Financial Statements MOEN AND COMPANY CHARTERED ACCOUNTANTS

Exhibit 1 - Financial Statements MOEN AND COMPANY CHARTERED ACCOUNTANTS

AUDITORS' REPORT To the Shareholders of Gemstar Resources Ltd. We have audited the Balance Sheets of Gemstar Resources Ltd. as at January 31, 2005 and January 31, 2004, and the Statements of Income, Retained Earnings (Deficit), and Cash Flows for the years ended January 31, 2005, and January 31, 2004. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at January 31, 2005 and January 31, 2004 and the results of its operations and its cash flows for the years ended January 31, 2005 and January 31, 2004 in accordance with Canadian generally accepted accounting principles. "Moen and Company" Chartered Accountants Vancouver, British Columbia, Canada April 4, 2005 Comments by Auditor for U.S. Readers On Canada-U.S. Reporting Difference In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the company s ability to continue as a going concern, such as those described in Note 1 to the financial statements. Our report to the shareholders dated April 4, 2005 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when they are properly accounted for and are adequately disclosed in the financial statements. "Moen and Company" Chartered Accountants Vancouver, British Columbia, Canada April 4, 2005 "Independent Accountants and Auditors" GEMSTAR RESOURCES LTD. (a Development Stage Company) BALANCE SHEET January 31, 2005 (With Comparative Figures at January 31, 2004) (In Canadian Dollars)

Nature and continuance of operations: Note 1 APPROVED ON BEHALF OF THE BOARD: "Linda Smith" ----------------------- Chief Executive Officer, Director "Shannon Krell" ------------------------ Chief Financial Officer, Director See Accompanying Independent Auditors' Report and Notes to Financial Statements GEMSTAR RESOURCES LTD. (a Development Stage Company) STATEMENT OF INCOME Year Ended January 31, 2005 (With Comparative Figures for the Year Ended January 31, 2004) (In Canadian Dollars)

See Accompanying Independent Auditors' Report and Notes to Financial Statements GEMSTAR RESOURCES LTD. (a Development Stage Company) STATEMENT OF RETAINED EARNINGS Year Ended January 31, 2005 (With Comparative Figures for the Year Ended January 31, 2004) (In Canadian Dollars)

See Accompanying Independent Auditors' Report and Notes to Financial Statements GEMSTAR RESOURCES LTD. (a Development Stage Company) STATEMENT OF CASH FLOWS Year Ended January 31, 2005 (With Comparative Figures for the Year Ended January 31, 2004) (In Canadian Dollars)

See Accompanying Independent Auditors' Report and Notes to Financial Statements GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 1. NATURE AND CONTINUANCE OF OPERATIONS The Company was incorporated on March 31, 1998. The Company is in the development stage relating to exploration and development of mineral properties and has not generated any revenues from its planned operations. The deficit has been accumulated during this development stage. Going Concern These financial statement have been prepared in accordance with Canadian generally accepted accounting principles applicable to a going concern which assume that the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has incurred losses since incorporation and inception of $1,938,636 and has a working capital deficit at January 31, 2005 of $977,583. These factors create doubt as to the ability of the Company to continue as a going concern unless sufficient funds are raised for the payment of its current liabilities and for ongoing operations. Realization values may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. Note 2. SIGNIFICANT ACCOUNTING POLICIES a) Fixed assets and depreciation The Company records depreciation on computer equipment at 30%, on a declining balance basis. January 31, 2005 2004 ------------ ---------- Cost $ 1,653 $ 1,653 Accumulated depreciation 844 496 ------------------------------------------------------------ $ 809 $ 1,157 ============================================================ b) General and administration expenses General and administration expenses are written off to operations as incurred. c) Financial Instruments The Company's financial instruments consist of cash, GST receivable, and current liabilities. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial statements approximates their carrying values. GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 2. SIGNIFICANT ACCOUNTING POLICIES (cont'd) d) Translation of Foreign Currency The accounts of the Company are translated into Canadian dollars on the following basis: - monetary assets and liabilities are translated at the rate of exchange in effect at the balance sheet date - non-monetary assets and liabilities are translated at the rate prevailing when the transaction occurred - revenue, general & administration expenses, and gains and losses are translated at the average exchange rate in effect during the period - exchange gains or losses from conversion are included in the current net income. - depreciation or amortization of assets are translated at the same exchange rates as the assets to which they relate; e) Use of estimates The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates that affect certain reported amounts and disclosures. Estimates are used for, but are not limited to, the accounting for doubtful accounts, depreciation, income taxes, and the recoverability of non-producing mining property capitalized costs and deferred exploration expenditures. Actual results may differ from those estimates. f) Stock-based compensation plan Effective January 1, 2002 the Company adopted, on a prospective basis, CICA HB 3870 stock-based compensation and other stock-based payments, which established standards for the recognition, measurement, and disclosure of stock-based payments made in exchange for goods and services. Stock-based compensation and other stock-based payments require that stock-based payments to non-employees be accounted for using a fair value based method of accounting. The new standards permit, and the Company has adopted, the use of the intrinsic value based method, which recognizes compensation costs for awards to employees only when the market price exceeds the exercise price at date of grant, but requires pro forma disclosure of earnings and earnings and earnings per share as if the fair value based method had been adopted. No stock options were issued during the period, and no stock options are outstanding at January 31, 2005. g) Cash Cash and cash equivalents consist of $2,989 cash deposit in bank, $6,900 security deposit for credit card and $354 cash in lawyers' trust account as at January 31, 2005. GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 2. SIGNIFICANT ACCOUNTING POLICIES (cont'd) h) Mineral Properties Acquisition costs of mineral properties are capitalized by the Company, and are dealt with in the same manner as deferred exploration costs. Mineral property sale proceeds or option payments received for exploration rights are credited firstly to mineral property costs, secondly, as a recovery of deferred exploration costs, and thereafter, recognized as a gain or loss in current operations. i) Values The amounts for deferred exploration costs and mineral properties represent costs incurred to date and are not intended to reflect present or future values. The recoverability of the amounts shown for mineral properties and deferred exploration costs is dependent on the confirmation of economically recoverable reserves, the ability of the Company to obtain the necessary financing to successfully complete their development, including compliance with the requirements of lenders who may provide this financing from time to time, and upon future profitable operations. j) Reclassification of Comparative Figures Certain of the comparative figures have been reclassified to conform to the disclosure in these financial statements for 2005. Note 3. SHARE CAPITAL a) Authorized: 100,000,000 common shares without par value b) Issued and outstanding:

GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 4. RELATED PARTY TRANSACTIONS (a) (i) Loans from related parties of $779,638 as at January 31, 2005 ($684,644 - January 31, 2004) are unsecured, non interest bearing, with no specific terms of repayment. (ii) Loans from related party of $106,754 as at January 31, 2005 is non interest bearing, and shall mature on January 1, 2006 unless it is converted into equity (each $0.05 of Principal outstanding may be converted into one share) prior to the maturity date. The summary of the loans from related parties are as follows: January 31, 2005 2004 ------------ ---------- Darcy Krell $ 291,152 $ 196,583 Linda Smith 413,486 413,061 Shannon Krell 75,000 75,000 ------------------------------------------------------------ 779,638 684,644 Ryan Krell 106,754 106,754 ------------------------------------------------------------ $ 886,392 $ 791,398 ============================================================ The company adopted Handbook 3860.A25, to recognize the residual valuation of equity component of the loans from Ryan Krell of $106,754. The liability component is valued first, and the difference between the conversion of the loans and the fair value of the liability is assigned to the equity component. The present value of the liability component is calculated using a discount rate of 4.5%, as shown below. Present value of loans - $106,754 payable at the end of 1year/ 2 years $102,157 $97,758 Equity component (by deduction) 4,597 8,996 ---------------------------------------------------------------- Conversion of the loans $106,754 106,754 ================================================================ (b) Management fees incurred and expenses paid on behalf of the Company for the year ended January 31, 2005 are as follows:

GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 5. INCOME TAXES The Company does not have any income tax liabilities during the current year and, accordingly, no income taxes are recorded. The potential income tax benefits associated with losses incurred by the Company have not been recorded in the accounts as future taxation, as they are offset by valuation reserves due to uncertainty as to the utilization of tax losses. Note 6. INVESTMENT IN MINERAL PROPERTY The claims that the Company acquired from L.C.M. Equity Inc. in the Black River area in the, Thunder Bay Mining Division, Ontario, expired during the fiscal year ended January 31, 2003, and accordingly, costs of $200,000 were written off, resulting in a charge to operations of $200,000 in that fiscal year. During the fiscal year ended January 31, 2004, the claims were restaked and the costs of $4,260 for restaking the newly named claims are capitalized as investment in mineral property. The Company has 100% interest in Dotted Lake Property (TB 3011450 expiring March 14, 2005, TB 3011451 expiring March 14, 2005, TB 3011452 expiring March 23, 2005, TB3011453 expiring March 23, 2005, TB3011454 expiring March 23, 2005, Thunder Bay Mining Division, Ontario, Canada. These claims are held in trust for the Company in the name of 1179406 Ontario Limited, the latter of which is owned by Mr. Robert Reukl, the original staker of the claims who transferred the claims to1179406 Ontario Limited. Note 7. ADVANCE FOR EXPLORATION EXPENDITURES The advance for exploration expenditures of $152,000 is held by L.C.M. Equity Inc. ("LCM") for exploration expenditures. LCM is required to proceed with exploration upon notice from Gemstar Resources Ltd. LCM is a private company which is not related to Gemstar Resources Inc. Management has determined that there is no impairment of this amount as at January 31, 2005 Note 8. LAWSUIT There is a claim by Ellis Foster that it is owed $51,680 for accounting services it allegedly provided to the Company. The Company disputes the payment of fees charged to it as the fees are in connection with the audit of Dalian Maple Leaf International School, a private company owned by the Company's former president, Mr. Sherman Jen. Note 9. RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES These financial statements are prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP). Differences at January 31, 2005 between Canadian GAAP and United States generally accepted accounting principles (U.S. GAAP) are described below, with the financial statement disclosure restated from Canadian GAAP with adjustments shown to conform to U.S. GAAP: GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 9. RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONT'D)

GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 9. RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONT'D)

GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 9. RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONT'D)

GEMSTAR RESOURCES LTD. Notes to Financial Statements January 31, 2005 -------------------------------------------------------------------------------- Note 9. RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONT'D) Detailed adjustments from Canadian GAAP to U.S. GAAP, referenced to disclosure restated, above, are as follows: (a) Deposit in credit card, legal retainer, and advance for exploration expenditure Under Canadian GAAP, deposit on credit card of $6,900, legal retainer of $354, and advance for exploration expenditure for $152,000 can be prepaid. Under United States GAAP, deposit on credit card, legal retainer and advance for exploration expenditure should be expensed as incurred, and accordingly, the amount of $159,254 is expensed in the previous statement of income for the year ended January 31, 2004. (b) Accounting for start-up costs - Mining Properties Cost of Mineral Property and Deferred Exploration Costs Under Canadian accounting principles, these costs and recoveries may be deferred prior to the commencement of commercial operations. Accounting principles in the United States require expenditures and revenue during the start-up of operations to be charged to earnings. The mining property costs of $4,206 which are deferred under Canadian accounting principles, are expensed in the previous statement of income for the year ended January 31, 2004 for U.S. GAAP. (c) Income taxes The accounting for income taxes under Canadian GAAP and United States GAAP is essentially the same, except that: - income tax rates of enacted or substantively enacted tax law must be used to calculate future income tax assets and liabilities under Canadian GAAP. - Only income tax rates of enacted tax law can be used under United States GAAP. For both Canadian GAAP and U.S. GAAP, no Future Income Tax (Canadian GAAP) or Deferred Tax (U.S. GAAP) are either recorded as assets or as liabilities, as they are off