreement with BIG K.G. (BIG),
  a German company, pursuant to which BIG will act as our agent for the purpose
  of locating European placees for a proposed private placement of 40,000,000
  units at a price of $0.025 per unit for total proceeds of $1,000,000 (the Private
  Placement). Each unit to be issued under the proposed Private Placement
  will consist of one share in our common stock and one share purchase warrant
  entitling the warrant holder to purchase one additional share of our common
  stock at a price of $0.05 per share. BIG will receive a commission of $100,000
  for services provided in connection with the proposed Private Placement. Although
  we have reached a verbal agreement with BIG in respect of the proposed Private
  Placement and are in the final stages of formalizing that agreement, there is
  no assurance that the proposed Private Placement will actually be completed.
  The proposed Private Placement will be made pursuant to Regulation S of the
  Securities Act of 1933 on the basis that the offering will be made solely to
  non-U.S. persons as defined in Regulation S.

Page 7 of 17

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ITEM 6.          
  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

PLAN OF OPERATIONS

Our plan of operations for the next twelve months will include
  the following components:

| | (1) | We plan to seek sub-licensing
        agreements to finance approximately $300,000 for the development of the
        InstaCool technology. We plan to proceed with product development and
        production of samples of self-chilling beverage container modules. This
        phase of development will include the following elements and will take
        approximately nine months once financing is in place:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | (c)                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (2) | We anticipate spending approximately
        $20,000 on professional fees over the next twelve months in complying
        with our reporting obligations under the Securities Exchange Act of 1934.                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (3) | We anticipate spending approximately
        $140,000 on general overhead expenses, including office expenses and consulting
        fees.                                                                                                                                                                                                                                                                              

Subject to obtaining financing, we anticipate that we will
  be spending approximately $460,000 over the next twelve-month period pursuing
  our stated plan of operations. Of these anticipated expenditures, we anticipate
  that $230,000 will be spent on our plan of operations over the next six months.
  Our present cash reserves are not sufficient for us to carry out our plan of
  operations without substantial additional financing. We are currently attempting
  to arrange for financing through sub-licensing that would enable us to proceed
  with our plan of operations. Other than the proposed financing with BIG K.G.
  described above, we do not have any financing arrangements in place and there
  is no assurance that we will be able to achieve sufficient financing required
  to commercialize the InstaCool technology and to earn revenues. In the event
  that we are not successful in developing and commercializing the InstaCool technology,
  we intend to focus on the advertising and marketing campaign for our web site.

Our actual expenditures and business plan may differ from
  the one stated above. Our board of directors may decide not to pursue this plan.
  In addition, we may modify the plan based on available financing.

RESULTS OF OPERATIONS

We did not earn any revenues during the fiscal year ended
  December 31, 2003. We do not anticipate earning revenues until we commence sales
  of advertising on our immigration web site or we are successful completing the
  development of the InstaCool technology and are successful in commercializing
  this technology. We are presently in the development stage and we can provide
  no assurance that we will be successful in earning revenues from our immigration
  web site or from the InstaCool technology even if we achieve the financing to
  develop this technology.

We incurred operating expenses in the amount of $232,416 for
  the fiscal year ended December 31, 2003 as compared to $163,424 for the fiscal
  year ended December 31, 2002. The largest component of our operating expenses
  were consulting services in the amount of $132,000 for the fiscal year ended
  December 31, 2003. These consulting services were incurred in connection with
  our efforts to raise the financing necessary to complete the $200,000 payment
  due to Cool Can under the Original License Agreement, negotiate the current
  Licensing Agreement and proceed with development of the Technology. For the
  fiscal year ended December 31, 2003, our operating expenses also included professional
  fees in the amount of $20,841 associated with our acquisition of the license
  for the InstaCool technology under the current License Agreement and compliance
  with

Page 8 of 17

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our ongoing reporting requirements under the Securities Exchange
  Act of 1934. We also incurred office and sundry expenses in the amount of $325
  during this period compared to $6,610 for the same period last year. We anticipate
  our operating costs will increase without any corresponding increase in revenues
  if we achieve the financing necessary to proceed with the development of the
  InstaCool technology.

We incurred a loss of $232,416 for the fiscal year ended December
  31, 2003 compared to a loss of $163,424 in the prior year. Our net loss was
  attributable entirely to our operating expenses.

LIQUIDITY AND FINANCIAL CONDITION

We had cash of $23 as at December 31, 2003 as compared to
  cash of $45 as at December 31, 2002. At December 31, 2003 we had a working capital
  deficit of $44,597 as compared to a working capital deficit of $150,356 at December
  31, 2002. The increase in working capital during the year ended December 31,
  2003 is attributable primarily to our settling of accounts payable by the issuance
  of the Convertible Notes described above.

We will require additional financing if we are not successful
  in earning revenues from either our web site or the InstaCool technology. There
  is no assurance that we will be able to obtain additional financing if and when
  required. We anticipate that any additional financing may be in the form of
  sales of additional shares of our common stock which may result in dilution
  to our current shareholders.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that
  have or are reasonably likely to have a current or future effect on our financial
  condition, changes in financial condition, revenues or expenses, results of
  operations, liquidity, capital expenditures or capital resources that is material
  to stockholders.

ITEM 7.          
  FINANCIAL STATEMENTS.

Index to Financial Statements:

|1. | Auditors
        Report;                                                            
|-- | -------------------------------------------------------------------------------------
|   |                                                                                      
|2. | Audited Financial Statements
        for the year ended December 31, 2003, including:
|   |                                                                                      
|   | a.                                                                                   
|   |                                                                                      
|   | b.                                                                                   
|   |                                                                                      
|   | c.                                                                                   
|   |                                                                                      
|   | d.                                                                                   
|   |                                                                                      
|   | e.                                                                                   

Page 9 of 17

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BALSAM VENTURES INC. (A Development Stage Company)

FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002 (Stated in U.S Dollars)

---



INDEPENDENT AUDITORS' REPORT

To the Shareholders and Directors of 
  Balsam Ventures Inc. 
  (A Development Stage Company)

We have audited the accompanying balance sheets of Balsam
  Ventures Inc. (a development stage company) as at December 31, 2003 and 2002,
  and the statements of operations, stockholders deficiency, and cash flows
  for the years then ended, and for the period from inception, August 17, 1999,
  to December 31, 2003. 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 United States generally
  accepted auditing standards. Those standards require that we plan and perform
  an audit to obtain reasonable assurance whether the financial statements are
  free of material misstatement. An audit includes examining, on a test basis,
  evidence supporting the amounts and disclosures in the financial statements.
  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation. We believe that our audit provides a reasonable basis for our
  opinion.

In our opinion, these financial statements present fairly,
  in all material respects, the financial position of the Company as at December
  31, 2003 and 2002, and the results of its operations and cash flows for the
  years ended December 31, 2003 and 2002, and for the period from inception, August
  17, 1999, to December 31, 2003, in accordance with United States generally accepted
  accounting principles.

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 has suffered recurring losses and net
  cash outflows from operations since inception. These factors raise substantial
  doubt about the Companys ability to continue as a going concern. Managements
  plans in regard to these matters are also discussed in Note 1. These financial
  statements do not include any adjustments that might result from the outcome
  of this uncertainty.

|Vancouver, B.C. | Morgan & Company   
|--------------- | ---------------------
|                |                      
|March 29, 2004  | Chartered Accountants



|Tel: (604) 687-5841 |                                     | P.O. Box 10007 Pacific Centre
|------------------- | ----------------------------------- | -----------------------------
|fax: (604) 687-0075 | Sute 1488 - 700 West Georgia Street
|www.morgan-cas.com  | Vancouver, B.C. V7Y 1A1            

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BALSAM VENTURES INC. (A Development Stage Company)

BALANCE SHEETS (Stated in U.S. Dollars)

|                                                           |   | DECEMBER
      31 |  
|---------------------------------------------------------- | - | ----------------- | -
|                                                           |   | 2003              |  
|                                                           |   |                   |  
|ASSETS                                                     |   |                   |  
|                                                           |   |                   |  
|Current                                                    |   |                   |  
|Cash                                                       | $ | 23                |  
|                                                           |   |                   |  
|Software Development Costs                                 |   | -                 |  
|                                                           |   |                   |  
|                                                           | $ | 23                |  
|                                                           |   |                   |  
|LIABILITIES                                                |   |                   |  
|                                                           |   |                   |  
|Current                                                    |   |                   |  
|Accounts payable                                           | $ | 44,620            |  
|                                                           |   |                   |  
|Convertible Notes Payable(Note 5)                          |   | 266,500           |  
|                                                           |   | 311,120           |  
|                                                           |   |                   |  
|SHAREHOLDERS DEFICIENCY                                   |   |                   |  
|                                                           |   |                   |  
|Share Capital                                              |   |                   |  
|Authorized:                                                |   |                   |  
|100,000,000
      common shares, par value with $0.001 per |   |                   |  
|share                                                      |   |                   |  
|                                                           |   |                   |  
|Issued and outstanding:                                    |   |                   |  
|20,500,000
      common shares at December 31, 2003        |   |                   |  
|and                                                        |   |                   |  
|20,200,000
      common shares at December 31, 2002        |   | 20,500            |  
|                                                           |   |                   |  
|Additional paid-in
      capital                           |   | 127,600           |  
|                                                           |   |                   |  
|Deficit Accumulated During The Development Stage           |   | (459,197          | )
|                                                           |   | (311,097          | )
|                                                           |   |                   |  
|                                                           | $ | 23                |  

---

BALSAM VENTURES INC. (A Development Stage Company)

STATEMENTS OF OPERATIONS (Stated in U.S. Dollars)

|                                              |   |             |  |   |            |  |   | INCEPTION   | 
|--------------------------------------------- | - | ----------- |  | - | ---------- |  | - | ----------- | 
|                                              |   |             |  |   |            |  |   | AUGUST 17   | 
|                                              |   | YEARS ENDED |  |   |            |  |   | 1999 TO     | 
|                                              |   | DECEMBER 31 |  |   |            |  |   | DECEMBER 31 | 
|                                              |   | 2003        |  |   | 2002       |  |   | 2003        | 
|                                              |   |             |  |   |            |  |   |             | 
|Expenses                                      |   |             |  |   |            |  |   |             | 
|Consulting services                           | $ | 132,000     |  | $ | 93,847     |  | $ | 225,947     | 
|Domain registration                           |   | 185         |  |   | 46         |  |   | 436         | 
|Professional fees                             |   | 20,841      |  |   | 44,628     |  |   | 113,703     | 
|Bank charges and
      interest               |   | 6,931       |  |   | 147        |  |   | 7,078       | 
|Office and sundry                             |   | 325         |  |   | 6,610      |  |   | 9,225       | 
|Regulatory                                    |   | 434         |  |   | 6,160      |  |   | 6,594       | 
|Stock transfer services                       |   | 25          |  |   | 2,887      |  |   | 5,340       | 
|Write off of software
      development costs |   | 8,675       |  |   | -          |  |   | 8,675       | 
|Travel                                        |   | -           |  |   | 9,099      |  |   | 9,099       | 
|License extension
      payment               |   | 63,000      |  |   | -          |  |   | 63,000      | 
|                                              |   |             |  |   |            |  |   |             | 
|Loss For
      The Year                       |   | 232,416     |  |   | 163,424    |  | $ | 449,097     | 
|                                              |   |             |  |   |            |  |   |             | 
|Loss Per
      Share                          | $ | 0.01        |  | $ | 0.01       |  |   |             | 
|                                              |   |             |  |   |            |  |   |             | 
|Weighted Average Number Of Shares             |   |             |  |   |            |  |   |             | 
|Outstanding                                   |   | 20,236,164  |  |   | 20,200,000 |  |   |             | 

---

BALSAM VENTURES INC. (A Development Stage Company)

STATEMENTS OF CASH FLOWS (Stated in U.S. Dollars)

|                                                |   |             |   |   |          |   |   | INCEPTION   |  
|----------------------------------------------- | - | ----------- | - | - | -------- | - | - | ----------- | -
|                                                |   |             |   |   |          |   |   | AUGUST 17   |  
|                                                |   | YEARS ENDED |   |   |          |   |   | 1999 TO     |  
|                                                |   | DECEMBER 31 |   |   |          |   |   | DECEMBER 31 |  
|                                                |   | 2003        |   |   | 2002     |   |   | 2003        |  
|                                                |   |             |   |   |          |   |   |             |  
|Cash Flows From Operating Activities            |   |             |   |   |          |   |   |             |  
|Net loss for the
      year                     | $ | (232,416    | ) | $ | (163,424 | ) | $ | (449,097    | )
|                                                |   |             |   |   |          |   |   |             |  
|Adjustments To Reconcile Net Loss To Net        |   |             |   |   |          |   |   |             |  
|Cash Used By Operating Activities               |   |             |   |   |          |   |   |             |  
|Write off of software
      development costs   |   | 8,675       |   |   | -        |   |   | 8,675       |  
|Shares issued to
      extend license agreement |   | 63,000      |   |   | -        |   |   | 63,000      |  
|Change in accounts
      payable                |   | 160,719     |   |   | 148,592  |   |   | 311,120     |  
|                                                |   | (22         | ) |   | (14,832  | ) |   | (66,302     | )
|                                                |   |             |   |   |          |   |   |             |  
|Cash Flows From Investing Activity              |   |             |   |   |          |   |   |             |  
|Software development
      costs                |   | -           |   |   | -        |   |   | (8,675      | )
|                                                |   |             |   |   |          |   |   |             |  
|Cash Flows From Financing Activity              |   |             |   |   |          |   |   |             |  
|Share capital                                   |   | -           |   |   | -        |   |   | 75,000      |  
|                                                |   |             |   |   |          |   |   |             |  
|Increase (Decrease) In Cash                     |   | (22         | ) |   | (14,832  | ) |   | 23          |  
|                                                |   |             |   |   |          |   |   |             |  
|Cash, Beginning Of Year                         |   | 45          |   |   | 14,877   |   |   | -           |  
|                                                |   |             |   |   |          |   |   |             |  
|Cash, End
      Of Year                         | $ | 23          |   | $ | 45       |   | $ | 23          |  

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES

|a) | During the year ended December 31, 2003, the Company
        issued 300,000 common shares with a value of $63,000 as consideration
        for the extension of a license agreement.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                     
|b) | During the year ended December 31, 2003, the Company
        settled accounts payable, in the amount of $266,500, by the issue of convertible
        notes (Note 5).               

---

BALSAM VENTURES INC. (A Development Stage Company)

STATEMENT OF STOCKHOLDERS EQUITY (DEFICIENCY)

DECEMBER 31, 2003 (Stated in U.S. Dollars)

|                                               | COMMON
      STOCK |  |   |        |  |   |            |  |   |               |  
|---------------------------------------------- | ------------------ |  | - | ------ |  | - | ---------- |  | - | ------------- | -
|                                               |                    |  |   |        |  |   | ADDITIONAL |  |   | SHARE         |  
|                                               |                    |  |   |        |  |   | PAID-IN    |  |   | SUBSCRIPTIONS |  
|                                               | SHARES             |  |   | AMOUNT |  |   | CAPITAL    |  |   | RECEIVABLE    |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Shares issued for cash at $0.001               | 5,000,000          |  | $ | 5,000  |  | $ | -          |  | $ | -             |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Shares issued for cash at $0.01                | 5,000,000          |  |   | 5,000  |  |   | 45,000     |  |   | -             |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Shares issued for cash at $0.20                | 100,000            |  |   | 100    |  |   | 19,900     |  |   | -             |  
|Subscriptions receivable                       | -                  |  |   | -      |  |   | -          |  |   | (2,500        | )
|Net loss for the period                        | -                  |  |   | -      |  |   | -          |  |   | -             |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Balance, December 31, 1999                     | 10,100,000         |  |   | 10,100 |  |   | 64,900     |  |   | (2,500        | )
|Subscriptions receivable                       | -                  |  |   | -      |  |   | -          |  |   | 2,500         |  
|Net loss for the year                          | -                  |  |   | -      |  |   | -          |  |   | -             |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Balance, December 31, 2000                     | 10,100,000         |  |   | 10,100 |  |   | 64,900     |  |   | -             |  
|Net loss for the year                          | -                  |  |   | -      |  |   | -          |  |   | -             |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Balance, December 31, 2001                     | 10,100,000         |  |   | 10,100 |  |   | 64,900     |  |   | -             |  
|Stock split (2 for 1)                          | 10,100,000         |  |   | 10,100 |  |   | -          |  |   | -             |  
|Net loss for the year                          | -                  |  |   | -      |  |   | -          |  |   | -             |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Balance, December 31, 2002                     | 20,200,000         |  |   | 20,200 |  |   | 64,900     |  |   | -             |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Shares issued for license extension payment at |                    |  |   |        |  |   |            |  |   |               |  
|$0.21                                          | 300,000            |  |   | 300    |  |   | 62,700     |  |   | -             |  
|Net loss for the year                          | -                  |  |   | -      |  |   | -          |  |   | -             |  
|                                               |                    |  |   |        |  |   |            |  |   |               |  
|Balance, December 31, 2003                     | 20,500,000         |  | $ | 20,500 |  | $ | 127,600    |  |   | $
      -     |  

---

BALSAM VENTURES INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002 (Stated in U.S. Dollars)

|**1.** | NATURE OF OPERATIONS
|------ | --------------------
|       |                     
|`      | a)                  
|       |                     
|       | b)                  
|       |                     
|       |                     
|       |                     
|       |                     
|       |                     
|       |                     
|       |                     
|       | c)                  

---

BALSAM VENTURES INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002 (Stated in U.S. Dollars)

|**2.** | SIGNIFICANT ACCOUNTING
        POLICIES
      The financial statements of the Company have been prepared
        in accordance with generally accepted accounting principles in the United
        States. Because a precise determination of many assets and liabilities
        is dependent upon future events, the preparation of financial statements
        for a period necessarily involves the use of estimates which have been
        made using careful judgement.
      The financial statements have, in managements
        opinion, been properly prepared within reasonable limits of materiality
        and within the framework of the significant accounting policies summarized
        below:
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

BALSAM VENTURES INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002 (Stated in U.S. Dollars)

|**2.** | SIGNIFICANT ACCOUNTING
        POLICIES(Continued)
|------ | --------------------------------------------------
|       |                                                   
|       | d)                                                
|       |                                                   
|       | e)                                                
|       |                                                   
|       |                                                   
|       |                                                   
|       |                                                   
|       |                                                   
|       | f)                                                

---

BALSAM VENTURES INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002 (Stated in U.S. Dollars)

|2. | SIGNIFICANT ACCOUNTING
        POLICIES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | g)                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3. | LICENSE
      Pursuant to an exclusive license agreement, dated November
        30, 2003, the Company has acquired the exclusive right and license for
        a period of 40 years to use, commercialize and exploit the technology
        for self-chilling beverage containers within the countries comprising
        the European Union and the Republic of China. In consideration of the
        grant of the exclusive license, the Company agreed to:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4. | RELATED PARTY TRANSACTIONS
      During the year ended December 31, 2003, directors
        compensation totalled $72,000 (2002 -$Nil).
      Accounts payable includes $16,636 (2002 - $Nil) due
        to directors.                                                                                                                                                                                                                                        

---

BALSAM VENTURES INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2003 AND 2002 (Stated in U.S. Dollars)

|**5.** | CONVERTIBLE NOTES PAYABLE
      During the year, the Company issued $260,000 of three
        year convertible notes bearing interest of 10% per annum. The notes are
        convertible into common shares at the lesser of $0.03 or 50% of the average
        trading price of the Companys common shares for the ten trading
        days prior to conversion. The Company may, at its option, elect to pay
        a portion of the interest by issuing common shares.
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

ITEM 8.          
  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

There have been no change in auditors or accountants nor have
  there been any disagreements on accounting and financial matters with the auditors
  and accountants.

ITEM 8A.        CONTROLS
  AND PROCEDURES.

As required by Rule 13a-15 under the Securities Exchange Act
  of 1934 (the Exchange Act), we carried out an evaluation of the
  effectiveness of the design and operation of our disclosure controls and procedures
  as of December 31, 2003, being the date of our most recently completed fiscal
  year end. This evaluation was carried out under the supervision and with the
  participation of our Chief Executive Officer, Mr. David Lam and Chief Financial
  Officer, Mr. John Boschert. Based upon that evaluation, our Chief Executive
  Officer and Chief Financial Officer concluded that our disclosure controls and
  procedures are effective in timely alerting management to material information
  relating to us required to be included in our periodic SEC filings. There have
  been no significant changes in our internal controls or in other factors that
  could significantly affect internal controls subsequent to the date we carried
  out our evaluation.

Disclosure controls and procedures are controls and other
  procedures that are designed to ensure that information required to be disclosed
  our reports filed or submitted under the Exchange Act is recorded, processed,
  summarized and reported, within the time periods specified in the Securities
  and Exchange Commission's rules and forms. Disclosure controls and procedures
  include, without limitation, controls and procedures designed to ensure that
  information required to be disclosed in our reports filed under the Exchange
  Act is accumulated and communicated to management, including our Chief Executive
  Officer and Chief Financial Officer, to allow timely decisions regarding required
  disclosure.

During our most recently completed fiscal year ended December
  31, 2003, there were no changes in our internal control over financial reporting
  that have materially affected, or are reasonably likely to affect, our internal
  control over financial reporting.

The term internal control over financial reporting
  is defined as a process designed by, or under the supervision of, the registrant's
  principal executive and principal financial officers, or persons performing
  similar functions, and effected by the registrant's board of directors, management
  and other personnel, to provide reasonable assurance regarding the reliability
  of financial reporting and the preparation of financial statements for external
  purposes in accordance with generally accepted accounting principles and includes
  those policies and procedures that:

| | (1) | Pertain to the maintenance of records
        that in reasonable detail accurately and fairly reflect the transactions
        and dispositions of the assets of the registrant;                                                                                                                                                                                                 
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                  
| | (2) | Provide reasonable assurance that transactions
        are recorded as necessary to permit preparation of financial statements
        in accordance with generally accepted accounting principles, and that
        receipts and expenditures of the registrant are being made only in accordance
        with authorizations of management and directors of the registrant; and
| |     |                                                                                                                                                                                                                                                                                                                                                                                  
| | (3) | Provide reasonable assurance regarding
        prevention or timely detection of unauthorized acquisition, use or disposition
        of the registrant's assets that could have a material effect on the financial
        statements.                                                                                                                                          

Page 10 of 17

---

PART III

ITEM 9.          
  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
  SECTION 16(A) OF THE EXCHANGE ACT.

The following table sets forth the names and positions of
  our officers and directors as of the date hereof.

|Name          | Age | Positions                                              
|------------- | --- | -------------------------------------------------------
|David Lam     | 47  | President, Chief Executive Officer, Director           
|John Boschert | 33  | Secretary, Treasurer, Chief Financial Officer, Director

Set forth below is a brief description of the background and
  business experience of our executive officers and directors:

Mr. David Lamis our president, chief executive officer
  and a director of the company. Mr. Lam was appointed as president, chief executive
  officer and director of the Company on December 10, 2002. Mr. Lam is the president
  and chief executive officer of Mediverse International, Inc. of Arcadia, California
  since 1994. Mediverse is a medical device exporting company and Mr. Lam is responsible
  for domestic strategic alliances and building the distribution network in Far
  East Asia. Mr. Lam is also the Managing Director of Topher Investment, L.L.C.
  since 1997, where he focuses on the acquisitions/sales of commercial real estate
  investments and property management.

Mr. John Boschert is our secretary, treasurer, and
  chief financial officer and a director of the company. Mr. Boschert was our
  president from July 4, 2002 to December 10, 2002 when Mr. Lam was appointed.
  Mr. Boschert has worked for Universal Domains Incorporated as a consultant since
  1998 and was involved with the daily operations of Prime Time Foods and Primo's
  Mexican Specialties. Prior to joining Universal Domains Incorporated, Mr. Boschert
  worked in the investor relations department for Harbour Pacific Capital Ltd.
  from 1997 to 1998. During the period from 1993 to 1997, Mr. Boschert was the
  managing partner of Concept Restaurants Ltd., a Vancouver based company which
  owned and operated a number of restaurants in British Columbia. Mr. Boschert
  received his diploma in business administration from Langara Community College
  in 1989.

TERMS OF OFFICE

Our directors are elected to hold office until the next annual
  meeting of the shareholders and until their respective successors have been
  elected and qualified. Our executive officers are appointed by our board of
  directors and hold office until removed by our board of directors or until their
  successors are appointed.

Page 11 of 17

---

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
  ACT

Section 16(a) of the Securities Exchange Act of 1934 requires
  our executive officers and directors, and persons who own more than 10% of a
  registered class of our securities (Reporting Persons), to file
  reports of ownership and changes in ownership with the SEC. Reporting Persons
  are required by SEC regulations to furnish us with copies of all forms they
  file pursuant to Section 16(a). Based solely on our review of such reports received
  by the Company, and written representations from certain Reporting Persons that,
  other than as described below, no other reports were required for those persons,
  we believe that, during the year ended December 31, 2003, all Reporting Persons
  complied with all Section 16(a) filing requirements applicable to them.

The following persons have failed to file, on a timely basis,
  the identified reports required by Section 16(a) of the Securities Exchange
  Act of 1934:

|Name and Principal Position                                                    | Number of Late Reports | Transactions Not Timely Reported | Known Failures to File a Required Form
|------------------------------------------------------------------------------ | ---------------------- | -------------------------------- | --------------------------------------
|David Lam, Director, President and Chief
      Executive Officer               | None                   | None                             | None                                  
|John Boschert, Director Secretary, Treasurer
      and Chief Financial Officer | None                   | None                             | None                                  

ITEM 10.        
  EXECUTIVE COMPENSATION.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth certain compensation information
  for Mr. David Lam, our President and Chief Executive Officer, Mr. John Boschert,
  our Secretary, Treasurer and Chief Financial Officer and Mr. Robert Smith, our
  former Secretary and Treasurer (together, our named executive officers)
  for our fiscal years ended December 31, 2003, 2002 and 2001.

|SUMMARY COMPENSATION TABLE          
|------------------------------------
|                                    
|Name                                
|Restricted
      Stock
      Awarded
|Robert Smith                        
|David Lam                           
|John Boschert                       

Page 12 of 17

---

STOCK OPTION GRANTS

We did not grant any stock options to our executive officers
  or directors during our most recent fiscal year ended December 31, 2003. We
  also have not granted any stock options to our executive officers or directors
  since December 31, 2003. In addition, as of December 31, 2003, no retirement,
  pension or insurance programs or other similar programs have been adopted by
  us for the benefit of our employees.

EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES

No stock options were exercised by our executive officers
  or directors during the financial year ended December 31, 2003 and no stock
  options have been exercised since December 31, 2003.

LONG-TERM INCENTIVE PLANS

We do not have any long-term incentive plans, pension plans,
  or similar compensatory plans for our directors or executive officers.

COMPENSATION OF DIRECTORS

Our directors receive monthly management fees of $3,000 per
  month.

EMPLOYMENT CONTRACTS

We do not have employment contracts with any of our executive
  officers or directors. We also do not have any termination of employment or
  change-in-control arrangements with any of our executive officers or directors.

ITEM 11.        
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information concerning
  the number of shares of our common stock owned beneficially as of April 12,
  2004by: (i) each person (including any group) known to us to own more
  than five percent (5%) of any class of our voting securities, (ii) each of our
  directors and each of our named executive officers, and (iii) officers and directors
  as a group. Unless otherwise indicated, the shareholders listed possess sole
  voting and investment power with respect to the shares shown.

|Title of Class         | Name and Addressof Beneficial Owner                                             | Number of Sharesof Common Stock(1) | Percentage ofCommon Stock(1)
|---------------------- | ------------------------------------------------------------------------------- | ---------------------------------- | ----------------------------
|DIRECTORS AND OFFICERS
|Common Stock           | David Lam, Director, President and
      Chief Executive Officer                | 1,240,900                          | 6.1%                        
|Common Stock           | John Boschert, Director, Secretary, Treasurer
      and Chief Financial Officer | 9,000,116                          | 43.9%                       
|Common Stock           | All Officers and Directors as a Group (2
      persons)                         | 10,241,016                         | 50.0%                       
|5% SHAREHOLDERS       
|Common Stock           | Cool Can Technologies, Inc.                                                     | 5,300,000                          | 20.8%(2)                    

Page 13 of 17

---

|(1) | Under Rule 13d-3, a beneficial owner
        of a security includes any person who, directly or indirectly, through
        any contract, arrangement, understanding, relationship, or otherwise has
        or shares: (i) voting power, which includes the power to vote, or to direct
        the voting of shares; and (ii) investment power, which includes the power
        to dispose or direct the disposition of shares. Certain shares may be
        deemed to be beneficially owned by more than one person (if, for example,
        persons share the power to vote or the power to dispose of the shares).
        In addition, shares are deemed to be beneficially owned by a person if
        the person has the right to acquire the shares (for example, upon exercise
        of an option) within 60 days of the date as of which the information is
        provided. In computing the percentage ownership of any person, the amount
        of shares outstanding is deemed to include the amount of shares beneficially
        owned by such person (and only such person) by reason of these acquisition
        rights. As a result, the percentage of outstanding shares of any person
        as shown in this table does not necessarily reflect the persons
        actual ownership or voting power with respect to the number of shares
        of common stock actually outstanding on April 12, 2004. As of April 12,
        2004, there were 20,500,000 shares of our common stock issued and outstanding.
        The listed number of shares and percentage of common stock for Messrs.
        Lam and Boschert assumes that the Convertible Notes issued to them, as
        described in Item 12 below, were converted on April 12, 2004 in accordance
        with their terms, resulting in 20,501,016 shares of common stock issued
        and outstanding.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2) | As discussed in Item 1 above, pursuant
        to the current License Agreement with Cool Can Technologies, Inc. (Cool
        Can), we have agreed to issue an additional 5,000,000 shares of
        our common stock (the New Shares) to Cool Can. The New Shares
        have not yet been issued, however, under Rule 13d-3, Cool Can is the beneficial
        owner of the New Shares as they have a right to acquire them within 60
        days. The percentage ownership of Cool Can is based on 25,500,000 shares
        outstanding, the number of shares of common stock that will be outstanding
        once the New Shares have been issued. Once the New Shares have been issued,
        Mr. Lam will own 4.9% of the common stock issued and outstanding and Mr.
        Boschert will own 35.3%. Together, Messrs. Lam and Boschert will own 40.2%
        of the common stock issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

We are not aware of any arrangement which may result in a
  change in control in the future.

ITEM 12.        
  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Except as described below, none of the following persons has
  any direct or indirect material interest in any transaction to which we were
  or are a party during the past two years, or in any proposed transaction to
  which we propose to be a party:

|(A) | any director or officer;                                                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                           
|(B) | any person who beneficially owns, directly or indirectly,
        shares carrying more than 5% of the voting rights attached to our common
        stock; or                                              
|    |                                                                                                                                                                                                           
|(C) | any relative or spouse of any of the foregoing persons,
        or any relative of such spouse, who has the same house as such person
        or who is a director or officer of any parent or subsidiary.

On October 1, 2003, we issued a total of $260,000 of 10% convertible
  notes due October 1, 2006 (the Convertible Notes). The Convertible
  Notes are convertible into shares of our common stock at the option of the holder
  on the basis of the lesser of $0.03 per share or 50% of our average trading
  price for the 10 trading days prior to conversion. A Convertible Note in the
  amount of $30,000 was issued to Mr. David Lam, one of our directors and our
  President and Chief Executive Officer. A Convertible Note in the amount of $3,899
  was issued to Mr. John Boschert, one of our directors and our Secretary, Treasurer
  and Chief Financial Officer.

Page 14 of 17

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ITEM 13.        
  EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS AND INDEX OF EXHIBITS REQUIRED BY ITEM 601
  OF REGULATION S-B

|Exhibit Number |  | Description of Exhibit                                                                                                                                               
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                      
|3.1            |  | Articles of Incorporation (1)                                                                                                                                        
|               |  |                                                                                                                                                                      
|3.2            |  | Bylaws (1)                                                                                                                                                           
|               |  |                                                                                                                                                                      
|10.1           |  | Exclusive License Agreement with Cool
        Can Technologies, Inc.(2)                                                                                              
|               |  |                                                                                                                                                                      
|31.1           |  | Certification
        of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002 (3)                                               
|               |  |                                                                                                                                                                      
|31.2           |  | Certification
        of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of of 2002 (3)                                            
|               |  |                                                                                                                                                                      
|32.1           |  | Certification
        of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3)
|               |  |                                                                                                                                                                      
|32.2           |  | Certification
        of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3)

|   |   |                                                                                                                             
|-- | - | ----------------------------------------------------------------------------------------------------------------------------
|(1 | ) | Previously Filed as an Exhibit to our Form SB-2 registration
      statement originally filed on March 30, 2000, as amended.
|(2 | ) | Previously Filed as an Exhibit to our Current Report on Form
      8-K filed on January 9, 2004.                            
|(3 | ) | Filed as an Exhibit to this Annual Report on Form 10-KSB                                                                    
|   |   |                                                                                                                             

(b) CURRENT REPORTS ON FORM 8-K

The following reports on Form 8-K have been filed:

|Date of Filing Form 8-K |  | Description of Form 8-K                                     
|----------------------- |  | ------------------------------------------------------------
|                        |  |                                                             
|January 9, 2004         |  | Exclusive License Agreement with Cool Can Technologies, Inc.

Page 15 of 17

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ITEM 14.        
  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The aggregate fees billed for the fiscal years ended December
  31, 2003 and December 31, 2002 for professional services rendered by the principal
  accountant for the audit of the Corporations annual financial statements
  and review of the financial statements included in our Quarterly Reports on
  Form 10-QSB and services that are normally provided by the accountant in connection
  with statutory and regulatory filings or engagements for these fiscal periods
  were as follows:

|                   | Year Ended December 31, 2003 | Year Ended December 31, 2002
|------------------ | ---------------------------- | ----------------------------
|Audit Fees         | $4,500                       | $4,000                      
|Audit-Related Fees | $NIL                         | $NIL                        
|Tax Fees           | $NIL                         | $NIL                        
|All Other Fees     | $NIL                         | $NIL                        
|Total              | $4,500                       | $4,000                      

Page 16 of 17

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act,
  the registrant caused this report to be signed on its behalf by the undersigned,
  thereunto duly authorized.

BALSAM VENTURES, INC.

|By: | /s/ David Lam                                     | 
|--- | ------------------------------------------------- | 
|    | David Lam, President, Chief Executive Officer and | 
|    | Director                                          | 
|    | Date:April 14, 2004                               | 

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