Blaine Exploration Ltd.

Balance Sheets

(Unaudited)

March 31,

March 31,

2011

2010

Assets

Current Assets

Cash

$

235

$

32

Accounts Receivable

1,890

1,890

Prepaid Expenses

0

0

2,125

1,922

Property and Equipment (Note 2)

63

79

Investments (Note 3)

60,700

60,700

Total Assets:

$

62,888

$

62,701

Liabilities and Shareholders Equity

Current Liabilities

Bank Indebtedness (Note 4)

$

0

0

Accounts Payable and accruals

1,273

1,272

Income Taxes

0

0

1,273

1,272

Shareholders' Equity

Opening retained earnings

47,269

47,081

Share capital (Note 5)

14,160

14,160

Profit/(loss)

186

188

61,615

61,429

Total Liabilities:

$

62,888

62,701

Approved by the Directors

See accompanying notes

_______________________

Statements of Income and Retained Earnings

(Unaudited)

Year ended

Year ended

March 31,

March 31,

2011

2010

Revenues

Management Consulting

$

1,800

$

1,800

Financial Consulting

0

0

Geophysical Consulting

0

0

Geological Consulting

0

0

Engineering Consulting

0

0

1,800

1,800

Operational Services

0

0

Seismic Acquisition

0

0

Technical Services

0

0

Total Services Income:

0

0

Interest and other

0

0

Total Income:

1,800

1,800

Expenses

General Operations

Contract labor

$

$

0

Insurance

0

0

Travel Expense

0

0

Repairs and maint.

0

0

Communications

0

0

Expenses/supplies

0

0

$

0

$

0

Office and Administrative

Contract labor

$

1,200

$

1,200

Rent

0

0

Expenses/supplies

70

62

Training

0

0

Legal/accounting

305

305

Communications

0

0

Gain on sale of asset

0

0

Current income tax

23

25

Foreign exchange

0

0

Depreciation and amortization

16

20

$

1,614

$

1,612

Total expenses:

$

1,614

$

1,612

Net (loss)/gain:

$

186

$

188

Retained Earnings

Beginning of year

47,269

47,081

Retained earnings at end of year

47,455

47,269

Note 1 - Accounting Policies

Blaine Exploration Ltd. was incorporated under the Business Corporations Act of Alberta September 6, 1988. The Corporation has current activities in Canada. On March 31, 1998 the assets of the U.S. division were sold at book value to A. Blaine and Cindy A. Hanks for proceeds of $5123 Canadian. The Corporation is engaged in exploration consulting and technical services. Significant accounting policies of the Corporation are summarized below:

(a) Basis of Presentation

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles.

(b) Oil and Gas Property

An interest in a non-producing oil and gas property is recorded at cost and is being amortized over ten years. Straight line method.

(c) Property and Equipment

Equipment is recorded at cost and depreciated over the estimated useful lives of the various classes of assets. Assets in their respective country are depreciated according to the normally accepted tax methods used. Some of which are presented below:

Computer equipment

30%

Seismic equipment

30%

Automotive equipment

30%

Furniture & equipment

20%

(d) Goods and Service Tax

Revenues are recorded net of the Goods and Service Tax ("GST") collected. Purchases of goods or services are recorded net of the GST that is recoverable. GST that is not recoverable is included in the cost of the goods or services to which it relates. The net amount due to, or from, the taxation authorities with respect to GST is included in accounts payable, or accounts receivable, as appropriate.

Note 2 - Property and Equipment

2011

2010

Computer equipment

$

27,171

$

27,171

Seismic equipment

11,252

11,252

Automotive property

5,197

5,197

Furniture and equipment

2,914

2,914

Oil and gas property

338

338

Incorporation costs

250

250

$

47,122

$

47,122

Less depreciation & depletion & Amortization

(47,059)

(47,043)

$

63

$

79

Note 3 - Investments

2011

2010

Loans to Gateway Resources Ltd.

0

0

US Subsidiary Blaine Development, Inc.

24,623

24,623

Shares of Gateway Resources Ltd.

36,077

36,077

(A private corporation)

60,700

60,700

Note 4 - Bank Indebtedness

2011

2010

Checks issued in excess of cash

$

0

$

0

Note 5 - Share Capital

2011

2010

Common shares, no par value

$

14,160

$

14,160

Authorized - unlimited number

Issued - 120,600